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2013-14 BUDGET Saratoga Springs City Schools March 5, 2013


Kurt Jaeger, MBA, CPA Assistant Superintendent Business

Todays Agenda
Budget Calendar Annual Meeting Financial Condition of District Budget Development Highlights Revenues & Expenditures Capital Financing Cost Containment
3/6/2013 2:45 PM

Early in the process


Subject to change State budget not finalized Program decisions not finalized

January-February Budget Development March 1 Property Tax Cap Filing March 5 Overview

March 12 Transportation and Facilities

2013-14 Budget Calendar

March 19 Instructional Program March 26 Finalize Decisions and adopt Bond Resolutions

April 9

Adopt Budget and Tax Report Card

April 10 Submit Property Tax Report Card May 1 May 14 May 21 Board Petitions Due to District Clerk Hearing Annual Meeting

3/6/2013 2:45 PM

May 21st Annual Meeting (Vote)


Budget Vote

Overview this evening


Election of Board of Education Candidates Three openings Bus Bond Proposition Presentation March 12

Capital Construction Proposition


Presentation March 12
3/6/2013 2:45 PM

Proposition One Bus Bond

Cyclical replacement of older buses/vehicles with high mileage. Seven 66 passenger buses ($764K) Three 24 passenger buses with the availability of 3 wheelchairs on each bus ($186K) Eligible for transportation aid (45.2%) In depth presentation on March 12th. Bond Resolution on March 26th

3/6/2013 2:45 PM

+ Proposition 2:
Capital Construction

Estimated amount $3.24 Million Financing:


$1,000,000 Capital Reserve Fund (voter approval) Bonds issued for remainder of project cost

Eligible for building aid (70.5%) In depth presentation March 12th. Bond resolution vote March 26th
3/6/2013 2:45 PM

Financial Condition of District

+ Financial Condition of District:


Discussion of operations
Balanced budgets; operating surpluses Modest tax increases Strong fund balances and reserves Low debt burden

Criteria

Diverse regional employment base Strong wealth and income of community Healthy operations resulting in strong finances

Standard & Poors Long Term Rating


March 15, 2010 AA+/Stable Reaffirmed December 2, 2011 AA+/Stable

+
$10.3M

General Fund Reserves as of June 30, 2012

$5.3M

$3.0M

$3.0M

$348K

$470K

Retirement Contributions

Tax Certiorari

Employee Benefits

Debt

Workers' Compensation

Capital Reserve

POST RETIREMENT HEALTH INSURANCE GASB 45


Employee Age Timeline

l_________________________l___________l_________________________________l 45 55 62 80 Hire Current Retirement Life Age Age Age Expectancy

Goal:

Match all health insurance costs with years of service.

Considerations:

1. Project cash requirements for future benefits until death. 2. Recalculate projected benefits to present value. 3. Allocate present value to employment period (past service already rendered and anticipated future service.) 4. Estimate annual required contribution to fund over 30 year period. 5. Original intent to fund annually. 6. Continuing to pay as you go requires greater percentage of budget in upcoming years.

POST RETIREMENT HEALTH INSURANCE

Annual Requirements to Fund Over 30 Year Period

Annual Fiscal Year Required Pay As

Cumulative Net Unfunded

Ending
6/30/2012 6/30/2011 6/30/2010

Contribution
9,640,539 9,508,526 11,952,457

You Go
5,248,582 5,324,907 4,896,456

Obligation
22,843,696 18,451,739 14,268,120

Funding (Overall) Status

Unfunded Accrued Liability as of June 30, 2012

123,339,009

Insights

1. Office of State Comptroller (OSC) proposed legislation to provide for the funding of these obligations via the creation of trust funds to be administered by OSC. As of June 30, 2010, the Board of Education had designated $11.4 Million of unreserved fund balance for this purpose (post retirement health insurance.) 2. The legislation proposed by the OSC has not been enacted into law. The Board of Education is evaluating the option of using these funds, over a multi-year period, to sustain the academic programs of the district by lowering the tax levy.

+ Message:

Retiree Health Insurance

Reserves

Budget Development Highlights:

Budget Development Highlights:

Differentiated timeline for budgetary subsidies

Structural Deficits Three year financial projection


Initial cost containment targets

Identification of major factors driving increases


Retirement System Costs ($2.3M) Health Insurance Costs ($1.7M)

Defined Difficulty managing

Better alignment of budgets with actual costs


Budgetary containment

Fund balanceshorter timeframe Reserveslonger timeframe Single useunless replenished

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10,000,000

Saratoga Springs City School District Unmanaged Operating Surplus/Deficit

5,000,000

0 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16

-5,000,000

-10,000,000

-15,000,000

REVENUES

What are the real caps?


Contingency budget caps tax levy at prior year level Sequestration caps federal grants Growth in personal income caps state aid increases Economic downturn caps assessments and interest income

TRS

Capital Expenditure

Tax Levy limit = 4.813%

FIVE YEAR TAX LEVY HISTORY SARATOGA SPRINGS CITY SCHOOL DISTRICT

Actual District Tax levy Next Year 2013-14 Historical 2012-13 2011-12 2010-11 2009-10 75,483,250

Per-Cent Change 3.90%

Comment Modeling per February 4, 2013 Committee Meeting

72,649,904 70,839,370 70,839,370 69,111,581

2.56% 0.00% 2.50% 0.00%

4 year average from 2009-10 to 2012-13 was 1.27%.

2009-10 was the first levy adopted after the major economic downturn.

2008-09

69,111,581

3.97%

STATE AID PRIOR TO TAX CAP (2012-13)


$33,000,000

$32,000,000

$31,000,000

Millions $30,000,000

$29,000,000

$28,000,000

$27,000,000

2009-10

2010-11

2011-12 School Year

2012-13 (Est.)

2013-14 (Est.)

+ Compare:
1991-1992 2013-3014

Revenues

Revenues

State Aid (47%) Tax Levy (49%) Other (4%)

State Aid (24.3%)


Tax Levy (67.5%) Other (8.2%)

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State Aid anticipated to decrease nearly $1.2 million.

State Aid Highlights:


2013-14 Reductions Building Aid Transportation Aid Private Excess Cost Aid

2012-13 Concerns
Potential Building Aid Reduction

+ How does NYSED see our district?


How will this impact future state aid?

Combined Wealth Ratio


Full Value Ratio Component AGI Ratio Component

2011-12 COMBINED WEALTH RATIOS


1.5

1.25

0.75

0.5

0.25

0 NYS Saratoga Springs

FULL VALUE RATIO

Saratoga Springs NYS 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2 1.3 1.4

Full Value

AGI RATIO

Saratoga Springs NYS 0.9 1 1.1 1.2

Income

2013 - 2014 PROPOSED BUDGET PROJECTED GENERAL FUND REVENUES MARCH 5, 2013 BUDGET PRESENTATION

Account STATE AID TOTAL STATE AID

(000's) 2012-2013 Estimated Revenues

(000's) 2013-14 Estimated Revenues

(000's) Increase (Decrease)

28,268

27,112

(1,156)

FUND BALANCE DESIGNATIONS From Capital Reserve From Reserve for Tax Reduction From Retirement Contribution Reserve From Reserve for Debt From Unreserved Fund Balance 261 1,750 348 5,338 7,697 OTHER RECEIPTS Total Other Receipts 1,117 1,055 (62) 1,000 261 1,000 5,888 8,149 1,000 (750) (348) 550 452

SCHOOL PROPERTY TAX LEVY (3.9% Model)

72,650

75,483

2,833

TOTAL REVENUE

109,732

111,799

2,067

Expended Reserves and Fund Balance


$5,000,000

$4,500,000

$4,000,000

$3,500,000

$3,000,000 Dollars

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0 2007-08 2008-09 2009-10 School Year 2010-11 2011-12 2012-13 (Est.)

EXPENDITURES

Projected 2013-14

Expenditures
Instruction (48.3%) Benefits (30.5%) Plant (6.7%) Debt (6.3%) Transportation (3.9%) General Support (4.3%)

ESTIMATED EXPENDITURE SUMMARY 2013-14 (After Budgetary Containment; Prior to Cost Containment) March 5, 2013 Budget Presentation (000's) 2012-2013 Estimated Budget Instruction Administration & Improvement Teaching-Regular School Programs for Children with Disabilities Occupational Education Teaching-Special Schools Instructional Media Pupil Services Total Instructional Costs Employee Benefits Plant Operation Maintenance Debt Service Pupil Transportation Interfund Transfers- Special Aid Interfund Transfers- School Lunch Interfund Transfers- Capital Fund General Support Board of Education Central Administration Finance Department Staff Costs Special Items Community Services Total General Support Total Expenditures Total Revenues Cost Containment Needed to Reach 3.9% Levy Growth (000's) 2013-14 Estimated Budget (000's) Increase (Decrease)

4,088 31,027 9,039 3,419 293 3,348 4,238 55,452 30,518 7,927 7,293 4,444 100 0

3,888 30,778 8,798 3,237 246 3,320 4,464 54,731 34,517 7,569 7,167 4,371 115 100 1,000

(200) (249) (241) (182) (47) (28) 226 (721) 3,999 (358) (126) (73) 15 100 1,000

34 421 1,028 990 1,374 152 3,999 109,733

27 265 1,025 842 1,333 156 3,648 113,218 111,799 1,419

(7) (156) (3) (148) (41) 4 (351) 3,485

Employee Benefits
Retirement Health

System Cost Drivers

Insurance

Sustainability Affordable Care Act

3/6/2013 2:45 PM

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+Drivers of Retirement Contributions by


Public Employers

Investment returns

Not reaching the stratospheric values of the nineties Not reaching interest rates of the nineties

Demographic make-up of the workforce

Ratio of active workers to retirees

Average age of the workforce


The older the workforce and the greater number of retirees, the higher contribution rate to cover reserves to pay these future liabilities.

Members vs. Retirees (TRS-Statewide)


As of June 30
1960 1980 2000 2009 2011 Members 99,555 203,330 224,986 280,338 280,435 Retirees 10,796 46,812 100,839 139,297 141,633

+ Retirement System Insights:

New York State


Creation of Tiers 5 and 6 Governors Proposal-Level 12.5% Employer Contribution Rates (ECR) funding option

Not law or approved by systems

State systems reported to be well-funded

Nationally

Concern about funding adequacy of pensions GASB 67 and 68 Pension Accounting and Financial Reporting (Effective 201415) Funding status to be reported on local financial statements For financial statement reporting purposes only one acceptable actuarial method acceptable for measuring adequacy of funding

(Financial Statements) Entry Age Normal Method (NYSTRS) Aggregate Cost Method

Potential to cause upward pressure on ECR

Illustration Only
Potential Impact of Rising Health Insurance Assume: Salary increases of 2% Health insurance increases of 9%
YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 SALARY $40,000 $40,800 $41,616 $42,448 $43,297 $44,163 $45,046 $45,947 $46,866 $47,804 $48,760 $49,735 $50,730 $51,744 $52,779 $53,835 $54,911 $56,010 $57,130 $58,272 H.I. $14,000 $15,260 $16,633 $18,130 $19,762 $21,541 $23,479 $25,593 $27,896 $30,407 $33,143 $36,126 $39,377 $42,921 $46,784 $50,995 $55,584 $60,587 $66,040 $71,983

POTENTIAL IMPACT OF RISING HEALTH INSURANCE COST


$80,000

$70,000

$60,000

$50,000 SALARY $40,000 H.I.

$30,000

$20,000

$10,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Year

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Pharmaceutical Industry Fee

High Cost (Luxury/Cadillac)Tax

Medical Device Manufacturer Fee

Affordable Care Act


ACA Reinsurance Fee Comparative Effectiveness Research Fee

ACA Insurance Fee

Tax on high earners and unearned income

Traditional health plans not sustainable? Cadillac Tax = extremely serious peril

Consider alternative plan structures to awaken patients to costs

Health Insurance Insights Concern over costs:


Cost is someone elses problem. Its covered by insurance.

Consider Collaborative Health Initiatives around the state

CAPITAL FINANCING

SARATOGA SPRINGS CITY SCHOOL DISTRICT


10 Year Debt Service Payment Summary Schedule

$7,500,000 $7,000,000 $6,500,000 Debt Service Payment $6,000,000 $5,500,000 $5,000,000 $4,500,000

$4,000,000
$3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 2013-2014 2014-2015 2015-2016 2016-2017

2017-2018

2018-2019

2019-2020

2020-2021

2021-2022

2022-2023

School Year

+ Chapter 97 Projects:
For

projects with a Commissioner Approval Date (CAD) on or after 7/1/11, changes the earliest Building Aid can start from:
Later of CAD + 18 months or notification of contract signing(SA-139 receipt) to Later of CAD+18 months or the date on which both the final Certificate of substantial completion and a complete final cost report are on file at SED Building Aid will not begin if SA-139 not received in time to be included in Nov 15th frozen data base (used for Governors budget).

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Receipt$ are delayed for years Paid over assumed amortization period

Insights on Building Aid


Expenditures and revenues are not matched up Presumably state aid will be paid, eventually

Additional discussion, questions or comments? Next-Cost Containment.

3/6/2013 2:45 PM

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Citations:
Governor Cuomo photo: http://nycccapitalregion.files.wordpress.com/2011/04/9008935-large.jpg

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