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A Review of MCPS Budget Category 12

A Review of MCPS Budget Category 12. Office of Legislative Oversight Report 2012-2. Presentation to Montgomery County Board of Education Fiscal Management Committee January 9, 2012. Category 12 Expenditures. Category 12 Expenditures.

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A Review of MCPS Budget Category 12

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  1. A Review of MCPS Budget Category 12 Office of Legislative Oversight Report 2012-2 Presentation to Montgomery County Board of Education Fiscal Management Committee January 9, 2012

  2. Category 12 Expenditures

  3. Category 12 Expenditures

  4. Category 12 Expenditures As Percent of Total Operating Budget (Tax-Supported)

  5. FY12 Category 12 Expenditures Other 8% FICA 21% Group Insurance Active 46% Retirement 15% Group Insurance Retiree 10%

  6. Retirement Costs

  7. MCPS Employees’ “Core” Pension Benefit • 77% (mostly teachers) in pension plan funded and administered by State • 23% (mostly non-teachers) in pension plan funded by County and administered by MCPS

  8. MCPS Employees’“Supplemental” Pension Benefit • All permanent employees receive pension supplement funded by the County and administered by MCPS

  9. MCPS’ Share of Pension Contribution

  10. Increase in Pension Fund Contribution Caused By: • Salary increases • Growth in workforce size • Lower than assumed investment performance • 2006 plan enhancements

  11. Assets ($ in the fund) Funded Ratio = Liabilities ($ obligated to pay)

  12. MCPS Pension Fund

  13. Decrease in Funded Ratio Assets Investment losses Liabilities 2006 plan enhancements

  14. Future Pension Costs • MCPS’ actuaries project: • Minimal change in FY13 • Increased cost in FY14 and FY15

  15. Group Insurance

  16. Group Insurance Funds • Revenue: primarily employer and employee premium contributions • Expenditures: primarily health care claims

  17. MCPS Group Insurance Fund Expenditures

  18. Group Insurance Budgeting Challenges • Changes in claims experience • Calendar vs. fiscal year • Time between budget development and start of fiscal year

  19. Active Employee Group Insurance Fund

  20. Active Employee Group Insurance Fund Surplus • Monthly data show expenditures trending lower than projected • Cumulative expenditures $7.6 million lower than projected midway through the fiscal year • In February/March, actuaries advised MCPS that a significant year end surplus was likely

  21. Active Employee Group Insurance Fund

  22. Education Committee Recommendations

  23. Recommendations for Council Action Request BOE submit supplemental information to Council in April and October of each year Integrate information into annual budget decision making and ongoing oversight

  24. Additional Information April Estimated future pension contributions Plan to achieve desired pension funding ratio Budgeted vs. actual group insurance data Projected year-end insurance fund balances October Budgeted vs. actual Category 12 expenditures Summary of intra-Category 12 transfers Explanation of need for transfers

  25. Education CommitteeDiscussion Issues Category 12 cost drivers and expenditures Status of pension “funded ratio” Fund balance policy for group insurance

  26. A Review of MCPS Budget Category 12 Office of Legislative Oversight Report 2012-2 Presentation to Montgomery County Board of Education Fiscal Management Committee January 9, 2012

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