“Tradition of Excellence”
Budget Presentation· 2013-14 Final Proposed Budget Amendment
· Variances since December· Proposed 2014-15 General Fund Budget
· Budget Assumptions & State Budget update· Revisions since last month’s update
· Proposed Sinking Fund and Debt Retirement Fund budgets· Future Forecast (2015-16 and 2016-17)
· Budget Assumptions· Financial Information
· Historical review of revenues· Historical review of expenses
· Wages, health benefits, retirement· Historical use of fund balance and budget reductions· Bulletin 1014
· Looking towards future years· State Aid – what is possible?· MPSERS and related School Aid Fund support of MPSERS
· Discussion/Questions
“Tradition of Excellence”
2013-14 Final Budget Amendment
Amended FinalRevenue $28,085,558 $28,134,097Expenses $28,466,270 $28,617,232Net Change ($380,712) ($483,135)Net Chg. (Unreserved) ($324,712) ($427,135)Net Chg. (IB Reserve) ($56,000) ($56,000)
Ending Fund Balance $2,514,444 $2,412,021Fund Balance 8.8% 8.4%
Ending IB Reserve $324,606 $324,606
“Tradition of Excellence”
Variances from Amended· Change in Revenues: Increase of $48,539
· KISD Itinerant funding: $54,000· Medicaid reimbursements: $18,000· Early Childhood Revenues: ($25,000)· Others: $1,539
· Change in Expenses: Increase of $150,962· Increase in Utilities: $129,000
· Heat: $74,000· Electric: $55,000
· Security Purchases: $26,000· Purchase of additional access controls, two way radios, replacement
of some security cameras· Others: ($4,038)
“Tradition of Excellence”
2014-15 Budget Proposals
Governor’s House SenateFoundation Increase $104 $115 $257Foundation Allowance $7,554 $7,565 $7,707Best Practices $52 $52 $0 Performance Funding $70 $70 $0MPSERS Credit $0 $0 $0Total Funding $7,676 $7,687 $7,707 MPSERS Liability % 19.76% 19.76% 20.96%
Net Impact $208,926 $241,706 $112,132
“Tradition of Excellence”
Other Budget Assumptions· 2% increase to Act 18 Special Education funding· $150,000 in EGRNOW! funding· No increase in wages/salaries (scale or step increment)· Health Insurance:
· MESSA increase: 6.07% + Approximate 2% for PPACA fees· WMHIP: 1.5% decrease in premiums, PPACA fees included· As a district, expenses are still less than the state “cap”
· Retirement:· “All in” retirement rate of 34.09% · “All in” expenses offset by $1,611,347 of School Aid Fund support· Net retirement rate: 24.68%
· Enrollment: 2,980 FTE students· Kindergarten/Young 5’s almost at budgeted amount· FTE count up 11 since the fall (2,994 to 3,005)
· Utilities:· Kept 50% of the 2013-14 overage in the 2014-15 budget to account for
higher per unit prices and another potential cold winter· Have not budgeted for any cost savings from bond program
“Tradition of Excellence”
2014-15 Proposed Budget2013-14 2014-15 Fav./(Unfav.)
Revenues $28,134,097 $28,799,028 $664,931
Expenses $28,617,232 $29,234,012 ($616,780)
Change in Fund Bal ($483,135) ($434,984) $48,151
Chg. in Unreserved Fund Bal ($427,135) ($122,984) $304,151
Chg. in Joint Facilities Fund Bal $0 ($250,000) ($250,000)
Chg. in Int’l. Bacc. Fund Bal ($56,000) ($62,000) ($6,000)
Ending Unreserved Fund Bal $2,412,021 $2,289,037 ($122,984)
Ending Unreserved Fund Bal % 8.4% 7.8% (0.6%)
Ending Joint Facilities Fund Bal $287,095 $37,095 ($250,000)
Ending Int’l Bacc. Fund Bal $324,606 $262,606 ($62,000)
“Tradition of Excellence”
2014-15 Budget changes from last month
· Last month projected a $89,000 deficit· Proposed budget is a $123,000 deficit· Changes since last month:
· Utilities: Increased expenses by approximately $50,000 to reflect rising per unit prices and potential for another cold winter
· No energy savings from bond projects budgeted at this time· Other 2013-14 adjustments rolled forward to 2014-15
· Approximate $40,000 negative impact· Retirement Expenses/Stabilization payment:
· Increase in “all in” expense: Approximately $737,000· Increase in stabilization payment: $782,000· $45,000 positive variance
“Tradition of Excellence”
2014-15 vs. 2013-14
· Revenues: Increase of $664,931· MPSERS Stabilization payment: $782,000· State Funding: $176,000· Reduction in students (3,000 to 2,980): ($149,000)· EGRNow!: ($280,000 to $150,000): ($130,000)· Others: ($14,069)
· Expenses: Increase of $616,780· MPSERS Expense: $737,000· Joint Facilities: $250,000· Health Care: $75,000· Retirement Incentive in 2013-14: ($138,000)· Budget Reductions: ($125,000)· Utilities: ($80,000)· Tech Purchases in 2013-14: ($26,000)· Others: ($76,220)
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Proposed Sinking Fund Budget
2013-14 2014-15Revenue $295,486 $302,986Expenses $250,000 $552,000Net Change $45,486 ($249,014)
Ending Fund Balance $1,286,299 $1,037,285
“Tradition of Excellence”
Long Term Sinking Fund Plan2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
Beginning Balance $1,286,299 $1,037,285 $682,492 $672,821 $680,263 $222,946 $444,578
Revenues $302,986 $335,207 $345,329 $362,442 $372,683 $364,632 $384,166
Athletic Turf Fund $40,000 $40,000 $40,000 $40,000 $40,000 $40,000 $40,000
Memorial Bleachers $250,000
Parking Lot Resurfacing $82,000 $60,000 $60,000
Back up Generators $300,000
Carpet Replacement $500,000 $275,000 $275,000 $500,000 $415,000
Others $130,000 $90,000 $40,000 $40,000 $40,000 $40,000 $40,000
Total Expenses $552,000 $690,000 $355,000 $355,000 $830,000 $140,000 $495,000
Ending Balance $1,037,285 $682,492 $672,821 $680,263 $222,946 $447,578 $336,744
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Proposed Debt Fund Budget
2013-14 2014-15Tax Collections $4,774,955 $6,496,109School Bond Loan Fund $1,427,160 $1,069,819Total Revenues $6,202,115 $7,565,928Expenses $6,202,115 $7,407,274Net Change $0 $158,654
Ending Fund Balance $225,557 $384,211
“Tradition of Excellence”
Budget Assumptions
· Per-Pupil Funding:· 2015-16: $125 increase ($7,679)· 2016-17: $150 increase ($7,829)
· $150,000 in EGRNOW! funding· 2,980 FTE students· Salaries: No scale increase, step increase in both years· Health Insurance: 3% increase· Retirement:
· Net retirement rate remains at 24.68% for both years· “All-in rate projected to grow to over 35% in 2015-16, level off for 2016-
17?· School Aid Fund support of MPSERS exceeds $2 million for both years
· Utilities: 5% price increase each fiscal year, offset by energy savings from bond program for a “net zero change” to utilities
“Tradition of Excellence”
2015-16 & 2016-17 Forecast2014-15 2015-16 2016-17
Revenues $28,799,028 $29,087,237 $29,563,163
Expenses $29,234,012 $29,597,628 $29,962,004
Change in Fund Bal ($434,984) ($510,391) ($398,841)
Chg. in Unreserved Fund Bal ($122,984) ($343,391) ($398,841)
Chg. in Joint Facilities Fund Bal ($250,000) $0 $0
Chg. in Int’l. Bacc. Fund Bal ($62,000) ($167,000) $0
Ending Unreserved Fund Bal $2,289,037 $2,048,069 $1,649,228
Ending Unreserved Fund Bal % 7.8% 6.9% 5.5%
Ending Joint Facilities Fund Bal $37,095 $37,095 $37,095
Ending Int’l Bacc. Fund Bal $262,606 $95,606 $95,606
“Tradition of Excellence”
State Foundation Grant History
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
$6,800
$7,000
$7,200
$7,400
$7,600
$7,800
$8,000 $7,554$7,476
“Tradition of Excellence”
Total State Funding History
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
$6,800
$7,000
$7,200
$7,400
$7,600
$7,800
$8,000
$8,200 $7,676$7,975
Total includes: Best Practices, Performance Funding, Federal StabilizationTotal does not include: MPSERS Credit, Change in Y’5/Kindergarten funding
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Personnel Expense Trend(2008-09 to 2014-15 Budget)
Wages Health Total Retirement
Retirement Offsets
Net Retirement
2008-09 $15,773,478 $2,890,277 $2,594,430 $0 $2,594,430
2009-10 $16,001,020 $2,925,490 $2,634,789 $0 $2,634,789
2010-11 $15,792,998 $2,908,473 $3,101,768 $0 $3,101,768
2011-12 $15,824,414 $3,092,473 $3,734,246 $304,634 $3,429,612
2012-13 $15,764,475 $2,471,727 $4,145,622 $618,763 $3,526,859
2013-14 (Budget) $15,497,511 $2,455,810 $4,571,817 $1,054,645 $3,457,172
2014-15 (Budget) $15,309,379 $2,505,785 $5,206,957 $1,611,347 $3,595,610
Net Change since 2008-09 ($464,099) ($384,492) $2,612,527 $1,611,347 $1,001,180
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Budget Reductions & Use of Fund Balance
Change in Fund Balance
Ending Fund Balance %
Budget Reductions
2007-08 $425,289 17.03% $40,000
2008-09 $23,934 16.91% $250,000
2009-10 ($332,283) 15.36% $686,000
2010-11 ($102,449) 15.07% $1,250,000
2011-12 ($661,107) 12.78% $680,000
2012-13 ($748,823) 9.99% $450,000
2013-14 (Budget) ($427,135) 8.43% $465,000
2014-15 (Budget) ($122,984) 7.83% $125,000
Total ($1,945,558) $3,946,000
“Tradition of Excellence”
Bulletin 1014 – 3 year trend2010-11 2011-12 2012-13
Total Sample 786 797 813
General Fund Revenues 282nd 186th 253rd
Expenses:
- Basic Program 101st 52nd 59th
- Added Needs 695th 703rd 706th
- Instructional Support 148th 147th 192nd
- Operations & Maintenance 303rd 309th 658th
- Business & Administration 386th 476th 482nd
Total GF Expenses 254th 202nd 236th
Avg. Teacher Salary 47th 44th 53rd
* 2012-13 drop in rankings for general fund revenues and operations & maintenance is the result of separating recreational millage revenue and related expenses from the General Fund
“Tradition of Excellence”
Key Variables for the future· Some key costs are stabilized:
· Health care – maximum contribution cap in place· Retirement – district’s contribution towards unfunded liability is capped
· Offset is lost funding opportunity through School Aid Fund support· Wages/Salaries:
· Local control· Wage scales frozen last three years
· EGRNOW!: Does it continue? At what level?· State Funding
· Biggest variable moving forward· $150 per year to offset a step increase and 3% health increase· 3% “Cost of Living” increase would be $225/pupil at today’s level· Does MPSERS support continue to increase, level off, or decrease
moving forward?· 3% employee contribution to MPSERS health insurance
· Contributions being held in escrow as legal challenge continues· Supreme Court recently agreed to hear arguments
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State Aid Possibilities
(In Millions) 2013-14 2014-15 2015-16 2016-17
Revenue Growth % 2.0% 3.1% 3.4% 3.0%
Revenue Estimate $11,496.3 $11,863.2 $12,268.1 $12,636.1
Increase in Revenues $226.6 $357.1 $404.8 $368.0
Students 1,522,600 1,512,000 1,503,400 1,503,400
Increase per student $149 $236 $269 $245
Increase in MPSERS support $247.3 $277.0 $233.0 ?
Inc. in MPSERS support/student $162 $183 $155 ?
Net revenue increase per student ($13) $53 $114 ?
Budgeted increase per student $53 $104 $125 $150
2014-15 and 2015-16 are state estimates, 2016-17 is district estimate
“Tradition of Excellence”
State Aid – Use of “fund balance”
(In Millions), Based on House Bdgt. 2013-14 2014-15 2015-16
Beginning Fund Balance $466.0 $310.9 ($15.4)
Total Revenues $13,547.3 $13,851.4 $14,256.3
Total Expenditures $13,702.4 $14,177.7 $14,110.0
Change in Fund Balance ($155.1) ($326.3) $146.3
Ending Fund Balance $310.9 ($15.4) $130.9
Foundation Grant Increase $53 $115 $0
Ending Fund Balance per pupil $207 ($10) $87
“Tradition of Excellence”
MPSERS – Looking forward
· Although district “cost” is contained, overall cost of the program is not
· “All in” cost at 34%· Plan is about 60% funded as of 9/30/13
· Driving factors:· In 2004, 2 active members for every retiree, 2014: 1.06 active members
for each retiree.· Investment performance:
· Assumes 8% annual return· Plan uses 5 year average to measure actuarial gain or loss· 15% loss in 2008, 7% loss in 2009, but returns of 15.96% in 2012
and 13.27% in 2013· Actuarial investment loss which had averaged $3 billion from 2009
to 2012, was “only” $860 million in 2013.· Overall actuarial loss for 2013 was $400 million
“Tradition of Excellence”
MPSERS – Looking forward
· Possible positive variables going forward:· Improving actuarial investment experience· Stabilizing active member to retiree ratio· Eventual payoff of state early retirement incentive plan (1.36% of rate)· Supreme Court ruling in state’s favor on 3% employee contribution to
retirement health insurance ($600 million in escrow, plus ongoing benefit of 3% contribution)
· What to hope for:· Leveling off of school aid fund support for MPSERS· Decrease in school aid fund support for MPSERS· Additional alterations to the program to make it more cost efficient· Eliminate school aid fund support of MPSERS and begin to reduce the
unfunded liability, which would lower the employer contribution rate.
“Tradition of Excellence”
Summary· 2014-15 Budget Proposal
· Maintain all academic programs for students in 2014-15· Significant progress toward eliminating our structural deficit· Ability to continue the process to implementing the International
Baccalaureate program· School Aid Fund growth:
· Will the growth expand in future years?· How much of that growth will be consumed by support for MPSERS?· What type of legislative decisions will be made in Lansing?
· MPSERS:· Will the true cost of the program continue to grow?· Additional legislative changes to the program?· How does the Supreme Court rule on the 3% health care contribution
· Others:· How quickly can we leverage the bond to provide operational savings
(utilities)?· Employee compensation – How can we increase efficiency, recognizing
that pay scales are projected to be frozen for a 4th straight year.