Solanco School DistrictPreliminary Budget Work

For 2013-14FY 2011-12 Close outFY 2012-13 in Process

FY 2013-14 Preparation and PlanningNovember 5, 2012 Board Session

Multi-Year Planning and Perspective• 2011-12 Fiscal year End and Audit

completion...finalization December / January Board meeting....end point = starting point

• Current 2012-13 Fiscal year up and running; new CBA, optional QHDHC program, student testing changes, Keystones, virtual and on-line programs, charter reforms, athletic reporting, February Governor’s budget address for 2013-14 –What’s next?

Multi-Year Planning and Perspective (2)

• Budget formation already started with staff for 2013-14;

• Board extended session Nov. 5, 2012• 2014-15 and beyond: Health Care,

Pension, State funding and education policy, local revenues, general economy....

• Deliver Services to the Community.

Fiscal Year Financial Results: Preliminary 2011-12 Audit Highlights

• Fund Balances:– Total – Deficit for the FY was $76,610

• Revenues = $44,420,679• Expenditures = $44,497,289• Deficit = $76,610

• Budgetary Structure for 2011-12 was $1.8M

• Budgetary Structure for 2012-13 is $2.02M

Fiscal Year Financial Results: Selected 2011-12 Audit Highlights

• Expenditures:– Total - Reduced year over year by $211,400 – Salaries - Reduced year over year by $307,700– Benefits – Reduced year over year by $350,000– Other Purchased Services - (e.g. Tuition for Special

Education and Charters) Increased year over year by $277,500

Fiscal Year Financial Results: Selected 2011-12 Audit Highlights

• Revenues:– Total - Increased year over year by $23,294– Earned Income Tax: Increased year over year by

$884,000 [approx. $300K was a one time prior years distribution] [From $4.9M to $5.4M ]

– Transfer taxes: Increased year over year by $30,000 [total is above 2008-09 FY level]

– Interest Earnings: Decreased year over year by $20,000 [Down from $594,000 in 2008]

2013-14 Preliminary Budget Work:Keeping the Main things in front....

• Solanco’s Act 1 Base property tax increase cap is 2.0%

• Pension Rate grows by 4.31% of payroll, the largest increase to date...2014-15 is 4.51%

• Solanco’s 2013-14 Act 1 cap does not cover the pension increase...Exceptions

• Salaries, Benefits, Special Education

• Assuming Zero from the State in additional revenue...

• ...Except for State share of the pension increase

• Cost Pressures expected due to additional & continued mandates

• Federal funds; Sequestration & Jan 1 2103 tax code

• Revenue overall trend...

Déjà vu

PENSION---PSERS

Last Year’s Slide ------Expenditures: Budget Assumptions

• Salaries in total remain flat from 11-12 to 12-13

• State mandated Pension Employer Cost Rate (ECR) grows from 8.65% to 12.36% of payroll [+3.71% of pyrl]

This Year ------Expenditures: Budget Assumptions

• Salaries in total remain flat from 12-13 to 13-14

• State mandated Pension Employer Cost Rate (ECR) grows from 12.36% to 16.67% of payroll [+4.31%]

• State Share remains intact

Pension

11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21 5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

8.65%

12.36%

16.69%

21.18%

23.66%24.50%

25.27%26.24%

26.96% 26.96%

Total Employer Contribution Rate % : As Per Act 120 December 2010

Above the line and below the line: Act 120 Collars are in Play up to

2014-15• Pension Rates --- Years from 2015-16 and

beyond... Unknown....

–Most likely understated....revisions (by the Actuaries) will be made in December

2012.

Pension: Rate times SalaryFiscal Year

Employer cost rate

Pension ECR:

Projected FY Percent increase

Gross % of Payroll

Increase

Payroll Actual and Estimated

Mandated Pension

Payments

2010-11 5.64% 17.99% 0.86% 21,472,833 1,211,068

2011-12 8.65% 53.37% 3.01% 21,165,171 1,830,787

2012-13 12.36% 42.89% 3.71% 21,100,000 2,607,960

2013-14 16.67% 34.86% 4.31% 21,150,000 3,525,494

2014-15 21.18% 27.06% 4.51% 21,150,000 4,479,570

2015-16 23.66% 11.71% 2.48% 21,450,000 5,075,070

2016-17 24.50% 3.55% 0.84%

2017-18 25.27% 3.14% 0.77%

2018-19 26.24% 3.84% 0.97%

2019-20 26.96% 2.74% 0.72%

2020-21 26.96% 0.00% 0.00%

Mandated Pension

Payments

FY Pension Increase

FY

1,211,068 213,106 2010-11

1,830,787 619,720 2011-12

2,607,960 777,173 2012-13

3,525,494 917,534 2013-14

4,479,570 954,077 2014-15

5,075,070 595,500 2015-16

Solanco SD: Budget Impact

$458,767

NET

PROPERTY TAX

So far, Good Trend

1,790,000,000

1,795,000,000

1,800,000,000

1,805,000,000

1,810,000,000

1,815,000,000

1,820,000,000

1,825,000,000

1,830,000,000

1,808,469,000

1,799,842,500

1,823,817,900

Solanco: Taxable Assessment Trend

Pension v. Property Tax

Pension Increase Net 458,767

1% Property tax yields 196,650

Equivalent % Property tax to cover Pension

Increase 2.33

Assumes $1,825 B assessment

Building the 2013-14 Budget:Two Years out from Completion

Current Mills 2012-13

11.2243 11.2243 Current Mills 2012-13

Minimum Increase to

Cover Pension 2.33% 2.60%

Target: Requires .6% in

Exceptions

Mill Increase 0.2619 0.2918 0.0300

Tentative Mills 2013-14 11.4862 11.5161 0.0300

Solanco 2013-14 Act 1 Cap at 2.0% - Revised PDE methodology from prior 7 years lowered

the Index with 3 year SAWW averaging

Earned Income Tax

So far, Better than Good trend...

Approx. $300K One time funds in 11-12

Approx. $600K one time funds in 12-13

Actual Actual Actual Budgeted Estimated Budget

Fiscal Year 2009-10 2010-11 2011-12 2012-13 2012-13 2013-14Amount 4,756,179 4,888,591 5,772,632 5,100,000 5,600,000 5,400,000

Increase $'s 132,412 884,041 500,000 (200,000)

Increase % 2.784% 18.084% 9.804% -3.57%% Over Budget %Over Estimated

Earned Income Tax

Actual to Actual

HEALTH CARE

Multiple Plans and Issues• Results from efforts--Health Care Cost Growth

Trend Reduced– 2.78% actuarial rate increase for 2012-13...prior

years were at double digit.– Optimistic, but cautious of rebound

• Near Term & Forward Planning – In Process– QHDHCP implementation January 2013– January 2014 increase deductible; adjust co-pays– January 2015 additional Co-pay adjustments

• Future -- PPACA – Excise Tax 2018; 30 hour staff; Exchanges ??? ( $’s from Early Ret?)

Additionally, On the Watch List...

• Special Education costs and contracts– Recent Senate bill passed to revise Special Education

funding – prospective only as written• Continued State tinkering on funding shares (i.e.

district state revenue) of long embedded programs (Transportation, Social Security, Pension, Plan Con debt reimbursement, BEF)

• Federal Programs and Fiscal shut down threat– IDEA [Special Education]– Title I– Other....economy in general, and payroll tax

• Property Tax; Act 1, Assessments, appeals, County Re-assessment....

Awareness....• Continued mandate driven cost increases• Continued state policy efforts to constrict

Board of Education funding authority• Continued policy efforts to increase student

accountability measures• Increasingly complex / conflicting / costly

reporting requirements...all dependent on IT processes and systems

• PDE restricted exception approval process

Bottom Line• 2011-12 FY end is in good shape...provides

improved base to manage 2012-13• 2012-13 issues one year closer, improvement

for operational needs in planning 2013-14.• A lot of work----Prior actions & efforts, solid

implementations have had positive impact --- student side and fiscal side ---good results

• Clearly, many things in motion and cost pressures remain in the forefront

NEXT STEPS

• 2012-13 Estimate work – ongoing through June• 2013-14 December 4 -Department and Building budget

sessions are held• 2013-14 Continue Budget Work For December 10

board review • 2013-14 December 17 Preliminary Action• 2013-14 January / Early February ----Final Preliminary

Budget adoption• 2013-14 May – Preliminary Final • 2013-14 June – Final Budget