Northeastern School District

Preliminary Budget

Presentation

2012-2013 School Year

The Bobcat Way: 100% of our students will graduate and be fully prepared for post-secondary education.
2012-2013 Budget Remarks
• Vision – 100% of our students will
graduate and be fully prepared for a
post-secondary education.
• Our Focus – even in a tough budget
year
• District Strengths – Found in our Core
Values
– We care deeply for one another.
– We have a strong emphasis on learning.
• Professional Learning Communities
• Response to Instruction and Intervention
• Revised Curriculum
• Value continuous improvement
• Highly trained and dedicated staff
 Budget 2012-2013
Big Ideas
• Revenue has leveled off, expenses continue to
increase without adding anything new (+6.25%)
• We must continue a multi-year planning
approach, including a plan to address rising
enrollments.
• We must continue to look for ways to reduce
expenditures while maintaining a quality
education for our children.
2012-13 Preliminary Budget
- Budget Overview
- Revenue
- Sources of Revenue
- 2 year Comparison
- 10 year history in dollars and %
- Expenditures
- Sources of Expenditures
- Salary & Benefit Budget
- 2 year Comparison
- 10 year history in dollars and %
- Fund Balance
- 10 year history in dollars
- 10 year history as % of Expenditures
- Millage Considerations
- History – adjusted index vs. NESD taxation
- Exceptions – Retirement and Special Ed
- 2012-13 Impact on District and Taxpayer
- Budget Forecast – next 3 years
- Revenue and Expenditures
- Future Impact of Millage Rate Decisions
 BUDGET OVERVIEW

DESCRIPTION 2012-13 BUDGET SUMMARY

TOTAL REVENUE $ 54,635,840

- TOTAL EXPENDITURES $ 57,892,378

DIFFERENCE: ($3,256,540)
SURPLUS/(DEFICIT)
- TOTAL PROPOSED TBD
EXPENDITURE CUTS
DIFFERENCE: ($3,256,540)
SURPLUS/(DEFICIT)
 Budget Revenue Figures
2011-12 2012-13 Inc (Dec) Inc -Dec

Budget Budget $ %

Local 35,559,860 35,493,595 (66,265) (0.2%)

State 17,730,311 18,340,087 609,776 3.4%

Federal 574,216 477,157 (97,059) (17%)

Other 625,000 325,000 (300,000) (48%)

Total 54,489,387 54,635,839 146,452 .27%

 2012 -13 Revenue Categories
Sources of Revenue
$477,157 , 1%

$18,340,087 , 34%

Revenue: Local
Revenue: State
Revenue: Federal

$35,493,595 , 65%
 2 year Budget Revenue
2 year Revenue Comparison
$55,000,000

$54,635,839

$54,489,387
$54,500,000

$54,000,000

Year
2011-12
2012-13
Revenue Sources - Ten Year History
Revenue Sources - 10 year History

40,000,000

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

-
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 B2011-12 B2012-13
#REF! #REF! #REF!
Local State Federal
 Revenue Growth % - 10 year History
0

0 16.1%

13.4%
0

9.7%
0 8.1%
7.5%
6.3%

0
2.6%

-
0.6% 0.27%
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 B2011-12 B2012-13

% rev growth
 Budget Expenditure Figures
2011-12 2012-13 Inc (Dec) Inc -Dec
Budget Budget $ %

Salaries 26,027,124 26,901,255 874,131 3.4%

Benefits 10,854,452 12,285,301 1,430,849 13.2%
Other 17,607,811 18,705,822 1,098,011 6.2%
Total 54,489,387 57,892,378 3,402,991 6.25%
 2012 -13 Expenditure Categories

$- , 0%

$18,705,822 , 32%

$26,901,255 , 47% Exp: Salary

Exp: Benefits
Exp: Other
Exp: New requests

$12,285,301 , 21%
 2012 -13 Salary Budget
2012-13 Salary Budget
1,150,173 , 4% 2,100,403 , 8%
1,878,884 , 7%

775,986 , 3%

Salaries: Admin,, tax collectors

Salaries: Teachers, Substitutes
Salaries: Status E
Salaries: Aides, Secretarial
Salaries: Custodial, Maintenance

20,887,808, 78%
 2012 -13 Benefit Budget
2012-13 Benefit Budget36,350 , 0%

2,057,946 , 17%

Group Life Insurance

6,077,000 , 50%
Social Security
Retirement
3,279,263 , 27%
Tuition Reimbursement
Unemployment Compensation

Worker's Compensation

Health Insurance

650,000 , 5%
150,000 , 1% 34,742 , 0%
2 year Expenditure Comparison
2 year Expenditure Comparison

$57,892,378
$58,000,000

$57,000,000

$56,000,000

$55,000,000 $54,489,386

$54,000,000

$53,000,000

$52,000,000

Year
2011-12
2012-13
 Expenditure Sources $ - 10 year History
30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

-
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 B2011-12 B2012-13

Salary Benefits Debt Service Other

 Expenditure Growth % - 10 year History
0

13.4%

0
10.3%
14.3%
0

8.3%
6.8%
0
4.9%
16.1%
13.4% 8.7%

0 9.7%
8.1% 7.5%
6.3% 6.2%

2.6%
- 0.6%
-0.1% 0.27%
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 B2011-12 B2012-13

(0)

% rev growth % exp growth

 Fund Balance
• New Fund Balance policy: target is 4%
minimum
• FB balance as of June 30, 2011: $2,326,443
• FB balance as of June 30, 2012: same as 2011
• Recommended use of committed fund balance
for retirement: $315,000
• FB projected balance as of June 30, 2013:
$2,011,443
 Fund Balance: Total $ amount
6,000,000

5,000,000

4,000,000
Fund Balance Remaining

3,000,000

2,000,000

1,000,000

-
2003-04 2004-05 2005-06 2006-07 2007-08School2008-09
Year 2009-10 2010-11 B2011-12 B2012-13
Fund Balance: % of budget
14.00%

12.00%

10.00%

8.00%
% of Budget

6.00%

4.00%

2.00%

0.00%
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 B2011-12 B2012-13

School Year
7.0%

Real Estate Taxation – NESD History

6.0%
5.8%
5.5%

5.1%
5.0%

4.6%

4.0% 4.0%

3.0% 2.99%

2.3%
2.0%
1.9%

1.0%

0.0% 0.0% 0.0% 0.0%

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

NESD Adj Index NESD actual millage incr Linear (NESD Adj Index)
 NESD Exceptions Available

• Retirement = +.35 mils

• Special Education = +.40 mils

 Potential Millage Rate Impact:
District Perspective
Real Estate Millage Increase Rev Incr Rev Incr
% Millage $

Adjusted Index 2.3% 24.26 $ 700k

Adjusted Index + Retirement exception 3.8% 24.61 $ 1,155k

Adjusted Index + Special Ed exception 4.0% 24.66 $ 1,220k

Adjusted Index + both exceptions 5.4% 25.01 $1,675k

 Potential Millage Rate Impact:
Taxpayer Perspective
Real Estate Millage Increase based on $ 100k $ 150k $ 200k
assessed property value

Adjusted Index + $ 54 +$ 81 +$ 108

Adjusted Index + Retirement exception +$ 89 +$ 134 +$ 178

Adjusted Index + Special Ed exception +$ 94 +$ 141 +$ 188

Adjusted Index + both exceptions +$ 129 +$ 194 +$ 258

 Budget Forecast: Revenue and
Expenditures
$70,000,000
$65,619,800
$62,698,287
$60,220,108
$60,000,000 $57,892,378 57,415,080
55,204,112 56,298,651
54,635,839
$54,489,387 54,489,387
$50,000,000
Forecasted Revenue and Expenditure growth

$40,000,000

$30,000,000

$20,000,000

$10,000,000

$- School Year
2011-12 2012-13 2013-14 2014-15 2015-16
 Budget Forecast
Impact of Millage Rate Decisions on Deficit
$-

$(1,000,000)

$(2,000,000)

$(2,556,540)
$(3,000,000) $(2,906,540)
$(3,256,540)

$(4,000,000)
$(4,220,397)
$(4,618,197)
$(5,000,000) $(5,015,997)
$(5,398,771)

$(6,000,000) $(5,899,204)

$(6,399,636)

$(7,000,000)
$(7,156,246)

$(7,680,483)
$(8,000,000)
$(8,204,720)

$(9,000,000)
2012-13 2013-14 2014-15 2015-16

Forecast: 50% millage Forecast: Max millage Forecast: No millage incr

 2012-13 Budget Implications
Staffing Implications
Try to fill most critical needs with the staff
we currently have. High School is the
number one priority. (realign resources we
already have)
Teacher Contract Negotiation year –
unknown outcome. May increase or
decrease our deficit.
All personnel openings are scrutinized -
Replace Essential Staff Only, No New
Positions Created
Continue to cease paying professional staff
members anything outside of our
contractual obligations (unless it can
be funded by Federal Title Funds)
Changes in Practice
Freeze 11-12 budget on 12/1/11
Class size - need to be flexible
Explore energy performance contract,
continue to review “green” practices for cost
savings
Continue to generate energy savings by
regulating the temperature to be lower in the
heating season and higher in the cooling
season ($20,000)
Use networked copiers for printing instead of
individual classroom printers (savings in ink
costs)
Scrutinize all conference/travel requests
 Revenue
Revenue Generating Ideas:
• Alternate Funding Sources Committee
• Sell Delinquent Real Estate taxes via Municipal Revenue Service
• Set up procedure to recover ACCESS reimbursement dollars
• Bobcat Foundation – renewed focus

Revenue Threats:
• The economy – dwindling revenue, rising costs
• Unfunded mandates
• PSERS contribution increase
• Tax assessment challenges (legally represented for all
commercial/industrial properties valued at $1 million dollars or more)
 Major Budget Expenditures
Cost cutting exploration ideas
MAJOR EXPENDITURE
Cost of Cyber Charter School
Alternative Education Costs
Special Education Transportation costs
Rising mandated special education costs
Salaries and Benefits
Salaries and Benefits
Salaries and Benefits
Salaries and Benefits
COST CUTTING EXPLORATION IDEA
Creative marketing approach to getting
back cyber charter school students
In house, Twilight Alternative Education
program for 2013-14
Examine alternate transportation
contractors for special education students
Set up procedure to gain ACCESS
reimbursement dollars
Explore incentives to encourage attrition
Explore incentives for employees to seek
health insurance elsewhere
Explore healthcare savings through
increased employee contribution, and/or
increased healthcare options
Eliminate programs resulting in furloughs
 2012-13 Budget Implications
General Fund Budget Implications Board Finance/Operations Considerations
No requests for new positions or new item Designate some unused construction funds
requests for debt payments
Cut scheduled replacement of Everyday Math Use of PSERS designated funds to help
curriculum materials ($150,000) balance the budget
Priority: Technology – Restore to 2009-10
replacement levels ($368,000) Level of taxation – Board decisions
Building level allocations – recommended to
stay level (cut 10% or more for the last two
years). This is not a large expenditure. Solvency Issues
 Budget 2012-2013
Big “Unknowns”
• Teacher’s contract and Act 93 agreement is being negotiated
this year. Result could either increase or decrease the current
deficit.
• Revenue streams from state, federal are not certain at this
time.
• Employee contribution to PSERS is not set in stone (currently
40% increase or $1 million dollars).
• Tax increase?
• Salary increases for all non-union employees has not been
decided by the board yet.
• Impact of charter school/tuition voucher legislation on our
future budget planning.
• LERTA legal tax challenge from ES3 – Win or lose?
• See handout: Walk-Away Decision Tree
 2012-2013 Budget Remarks
• The Language of Resilience –
– Instead of “If only…” statements, we will encourage
“How can I” statements
Instead of: “If only we did not have this huge deficit to deal
with!” TO
“How can I effectively deliver a high quality education
working within our current budget constraints?”
ADMINISTRATION, BOARD AND STAFF MEMBERS MUST
CONTINUE TO WORK TOGETHER TO FIGURE OUT THE
BEST SOLUTIONS TO OUR BUDGET CHALLENGES IN
ORDER TO SUPPORT OUR STUDENTS!