PreliminaryBudgetSY2018‐2019

NewHope‐SoleburySchoolDistrict

2018‐2019Preliminary

BudgetPresentation

• BudgetGoals• SchoolDistrictBudgetBasics• BudgetHistory• 2018‐2019BudgetProcess• 2018‐2019BudgetHighlights• BudgetTimeline

Offerthebestqualityeducationpossibleforourcommunity’schildrenOffer

IncreasestudentachievementandgrowthIncrease

ProvidecomprehensiveservicestostudentsProvide

AligntoclasssizeguidelinesAlign

EncourageprofessionaldevelopmentandprofessionalgrowthEncourage

DevelopashortandlongtermplanforcapitalprojectsDevelop

SY2018‐2019

BudgetaryGoals

Act1of2006

• Establishes a set index by which property taxes cannot be raised beyond• 2018 – 2019 index is set at 2.4%

• Districts can apply for exceptions to increase property taxes beyond the index• Increases in Retirement, Special Education• Fund Balance below required threshold

• Budget approval can take 1 of 2 paths• Adopt a resolution to remain within the Act 1 Index

• Adopt a resolution authorizing proposed preliminary budget display and advertising

Act1of2006Recommendation

• Adopt a resolution authorizing proposed preliminary budget display and advertising

• Set a goal of balancing the 2018‐2019 budget while staying within the Act 1 index of 2.4%

• Apply for exceptions allowing for a tax increase up to 3.1% (estimate)

• Review, Refine and Adjust until final form in June• This path does not set a final property tax rate –just the basis for approval of exceptions

• Allows for the most flexibility and opportunity

FundBalance

• Fund Balance – Difference between assets and liabilities• Equate it to your savings account• Unsustainable to pay your mortgage with savings – eventually run out of money

• Fund Balance should be used strategically, not to pay for recurring expenses.• Pre‐planned purposes, one‐time expenditures, unexpected items

• Not – Increases in salaries and benefits• Fund Balance is also essential for cash flow purposes.

ALookBackReflectingon

thePast

• 2015‐2016Budget• Revenues– $37.1M• Expenditures– $39.7M• UseofFundBalance‐ $2.6M• BeginningFundBalance‐ $6.3M• EndingFundBalance‐ $3.7M

• PreliminarybudgetforSY2016‐2017showedadeficitof~$4.1M• Leavingnoavailablefundbalance.

• 2016‐2017and2017‐2018budgetsneededtomakesignificantimprovementstobothrevenuesandexpenditures.

ALookBackReflectingon

thePast

• BudgetfreezeOctober2016• Twolargetaxincreases

• 2016‐2017– 4.8%(indexplusexceptions)• 2017‐2018– 4.0%(indexplusexceptions)

• Retirementincentiveforprofessionalandadministrativestaffmembers• TotalTeacherretirees:14• TotalAdminretirees:3

• Otherstaffingefficienciesatboththeadministrativeandprofessionallevel.

• Needsbasedbudgetphilosophy

2018‐2019BudgetProcess

• September2017• BeganbudgetdiscussionswithLeadershipTeam

• NeedsBasedbudgetphilosophy.

• October2017• Budgetspresentedtointernalteamforreview

• November2017• Afirstlookwaspresentedtothefinancecommittee

• December2017• Boardapprovaltomoveforwardwithadvertisingpreliminarybudgetnoticeforpublicinspection.

PreliminaryBudgetHighlightsBudgetaryAreas 2017‐2018 2018‐2019 Change

Expenditures 40,337,604 41,194,399 2.2%

Revenues 40,112,467 41,076,937 2.4%

UseofFundBalance 225,137 117,462

EndingUncommittedFundBalance

3,043,674 2,926,211

FundBalanceasa%ofExpenditures

7.55% 7.10%

SY2018‐2019Revenues

RevenueComparison– Increaseof$964,471 TaxIncrease– 3.1%generates$915,000innewrevenue DelinquentTaxReduction‐ $75,000inlinewithcurrentestimates OtherLocal– Increaseof$20,000forinterestearnings StateRevenue– Increaseof$113,075

EducationFunding– Flatto17‐18Budget SpecialEducationFunding– Reductionof$100,000foroutofstaterevenue RetirementandSocialSecuritySubsidy– Increaseof$200,000

FederalRevenue– Decreaseof$9,500 EstimatingslightreductionsinTitlefunding

RevenueType2016‐2017Actual

2017‐2018Budget

2018‐2019Preliminary Change

%ofTotalRevenue

6000Local 32,997,729 33,485,775 34,346,671 860,896 84%7000State 6,337,853 6,407,192 6,520,266 113,075 16%8000Federal 146,310 219,500 210,000 (9,500) 1%Total 39,481,892 40,112,467 41,076,937 964,471

SY2018‐2019Preliminaryvs17‐18FinalBudgetSummaryofChanges– SalaryandBenefits

ExpenditureReduction/(Increase)

Increase(Decrease)

Description

Salary 285,000 NHSEAcontractendedJune30,2017SupportStaffcontract enddateisJune30,2018Act93increasespercontractRetirementincentiveisreducedby$240,000fromprioryear

Medical/Rx 350,000 NHSDparticipatesinabenefits consortiumwithotherschooldistrictsinBucksandMontgomeryCounty.Firstlookofbenefitsratesnot yetproduced– 10%placeholder

Dental 21,000 Firstlookofbenefitsnot yetproduced– 7%placeholder

PSERS 350,000 PSERSrateiscertified at33.43%andtheestimatewas34.18%.Current is32.57%.PSERSexpensefor2018‐2019isestimatetobe$6.1Mor15%oftotaloperatingbudget

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22

PSERS ‐ Employer Contribution Trend

Employer Rate Current

PSERSImpact

 ‐

 1,000,000

 2,000,000

 3,000,000

 4,000,000

 5,000,000

 6,000,000

 7,000,000

 8,000,000

10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22

PSERS ‐ Employer Costs

Employer Cost Net of State Reimbursement

SY2018‐2019Preliminaryvs17‐18FinalSummaryofChanges– OtherFunctionsExpenditureReduction/

(Increase)Increase(Decrease)

Description

Building/DepartmentBudgets (20,000) NeedsBasedBudgeting– 1st reviewofallbudgets3rd yearusingthisbudgetphilosophy.

1:1ProgramDevicePurchase (150,000) 300,000wasbudgetedlastyeartopurchaseversuslease.Leaving150,000 inbudgettotransfertoatechnologycommittedfundfornextyearspurchase.

SpecialEducationTuition (180,000) Students inoutofdistrictplacementsaregraduatingorbeingbroughtbackinhouseormorecostefficientprogramswhilestillmeetingeducationalneeds.

Transportation 30,000 Standardcontractincreaseforoptional5th yearofcontract withFirstStudent

CapitalImprovement Placeholder 45,000 16‐17 Addedaplaceholdertothebudgetforthisitem.Increasedto100,000andisfundedwithPlanCon reimbursement

BudgetaryReserve 0 100,000forgeneralbudgetaryunknownitems50,000fordonations– considering increasingthislineitem

2018‐2019PreliminaryBudgetScenarios18-19 19-20 20/21 21-22

Beginning Fund Balance 5,503,674 4,478,111 2,874,014 845,793

Total Revenue - 0.00% Tax Increase 40,168,837 40,797,036 41,529,616 42,290,130 Total Expenditures 41,194,399 42,401,133 43,557,837 44,744,001 Surplus / (Deficit) (1,025,562) (1,604,097) (2,028,221) (2,453,871)

Ending Fund Balance 4,478,111 2,874,014 845,793 (1,608,078)

18-19 19-20 20/21 21-22Beginning Fund Balance 5,503,674 5,181,150 4,294,152 2,997,371

Total Revenue - 2.40% Tax Increase 40,871,876 41,514,135 42,261,057 43,036,200 Total Expenditures 41,194,399 42,401,133 43,557,837 44,744,001 Surplus / (Deficit) (322,524) (886,998) (1,296,780) (1,707,801)

Ending Fund Balance 5,181,150 4,294,152 2,997,371 1,289,571

18-19 19-20 20/21 21-22Beginning Fund Balance 5,503,674 5,386,211 4,708,376 3,624,942

Total Revenue - 3.10% Tax Increase 41,076,937 41,723,298 42,474,403 43,253,813 Total Expenditures 41,194,399 42,401,133 43,557,837 44,744,001 Surplus / (Deficit) (117,462) (677,835) (1,083,434) (1,490,188)

Ending Fund Balance 5,386,211 4,708,376 3,624,942 2,134,755

Scenario 1 - 0.00% Tax Increase

Scenario 2 - 2.40% Tax Increase - Act 1

Scenario 3 - 3.10% Tax Increase - Act 1 plus Exceptions

 33,000,000

 35,000,000

 37,000,000

 39,000,000

 41,000,000

 43,000,000

 45,000,000

12‐13 13‐14 14‐15 15‐16 16‐17 17‐18 18‐19 19‐20 20‐21 21‐22

Expense to Revenue Gap ‐ Continues Trending Apart

Revenue Expense Current

NewHope‐Solebury MillageHistoryFiscalYear TaxRate Change AverageTax

BillAverageIncrease

%Increase Act1Index

2009/2010 79.84 3.14 4,537 178 4.09% 4.10%

2010/2011 82.15 2.31 4,668 131 2.90% 2.90%

2011/2012 83.30 1.15 4,733 65 1.39% 1.40%

2012/2013 84.72 1.42 4,814 80 1.70% 1.70%

2013/2014 86.16 1.44 4,896 81 1.70% 1.70%

2014/2015 87.96 1.81 4,998 102 2.10% 2.10%

2015/2016 89.64 1.67 5,093 94 1.90% 1.90%

2016/2017 93.94 4.30 5,338 244 4.80% 2.40%

2017/2018 97.69 3.76 5,551 213 4.00% 2.50%

2018/2019 100.72 3.03 5,724 172 3.10% 2.40%

• SY2011‐2012toSY2015‐2016• Totalexpenditureincreaseof20%or4%peryear

• TaxRateincreaseof8.8%or1.76%peryear

• SY2016‐2017toSY2017‐2018• Totalexpenditureincreaseof1.52%or0.76%peryear

• SY2018‐2019• Bringtheseincreasesbackinline.• Expenditureincreaseshouldbebelowtaxrateincreaseaspropertytaxesareonlyonerevenuelineitemmakingup70%ofrevenue.

BudgetHistory

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19

Budget History

Expenditure % Change Tax Rate % Change

BudgetaryUnknowns

• State/FederalRevenues• MedicalBenefitsrateincreases• MBITenrollmentfigures• CharterSchoolEnrollmentsandTuition

• NewHope‐Solebury EducationAssociationContractNegotiations

• PreparationforNewHope‐Solebury EducationSupportPersonnelContractNegotiations

Summary

• FinancialPositionofthedistrictcontinuestoimprove– stillfragile

• RecommendingapprovalofthisPreliminaryBudgettobeputonpublicdisplaytoapproveatJanuaryBoardmeeting

• Strivetoapproveafinalbudgetwithataxincreasenottoexceedtheindexof2.4%.

• Applyforreferendumexceptionsforflexibility• Thisisnotafinalbudgetandyouarenotsettingataxratetonight.• Thisisthefirststepalonga6monthprocesstotheadoptionofafinalbudget.

• Thispresentationonlyincludesthebudgethighlights• Supplementaldataandreportsareincludedinthebudgetpacket• IncludingformPDE‐2028whichistheofficialbudgetdocumentsubmittedtoPDE

Timeline

• December 21 – Approval to display and advertise preliminary budget.

• January Board Meeting• Approve Preliminary Budget• Authorize the District to file for referendum exceptions

• February – May• District continues to review and update budget and provides monthly updates at the Finance Committee meetings.

• May Board –Proposed Final Budget Adoption Resolution• Authorize Proposed Final Budget Advertising and Public Inspection

• June Board – Final Budget Adoption Resolutions

QUESTIONS?