Financial Planning

FHSD Financial Planning

February 5, 2009

Impact of National Economic Downturn

•! Decline in Sales Tax Revenue

•! Decline in Property Tax Revenue

–!Decline in Real Estate Property Values

–!Decline in Personal Property

–!Decline in New Construction

•! Job losses

FY09 District Revenue by Category

Property

Taxes

50.2%

Sales Tax

8.2%

Basic

State Aid

22.2%

Other

19.4%

FHSD’s three major revenue sources

•! Statewide Sales Tax Revenue

•! Basic State Aid (Foundation Formula)

•! Local Property Tax Revenue

Statewide Sales Tax Revenue

•! Sales Tax Revenue to FHSD down $1M in 2008-2009

•! Sales Tax Revenue expected to show no recovery in 2009-2010

Foundation Formula Revenue

•! Governor Nixon’s proposed budget shows level state funding for K-12 education

–!Foundation Formula

–!Categorical Funding

Local Property Tax Revenue

•! St. Charles Assessor currently completing recalibration of real estate property assessments

•! Assessor’s data shows 2-10% decline in real estate property values during the last 6 months

•! Personal Property Tax showing a greater percent decline

•! Assessor’s data shows a 1.29% increase from new construction

•! Combined effect – Estimated 6-8% decrease in assessed valuation for FHSD

Legal Considerations

Hancock Amendment

•! As property values increase, maximum allowable tax rate decreases

•! As property values decrease, maximum allowable tax rate increases

Senate Bill 711

•! Districts cannot access voluntary rollbacks of tax rates during reassessment years (2009, 2011, etc.)

•! FHSD has been voluntarily rolling back 25¢ since 2004, saving taxpayers $25M to date

•! FHSD Board of Education decided to continue the 25¢ voluntary rollback for tax years 2008 and 2009

Current Reality Considerations

2008-2009 Operating Budget Deficit

•! June 2008 budget had a $4.8M deficit

•! Decreased statewide sales tax revenue

•! Decreased foundation formula revenue

•! November 2008 budget had a $6M deficit

•! Recommended 2008-2009 budget reductions should reduce deficit to $3M

August 5th Proposition

•! Voters overwhelmingly approved a 5-year, 20¢ tax rate extension (65.49% yes)

•! Economic downturn accelerated in Fall 2008

•! BOE continued the 25¢ voluntary rollback as promised

•! District would be facing an additional $4M reduction in revenue

Proposition B – November 4, 2008

•! Proposition B – Building for Our Children’s Future passed with 65.12% approval

•! Funds can only be used for the approved purposes

•! $78.5M bond issue for renovation and new construction at FHHS, Daniel Boone, FHN, Maintenance, and other building projects

•! These construction projects promise to help the local economy

Decision-Making Principles

Desired Outcomes

•! Education of our children

•! Relief for taxpayers who have been so supportive of our schools

•! Short and long-term consequences of our decisions – need a balanced budget

•! Maintaining an excellent education at an exceptional value to our taxpayers

Principles to determine reductions

•! Reductions away from classroom first

•! Reductions due to enrollment decline

•! All expenditures reviewed and considered for reduction

•! Ideas sought to reduce costs and improve education

Principles to implement reductions

•! Attrition first

•! Staff who are affected will be placed in openings at other locations

•! Staff who are affected will be considered for other positions for which they are qualified

•! Staff who are affected will be assisted in job search

Any pay increases (including lane and

step changes) will result in additional

expenses that will have to be offset with

further budget reductions

Scenario #1

•! Apply the Hancock Amendment and balance the budget ($3M reduction)

Scenario #1

Reduction in Staffing Head Count

Full Time

Equivalent

Percent of

Current

Staff

Central Office Admin 1 1 6.25%

District Support 5 5 4.90%

Building Admin 2 2 2.82%

Teachers 6 6 0.47%

Non-Certified Staffing 17 8.002 1.55%

Totals 31 22.002 1.11%

What does Scenario #1 mean to the average home owner?

•! Assessed value declined

•! 2009 taxes same as 2008

Average Home

$250,000

Scenario #2

•! Apply the Hancock Amendment and balance the budget

•! Plus voluntarily rollback an additional 10¢ to our taxpayers ($5M reduction)

Scenario #2


Full Time

Equivalent

Percent of

Current

Staff




Teachers 19 17.98 1.42%


Totals 62 50.09 2.54%


•! Assessed value has declined

•! 2009 taxes $47.50 less than 2008 taxes

Average home

$250,000

Scenario #3

•! Apply the Hancock Amendment and balance the budget ($3M reduction)

•! Plus voluntarily rollback an additional 20 cents to our taxpayers ($7M reduction)

Scenario #3


Full Time

Equivalent

Percent of

Current

Staff




Teachers 30 30 2.37%


Totals 80 67.71 3.43%


•! Assessed value has declined

•! 2009 taxes $95 less than 2008 taxes

Average Home

$250,000

Questions?

Please email: [email protected]

Financial Planning

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