1 Board Budget Commission January 21, 2016 Agenda Meeting Goals -5 Minutes Calendar and Timeline -5 Minutes Governors State of the State Address -10 Minutes Revenue Forecast, FY2017-FY Minutes Specific Cost Considerations, FY2017-FY Minutes Multi-Year Expenditure Considerations -15 Minutes Current Budget Year Recap -5 Minutes FY17 Budget Parameters -20 Minutes Whats Next and Final Comments -5 Minutes 2 3 Meeting Goals Goals 4 For this meeting -To obtain a clear understanding of the long-term revenue forecast for fiscal years To review specific cost considerations for FY17-FY21 -To begin examining long-term expenditure costs associated with district strategic priorities -To discuss current estimates based on Board approved FY17 budget parameters -To identify any unforeseen or not already captured long-term costs / revenues for the district Going forward -Continue developing a comprehensive multi-year plan that balances revenue against expenditures -Continue considering the long-term implications for revenue streams -Continue identifying the long-term approach for strategic priorities and other large expenditure items -Continue identifying decision-packages to allow for transparent and clear priorities for new revenue 5 Calendar and Timeline Budget Calendar (1 of 3) 6 Atlanta Public Schools Fiscal Year 2017 General Fund Budget Development Calendar 9/4/2015v10 Item #Item Description Dates 1 Board/Superintendent workshop - Initial Academic and Operating Goals and Priorities for Budget Parameters August 27, Senior Executive Leadership Team review of the Fiscal Year 2017 budget planning framework and timeline September 1, Budget parameters identified and finalized by Senior Executive Leadership TeamSeptember 1, Fiscal Year 2017 Budget Planning Parameters and Timeline presented and approved by the BoardSeptember 8, Expanded Cabinet discusses budget framework, parameters and timelineSeptember 17, Senior executive leadership team discussion of the budgetOctober 27, Board reviews/discusses Fiscal Year 2017 budget assumptions, staffing formulas and strategic prioritiesNovember 2, Departments receive Fiscal Year 2017 Budget templatesNovember 11, Board Budget Commission Meeting to Discuss Multi-year Budgeting StrategyNovember 12, Budget and Finance Advisory Committee, initial meeting (CFO only)November 12, Expanded Cabinet discusses budget approach, options and provides feedbackNovember 19, Board approves Fiscal Year 2017 budget assumptions, staffing formulas and strategic prioritiesDecember 14, Budget and Finance Advisory Committee, second meetingDecember 17, Fiscal Year 2015 Mid-Year adjustmentJanuary 11, Departments submit completed budgetsJanuary 14, Governor's State of the State Address and Education Budget (OMB)January 14, Board Budget Commission Meeting to Discuss Multi-year Budgeting StrategyJanuary 21, Budget and Finance Advisory Committee, third meetingJanuary 21, Budget Office compiles budgetJanuary 29, 2016 Budget Calendar (2 of 3) 7 Atlanta Public Schools Fiscal Year 2017 General Fund Budget Development Calendar 9/4/2015v10 Item #Item Description Dates 20 FC Tax Commissioner and FC Chief Assessor Presentation at Board or Budget Commission Meeting February 1, Senior Executive Leadership Team budget retreat to complete preliminary budget proposal February 2, Budget and Finance Advisory Committee, fourth meetingFebruary 11, Superintendent presents the Fiscal Year 2017 Budget Primer to the Board Budget Commission meeting (at call of Committee chair) February 18, Board Budget Commission meeting (at call of Committee chair)February 29, Superintendent presents the Fiscal Year 2017 Budget Primer to the BoardMarch 7, Conduct regional public meeting for Fiscal Year 2017 General Fund BudgetMarch 10, Conduct regional public meeting for Fiscal Year 2017 General Fund BudgetMarch 17, Board Budget Commission meeting (at call of Committee chair)March 17, Conduct regional public meeting for Fiscal Year 2017 General Fund BudgetMarch 24, Board Budget Commission meeting (at call of Committee chair)March 28, Budget and Finance Advisory Committee, fifth meetingMarch 28, Conduct regional public meeting for Fiscal Year 2017 General Fund BudgetMarch 31, Conduct Public Hearing on FY17 BudgetApril 11, Superintendent presents the Fiscal Year 2017 Budget to the Board (Tentative adoption)April 11, First read of the tax Millage rates for Fiscal Year 2017April 11, Salary Hearing #1 (If necessary)May 5, Tax assessor provides preliminary appraisal values to DistrictMay 6, Salary Hearing #2 (If necessary)May 12, 2016 Budget Calendar (3 of 3) 8 Atlanta Public Schools Fiscal Year 2017 General Fund Budget Development Calendar 9/4/2015v10 Item #Item Description Dates 39Superintendent presents the Fiscal Year 2017 Budget to the Board (Final Adoption)June 6, Final adoption of the tax Millage rates for Fiscal Year 2017 (may require a called Board meeting (public hearings) depending on the county's schedule and millage rollback) June-16 41Advertise the tax digest for the five year history Fiscal Years June-16 42Advertise and publish notice of tax rate and budgetJune-16 43Advertise the first and second public hearings for the tax Millage rates (If necessary)June-16 44Hold the first and second public hearing on the tax Millage rate (If necessary)June-16 45Advertise the third public hearings for the tax Millage rates (If necessary)June-16 46Hold the third public hearings for the tax Millage rates (If necessary)June-16 47Deadline for millage rates to be delivered to Fulton County Tax CommissionerJune-16 48Tax assessor provides final appraisal values to the DistrictAugust 1, 2016 9 Governors State of the State Address Proposed State Budget Changes by Governor $300 million reduction in austerity cuts Salary increases for teachers Increase in employer portion of Health Insurance Local 5-mill share 10 11 Revenue Forecast, FY2017-FY2021 Considerations for Discussion 12 Roughly 26 percent of general fund revenue comes from the State. Starting in FY17, APS will receive $4.5 million more annually as a result of becoming a charter system. Assumption of $8.0 million increase in QBE for FY2017. General Assembly is considering significant changes to its funding formula which makes FY18-FY21 difficult to forecast (2% growth assumed in these years). Roughly 26 percent of general fund revenue comes from the State. Starting in FY17, APS will receive $4.5 million more annually as a result of becoming a charter system. Assumption of $8.0 million increase in QBE for FY2017. General Assembly is considering significant changes to its funding formula which makes FY18-FY21 difficult to forecast (2% growth assumed in these years). Considerations for Discussion 13 A mil of tax is equal to $1.00 per every $1,000 of assessed valuation of real estate property. Since FY2009, the APS millage rate has stood at One mil currently generates about $22 million. A mil of tax is equal to $1.00 per every $1,000 of assessed valuation of real estate property. Since FY2009, the APS millage rate has stood at One mil currently generates about $22 million. Considerations for Discussion 14 Roughly 70 percent of general fund revenue comes from local property taxes. We anticipate steady growth of the tax digest will continue over the next several years. The projections assume a 5% increase* for FY2017 and a continued annual 3% growth rate in out years. Roughly 70 percent of general fund revenue comes from local property taxes. We anticipate steady growth of the tax digest will continue over the next several years. The projections assume a 5% increase* for FY2017 and a continued annual 3% growth rate in out years. *Revised projected local revenue assumptions; 3% growth presented to Board on December 14 th. Considerations for Discussion 15 Includes Payments in Lieu of Taxes, tuition, investment interest, rental of facilities, sale of assets, lost and damaged reimbursements, charter buy-back, field trips, and other sources. FY2016 assumes back-payment of IGA Includes Payments in Lieu of Taxes, tuition, investment interest, rental of facilities, sale of assets, lost and damaged reimbursements, charter buy-back, field trips, and other sources. FY2016 assumes back-payment of IGA Considerations for Discussion 16 APS is projected to see steady revenue growth in FY2017 through FY2021. 17 Specific Cost Considerations, FY2017-FY2021 Considerations for Discussion 18 As the local tax digest grows and as existing charter schools complete their grade-level build out, expenditures related to charter school scaling will continue to grow. Charters also receive a portion of local revenue which is not reflected here. Considerations for Discussion 19 The annual pension liability payment represent 7.2% of general fund spending. The current annual payments are roughly $1,000 per student, and will grow to $1,400 per student by 2029. Considerations for Discussion 20 APS has a long- standing practice of maintaining a fund balance above 7.5% of revenue, but below the statutorily required cap of 15%. With a projected FY17 Budget around $730m, that would mean a fund balance between $54.75m and $109.49m APS has a long- standing practice of maintaining a fund balance above 7.5% of revenue, but below the statutorily required cap of 15%. With a projected FY17 Budget around $730m, that would mean a fund balance between $54.75m and $109.49m Minimum FY2016 21 Multi-Year Expenditure Considerations Operational Challenges -Transportation -HVAC and other maintenance -Operational cost of bringing back on buildings Schools -Staffing formulas -Equity audit -Signature Programs and Flexibility -Scaling up of existing charters -Maintenance of Effort Strategic Priorities -Pay Parity -Turnaround -CRCT Remediation / Enrichment -Early Childhood -Textbooks -IT -Talent Management Other -Pension -Benefit Rates Operational Challenges -Transportation -HVAC and other maintenance -Operational cost of bringing back on buildings Schools -Staffing formulas -Equity audit -Signature Programs and Flexibility -Scaling up of existing charters -Maintenance of Effort Strategic Priorities -Pay Parity -Turnaround -CRCT Remediation / Enrichment -Early Childhood -Textbooks -IT -Talent Management Other -Pension -Benefit Rates Considerations for Discussion State -Charter System Funds (+) -Funding Formula Adjustment (+/-) -Potential impact of OSD (-) Local -Senior Tax Exemptions (-) -Millage Rate (+/-) Other Local -TADs (+) Federal (+/-) State -Charter System Funds (+) -Funding Formula Adjustment (+/-) -Potential impact of OSD (-) Local -Senior Tax Exemptions (-) -Millage Rate (+/-) Other Local -TADs (+) Federal (+/-) 22 Multi-Year Planning Framework 23 24 Current Budget Year Recap Looking Ahead to FY17 25 $703.5 m $656.5 m Includes Turnaround, CRCT Remediation/ Enrichment, Flexibility & Signature Programing, Charter System Transition, and Pay Parity $242 m +TBD 26 FY17 Budget Parameters Budget Parameters 27 Resource ParametersEstimateComment The district will establish a millage rate consistent with the Boards mission and vision 1 mil = $22 millionDistricts millage rate has remained at since FY2008. The district will maintain a fund balance between 7.5% and the statutory limit of 15% of projected expenditures Estimated fund balance on 6/30/16: $75.3 million With projected FY17 revenues of roughly $730 million, the fund balance should remain above $54.75 million and must remain below $ million. The district will fully realize all funds coming in from intergovernmental agreements $1.5 millionCurrent Estimate Budget Parameters 28 Expenditure ParameterCost EstimateComment Allocation decisions will be made to prioritize achieving a more equitable distribution of resources pursuant the districts equity audit. TBD The district will allocate resources to implement effectively the systems move to a charter system operating model. $250,000 The district will fund pension obligations in accordance with State statute and actuarial standards. $51.9 million The district will invest in a multi-year school turn-around strategy that provides additional support and interventions for schools at risk of state take-over. $25.0 million The district will make investments in early childhood education based on findings from research study. TBD The Governors FY2017 budget proposal includes the implementation of a new compensation model to retain teachers Budget Parameters 29 Expenditure ParameterCost EstimateComment The district will ensure that the budget is aligned to the Boards mission and vision and that resources are allocated against key district strategic priorities in the areas of: Academic Program * Ongoing implementation of districts CRCT remediation & enrichment efforts $4.5 million Year 2 of support plan for impacted students still enrolled at APS. * Improvement in student achievement in math, science, and literacy, including a comprehensive materials of instruction strategy (inclusive of textbook adoption and online student and teacher resources) TBD College Readiness: AP tests, IB exams, early college textbooks, expansion of work based learning, college tours, internships, SAT/ACT prep, and others. Career Readiness: Dual-enrollment, internships, CTAE, work readiness workshops, career monitoring, CTAE program certification. * Ongoing implementation of signature programming across clusters $12 million * Ongoing implementation of positive behavior supports programming TBD Budget Parameters 30 Expenditure ParameterCost EstimateComment The district will ensure that the budget is aligned to the Boards mission and vision and that resources are allocated against key district strategic priorities in the areas of: Talent Management * Strategies to recruit, professionally develop, and retain high-quality staff $40,000 Additional costs are included in the turnaround budget * Continued implementation of multi-year compensation study recommendations to address pay parity $13 million Phase 2 includes placing all non- instructional staff on the proper pay scale, as well as a 1% COLA for all staff and a step increase Budget Parameters 31 Expenditure ParameterCost EstimateComment The district will ensure that the budget is aligned to the Boards mission and vision and that resources are allocated against key district strategic priorities in the areas of: Systems & Resources * The safety, security, and well-being of students and staff (including the implementation of a new safety/security model) $10.62 million Includes salaries, benefits, and one- time costs for start-up equipment * Preventative maintenance of support infrastructure (including buildings, buses, and technology) TBD Budget Parameters 32 Expenditure ParameterCost EstimateComment The district will ensure that the budget is aligned to the Boards mission and vision and that resources are allocated against key district strategic priorities in the areas of: Culture * Continued implementation of cultural transformation strategy, including strengths-based programming $630,000Strength Finder licenses for new employees, Gallup engagement for all employees and continued implementation of organizational culture initiatives * Implementation of Districts external communications strategy $1.54 millionOperating budget for Communications department Whats Next Next Meeting- Thursday, February 18 th 33