Board of Education March 5, 2015

2015/2016 Budget Development Update

Agenda

National and State Economy School Finance Jeffco Funding Budget Process Community Engagement

► Forums ► Survey

Board Discussion and Direction

National/State Economy

Middle Phase of this Business Cycle ► Business-led Recovery ► Labor Market Healthy and Improving ► Households and Banks in Better Shape ► Broader Economy Offers Support for Real Estate Markets

Few Reasons for Concern ► Fed will Tighten the Money Supply ► Global Economy ► Oil Prices and Capital Investment

employment Colorado Outpacing U.S.

98

100

102

104

106

108

110

Colorado

Nation

Source: U.S. Bureau of Labor Statistics. Seasonally adjusted three-month moving averages. Shaded area indicates recession. Data through November 2014. Colorado data includes revisions expected by LCS.

Index July 2009 = 100

measures of unemployment Colorado Outpacing U.S.

Source: U.S. Bureau of Labor Statistics. Underemployment rates are 12-month moving averages. Shaded area indicates recession. Data through November 2014.

income Colorado Outpacing U.S.

95

100

105

110

115

120

125

130

2008

Q1

2008

Q3

2009

Q1

2009

Q3

2010

Q1

2010

Q3

2011

Q1

2011

Q3

2012

Q1

2012

Q3

2013

Q1

2013

Q3

2014

Q1

Personal Income Index Base 2009 Q2 = 100

Colorado

U.S.

95

100

105

110

115

120

125

130

2008

Q1

2008

Q3

2009

Q1

2009

Q3

2010

Q1

2010

Q3

2011

Q1

2011

Q3

2012

Q1

2012

Q3

2013

Q1

2013

Q3

2014

Q1

Wages & Salaries Index Base 2009 Q2 = 100

Colorado

U.S.

Source: U.S. Bureau of Economic Analysis. Data through the third quarter of 2014. Shaded area indicates recession.

percent change employment Second Quarter 2013-2014

Source: U.S. Bureau of Labor Statistics, QCEW. Data through second quarter 2014

8

quote

State General Fund Revenue Outlook

$6.6

$5.5$5.5$5.8

$6.1

$7.0$7.5$7.7

$6.7$6.4$7.1

$7.7

$8.5$9.0

$9.6$10.2

$11.1

$4

$5

$6

$7

$8

$9

$10

$11

$12B

illi

on

s o

f Do

llar

s

Bars represent LCS ForecastDots represent OSPB Forecast

Source: Colorado State Controllers Office, LCS and OSPB projections based on the December 2014 forecast.

9

TABOR Refunds Structural Issues Demographics

State Tight Budgets Will Persist

State TABOR – A Simile

Income and Sales Taxes

Fees TABOR Refund

TABOR Limit

$0

$2

$4

$6

$8

$10

$12

$14

Referendum C Timeout Period

Referendum C Cap Current TABOR Limit

Original TABOR Limit

Bars Show Revenue Subject to TABOR

White bars = Referendum C time out; Darker bars = years revenue exceeded or is expected to exceed the limit

Source: Colorado State Controllers Office and Legislative Council Staff December 2014 Forecast.

State TABOR Referendum C

K-12 Education

38%

Higher Education

8% Corrections

8%

Judicial 5%

Health Care 25%

Human Services

9% Other 7%

FY 2014-15 General Fund

Operating Budget

$8.9 billion

State FY 2014-15 General Fund Budget

Sources: Colorado Department of Education, U.S. Census Bureau, & Bureau of Labor Statistics, and JBC Staff.

60

110

160

210

260

310

360

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

Ind

ex F

Y 0

1 =

10

0

Medicaid Caseload

State Share School Finance

Higher Education Enrollment

Inflation

CO Population

K-12 Enrollment

General Fund Operating Appropriations

General Fund Revenue

State Medicaid Caseload Growth / General Fund Budget

During the next 15 years, the aging of the population will: ► change the housing mix, likely dampening

growth in housing values and the property tax base;

► change income and spending patterns, likely dampening growth in the income and sales tax bases; and

► increase demand for government services, applying further budget pressure on governments.

State Demographics Matter

Even with state revenues increasing, limits on funding for programs Reducing the State Education Fund

causes concern TABOR refunds Maintaining the negative factor

as required

State Caution at the State Level

Amounts by Source

Public School Finance FY12-FY17 Amendment 23 Target vs. Funded State

$479M

ONE TIME

$198M

ONGOING

$281M

$38M

ONE TIME

$16.6M

ONGOING

$17M

$19.5M $18.4M

($2.5M) ($1.8M)

Governor’s Proposal Jeffco’s Estimates

Amounts in millions Ongoing One-time Total

Governor’s Revised Request 19.5 18.4 37.9

Pass Through to Charters (2.3) (1.6) (3.9)

Pass through to Child Care (0.2) (0.2) (0.4)

General Fund 17.0 16.6 33.6

2015/2016 Assumptions REVENUE Ongoing One time Total

School Finance Act 19,465,700 18,437,700

Flow Through to Charter of state PPR increase (2,316,200) (1,555,900)

Flow through to Child Care fund of state PPR increase for Preschool (CPP) (186,400) (183,200)

Move kindergarten to the General Fund from the Child Care Fund 4,000,000

Investment Earnings, fees, and other (40,900)

Total Change in Revenue 20,922,200 16,698,600 37,620,800

EXPENDITURES

Legislated PERA AED 0.3% 1,215,000

Legislated PERA SAED 0.5% 2,025,000

Estimated Retirement and Turnover Savings (4,000,000)

Affordable Care Act 3,000,000

Move kindergarten to the General Fund 4,000,000

Salary Accrual, Utilities 1,500,000

Increase in GF transfers (Capital Reserve, Transportation, Insurance Reserve) 487,600

General Increase Placeholder TBD 12,000,000 18,000,000

Total Change in Expenditures 20,227,600 18,000,000 38,227,600

Change in General Fund Reserves 694,600 (1,301,400) (606,800)

Point of Reference Approx. Costs Associated with Decisions

One hour per day additional interventionist at each school - $1.3M Priority one facility deficiencies - $16.9M 1 percent increase to all staff - $5.2M Add or eliminate $10 per pupil technology fee

across all students - $.8M Equalizing charter school mill levy override –

$2.5M at current enrollment assumptions, $3.0M with additional potential growth Reduce class size in first through third grades

by one student - $2M

Per Pupil Funding

7,070

6,637

6,309 6,317 6,482

6,850

7,307 7,081

$5,000

$6,000

$7,000

$8,000

**2014/2015 - CDE has based Total Program and Per Pupil funding numbers on the adoption of the supplemental. **2015/2016 - CDE has based Total Program and Per Pupil funding numbers on projected enrollment and adoption of the Governor's Revised Budget Request **2016/2017 assumes the negative factor remains at the 2014/2015 level of $894M, and enrollment stays flat compared to 2015/2016

General Fund Projection 12/2014

General Fund - Reserves

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

$90,000,000

Ending Fund Balance Total Required Reserves

SBB – Student Based Budgeting Schools

► Finished allocating their budgets to line items

Achievement Directors and Budget Office ► Reviewed budget for required items

and reasonableness HR is in process for filling positions Next Steps

► Budget tool is open for principals to continue making changes.

► Information will be pulled as of March 20 for development of the 2015/2016 Budget.

► Changes after won’t be adjusted until after June 30.

x

26

Programmatic review of central departments Review will provide evaluation of

activities meeting goals. Resource constraints in financial

services has revised the timeline of this work. Planned completion is August 2015.

PBB – Priority Based Budget

COMMUNITY ENGAGEMENT

Budget Forums Six forums – January 22, 24 & 28, 2015 194 Attendees Overall Summary

Ongoing – Compensation increases and facilities/capital One time – Facilities/capital and reserves

Evaluations Opportunity to voice opinions Liked small group discussion Earlier/more information on budget Heard about through social media, Chalktalk,

district website and other.

COMMUNITY ENGAGEMENT

Online Budget Survey Tool was open Jan. 28 through Feb. 18 (3 weeks) Available in English/Spanish/Russian/Vietnamese Outreach – Communications publicized through:

► Internal Media Channels (Leadership Memo, Messenger, website, dedicated parent email, customized text messages, customized district access points)

► Social Media and Media Relations (press release, Facebook, Twitter) ► Community Organizations (cities/municipalities/local organizations) ► Paid Advertisements

Response ► 13,671 visitors; 9,121 responses

Results ► Being compiled; will be communicated to the Board and

published on Jeffco’s website

COMMUNITY AND STAFF ENGAGEMENT

Other Input

SPAC/SAC Input Principal feedback Cabinet Recommendations

Jan 2015

•Board Community Forums – 1/22, 1/24 & 1/28

•SAC/DAC •School level

accountability groups meet

•District level accountability group meets

•Open Citizen Budget tool for two three weeks [opened on 1/28-2/18]

Feb 2015

•5th Board Study Session •SAC/DAC/

FOC, Community input presented to BOE

•Survey closes on 2/18

•Communicate Forum Feedback to BOE

•BOE Direction on budget

•Survey closes on 2/18

•SPAC to communicate input from SAC

Mar 2015

•5th - Board Regular Meeting •Budget

Update incorporating input from Leadership (Cabinet), SPAC/SAC, Student Based Budgeting, Budget Forums and Budget Survey

•19th - Board Regular Meeting •Final BOE

direction on 2015/2016 Proposed Budget before Spring Break

Apr 2015

•4 weeks to develop Proposed Budget for May 7 BOE meeting

May 2015

•7th - Board Study Session

•Presentation of Proposed Budget 1st Public Hearing (will include a revised forecast if any legislation is final.)

•Proposed budget must be presented to the BOE no later than June 1 per C.R.S. 22-44-108(1)

•BOE Final Revisions to Proposed Budget

•May 14th - Board Regular Meeting •2nd Public

Hearing; and •Budget Adoption

2015/2016 Budget Development

Timeline

March BOE priorities including direction for

placeholders or identified items to be funded Budget office will incorporate all BOE direction

into a revised projection to be presented in March BOE meeting March 19, 2015, present

Projection #2 inclusive of BOE direction on priorities and placeholders

April Budget office builds the proposed budget

2015/2016 Budget Development

Timeline

May BOE meeting May 7, 2015

First public hearing to present the 2015/2016 Proposed Budget including Projection #3

BOE direction on any revisions to be incorporated into the adopted budget

BOE meeting May 14, 2015 Second public hearing for 2015/2016

budget adoption

2015/2016 Budget Development

Timeline

Effectively allocate monetary resources to enhance student achievement;

Clearly communicate the financial state of the district to the public;

Comply with all state, federal, and local statutes and regulation as well as internal organizational controls;

Identify all budgetary changes from year to year; and

Set appropriations to ensure positive reserve balances in all funds.

2015/2016 Budget Development

Goals and Objectives

The budget will:

Meet specified deadlines while producing a comprehensive and accurate budget;

Provide opportunities for community and staff input to support Board budget direction;

Identify budget assumptions fused for the development process;

Use forecasting to anticipate future needs and resources; and

Review all programs and departments.

2015/2016 Budget Development

Goals and Objectives

The process will continue to:

Board Direction

Expense Placeholders Jefferson/Alameda Plan Early Compensation Decisions