Transcript Document

Getting the Community Involved in
Dealing with Current Financial Realities
Mohsin Dada CFP®
CFO
North Shore School District 112,
Highland Park, IL
May 17, 2012
Objectives

Create Awareness of our available Financial Resources

Think of ways to Balance the District Budget, while
maintaining the current level of services to our students

Address Significant Financial Impacts

Obtain Philosophical Agreement as to Budget Approach
Financial Challenges
Revenues not keeping pace with expenditures
 Historically low CPI
 Declining new construction
 Stagnant or declining federal/state aid
 Rising personnel costs
 Rising special education costs
 Uncertainty of future military impact aid
Facilities Needs


Aging Buildings are Costly to Repair
Small Buildings are Inefficient to Operate
North Shore School District 112
Revenue by Type – FY12
STATE SPECIAL EDUCATION REIMBURSEMENTS
School Year
Annual Extraordinary
Reimbursement Per Pupil
1978-79
$2,000 Per Year
Annual Special Ed
Personnel Reimbursement
$6,250 (Certified)
$2,500 (Non-Certified)
Proration rate as s um ed at 100%
1986-87
$2,000 Per Year
Proration rate as s um ed at 100%
$8,000 (Certified)
$2,800 (Non-Certified)
Proration rate as s um ed at 100%
1990-91
$2,000 Per Year
Proration rate as s um ed at 100%
$8,000 (Certified)
$2,800 (Non-Certified)
Actual Reim burs em ent: $1,973
ProrationRate: 100%
Proration Rate: 98.63%
1996-97
$2,000 Per Year
$8,000 (Certified)
$2,800 (Non-Certified)
Actual
Actual Reim burs em ent: $1,734
$6,448
(Certified)
$2,327 (Non-Certified)
2008 onwards
Proration rate: 86.71%
Proration rate: 83.10%
The Reim burs em ent is no
longer bas ed on Special Education
s ervices and is calculated
as a % of regular education enrollm ent.
$9,000 (Certified)
$3,500 (Non-Certified)
Factors Affecting Revenues
As of December 2011
 Property tax levy is capped at CPI plus any new
property growth
•
•
•
Low CPI in last 3 years: average 1.43%
Nominal new property growth
Declining Equalized Assessed Valuation (total
property wealth of district)
 Interest Earnings < 1%
 No growth in state or federal funding
Factors Affecting Revenues
Property Taxes Capped at CPI Plus New Construction
As of December 2011
• Average CPI Increase, Last Three Years:
1.43%
• Historic CPI Average
2.50%
• Average New Construction, Last Three Years: .89%
FY12 0.35% (estimated)
FY11 0.94%
FY10 1.39%
• 8 Year New Construction Average:
• Investment earnings at Historic Lows
1.43%
Factors Affecting Revenues
Property Taxes Capped at CPI Plus New Construction
• Average CPI Increase, Last Four Years:
1.83%
• Historic CPI Average (Since 1992)
2.53%
• Average New Construction, Last Three Years: .93%
FY12 0.46%
FY11 0.94%
FY10 1.39%
• 10 Year New Construction Average:
• Investment earnings at Historic Lows
1.43%
Factors Affecting Revenues
Fiscal Year 2012 General State Aid
Amount of GSA per student
Number of School Districts in the state
865
Foundation Level
Alternative Method
Flat Level
625
171
69
$429 - $6,119
$219 - $428
$218
General State Aid provides unrestricted grants-in-aid to school districts in an equitable manner.
It is distributed in inverse proportion to local fiscal capacity, as measured by property tax wealth per student.
North Shore School Dist 112 is relatively a wealthy school district in comparison to most school districts in the state
and is in the Flat Level of $218 per student.
State Categorical Reimbursements
Our Financial History
10 YEARS OF DEFICIT - SURPLUS SPENDING
$4,000,000
3,542,599
$3,000,000
$2,000,000
$1,000,000
729,040
$0
-203,103
-679,886
-$1,000,000
-1,381,418
-1,247,999
-1,346,185
FY 11
FY 12
(estimated)
-$2,000,000
-$3,000,000
-$4,000,000
-3,753,364
-4,227,304
-3,835,041
-$5,000,000
FY 03
FY 04
FY 05
FY 06
FY 07
FY 08
FY 09
FY 10
Operating Surplus or Deficit after adjustment from Bond Proceeds, Capital Leases and Transfers
Operating Fund Projections with Fund Balance Target
Aggregate View - Projection Summary
$25,000,000 $22,942,981
$19,784,226
$20,000,000
$15,652,151
$15,000,000
$10,232,637
$10,000,000
$3,209,975
$5,000,000
$0
($5,000,000)
($5,708,495)
($10,000,000)
2012
2013
2014
FY-End Balances
2015
2016
2017
25% of Expenditures
Operating Funds – Education, Operations & Maintenance, Transportation, Illinois Municipal Retirement Fund, Tort and Working Cash
North Shore School District 112
Expenditures by Type – FY12
Factors Affecting Expenditures
 Salaries and benefits account for close to 70% of budget
– Salaries have risen by more than CPI
– Medical insurance rates have risen by an average 9.34% in
past 3 years
 Unfunded government mandates
– Special Ed Costs
– Transportation costs
– ELL, NCLB, RtI
 Repair and Maintenance of Aging Facilities
Salaries by Staff Type
Salaries

Increase in base salary

Average step (with 0 base increase)

Number of columns

Lowest Salary

Highest Salary

Ratio of lowest to highest

Total cost of teachers

Retirement incentive for teachers

Number of teachers on retirement incentive
1.55%
3%
11
$ 41,149
$ 110,446
268%
$ 31,271,907
6%
30
Cost of Lane Changes
Lane Change Cost in Dollar Amount
Lane Change Cost in Percentage for
Teachers not on Retirement Schedule
Number of Employees Qualified in
Lane Change on Salary Schedule
Average increase for 104 employees
who qualified for lane change on
salary schedule
Range of Increase for Employees who
Qualified for a Lane Change on Salary
Schedule
$435,564
1.57%
104
11.84%
8.13% to 23.8%
2011-2012 INDEX
Steps
BA - 0
BA - 9
BA - 18
BA - 27
MA - 0
MA - 9
MA - 18
MA - 27
MA - 36
MA - 42
MA - 45
1
1.0000
1.0350
1.0700
1.1075
1.1449
1.1850
1.2250
1.2679
1.3108
1.3567
1.4025
2
1.0300
1.0660
1.1021
1.1407
1.1792
1.2205
1.2618
1.3059
1.3501
1.3973
1.4446
3
1.0608
1.0980
1.1351
1.1749
1.2146
1.2571
1.2996
1.3451
1.3905
1.4392
1.4879
4
1.0926
1.1309
1.1691
1.2101
1.2510
1.2948
1.3385
1.3854
1.4322
1.4824
1.5325
5
1.1254
1.1648
1.2042
1.2463
1.2885
1.3336
1.3787
1.4269
1.4751
1.5271
1.5791
6
1.1591
1.1997
1.2402
1.2837
1.3271
1.3735
1.4200
1.4697
1.5194
1.5725
1.6257
7
1.1939
1.2357
1.2774
1.3221
1.3668
1.4147
1.4625
1.5137
1.5649
1.6197
1.6744
8
1.2297
1.2727
1.3157
1.3618
1.4078
1.4571
1.5064
1.5591
1.6119
1.6683
1.7246
9
1.2666
1.3109
1.3552
1.4027
1.4501
1.5008
1.5516
1.6059
1.6602
1.7183
1.7764
10
1.3046
1.3502
1.3959
1.4447
1.4936
1.5459
1.5981
1.6541
1.7100
1.7699
1.8297
11
1.3437
1.3907
1.4378
1.4881
1.5384
1.5922
1.6461
1.7037
1.7613
1.8230
1.8846
12
1.3445
1.3936
1.4402
1.4948
1.5845
1.6400
1.6955
1.7548
1.8142
1.8776
1.9411
13
1.3577
1.4073
1.4544
1.5095
1.6321
1.6892
1.7463
1.8075
1.8686
1.9339
1.9993
14
1.3755
1.4237
1.4718
1.5435
1.6810
1.7399
1.7987
1.8617
1.9246
1.9920
2.0593
15
1.3884
1.4370
1.4856
1.5580
1.7315
1.7920
1.8527
1.9175
1.9823
2.0517
2.1211
16
1.7834
1.8459
1.9083
1.9751
2.0418
2.1133
2.1847
17
1.8369
1.9012
1.9655
2.0343
2.1031
2.1767
2.2503
18
1.8448
1.9094
1.9739
2.0701
2.1662
2.2420
2.3178
19
1.8630
1.9282
1.9934
2.0905
2.1755
2.2814
2.3873
20
1.8804
1.9463
2.0121
2.1101
2.1969
2.2971
2.4589
21
1.8981
1.9645
2.0310
2.1299
2.2175
2.3187
2.5327
2.2384
2.3404
2.6087
22
23
2.6344
24
2.6591
25
2.6841
26
27
28
29
30
31
1.7592
32
33
34
1.7944
2.2150
1.9645
2.4897
2.3640
2.5975
Medical Insurance Costs
TYPE
PPO Single
HMO Single
DIFFERENCE
TOTAL ANNUAL PAID BY
PREMIUM
EMPLOYEE
$8,532.00
$5,208.00
$3,324.00
-
PPO Family
HMO Family
DIFFERENCE
$23,172.00
$14,124.00
$9,048.00
PAID BY EMPLOYER
$8,532.00 (100%)
$5,208.00 (100%)
$3,324.00
$11,388.00 $11,784.00
$6,132.00 $7,992.00
$5,256.00 $3,792.00
HMO/PPO Participation Ratio By Category
2011 All Employees
HMO
SINGLE
% by Category
FAMILY
% by Category
TOTAL
% by Category
PPO
TOTAL
87
438
525
16.6%
83.4%
100.0%
44
54
98
44.9%
55.1%
100.0%
131
492
623
21.0%
79.0%
100.0%
Health Care Trend Rate History
10.7%
2011
10.5%
(Projected)
(Projected)
10.7%
2010
10.5%
10.7%
2009
10.4%
10.7%
10.6%
Year
2008
PPO
HMO
11.2%
10.9%
2007
12.4%
2006
12.2%
13.0%
13.2%
2005
14.2%
2004
14.1%
15.7%
2003
0.0%
16.4%
2.0%
4.0%
Source: Aon Consulting 2010 Health Care Trend Survey
6.0%
8.0%
10.0%
Rates
12.0%
14.0%
16.0%
18.0%
North Shore School District 112
Operating Statistics – Last Ten Fiscal Years
Fiscal Year
Average Daily
Operating
Attendance
Expenditures
Cost Per
Pupil
Percentage
Change
Expenses
Cost Per
Pupil
Percentage
Change
Teaching
Staff
PupilTeacher
Ratio
2011
3,935
$ 59,988,835
15,245
5.17%
$ 75,153,235
19,099
3.50%
477
8.3
2010
4,073
59,038,008
14,495
2.79%
75,159,464
18,453
7.60%
459
8.9
2009
4,109
57,944,941
14,102
-0.87%
70,466,445
17,149
1.56%
428
9.6
2008
3,815
54,268,458
14,226
0.18%
64,412,553
16,886
0.56%
424
9.0
2007
3,917
55,624,748
14,201
-0.65%
65,775,534
16,792
1.76%
421
9.3
2006
3,861
55,187,860
14,294
13.43%
63,714,933
16,502
12.46%
410
9.4
2005
3,929
49,509,540
12,601
6.27%
57,654,848
14,674
1.94%
409
9.6
2004
3,951
46,849,473
11,858
5.70%
56,876,465
14,395
14.00%
375
10.6
2003
4,026
45,166,005
11,219
3.38%
50,837,161
12,627
4.29%
377
10.7
2002
4,028
43,711,307
10,852
-0.14%
48,768,151
12,107
0.29%
367
11.0
2001
3,937
42,783,578
10,867
4.21%
47,529,999
12,073
2.78%
363
10.9
North Shore School District 112
Current Situation
Compounding Effect of Expenditures Exceeding
Revenues
North Shore School District 112
Summary of Major Expenditures Assumptions
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No Shift of Pension Obligation to the local Board of Education from the State of Illinois
Pension Rate for Employer to stay at 0.58%
THIS (TRS Health) Employer Rate 0.66%
TRS Federal Fund pension rate 25.12%
Health Insurance increase 10%
Dental Insurance increase 6%
Enrollment no significant change
Staffing no change
No significant change in Impact Aid
Retirees FY13 – 5, FY14 – 6, FY 15 – 9, FY 16 – 0
New hire replacement BA-Step 6 $48,435
SCFAC Recommendations
 District must address key cost drivers. Items the committee
identified that can be addressed in the FY13 budget include:
– Personnel
o Consider further personnel reductions to obtain
student/staff ratios that are more in line with district
guidelines
o Consider reviewing allocation guidelines for special
education related personnel: teachers, social workers,
speech therapists, classroom aides and
paraprofessional staff
– Compensation
o Consider restructuring employee healthcare benefits
Financial Strengths
 Strong reserve balance
 Strong tax base
 Good financial
management
 Low debt level /
Capacity for additional
debt
 Valuable real estate
assets
 Strong credit rating
 High tax collection
rates
 High revenue per
student
 Engaged community
perceives high value
ANY QUESTIONS???