Seton Catholic School Financial State of the School

1. Presented by: Andy Walker and Matt Craft Parish Finance Council Seton Catholic SchoolFinancial State of the School

2. The Decision to Build the School • Bishop Williams commissioned a panel to review Catholic elementary school education in Lexington in January 1994. • The committee’s work resulted in two recommendations: • An elementary school should be built on the south side of Lexington; and • Conduct a financial feasibility study to determine if funds would be available. • In November 1996 Bishop Williams contracted with an outside agency to perform the feasibility study. • Bishop Williams in consultation with the pastors of Fayette County accepted the recommendations from the Fayette Region Feasibility Committee to build a school on the property of St. Elizabeth Ann Seton Parish. • Construction plans began in the Fall of 2001.

3. United in Faith Campaign • In 2001, the Diocese launched the United in Faith Campaign. • The goal of the United in Faith Campaign was to raise $7.0 million: • $5 million for construction of Seton Catholic School; and • $2 million to create tuition assistance endowment for students at all catholic elementary school in the Lexington area. The $2 million endowment was not reached. • The project did not include a cafeteria or a gym. Those facilities were to be added at a later date through additional funding from Seton community. • Seton parish would have the responsibility for furnishing, operating, and maintaining the facility through their own operating budget. • Ground breaking was the Fall of 2004 and classes began in the Fall of 2005.

4. United in Faith Campaign • Parishes and the Diocese were required to participate in the United in Faith Campaign. • St. Elizabeth Ann Seton $1,000,000 • Mary Queen of the Holy Rosary $ 724,665 • Christ the King $1,267,981 • St. Peter $ 263,335 • St. Peter Claver $ 64,872 • St. Paul $ 254,029 • Holy Spirit $ 176,301 • Pax Christi $ 248,817 • Diocese $1,000,000 Total $5,000,000 Plus $2,000,000 for endowment

5. Parish Debt – Building the School • When St. Elizabeth Ann Seton School was built in 2005, the cost to build the school was $7.7 million. • $4.7 million of that goal was received through donations from all Lexington parishes and our Diocese. The Diocese was $300,000 short of their $1.0 million pledged goal. • St. Elizabeth Ann Seton Church borrowed an additional $4.7 million to meet the total.* • The additional remaining balance of $1.7 million was held by the Diocese in a Deposit & Loan account. • Starting in 2008 through 2011, St. Elizabeth Ann Seton Church found it necessary to access part of that $1.7 million reserve to make principal and interest payments on the overall debt. Our reserve total in the United in Faith Campaign account now stands at approximately $1.19 million. • As of December 31, 2013, our current loan principal was $3,702,729. * The additional $2 million was borrowed to complete the project by building a gym and cafeteria. We soon realized that we had a mortgage payment that we could not afford through the Sunday Offertory.

6. Our Future Capital Campaign • Our parish set a goal to raise $2.4 million for this campaign. This goal is based on a national standard of 2.5 times annual offertory collections across many religious organizations in the US. • As of December 31, 2013, 413 families have pledged $1,883,803. • Approximately 47% of Seton families are participating in the Campaign. • Our total cash collected based on pledges is $1,352,220*. • * Some families have prepaid pledges and some families contributed without making a pledge. • Total cash collected to date is $1,365,874. • $1,352,220 + Fund to Paving the Way of $13,358 + $296.

7. Where are the Capital Campaign Funds? • St. Elizabeth Ann Seton Parish has two accounts with PNC Bank that are designated for retiring the debt on our school building: • The United in Faith Campaign reserve account - $1,192,592. • The Our Future Capital Campaign Account - $1,030,220. • Total Collected = $1,365,874 • $82,821 was paid to the Diocese from this account to fulfill our 2010-2011 Annual Appeal commitment. • SEAS makes quarterly payments of $19,057 to the Diocese from this account, through May 15, 2014, to fulfill our obligation to the Diocesan Campaign, One in Faith & Mission, with $38,114 outstanding.* • These funds can only be accessed to pay down the current debt. • * The Diocese projected that we could raise $845,000 in our parish for the One in Faith & Mission Campaign. We opted for the “Piggyback” to run our own Campaign. That required us to guarantee the Diocese 40% of that amount plus the Annual Appeal for 2010-2011. Calculation: $845,000 - $82,821 (Annual Appeal for 2010-2011) = $762,189 x 40% = $304,918.

8. Ministry of the Parish • Seton Catholic School is the largest ministry of the Parish. • There are 903 families registered in our parish. • There were 200 parish families or 22% of the parish that have children enrolled at Seton Catholic School for the 2013 – 2014 school year. • The parish provides funds to the School to make tuition more affordable. • $120,000 in subsidy. • $258,501 in principal and interest payments for last fiscal year. • $74,763 Country Fair Fundraiser. Before the school was built, the Fair income went to the Church. • $453,264 in total financial support • Total offertory for the Parish for the year ending June 30, 2013 was $1,020,068. • The Diocese recommends that Parishes provide financial assistance to their schools. The guideline for support is between 20 – 35% of offertory. (Increased from 18 – 22% to include debt service.) • The Parish provided 37% of its offertory to the school + the Country Fair (or approximately 41% if it was included in the offertory).

9. Financial Controls • Fiscal year for the church and school is July 1-June 30. • Seton Catholic School and S.E.A.S Parish have separate bank accounts and budgets. • The school can only have 2 bank accounts: • Operational account • Gaming activity • The school cannot have other accounts (ie Athletic Booster, PTO, Aftercare, etc.). • The school budget is prepared by the principal, Dana Ungerbuehler, Brandi Fister, then and presented to the School Board, revised as needed, and then presented to the Parish Finance Council.

10. Balancing the Budget • There are two ways to balance our school budget: • Increase Revenue • Higher Tuition • Increase Enrollment • Additional Revenue Opportunities • Manage Expenses Better

11. Tuition Rates

12. Growing the School Revenue Opportunity for K – 8 = 87 x $5,000 = $435,000.

13. Efforts continue to increase income • We have held onto the philosophy to INCREASE revenue rather than impose additional cuts…which means jobs and programs. • New quality programs added to increase revenue: ProgrammingRevenue Enhancers • Play School Annual Fund • All day Pre-K Scrip • Summer Care Grants • Summer Camps BoxTops • Faith 1st Sports field rental Discount Cards

14. Expenses and Fees • When a business incurs additional expenses, it must cut expenses and / or increase revenue. • If all of our revenue increase is done through tuition, then our Diocesan Assessment also increases. • By increasing fees, rather than tuition, parents save money because this revenue (fees) is non-assessable by the Diocese.

15. Diocesan Assessment • Every school and parish pays a Diocesan Assessment. Schools pay 8.16% of K-8 tuition to the Diocese to help cover their operations. • 2012-2013 Seton paid $127,017.04 • Current year $145,845 is budgeted • Fees, preschool tuition, playschool, fundraising is not assessable. • Tuition Increase - $100.00 • Assessment $8.16 • Total Revenue $ 91.84 • Tuition Increase - $108.88 • Assessment $8.88 • Total Revenue $100.00

16. Textbook Fees • Includes consumable workbooks, replacement textbooks, e-Texts, consumable instructional supplies, paper and copying expenses, and more. • By charging a textbook fee, we minimize increases in tuition, thus reducing the Diocesan Assessment. • The Textbook fee is collected at the time of registration. • Instructional supplies and curriculum for STEM program.

17. Technology Fees • Includes maintenance and replacement of hardware throughout the building. • Also included are annual fees for:

18. Teacher’s contracts • Teachers earn 88% of FCPS previous year’s salary schedule. • Until 2012-2013 year, teachers were paid in 24 equal paychecks from August 30 through August 15 (crossing over two fiscal years). • Beginning April of 2012, the salary payout changed to 21 pay periods. • Teachers are now paid from August 30 through June 30 (all within the same fiscal year).

19. Salary Payout Change • Cash Flow issues due to Diocesan change in Teacher Pay Cycle and Pre-Pay tuition cycle. • Annual Pay Periods decreased from 24 t0 21. • As a result of fewer pay periods, the payroll increases per pay period. • Teacher salaries increased by 3% in accordance with FCPS.

20. Loan Repayment • The Diocese of Lexington allowed for payroll loans to remain interest free for 5 years. • Seton budgets include annual payments of $50,000. • Seton will avoid interest payments if we are able to make these 5 payments from our operating budget.

21. 2013-2014 Cost To Educate • The cost to educate one student at Seton has been calculated at $7,875* • Parishioner Rate (including fees) = $5,320 • Non Parishioner Rate (with fees) = $7,765 • A “GAP” of • Parishioner $2,555 • Non Parishioner $110 * Includes an annual building debt payment of $258,501 which is currently paid by the parish.

22. Filling the GAP • In an effort to make our school more affordable we have reduced tuition below the actual cost with dependency on the following other sources of income: • Parish Subsidy • Annual Fund Drive • Evening With the Stars • Country Fair • Raskob STEM Grant 0f $25,000 and $25,000 matching funds (one time grant)

23. Filling the GAP: Parish Subsidy • St. Elizabeth Ann Seton Parish supports our school financially: • Annual cash subsidy - $120,000; • Principal and interest payments. Last fiscal year - $258,501; • Country Fair fundraiser. Last year was $84,242 – 12.4% assessment = $74,133 • Total Financial Support = $452,634

24. Filling the GAP: Annual Fund • Challenges • Families may not understand the need • Difficult to “mandate” that people participate • During the 5 year history, participation has hovered around 50% or less Benefits • Fundraising companies generally keep more than ½ of the profit • School keeps 100% of income • Tax deductible • Some employers will match donations

25. Annual Fund Participation Families % of Families School YearContributingContributingAmount • 2010 – 2011 156 51.7% $60,485* • 2011 – 2012 154 50.7% $47,145 • 2012 – 2013 150 50% $47,486 • 2013-2014 6421%$23,745 • *$15,000 donation. IBM and a family contributed to create the mobile lab.

26. Discount Cards • Last year, we added entertainment cards, allowing families to recoup their Fill the GAP contribution by selling cards. This years sponsors are listed below: • Valvoline McDonald’s Sutton’s Columbia’s • Jet’s Pizza Subway Cane’s Papa John’s • Joseph Beth Monkey Joe’s Culver’s • Backyard Burger • Current income from this years Discount Cards is $8,919. • Total profits from this year’s Discount Cards is $8,178.

27. EWTS and Country Fair

28. Covering the cost

29. Tuition Assistance • Seton Catholic School provides financial support to subsidize qualifying families through the FAIR tuition assistance program: • Amount of financial assistance: • 2013 – 2014 - $150,000 • 2014 – 2015 - $137,000 • 82 students and 44 families benefited from this program in 2012 – 2013 school year. • 84 students and 45 families and are receiving assistance for 2013 – 2014 school year.

30. Blue Ribbon School • The National Blue Ribbon Schools Program is a U.S. government program created in 1982 to honor schools which have achieved high levels of performance. • More than 133,000 public, charter, private and parochial schools serving grades K-12 are eligible for the award. • In the 30 year history, 7,000 schools have received the award or approximately 233 schools per year. • To qualify, the schools must have 5 years of data and most first time applications are not successful. • This award is a great tribute to all the hard working students, parents who work with their children, teachers who educate our children, our administration, and parishioners that support the school.

31. Why STEM Education Matters? • Science, technology, engineering and math (STEM) are where the jobs are. • Over the next 10 years STEM jobs are projected to grow by 17 percent vs. 9.8 percent for non-STEM jobs. • STEM workers can expect higher salaries. • According to the Commerce Department, people in STEM fields can expect to earn 26% more money on average and are less likely to experience job loss. • U.S. is failing to produce enough skilled STEM workers. • 60% of new jobs that will open in the 21st century will require skills possessed by only 20 percent of the current workforce. • Worldwide, the U.S. ranks 17th in the number of science degrees it awards.

32. Why STEM Education Matters? • The U.S. is fast losing its competitive edge. • The World Economic Forum ranks the U.S. as No. 48 in quality of math and science education. • American students aren’t keeping up with students in other countries in math and science. • The Organization of Economic Cooperation and Development showed American students scored 17th in science achievement and 25th in math ability out of 65 countries. • According to the 2009 National Assessment of Education Progress results showed that students’ performance in science proficiency worsened the longer they were in school: • 72% of 4th graders; • 63% of 8th graders; and • 60% of 12th graders scoring at or above a “basic” level.

33. Why STEM Education Matters? • Other nations are racing to establish dominance in math and science. • Russia is building an “innovation city” outside Moscow. • Saudi Arabia has a university for science and engineering with a $10 billion endowment. • China is creating new technology universities and has replaced the US as the world’s top high technology exporter. • These countries have concluded the way to win the world economy is by doing a better job of educating and innovating. • The STEM gap is costing American jobs and money. • According to a 2011 Harvard study, U.S. students fall behind 31 countries in math proficiency. • Increasing that math proficiency to the level of Canadian students could increase economic growth by $75 trillion over the next 80 years.

34. Seton STEM 2013-2014

35. Moving forward with STEM • The first year of STEM has gotten off to a positive start! • The Engineering is Elementary: Engineering and Technology Lessons for Children promote children’s natural curiosity to learn engineering and technology concepts. • Engineering is Elementary is a curricular program that integrates engineering with elementary science topics. • Elementary grades will add additional STEM Engineering Units as funding allows.

36. Moving forward with STEM • Middle school teachers present an integrated STEM unit for each grade. Each interdisciplinary unit presents materials on a topic in the subjects of technology, math, science, social studies, and language arts. Topic this year, included: • Astronomy – 6th grade • Ancient Egypt – 7th grade • Energy – 8th grade • Robotics. Student build age-appropriate Lego robots and learn basic programming skills. • We are currently in discussions with Newton’s Attic to develop a partnership for incorporating more engineering experiences in the middle school classes.

37. In Summary • Seton Catholic School does NOT charge the full the cost it takes to educate a student. • Our children get a great education at an excellent value. • We need to do a better job marketing our school by leveraging our Blue Ribbon Status and STEM programs. • The school has made cuts and operates on a very tight budget. There are no opportunities to make further “cuts” without having a negative impact on our academic and faith formation. • Your support of our Fill The Gap efforts are NECESSARY for us to deliver the quality education you expect.

38. Questions Seton Catholic School – 2012 Blue Ribbon School

39. When can we start building? • In order to move forward with future building, St. Elizabeth Ann Seton Church would need to do several things: • Reduce our parish shortfall and move from a Church currently operating at a loss to one whose operational finances are fully secure; and • Complete a successful Capital Campaign, to raise monies necessary to renovate and construct future buildings. In 2009, we asked the Diocese of Lexington to allow SEAS to run our own Capital Campaign, independent of the Diocesan Campaign. We were granted permission to do so, provided we meet our Diocesan commitment of $304,000 *toward their goals and initiatives. By doing this independently, St. Elizabeth Ann Seton Church has the potential to retain hundreds of thousands of dollars more right here in our parish. • Total Dioceses payments are $82,821 + $304,000 = $386,821. The $304,000 is currently being paid quarterly to the Dioceses through May 15, 2014, with approximately $38,114 outstanding. • * The Diocese projected that we could raise $845,000 in our parish for the One in Faith & Mission Campaign. We opted for the “Piggyback” to run our own Campaign. That required us to guarantee the Diocese 40% of that amount minus the Annual Appeal for 2010-2011.. Calculation: $845,000 - $82,821 (Annual Appeal for 2010-2011) = $762,179 x 40% = $304,918..

40. When are we going to build a gym? • In order for building to begin, the Diocese of Lexington must approve our building plans. • We, as a parish, must be able to meet daily operating expenses, (which include the payment on our parish debt) • We must secure 50% of the funds needed to complete our building project in cash plus 10% in pledges. • $2,000,000 x 0.60 = $1,200,000 • Reduce outstanding debt by 60%. • $3,702,729 x 0.60 = $2,221,637

41. How far are we from our Goals? • Total Savings • United in Faith $ 1,192,592 • Our Future Capital Campaign $ 1,030,220 * • Total$ 2,222,812 • Funding Required • New Construction (60%) $ 1,200,000 • Debt Reduction (60%) $ 2,221,637 • Total $ 3,421,637 • Difference($ 1,198,825) • * $1,883,803 pledged. Approximately $520,464 to collect.

42. Cash Flow Challenge Diagram