NOVEMBER 7, 2016 SCHOOL FINANCE Strategic Planning...2016/11/07 · Savings a few bucks can have long -term negative consequences Low bid auditor missed basic expenditure related

NOVEMBER 7, 2016

SCHOOL FINANCE

PLUS:

FOOD SERVICE ENVIRONMENTAL SERVICES

TECHNOLOGY

Quiz

https://goo.gl/Kl9Fdd

Early Key Events Two Weeks (aka, We’re the Government

and We’re Here to Serve You) June Appointments with the Chief You Get What You Pay For Phone Call to Virginia The Wheels Within the Wheel The Sheet The Big “S”

Two Weeks

Stakeholders deserve: Timely responses to inquiries Information that makes sense, or an offer to

explain the information

The Chief

It makes zero sense to: Drive bad spending decisions Reward bad spending decisions Punish good spending decisions

The Low Bid Blues

Savings a few bucks can have long-term negative consequences

Low bid auditor missed basic expenditure related to July/Aug teacher fringe benefits

June 30, 1992 deficit Fund Balance of $240,000 was adjusted down to $732,000

June 30, 1993 deficit was reduced to $319,000

Meritorious Budget Award SLCS one of only a few dozen districts in the

country to participate in first year of the program (1995-96) and first in Michigan

Became Reviewer Became Executive Board Member (Chair in

2003), Board responsible for setting and amending award criteria

Provided training at ASBO International Annual Conference

The Wheels Within the Wheel

Tied wages to state funding (1997) Implemented benefit cap (1997) Retirement cost containment (1997) The Sheet

“The Sheet”

Simply, an Excel workbook that provides long term financial planning (5 years minimum)

All major financial decisions are run through the Sheet

Allows SLCS to budget very tightly since approximately 85% of costs are tied to either a fixed ceiling or the State’s per pupil allocation

Stability

The stability that this District has had over the past 25 years I believe is one of the largest contributing factor for our success

From board members, to custodians, to bus drivers, to teachers, to clerical staff, etc., many people have chosen to spend their career in SLCS

District Funds

General Fund (main fund, day to day operations) Special Revenues Funds (food service,

community education) Debt Funds (taxes collected to pay for voter

approved bond debt payments) Capital Project Funds (Bond issues related

construction, General Fund funded expenditures for bus purchases, smaller capital projects, and major technology purchases)

General Fund

Revenues

By the Numbers

2005-06 2014-15

SLCS Per Pupil Foundation $6,931 $7,126

Avg. State “ “ $7,387 $7,497

Avg. Oakland County “ “ $8,308 $8,432

SLCS Per Pupil Total Revenues $8,043 $9,151

Avg. State “ “ “ $8,917 $9,457

Avg. Oakland County “ “ “ $10,403 $11,279

# of Districts 768 841

Students Statewide 1,712,133 1,516,358

SLCS Official Enrollment 6,949 7,659

Teachers / Non-Teachers 380/277 413/261*

Source: michigan.gov bulletin 1014 Oakland Schools Summaries and Surveys *475/272 in 2016-17

Proposal A

Approved by voters in March of 1994, Proposal A:

Eliminated the use of local property taxes as the main source of school funding and created a new state education tax- School districts began to get per-pupil payments from the state

The state sales tax increased from 4 cents to 6 cents on the dollar- The extra two cents was to go to the school aid fund, the state budget for schools

Required the state’s lowest-funded school districts to receive a basic level of education funding, which raised the amount they received and significantly closed the gap between low-funded schools and others

Proposal A

Was Proposal A Successful: Yes and No

Property taxes were significantly reduced statewide

The really poor districts were brought up to a minimal level

The gap between poor and rich has been reduced, but is still significant

The amount a district received in 1994-95 was directly correlated with their 1993-94 spending and were locked into a pecking order forever (you could theoretically catch up to the next district, but can never pass them)

If a district’s spending in 1993-94 was at a level that was above the maximum per pupil amount under Proposal A, that district was allowed to ask voters for a local millage to keep their higher spending

this option was not available to other districts*

* Some exceptions for county wide millages, sinking funds, or recreational millages

Proposal A vs. Old Model

Total SLCS 2016-17 Revenues under Proposal A $62,995,000

Total SLCS estimated revenues using old model of state equalized values multiplied by the local millage rate (34.58 in 1993-94) $86,460,000 (2,500,289,370/1000 x 34.58)

Proposal A Funding Gap Revenues: Compared to Other Districts

District

2014-15 Per Student

Base Foundation

Additional Per Pupil Dollars based on South Lyon Student

Count of 7,637

Southfield $ 10,901 $ 28,829,675

Farmington $ 9,975 $ 21,757,813

Novi $ 8,409 $ 9,798,271

County Avg. $ 8,432 $ 9,973,922

State Avg.* $ 7,497 $ 2,833,327

South Lyon $ 7,126 $ 0

* Estimate

Oakland County – Total Revenues Per Student 2014-15*

DISTRICT Revenues Rank DISTRICT Revenues Rank DISTRICT Revenues Rank

Pontiac $16,243 34 West Blmfield $10,910 127 Lake Orion $10,309 183

Bloomfield $15,373 37 Troy $10,804 133 Ferndale $10,208 195

Birmingham $14,146 40 Holly $10,765 135 Avondale $10,059 224

Southfield $13,763 49 Rochester $10,753 136 Brandon $10,030 231

Farmington $13,185 62 Hazel Park $10,741 139 Berkley $9,837 277

Clawson $12,736 67 Clarenceville $10,667 144 Huron Valley $9,585 334

Waterford $11,196 107 Oak Park $10,535 154 South Lyon $9,151 499

Royal Oak $11,114 110 Walled Lake $10,513 159 Oxford $9,058 543

Lamphere $11,046 116 Clarkston $10,351 174

Novi $10,965 123 Madison $10,325 181

* From State of Michigan Bulletin 1014 Total of 841 Public and Charter Schools

2016-17 Recommended Budget General Fund Sources of Revenues

State versus Local Control

State 91%

Local/Other 2%

ISD 4%

Federal 3%

Revenues Per Pupil versus Enrollment

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Enrollment 7.1% 4.2% 4.7% 6.4% 3.7% 1.5% 2.9% 3.8% 1.9% 2.9% 1.0% 1.1% 1.5% 0.3% 0.2% -0.1% 0.0% 4.1% 1.1% 2.8% 4.8% 5.0%Per Pupil 2.9% 2.9% 2.7% 0.0% 4.1% 5.0% 4.8% 3.1% -1.1% 1.1% 2.6% 3.4% 1.3% 1.9% -2.2% 0.0% -3.0% 0.8% 2.4% 2.0% 0.3% 1.6%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

* Budgeted

2015-16 Special Education Sources of Funding

0

1

2

3

4

5

6

7

8

Mill

ions

General FundPA 18 CountyState Extra

2003-04 through 2016-17 Student Enrollment

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Avg. 1.7% Avg. 0.1% Avg. 3.3%

2016-17 Recommended Budget Revenues: State Aid Formula

Fall 2016 Est. Student Count 8,428 Winter 2015 Student Count 8,021 Weighted Avg. Student Count (90%/10%) 8,387

2016-17 Total Per Pupil Allocation $7,511

2016-17 Total Foundation Revenues $62,994,757

2016-17 Recommended Budget Revenues: State Aid Formula

2016-17 Total Foundation Revenues $ 62,994,757 Less: 18 Mills Levied on Non-Homesteads $ 8,788,000 State Portion of Foundation Allowance $ 54,206,757

18 Mills Levied on Non-Homesteads $ 8,788,000 Less: Delinquencies (0.50%) -$ 43,940 Amount of Local Taxes $ 8,744,060

General Fund Expenditures

2016-17 Recommended Budget General Fund Expenditures

Salaries 51%

Cap. Outlay 0%

Purchased Serv. 7%

Supplies 5%

Benefits 34%

Other 3%

2016-17 Recommended Budget Expenditures: Compensation

Salaries: 62.5% of Per Pupil Increase of 1.62% = 1.01%

Exception is minimum of 1% for top step teachers and administrators (not applicable)

Fringe Benefits: Includes impact of PA 152

Cap increased by Medical CPI (2.5%) Difference paid by employee

2016-17 Recommended Budget Expenditures: Compensation

Retirement:

24.94% Avg. Retirement Rate (SLCS pays) 11.70% MPSERS Stabilization (State pays) 36.64% Total Rate

2016-17 Recommended Budget Staffing Changes (FTE*)

Position 2016-17

R. Budget Elementary Teachers 14.0

Middle School Teachers 5.6

High School Teachers 7.2

Elective Teachers 5.6

Special Education Teachers 4.9

Spec. Ed. Speech, SW, Psy 4.4

Special Ed. Para Pros 3.0

Contracted Special Ed. 1.4

Custodians 1.0

Bus Drivers 3.0

TOTALS 50.1

* Full Time Equivalent

Instructional vs. Support Costs

Instruction is defined as direct classroom costs Does not include costs such as guidance counselors, media specialists,

social workers, nurses, PT and OT

Budget adjustments have been focused on non-instructional areas

In 2008-09 $7.2 million more spent on instructional costs versus support costs

For 2016-17 Recommended Budget, gap increases by 283% to $20.4 million

Instructional vs. Support Costs

$32.17 $32.81 $32.91 $35.12

$36.86 $38.68

$41.63

$44.75

$48.78

$24.90 $23.15

$21.74 $21.41 $23.37

$25.36 $26.21 $26.94 $28.38

$10

$15

$20

$25

$30

$35

$40

$45

$50

$55

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16* 2016-17*

Mill

ions

Instructional Support *Budgeted

Employee Contracts

SLAA Contract (Administrators) expires June 2020

SLEA Contract (Teachers) expires August 2020

Teamsters Contract expires June of 2018

MESPA Contract expires June of 2019

Budget Process

Combination of Models

Per Pupil Allocation for School Building Budgets (Through SIP Process)

Zero Based Budgeting for Departments Staffing wage costs are dictated by contracts Hiring is based on class size targets, special

education caseloads, and support needs

Budget Process

Revenue Consensus Meeting - January Building allocations and other budget

request forms sent in early February Budgets due late March April – Preliminary Budget May – Recommended Budget June – Budget Adoption Throughout – District Finance Committee

SLCS Spending

2016-17 Spending

51% increase since 2003-04 $72.4 million versus $47.9 million

So shouldn’t we have enough money for what we need to do?

What have we done with all that “extra” money?

2003-04 through 2016-17 General Fund Operating Expenditures

0

10

20

30

40

50

60

70

80

Mill

ions

Does not include transfers and Section 147c * Budget

2003-04 through 2016-17 GF Operating Expenditures Adj for Inflation (CPI)

0

10

20

30

40

50

60

Mill

ions


2003-04 through 2016-17 GF Operating Expenditures Per Pupil

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000


2003-04 through 2016-17 GF Operating Expenditures Per Pupil (CPI)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000


Instructional Time Hours Per School Year

0

200

400

600

800

1,000

1,200

PPI K-5 6-8 9-12

2003-04 through 2016-17 GF Operating Exp. Per Pupil, Per Instruct. Hr.

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00


2003-04 through 2016-17 GF Oper. Exp. Per Pupil, Per Instruct. Hr. (CPI)

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00


General Fund

Financial Performance

1990-91 through 2016-17 General Fund Revenues

0

10

20

30

40

50

60

70

80

Mill

ions

1990-91 through 2016-17 General Fund Expenditures

0

10

20

30

40

50

60

70

80

Mill

ions

1990-91 through 2016-17 General Fund Annual Surplus (Shortfall)

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

Thou

sand

s

1990-91 through 2016-17 Annual Fund Balance (Rainy Day Fund)

-1

0

1

2

3

4

5

6

7

8

9

Mill

ions

1990-91 through 2016-17 Annual Fund Balance (Rainy Day Fund) % of Expenditures

-2%

0%

2%

4%

6%

8%

10%

12%

14%

Bond Issues and

Debt Millage

Debt Millage

Is similar to a home mortgage which is paid back over 20-30 years Since annual payments are fixed based on a debt payment

schedule, the “burden” is spread throughout a community based on taxable value

Generally: When total taxable value grows, debt millage rates go down, since debt

payment schedule is fixed When total taxable value declines, debt millage rates must go up, since debt

payment schedule is fixed

Non payment of taxes and Tax Tribunal Decisions can have further negatively impact

2016-17 Recommended Budget Taxable Value History

Fiscal Year Taxable Value % Increase 2016-17 2,042,469,464 6.32% 2015-16 1,921,006,556 6.32% 2014-15 1,806,876,140 5.58% 2013-14 1,711,440,797 2.92% 2012-13 1,662,784,156 0.20% 2011-12 1,660,022,452 -2.97% 2010-11 1,710,914,103 -9.54% 2009-10 1,891,389,877 -3.32% 2008-09 1,956,327,421 1.14% 2007-08 1,934,214,536 6.69% 2006-07 1,812,848,754 7.60%

Debt Millage Slow Recovery

After nine years, the total taxable value of the

District now finally exceeds what it was in 2008-09

Isolating the existing tax base (not including adds and losses), the current total taxable value is 17.9% lower

The overall taxable value is 31% lower in 2016-17 than we thought it would be when projecting in 2006

Total Taxable Change Existing Tax Base Versus Adds/Deletions

7.3% 8.0% 7.2% 7.6% 6.7%

1.1%

-3.3%

-9.5%

-3.0%

0.2%

2.9%

5.6% 6.3% 6.3%

3.2% 3.3% 3.0%

3.9% 3.2%

-1.5%

-5.3%

-10.4%

-4.9%

-2.5%

-0.6%

1.2% 1.6% 1.4%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

Taxa

ble

Val

ue %

Cha

nge

Bond Principle and Interest Payments

$16.58 $16.66 $17.06

$17.83 $18.37

$18.66

$17.28 $17.25

$18.54

$20.39 $20.40

$19.60

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

$22.0

Tota

l Pay

men

ts (M

illio

ns)

Debt Millage Rates Projected versus Actual

8.50 8.50 8.50 8.50

10.50 10.85 10.85 10.70

9.70 9.70 9.60

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

Est. TV increase for 15-16 = 5.0%

Debt Millage Factors

Districts with more affordable housing and/or less

commercial and industrial properties tend to have higher debt millages

For example in 2013-14, the taxable value per student in SLCS was $242,869, compared to $302,984 for Novi, $449,608 for Royal Oak, and $565,524 for Bloomfield Hills

Additionally, districts with newer or upgraded facilities also tend to have higher debt millage rates

Voter Approved Bond Issues

$29.0

$10.0 $3.5 $4.1

$39.9

$67.9

$98.9

$64.4

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Socio-Economic

Free and Reduced Student Meals

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15SLCS 12.1% 13.0% 16.4% 19.9% 19.4% 17.6% 18.9% 19.3% 17.1%State 35.5% 36.9% 41.0% 45.9% 46.4% 47.8% 47.9% 48.2% 46.6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Student

Performance

Student Performance How “Productive” a District is (i.e. student results

versus available resources) can be difficult to determine due to many factors (Poverty, Students with Special Needs, etc.)

However, SLCS does very well when examining student results, and then also applying available resources

Student Performance When taking into account total revenues

per student versus M-Step test scores, SLCS ranked #3 out of the 95 districts in the five county area in 2014-15

Student Performance

Ranking

Top 20 districts In 5 counties Rank in Funding Rank in Scoring

$ of effort for $100 of results

1 Northville 66 1 $ 39.54 2 Brighton 94 10 $ 40.24 3 South Lyon 84 11 $ 43.23 4 Plymouth Canton 78 14 $ 44.47 5 Dexter 60 6 $ 44.92 6 Troy 26 3 $ 45.23 7 Novi 22 2 $ 45.65 8 Rochester 27 4 $ 46.16 9 Saline 40 13 $ 50.26

10 Oxford 80 20 $ 50.53 11 Chelsea 36 12 $ 50.78 12 Armada 90 22 $ 50.93 13 Berkley 56 16 $ 51.13 14 Hartland 81 21 $ 51.52 15 Howell 91 26 $ 52.20 16 Lake Orion 31 15 $ 53.14 17 Gross Ille 44 17 $ 55.45 18 Pinckney 93 34 $ 55.81 19 Huron Valley 72 25 $ 56.61 20 Clarkston 67 23 $ 56.63

Food Service

Food Service Department Facts

The Food Service Department is expected to be self sufficient financially

A Special Revenue Fund keeps the operations separate from the General Fund

SLCS is one of the few districts that still prepares food at each school building, versus a main kitchen with distribution to each site


The Food Service Department served approximately 320,000 lunches last year and 75,000 breakfasts The Department does receive some State

and Federal dollars in addition to the breakfast and lunch fees paid by the students


The Fund is also charged 6% of total expenditures as an indirect cost that is paid to the General Fund – This represents the District providing such things as utilities, cleaning, insurance, payroll services, benefit administration, general administration, maintenance, accounting, and auditing

Food costs account for 42%-45% of total expenditures These costs are “variable” in nature, since they change depending on

participation Adding the indirect cost of 6%, approximately 50% of all expenditures are

variable, meaning for each $100 of additional meal revenues, $50 is already spoken for

The remaining 50% are essentially “fixed” costs, since they don’t change with modest changes in participation

2014-15 Revenues

Direct Pay, $718,427 , 47%

State $, $74,018 , 5%

Federal $, $705,439 , 46%

Other, $25,411 , 2%

2014-15 Expenditures

Employee Costs,

$644,393 , 43% Food Costs, $658,339 , 44%

Other, $112,922 , 7%

Indirect Cost, $85,897 , 6%

Food Service Financial Performance 2010-11 through 2015-16

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16*

Mill

ions

Revenues

Expenditures

Environmental

Services

Environmental Services This includes the areas of building and

grounds maintenance, custodial, warehouse, delivery, and facility rental

Environmental Services SLCS has approximately 1,500,000 square

feet of school building space Total custodial and building engineer

staffs are about 20% lower than they were in 2004-05, despite the addition of South Lyon East High School and approximately 1,500 more students

Environmental Services A preventative work order system was

created by Charlie McGinnis, our previous manager of facilities, that later became a model used by the company School Dude and is in operations in school districts throughout the nation

Technology

District Tech Support

Staff: 7 full time employees Student Interns

Tech Infrastructure Fiber optic network across 14 buildings. Over 65 miles of fiber optic

cable. 10 Gigabit Internet Connection through Oakland County ISD 20 Servers

Application Network and workstation management User and shared directory space Internet filtering

2066 Workstations 3700+ mobile devices (Chromebooks, Laptops, ipads, tablets, cell

phones, etc) 3500 User accounts 200 software titles


Building Security System Lenel security ID badge and electronic access High Definition security cameras at each entrance 30+ days of video retention Emergency lockdown activation

Wireless Network Infrastructure

Access point coverage to 99% of total building space. 100% of academic instructional space

Gmail access Grade 2 to 12 All full time staff


IT staff to workstation ratio can vary depending on the complexity/variety of systems being supported with many variables constituting a ratio.

For a typical enterprise wide network the average IT staff ratio is 1 technician to every 150 to 200 workstations.

Our District ratio is closer to 1 staff member to every 752 devices.

This does not account for IT support for phone or network backbone and general IT infrastructure responsibilities.

Pre-Bond Student Devices

Chromebooks Computers Total Devices Number of

Students Ratio Students to Computers

Bartlett 110 77 187 408 2.18

Brummer 143 86 229 582 2.54

Dolsen 108 89 197 490 2.49

Hardy 176 106 282 573 2.03

Kent Lake 137 91 228 580 2.54

Salem 110 97 207 387 1.87

Elementary Average Ratio:

Sayre 143 110 253 587 2.32 2.25

Centennial 202 316 518 928 1.79

Middle School Average Ratio:

Millennium 201 322 523 856 1.64 1.72

East High School 115 502 617 931 1.51

High School Average Ratio:

South Lyon High School 183 688 871 1256 1.44 1.48

Current Student Devices Chromebooks Computers Total Devices

Number of Students

Ratio Students to Computers

Bartlett 254 42 296 406 1.37

Brummer 346 44 390 663 1.70

Dolsen 300 49 349 568 1.63

Hardy 359 64 423 708 1.67

Kent Lake 329 54 383 641 1.67

Salem 271 41 312 443 1.42

Elementary Average Ratio:

Sayre 342 53 395 606 1.53 1.57

Centennial 309 283 592 1030 1.74

Middle School Average Ratio:

Millennium 341 278 619 959 1.55 1.64

East High School 368 491 859 985 1.15

High School Average Ratio:

South Lyon High School 256 667 923 1270 1.38 1.26

District Technology

Infrastructure

District Technology

Infrastructure

Network and servers

District Technology

Infrastructure

Network and servers

CITA software and technology

The technology necessary to deliver our curriculum is provided by the District to all teachers, all students.

District Technology with SIP and PTO Additions

Infrastructure

Network and servers


Building SIPS and PTOs



Infrastructure

Network and servers




Infrastructure

Network and servers



Evolution of Curriculum Technology

Punch cards & Programming

Graphing Calculator

PCs/Macs, Mice, Word Processing & Spreadsheets

Cell Phones, Laptops, iPods Internet

1950s 1980s 1990s 2000s +2010s

Tablets, Smartphones, Chrome Books


15 years ago, chose software that reinforced benchmarks. We had 3rd grade math software, 4th grade math software, etc., as supplemental materials to enhance and extend our curriculum

Curriculum and assessments changed The constructivist approach: tools for students to

construct their own knowledge. Software changed The flexible apps approach


Curriculum technology is determined by the SAC process, by teachers and administrators for teachers and students

Bond purchasing will happen over a 4 year period. Technology is changing so fast we don’t know what it

will look like four years from now But we have a process in place to figure this out. Software before hardware: We have always looked for

good content, then figured out the best devices to deliver this

Questions?

NOVEMBER 7, 2016 SCHOOL FINANCE Strategic Planning...2016/11/07 · Savings a few bucks can have long -term negative consequences Low bid auditor missed basic expenditure related

Documents