Financial ReviewSouth Kitsap School District

Looking Back to 2012-2013 Fiscal Year

What are the Financial Results of Fiscal Year 2012-2013?

Recap Fiscal Year 2012-13F-196 Report

Total Revenue 87,913,248$

Total Expenditures 88,613,705

Other Sources (Uses) (153,932)

Excess of Revenues and Other Sources Overunder) Expenditures and Other Uses-Budget Basis (854,389)

Beginning Fund Balance 5,715,975

Ending Fund Balance 4,861,586$

Fiscal Year 2012-13 Recap• Began the fiscal year with $634,025 less in

reserves than projected• Less Student Enrollment than Projected

– 116 AAFTE below projections or $592,775• The reliance of reserves to meet on-going

expenditures $1,600,000• Increased costs associated with unfunded

mandates – Special Education

Recap Fiscal Year 2012-13Revenue by Source

Budget Actual VarianceLOCAL SUPPORT 18,521,607 18,606,101 84,494 LOCAL NON-TAX 2,498,574 2,487,165 (11,409) STATE, GENERAL PURPOSE 49,017,458 48,501,645 (515,813) STATE FUNDS, SPECIAL PURPOSE 11,142,303 11,478,747 336,444 FEDERAL FUNDS, GENERAL PURPOSE 450,000 498,307 48,307 FEDERAL FUNDS, SPECIAL PURPOSE 8,628,329 6,340,409 (2,287,920) REVENUES FROM OTHER AGENCIES - 874 874 OTHER FINANCING SOURCES 5,000 5,629 629 Total Revenue 90,263,271 87,918,877 (2,344,394)

Recap Fiscal Year 2012-13Revenue by Source

LOCAL SUPPORT21%

LOCAL NON-TAX3%

STATE, GENERAL PURPOSE55%

STATE FUNDS, SPECIAL PURPOSE

13%

FEDERAL FUNDS, GENERAL PURPOSE

1%

FEDERAL FUNDS, SPECIAL PURPOSE7%

REVENUES FROM OTHER AGENCIES0%

OTHER FINANCING SOURCES0%

Recap Fiscal Year 2012-13Expenditure by Program

Budget Actual VarianceRegular Instruction 49,020,692.00 46,996,165.00 2,024,527.00 Special Education 12,492,582.00 12,811,330.00 (318,748.00) Vocational Education 4,382,172.00 4,346,578.00 35,594.00 Compensatory Programs 3,967,803.00 3,262,340.00 705,463.00 Other Instructional Programs 2,156,929.00 496,080.00 1,660,849.00 Community Services 491,227.00 471,326.00 19,901.00 General Support Services 12,687,016.00 12,374,996.00 312,020.00 School Food Services 3,493,958.00 3,099,492.00 394,466.00 Pupil Transportation 4,588,432.00 4,755,397.00 (166,965.00) Total Expenditures 93,280,811.00 88,613,704.00 4,667,107.00

Recap Fiscal Year 2012-13Expenditure by Program

Regular Instruction53%

Special Education14%

Vocational Education

5%

Compen-satory

Programs4%

Other In-structional Programs

1%

Pupil Trans-

portation5%

Community Services

1%General Support Services

14%

School Food Services3%

2006-07 Actual 2007-08 Actual 2008-09 Actual 2009-10 Actual 2010-11 Actual 2011-12 Actual 2012-13 Actual0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

South Kitsap School DIstrictAnalysis of Exp by Activity

* Staff De-velopment re-classed to Teacher Sup-port in 2011/12

Why do we need Fund Balance?

• To Cover Cash Flow needs – Current reserve of $4.8 million covers approximately 20 days of annual expenditures. Available Reserves covers 16 days of annual expenditures

• Emergency Resources• Uncertainty (Legislative, Voter Approval)• Evidence of Financial Condition• Board Policy of 3.0% growing to 5.0% by 2016-

17

Fund Balance 5-Year HistoryFiscal Year 2013-14

Budgeted2012-13 2011-12 2010-11 2009-10

Total Fund Balance

$3,577,361 $4,861,586 $5,715,975 $7,756,636 $8,621,546

$ Change From Prior Year

-1,284,225* -$854,389 -$2,040,661 -$864,910 1,289,011

% Change From Prior Year

-26.5%* -14.98% -26.30% -10.00% 17.60%

% of Revenue

3.74% 5.5% 6.5% 8.7% 9.3%

* 2013-14 Budget assumes no carryover and all funds will be fully expended.

Fund Balance Per StudentFiscal Year 2013-14

Budgeted 2012-13 2011-12 2010-11 2009-10South Kitsap $393 $509 $597 $802 $872

Districts5,000-10,000 AAFTE

Unknown Unknown $970 $906 $871

WashingtonState Unknown Unknown $1,044 $996 $975

Fund Balance Subcomponents

• Non-spendable• Restricted• Assigned• Committed• Unassigned

Fund Balance by SubcomponentAs a Percent of Revenues

Description $% of

Revenue $% of

Revenue $% of

Revenue $% of

RevenueNonspendable 435 0.50% 449 0.51% 434 0.50% 409 0.50%Restricted - 0.00% 421 0.48% 416 0.50% 1,372 1.50%Assigned 100 * 0.10% 1,765 2.00% 1,481 1.70% 1,234 1.40%Committed 2,874 3.00% 2,198 2.50% 2,199 2.50% 2,233 2.50%Unassigned 168 0.20% 29 0.03% 1,186 1.30% 2,509 2.80%Total Fund Balance 3,577 3.80% 4,862 5.52% 5,716 6.50% 7,757 8.70%* Assigned based on CBRC Recommendation

2013-14 2012-13 2011-12 2010-11

Budgeted Reserves Compared to Actual

Ending BalanceAdopted Budget August 31, 2013

Actual ReservesAugust 31, 2013 Difference

Non-spendable 435,000 448,631 13,631

Restricted 200,000 420,999 220,999

Committed 2,304,065 2,197,831 (109,234)

Assigned 1,298,596 1,764,936 466,340

Unassigned 168,440 29,190 (139,250)

Total $ 4,406,101 $4,861,586 $ 455,485

South Kitsap School DistrictFund Balance Reserve

Components

Non-Spendable Inventory9%

Restricted Revenue9%

Board Poliy45%

Other Carryover36%

Unassigned1%

South Kitsap School DistrictFund Balance Reserve

Componentsas of August 31, 2013

Cash Balances

• Board EL-7 Budget Planning – Requires cash balances to be equal to or greater than 35 days of cash on hand for operating expenditures by the 2016-17 budget proposal

• Currently have 20 days Cash on hand at $4.7 million

• Thirty-five days cash on hand at August 31, 2013 equals $8.5 million

- 500,000.00

1,000,000.00 1,500,000.00 2,000,000.00 2,500,000.00 3,000,000.00 3,500,000.00 4,000,000.00 4,500,000.00 5,000,000.00 5,500,000.00 6,000,000.00 6,500,000.00 7,000,000.00 7,500,000.00 8,000,000.00 8,500,000.00 9,000,000.00 9,500,000.00

Cash BalanceSeptember 2012 - August 2013

Cash Balance

35 Days Cash = $8.5 million

Looking Forward

What’s the Impact to This Year’s 2013-2014 Budget

Student Enrollment ForecastCurrently -154 Average Annual FTE

2013-2014 Budget AAFTEKindergarten 323

Grades 1-6 4,174

Grades 7-9 2,188

Grades 10-12 2,245

Running Start 157

Total AAFTE 9,087

2013-14 YTD AAFTEKindergarten 331

Grades 1-6 4,203

Grades 7-9 2,151

Grades 10-12 2,097

Running Start 151

Total AAFTE 8,933

Sept Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June 8,750.00

8,800.00

8,850.00

8,900.00

8,950.00

9,000.00

9,050.00

9,100.00

9,150.00

9,200.00

9,250.00

9,300.00

9,350.00

9,400.00

9,450.00

9,500.00

9,550.00

9,600.00

9,650.00

South Kitsap School DistrictEnrollment FTE

2010-11 - 2013-1410-11 Ac-tual11-12 Ac-tual12-13 Ac-tual13-14 Budget Projection13-14 Pro-jectd Actual

2013-14Budget AAFTE

Projected9,087

2013-14 Pro-jected Actual

AAFTE 8,933

2013-14 Budget Impacts

• Loss of funding from decrease in budgeted students (based on 154 students @ $5,498 = $846,650

• Mitigated loss of approximately 154 AAFTE by reallocating current certificated and classified staff resources to areas of need versus hiring new positions

• The Adopted 2013-2014 Budget is balanced and does not use reserves except for approved carryover budgets (unspent) from the 2012-13 Fiscal Year

• The Board Reserve will be in Compliance with EL-7 at 3% at August 31, 2014

South Kitsap School District – Budget Challenge (Gaps) History

2006-2007 $1.1 million

2007-2008 $1.7 million

2008-2009 $2.9 million

2009-2010 $6.8 million

2010-2011 $5.8 million

2011-2012 $7.2 million

2012-2013 $1.5 million

2013-2014 $3.3 million

Potential Future Budget Challenges ued)

• Unstable student enrollment• Build Board Designated Fund Balance from

3.0% to 5.0% by 2016-17 budget adoption• Build 35 days of cash on hand for operating

expenditures by 2016-17 budget adoption• Reduction of Federal Funding - Sequestration

– Could see additional reductions in all Federal Grants which includes Title I and Special Ed - Title VI-B Grants in 2014

Potential Future Budget Challenges(Continued)

• Compliance with State Mandates– Learning Assistance Program– High Poverty K-2 Class Size– 1080 Hours for 7-12 grade– How does the McCleary Decision impact budget?

Continued Budget Development Strategies

• Investing in our End Statements– Focusing on the success of the whole child

• Developing a new Community Budget Group of 25 individuals who will analyze the budget annually preparing a 3-5 year budget recommendation to the Board of Directors

• Identifying Efficiencies, Deferrals, Savings, Reductions and Revenue Enhancements

Continued Budget Development Strategies (Continued)

• Continued Clarity & Transparency– Beginning third year of detailed reports that

includes:• Adopted Budgets including the F195 Report• Monthly Enrollment Reports• Monthly Budget Status Reports• Monthly Warrants Paid• Annual Audit Reports

• Continued Resourceful and Responsible Fiscal Management

What’s Next?

• Continued Monthly Monitoring of Student Count• Work with Demographer to develop high medium

and low enrollment and average annual FTE projections for 2014-15 school year

• Actively Participate and Monitor Legislative Actions and its Impact to South Kitsap School District

• Identify Savings and efficiencies to build available resources for current and future years

• Develop 2014-2015 Budget strategies starting in November 2013

• Stay Informed

Questions