2017/18 BUDGET

Board of Education Study Session January 26, 2017

AGENDA

State of the Economy December Forecast / Proposed Legislation Governor’s Request

Jeffco FY 2016/17 Update Final Funded Student Count Retirement/Turnover Savings

Jeffco FY 2017/18 Budget Reductions – Background, Scenarios and Cabinet Recommendations

Use of One-Time Funds Timeline and Next Steps Questions

State of the Economy

DECEMBER FORECAST FROM THE STATE

State Revenue Unchanged at 4.4% Economic Status Still in slow recovery Property Tax Residential Assessment

Rate (RAR) Change due to Gallagher amendment Drop in local share from schools TABOR refunds beginning in 2017/18 $224.7 million above cap

Office of State Planning and Budget

Maintains a constant ratio between property tax revenue from residential and business

Assessment rate is reduced when residential property values outpace business property values

Residential rates are impacted from population growth statewide

GALLAGHER AMENDMENT

Property valuations are set by the county assessor

Current assessed values of the actual value of the property: Residential is 7.96% Commercial is 29%

Change, required by the Gallagher Amendment, would drop the residential assessed rate from 7.96% to 6.56% for 2017/18

Reduction of the rate results in lower local share for K-12 that the state will need to backfill

PROPERTY TAX CALCULATION

EXAMPLE – PROPERTY TAX LEVY PROPOSED GALLAGHER CHANGE

Current Estimate

Actual Home Value $100,000 $100,000

Assessed Value $7,960 $6,560

1 Levied Mill $7.96 $6.56

2017/18 GOVERNOR’S BUDGET AMENDMENT

Adjusted for the change in residential assessment rate and loss of local share in school finance total program

Estimated loss to be covered by the state is $135 million

Net effect to K-12 (factoring in inflation and growth) results in a $106 million funding shortfall

Proposed to be covered with reductions to the Senior Homestead Exemption and with an increase in the marijuana tax

November 2016 Governor’s Budget

Governor’s Request $14.4M

Total General Fund

Increase $13.0M

Less Pass Through

to Charters $(1.4M)

2017/18 ASSUMPTIONS

Governor’s Request $4.4M

Total General Fund

Increase $4.0M

Less Pass Through

to Charters $(.4M)

2017/18 ASSUMPTIONS

If Residential Assessed Value (RAR) shortfall is not backfilled...

2016/17 UPDATE

2016/2017 UPDATE

Budgeted 500 student decrease Final student counts are being finalized;

anticipate this number will likely increase and require savings to cover.

Budgeted $6M retirement/turnover savings Savings in excess of this amount is committed

to address compensation opportunities. If this amount is higher than actuals,

another shortfall will need to be covered.

Current analysis to assumptions: ► October count (620) loss ► Retirement and turnover savings actual $9M

Currently monitoring

2016/2017 assumptions

for any adjustments

needed to balance

the budget.

JEFFCO 2016/17 UPDATE FINAL FUNDED STUDENT COUNT

Funded Count* 15/16 16/17 Change

District-Managed Schools 73,859 73,240 (619)

Charter Schools 7,563 7,940 377

Total District Funded Count 81,422 81,180 (242)

*2016/2017 Per Pupil Funding - $7,237

2017/18 BUDGET

2017/18 BUDGET

Background and Process Scenarios Cabinet Recommendations

Background and Process

Compensation for All #1 Board of Education Priority Current state outlook not positive Staff was directed to find funds to invest

in compensation ─target $25 million One-on-One meetings throughout

December District leadership partnered with budget

and reviewed each division of the district. No set percentage directed. Focused on programs and activities.

Cabinet reviewed and prioritized a reduction list.

Board of Education Study Session November 17, 2016

2017/18 BUDGET – Scenarios

Amounts in Millions

No Reductions

Needed Governor’s Proposal

Governor’s Proposal and Loss

of RAR

No New Funding and Loss of RAR

State Funding Change 20 13 4 (10)

2017/18 Retirement/Turnover Estimate 7 7 7 7

Funded Enrollment Change (4) (4) (4) (4)

2016/17 Retirement/Turnover Over Estimate 2 2 2 2

Net New Available Ongoing Resources 25 18 9 (5)

Target – Compensation Investment 25 25 25 25

Shortfall - (7) (16) (30)

Cabinet Reductions Needed - 7 16 20

SBB Reductions Needed - - - 10

Net - - - -

2017/18 BUDGET CABINET REDUCTION RECOMMENDATIONS

District leadership has identified $20.4 million toward the targeted goal. A phased approach for implementing

reductions and fee changes follows.

This approach prepares the district to adjust for funding needs based on the range of scenarios from worst case to best case.

► Phase 1A $4,508,410 Phase 1B $7,987,008 Total $12,495,418

► Phase 2 $4,554,204

► Phase 3 $1,815,030

► Phase 4 $1,534,299

► TOTAL $20,398,951

2017/18 BUDGET CABINET REDUCTION RECOMMENDATIONS

Detail for the phased reduction and fee changes is provided on the Cabinet General Fund Recommended Reductions spreadsheet, which will be available on BoardDocs by Friday, January 27, 2017.

Use of One-Time Funds

2015/2016 UNDERSPEND

The General Fund ended the year with $24 million more than anticipated Factor out $8 million in school accounts $16 million remaining from 2015/16

to be used for one time needs Board also built reserves in 2015/16

by an additional $12.6 million

Recommendations: ► Supplement urgent facility needs

(presentation to follow) ► Cover unforeseen state shortfalls

Unassigned $76,419,654 (13% of

Expenditures)

Assigned $49,262,544

2016/2017 GENERAL FUND RESERVES

2015/16 Comprehensive Annual Financial Report

Multi-Year Commitment Reserve $17,006,337

TABOR Reserve $17,756,207

School Carryforward Reserve $14,500,000

Undesignated Reserve $52,725,000

Board of Education Policy Reserve $23,694,654

Timeline and Next Steps

TIMELINE

DEC

Kick Off School (SBB-

Student Based

Budgeting) and

Department (BFO-

Budgeting for

Outcomes) Processes

JAN/FEB

Community Engagement

Early Direction/ Feedback

MAR

Community Engagement

Results

DAC Final Report

Request Board

Direction

Build Budget

APR

Continue Building the

Budget

March Forecast

and Fine Tuning of Budget

Public Hearing

Proposed Budget

MAY

Budget Adoption

NOV

Governor’s Proposed

Budget

NEXT STEPS

Implement All Phase 1 Reductions Prepare for Implementation

of Next Phases on March 16, 2017

QUESTIONS