Board of Education. Bloomfield Hills Schools Public Hearing Budget Update. June 19, 2014

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1 Board of Education Bloomfield Hills Schools Public Hearing Budget Update June 19, 2014 Property Tax Millage Rates 2014 Tax Year changes 1

2 2014 Millage Rate Summary Tax Base Purpose # of Mills Non-Homestead General Operating Commercial Personal Property General Operating Homestead General Operating All Classifications of Property Debt Service & Sinking Fund* * 2014 begins the first year of a five year millage with a 50% decrease in the authorized rate to.74. The authorized rate is subject to rollback under the Headlee Amendment. Headlee requires a rollback of the rate when annual growth on existing property is greater than the rate of inflation. Fiscal Year 2013/14 General Fund Final Budget changes 2

3 Final Budget - General Fund Fiscal Year 2013/14 General Fund Fund balance as of July 1, 2013 (audited) $ 24,189,972 Revenue* $82,026,886 Expenditures* ($84,481,741) Expenditures over revenue ($2,454,855) General Fund Fund balance as of June 30, 2014 (projected) $ 21,735,117 * Revenue and expenditures include $2.7M of retirement contributions paid directly by MDE and required to be reported by districts as being received and paid from/to the State. Final Budget - Update Fiscal Year 2013/14 Special Revenue Funds Fund balance as of July 1, 2013 (audited) $ 8,190,768 Revenue $ 20,203,769 Expenditures ($ 20,648,210) Expenditures over expenditures ($ 444,441) Special Revenue Funds Fund balance as of June 30, 2014 (projected) $ 7,746,327 Special revenue funds include: Center Programs, International Academy, Recreation/Community Service, Recreation Millage, and Food Service. changes 3

4 Fiscal Year 2013/14 - General Fund Summary of Revenue & Expenditure Changes Description Impact on Fund Balance Better (Worse) Original Budget Expenditures over Revenue ($ 1,805,377) Local Revenue Property tax revenue increased with increasing taxable values 221,959 Incoming non-resident tuition decreased State Revenue Foundation per pupil $11,884 same Enrollment fall estimate approximates actual; winter count is next week Best practices - $52 per pupil additional funding Special education funding prior year adjustment based on lower than projected spending due to medical plan changes/lower costs (timing difference between last year & this year) Hold harmless guarantee - $43 per pupil to receive a guaranteed minimum of a $5 increase per pupil BHHS transition Co-curricular athletics, band, choir, etc. additional uniform/apparel costs offset by athletics savings beyond original estimates Professional development Technology devices and related items (RFPs, etc.) (884,336) (74,882) Fiscal Year 2013/14 - General Fund Summary of Revenue & Expenditure Changes - continued Description Impact on Fund Balance Better (Worse) Federal revenue increased $207,648, offset by an expenditure increase of $207,648 - Staffing - salaries/wages, fringe benefit costs (excluding federal grant changes) Transportation, including overtime due to significant changes for the high school and middle schools Decreases in paraprofessionals, custodial and technicians Retirement/MPSERS actual costs to date exceed original budget estimates Health insurance - costs decreased, offsetting the retirement increase. The remaining employee groups began new plan coverage January FICA/other Outgoing tuition primarily related to center programs for our students, including our center programs and other districts that our students attend (84,947) 342,043 Other adjustments net 4,479 Midyear Budget Expenditures over Revenue ($ 2,281,061) changes 4

5 Fiscal Year 2013/14 - General Fund Summary of Revenue & Expenditure Changes Description Impact on Fund Balance Better (Worse) Midyear Budget Expenditures over Revenue ($ 2,281,061) Local Revenue Property tax revenue Revenue generating programs, $120k related to Bloomin programs and Farm summer programs 47,369 State Revenue Foundation per pupil Categorical funding: best practices, performance incentive, etc. Adjustments between local and state portion of foundation 175,098 Non-recurring costs, including BHHS transition and technology initiatives Co-curricular Professional development Technology devices and related items (RFPs, etc.) (356,663) Fiscal Year 2013/14 - General Fund Summary of Revenue & Expenditure Changes - continued Description Impact on Fund Balance Better (Worse) Utilities water/sewage decrease offset gas, electricity and fuel cost increases 34,410 Discretionary budget savings, unspent allocations by buildings and departments 164,018 Staffing costs, salaries/wages and fringe benefits, including retirement costs (286,538) Outgoing tuition primarily related to center programs for our students, including our center programs and other districts that our students attend 157,850 Transfer out to Food Service Fund to fund this year s projected fund deficit (54,827) Other adjustments net (54,511) Final Budget Expenditures over Revenue ($ 2,454,855) changes 5

6 Fiscal Year 2014/15 General Fund Original Budget Original Budget General Fund Fiscal Year 2014/15 General Fund Fund balance as of July 1, 2014 (projected) $ 21,735,117 Revenue* $ 84,298,729 Expenditures* ($ 86,622,535) Expenditures over revenue ($ 2,323,806) General Fund Fund balance as of June 30, 2015 (projected) $ 19,411,311 * Revenue and expenditures include $4.5M of retirement contributions paid directly by MDE and required to be reported by districts as being received and paid from/to the State. changes 6

7 Original Budget Special Revenue Funds Fiscal Year 2014/15 Special Revenue Funds Fund balance as of July 1, 2014 (projected) $ 7,746,327 Revenue* $ 19,478,197 Expenditures* ($ 19,679,724) Expenditures over revenue ($ 201,527) Special Revenue Funds Fund balance as of June 30, 2015 (projected) $ 7,544,800 Fiscal Year 2014/15 - General Fund Revenue & Expenditure Changes FY14 Final to FY15 Original Budget Description Impact on Fund Balance Better (Worse) FY14 Final Budget Expenditures over Revenue ($ 2,454,855) Foundation allowance funding, including projected stable enrollment and a $50 per pupil increase 273,850 Performance incentive decreased by $30 per pupil (164,310) MPSERS UAAL pre-funding has been included in both the revenue and expenditures beginning 2012/13: FY13 $1.1M or $272 per pupil FY14 $2.7M or $451 per pupil FY15 $4.5M or $820 per pupil The amount relates to the retirement reform law and represents our share of the amount paid directly from the State School Aid Fund on behalf of local districts. For BHS, this represents approx. $451 per pupil for FY14, an increase of $272 over FY13. 1,813,694 ( ) Retirement contribution change, net, but exclusive of the pre-funding above (240,034) changes 7

8 Fiscal Year 2014/15 - General Fund Revenue & Expenditure Changes FY14 Final to FY15 Original Budget Description Impact on Fund Balance Better (Worse) Staffing, net salary and FICA change, including contractual increases, attrition savings, and budget balancing action items (61,267) Health insurance includes inflationary increase of 7%, net of budget balancing action items (370,622) Other projected expenditure savings including budget balancing actions 330,910 State categorical, federal grants and other local revenue 362,522 FY15 Original Budget Expenditures over Revenue ($ 2,323,806) Fiscal Year 2014/15 General Fund A Closer Look changes 8

9 General Fund Revenue Fiscal Year 2014/15 - General Fund Largest Revenue Source Our largest source of revenue is the foundation allowance totaling about $63 million, which comprises around 74% of our total General Fund revenue: Foundation per pupil x BHS General Fund blended membership $11,934 x 5,280 Blended BHS membership is a weighted average of the fall & winter counts 90% of fall 2014 & 10% winter 2015 changes 9

10 Fiscal Year 2014/15 - General Fund Revenue by Source 7% 3% 11% 5% Foundation Allowance 74% State portion 38% Local portion 36% Interdistrict State (categorical grants) Federal Local (other than taxes) The Foundation Allowance is funded both locally, through non-homestead and hold harmless operating taxes, and by the State School Aid Fund. Approximately $63 million, or 74% of total revenue represents the per pupil Foundation Allowance funding. Blended Enrollment History School Year: General Fund Center Pgms Fund State Aid Membership Fall Winter Blend: 2014/ = % / 10% 2013/ = % / 10% 2012/ = % / 10% 2011/ = % / 10% 2010/ = % / 25% 2009/ = % / 25% * Beginning 2013/14, the blended count is 90% of the fall and 10% of the winter within the same school year. For 2012/13 and prior years, the State Aid Membership is a blended count of the preceding school year's winter count and the current school year's fall count. Note: The foundation allowance per pupil multiplied by the blended State Aid Membership determines the Foundation revenue amount for the fiscal year, including general education, center & non-center special education students. changes 10

11 Fiscal Year 2014/15 - General Fund Revenue by Source 48% Local 3% 5% State Federal 44% Interdistrict Best Practices State School Aid Act, Section 22f Criteria Policyholder for medical benefit plans Obtain competitive bids for at least one non-instructional service Schools of choice Provide online learning opportunities Do we comply? Yes Yes No Yes Provide a public online dashboard with finance and academic metrics Comply with school employee compensation determination requirements under MCL (compensation tied to evaluation) Comply with the prohibited subjects of bargaining as required under the Public Employment Relations Act (PERA) Implement a comprehensive guidance and counseling program Offer pupils in grades K-8 the opportunity to complete coursework or other learning experiences that are substantially equivalent to 1 credit in a language other than English Yes Yes Yes Yes Yes changes 11

12 General Fund Expenditures Fiscal Year 2014/15 - General Fund Expenditures by Object 31% 52% 5% 6% 2% 4% Salaries Benefits Purchased services Supplies and other Transfers out Tuition outgoing Our largest cost is our staff totaling about $72 million, which comprises around 83% of our total General Fund expenditures. changes 12

13 General Fund MPSERS Contribution History $12,000,000 $10,000,000 Contribution Rates: % % % % % 2014 & beyond: Ongoing monitoring of effective rate is necessary for budgeting. Employer portion is up to 24.79% in 2014 and 25.78% in 2015 Beginning 2012, the State Budget provided relief funding to offset rising retirement costs & 2013 totaled approximately $1M, which was reduced to $700k for FY14 & FY15. $8,000,000 $6,000,000 Chart excludes amounts paid directly by the State toward the underfunded accrued actuarial liability for 2014 & 2015: $1.1M $2.7M $4.5M $4,000,000 $2,000,000 $ FY 2009 through 2013 Actual costs FY2014 & 2015 are projected costs Employee required (with mandatory 3% increase) contributions: $1,739,993 $1,698,505 $2,998,574 $3,263,968 $3,570,346 (Data not yet available) General Fund Long-term Forecast through 2017/18 changes 13

14 Preliminary Long-term Forecast General Fund Key Assumptions Revenue Enrollment based on latest projections, which include slight increases after next year Foundation Allowance increased at the same rate as next year, $50 per pupil. State one-time funding, best practices and performance categoricals kept flat for future years based on next year s levels, which are down a total of $32 per pupil Expenditures Salary/wages in accordance with contracts. Retirement rate varies by employee elections and is monitored during the year based on the effective rate being paid on payroll. Health care cost projections will continue to be updated based on claims trends. The district is limited by the medical benefit hard cap, which is adjusted annually based upon the Consumer Price Index change. Budget balancing actions are being continually being discussed. Savings are factored into the forecast once we conclude to proceed with an action. Our focus remains on continued nonpersonnel cost savings as well as staff cost savings primarily through attrition Managing our Resources changes 14

15 Foundation Allowance History Cumulative Change compared to CPI Fiscal Yrs: Foundation allowance history 1994/ / / /10* 2010/11* 2011/ / / /15 Cumulative Min. foundation allowance $ 4,200 $ 7,204 $ 7,316 $ 7,162 $ 7,146 $ 6,846 $ 6,966 $ 7,026 $ 7,076 Increase (decrease) (154) (16) (300) Percent change 1.68% 1.55% 2.10% 0.22% 4.20% 1.75% 0.86% 0.71% 68.48% Basic foundation allowance $ 5,000 $ 7,204 $ 7,316 $ 7,162 $ 7,146 $ 6,846 $ 6,966 $ 7,026 $ 7,076 Increase (decrease) (154) (16) (300) Percent change 1.68% 1.55% 2.10% 0.22% 4.20% 1.75% 0.86% 0.71% 41.52% Max. (Hold harmless) foundation $ 6,500 $ 8,433 $ 8,489 $ 8,335 $ 8,319 $ 8,019 $ 8,019 $ 8,049 $ 8,099 Increase (decrease) (154) (16) (300) Percent change 0.57% 0.66% 1.81% 0.19% 3.61% 0.00% 0.37% 0.62% 24.60% Bloomfield Hills Schools $ 10,454 $ 12,387 $ 12,443 $ 12,170 $ 12,154 $ 11,854 $ 11,854 $ 11,884 $ 11,934 Increase (decrease) (273) (16) (300) Percent change 0.39% 0.45% 2.19% 0.13% 2.47% 0.00% 0.25% 0.42% 14.16% Consumer Price Index (CPI) Percent change 3.23% 2.83% 3.86% 0.42% 1.73% 3.12% 2.09% 1.48% 61.25% *Fiscal yrs 2009/10 & 2010/11 are based on the effective foundation allowance, which is less than the published nominal foundation per pupil due to State budget actions. changes 15

16 State Budget Highlights General Fund Expenditure Changes Since 2008/09 FY2008/09 FY2009/10 FY2010/11 FY2011/12 FY2012/13 Change From 2008/09 Salary/wages (all staff) $47,600,000 $45,300,000 $43,900,000 $43,200,000 $44,100,000 ($ 3,500,000) Decrease = 7% Enrollment fall MPSERS contribution $7,800,000 $7,600,000 $8,700,000 $10,100,000 $11,700,000 ( 48 ) Decrease=1% $3,900,000 Cost Increase = 50% Fringe benefits (Medical, Dental, Vision, LTD, STD, AD&D, workers compensation insurance, etc) $10,100,000 $10,200,000 $9,100,000 $9,800,000 $7,400,000* ( $2,700,000) Decrease = 26% *Includes approximately $600,000 of one-time cost savings changes 16

17 State Budget Highlights Other sources of revenue that fund School Aid include: - Federal funds $1.765B - General Fund/General Purpose $235M - Beginning balance, if any changes 17

18 School Aid Fund Covering more costs with less funding changes 18

19 Interested in more information? changes 19

20 Munetrix Financial Indicators Enrollment changes Current year One year ago Two years ago General Fund revenue over(under) expenditures Current year One year ago Two years ago General Fund Fund balance as a percent of total expenditures General Fund Fund balance as a percent of operating expenditures Fund balance or fund deficit Foundation allowance change Bloomfield Hills Schools Zero indicates the lowest risk Munetrix Summary Fiscal Years 2007 through 2013 Multi-year General Fund Data for the Bloomfield Hills Schools Located at changes 20

21 changes 21