SENATE HOUSE FOUNDATION SCHOOL PROGRAM TARGET REVENUE PRORATION PROPERTY VALUE COMPRESSION RECAPTURE...
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Transcript of SENATE HOUSE FOUNDATION SCHOOL PROGRAM TARGET REVENUE PRORATION PROPERTY VALUE COMPRESSION RECAPTURE...
SENATE
HOUSE
FOUNDATION SCHOOLPROGRAM
TARGET
REV
ENUE
PRORATIO
NPROPERTYVALUE
COMPRESSION
RECAPTURE 22:1
EOC
TRE
AUSTERITY
Piecing Together a New Plan
2011-2012 Board Budget Study Session #1May 16, 2011
2
Agenda
Legislative Update• Budget Bills• Fund Formula Bills
Annual Benchmarking Update
Preliminary General Fund Budget
• Expenditure Increases and Reductions• Education Jobs Funding
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2
1
State Budget Bill Update
3
Statewide Estimates 2010-
2011 House Senate
House/Senate
Difference
Foundation Program $36.0B $33.2B $37.0B ($3.8B)
Facility Funding 1.2B 1.6B 1.6B -0-
SSI & At-Risk Programs 4.4B 3.3B 3.6B ($0.3B)
Tech & Instruct Materials 1.2B 0.3B 0.7B ($0.4B)
Other 7.3B 7.0B 7.1B ($0.1B)
TOTALS $50.1B $45.4B $50.0B ($4.6B)
Proposed Budgets vs. 2010-2011 ($4.7B) ($0.1B)Overall, the Senate’s version of the 2012-2013 biennial budget provides $4.6B more in education funding than the House’s budget. Although it does not provide funds for enrollment growth or additional hold-harmless for declining property value, it provides nearly as much total funding as is estimated for the 2010-2011 biennium.
House & Senate Budgets
4
House & Senate Budgets
Statewide Estimates TEA
Versus House
Versus Senate
2010-2011 Budget $50.1B
New Enrollment 1.8B
Hold-Harmless for Property Value Decline 1.0B
MINIMUM FOR 2012-2013
$52.9B ($7.5B) ($2.9B)
(14.2%) (5.5%)
Difference from Minimum Need
The Texas Education Agency requested nearly $55B for the biennium. If the only changes made to the 2010-2011 budget were minimal increases for new enrollment and hold-harmless for property value decline, the minimum need for the 2012-2013 biennium would be $52.9B. The House and Senate versions of the budget fall $7.5B and $2.9B short of that mark, respectively. 5
Formula Funding BillsHouse Version
6
Under current law, increases to Weighted Average Daily Attendance would increase State Funding by $7.7M. Decreases in property tax revenue would trigger an increase to State funding (via hold-harmless) of approximately $5M.
2010-2011 Revenue vs. 2011-2012
NEISD General Fund 2010-2011
2011-2012 Current
Law Difference
Property Tax Revenue $282.8M
$277.5M ($5.3M)
Other Local Revenue 4.4M 3.9M (0.5M)
State Revenue 188.9M 201.5M 12.6M
TRS Revenue 23.5M 23.5M 0.0M
Federal Revenue & Other 6.2M 5.6M (0.6M)
Total Revenue $505.8M
$512.0M
$6.2M
Difference from Current Law Revenue Estimate
7
Under House Bill 2485’s funding formula, NEISD will see a decline in revenue of $43.4M in 2012 compared to 2011. Revenue would drop another $3M in 2013 and $2M in 2014.
2010-2011 Revenue vs. 2011-2012
NEISD General Fund
2010-2011
2011-2012 HB
2485 Difference
Property Tax Revenue $282.8M
$277.5M ($5.3M)
Other Local Revenue 4.4M 3.9M (0.5M)
State Revenue 188.9M 151.9M (37.0M)
TRS Revenue 23.5M 23.5M 0.0M
Federal Revenue & Other 6.2M 5.6M (0.6M)
Total Revenue $505.8M
$462.4M
($43.4M)
Based on House Bill 2485
8
Compared to the current funding formula law, NEISD will lose nearly $50M in 2012, all in State revenue. The State’s share of total General Fund revenue would fall from 39% to 33%.
2011-2012 Effective Revenue Loss
NEISD General Fund
2011-2012
Current Law
2011-2012 HB
2485Differenc
e
Property Tax Revenue $277.5M $277.5M $0.0M
Other Local Revenue 3.9M 3.9M 0.0M
State Revenue 201.5M 151.9M (49.6M)
TRS Revenue 23.5M 23.5M 0.0M
Federal Revenue & Other 5.6M 5.6M 0.0M
Total Revenue $512.0M
$462.4M
($49.6M)
House Bill 2485 -- Difference from Current Law
9
Formula Funding BillsSenate Version
10
2010-2011 Revenue vs. 2011-2012
NEISD General Fund
2010-2011
2011-2012 SB22 Difference
Property Tax Revenue $282.8M
$277.5M ($5.3M)
Other Local Revenue 4.4M 3.9M (0.5M)
State Revenue 188.9M 164.8M (24.1M)
TRS Revenue 23.5M 23.5M 0.0M
Federal Revenue & Other 6.2M 5.6M (0.6M)
Total Revenue $505.8M
$475.3M
($30.5M)
Based on Senate Bill 22
Under Senate Bill 22’s funding formula, NEISD will see a decline in revenue of $30.5M in 2012 compared to 2011. Revenue would remain relatively flat thereafter.
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2011-2012 Effective Revenue Loss
NEISD General Fund
2011-2012
Current Law
2011-2012 SB22
Difference
Property Tax Revenue $277.5M $277.5M $0.0M
Other Local Revenue 3.9M 3.9M 0.0M
State Revenue 201.5M 164.8M (36.7M)
TRS Revenue 23.5M 23.5M 0.0M
Federal Revenue & Other 5.6M 5.6M 0.0M
Total Revenue $512.0M
$475.3M
($36.7M)
SB 22 -- Difference from Current Law
Compared to the current funding formula law, NEISD will lose nearly $37M in 2012, all in State revenue. The State’s share of total General Fund revenue would fall from 39% to 35%.
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Formula Funding BillsWhat if None Passes?
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If the Legislature passes an appropriations bill but does not change the Foundation School Program’s funding formulas to distribute only the amount appropriated, the Commissioner of Education could:
• Fully fund 2011-2012, and prorate 2012-2013• Needs approval by the Governor
• Legislative Budget Board would propose to the next Legislature (January 2013) to take shortage from Rainy-Day to finish out 2012-2013
Budget Bill but No Funding Bill?
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Commissioner’s
Proration
Toolkit
Sources: Legislative Budget Board; Moak, Casey & Associates
• If the 83rd Legislature denies the January 2013 Rainy-Day request, Commissioner stops payments to districts in May 2013
• From an total allocation perspective, this hurts property-rich districts since proration is based on available property tax base
• From a cash perspective, however, this disproportionally hurts property-poor districts that have their State aid payments spread evenly throughout the year
• Property-wealthy districts receive more State funds in September & October, and live off property tax revenue beginning in January
•Proration is a delay, not a reduction• Statute mandate any cut in 2013 would have to be added to
the 2014-2015 biennium budget
Budget Bill but No Funding Bill?
15Sources: Legislative Budget Board; Moak, Casey & Associates
From Texas Education Code §42.2516
“The commissioner shall determine the state compression percentage for each school year based on the percentage by which a district is able to
reduce the district's maintenance and operations tax rate for that year, as compared to the district's adopted maintenance and operations tax rate
for the 2005 tax year, as a result of state funds appropriated for distribution under this section for that year from the property tax relief
fund established under Section 403.109, Government Code, or from another funding source available for school district property tax relief.”
Budget Bill but No Funding Bill?
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The Commissioner of Education has the authority to change the
“compressed tax rate.”
Quote from Robert Scott:“Please don’t put me in that spot.”Source: TASA Capital Watch Alert
Tax Rate Compression
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• When the 79th Legislature lowered property taxes, they did not lower local property tax rates to $1.00.
• The Legislature lowered each district’s rate to 66.67% of it’s 2005 rate. Almost every district in the state taxed @ $1.50 at the time, so 66.67% compression = $1.00.
• If the State fails to provide adequate funding to districts, such that the total available revenue (local & state) per Weighted Average Daily Attendance is not comparable to pre-2006 amounts, then the commissioner must adjust the compression rate.
Sources: Legislative Budget Board; Moak, Casey & Associates
Tax Rate Compression
18
HYPOTHETICAL SITUATION
• Commissioner changes NEISD’s compression from 66.67% to 68%
• 68% X $1.50 = new $1.02 compression rate
• NEISD’s current tax rate is $1.04 ($1.00 compression + $0.04 enrichment pennies)
• If NEISD does raise it’s taxes by $0.02, the State will penalize NEISD by taking away approximately $4 million of Tier II State funding.
• Only 2¢ of our tax rate would be “golden pennies” instead of the 4¢ we now have (local tax rate only 2¢ above compressed rate).
General Fund Forecast
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• Reflects house version of budget and formula funding bills
• These reflect current “near-worst-case” scenario• Situation more grim if either (a) law to use Rainy-Day fund to
cover 10-11 biennial deficit or (b) law to delay August FSP payment do not pass.
• Does not yet reflect Education Jobs Fund• This will be addressed later in the presentation
• Significant Assumptions• Approximately 1,050 new students• Start-up costs for two new schools opening in August
2012• General Fund absorbs significant costs from State-killed
programs, such as Technology Allotment, Student Success Initiative, Adult Ed and shared service arrangement for Regional Day School for the Deaf
General Fund Forecast
20
(in millions)
2010-2011
Forecast
1st Year Chan
ge
2011–2012
Forecast
2nd Year
Change
2012–2013
Forecast
3rd Year Chan
ge
2013–2014
Forecast
Revenue $505.8($43.4
) $462.4 ($3.1) $459.3 ($2.0) $457.3
Expenditures 485.8 (16.8) 469.0 10.3 479.3 5.5 484.9
Increase (Decrease) to Fund Balance $20.0 ($6.6) ($20.0) ($27.5)
Beginning Fund Balance 71.9 91.9 85.3 65.3
Ending Fund Balance $91.9 $85.3 $65.3 $37.8
Months of Operating Fund Balance 2.4 2.3 1.7 1.0
Revenue/Student $7,606 ($760) $6,846 ($155) $6,691 ($134) $6,557
Expenditures/Student $7,305 ($361) $6,944 $39 $6,983 ($31) $6,952
General Fund ForecastBased on HB 2485
The revenue reductions based on HB2485 continue past the next biennium (into at least 2013-2014). Almost $27M in fund balance will be eroded over 2 years, and dramatically more in 2014 if the 2013 Legislature doesn’t increase funding.
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Expenditure Increases for 2011-2012
Costs to Absorb Educational Programs Losing Grant Funding $3,000,000
Set-aside for Repayment of QSCBs 1,700,000
Increased District Share of Health Insurance 1,795,000
Other Increases for New Schools, Inflation, Infrastructure 2,813,000
Contingency Allowance 2,500,000
Total Expenditure Increases $11,808,000
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Expenditure Reductions for 2011-2012
Central Office Positions Frozen/Eliminated (~52 FTEs, 6.2%) ($2,550,000)
Eliminate Retention Supplement (6,140,000)
Utility Savings (450,000)
Reduce Contract Days for Teachers > 187 days (250,000)
Central Office Department Budget Reductions (350,000)
Reduce Contract Days by 2 for Admin & Paras >190 days (577,000)
Total Before Campus Reductions ($10,337,000)
Campus Reduction Goals
Elementary School Teachers(130 FTEs, 6.4%) ($7,865,000)
Middle School Teachers(37 FTEs,3.8%) (2,173,000)
High School Teachers(59 FTEs, 4.6%) (3,551,000)
General Assistants & Clerical Admin – All levels(90 FTEs, 5.4%)
(2,716,000)
Campus Admin & Other Professionals – All Levels (25 FTEs, 3.7%)
(1,879,000)
Total Potential Campus Reductions ($18,184,000)
Grand Total Reductions ($28,521,000)23
Reductions to Teacher Staffing Levels
Current Allocatio
nReduction Goal
Resignees/
RetireesTo-Date Difference
Elementary School Teachers 2,030.7 130 100 (30)
Middle School Teachers 953.6 37 38 1
High School Teachers 1,284.5 59 63 1
Total 4,268.8 226 201 (28)
% of Current Allocation 5.3% 4.7%
Teacher Turnover Rate: 2005-2006
10.1%
2006-2007 11.7%
2007-2008 11.2%
2008-2009 10.4%
2009-2010 8.2%
If 2010-2011’s turnover rate is 8%, total teacher turnover would be 341.If 2010-2011’s turnover rate is 6%, total teacher turnover would be 255.
24
Cost Avoidances for 2011-2012
Eliminate Pay Raise $9,280,000
Not Adding Teaching Staff to Accommodate Enrollment Growth 4,060,000
Reduce Contingency Allowance & AARs 2,000,000
Total Cost Avoidance $15,340,000
Total Reductions from 2010-2011 Actual $28,521,000
Total Cost Avoidances for 2011-2012 15,340,000
Net Change Compared to Planned 2011-2012 Cost Structure $43,861,000
An earlier example showed that HB2485 revenue compared to current law revenue for 2012 was nearly $50M lower. Similarly, in addition to expenditure reductions of $28.5M resulting from this legislation, NEISD is planning $15.3M in cost avoidances. This represents planned expenditure growth that will no longer occur. The total change to NEISD’s anticipated cost structure due to the under-funding of education is $43.9M.
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Education Jobs Bill
26
• North East ISD was allocated $10,594,000
• Funds must be used for compensation and benefits of school-level employees for the following allowable purposes:
• To retain, recall, or rehire employees• To restore reductions in salaries, including furlough days
• Funds were intended to be distributed for use in 2010-2011
• All Federal guidance refers to 2010-2011• Currently reviewing TEA guidance for proper use in 2011-2012• Update will be provided to Board of Trustees on May 23, 2011
Education Jobs Bill
27
Benchmarking Update
28
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Inst
ruct
ion
Libra
ry S
vcs
Staff
Dev
Inst
r Ldrs
hp
Schl L
drshp
Counselin
g
Social
Work
Health
Svc
s
Transp
ortatio
n
Extra
curri
cula
r
Gener
al A
dmin
Mai
ntenan
ce
Securit
y
Data
Prcsg
Total
-
10
20
30
40
50
60
70
80
90
100
Ra
nk
wit
hin
To
p 1
00
NEISD vs. 100 Largest Texas ISDsGeneral Fund Expenditures per Student
North East ISD ranked 75th out
of the 100 largest Texas ISDs for per
Student spending for
2009-2010. (25 districts spent more
per student) NEISD spent
$250 per student more
than the weighted
average of the group, a
difference of 3.5%.
30
State Peer Group2009-2010 Selected Demographics
District Enrollment
Wealth/ WADA EDS % Target
Revenue
Arlington 63,385 $267,494 59.8% $5,003
Conroe 49,323 $337,689 35.6% $5,463
Fort Bend 69,066 $288,134 35.2% $5,228
Garland 57,654 $193,456 57.2% $4,999
Katy 58,444 $284,551 29.1% $5,602
Klein 44,695 $241,173 36.2% $5,160
Lewisville 50,664 $391,246 25.6% $5,842
Northside 91,464 $292,113 50.3% $5,382
Round Rock 42,777 $424,603 28.7% $5,981
Peer Group Average 58,608 $297,224 41.2% $5,380
North East 65,217 $357,700 42.8% $5,704
31
NEISD vs. State Peer GroupGeneral Fund Expenditures per Student
$414$202North East ISD spent $414
more than the average of our
peer group, mainly in the
areas Instruction,
Staff Development,
School Leadership and Maintenance.
$(80)
$(60)
$(40)
$(20)
$-
$20
$40
$60
$80
$100 $202
$20
$48
$0
$46
($12)
$27 $25 $21 $10
$25
$59
$2
($59)
$414 Dollars Spent per Student Variance
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Inst
ruct
ion
Libra
ry S
vcs
Staff
Dev
Inst
r Ldrs
hp
Schl L
drshp
Counselin
g
Social
Work
Health
Svc
s
Transp
ortatio
n
Extra
curri
cula
r
Gener
al A
dmin
Mai
ntenan
ce
Securit
y
Data
Prcsg
Total
(60%)
(50%)
(40%)
(30%)
(20%)
(10%)
(0%)
10%
20%
30%
40%
50%
60%
5%
18%
54%
0%
10%
(4%)
209%
32%
9% 7%
17%
8%3%
(52%)
6%
% Difference in Student Spending
NEISD vs. State Peer GroupGeneral Fund Expenditures per Student
Although North East ISD spent $202 more for
instruction than our peer group average, that
represents only a 5% difference.
Alternatively, NEISD spent
209% more than our peer
average on Social Work
Services, but that represents
only $27 per student.
209%
33
NEISD vs. State Peer GroupFunction 11 - Instruction
General Fund Only NEISD State Peers Difference %
Difference
Function 11 per Student $4,665.7 $4,463.5 $202.2 4.5%
Payroll as a % of Total 96.3% 96.9%Payroll makes up
almost all Function 11 costs!
Student / Professional FTE 15.43 15.36 (0.07) (0.4%)
Student / Para FTE 103.88 103.60 (0.28) (0.3%)
Salary / FTE – Professional $55,422 $52,951 $2,471 4.7%
Salary / FTE – Para $18,239 $18,509 ($270) (1.5%)Compared to our peers, NEISD has similar student-to-staff ratios, and similar costs for instructional assistants. NEISD pays 4.7% higher salaries for professional instructional staff.
34
NEISD vs. State Peer GroupFunction 13 – Curriculum & Staff Development
General Fund Only NEISD State Peers Difference %
Difference
Function 13 per Student $137.4 $89.2 $48.2 54.0%
Payroll as a % of Total 82.1% 80.2% 1.9%
Student / Professional FTE 835.0 2,128.9 1,293.9 60.8%
Student / Para FTE 5,176.0 10,468.9 5,292.9 50.5%
Salary/ FTE – Professional $67,912 $80,921 ($13,009) (16.1%)
Salary / FTE – Para $32,632 $31,161 $1,471 4.72%
Compared to our peers, NEISD has significantly lower ratios for staff devoted to curriculum and staff development. TEA data reporting standards do not allow for a comparison of what positions each district codes to this function. For NEISD, it comprises mostly deans.
35
NEISD vs. State Peer GroupFunction 23 – School Leadership
General Fund Only NEISD State Peers Difference %
Difference
Function 23 per Student $481.3 $435.7 $45.6 10.5%
Payroll as a % of Total 96.2% 98.0%Payroll makes up
almost all Function 23 costs!
Student / Professional FTE 315.4 309.5 (5.9) (1.9%)
Student / Para FTE 214.2 212.0 (2.2) (1.0%)
Salary / FTE – Professional $83,736 $77,054 $6,682 8.7%
Salary / FTE – Para $25,410 $23,675 $1,735 7.3%Compared to our peers, NEISD has similar student-to-staff ratios in school administrative positions. NEISD pays 8.7% higher salaries for professional administrative staff and 7.3% more in paraprofessional staff.
36
NEISD vs. State Peer GroupFunction 33 – Health Services
General Fund Only NEISD State Peers Difference %
Difference
Function 33 per Student $104.1 $78.8 $25.3 32.1%
Payroll as a % of Total 95.5% 97.7%Payroll makes up
almost all Function 33 costs!
Student / Professional FTE 875.4 902.4 27.0 3.0%
Student / Para FTE 1,015.8 3,885.5 2,869.7 73.9%
Salary / FTE – Professional $55,380 $51,534 $3,846 7.5%
Salary / FTE – Para $18,816 $21,244 ($2,428) (11.4%)Compared to our peers, NEISD has a similar student-to-staff ratio for professional health staff (i.e., nurses). NEISD has a significantly lower ratio for paraprofessional health staff. TEA reporting standards do not allow for detail of the types of paraprofessional positions at our peers; for NEISD this is mainly clinic assistants.
37
NEISD vs. State Peer GroupFunction 51 – Facilities Maintenance & Operations
General Fund Only NEISD State Peers Difference %
Difference
Function 51 per Student $763.7 $704.4 $59.3 8.4%
Payroll as % of Budget 57.8% 48.4% 9.4%
Utilities as a % of Budget 25.6% 33.8% (7.2%)
Payroll Cost per Student $433.7 $324.3 $109.3 33.7%
Student / Auxiliary FTE 93.5 138.7 45.2 32.6%
Salary / FTE – Auxiliary $29,450 $27,792 $1,658 6.0%
Utilities Cost per Student $195.3 $237.8 ($42.4) (17.8%)
Compared to our peers, NEISD has a lower student-to-staff ratio in custodial and maintenance positions. NEISD pays 6.0% higher salaries for auxiliary staff. NEISD has a significant savings in utilities compared to our peers.
38
State Peer GroupSpending vs. Target Revenue
DistrictTarget
Revenue/WADA
Operating Costs/WADA
Ratio of Costs to Target
M&O Tax Rate
Arlington $5,003 $5,661 113.1% $1.0400
Conroe $5,463 $5,524 101.1% $1.0400
Fort Bend $5,228 $6,012 115.0% $1.0400
Garland $4,999 $5,444 108.9% $1.0400
Katy $5,602 $6,185 110.4% $1.1266
Klein $5,160 $5,556 107.7% $1.0400
Lewisville $5,842 $6,458 110.5% $1.0400
Northside $5,382 $5,957 110.7% $1.0400
Round Rock $5,981 $6,256 104.6% $1.0400
Peer Group Average $5,380 $5,896 109.6% $1.0496
North East $5,704 $6,227 109.2% $1.0400
39
June 13 – Call for Public Hearing
Upcoming Meetings
May 23
June 27 – Public Hearing
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Questions?