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Oakland Schools BudgetPresentation 2010-2011May 5, 2010

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Doing More with Less

Primary goal is to retain core services to our local school districts

District demand for ISD services is growing in many areas

Revenue to the ISD continues to decrease in all funds

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Key Factor in Budget Development

Local School District Funding– Student count & Foundation Allowance (70%)

Intermediate School District Funding– Revenue based primarily on property taxes (90%)

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Property Tax Forecast

Property Tax decreases

Fiscal Year 2008-09 -0.5% - $ 0.4MFiscal Year 2009-10 -4.5% - $ 11.7MFiscal Year 2010-11 -13% - $ 38.4MFiscal Year 2011-12 -12% - $ 59.8MFiscal Year 2012-13 -5.0% - $ 67.6MFiscal Year 2013-14 -0.0% - $ 67.6MFiscal Year 2014-15 2.0% - $ 64.7M

Annual Property Tax Collection has declined from FY 2009 to FY 2014 by 31%Accumulative loss from FY 09 to FY 15 is $310.3MFY 2008 base year tax levy is $216.9M

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Oakland Schools Property Tax Revenue

1.011.021.031.041.051.061.071.081.091.0

101.0111.0121.0131.0141.0151.0161.0171.0181.0191.0201.0211.0221.0

GEF 12.9 12.2 10.6 9.3 8.9 8.9 9.0

SEF 163.6 155.0 134.9 118.7 112.8 112.8 115.0

CFEF 40.0 38.0 33.0 29.1 27.6 27.6 28.2

Total (Flat FY08) 216.9 216.9 216.9 216.9 216.9 216.9 216.9

Loss (CY vs FY08) (0.4) (11.7) (38.4) (59.8) (67.6) (67.6) (64.7)

Accumulated Loss (0.4) (12.1) (50.5) (110.3) (177.9) (245.5) (310.2)

Total CY Tax Rev. 216.5 205.2 178.5 157.1 149.3 149.3 152.2

FY09 FY10 FY11 FY12 FY13 FY14 FY15

FY 2007-08 Property Tax Level

Dollars in millions

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State Aid Reductions

General Education: Section 81 14.5% reduction ($500,000)

($1.7M) decrease from FY 2009

Special Ed & Career Focused Ed Held flat from prior year

($608,564) decrease from FY 2009

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Cost Containment Reductions & Measures in Response to Declining Revenue

Continued health insurance premium share FY 2010 & 2011 salary freeze Five (5) unpaid furlough days for all employees (approx.

2% wage decrease) Salary reduction in 2012 by 3% for three years Attrition, Voluntary Employee Sick Leave Program

(VESLPP) and workforce reductions – 105.5 FTE reductions

Continued planned spend down of fund equity to 5%

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Cost Containment Reductions & Measures in Response to Declining Revenue

Reduction in travel & other purchased services Reduced supply budgets Lower contractors’ pay rates Less frequent equipment replacement Lease consolidation Lower energy consumption

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Oakland Schools, Current Benefit Plan Summary

January 2010 - Non-union– Community Blue PPO, employees premium share ranging up to 4.5%– Flexible Blue, employee paid bonus and H.S.A. contribution– Prescription co-pay changes from $10/$20 to $5 Generic and $30 Brand– Spousal surcharge raised to 6% of two person cost

July 2010 - Union– 6% cap in place – year to year carry-over– MESSA Choices– Prescription benefit $10 generic and $20 brand name– Office visits $5 co-pay– Current contract expires June 30, 2011

Oakland SchoolsFinancial Impact of Benefit Plan Changes

2005 2006 2007 2008 2009 2010

Oakland Schools

Annual Cost

Enrolled405

Enrolled400

Enrolled397

Enrolled405

Enrolled402

$ 4,656,274$ 4,948,988

$ 5,491,541

$ 6,093,774

$ 4,524,888

$ 4,417,109 $ 4,017,646 $ 4,250,968 $ 4,465,160$ 4,524,888

$ 238,637$ 931,342

$ 1,240,573

Oakland SchoolsAnnual Savings

Annual CostIf No Changes

Savings Over Five Years = $ 5,387,820

Data Source: McGraw Wentworth

Analysis of Actual Results

Enrolled388

$ 6,764,089

$1,348,655

$ 5,415,434

$ 1,628,613

Note: 1. Enrollment is noted at the bottom of each bar with 2010 cost at 1/1/2010 level (anticipated to change in June 2010)2. Cost with no changes based on 11% annual rate of increase (most projections range from 7% to 13%)3. 2010 savings based on actual 2010 BCBS rate renewal (no credit / adjustment for Risk Related Fund)

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Over 94% of Oakland Schools Budget is Spent on Services to Local Districts

FY 2011 Proposed – $314.1 Million5.19%

94.81%

Transfers to LEAs & Direct Program Support - $297.8M

ISD Operations - $16.3M

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About those services to LEAs

Services are prioritized by local superintendents and their staff through a survey done every 3-4 years.

Usage data from District Service Report Feedback on services is collected annually from each

referent group (HR, finance, instruction, technology, etc.)

Input to Oakland Schools – Continuous Improvement Plan

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Oakland Schools Programs & Services

Highlights from 2008/2009 District Service Report

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Professional Development and Instructional Services

More than 55,000 participants attended 2,100 ISD and regional events

Pearson Benchmark used by 26 districts and Inform by 27 districts with 50% subsidy from ISD

616,000 assessments administered (up from 213,000 last year)

3,644 Special Education students received direct services

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Professional Development and Instructional Services

$1,970,200 worth of materials provided to students with special needs

Homeless/Wraparound served 1,270 students 1,345 Back to School (increase of 300) and 1,029 truant

students (decreased of 164) served $21,871,847 saved by districts who sent students to the

Career Technical Campuses

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Technical CampusesCluster Enrollment 2009-2010

15%

17%

11%

13%10%

12%

8%

8%6%

Transp. Tech - 15%

Health Science - 17%

EET - 11%

BMMT - 13%

Cosmetology - 10%

Culinary Arts - 12%

Constr. Tech - 8%

Agriscience - 8%

Visual Imaging - 6%

1st semester enrollment - 3,070

2nd semester enrollment – 2,928

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Technology, Business and Operational Services

SPAM filtering blocked more than 1.2M SPAM emails/day Student information system (Zangle) saved $56,795 each for 15

districts totaling $851,925 AMS Business/Finance/HR application saved 6 districts $85,797

each, totaling $514,782 Tech Services fielded and resolved 21,600 technical assistance

calls from local districts Transportation collaboration helped reduce Special Education bus

mileage by 295,478 miles with an estimated savings to 26 school districts of $2.2M. Summer route collaboration saved an additional $35,696 and 7,072 miles.

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Technology, Business and Operational Services

$3.1M volume of cooperative purchases in Oakland County; participated in more than $12.4M of purchases in statewide competitive bids

Production Printing & Graphics produced 11.4M copies (up from 1.8M) at reduced cost and free delivery to local districts

Local districts received $5,356,447 through Medicaid Fee for Service revenue

Fee for service support to Brandon, Clawson, Madison, Oak Park, Pontiac, Southfield and South Lyon

Technical Campus Student Enrollment– 1st semester enrolment 3,070– 2nd semester enrollment 2,928

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Program Highlights in the Proposed 2010-2011 Budget

Alternative high school program in Southwest Quadrant (under study)

Resources for formative student assessments aligned to state standards

Maintaining resources for schools at risk Atlas-Rubicon West, curriculum management system

- $139,000 More external service staff placed in LEAs upon

request

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FY 2010-11 Budget Highlights Program Support & Subsidies

Continuation of Benchmark/Inform subsidy - $500,000 Expanded Math and Science support - $550,000 Targeted Schools Refugee Program - $100,000 for 3 years $19.3m for direct instruction of 3,000 students in

high-end/high-tech programs at the Technical Campuses Regional CTE program support - $2.5m CFE Transportation Reimbursement - $2m

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FY 2010-11 Budget Highlights Program Support & Subsidies

Regional Procurement Process (cooperative contract network with over $10.4 million of annual usage)

AMS, Zangle, ONE Network technical support Provide Special Education PA-18 funding and support -

$137.5M (decreased by $8.8m from FY 2010) Beverage Consortium Transportation Improvement Association (TIA) Inter-district mail services Tri-County Alliance

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Overview of Fiscal Year 2010-11

Oakland Schools Proposed Budgets

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Fund Balance Target Setting Protocol

The proposed protocol for the development of each fund’s year ending fund balance target will be predicated upon:

5 percent of the operating programs contained in said fund Known economic liabilities or designated reserves of a specific

fund

The fund balance target setting protocol recognizes the following economic realities:

– The State of Michigan’s economic environment– The economic status of the LEAs that comprise the Intermediate

School District.

Oakland Schools Board of Education approved the Protocol on 6/15/2009

Practice for the Special Education Fund is to distribute the amount inexcess of the target unreserved fund balance.

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Oakland SchoolsTotal Revenue Summary

55%

3%

6%

1% 6%

29%

Property Tax Revenue - $178.6

State Revenue - $9.0Other Local Revenue - $20.7

Other Financing Sources - $1.9New Grant Award Funding - $94.5

Est. Grant C/O - $19.2

Dollars in millions

FY 2011 $323.9 Million

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Revenue Assumptions

Property tax revenue decrease of 13% Expected investment rate of return is 1.5% on available

resources Increased local district utilization of our Finance, Human

Resource application, Benchmark & Inform system and Novanet fee-based software system.

General Education Section 81 reduced by 14.5% All other State Aid held flat

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Oakland Schools Fiscal Year 2011Total Expenditure Budget by Type

63.3%

20.5% 5.7%

3.4%

2.8%

0.3%

3.2%

0.8%

Transfers to LEAs - $222.6

Salaries & Benefits - $72.2

Purchase Services - $20.0

Utilities - $1.2

Supplies, Materials, Dues & Fees - $11.3

JobLink Program - $11.8

Capital Outlay & Other - $9.9

Transfers to Other Funds - $2.7

Dollars in millions

$351.7 Million

Cash to LEAs

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Difference between Revenue & Expenditures

Total Difference: $27.8 Million

Capital Projects Funds $(10.9M) Debt Service payments $(5M) Special Education Fund $(11.0M) All other funds $(.9M)

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Oakland SchoolsFinancial Impact of Benefit Plan Changes

2005 2006 2007 2008 2009 2010

Oakland Schools

Annual Cost

Enrolled405

Enrolled400

Enrolled397

Enrolled405

Enrolled402

$ 4,656,274$ 4,948,988

$ 5,491,541

$ 6,093,774

$ 4,524,888

$ 4,417,109 $ 4,017,646 $ 4,250,968 $ 4,465,160$ 4,524,888

$ 238,637$ 931,342

$ 1,240,573

Oakland SchoolsAnnual Savings

Annual CostIf No Changes

Savings Over Five Years = $ 5,387,820

Data Source: McGraw Wentworth

Analysis of Actual Results

Enrolled388

$ 6,764,089

$1,348,655

$ 5,415,434

$ 1,628,613

Note: 1. Enrollment is noted at the bottom of each bar with 2010 cost at 1/1/2010 level (anticipated to change in June 2010)2. Cost with no changes based on 11% annual rate of increase (most projections range from 7% to 13%)3. 2010 savings based on actual 2010 BCBS rate renewal (no credit / adjustment for Risk Related Fund)

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Budget Highlights

• MPSERS retirement rate budgeted at the weighted average rate of 18.79% (19.41% effective October 1, 2010)

• Non-union & union healthcare cost budgeted at annual increase of 13%

• Purchase Services, Supplies & Materials, Dues & Fees reduced by aggregate 10%

• Utilities reflect a 6% decrease from the prior year

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Budget Highlights

FY 2011 proposed non-union salary & wage changes

A wage freeze was implemented on January 1, 2010 forNon-union staff. Non-union wages follow the calendar year.

5 unpaid furlough days for 12 month staff (2% salary decrease)

Continuation of employee premium share based on paylevel (up to 4.5%)

The progression increment movement within the market ranges plus the longevity stipends account for an average of 0.5% annually.

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Budget Highlights

FY 2011 proposed union salary & wage changes

The OSTCEA and the Board of Education approved a one yearextension on the existing contract, expiring June 30, 2011.

The contract includes a wage freeze implemented on July 1, 2010.

3 unpaid furlough days for 10 month staff (2% salary decrease)

Continuation of the 6% health insurance cap.

Step increases are provided by contract for an average of 1.2% annually.

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Allocation of costs

General Allocation50% GE, 25% SE, 25% CFE

Activity Based Cost Allocation–FTE based23% GE, 25% SE, 52% CFE

Abraham & Gaffney – sq footage based50% GE, 26% SE, 24% CFE

Cost Based Allocation – Transportation73% GE, 25% SE, 2% CFE

Reference Enterprise Wide Summary Document

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General Education Fund Summary

Total Revenue: $17.5 Million– Property tax – $10.6M (60% of total revenue)– Other local revenues – $3.5M– State sources revenues – $2.9M– Other financing source revenues – $.5M

Total Expenditures: $17.7 Million– General administration – $1.7M– Finance and operations – $7.2M– Instructional services – $8.7M– Plant and fixed charges, transfers to LEAs – $.1M

Note: Medicaid Revenue now reflected in Fund 273

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$0

$5

$10

$15

$20

$25

$30

$35

2002Actual

2003Actual

2004Actual

2005Actual

2006Actual

2007Actual

2008Actual

2009Actual

20102nd

Amend

Proposed2011

Revenue Expense Unreserved Fund Balance Reserved Fund Balance

Dollars in millions

General Fund Overview

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Fiscal Year 2011General Education Fund Balance

END OF YEAR:Unreserved: $ 3,392,200

Reserved:Prepaid, Inventory and Deposits $ 35,000

Total Budgeted Ending Fund Balance $ 3,427,200_______________________________________________________

5% of GEF operating expenditures ($17.7 m): $ 0.9MState Aid exposure (sec 81): $ 2.9MFund Balance Protocol Target: $ 3.8 Million

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Pending Legislation limits General Education Fund to 15% fund balance

Current Operating Expenditures (COE) - MDE defined Total Current Operating Expenditures do not include:

• Capital Outlay• Community Services• Transfers outs (includes Medicaid transfers to

districts)

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Fiscal Year 2011 District Debt

Amount Average Annual

Payment

GEF Debt Principal: $ 5,165,000 $ 750,000

CFEF Debt Principal: $44,770,000 $ 3,100,000

QSCB Debt Principal (funds): $14,800,000 $ 850,000

Total OS Bonded Debt: $64,735,000 $ 4,700,000

NOTE: Debt Service for the Administration Building

Project Bond (2003) and QSCB issue is pre-funded in Debt Service

Fund 310 & 313 and Debt Service for the campus renovations bond

(2007) is pre-funded in Debt Service Fund 312 through FY 2014

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General Fund Five-Year Forecast

 

Proposed 2010-11

Projection 2011-12

Projection 2012-13

Projection 2013-14

Projection 2014-15

Revenue: 17,485,300 16,438,850 17,525,423 16,266,017 17,496,124

Expenditures: 17,673,000 17,520,690 17,419,037 17,578,308 17,746,829

Operating Excess (Deficit)

(187,700)

(1,081,840)106,386

(1,312,291) (250,705)

End of Year Fund Balance:  

Reserved: Prepaid, Inventory and deposits 34,900 0 0 0 0

Unreserved/Designated 3,614,900 2,345,360 2,451,745 1,139,454 888,749

Total 3,392,300 2,345,360 2,451,745 1,139,454 888,749

End of Year Unreserved FB as % of Expenditures 19.19% 13.39% 14.08% 6.48% 5.01%

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ISD Budget Resolution

Revised School Code 380.624 - Overview1. Not later than May 1 of each year, the ISD shall submit

proposed budget for next fiscal year to the board of each constituent district for review

2. Not later than June 1 of each year, the board of each constituent district shall review the proposed ISD budget, shall adopt a board resolution expressing its support for or disapproval of the proposed budget

3. Mail copy of resolution indicating support or disapproval (with rationale) to the Oakland Schools Board of Education

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General Education Fund

Questions & Comments

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Special Education Fund Summary

Total Revenue: $142.0 Million– Property tax – $134.9M (95% of total revenue)– Other local revenues – $1.4M– State sources revenues – $5.7M

Total Expenditures: $153.0 Million– Program supervision and direction – $2.3M– Program operations – $7.5M– Plant and fixed charges – $5.7M– LEA transfers and program subsidies – $137.5M

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Special Education Fund Overview

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2002Actual

2003Actual

2004Actual

2005Actual

2006Actual

2007Actual

2008Actuals

2009Actual

2010 2ndAmend

Proposed2011

Revenue Expense Unreserved Fund Balance Reserved Fund Balance

*FY 2004 contains “one time” operating adjustment for prior years **Dollars in millions

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Fiscal Year 2011 Special Education Program Support & Subsidies

PA-18 Base Distribution $ 134,332,100

Start-up Contingency $ 850,000

Extraordinary Contingency $ 250,000

Section 24 subsidy $ 100,000

Group Homes $ 1,200,000

Havenwick $ 150,000

SEI Regional Day Treatment $ 450,000

Michigan Rehab Services Cash Match $ 180,000

Total $ 137,512,100

PA-18 Base Distribution $(8.8M) decline from FY 2010

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106.9 110.09

145.8137.8 134.7

143.4

160.7

148.18157.03

137.5

18.5 16.9 15.519.3718.918.617.6616.02

27.423.4

0

20

40

60

80

100

120

140

160

180

FY 200

2 Act

ual

FY 200

3 Act

ual

FY 200

4 - A

ctual

FY 200

5 Act

ual

FY 200

6 Act

ual

FY 200

7 Act

ual

FY 200

8 Act

ual

2009

Act

ual

2010

2nd

Amen

d

Propos

ed 20

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Transfers to LEAs

OS Operations

Dollars in millions

Oakland Schools Special Education Expenditure Budget Comparison

*External services with offsetting revenue not included in FY 2010 OS Operations

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PA-18 Base Distribution FY 2003-2015

$103.2$105.6

$112.0

$148.0

$155.0

$160.0

$167.0$171.0

$174.0

$141.9$142.4$143.1

$108.7

$103.2

$128.4

$109.5

$134.3

$130.9$133.7

$142.1

100

120

140

160

180

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

Dollars in millions

Trend Line: RedAfter Property Tax Decline: Blue

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Fiscal Year 2011Special Education Fund Balance

END OF YEAR:Unreserved: $ 755,200

Reserved:Future SE Center Facility Renovations $ 286,000

Total Budgeted Ending Fund Balance $ 1,061,200

5% of SEF operating expenditures ($15.5 m): $ .775MState Aid exposure (sec 51a, 51a.8) $ 3.9MFund Balance Protocol Target: $ 4.675 Million

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Special Education Five-Year Forecast

 Proposed

2010-11Projection

2011-12Projection

2012-13Projection

2013-14Projection

2014-15

Revenue: 142,044,900 125,951,499 120,248,596 120,541,458 123,130,206

Expenditures: 153,016,800 125,868,753 120,153,830 120,432,549 123,021,792

Operating Excess (Deficit) (10,971,900) 82,746 94,767 108,909 108,415

End of Year Fund Bal:  

Reserved Center Program Facility Renovation 286,000 386,000 486,000 586,000 686,000

Reserved/Designated 0 0 0 0 0

Unreserved/Designated 775,200 757,946 752,712 761,621 770,036

Total 1,061,200 1,143,946 1,238,712 1,347,621 1,456,036

End of Year Unreserved FB % net of LEA

O.T. 5.00% 5.00% 5.00% 5.00% 5.00%

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Special Education Fund

Questions & Comments

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Career Focused Education Fund Summary

Total Revenue: $34.1 Million– Property tax – $33.0 M (96% of total revenue)– Other local revenues – $0.6 M– State sources revenues – $.4 M– Other financing source revenues – $0.1 M

Total Expenditures: $32.9 Million– Campus and other program administration – $21.8 M– LEA transfers and direct program operations – $5.1 M– Facility and technology maintenance/renovations – $0.1 M– Plant and fixed charges – $5.9 M

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Career Focused EducationFund Overview

$0

$10

$20

$30

$40

$50

$60

$70

2002Actual

2003Actual

2004Actual

2005Actual

2006Actual

2007Actual

2008Actual

2009Actual

20102nd

Amend

Proposed2011

Revenue Expense Unreserved Fund Balance Reserved Fund BalanceDollars in millions

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Fiscal Year 2011Career Focused Education Fund Balance

END OF YEAR:Unreserved: $ 8,069,800

Reserved:Prepaid, Inventory and Deposits $ 67,200

Total Budgeted Ending Fund Balance $ 8,137,000_______________________________________________________

5% of CFEF operating expenditures ($32.9): $ 1.6MState Aid exposure (sec 61a.1, 61a.2): $ .4 MFund Balance Protocol Target $ 2.0 Million

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Career Focused Education5-Year Forecast

 Proposed 2010-11

Projection 2011-12

Projection 2012-13

Projection 2013-14

Projection 2014-15

Revenue: 34,195,900 30,312,556 28,917,591 28,985,006 30,100,462

Total Expenditures: 32,910,900 32,087,848 30,524,315 30,949,980 31,323,685

Operating Excess (Deficit) 1,285,000(1,775,292

) (1,606,724) (1,964,974) (1,223,224)

End of Year Fund Balance

Unreserved 8,137,000 6,361,708 4,754,985 2,790,011 1,566,787

End of Year Unreserved FB as % of Expenditures 24.72% 19.83% 15.58% 9.01% 5.00%

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Career Focused Education Fund

Questions & Comments

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Proposed Grants and Funded Projects Summary

Total dollar award value of all current grants and funded projects: $113.7M

New Awards $94.5M Carry Over $19.2M

Direct transfer to districts: $88M ISD administered grants and projects: $25.7M

(Includes JobLink $11.8M)

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Other Funds

Cooperative Activities Fund 270 – Collaborative Program Development Initiative (CPDI)

Cooperative Activities Fund 271 – Oakland Network for Education (ONE)

Cooperative Activities Fund 272 - Alternative Education High School ( Under Study)

Cooperative Activities Fund 273 – Medicaid Debt Service Fund 310 – Administrative Building Bond 2003: 15

years, ending 2018 Debt Service Fund 312 – CFE Campus Renovations Bond: 29

years, ending 2036 Debt Service Fund 313 – Qualified School Construction Bond:17

years, ending 2027

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Other Funds

Capital Projects Fund 404 - CFE Technical Campus Renovations Phase II Project

Capital Projects Fund 406 – Admin Bldg Renovation & Maintenance Capital Projects Fund 408 – Qualified School Construction Bond Production Print Fund 710 – Enterprise Fund (subsidy eliminated) Risk Related Activity Fund 810 – Internal Service Fund

(unemployment pre-funded)

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Questions & Comments