Solanco School District Preliminary Budget Work For 2013-14

1. Solanco School DistrictPreliminary Budget WorkFor 2013-14 FY 2011-12 Close out FY 2012-13 in Process FY 2013-14 Preparation and Planning November 5, 2012 Board Session

2. Multi-Year Planning and Perspective • 2011-12 Fiscal year End and Audit completion...finalization December / January Board meeting....end point = starting point • Current 2012-13 Fiscal year up and running; new CBA, optional QHDHC program, student testing changes, Keystones, virtual and on-line programs, charter reforms, athletic reporting, February Governor’s budget address for 2013-14 –What’s next?

3. Multi-Year Planning and Perspective (2) • Budget formation already started with staff for 2013-14; • Board extended session Nov. 5, 2012 • 2014-15 and beyond: Health Care, Pension, State funding and education policy, local revenues, general economy.... • Deliver Services to the Community.

4. Fiscal Year Financial Results:Preliminary 2011-12 Audit Highlights • Fund Balances: • Total – Deficit for the FY was$76,610 • Revenues = $44,420,679 • Expenditures = $44,497,289 • Deficit = $76,610 • Budgetary Structure for 2011-12 was $1.8M • Budgetary Structure for 2012-13 is $2.02M

5. Fiscal Year Financial Results:Selected 2011-12 Audit Highlights • Expenditures: • Total - Reduced year over year by $211,400 • Salaries - Reduced year over year by $307,700 • Benefits – Reduced year over year by $350,000 • Other Purchased Services - (e.g. Tuition for Special Education and Charters) Increased year over year by $277,500

6. Fiscal Year Financial Results:Selected 2011-12 Audit Highlights • Revenues: • Total - Increased year over year by $23,294 • Earned Income Tax: Increased year over year by $884,000 [approx. $300K was a one time prior years distribution] [From $4.9M to $5.4M ] • Transfer taxes: Increased year over year by $30,000 [total is above 2008-09 FY level] • Interest Earnings: Decreased year over year by $20,000 [Down from $594,000 in 2008]

7. 2013-14 Preliminary Budget Work:Keeping the Main things in front.... • Solanco’s Act 1 Base property tax increase cap is 2.0% • Pension Rate grows by 4.31% of payroll, the largest increase to date...2014-15 is 4.51% • Solanco’s 2013-14 Act 1 cap does not cover the pension increase...Exceptions • Salaries, Benefits, Special Education • Assuming Zero from the State in additional revenue... • ...Except for State share of the pension increase • Cost Pressures expected due to additional & continued mandates • Federal funds; Sequestration & Jan 1 2103 tax code • Revenue overall trend...

8. Déjà vu PENSION---PSERS

9. Last Year’s Slide ------Expenditures: Budget Assumptions • Salaries in total remain flat from 11-12 to 12-13 • State mandated Pension Employer Cost Rate (ECR) grows from 8.65% to 12.36% of payroll [+3.71% of pyrl]

10. This Year ------Expenditures: Budget Assumptions • Salaries in total remain flat from 12-13 to 13-14 • State mandated Pension Employer Cost Rate (ECR) grows from 12.36% to 16.67% of payroll [+4.31%] • State Share remains intact

11. Pension

12. Above the line and below the line: Act 120 Collars are in Play up to 2014-15 • Pension Rates --- Years from 2015-16 and beyond... Unknown.... • Most likely understated....revisions (by the Actuaries) will be made in December 2012.

13. Pension: Rate times Salary

14. Solanco SD: Budget Impact $458,767 NET

15. PROPERTY TAX

16. So far, Good Trend

17. Pension v. Property Tax Assumes $1,825 B assessment

18. Building the 2013-14 Budget:Two Years out from Completion

19. Earned Income Tax

20. So far, Better than Good trend... Approx. $300K One time funds in 11-12 Approx. $600K one time funds in 12-13

21. HEALTH CARE

22. Multiple Plans and Issues • Results from efforts--Health Care Cost Growth Trend Reduced • 2.78% actuarial rate increase for 2012-13...prior years were at double digit. • Optimistic, but cautious of rebound • Near Term & Forward Planning – In Process • QHDHCP implementation January 2013 • January 2014 increase deductible; adjust co-pays • January 2015 additional Co-pay adjustments • Future -- PPACA – Excise Tax 2018; 30 hour staff; Exchanges ??? ( $’s from Early Ret?)

23. Additionally, On the Watch List...

24. Special Education costs and contracts • Recent Senate bill passed to revise Special Education funding – prospective only as written • Continued State tinkering on funding shares (i.e. district state revenue) of long embedded programs (Transportation, Social Security, Pension, Plan Con debt reimbursement, BEF) • Federal Programs and Fiscal shut down threat • IDEA [Special Education] • Title I • Other....economy in general, and payroll tax • Property Tax; Act 1, Assessments, appeals, County Re-assessment....

25. Awareness.... • Continued mandate driven cost increases • Continued state policy efforts to constrict Board of Education funding authority • Continued policy efforts to increase student accountability measures • Increasingly complex / conflicting / costly reporting requirements...all dependent on IT processes and systems • PDE restricted exception approval process

26. Bottom Line • 2011-12 FY end is in good shape...provides improved base to manage 2012-13 • 2012-13 issues one year closer, improvement for operational needs in planning 2013-14. • A lot of work----Prior actions & efforts, solid implementations have had positive impact --- student side and fiscal side ---good results • Clearly, many things in motion and cost pressures remain in the forefront

27. NEXT STEPS • 2012-13 Estimate work – ongoing through June • 2013-14 December 4 -Department and Building budget sessions are held • 2013-14 Continue Budget Work For December 10 board review • 2013-14 December 17 Preliminary Action • 2013-14 January / Early February ----Final Preliminary Budget adoption • 2013-14 May – Preliminary Final • 2013-14 June – Final Budget