Topics for Discussion

1. Topics for Discussion School Aid Budget Highlights of State of the State Impact for Kalamazoo RESA Knowns and Unknowns Employee Compensation and Benefit Changes For Kalamazoo RESA 2013-2014 school year Program Highlights and New Initiatives Kalamazoo RESA Legislative Update

2. Snapshot: Michigan’s Economy Modest growth in revenues Surplus expected for 2013 & 2014 budget One of the biggest pressures on the budget is the increased cost of MPSERS – we expect much of the surplus to be directed here. Road funding debate could play a big part in the decision making which could effect revenues to schools – watch for tax policy changes Unemployment rate has been steady at 8.5% Modest gains in employment in the private sector but continued decline in the governmental sector Positive growth in real estate and auto markets Statewide estimate for wage and salary growth for FY 2014 is 0.8% With overall personal income projected to grow 1.9%

3. Legislation to watch EAA Possible ISD Role Roads Impact on School Aid Fund Budget Common Core and SBAC Uncertain future Skunkworks project Now assigned to MDE School Aid Budget Process Conference report draft issued May 23rd Governor has set goal of June 1st for completion

4. State Budget: Proposal Three varying versions:Executive, House, Senate Major Factors:Foundation allowance $0-$100/pp for lowest funded districts ($30-60 in conference report) Equity payment - $0-$34/pp for lowest funded districts (up to $50 in conf rpt) 80-100% funding for cyber schools (not included in conf rpt) Pupil Count Changes 80/20, 80/20 current year, 90/10 current year, new online enrollment options(90/10 current year – conf rpt) Best Practices Language $0-$16/pp for LEAs ($52 conf rpt Performance $30/$30/$40) Consolidation of Services incentive grants eliminated Technology Readiness Grants $0-$50,0000,000 ($50 M conf rpt) ISD State Aid Same as 2012-2013 with 0-3.2% if Best Practices met (3.2% in conf rpt) GSRP various levels of Increased slots and per pupil allocation MPSERS contribution rate 20.96%-24.79%Balance to be paid from 3% escrow fund and $150 million reserve fund Continues transfers to community colleges and universities Continues most categoricals at current year funding Kalamazoo RESA’s strategy is to balance the budget through various approaches

5. KRESA Budget Highlights • General Fund Revenues • No increase in taxable values • No increase in State Aid (possible reduction) • Grant changes – reductions and increases • Reduction in Federal revenue due to Sequestration • Changes made in Fee for Service Models • Special Education Revenues • No increase in taxable values • No or minimal increase in State Aid • Reduction in Federal revenue due to Sequestration

6. Kalamazoo RESA Compensation and Benefit Changes for 2013-2014 Approved by the Board of Education on May 16 Average of 2% increase in salary schedules Steps frozen for all employees Add Step 25 to Grade 17 salary schedule to maintain competitiveness with local districts along with other market adjustments for interpreters, braillists, Approved new salary schedule for technology positions and early childhood education positions Commitment to moving to a Performance pay system for all employees vs. increases based on seniority. A study will be conducted during the 2013-2014 school year. The board is implementing this concept for Grades 21 and above for the 2013-2014 school year. Total cost to the budget for all recommendations approved by the Board of Education - approximately $ 759,000

7. Costs: Health Insurance Health Insurance Plan decisions for current employees delayed until October 2013 Estimated 9% increase in employee health/dental/vision/life/long-term disability insurance January-June 2014 for budget purposes Comparison to Cap unknown until Oct or Nov 2013 Affordable Health Care Reform – Next phase effective January 1, 2014 KRESA’s measurement period will run from April 2013 – October 2013. Our administration period will be November and December of 2013 and our stabilization period will be January – December of 2014. Implement Tier 2 benefit plan for all new hires as of July 1, 2013 Single subscriber coverage for Grades 9-12 Reduced paid time away benefits

8. Increased Compensation Costs Wages – 2% raise = $ 393,061 Market Adjustments = 41,028 Retirement = $ 187,243 Health Insurance = $ 178,565 Other Benefit Costs = $ 38,898 Increased Costs = $ 838,795 General fund budget projection Total Revenues=31,524,665 Total Expenditures=31,646,292 Excess/(Deficit)=(121,627) Unassigned Fund Balance =4,142,515 13% Budget: Summary Special Education fund budget projection Total Revenues = 36,382,729 Total Expenditures = 36,382,729 Excess/(Deficit) = -0- Unassigned Fund Balance = 700,000 2% Combined fund balance = 7% Reduction in $’s paid to LEAs = 4,769,026

9. Still up in the air State aid act? Foundation allowance? MPSERS reform? Any Time, Any Place, Any Way, Any Pace initiatives

10. What we’re doing

11. New Initiatives for 2013-2014 Education Reconnection YOU is implementing a new program in collaboration with our local school districts to reconnect students who have left their educational programs to reconnect them into a program that will lead to a High School Diploma coupled with paid employment experience Technology Consolidations and Collaborations Kalamazoo RESA will be managing and staffing the AAESA technology services. Kalamazoo RESA will be managing and staffing Galesburg-Augusta technology services. Kalamazoo RESA is providing IT Engineering services to Portage, Mattawan, VBISD, AAESA, and others. The Learning Network’s Efforts to Outcomes Early Childhood Starting July 1, 2013 Kalamazoo RESA anticipates it will become the grantee for the Kalamazoo County Head Start program. We will be hiring approximately 80-90 employees to staff 20 classrooms throughout the county and provide support services to students and families. Kalamazoo RESA will also be operating the GSRP preschool programs in some of our districts next year

13. Question & Answer Contact information Ron Fuller, Superintendent (rfuller@kresa.org) Holly Norman, Deputy Superintendent (hnorman@kresa.org)