Budget Update2012-2013

January 26, 2012

Our Priorities have not changed…

Students

Employees

But normal now is….

Slow recovery Ongoing lags in state economy and state revenues Flat local tax revenues (real estate, pp taxes) Expired stimulus funding Ongoing hiring hesitation Budgeting year round

Average Daily Membership

Last year – 14,200 budget/14,259 actual = +59 This year - 14,074 budget/14,015 est. = (59) More students in grades 9-12 than incoming KG KG enrollment down by 61 from last Sept Grades 10-12 enrollment down by 90 compared

to grades 9-11 last year 9th grade up by 43 compared to 8th grade last

year Impacts staffing when enrollment is declining

overall but decline is spread over all 26 schools and all grades

ADM Trend

Average Daily Membership Trend

13,200

13,400

13,600

13,800

14,000

14,200

14,400

14,600

14,800

15,000

AD

M

Budget Increase Factors

VRS rate increase – HUGE Gasoline/diesel prices fluctuate Joint capital plan – long term investment Aging technology – Tech Assessment Plan Year 2 Health insurance Salaries – no raises in 3 years Utilities – NO – energy savings paying off!

Governor’s Budget Proposal for 2012-13 VRS teacher rate from 11.33% to 16.66% (includes 5%

employee share) (actuaries recommended 21.77%) VRS life insurance rate from 0.28% to 1.19% State retiree health credit from 0.60% to 1.11% (this was a

state plan that was forced down to school divisions) Number of new pilot initiatives (charters, STEM, virtual) Recommending VRS reforms in coming weeks

What happened to VRS fund?

Funded status estimated at 65% (80%+ deemed healthy) GA funded 1/3 of recommended rate in FY11 GA funded ½ of recommended rate in FY12 GA loan in FY11 now needs to be paid back with interest GA has not approved recommended rates in past 20 years SB paid employee share starting in 1983 in lieu of raise Plan 2 employees hired after 7/1/10 pay employee share of

5%

Funding Sources

Revenue Sharing Agreement with BOS – combine new revenues, cover increases in salary and benefits, and then split the remainder 50/50

Stimulus Funds – none approved to date Personnel savings from 3 year hiring freeze Health reserves Capital reserves Operating budget cuts

Budget Reductions

All departments submitting a plan for reducing budgets Filling vacancies on limited basis after 2 years of hiring freeze Carry forward of all budget reduction items “on the table” for

the past 3 years

Budget Summary for FY12-13

$ 0.3M State revenue increase – after Gov revised this week

(5.0M) Mandated expenditure increase – VRS employer rate

(1.6M) Technology Assessment Plan – Year 2

(0.3M) CIP joint financing plan with County

(2.7M) Employee raise?

(TBD) Essential expenditure increases?

$(9.3M) Preliminary budget shortfall

Timeline

School Board timeline Jan 26 - Budget update and

public hearing Feb 1 – Joint SB and BOS

meeting, Budget update – House & Senate, health ins options

Mar 6 - Budget Summit - Information

Mar 13 - Budget Summit - Decisions

Mar 15 - Board meeting Mar 20 - Budget work session Mar 27 - Budget adoption

General Assembly Sessions Jan 11 – GA Session begins Feb 15 – budget bills released March 10 – adopt and adjourn Apr ?? – reconvened session

Visit our web site for budget updates…. www.rcs.k12.va.us