1

Understanding Princeton

School Finances

Princeton BOE Finance Committee

Princeton Public Library

May 14, 2018

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Outline of Discussion

• Financial Role of the Board and Others in Financial Decision-Making

• School Tax Overview/Tax Impact

• Operating Budget

• Our Schools – What Taxes Support

• Further Information

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The Financial Role Of The Board

10 elected community volunteers

• Ensure the financial integrity of the district by providing a “thorough and efficient”

education at a price the community can afford

Finance Committee – 4 Board members, reappointed annually, who

recommend to the full Board how best to:

• Develop policies to ensure strong financial oversight and integrity

• Accept yearly Comprehensive Annual Financial Report (CAFR)

• Approve corrective action plan, if any, and monitor progress

• Review and approve/reject any potential contract or bid

• Enhance financial transparency and public communication

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Others Involved in Financial Decision-Making

Community:

• Taxpayers

• Municipal Government

NJ Department of Education:

• Commissioner

• Executive County Superintendent

Princeton Public Schools:

• Board of Education

• Superintendent

• Business Administrator/Treasurer

• Outside Auditors

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2017 Princeton Property Taxes = $161M

Source: 2017 Princeton Budget Newsletter, PPL CFAC presentation.

Princeton Public Schools

48%

Mercer County 29%

Municipality of Princeton

21%

Open Space 2%

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2017 School Tax: Two Separate Levies = $78.6M

General Fund Levy ≅ $73.1M

• Funds annual operating budget

• Subject to 2% cap with waivers for

pension, enrollment and certain

healthcare costs

Debt Service Levy ≅ $5.5M

• Funds long-term capital projects

• Approved by taxpayers via referendum

• $22.2M debt outstanding, paid off by 2023

General Fund (93%)

Debt Service (7%)

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Flow Chart: From Property Taxes To School Expenses – 2017

$ Millions & %

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Calculating the 2018 School Tax Levy

2017-18 TOTAL School Tax Levy:

$73.1M General Fund Levy

+$5.5M Debt Service Levy

= $78.6M

2018-19 General Fund Levy:

($73.1M x 1.02) + NJ State waivers:

$1.1M for rising enrollment

+$0.6M from a “banked waiver” (last year before it expired)

= $76.2M

2018-19 TOTAL School Tax Levy:

$76.2M General Fund Levy

+ $5.2M Debt Service Levy

= $81.4M*

*Actual tax levy of $80.0M reflects split calendar year: 50/50 of current/prior year rate.

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Taxpayer Impact

• Actual 2018 total school levy of $80.0M

• Tax rate increases from 1.101 to 1.120 per $100 assessed property value*

– Princeton 2018 tax base (ratables) of $7,129M**

– Tax base increased 2% from 2017 – 2018, which means tax levy shared across more

total assessed value

• $9,375.54 for average assessed home/year ($837,074)

• Increase of 1.73% or $159/average home over 2017

*estimate provided by PPS

**2018 ratables provided by Princeton tax assessor

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2018 School Tax Levy Funds 85% of Total Operating Budget

Tax Levy85%

Cranbury Tuition6%

State Aid 5%

Fund Balance3%

Other1%

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Debt Service Levy Pays for Long-Term Debt

2001 bonds – PAC, PHS arts wing, JW & 4 elementary additions, renovations, JW pool

• $16.4M long-term debt outstanding (@4%)

• 2018/19 principal = $3.8M, interest = $354,800

• Total amount approved = $81.5M (equivalent to $115M today)*

• Amount bonded = $60.9M (taxpayers paid less than approved)

• Matures 6/30/22

2012 bonds – JW Learning Commons, auditorium and other upgrades, generator,

windows and other District maintenance projects

• $5.8M long-term debt outstanding (@1.25%)

• 2018/19 principal = $1.1M, interest = $45,475

• Total amount approved & bonded = $11M

• Matures 6/30/23

*Bureau of Labor Statistics calculator

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2018 Operating Budget: How It’s Spent -

Non-Discretionary vs. Discretionary Expenses

Non-Discretionary Costs – 85%

• Salaries 57%

• Health Benefits 12%

• Charter School 7%

• Other (e.g. insurance) 8%

Non-Discretionary Costs: Salaries57%

Non-Discretionary Costs: Health Benefits

12%

Non-Discretionary Costs: Charter School

8%

Other Non-Discretionary8%

Discretionary Cost15%

Discretionary Costs – 15%

• Student Services/SE 6%

• Transportation 3%

• School Budgets 2%

• Facilities & Maintenance 1.4%

• Technology 1.2%

• Curriculum & Instruction 1%

• Athletics 1%

• Other Central Office 0.7%

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Cost Drivers: Increasing Enrollment

Source for enrollment, FTE teaching staff - 2017 CAFR Schedule J-17, except 2018 = 361 (PPS)

352 354 324 328 344

3,366 3,340 3,378 3,4223,553

3,763

2008 2010 2012 2014 2016 2018

Enrollment vs. Teaching Staff

Teaching Staff Enrollment

+ 12%

increase in

enrollment

+2.3% increase

in

FTE teaching

staff

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Cost Drivers: Diversity Of Needs

State Aid Formula adds additional “weights” to reflect increased costs of educating a variety of students:

Base = 1.0 (cost of educating an elementary school student)

Additional weights:

Middle School = .04

High School = .16

At-Risk Factors:

Free/Reduced Lunch = .42

English as Second Language = .46

Both = .56

• For 2018-19, for State Aid and waiver purposes:

• NJ Dept. of Education calculated Princeton’s increased student population as 196 students

• 196 = 137 actual students + 59 additional equivalent students, due to the weights

State Aid also pays for 2/3rds of most of district’s state-determined special education costs:

• Because State uses the average classification percentage across all districts, districts like Princeton, who provide services to a greater percentage of their students, are underfunded

When comparing districts, consider that student population diversity impacts educational costs

For further information, see: New Jersey School Board Association, "School Finance 101," available at: https://www.njsba.org/news-information/parent-connections/school-finance-101/

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Cost Drivers: Salaries – 57% = $51.6M

Contractual Obligations

• Negotiated contracts with three labor unions – PRESSA, PREA, PAA

• Annual increases of 2.63%

• All contracts continue through June, 2020

• Recent negotiations were open, amicable and student-focused

Additional costs:

Actual salary/pay expenses rose by 4.83% over 2017/18 due to:

• Staff receipt of advanced degrees

• New hires required for rising enrollment

• Increase in aides for instruction, special education

• Retirement payouts

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Cost Drivers: Health Benefits – 12% = $10.9M

6,737

7,892

8,9309,275

9,868

10,900

2008 2010 2012 2014 2016 2018

Health Benefit Costs 2008-2018($ Millions)

Source: PPS Administration, health benefit costs net of staff contributions

+62% increase

over 10 years

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Cost Drivers: Charter Tuition – 7% = $6.4M

2,664

4,431 4,4834,729

4,907

6,352

2008 2010 2012 2014 2016 2018

Charter School Tuition 2008-2018($ Millions)

+ 58%

increase in

tuition over 10

years

Source of data: 2017 CAFR Schedule B-2

Many districts, like Millburn, Montgomery, and West Windsor-

Plainsboro, do not have charter schools, which impacts cost

comparisons

(per head tuition approximately $15,300)

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2018 Operating Budget - Process

Budget Workshop – March 6

& 13

Board Approved Tentative Budget –March 20

Tentative Budget

Submitted to County – March

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Budget Feedback & Adjust-

ments, BOE

Meeting & After if

Possible

Public Hearing/

Final Board

Approval – April 24

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2018 Operating Budget - Challenges

2018-19 Budget – General Fund of $76.2M

• No new staff included (rising enrollment)

• Health benefit increase of only 0.9% budgeted

• State funding level not final– may change once State Budget adopted

Longer Term

• Increasing enrollment/space needs

• Increasing salary costs above 2%

• Increasing health benefit costs

• Maintenance costs of aging facilities

• Impact of projected decrease in Cranbury students attending high school

• Impact of the Princeton Charter School expansion by 76 students

• Uncertain fiscal and political environment at both the state and federal levels

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Princeton Public Schools – What Taxes Support

Among best public school districts in NJ and the nation (US News 2018, Niche 2017)

PPS available to any child residing in Princeton:

• 6 schools, including PHS; JW Middle School; 4 neighborhood elementary schools

• Over 3700 diverse students, pre-K to Grade12

– 54% White; 19% Asian; 14% Hispanic; 7% African American, 6% multiracial*

– 22% speak a language other than English at home (more than 50 languages total)

– 5% of students are English Language Learners

– 16% are students with special needs (20% if include students with 504 plans)

– 13% are from low-income families (free/reduced school lunch eligible)

• 755 staff

– Student/teacher ratio average of 11:1

– 13 years average teaching experience

– More than 72% have advanced degrees

– Last year, 44% of new staff hires were educators of color

*2017/18 NJ DOE Enrollment District Reported Data

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A Wide Range of Offerings at 4 Elementary & 1 Middle School:

Four neighborhood elementary schools

• 2 offer pre-K for all families

• All offer full-day Kindergarten for all families

• All elementary students begin Spanish no later than 2nd grade

• 1 elementary school offers award-winning Dual Language Immersion

• All schools offer weekly art, music, & library instruction,

A middle school for all

• Offering 3 world languages: Spanish, French, and Mandarin

• Wide array of after-school sports and clubs

• Students are involved in drama, video production, art, band, choir, orchestra

In addition, taxes support tuition for 422 students at Princeton Charter School (K-8)

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A Comprehensive Range of Options at Princeton High School

Rigorous, wide-ranging course offerings

• 98% graduation rate

• 270 course offerings

• 70% of students take at least 1 accelerated/AP class

• 89% of students taking an AP exam score 3 or higher

• 6 foreign languages at PHS

• Designated as a NJ Model School in the Arts

• Students have option to take courses elsewhere, including vocational courses, Mercer

County Community College & Princeton University

• Among top public high schools in nation – U.S. News

Rich range of extracurricular offerings

• Over 100 clubs and 40 community service groups

• Over 25 sports programs and teams at the freshman, JV, and varsity levels

• No student denied participation due to family’s inability to pay

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Further Information

Attend/watch BOE meetings on YouTube

Experience school events – concerts, plays, athletic events

Be involved at the local, state, and federal levels

Learn more

– 2018-19 Budget: http://princeton.ss16.sharpschool.com/district/about_us/board/

– 2017-18 User Friendly Budget: http://www.nj.gov/education/finance/fp/ufb/

– June 30, 2017 CAFR (audited financials – 2 year delay):

http://www.nj.gov/education/finance/fp/cafr/search/17/4255.pdf

– Referendum information:

http://www.princetonk12.org/district/about_us/facilities_referendum/

– New Jersey School Board Association, "School Finance 101," available

at: https://www.njsba.org/news-information/parent-connections/school-finance-101/

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Princeton Public Schools Mission

Our Mission

Preparing all

students to lead lives

of joy and purpose

as knowledgeable,

creative, and

compassionate

citizens of a global

society.

EVERY CHILD

KNOWN• Relationships

• Differentiated

Learning

• Community

• Homework

• AP Options

• Time management

• Mental health

• Nutrition/drugs, etc.

WELLNESSEnhancing Balance

• Vision & expectations

• Internal/external

• Athletics

• Alumni & new families

• Community, crisis, board

CONNECTEDNESSCommunication & Caring

• Problem-based learning

• Technology• Assessment

• Mindset

• Ideas to disrupt

INNOVATIONExploring New Ideas

• Cultural

responsiveness

• Outreach

• Equity and access

• Early literacy

ACHIEVEMENTClosing the Gap