Wednesday, May 6, 2015

Board Meeting Recap - Budget Hearing

Board Meeting Recap
Budget Hearing - May 4th, 2015


Budgets have lots of numbers… The business office needs to comply with accounting rules, legislative mandates and board policies - there are so many graphs, charts, and spreadsheets ...and lots of numbers!


BUT budgets are important and they are road maps for the future.  


Not many people came to the hearing, we understand (lots of numbers).  We were happy to see some of you online watching the live feed.  For the rest of you we hope this recap provides you the information you need with links to additional details and resources.


Probably the most significant part of the meeting was the last 30 minutes when the Board members deliberated on the funding options.  To watch this part of the meeting, go to the go to the Board meeting video page on the district website and scroll to minute 1:42.30.  





Meeting Outline

In this hearing Board members reviewed the proposed budget plan with the goal of eventually approving the plan on June 15.  It's a roughly $79MM plan (that's 79 million dollars) and so it takes a while to understand and vet.  


The discussions fell into 3 major areas.

  1. This year's expense plan

  2. This year's funding plan

  3. How long long term needs and challenges impact this year's expense and funding plan


Below are some of the questions the Board considered during the hearing.

  1. The expense plan
    - What are the cost drivers and how do they impact expenses?
    - Are the dollars in the plan being spent efficiently and effectively?
    - Have all reasonable cost containment measures been evaluated and executed properly?


  2. The funding plan
    - What are the revenue sources and what is the best use of them?
    - Are fund balances (think of these as reserves) being set and used properly?
    - Are tax levels adequate and fair - now and in the future?
    - How much and when should the district borrow?
    - Have we considered and are we taking advantage of alternate sources of revenue?


  3. Long term needs and challenges
    - What are the district's challenges and how should we address them?
    - What is the best way for the district to address increased PSERS costs?
    - What is the best way to fund the 10-year capital plan?



Below are highlights from the hearing. The full presentation is available in Board Docs and the video is now posted to the website.




The Expense Plan:


John Sanville and Bob Cochran (Business Manager) explained that the expense plan will ensure that all of UCF's programs will be fully supported.  Below are a few highlights of the discussion (for additional details see the presentation in Board docs pages 7 - 19)

Cost Drivers

  • Personnel costs are the main driver at approx. 70% of all expenses (go to the presentation page 8 for a full list of cost drivers).

  • Costs have increased by about $3.2MM driven largely by benefits ($1.8MM).

  • Continued increases in required contributions to the employee retirement fund (PSERS) are a major factor. For every $100.00 in salary an employee is paid an additional $25.00 is paid to the state for the pension fund. This number will increase over the next two years before leveling off at around $33.00.

  • Special Education costs have increased significantly over the past few years and account for $.6MM of next year's increase, driven by more students in this category, rising costs per student, and a change in accounting for medical access costs.

  • Enrollments are not a major factor in this budget - using the latest projections (developed by the consultants who worked on the PES redistricting study), enrollments look stable for the next few years.


Cost Containment

  • The administration has taken action over the past several years to reduce expenses.  Examples of cost reductions include reducing administrative headcount by 25% and eliminating mid-day kindergarten transportation. Go to the presentation (page 3) for a more detailed list of cost containment measures.

  • Participation fees have been increased to lower taxpayer costs for some services.  

  • Employee health care plan modifications over the past few years have helped limit health care cost increases.

  • All employees have taken pay freezes two out of the last six years.  Over those six years salary increases have averaged about 1.8% for support staff, 2.0% for admin, and 3.0% for teachers.


Follow-ups and next steps for expense plan

  • The Board would like to see a list (with costs) of new initiatives in the plan.  

    What are new initiatives?
    New initiatives are a component of each year's budget, normally as an outcome of curriculum evaluations. Curriculum is evaluated on a 5 year cycle by subject and grade level, often resulting in the acquisition of new resources, textbooks, and technologies.  New student programs such as anti-bullying and wellness are also examples of new initiatives that need to be funded through the budget. Though these items have been reviewed in various forums throughout the year, the Board would like to review and vet this list as part of the budget approval process.

  • The Board would like more time at the next Curriculum and Educational Technology Committee meeting to review the technology plan further.




The Funding Plan:


Uncommitted Fund Balance

  • These are monies school districts must have on hand to pay for unexpected and/or exceptional situations - in layman's terms this is like an individual having a "rainy day fund".

  • The decision about how much to hold in this fund balance in the current year can impact tax rates this year and on into the future.

  • The current budget proposal is to hold about $6.5MM in uncommitted fund balance - some of these funds are assigned for a specific purpose, others are open-ended and unassigned.

  • $2.5MM is assigned to helping pay for future increases to PSERS.

  • Board policy requires that we hold between 5% - 8% of annual expenses in an unassigned fund balance - for next year that amount is between $4.0MM and $6.3MM.

  • Higher unassigned fund balances are a key component in UCFSD's excellent bond rating, helping to reduce borrowing costs.


Taxes: The Board is considering 3 options (pages 41 - 43 in the budget presentation)

  • Scenario 1: Increase taxes by avg 2.85%.  This would increase the uncommitted fund balance by $.5MM.

  • Scenario 2: Increase taxes by avg 2.5%. This would reduce the PSERS assigned fund balance by $.2MM.

  • Scenario 3: Increase taxes by avg 1.9%.  This would reduce the PSERS assigned fund balance by $.6MM.


Long-term Considerations: Capital Plan and PSERS cost increases

  • The ten-year capital plan will require UCFSD to raise funds by selling bonds within the next year or so.  There was discussion of keeping annual debt service payments below 11% of all expenses.  Scenario 1 and 2 likely leave more money available for this goal.

  • Rising PSERS costs will require UCFSD to raise funds over the next few years.  Smaller tax increases can be achieved this year by reducing the PSERS assigned fund balance (scenarios 2 and 3) but would likely leave less money on hand to help offset future PSERS cost increases.


Follow-ups and next steps for budget process

  • Update plan for Board review by May 8th

  • Board reviews and approves proposed final budget - May 11th work session (public meeting) - 7:00PM - District Office meeting room

  • Public Inspection copy available on the website beginning May 26th

  • Board approves final budget - June 15th Board meeting - 7:30PM - District Office meeting room.


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