Jimmy Hay, Director of Finance & Business

Paola USD #368

2013-14 Budget Presentation

2013-14 Budget Book Contents

Table of Contents - list of all codes/funds

Budget Review (Jimmy) – budget summary

Hearing Notice (Code 99) – mill levies

Budget At A Glance – charts/graphs Budget Profile (Judy) – district

information Budget Documents – individual

codes/funds Forms – supporting

documents/worksheets

General Fund

Mill levy set by State at 20 mills Funds are transferred to numerous

programs and weighted funds (At-Risk, Bilingual, Vocational Education, Professional Development, etc.).

Base State Aid Per Pupil (BSAPP) x Weighted Enrollment = General Fund Budget

Base State Aid Per Pupil History

Budget Year BSAPP BSAPP Change ($) BSAPP Change (%) General Fund

FY ’09 (2008-09) $4,433 (reduced to $4,400) --- --- $13,172,216 ( Budgeted; reduced by $394,616)

FY ’10 (2009-10) $4,218 (reduced to $4,012) ($215) (4.85%) $11,982,494 (reduced by $558,324)

FY ’11 (2010-11) $3,937 ($281) (6.66%) $11,540,528

FY ’12 (2011-12) $3,780 ($157) (3.99%) $11,444,328

FY ’13 (2012-13) $3,838 +$58 +1.53% $11,514,768

FY ’14 (2013-14) $3,838 --- --- $11,660,228 (budgeted)

FY ’15 (2014-15) $3,852 (projected) +$14 +.36%

TOTAL DECREASE: ($581) (13.1%) ($1,511,988) (-11.5%)

Since FY ’09, the BSAPP has decreased $581 (13.1%) and the Budgeted General Fund has decreased $1,511,988 (-11.5%). The current BSAPP of $3,838 maintains school funding levels close to the 2000-01 year when the BSAPP was $3,820 – 13 years ago! During the 2013 session, the Legislature approved a two year budget plan. BSAPP will remain flat at $3,838 for 2013-14. A slight

$14/pupil increase is projected for 2014-15, if state-wide assessed values increase. Based on state statue, the BSAPP should be $4,492. If USD #368’s General Fund was based on the statutory BSAPP of $4,492 it would be

$13,647,145. This would equate to $1,986,917 additional General Fund monies!

General Fund, cont.

The 2013-14 budget is based on an expected student full-time equivalent (FTE) of 1,961.6 students (3 year average enrollment). Follow is a summary of recent district FTE enrollment:

Year Actual FTE Enrollment

FY ’08 (2007-08) 2,062.5

FY ’09 (2008-09) 2,027.9

FY ’10 (2009-10) 2,028.1

FY ’11 (2010-11) 2,010.3

FY ’12 (2011-12) 1,986.6

FY ’13 (2012-13) 1,953.3

FY ’14 (2013-14) 1,945.0 (projected)

Projected enrollment for 2013-14 reflects a decrease in students based on a smaller incoming Kindergarten class compared to the Senior

class that graduated, partially offset by intra-grade increases to result in a projected decrease in enrollment.

General Fund budget is calculated on the higher of: Current year enrollment - projected to be 1,945 for FY ’14 (8.3 FTE less than FY ’13) Prior year enrollment - was 1,953.3 for FY ‘13 3-year Average – would be 1,961.6 for FY ‘14

The total District weighted FTE, which includes weightings for low enrollment, bilingual education, vocational education, at-risk students,

non-proficient students, transportation, and special education for 2013-14 is estimated at 3,038.1 FTE.

TOTAL GENERAL FUND: 3,038.1 weighted FTE x $3,838 BSAPP = $11,660,228

General Fund, cont.

Weighted FTE Enrollment comparison (Form 150 summary):

Weighting 2012-13* 2013-14 Difference

Enrollment (Sept 20th) 1,986.6 1961.6 (25.0)

Enrollment used Prior Year Average

High Enrollment 69.6 68.7 (.9)

Bilingual Education (hours) .5 .4 (.1)

Vocational Education (hours) 40.5 40.8 .3

At-Risk(free lunch) .456 FTE 294.1 268.6 (25.5)

Non-Proficient (testing) 5.3 5.2 (.1)

Transportation (>2.5 miles) 152.1 154.6 2.5

Special Education 451.5 538.2 86.70

FHSU Math & Science Academy 0.00 0.00 ---

TOTAL WEIGHTED FTE: 3,000.2 3,038.1 37.90

x BSAPP $3,838 $3,838 ---

= GENERAL FUND $11,514,768 $11,660,228 +$145,460

*The 2012-13 budget was based on prior year enrollment of 1986.6 (actual enrollment was 1953.3).

General Fund, cont.

District’s calculated free lunch percentage:

Students 2009-10 2010-11 2011-12 2012-13 2013-14

Students eligible for free lunches 421 508 556 645 589

Free Lunch Percentage 20.66% 25.05% 27.40% 32.47% 30.00%

General Fund, cont.

Transfers from the General Fund include Bilingual Education ($1,535), Special Education ($2,065,504), and At-Risk ($1,069,362).

General Fund Revenue Summary: Local $2,246,898 (19%) and State $9,413,330 (81%)

General Fund Expense Summary: Salaries/Benefits $8,169,452 (70%), Transfers $3,136,401

(27%), and Supplies/Misc $354,375 (3%)

General Fund, cont.

District assessed valuation history (Miami & Franklin County):

Year Assessed Valuation (all funds) Increase/Decrease % 2008 $133,432,513 --- ---

2009 $132,273,894 ($1,158,619) (.87%)

2010 $130,610,152 ($1,663,742) (1.26%)

2011 $129,616,864 ($993,288) (.76%)

2012 $128,895,556 ($721,308) (.56%)

2013 $128,620,538 ($275,018) (.21%)

TOTAL: ($4,811,975) 3.61%

Average Tax Delinquency Percentage for Miami County:

Year Delinquency 2011 2.19%

2010 2.26%

2009 2.62%

The delinquent tax rate used for the 2013-14 budget is 5%.

Supplemental General (LOB)

The LOB is calculated by using the BSAPP of $4,433 per state statute. The District will receive 39.67% state aid for every dollar compared to 40.94% last year. The 2013-14 LOB state aid is prorated at 78%

(was 79% last year). LOB Proration History:

Year Proration State Contribution

2008-09 100% $323,424,384

2009-10 89.5% $339,191,618

2010-11 91.7% $338,729,552

2011-12 85.7% $339,211,730

2012-13 79.0% $339,224,103

2013-14 78.0% (estimated) $339,212,000

The State’s contribution toward LOB proration has remained flat the last few years. For 2013-14, it will be approximately $90 million

underfunded state-wide. If the LOB state aid was funded at 100%, this would generate an additional $344,232 for USD #368!

Supplemental General (LOB), cont.

Weighted Enrollment 3,038.1 Less Special Ed Weighting -538.2 2499.9 BSAPP x $4,433

$11,082,057 2013-14 Special Ed Aid + $2,065,504

$13,147,561 USD #368 authority x 30% LOB Budget $3,944,268

Supplemental General (LOB), cont.

2012-13 LOB

$3,909,406

2013-14 LOB

$3,944,268 (+$34,862)

Supplemental General (LOB), cont.

Assessed Value Per Pupil (AVPP) vs. State Aid:

Year Valuation Enrollment AVPP USD #368 State Aid LOB

2008-09 $133,432,513 2,027.9 $65,798 34.64%

2009-10 $132,273,894 2,028.1 $65,220 38.82%

2010-11 $130,610,152 2,010.3 $64,970 34.46%

2011-12 $129,616,864 1,986.6 $65,245 37.82%

2012-13 $128,895,556 1,953.3 $65,988 40.94%

2013-14 $128,620,538 1,945.0 (projected) $66,128 39.67%

After state aid, the balance of the LOB revenue is generated with a local levy. The District’s maximum LOB authority per the resolution passed in 2002 is 30% of the General Fund. The estimated levy for 2013-14 is 19.145 mills, an increase of 1.226 mills.

Supplemental General (LOB), cont.

Transfers from LOB include Professional Development ($20,000), Parents As Teachers ($26,340), Special Education ($1,024,632), and Vocational Education ($390,610).

Supplemental General (LOB) Fund Revenue Summary: Balance $216,305 (5.5%); Local $2,507,504 (63.6%); State $1,220,459 (30.9%)

Supplemental General (LOB) Fund Expense Summary: Transfers $1,461,582 (37.1%), Contracted transportation & fuel $620,000 (15.7%), Electricity/Heating $559,550 (14.2%), Maintenance salaries $260,270 (6.6%), Insurance $285,000 (7.2%), Repairs/Maintenance/Cleaning $107,000 (2.7%), Water $76,500 (1.9%), Textbooks $145,000 (3.7%), Technology $95,000 (2.4%) and $334,366 (8.5%) for remaining LOB expenses (instructional equipment, supplies, custodial supplies, etc).

Other Funds

2012-13 Budget: Federal Funds $397,085 Adult Education

$234,520 Adult Ed Suppl.

$183,082 At-Risk

$1,349,097 Bilingual

$41,919 Capital Outlay

$2,720,000 Driver Training

$35,580 Food Service

$1,315,546 Professional Dev.

$44,000 Parent Education

$222,320 Special Education

$3,147,591

2013-14 Budget: Federal Funds $357,619 Adult Education

$208,022 Adult Ed Suppl.

$125,766 At-Risk

$1,569,362 Bilingual

$40,000 Capital Outlay$2,720,000 Driver Training

$43,488 Food Service

$1,272,069 Professional Dev.

$99,104 Parent Education

$218,184 Special Education

$3,740,136

Other Funds, cont.

2012-13 Budget: Vocational Education

$682,694 Gifts & Grants$106,267 Special Reserve $0 KPERS

$1,916,359 Contingency Reserve $0 Student Materials $0 Activity Fund $0 Bond & Interest

$2,439,577 Special Assessment

$29,107 Special Ed Coop

$14,303,916

2013-14 Budget: Vocational Education

$690,079 Gifts & Grants$113,937 Special Reserve $0 KPERS $2,100,770 Contingency Reserve $0 Student Materials $0 Activity Fund $0 Bond & Interest

$1,536,136 Special Assessment

$29,107 Special Ed Coop

$15,087,757

At-Risk

FY 13 Actual FY 13 Budget FY 14 Proposed Budget $ Difference % Difference 733,896 1,349,097 1,569,362 220,265 16.3%

At-Risk funds are transferred from the General Fund ($1,069,362). The revenue generated by at-risk students must be spent on programs for students that meet the definition of at-risk and are charged to this fund. Funding is calculated by and must be spent on at-risk and non-proficient students as defined by State guidelines.

Programs included are: Foster Grandparents, Jumpstart and after school tutoring, in-school suspension, Alternative school, Supplemental reading, Instructional aides, MAP testing services, and general education salary allocations.

At Risk Funding for 2013-14 is based on the following: FTE Students eligible for free lunches (589 students) 268.6 Non-proficient students (112 students) 5.2 TOTAL: 273.8 x $3,838 = $1,050,844

District’s calculated free lunch percentage:

Students 2009-10 2010-11 2011-12 2012-13 2013-14

Students eligible for free lunches 421 508 556 645 589

Free Lunch Percentage 20.66% 25.05% 27.40% 32.47% 30.00%

FY 14 proposed budget amount includes the carryover balance for this fund. District does not plan to expend the carryover balance, but

must have the budget authority to do so if necessary.

Special Education

FY 13 Actual FY 13 Budget FY 14 Proposed Budget $ Difference % Difference 2,284,835 3,147,591 3,740,136 592,545 18.8%

Money for Special Education is transferred into this fund to help operate special education programs for the first 3.5 months of the fiscal year. The state does not provide any money for special education until at least October 15 of each year. The carryover balance in this fund is needed in order to operate for the first 3.5 months of the fiscal year.

No increase in special education funding since 2008-09 (total dollars have remained the same; state categorical aid variation due to FTE of staff claimed state wide).

Special Education categorical aid funding is figured on a per teacher basis, not a per student basis method used for regular education funding. The funding amount based on the number of teachers is then divided by the BSAPP to arrive at an FTE.

Categorical aid per teacher for 2012-13 was $28,275 and is estimated to be $27,750 for 2013-14. The special education FTE of 538.2 results in a $2,065,504 transfer from General Fund to Special Education (538.2 x $3,838 =

$2,065,504) This fund includes expenditures for Coop payments/USD 368 assessments ($1,024,632), special education contracted transportation

($289,000), pass through of USD 368 special education entitlement aid to the Coop ($1,848,304) and salaries for special education teacher substitutes.

FY 14 proposed budget amount includes the carryover balance for this fund. District does not plan to expend the carryover balance, but must have the budget authority to do so if necessary.

Special Reserve Fund – Health Insurance

FY 13 Actual FY 13 Budget FY 14 Proposed Budget $ Difference % Difference 1,386,638 0 0 0 0

USD #368 is semi self-insured utilizing a third party claims administrator, insurance broker, and stop loss (re-insurance) carrier. Following is a summary of the health insurance fund:

2008-09 Actual 2009-10 Actual 2010-11 Actual 2011-12 Actual 2012-13 Actual

Beginning Balance $893,600 $883,970 $650,400 $532,210 $793,230

Revenue $1,937,451 $2,024,752 $1,992,171 $1,787,589 $1,854,260

Expenses $1,947,081 $2,258,322 $2,110,361 $1,526,569 $1,386,638

Ending Balance $883,970 $650,400 $532,210 $793,230 $1,260,852

Stop Loss (per person) $60,000 $60,000 $75,000 $75,000 $75,000

During 2012-13, revenues exceeded expenses, resulting in a reserve balance increase of $467,622. Actual expenses only are reported for this fund, therefore there are no budgeted amounts shown. For 2013-14, the stop loss (per person) specific deductible will be $85,000. Original contingency funds of $345,800 were earmarked for the health insurance fund. Including the reserve fund of $1,260,852, this

makes a total health insurance reserve of $1,606,652.

Bond & Interest

FY 13 Actual FY 13 Budget FY 14 Proposed Budget $ Difference % Difference 2,439,577 2,439,577 1,536,136 (903,441) 37.03%

Revenue in this fund is generated by a mill levy and is available for payment of bond principal and interest. The proposed levy would decrease approximately 1.23 mills to a total of 11.114 mills. The budgeted amount is necessary to meet the bond repayment schedule for the next 18 months.

2008-09 Actual 2009-10 Actual 2010-11 Actual 2011-12 Actual 2012-13 Actual: 2012-13 Budget

Expenditures (pmts) $1,170,591 $2,392,615 $2,432,473 $2,484,390 $2,439,577 $1,536,136

State aid factor (%) 20% 18% 18% 19% 21% 24%

State aid ($) $234,118 $430,671 $430,674 $472,034 $512,311 $368,673

Outstanding Debt $15,725,000 $15,230,000 $13,450,000 $11,570,000 $10,000,000 $7,860,000

Mill Levy 15.602 16.070 13.325 13.262 12.344 11.114

Assessed valuation changes impact the bond & interest state aid percentage.

Bond Payoff Schedule

Based on the current repayment schedule, all district bonds would be paid in full by June 30, 2018

Cash balance in the bond & interest fund will be sufficient to pay the bonds in full by Sept 1, 2016 (16-17)

The last year to levy for the bond & interest fund would be 15-16 The latest possible bond election date would be early 2016. Assuming a 3-12 month bond

planning timeline, the process would need to begin early to mid 2015 (or sooner). The following dates are available election dates in 2014 and 2015 per the Miami County Clerk:

2014: August 5, 2014 & November 4, 2014 2015: March 3, 2015 & April 7, 2015

Current projections indicate the district could issue up to $20 million in new bond funds and maintain a flat mill levy (subject to interest rates, state aid changes, etc.)

Bond Series

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Series 2005

$4,085,000

$3,110,000

$1,590,000

-0-

Series 2009

$315,000 -0-

Series 2012

$3,460,000

$3,460,000

$3,460,000

$3,460,000

$1,945,000

$400,000

TOTAL: $7,860,000

$6,570,000

$5,050,000

$3,460,000

$1,945,000

$400,000

Coop Special Education

FY 13 Actual FY 13 Budget FY 14 Proposed Budget $ Difference % Difference 13,157,787 14,303,916 15,087,757 783,841 5.5%

The District is the sponsoring district of the East Central Kansas Special Education Cooperative for seven other area school districts (Central Heights, Garnett, Jayhawk, Louisburg, Osawatomie, Paola, Pleasanton, and Prairie View).

Coop Revenue Comparison:

2012-13 2013-14

Interest $20,000 $10,000

Payments from participating school districts $8,649,854 $9,000,797

Payments from USD #368 $2,146,391 $2,684,236

Federal aid/Medicaid $2,122,672 $2,149,025

Greenbush state aid flow through & Miscellaneous $365,000 $243,700

TOTAL REVENUE: $13,303,917 $14,087,758

Sponsoring the special education coop does not impact our mill levy. Each district contributes according to the services provided to them.

However, the additional expenses from the special education coop overstate our overall budget and expenses per pupil. This is similar to the Parents As Teachers consortium and the Adult Education consortium which the Paola district also hosts.

FY 14 proposed budget amount includes the carryover balance for this fund. District does not plan to expend the carryover balance, but must have the budget authority to do so if necessary.

Total Expenditures & Budget Authority

TOTAL EXPENDITURES & BUDGET AUTHORITY: FY 13 Actual FY 13 Budget FY 14 Proposed Budget $ Difference % Difference

40,554,995 44,592,834 45,556,032 963,198 2.16% As noted, the FY 14 proposed budget amounts include the carryover balance for most funds. District does not plan to expend the carryover

balances, but must have the budget authority to do so if necessary. As the Notice of Hearing states, the expenditures establish the maximum limits of the 2013-14 Budget.

For example, the 2012-13 proposed budget was $44,592,834 and the actual expenditures were $40,554,995, a difference of $4,037,839 less than the published budget amount. FY 14 actual expenditures will most likely be less than the published budget of $45,556,032 as the fund balances are not expected to be expended.

Estimated FY 14 net expenditures are $40,958,049 after budgeted transfers of $4,597,983.

Mill Levy Summary

2008-09 (actual)

2009-10 (actual)

2010-11 (actual)

2011-12 (actual)

2012-13 (actual)

2013-14 (proposed)

General Fund 20.000 20.000 20.000 20.000 20.000 20.000

Supplemental General (LOB)

17.964 16.426 19.044 19.017 17.919 19.145

Capital Outlay 4.993 5.993 6.006 6.000 7.996 8.000

Bond and Interest 15.602 16.070 13.325 13.262 12.344 11.114

Total Mill Levy 58.559 58.489 58.375 58.279 58.259 58.259

Change from prior year ---- .07 decrease .1140 decrease .0960 decrease .02 decrease Unchanged

Total Taxes Levied $7,645,962 $7,537,908 $7,447,676 $7,355,460 $7,304,790 $7,295,645

The proposed budget is the maximum amount which can be adopted should the hearing notice be approved for publication. The estimated tax rate (mill levy) is subject to slight change depending on final assessed valuation. Budget hearing will be held at the August 12th Board of Education meeting at 7 pm.

Per Pupil Expenditures

Cost per student factors (Paola) Title/Neglect (Lakemary Center) Adult Education – 2 districts: Paola/Osawatomie Parents As Teachers – 5 districts Special Education Coop – 8 districts ($15

million) Vocational – Carl Perkins Consortium (3

districts)USD #368’s budget is the 33rd largest

in Kansas (out of 286 districts)**Source: KSDE Custom Reports, 2011-12

Challenges for the future…

Continued decrease in enrollment Continued decrease in assessed

valuationState income tax

reduction/elimination ramifications (possible -$23.7 million ending state general fund balance in FY 18)

Stagnant state funding (BSAPP) combined with increasing operational & staff costs

Health Care Reform / Affordable Care Act

Adequate Funding?

According to KSDE, Kansas schools are short $1.23 billion (Hays Post)

Kansas State Board of Education voted in July to seek $673 million increased education funding (KASB)

In January 2013, a three-judge panel ruled that the extensive reductions in state aid were unconstitutional.

Judges stated that it “seems completely illogical that the state can argue that a reduction in education funding was necessitated by the downturn in the economy and the state’s diminishing resources and at the same time cut taxes further.”

Kansas Supreme Court appeal hearing October 8th

Decision expected to be issued during the 2014 legislative session

USD #368

Questions?

USD #368

Thanks!