Budget Update April 12, 2012 1. Budget Update School Board Meeting April 12, 2012 – Local Tax Rate = 76.2 Cents – CIP/School Bus Replacement – VRS Employee.

Budget Update

April 12, 2012April 12, 2012

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Budget Update

• School Board Meeting April 12, 2012– Local Tax Rate = 76.2 Cents– CIP/School Bus Replacement– VRS Employee Contribution– Current Funding Gap Recommendations– Requested Actions– Fund Balance Information– Dates for Future Budget Discussions

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Current Funding Gap(With Updated Local Transfer)

Current Gap AmountSchool Board Request -$3,739,306Additional Revs from Local Transfer

$1,078,946

Additional Revs BOS requests for use of School Bus Replacement $648,250

New Gap (w/ Equalized Tax Rate) -$2,012,110

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School Bus Replacement Funding FY 12/13 and Beyond

• Buses can be funded in the CIP for FY 12/13. • Actions by both Boards can set the stage for

CIP funding beyond FY 12/13.• Based on conditional School Board actions to

contribute revenue to the CIP, agree that school buses should compete equally within the CIP along with other projects.

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Buses to CIP for FY 12/13• With School Board approval, BOS would make a

single appropriation* of about $1.4M into the CIP for FY 12/13:– $299K in state revenues to be provided directly to the

CIP (current state SOQ funding attributable to school bus replacement)

– $648K from the schools local transfer– $450K transfer of the balance from the school bus

replacement fund (expected fund balance after 15 buses are purchased for $1.31M in FY 11/12)

* subsequent to Board of Supervisors (BOS) adoption, it may be possible to include in the appropriation of FY 12/13 budget

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Buses in CIP FY 13/14 and Beyond

• In the adopted FY 12/13 budget, the CIP will continue to show $0 funding for buses in FY 13/14 and beyond.

• The School Board could take the following conditional actions:– Commit the annual portion of state SOQ funding formula

attributable to school bus replacement to the CIP.– Develop a formula for annual commitment of a portion of

School Division undesignated fund balance to the CIP (May 10 business meeting).

– Based on conditional School Board actions to contribute revenue to the CIP, agree that school buses should compete equally within the CIP along with other projects.

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VRS Employee ContributionSenate Bill 497 (SB 497)

• Mandates employees to share in the cost of VRS by contributing five percent of their salary

• Mandates a five percent increase in employee salaries

• Options– Any combination over the next five years equaling

5% with a minimum of a 1% increase each year– New employees may be subject to 5% VRS

employee share beginning next year

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Employee Costs (SB 497)5% Option

Example Employee5% Increase

“SB 497”

Original Salary $ 50,000

Employee Share FICA $ 3,825

Effective Original Salary $ 46,175

Salary with 5% VRS “Offset” $ 52,500

VRS (New Employee Share) $ 2,625

Employee Share FICA $ 3,815

Final Effective Salary $ 46,060

Effective Dec./Inc. Salary $ (115)

Effective Salary % Dec./Inc. -0.25%

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Employee Costs (SB 497)1% Option

Example Employee1% Increase

“SB 497”

Original Salary $ 50,000

Employee Share FICA $ 3,825

Effective Original Salary $ 46,175

Salary with 1% VRS “Offset” $ 50,500

VRS (New Employee Share) $ 505

Employee Share FICA $ 3,825

Final Effective Salary $ 46,170

Effective Dec./Inc. Salary $ (5)

Effective Salary % Dec./Inc. -0.01%

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Employee Costs (SB 497)1% Option

Example Employee1% Increase

“SB 497”+1% Salary

Increase+2% Salary

Increase

Original Salary $ 50,000 $50,000 $50,000

Employee Share FICA $ 3,825 $3,825 $3,825

Effective Original Salary $ 46,175 $46,175 $46,175

Salary with 5% VRS “Offset” $ 50,500 $51,000 $51,500

VRS (New Employee Share) $ 505 $510 $515

Employee Share FICA $ 3,825 $3,862 $3,940

Final Effective Salary $ 46,170 $46,628 $47,045

Effective Dec./Inc. Salary $ (5) $453 $870

Effective Salary % Dec./Inc. -0.01% 0.98% 1.88%

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School Division Costs (SB 497)(Above School Board Requested Budget)

1% Increase 5% IncreaseTeachers $585,876 $2,928,803Classified $279,840 $1,399,203VRS (Savings) -$674,619 -$3,531,028Group Life $3,790 $18,971Totals $194,887 $815,949

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Current Budget Situation

Current Gap Amount

School Board Request -$3,739,306

Additional Revs from Local Transfer

$1,727,196*

Senate Bill 497 - (1% Increase) -$194,887**Local Transfer Designated (for Buses) -$648,250

New Gap (w/ Equalized Tax Rate) -$2,855,247

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*Includes $648K BOS requests for use of School Bus Replacement.** May be offset by BOS fund balance as discussed during their deliberations.

Considerations for Reduction(Tier 2)

Tier 2 Reductions Amount

Administrative Assistant (Murray) $24,134

Increase Work Days for 10-Month Transportation Employees $35,574

Daytime Custodial Staff Needed at Larger Elementary and Middle Schools $46,632

Improvement of End-User to Client Service Specialist $144,816

Reclass. of School Nurse (FLSA Exemption Status and Compensation Increase) $62,700

Total: $313,856

Recommend Moving to Tier 1 (Not Considered for Reduction) Amount

FY 2012-13 Staffing Standards - Media Specialists $13,170

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Considerations for Reduction (Cont.)Salary Reduction Scenarios Amount

1% Classified Reduction $334,058*1% Teacher Reduction $515,949*

Total: $850,007

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*Subject to Slight Change

Current Budget Recommendations

AmountNew Gap (w/ SB 497: 1%) -$2,855,247Tier 2 Reductions (Revised) $313,856Salary Reductions $850,007Updated Potential Funding Gap -$1,691,384

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Potential Solutions• State Budget:– Possible Small Revenue Increases (may be as much as

$330K)– Appears to permit local governments to phase-in VRS

employee share over the next five years• Local Options:– Request General Government fund balance to fund School

Portion of SB 497– Use additional School Fund Balance to meet needs– Reduce Tier 1 items

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Potential Considerations of Tier 1 Items

Tier 1 Initiatives

Staffing Standards - Media $13,170 Professional Development (Tech) $100,000

Staffing Standards - Counselor $32,925 Staffing Standards – Art, Music, & PE $131,702 ESOL Staffing $65,851 Response to Intervention (RTI) $381,936 Continue Tech Support Initiative $67,408 Growth $479,789

Legislative Liaison $67,408 FY 2012-13 Staffing Standards -AP $69,143 Total: $1,409,332

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Protected Tier 1 Items

Protected Tier 1 Initiatives

Reduce Class Load in Grades 4 - 12 $1,127,369 Fuel Cost $75,200

Liability/Auto Insurance $5,000 Health & Medical Sciences Academy Staffing $32,925*

CATEC Increase $17,912 VRS $4,268,238

Custodial Staff for Greer Addition $15,543 Utility Costs $96,582

Dental Increase $35,970 Unemployment Insurance $20,000

Teacher Salary Inc. (Remaining 1%)** $511,602 PREP $87,940

Classified Increase (Remaining 1%)** $334,037 Total: $6,628,318

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* Seeking alternative funding** Moved to Tier 1 protected to preserve commonality

Staff Recommended Actions• Reduce Salary to 1% increase over VRS mandates

for both teachers and classified – Saves ~$850,007

• Reduce current funding by the Revised Tier 2 Reductions – Saves ~$313,856

• Discuss Meeting Minimum 1% Mandated VRS Salary Increase ($194,887)

• Clarify Protected Tier 1 items• Delay additional action until more information is

available regarding state actions

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Fund Balance InformationFund Balance Amount

Beginning Fund Balance (FY 11/12) $7,554,405

Budgeted Use of Fund Balance (FY 11/12) ($2,827,034)

Additional Use of Fund Balance (FY 11/12) ($391,099)

Projected Fund Balance (End FY 11/12) $4,336,272

Budgeted Use of Fund Balance (FY 12/13) ($1,800,000)

Projected Ending Fund Balance (FY 12/13) $2,536,272

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Future Budget Discussion• § 22.1-93. Approval of annual budget for school purposes. • Notwithstanding any other provision of law, including but not limited to

Chapter 25 (§ 15.2-2500 et seq.) of Title 15.2, the governing body of a county shall prepare and approve an annual budget for educational purposes by May first or within thirty days of the receipt by the county of the estimates of state funds, whichever shall later occur, and the governing body of a municipality shall prepare and approve an annual budget for educational purposes by May fifteen or within thirty days of the receipt by the municipality of the estimates of state funds, whichever shall later occur. Upon approval, each local school division shall publish the approved annual budget, including the estimated required local match, on the division's website, and the document shall also be made available in hard copy as needed to citizens for inspection.

• Approval of Budget is expected by April 26 to meet appropriation deadlines and avoid substantial delays of Capitol Improvements Projects.

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Future Budget Discussion

• April 11 – FY 12/13 Budget Adoption (Operating and Capital): Board of Supervisors

• April 26 – Budget Development Worksession and Budget Worksession: School Board

• May 9 - FY 12/ 13 Resolution of Appropriations: Board of Supervisors

• June 6 – CIP review for potential adjustments: Board of Supervisors

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Staff Recommended Actions• Reduce Salary to 1% increase over VRS mandates

for both teachers and classified – Saves ~$850,007

• Reduce current funding by the Revised Tier 2 Reductions – Saves ~$313,856

• Discuss Meeting Minimum 1% Mandated VRS Salary Increase ($194,887)

• Clarify Protected Tier 1 items• Delay additional action until more information is

available regarding state funds

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