Public Budget Presentation

1. Public Budget Presentation June 3 , 2002 Lewis Plauny Montrose Area

2. Presentation Agenda • Current “Draft Budget” key numbers • Explain Budgetary Reserve & Fund Balance • Major Revenue & Expenditure Increases • Our Continuing Budget Improvement Plan • Insights on Grants & Budget Problems • Standard & Poors Review • Answer questions & ask for decisions Montrose Area

3. Budget Draft Status • 2001-2002 Budget $18,000,000 • 2002-2003 Budget approx. $19,500,000 • Increase of $ 1,500,000 or 8.3% Montrose Area

4. Review of “Budget Draft” content • 155 Page Board Document Itemizes all anticipated expenses and revenues • Current Expenses are $ 18,221,995 • Current Revenues are $ 18,171,324 • Difference is $ -50,671 • Difference in millage equivalent is .28 mill • 1.0 mill = 2.6 % tax increase • .5 mill = 1.3 % tax increase Montrose Area

5. How We Calculate “Millage Equivalent” • In 2001-2002 the District collected$ 6,901,236.09 in current real estate taxes. • This was 90.4% of the levied taxes. • Amount collected divided by 37.5 mills levied equals 184,032.96 dollars collected for each mill levied. Montrose Area

6. Why We Should “Think” “Millage Equivalent” • Proactive - To be “fiscally responsible” local Boards should fund “Current Revenues”=“Current Expenditures” and “Think of all newly created budget costs in terms of millage increases” • Reactive - The State & Federal govts are always one to three years behind (if) they fund school needs Montrose Area

7. Millage Impacts • Average 2001-2002 Real Estate Parcel is assessed at 27,340 (after Clean & Green) • One mill is $ 26.62 increase on the average parcel. Montrose Area

8. Budgetary Reservefor 2002-2003 • A Budgetary Reserve is a “non-itemized placeholder amount” that is used to anticipate unforeseeable expenses during the budget year that “must” be recorded in the General Fund. • Example: a “special needs” student enrolls during the year and the district must pay his/her tuition • Budgetary Reserve is approx. $ 198,000 • $ 198,000 is approx. 1% of a $ 19,500,000 Montrose Area

9. Beginning Fund Balancefor 2002-2003 • 2001-2002’s budget total is $ 18,000,000 • The District budgets to a 7 ½ % fund balance • 7 ½ % of $ 18,000,000 is $ 1,350,000 • Tentative Budget is approx. $ 19,500,000 • 7 ½ % of $ 19,500,00 is $ 1,462,500 Montrose Area

10. 2002-2003 BudgetExpenditure Increases • Blue Cross (211 only) Increase2002-2003 $ 1,128,6712001-2002 $ 1,071,400 57,271 • Salary (100s) Increases 2002-2003 $ 9,554,058 2001-2002 $ 8,787,637 766,421 Montrose Area

11. 2002-2003 BudgetSubsidy Increases • ESBE Increase $ 128,755 (1%) = 0.69 mills • Special Education Increase $ 46,959 (6.6%) = 0.25 mills • Retirement Rate Decrease ????? Decrease in name only $ 231,928 = -1.26 mills Montrose Area

12. Three Year Budget Improvement Plan • Improving budgeting practices do not increase funding or decrease costs • Improves the methods and procedures with which we create the budget • Improves identifying costs and purchasing accountability Montrose Area

13. A Balanced Educational Plan Budget Plan Expenditure Plan • Increasing one side causes the other two sides to increase • Decreasing one side causes the other two sides to decrease Continuous Improvement Plan Montrose Area

14. Electronic EquipmentDepreciation Philosophy • A recommended “Sustainability Guideline” • If you can not afford to “replace” it, you can not afford to “maintain” it • If you can not afford to “maintain” it, you can not afford to “buy” it • If you can not afford to “train staff to use it properly”, you can not afford to “buy” it Montrose Area

15. Grant Insights • Funding allocations are determined primarily by the availability of funds at higher levels of government • Funding for all grants will change and the funding changes will not always be positive • Higher government levels do not have “downward” accountability Montrose Area

16. Entitlement Type Grants • Expect continuing State & Federal support • Example: Title 1 for poor & needy families • Grant amounts controlled by State & Federal funding allocations • Funding will increase or decrease • “Allowable uses” will change • May be “carefully” used for continuing salaries and benefits Montrose Area

17. Entitlement Type GrantsApplied for annually • Social Security Reimbursement • Retirement Reimbursement • Building Debt Service Reimbursement • Special Education • Cafeteria Reimbursement • Title 1 – Poor and needy families and Reading First • Title II – (Part A) Improving Teacher Quality and (Part D) Enhancing Education Through Technology • Title V – Innovative Programs Montrose Area

18. Competitive Type Grants“Sunset” type legislation • Politically motivated (can occur midyear) • Used to “start” but not “continue” support of Federal and State education initiatives • Be thankful for them but, • Only spend after you have received funds • Use grant funds for non-recurring expenses • Consider carefully future program maintenance costs Montrose Area

19. Standard & Poors Review • Local-Source Revenue Per Student (Definition) – Includes revenue for instruction, support services, and other operating purposes obtained from local sources including real estate property and other district-levied taxes, investment earnings, and tuition. Revenue is divided by total enrollment to determine per-student basis. Montrose Area

20. Standard & Poors ReviewMASD Key Factors • “Well below-average operations and maintenance expenditures per student” • “Exceptionally above-average transportation expenditures per student” • “Well below-average local-source revenue per student” Montrose Area

21. Standard & Poors Quotes • “On a per-student basis, the district’s operations and maintenance expenditures of $460 are exceptionally below the state average of $658, and lower than the peer group average. Statewide, only 6.0% of Pennsylvania’s school districts report lower per-student operations and maintenance expenditures. Spending on operations and maintenance represents 6.8% of the district’s operating expenditures, compared with the state average of 9.0%. During the period examined, the district’s per-student operations and maintenance expenditures have decreased by 7.2%. This is counter to the state trend, which has increased, and counter to the peer trend, which has remained relatively unchanged over the same time period.” Montrose Area

22. Standard & Poors Quotes • “Transportation expenditures of $814 per student are exceptionally above the state average of $414, and higher than the peer group average. Statewide, only 1.2% of Pennsylvania’s school districts spend more per student than the district. Spending on transportation represents 12.1% of the district’s operating expenditures, compared with the state average of 5.7%. During the period examined, the district’s per-student transportation expenditures have increased by 17.4%. This is greater than the state and peer increases over the same time period.” Montrose Area

23. “Postponing” Capital Expenditures • Postponing “real” and “needed” costs is not “budget cutting”. • The “need” does not “go away”. • Not budgeting a “need” results in “hidden deficit budgeting”. • The negative impact is even worse in future budgets. Montrose Area

24. “Inherent Structural Budget Deficiencies”“built-in” budget problems • Employee Contracts, Benefits & Services Cost Increases • Proportionally Reduced State & Federal Funding • Decrease in State subsidies from 52% to 3x% • “Hidden” problems • “Work loads shifted” from Federal and State staff to Local education staff • Unfunded State & Federal Mandates“ shift tax burden” from Federal & State tax levies to Local tax levies“ Montrose Area

25. What we need to do • Decide on any final budget changes • Decide on a total final budget amount • Decide the millage rate for next year • Approve both items at Friday’s meeting Montrose Area