2009-2010 general operating budget

KAUKAUNA AREA SCHOOL DISTRICT

2009-2010 General Operating Budget

What is a general operating budget?

The general operating budget of the Kaukauna Area School District consists of:Fund 10 – Regular educationFund 27 – Special education

All expenditures associated with either regular or special education are counted in the general operating budget. The numbers include salaries, benefits, purchased services, non-capital and capital equipment, post retirement benefits, and insurance and judgments

Revenue Limit Explained… Wisconsin Act 16 implemented revenue limits beginning with the 1993-94

school year. A district's revenue limit is the maximum amount of revenue it may raise through state general aid and property tax for the General, Non-Referendum Debt (authorized after August 12, 1993), and Capital Expansion Funds, also referred to as Funds 10, 38, and 41 respectively. (Prior to 01-02, the Community Service Fund levy was included in the revenue limit.)

The maximum limit is based upon enrollment changes, the Consumer Price Index, and each district's prior year controlled revenue. Upon application and approval by the Department, a district may increase its maximum limit by an additional amount for specific exemptions. A district then determines the maximum allowable levy for Funds 10, 38, and 41 by subtracting the Department-provided October 15 General Aid Certification

and Poverty Aid estimates from the district's maximum revenue limit. Kaukauna’s revenue limit accounts for 89.2%

of the total operating revenue received by the district

Projected KASDRevenue Limit 2009-2010

2008-2009 base revenue limit$38,126,356State equalization aid $26,993,409State computer aid (value) $ 93,777Non-referendum debt service $ 391,489

Non-referendum debt service covers district cost to pay back state retirement system for imposed start-up costs (the interest rate being charged on this is much less than what was being imposed by the Wisconsin Retirement System)

Non-referendum tax levy $10,647,681The non-referendum tax levy of $10,647,681 is the

maximum tax levy allowed by the district based on the state revenue limit


2008-2009 base revenue limit $38,126,356Three year membership average (2006-2008)

4,1082006 = 4,065; 2007 = 4,123; 2008 = 4,137

2008-2009 base year revenue per student$9,281

= base revenue limit/membership averageFor 2008-2009, KASD had it’s revenue limit based on $9,281

per FTE

2009-2010 per pupil increase $0.00Due to the state budget shortfall KASD is using $0.00 for its

per pupil increase allowed for 2009-2010. Current law states that the number could be as high as $284.00.


2009-2010 base revenue per FTE $9,2812008-2009 figure + increase allowed by state

Projected 2009-2010 membership avg 4,1412007 = 4,123; 2008 = 4,137; 2009 = 4,162

2009 -2010 total revenue allowed $38,432,6212009-2010 non-referendum debt $399,241

2009-2010 operating revenue limit $38,033,380

KASD will receive at least $306,265 more in revenue for 2009-2010 based on the revenue limit, 25 additional students, and a $0.00 per pupil increase

Total Operating RevenueCode Revenue Source 2008-2009 BUDGET

2009-2010 BUDGET - $0.00 per pupil

increase

2009-2010 BUDGET - $100 per pupil

increase

2009-2010 BUDGET - $200 per pupil

increase

211 Property tax 10,647,681.00$ 11,043,380.00$ 11,043,380.00$ 11,043,380.00$ 212 Property tax chargeback (unpaid taxes) 2,789.98$ 2,789.98$ 2,789.98$ 244 Payment from FVTC 68,000.00$ 68,000.00$ 68,000.00$ 68,000.00$ 248 School bus transportation reimbursement 32,500.00$ 32,500.00$ 32,500.00$ 32,500.00$ 271 Event admissions 69,150.00$ 68,350.00$ 68,350.00$ 68,350.00$ 279 Other school activity income 37,500.00$ 39,000.00$ 39,000.00$ 39,000.00$ 280 Interest on investments 416,805.83$ 410,000.00$ 410,000.00$ 410,000.00$ 291 Gifts 10,000.00$ 10,000.00$ 10,000.00$ 10,000.00$ 292 Student fees 154,400.00$ 152,500.00$ 152,500.00$ 152,500.00$ 293 Facility rentals 63,500.00$ 63,500.00$ 63,500.00$ 63,500.00$ 297 Student fines341 Payment for services 10,000.00$ 10,000.00$ 10,000.00$ 10,000.00$ 343 Athletic event entry fees 12,295.00$ 11,395.00$ 11,395.00$ 11,395.00$ 345 Open enrollment - students attending 276,520.00$ 275,000.00$ 275,000.00$ 275,000.00$ 517 Federal aids through CESA 10,000.00$ 10,000.00$ 10,000.00$ 10,000.00$ 612 Transportation aid 110,000.00$ 110,000.00$ 110,000.00$ 110,000.00$ 613 Common school fund - library aid 132,881.00$ 135,000.00$ 135,000.00$ 135,000.00$ 618 English as a second language aid 19,000.00$ 19,000.00$ 19,000.00$ 19,000.00$ 621 Equalization aid 26,993,409.00$ 26,900,000.00$ 27,314,100.00$ 27,728,200.00$ 630 Special project grant - AODA 63,997.00$ 63,997.00$ 63,997.00$ 63,997.00$ 691 Computer aid 93,777.00$ 90,000.00$ 90,000.00$ 90,000.00$ 699 Other state revenue - AODA 13,016.00$ 13,016.00$ 13,016.00$ 13,016.00$ 730 Special project grants 136,195.00$ 136,195.00$ 136,195.00$ 136,195.00$ 751 Title I 270,908.00$ 270,908.00$ 270,908.00$ 270,908.00$ 752 Title V-A 4,755.00$ 4,755.00$ 4,755.00$ 4,755.00$ 791 Federal aid - PEP Grant 20,454.00$ 20,454.00$ 20,454.00$ 20,454.00$ 860 Sale of property 240,000.00$ 964 Refund for work comp insurance 32,496.00$ 32,496.00$ 32,496.00$ 32,496.00$ 981 Medicaid reimbursement 125,000.00$ 125,000.00$ 125,000.00$ 125,000.00$

347 Special ed - open enrollment 50,000.00$ 50,000.00$ 50,000.00$ 50,000.00$ 349 Special ed - 66.03 agreement 40,876.69$ 40,876.69$ 40,876.69$ 40,876.69$ 516 Special ed - CESA aid 13,000.00$ 13,000.00$ 13,000.00$ 13,000.00$ 611 Special ed aid - state funding 1,358,172.00$ 1,545,000.00$ 1,545,000.00$ 1,545,000.00$ 730 Special ed aid - federal funding 848,742.00$ 770,688.00$ 770,688.00$ 770,688.00$

TOTAL 42,375,030.52$ 42,536,800.67$ 42,950,900.67$ 43,365,000.67$

Summary of Operating Revenue 2008-2009 operating budget revenue $42,375,030

$0.00 per pupil increase, 2009-10 revenue$42,536,800 Total increase in operating revenue = $161,700

$100.00 per pupil increase, 2009-10 revenue $42,950,900 Total increase in operating revenue = $575,870

$200.00 per pupil increase, 2009-10 revenue $43,365,000 Total increase in operating revenue = $989,970

$284.00 per pupil increase, 2009-10 revenue $43,712,844 Total increase in operating revenue = $1,337,814

District operating revenue, based on 25 additional students for 2009-10, is projected to increase somewhere between $161,770 and $989,970


Expenditures100 Salaries Fixed cost

All salary projections are based on 3.8% total package contracts for unsettled groups

Salary projections include replacements for ALL retirements that the district has received notification of

200 Benefits Fixed costBenefits are based 3.8% total package contracts for

unsettled groupsBenefit projections are based on the following:

15% health insurance increase, 3% dental insurance increase, 8% long term care increase

Wisconsin Retirement System increasing their rate from 10.4% to 11.2% Retired employees added into the cost of post employment benefits FICA, long term disability insurance, and life insurance costs were

projected using same formulas from 2008-2009


Expenditures300 Purchased services Fixed

costCost of living increase for school bus transportation, cleaning

service, etc.Utility costs increased by 12% across the boardMaintenance costs for buildings remained constant excluding

water projects at Haen and QuinneyOpen enrollment budgeted at same cost as 2008-2009

400 Non-capital objectsVariable costClassroom/office supply budgets unchanged from 2008-

2009Non-capital object budget unchanged from 2008-2009


Expenditures

500 Capital objectsVariable costAll capital object costs unchanged from 2008-2009

700 Insurance/judgments Fixed costProperty insurance increased by 5% for 2009-2010Unemployment insurance increased by $70,000 based

on projected

900 Dues & fees Variable costSame figures pulled forward from 2008-2009 budget

2009-2010 General Operating Budget Expenditures by Object

Area

General Operating Expense by Object

Code Expenditure

2008-2009 Operating Expenses

2009-2010 Operating Expenses

% +/- in Operating Budget

100 Salaries Fixed 22,467,417.91 22,810,530.06 1.53%200 Benefits/post retirement costs Fixed 10,379,618.14 11,361,705.69 9.46%300 Purchased services Fixed 6,948,383.66 7,183,371.29 3.38%400 Non-capital objects Variable 1,171,162.30 1,152,545.34 -1.59%500 Capital objects Variable 600,793.75 586,462.00 -2.39%600 Capital lease programs Fixed 435,681.76 428,002.12 -1.76%700 Insurance and judgements Fixed 264,688.00 347,122.40 31.14%900 Other object/dues and fees Variable 107,285.00 107,285.00 0.00%

TOTAL 42,375,030.52 43,977,023.90 3.78%

2009-2010 Operating Expense by Object

Salaries52%

Benefits/post retirement costs

26%

Purchased services

16%

Non-capital objects3%

Capital objects1%

Capital lease programs

1%

Insurance and judgements1%

Other object/dues and fees0%

2009-2010 OPERATING BUDGET BY OBJECT

Salaries

Benefits/post retirement costs

Purchased services

Non-capital objects

Capital objects

Capital lease programs

Insurance and judgements

Other object/dues and fees

Cost Analysis2009-2010 Operating Budget

Fixed Costs vs. Variable CostsTotal fixed costs $42,130,731

95.80%Total variable costs $ 1,846,292

4.20%Salary/benefits vs. Other CostsSalary/benefit cost $34,172,235 77.70%Purchased service cost $ 7,183,371

16.33%Capital/Non-capital $ 2,039,007 4.64%Remainder $ 582,410 1.33%

PROJECTED BUDGETARY SHORTFALL

Level 1 Budgeting – Current Fiscal Year


Revenues vs. Expenditures 2009-2010 Operating Budget

2009-2010 operating budget expenditure 43,977,023.90$ 2009-2010 revenue, $0.00 increase per FTE 42,536,800.67$ Projected budget shortfall 1,440,223.23$


2009-2010 operating budget expenditure 43,977,023.90$ 2009-2010 revenue, $200.00 increase per FTE 43,365,000.67$ Projected budget shortfall 612,023.23$

At $284.00 per pupil increase, which is current DPI standard, the budget shortfall is $264,179


LEVEL 2 BUDGET DEFINITIONIn the past district budgets were produced

using Level 1 costs which basically are those expenses the district will encounter during that budget year.

Level 2 budgeting, for lack of a better term, includes funds in the current year budget that will be used to pay for fixed costs in the future. The main idea behind Level 2 budgeting is costs are being incurred during the current budget year that need to be expensed in order to have the funds to pay those bills in the future.


Level 2 Budget ExamplesExamples of Level 2 expenditures

include:Post employment retirement benefits

generated by current staffDepreciation of computer hardware and

infrastructureBuilding maintenance and construction

Roof projects and roof repairsCarpet/tile replacementHard surface repair and replacement including

playgrounds and parking lots


Level 2 Expense – Post Retirement Benefits

2009-2010 post retirement benefit cost for the district is $1,049,776. This figure includes: Current year health, dental, and life insurance costs for all covered retired

employees Current year stipend payments to retired administrators per individual

contract

The 2009-2010 post retirement benefit cost should also include funds set aside to cover benefits earned in the past that will be paid in the future The true Post Retirement liability for KASD is $35 million based on current

and past employees and benefit packages earned while employed by the district

The actuarial company states the district should include $1.2 million in each budget to help offset the cost of the true OPEB

From a practical standpoint the district Level 2 budget for 2009-2010 will include $500,000 for future post retirement benefits

This budgetary amount should be a permanent part of the district budget


Level 2 Expense – Computer Infrastructure

Each year the district falls further behind with computers and equipment

Computers should be turned over every four or five years – KASD is currently on a seven to eight year rotation

More importantly the district’s computer infrastructure – from servers to networking – is aging and not able to handle new software technology

To bring KASD back to where it should be the computer equipment Level 2 budget will be increased $300,000

The budget increase will have to remain in subsequent costing for at least seven years


Level 2 Expense – Building Maintenance

Utilizing studies done within the past four years the district should be budgeting $954,000 per year for building maintenance. A cost breakdown per building is shown below: Tanner $78,642 Roofs, playground, and parking lot Park $30,435 Playground, parking area, ventilation Haen $101,791 Roofs, parking lot, playground, windows Quinney $171,603 Roofs, parking lot, playground, windows River View $237,121 Roofs, parking lot, intercom, tennis courts High School $316,275 Parking lot, roofs (20+ yrs), track upgrade

Nicolet $17,857 Playground repairs, roof

Per year budget figures shown above include money set aside to do roofing projects, parking areas, playgrounds, windows, and other items

While projects may be five to 10 years out the cost in the budget figures is amortized over that time to aid in budgeting and cash flow


Level 2 Expense – Total Budget Costs

Post retirement benefit$500,000.00

Computer infrastructure$300,000.00

Building maintenance$953,727.00

Total Budget Costs – Level 2 $1,753,727.00

PROJECTED BUDGETARY SHORTFALL

Level 2 (Present Costs & Future Obligations) Budgeting

Revenues vs. Expenditures 2009-2010 Level 2 Operating Budget




Why not budget as in the past regarding future costs?

Numerous public and private sector organizations have faced bankruptcy due to not budgeting for future costs

Costs discussed in the Level 2 budget model are real and will not go away – in some cases the costs will only multiply if nothing is done to plan for them

A school district referendum to exceed revenue caps – if that form of school financing is still in place – is not guaranteed to pass

Can the state help?Several proposals on the table for changing

state funding formula for schools but the bottom line is no matter what formula is used it is still from the same pot of moneySome proposals include sales tax increases to

generate more funds but with current economic condition of the state this is unlikely to pass

Time frame on implementation of new funding formula will not fall into the budgetary cycle of the district thus making it impossible to wait for the state to adjust possible revenues districts will receive

Is the fund balance an option?

The ending fund balance for the district on June 30, 2008, was $3,250,000 which is 7.3% of the 2009-2010 standard operating budget or 7.1% of the level two budget

DPI had recommended a fund balance of approximately 15% for public school districtsDPI has backed off on this knowing the financial

restraints school districts must operate underDrawing down the fund balance to cover operating

costs will cause the district to:Have a higher interest rate for borrowingNegate a cushion should a major maintenance issue

developPush the district toward the breaking point of solvency

What is the district going to do?

The 2009-2010 budget will be developed using the following criteria:$0.00 per pupil increase per student from

state toward the revenue limit25 additional full time students for 2009-

2010 Settled contracts budgeted as they are;

contracts being negotiated are budgeted at 3.8% total package (per current state law)

Budget reductions totaling $3.2 million dollars will be pursued to help balance projected shortfall

2009-2010 general operating budget

Documents