wayne county public schools board of education …...identify revenue enhancements/cost reductions...

Wayne County Public Schools Board of Education Meeting

June 29, 2020

School Operations Specialists “Succeeding Together”


Who are we? • Formed in February 2020

• Former and current school administrators with proven success

• Prior independent contractor with experience in multiple NC systems and across the southeast (currently working in 3 NC systems)

• Unique business approach that we provide experts based upon the need of each individual district

• Professionals who work with your administration – “Succeeding Together”

• Highest level of integrity and values that is translated into our work

• We tell it like we see it


Scope of work • Provide technical support to the finance staff in year-end close-out procedures for

the 2019-2020 fiscal year;

• Assist finance staff in ensuring all State and Federal Funds year-end requirements are met;

• Review the current 2019-20 Budget and assist finance staff in providing final budget amendments for the June Board of Education meeting;

• Assist the finance staff to ensure all year-end adjustments have been submitted to the Department of Public Instruction as required by the June 30, 2020 dead-line;

• Ensure the district is using the State and Federal COVID-19 funding required to be the expended by end of the fiscal year (June 30th);

• Review of sales tax, waste disposal fees, background checks and energy saving with DavenportLawrence under separate agreement approved by the Board;

• Identify revenue enhancements/cost reductions and budget savings

• Make recommendations for 2020-21 fiscal year


Challenges and Opportunities • Finance officers last day May 26, 2020

• Superintendent last day June 3, 2020

• Understanding of where documents reside • COVID 19 • Uncertainty around state carryover • Statutory requirements not followed

• Budget documents are incomplete, incorrect and out of balance

• Lack of fiscal oversight • Spending habits exceed revenue • Inadequate controls, procedures and processes

• Lack of transparency

Contributing factors to budget shortfalls


• Expenses exceed revenue • Local funding level • Decrease in ADM • Increased charter school enrollment • Unfunded positions added • Increased contractual services • Expensive programming and individual schools • New initiatives not adequately funded • Early implementation of K-3 class size • Fixed cost increases not budgeted • Inefficiencies within organization • Lack of position control • State and federal mandates

COVID 19 Funding received as of 6/25/2020


• Federal Funding

• Cares Act 2020 $6,043,670

• State Funding

• Coronavirus Relief Fund – School Nutrition $1,142,950

• COVID-19 Supplemental Funds $737,783

• CRF- Student Computers and Devices $435,358

• CRF-Personnel Computers and Devices $59,775

• CRF- Home and Community WiFi $141,893

Enrollment Trends


• With 18,033 students in 2019-20 Average Daily Membership (best 1 of 2), Wayne County Public Schools (WCPS) is the 21st largest district in North Carolina

• Enrollment declined by 525 students (2.8%) in the past three years.

Data Source: NC DPI Student Accounting Data Note: 2014-15 and 2015-16 actual ADM figures are final month, not best 1 of 2, due to lack of publicly available data.

https://www.dpi.nc.gov/districts-schools/district-operations/financial-and-business-services/demographics-and-finances/student-accounting-data

Student Demographics


• The student population of WCPS is approximately one-third white, one-third black, and one-quarter Hispanic.

• The Community Eligibility Provision (CEP) for free and reduced-price school meals in is place in 32 out of 33 WCPS schools. According to state data, more than 90% of WCPS students are economically disadvantaged.

Data Source: NC DPI Statistical Profile

33.9%

33.4%

25.0%

6.24%

WCPS STUDENT RACE/ETHNICITY – 2019-20

White Black Hispanic Two or More Asian Indian Pacific Islander

http://apps.schools.nc.gov/ords/f?p=145:15:::NO::

Per Pupil Expenditure Trends


• In the 2019-20 North Carolina Association of County Commissioners Budget and Tax Survey, WCPS ranked 83rd out of 94 reporting counties in per pupil operating appropriations, and 47th out of 93 reporting counties in per pupil capital expenditures.

• In the 2018-19 Fiscal Year, Wayne County ranked 57th (out of 115 NC LEAs) in state, 30th in Federal, 96th in local, and 78th in total per pupil expenditures.


2015 2016 2017 2018 2019

Local PPE $1,035.15 $1,131.88 $1,224.20 $1,380.59 $1,517.49

Federal PPE $752.42 $769.03 $750.90 $695.51 $813.28

State PPE $5,976.96 $6,168.96 $6,473.28 $6,590.23 $6,941.32

Total PPE $7,764.53 $8,069.87 $8,448.38 $8,666.33 $9,272.09

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000

$10,000

Per Pupil Expenditure Trends (2015-2019)

State PPE Federal PPE Local PPE Total PPE

http://www.ncacc.org/192/Budget-Tax-Survey






http://apps.schools.nc.gov/ords/f?p=145:35:::NO:::

Public School Forum’s Local Finance Study


• In the Public School Forum’s 2019 Local Finance Study, Wayne County ranked 77th out of 100 counties in ability to pay, and 57th in relative effort measured as the percent of local revenue spent on K-12 public education

• In general, lower wealth counties spend a higher proportion of their overall local tax revenue on K-12 education than higher wealth counties, but Wayne County spends proportionally less local revenue on K-12 education that counties with a similar ability to pay.

Data Source: Public School Forum – 2019 Local Finance Study

Trendline:

Lower wealth counties generally spend a higher

proportion of their overall local tax revenue on K-

12 public education

Wayne County:

Wayne County spends proportionally less local tax revenue on K-12

public education than most counties with a similar ability to pay, but

proportionally more than most high wealth counties.

https://www.ncforum.org/2019-local-school-finance-study/







Local Salary Supplement Trends


• Average local supplements for teachers increased significantly in FY 2019-20

• Wayne County currently ranks 32nd out of 115 districts in average teacher salary supplements, 56th in assistant principal supplements, and 79th in principal salary supplements.


$3,596

$5,560

$4,154

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Teachers - Avg. Supplement Principals - Avg. Supplement

Assistant Principals - Avg. Supplement

Trends in Local Salary Supplements (2014-15 to 2019-2020)

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

http://apps.schools.nc.gov/ords/f?p=145:25:::NO:::

Employee Benefit Trends

School Operations Specialist “Succeeding Together”

• Employer health insurance costs are increasing at twice the overall rate of inflation as measured by the Consumer Price Index for Urban Consumers (CPI-U)

• Employer costs for state retirement contributions are increasing at nearly four times the overall rate of inflation.

• Both trends place ever increasing pressure on the WCPS local budget.

Data Source: NCGA Fiscal Research – History of Budget Legislation

13.1% 14.2% 14.7% 15.2% 15.3%

16.3% 17.1%

18.9% 19.7%

$4,931 $5,192 $5,285 $5,378 $5,471 $5,659

$5,869 $6,104

$6,306

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

He

alth

In

sura

nce

Em

plo

ye

r C

ontr

ibutio

n

Re

tire

me

nt C

ontr

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ate

Employer Health Insurance and Retirement Cost Trends (FY 2011-12 to FY 2020-21)

Employer Retirement Contribution (% of salary)

Health Insurance Employer Contribution ($)

https://www.ncleg.net/FiscalResearch/budget_legislation/budget_legislation.html




General Fund Expenditure Trends

School Operations Specialists “Succeeding Together “

• General fund expenditures exceeded revenues by $3.5 in FY 2017-18 and by $5.4M in FY 2018-19

Data Source: WCPS FY 2019 Audit Summary – Rives & Associates, LLP

$23,759,391 $23,319,501 $24,943,935 $24,109,025 $24,447,949

$22,205,598 $23,393,244

$25,722,158 $27,600,420

$29,842,009

$1,553,793

($73,743) ($778,223) ($3,491,395)

($5,394,060)

($10,000,000)

($5,000,000)

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 June 30, 2019*

WCPS - General Fund Revenue and Expenditure Trends FY 2014-15 to FY 2018-19

General Fund Revenues General Fund Expenditures

Revenues Over/(Under ) Expenditures

https://www.waynecountyschools.org/Downloads/Report to the Board FY 19 - 6-2-2020.pdf




Local Unassigned Fund Balance Trends


• Unassigned local fund balance declined by $900K in FY 2016-17, by $2.76M in FY 2017-18, and $5.33M in FY 2018-19.

Data Source: WCPS FY 2019 Audit Summary – Rives & Associates, LLP

2,505,526

$5,381,332

$4,468,728

$1,709,764

-$3,618,654

-5,000,000

-4,000,000

-3,000,000

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

June 30, 2015 June 30, 2016 June 30, 2017 June 30, 2018 June 30, 2019

WCPS Local Unassigned Fund Balance Trends

(FY 2014-15 - FY 2018-19)





$7,074,163 $6,914,004 $6,903,682 $6,965,757

$7,642,721 $7,642,721

$9,409,638

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

$10,000,000

2014-15 2015-16 2016-17 2017-18 2018-19 2019-20* 2020-21*

WCPS Low-Wealth Supplemental Funding Trends FY 2014-15 to FY 2020-21

Data Source: NC DPI Financial and Business Services

*2019-20 and 2020-21 figures are planning allotments from DPI


https://www.dpi.nc.gov/districts-schools/district-operations/financial-and-business-services/allotments-funding-public-school-units/allotment-support-documentation

Exhibits above reflect funds 2 & 8 general ledger transactions in Fiscal Years 2014-15 through 2019-20 with the following key

adjustments:

FY 18-19 data excludes a $6,879,166 refinancing paying on the performance energy contract

FY 19-20 includes a $2.166M in salary supplement costs paid from the State PRC 031 (low wealth supplemental fund). This

adjustment is needed as state PRC 031 funds are overdrawn by $2.166M in FY 19-20.

Note: Supplemental exhibits contain more detailed expenditure trends of local, as well as combined state and local

expenditures by purpose and object from FY 2014-15 to FY 2019-20.

General Fund Transactions by Purpose Code & Fiscal Year (Funds 2 & 8) Purpose Code - 1000 Level 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

5000-Instructional Services $8,948,457 $9,756,520 $10,241,316 $12,100,334 $12,884,829 $10,608,821 6000-Operational Support $11,259,598 $10,306,828 $11,749,110 $11,195,859 $10,977,142 $10,553,747 6000-System-Wide Support Services $1,273,034 $1,462,082 $1,771,897 $2,341,332 $3,904,470 $3,222,907 7000-Ancillary Services $6,364 $5,510 $3,887 $0 $0 8000-Non-Programmed Charges $718,145 $915,581 $978,088 $1,019,865 $1,208,627 $1,342,600 9000-Capital Investments $946,721 $980,669 $573,855 $0 Grand Total $22,205,599 $23,393,241 $24,744,298 $27,638,059 $29,548,923 $25,728,075

General Fund Transactions by Object Code & Fiscal Year (Funds 2 & 8) Object Code - 100 Level 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

100-Salaries $8,192,909 $8,560,213 $9,780,585 $11,655,146 $12,564,553 $11,931,379 200-Employer Provided Benefits $2,426,071 $2,280,228 $2,639,702 $3,144,405 $3,419,980 $2,731,277 300-Purchased Services $6,942,027 $6,805,159 $7,870,672 $8,110,275 $8,686,330 $7,328,902 400-Supplies and Materials $3,914,848 $4,702,730 $3,158,396 $3,697,022 $3,527,915 $2,304,720 500-Capital Outlays $11,599 $129,330 $316,855 $11,346 $141,518 $89,196 700-Transfers $718,145 $915,581 $978,088 $1,019,865 $1,208,627 $1,342,600 Grand Total $22,205,599 $23,393,241 $24,744,298 $27,638,059 $29,548,923 $25,728,075

Local Revenue and Expense 6/25/2020 Revenue

Fund 2 $19,467,519.83

Fund 8 $5,906,237.46

Total $25,373,757.29

Expenses

Fund 2 $19,586,710.38

Fund 8 $3,974,416.38

Total $23,561,126.76

Total Local Revenue over Expenses $1,812,630.53

State Low Wealth Funds over expended at 6/25/2020 ($2,166,962.00)

Fund 2 Revenue

4110 County Appropriation ($19,053,791.00)

4410 Fines and Forfeitures ($409,854.00)

4450 Interest Earned on Investments ($3,874.83)

($19,467,519.83)

Fund 8 Revenue

3200 State Revenue-Other Funds More at Four ($1,012,690.00)

3250 Sales and Use Tax ($108,704.85)

3700 Federal Revenue - Other Funds Impact Aid/Medicaid ($1,320,148.02)

3800 Other Restricted Grants ROTC ($271,524.94)

4110 County Appropriation ($1,672,200.00)

4450 Interest Earned on Investments ($827.30)

4490 Other Local Operating Revenues Misc. ($357,579.05)

4840 Insurance Settle Sch Property ($431,609.74)

4880 Indirect Cost Allocated Federal and CNS ($730,953.56)

($5,906,237.46)


General Findings from Expenditure Trend Analysis


• Local salary supplement cost outpaced local revenues beginning in FY 2017-18, primarily due to maintaining supplement structure as a percent of state salary schedules (significant increase in state teacher pay in FY 2017-18 placed additional pressure on local budget).

• Cost of contractual services increased significantly in FY 2017-18 and accelerated further in FY 2018-19.

• Rapidly accelerating state retirement costs placed increased pressure on local budget (increased from 15.2% of employee salaries in FY 2014-15 to 19.7% in 2019-20 and will increase further to 21.68% in FY 2020-21).

• Charter school enrollment growth led to $618K increase in local pass-through funding from FY 2014-15 to FY 2019-20.

• Significant savings realized in FY 2019-20 due primarily to impact of COVID-19 and switch to online learning in March

Recommendations 2020-21

School Operations Specialist “Succeeding Together”

• Compliance with statutory requirements around budgeting • Create balanced budget-all funds!!!!! • Review expenditure trends for last four years • Strengthen internal controls • Increased transparency around budget and expenditures • Quarterly reporting of expenditure data, position

reconciliation and fund balance projections • Formation of a “Budget Advisory Committee” – made up of

community members, business leaders, county officials and school staff (10 to 15 members)

Recommendations 2020-21 (continued)


• Review of programmatic expenditures and school site cost

• Pay supplements monthly and change from a % to flat amount

• Increase efficiencies within the organization

• Consider revenue enhancements and expense reductions

• Provide multiple year cost estimates for new money request

• Create position control system and report any increase in positions quarterly

Questions?


wayne county public schools board of education …...identify revenue enhancements/cost reductions...

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