School District of Cadott Community

Preliminary Budget Hearing August 18, 2014

Budget Summary

The 2014-2015 Proposed Budget is based upon:

BALANCE

• • • • • • • • •

Balanced Initiatives

Elementary Building Renovation HORNET Pride Technology Updates The needs of the students with communities ability to pay Health Insurance Rate Cumulative Reductions of more than 15% from 3 years ago Past Security Initiatives – Cameras, Door Entry Access, etc. within existing District funds Refinancing of District Debt (2014-15) – Taxpayer Savings Taxing Under Allowable Revenue Limit Cost Per Student lower than Surrounding School Districts, CESA 10, and State

The purpose of the Annual Budget is to achieve educational objectives that will impact the future

.

The Annual Budget

• Is a financial plan based upon budget priorities throughout the year • Annual Budget adjustments are made for the final certification of general aid • The property tax levy to support the budget is submitted for consideration at the Budget Hearing

Budget Priorities

• Focus on balancing the needs of all stakeholders: students, staff, and community members to continue to deliver the best education possible. • Continue to assess health insurance cost in conjunction with the Health Insurance Committee to reduce costs.

• Implement policies and procedures that ensure fiscal responsibility.

• Continue to support our excellent food service that continues to offer nutritious quality meals and ensure those qualifying for free & reduced meals are provided with them.

• Continue district exploration of energy conservation methodologies

Budget/District Priorities

• Provide financial solvency by continuing to prioritize budget priorities that are in the long-term best interest of students and taxpayers.

• Maintain buildings and grounds using the district’s soon to be created ten year maintenance schedule as a repair timeline tool. • Address annual transportation replacement needs to ensure children’s safety • Continue to provide necessary Professional Development to teachers and support services.

• Continue evaluation of enrollment trends and develop long-range budget plans for the school district.

•

Budget Assumptions

District enrollment was estimated to remain flat from last year using the Revenue Limit September Third Friday Count methodology calculation – – Initial registration numbers (8/15/14) indicate a decline in enrollment It is assumed the district will have a net loss of 8 students to open enrollment • No significant program changes will be made in 2014-2015.

• Health Insurance cost will increase by approximately 10%. • No significant increases in Fuel Costs • No significant increases in Utilities • No significant increases in Operating Expenses

Budget Assumptions

• • • In January 2014, the school board directed administration to develop a budget capped by a 5.0% tax levy increase of which $54,000 will go to increased debt service payments and $139,732 will go into funds 10, 38, 39, & 80.

Although we expect to balance the budget during the school year, we are currently projecting a deficit of $574,688 to be covered by Fund Balance Reserve Changing enrollment and unanticipated expenses may require some additional use of fund balance.

• • • •

Fund Balance Reserve

The fund balance reserve is built up from years when there is more revenue than expenditures often a result of cutting staff or underspending the budget.

The fund balance is important for cash flow and unanticipated expenditures – A healthy fund balance is 15%-20% of total expenditures allowing the district to cover 2 months of Operating Expenses and an emergency.

– In the past, it was not enough to cover the cash flow in our district during the school year resulting in Short term borrowing up to $1 million and a Line of Credit with Citizens State Bank in Cadott costing over $10,000 Our current 2013-14 fund balance reserve is $1,664,418 million (about 13.5% of our total expenditures).

Our projected 2014-15 fund balance reserve will be $1,089,730 Million ( about 8.7% of our total expenditure )

Historical Fund Balance Reserve Trend

General Fund Balance As of June 30th Amount % of Previous 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 $ 2,239,936 $ 2,343,764 $ 2,094,630 $ 1,879,358 $ 1,879,358 $ 1,805,149 $ 1,563,977 $ 1,588,531 $ 1,668,694 $ 1,665,475 $ 1,089,730 134.49% 104.64% 89.37% 89.72% 100.00% 96.05% 86.64% 101.57% 105.05% 99.81% 65.43% $ Change $ 574,461 $ 103,828 $ (249,134) $ (215,272) $ $ (74,209) $ (241,172) $ 24,554 $ 80,163 $ (3,219) $ (575,745)

General Fund Reserve at end of June

$2 500 000 $2 000 000 $1 500 000 $1 000 000 $500 000 $ 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Amount

Total Budget

• • The total budget includes over 14 major funding categories and hundreds of “line items”.

The total budget for the school district in 2014 2015 is expected to be over $10,000,000.

Where does the Money Come From?

• Wisconsin School finance regulations specify the amount of dollars the district is permitted to raise from property taxes and general state aid. This amount is called the revenue limit.

Major Revenue

• •

Revenue is controlled by the state imposed revenue cap (1993). Revenue primarily consists of:

– Tax Levy (school property taxes) – State Aid (general and categorical) – Federal Aid (categorical) – Fund Balance Reserve (unspent designated dollars from previous years)

• • •

Revenue Limit

The revenue limit is based on a variety of factors with the greatest weight placed on student enrollment.

According to the state law, our school district could generate revenue of $10,773,298 million for funds under the revenue limit.

Despite the recent reductions in state aid, we are one of the few districts in the state that consistently spends below the revenue limit ( $3,142,711 million under projected in 2014-15).

2013-14 Top and Only School Districts Taxing Under the Allowable Revenue Limit By at least 1 Million Dollars Ranking by Dollar Amount Under Revenue Limit 5 6 7 1 2

3

4 9 10 11 12 13 14 15 16 District Name 2013-14 Top and Only School Districts Taxing Under the Allowable Revenue Limit Line 11: Revenue Limit with all Exemptions By at Least 1 Million Dollars Line 12: General Aid Certified Line 13: Allowable Levy (includes Computer Aid) Line 16: Low Revenue Ceiling Aid* Net Allowable Levy (includes Computer Aid) Taxing Under the Allowable Revenue Amount Hudson Madison Metropolitan

Cadott Community

Waupaca Norris D C Everest Area Campbellsport Galesville-Ettrick Sun Prairie Area Waterford Graded Stoughton Area Gresham School District Hortonville Melrose-Mindoro Menominee Indian $ 64,980,648 $ 27,002,681 $ 37,977,967 n/a $ 308,639,942 $ 53,802,373 $ 254,837,569 n/a

$ 10,358,937

$ 22,948,164

$ 5,406,131

$ 8,912,843

$ 4,952,806

$ 14,035,321

n/a

n/a $ 2,622,429 $ 287,604 $ 2,334,825 n/a $ 59,017,050 $ 37,017,621 $ 21,999,429 n/a $ 15,237,597 $ 6,110,525 $ 9,127,072 n/a $ 15,155,147 $ 8,506,582 $ 6,648,565 n/a $ 76,345,159 $ 39,090,425 $ 37,254,734 n/a $ 16,055,343 $ 6,100,288 $ 9,955,055 n/a $ 34,887,077 $ 15,112,938 $ 19,774,139 n/a $ 4,177,642 $ 1,641,613 $ 2,536,029 n/a $ 33,270,899 $ 18,354,515 $ 14,916,384 n/a $ 8,953,168 $ 4,817,116 $ 4,136,052 n/a $ 10,123,822 $ 6,411,667 $ 3,712,155 n/a $ 37,977,967 $ 12,373,976 $ 254,837,569 $ 9,073,440

$ 4,952,806 $ 2,771,613

$ 14,035,321 $ 2,702,005 $ 2,334,825 $ 2,329,825 $ 21,999,429 $ 1,668,207 $ 9,127,072 $ 1,614,026 $ 6,648,565 $ 1,600,000 $ 37,254,734 $ 1,482,728 $ 9,955,055 $ 1,343,000 $ 19,774,139 $ 1,275,000 $ 2,536,029 $ 1,272,180 $ 14,916,384 $ 1,247,765 $ 4,136,052 $ 1,163,206 $ 3,712,155 $ 1,162,155 Percent of Allowable Revenue 19.04% 2.94%

26.76%

11.77% 88.84% 2.83% 10.59% 10.56% 1.94% 8.36% 3.65% 30.45% 3.75% 12.99% 11.48% (DPI) 2013-14 Final Revenue Limit Calculation (8/17/2014)

• • • •

State Aid

State Aid is mostly dependent on enrollment, district property valuation and spending from the previous year.

2014-15 state aid (estimated) = $5.6 million State aid for our district in 2014-15 was projected to be higher than 2013-14, but due to declining enrollment and unspent 2013-14 budget allocation it is anticipated our state aid will be corrected by DPI to less than last year.

A higher percentage of state money continues to be directed to schools through levy credits (not equalized) and vouchers.

The School District of Cadott receives 94% of its money from two sources.

Projected Fund 10 Revenue Interdistrict (Wisconsin) 2% Interdistrict (Out of State) 0% Intermediate 1% Local Sources 25% State Sources 69% Other Revenue 0% Non-Revenue Sources 0% Federal Sources 3%

Where is the Money Spent?

Two different perspectives

•

Expenditures by Function

– Is the purpose for which the expenditure is made.

•

Expenditures by object

– Is the type of goods and services purchased.

Expenditures by Function

2013-14 Expenditures by Function Note: Fund 10 Expenditures only Facility Costs $403 4% Transportation Costs $591 6% Food & Comm Serv Costs $479 5% Instruction $5,914 56% Oper/Admin/Other $2 297 22% Pupil/Staff/Support $778 7%

Division of Expenditures by Object

• Wages and Benefits

Insurance & Judgements 2% Debt Retirement 0% Capital Objects 1% Non-Capital Objects 4%

67% Non-Salary 33%

Interfund Transfers 11% Fund 10 Expense by Object Other Expenses 1% Purchased Services 14% Salaries 45% Employee Benefits 22%

•

Reducing Expenditures

Previous expenditure reductions include: – Higher employee contributions for retirement and health insurance.

– Health insurance plan design changes.

– Reduction/elimination of Post Retirement Benefits – Reorganization/reduction in maintenance, administrative and special education staffing – Carrier change for school district insurances (auto, work comp, liability, property, etc.) – Elimination of short-term borrowing – Hiring less experienced teachers – Refinancing Callable Debt

Other Expenditures

•

Fund 73- Post Retirement Benefit Fund

Fund 73 was established as an irrevocable trust to account for post-employment benefits. Funds are invested with MidAmerica Administrative and Retirement Solutions. Below is an audited accounting of the trust fund: Balance 7-1-2013 $ 1,429,275.90 Revenue $ 120,839.89 Expenditures Balance 6-30 2014 $ (289,850.15) $ 1,260,265.64 Based on an actuarial study completed in June of 2014, the district's post-employment benefit trust is fully funded based on current retirees and current post-employment benefits offered to staff.

Other Expenditures

Fund 80 Report Fund 80 is used to support the summer recreation activities of the Cadott School District. Shown below is the audited accounting of Fund 80.

Summer Recreation Softball Summer Recreation Baseball Summer Recreation T-Ball Summer Recreation Supervisor Total Budgeted Expenses: $ 1,924.18 $ 2,314.44 $ $ 5,328.68 $ 9,567.30 Balance 7/1/2013 Revenue Expenses Balance 6/30/14 $ 8,513.73 $ 12,241.00 $ (9,567.30) $ 11,187.43 Tax Levy Fees Total Budgeted Revenue $ 8,290.00 $ 3,951.00 $ 12,241.00

What is a Levy Rate vs. a Mill Rate

• •

The District sets a percentage rate for taxes, called a levy rate , which is then calculated against the assessed equalized value of each homeowner’s property.

Mill rate is the amount of tax payable per dollar of the assessed value of each homeowner’s property.

Cadott’s School District’s Proposed Mill Rate

•

The property tax levy required to support the 2014-15 budget is estimated at $2,061,503.

Increasing the Levy

• • • If the Board increases the school tax levy by 5.0%, the levy amount will increase $138,732 .

Assuming no increase in property valuation, the mill rate will increase from $9.02 to $9.47 (per $1,000 of property valuation).

$100,000 of property = $45/year, $3.75/month, 12.5 cents/day school tax increase

Mill Rate Analysis

2000 – 01 = $9.20

2001 – 02 = $7.86 2002 – 03 = $7.78

2003 – 04 = $7.30

2004 – 05 = $6.99

2005 – 06 = $6.95

2006 – 07 = $6.50

2007 – 08 = $6.57

2008 – 09 = $6.31

2009 – 10 = $6.81

2010 – 11 = $7.13

2011 – 12 = $7.49

2012 – 13 = $8.73

2013 – 14 = $9.02

Projected 2014-2015 = $9.47

$20,00 $18,00 $16,00 $14,00 $12,00 $10,00 $8,00 $6,00 $4,00 $2,00 $-

Mill Rate Analysis

Survey of Equalized Tax Rates District State

Surrounding Area Mill Rate Comparisons

Area Mill Rate Comparison 13-14

$10,18 $11,24 $11,68 $8,72 $9,02 $9,47 Stanley-Boyd Area District Stanley-Boyd Area Cadott Community Chippewa Falls Area Fall Creek 2013-14 Surrounding district Mill Rate Comparisons Levi Amount Mill Rate $ 2,741,723 Augusta $8.72 Tax Value $9.02 Cadott Community $2,774,656 $9.47 Chippewa Falls Area Fall Creek Augusta Cornell $22,290,665 $2,690,149 $3,212,003 $1,873,363 $10.18 $11.24 $11.68 Cornell $ 314,318,141 $307,721,338 $2,353,610,431 $264,333,466 $285,765,075 $160,376,098

•

What Meaning Can we draw from the Mill Rate Comparison?

Actually, very little. Unless we compare student membership, Levi Amounts, Tax Valuation, Under Levy Amount, Mill Rate, etc. over several years 2013-14 Longitudinal Comparison between Stanley-Boyd and Cadott 2008-09 2009-10 2010-11 2011-12 2012-13 Cadott 2013-14 District Membership Maximum Revenue Limit with Exemptions Total Equalized Property Value Equalized Mill Rate District Total Equalization Aid District Total Shared Cost Total Levy Under Levy Revenue Limit Stanley-Boyd District Membership Maximum Revenue Limit with Exemptions Total Equalized Property Value Equalized Mill Rate District Total Equalization Aid District Total Shared Cost Total Levy Under Levy Revenue Limit 873 874 881 888 892 886 $ 8,682,698 $ 9,248,107 $ 9,490,291 $ 9,763,013 $ 10,286,078 $ 10,358,937 $ 298,077,610 $ 304,016,974 $ 301,886,849 $ 313,840,269 $ 308,620,814 $ 307,721,338 $ 6.310 $ 6.810 $ 7.130 $ 7.490 $ 8.730 $ 9.020 $ 5,692,526 $ 5,918,533 $ 5,841,679 $ 5,452,595 $ 5,416,660 $ 5,406,131 $ 7,395,682 $ 8,077,836 $ 8,070,985 $ 8,230,429 $ 7,896,631 $ 7,734,029 $ 1,880,975 $ 2,069,857 $ 2,152,651 $ 2,349,867 $ 2,693,841 $ 2,774,656 $ 1,372,640 $ 1,522,860 $ 1,762,974 $ 2,226,861 $ 2,182,262 $ 2,771,613 2008-09 (2007-08 DATA) 2009-10 (2008-09 DATA) 2010-11 (2009-10 DATA) 2011-12 (2010-11 DATA) 2012-13 (2011-12 DATA) 2013-14 (2012-13 DATA) 974 968 964 956 963 973 $ 8,798,977 $ 8,976,026 $ 9,131,886 $ 9,041,742 $ 9,191,658 $ 9,303,841 $ 313,380,835 $ 318,090,804 $ 316,890,130 $ 318,714,098 $ 308,883,313 $ 314,318,141 $ 7.400 $ 7.560 $ 8.080 $ 8.490 $ 8.880 $ 8.720 $ 7,038,526 $ 6,821,769 $ 6,658,496 $ 6,263,901 $ 6,423,181 $ 6,571,374 $ 8,921,456 $ 9,404,725 $ 9,154,674 $ 9,167,318 $ 8,911,980 $ 9,083,761 $ 2,318,010 $ 2,406,086 $ 2,561,413 $ 2,705,136 $ 2,742,052 $ 2,741,723 $ 451 $ 294,257 $ 448,390 $ 97,841 $ 88,503 $ 52,493

Projected tax impact for a home valued at $100,000

• Last years mill rate was $9.02 per $1000 of property value • This years mill rate projection is $9.47 per $1000 of property value.

• Annual Impact = increase of $45.00

Annual Property Valuation Tax Impact

Property Value $100,000 $125,000 $150,000 $175,000 $200,000 $225,000 $250,000 2013-14 Levy $9.02

$902.00

$1,127.50

$1,353.00

$1,578.50

$1,804.00

$2,029.50

$2,255.00

2014-15 Projected Tax Table 2014-15 Projected Property Tax Impact 2013-14 Equalized Value of the District - $307,739,910 2014-15 Projected Equalized Value of the District - $307,381,335 2014-15 Levy $9.47

$947.00

$1,183.75

$1,420.50

$1,657.25

$1,894.00

$2,130.75

$2,367.50

Levy $ Increase $0.45

$45.00

$56.25

$67.50

$78.75

$90.00

$101.25

$112.50

Per Month Increase $3.75

$4.69

$5.63

$6.56

$7.50

$8.44

$9.38

Per day increase $0.12

$0.15

$0.18

$0.22

$0.25

$0.28

$0.31

This information based on the District-wide Levy *Note: Potential Home Owner Property Tax Impact is driven by Overall District Property Valuation. (If a $100,000 2013-14 home value decreases in 2014-15 an actual tax increase may not be seen)

Questions?