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Presentation from Robert Allen, Deputy Superintendent For Operations, Ann Arbor Public Schools, on the financial overview of the school system and its budget
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Ann Arbor Public SchoolsAnn Arbor Public Schools
Funding and Finances
4/17/07
Goals for This EveningGoals for This Evening
• How is AAPS FundedHow is AAPS Funded
• How are Funds SpentHow are Funds Spent
• Where Do We Go From Here Where Do We Go From Here
Definitions:Definitions:
Foundation Allowance:Foundation Allowance: A funding formula providing for a per A funding formula providing for a per pupil distribution of State aid based on the pupil distribution of State aid based on the district’s previous combined State and local district’s previous combined State and local revenue, the growth in the State’s School Aid revenue, the growth in the State’s School Aid Fund and legislative action. Since Fund and legislative action. Since determined in 1994, growth can only occur by determined in 1994, growth can only occur by legislative action.legislative action.
Blended Membership Count:Blended Membership Count: The actual number of pupil memberships The actual number of pupil memberships (converted to full-time equivalent) for the (converted to full-time equivalent) for the February and September counts. A 25 percent February and September counts. A 25 percent to 75 percent blend respectively of these to 75 percent blend respectively of these counts determines the number of pupils counts determines the number of pupils eligible for Foundation Allowance Funding.eligible for Foundation Allowance Funding.
Building a Foundation Building a Foundation AllowanceAllowance
State
Homestead
Non-Homestead FY 2006/07 Per Pupil Allocation
17.97 Mills $3,448 Local Non-Homestead (Commercial, Industrial, Rental, and Seasonal Homes) (Variable) 4,704 State Contribution (Variable)
$ 233 State Contribution -20J Hold
Harmless
$8,385 Foundation Allowance (Base)
1,234 Hold Harmless (fixed)
$9,619 Foundation Allowance
(Per-pupil Funding)
Revenue Sources:
Sales, Income, Use, Cigarette, Liquor, Excise Taxes, Lottery, etc.
6 mills (fixed)
6 mills (fixed)
4.98 mills (variable)
Valuation $3.21 Billion
Valuation $4.11 Billion
Revenue ProjectionRevenue Projection FY 2006/07FY 2006/07
Funding driven by two major factors:
Student population (possible slow growth)
State revenue (economic down-turn, uncertainty)
Before and After Before and After Proposal A Proposal A
Local, 93.31%
State, 1.21%Other,
5.48%
Local State Other
Projected 2006-07
Before 1993/94
Foundation Allowance
85.6%
Other State Sources
4.7%
Other Local Sources
1.1%Other Sources8.6%
State Budget ShortfallState Budget Shortfall
• GF/GP shortfall $500 million GF/GP shortfall $500 million
• K-12 shortfall $577 million? K-12 shortfall $577 million?
• TOTAL SHORTFALL $1,077 TOTAL SHORTFALL $1,077 million?million?
FUNDING ALLOCATION SINCE PROPOSAL A
Fiscal yearPer Pupil Allocation
$ Incremental Increase % Increase
93-94 $7,574
94-95 $7,734 $160 2.11%
95-96 $7,887 $153 1.98%
96-97 $8,042 $155 1.97%
97-98 $8,196 $154 1.91%
98-99 $8,196 $0 0.00%
99-00 $8,434 $238 2.90%
00-01 $8,734 $300 3.56%
01-02 $9,034 $300 3.43%
02-03 $9,181 $147 1.63%
03-04 $9,160 -$21 -0.23%
04-05 $9,234 $74 0.81%
05-06 $9,409 $175 1.90%
06-07 $9,619 $210 2.23%
Average Increase $157 1.86%
Per Pupil Allocation vs Per Pupil Allocation vs InflationInflation
0%
5%
10%
15%
20%
25%
30%
35%
40%
1994 1995 1996 1997 1998 1999 2000 2001 2002 *2003 *2004 2005 2006
Fiscal Year
Co
mp
ou
nd
ed P
erce
nta
ge
Foundation Increase Detroit CPI
Note: Foundation increasehas trailed inflationby approximately$16.95 million over the past 13 years
Historical Blended FTE Historical Blended FTE EnrollmentEnrollment
Student FTE Enrollment
15,619
16,091
16,49816,635 16,668 16,632
16,817 16,852
16,353
15,322
14,000
14,500
15,000
15,500
16,000
16,500
17,000
17,500
FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06
1
$24,063,658
$36,420,905
$40,932,993$36,886,039
$27,971,185
$23,589,214
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
FY01 FY02 FY03 FY04 FY05 FY06
General Fund General Fund Historical Fund BalanceHistorical Fund Balance
Expenditures as Percentage of Expenditures as Percentage of Total Budget Total Budget
FY 2006FY 2006
Total Budget $181 Million
Instruction & Support
80%
Administration & Support
20%
Instruction & Support Administration & Support
What’s Included?What’s Included?
Instruction & Instruction & Support Support
• TeachersTeachers• ParaprofessionalsParaprofessionals• Technical Technical Assistants Assistants
• CoordinatorsCoordinators• Building Building AdministrationAdministration
• Building Building SecretariesSecretaries
Administration & Administration & SupportSupport
• Central Central AdministrationAdministration
• Directors/Directors/SupervisorsSupervisors
• Administrative Administrative Support Support
• Custodial/Custodial/MaintenanceMaintenance
• TransportationTransportation
Public Schools of the City of Public Schools of the City of Ann ArborAnn Arbor
Current Operations Fund ExpendituresCurrent Operations Fund ExpendituresYear Ended June 30, 2006Year Ended June 30, 2006
3%
3%
3%
91%
Salaries and Benefits Utilities and Insurance
Contracted Services Supplies, Materials and Equipment
Note: Excludes transfers to other funds
Budget Breakdown 2006/07Budget Breakdown 2006/07Salaries & BenefitsSalaries & Benefits
Other3%
Administration & Support
11%
Instructional Support
14%
Teacher Costs72%
Total Teacher Costs Instructional Support Administration & Support Other
Teachers Include:Teachers Include:
• Classroom TeachersClassroom Teachers
• Media SpecialistsMedia Specialists• CounselorsCounselors• Occupational/Occupational/
Physical Physical TherapistsTherapists
• PsychologistPsychologist• Social WorkerSocial Worker• Speech TherapistSpeech Therapist• Teacher ConsultantsTeacher Consultants• NurseNurse
• ElementaryElementary• Middle SchoolMiddle School• High SchoolHigh School• Special EdSpecial Ed• Vocational EdVocational Ed• English As A Second English As A Second
LanguageLanguage• LiteracyLiteracy• Adult EdAdult Ed• PreschoolPreschool
Direct InstructionDirect Instruction
High High
SchoolSchoolMiddleMiddle
SchoolSchool
ElementarElementary y
SchoolSchool
OperatiOperating Costng Cost
$27,352,2$27,352,23333
$20,282,3$20,282,30404
$38,474,0$38,474,05959
Number Number of of
StudentStudentss 5,7395,739 3,6923,692 7,4137,413
Cost Cost Per Per
StudentStudent $4,766$4,766 $5,494$5,494 $5,190$5,190
Instructional SupportInstructional Support
Special Education & Special Education & Pupil Support ServicesPupil Support Services $31,017,416$31,017,416
Compensatory InstructionCompensatory Instruction $2,670,875$2,670,875
Vocational EducationVocational Education $2,489,304$2,489,304
Support Services-Support Services-Instructional staffInstructional staff $8,527,424$8,527,424
Support Services- School Support Services- School AdministrationAdministration $11,503,418$11,503,418
TotalTotal $56,208,437$56,208,437
Administration & SupportAdministration & Support
Legal Costs (Board of Legal Costs (Board of Education)Education) $1,024,041$1,024,041
Executive AdministrationExecutive Administration $1,318,317$1,318,317
Business ServicesBusiness Services $2,197,779$2,197,779
Operations & MaintenanceOperations & Maintenance $18,299,292$18,299,292
TransportationTransportation $6,788,307$6,788,307
Support Services- Support Services- CentralCentral $3,832,759$3,832,759
AthleticsAthletics $3,017,616$3,017,616
TotalTotal $36,478,111$36,478,111
Specific ExpensesSpecific ExpensesFY 2006FY 2006
• Teaching Supplies and Materials Teaching Supplies and Materials = $1,568,000 = $1,568,000
• Equipment and Furniture = Equipment and Furniture = $57,000$57,000
• UtilitiesUtilities = = $5,315,693$5,315,693
Three Year Budget ProjectionThree Year Budget ProjectionWith No Foundation Allowance IncreaseWith No Foundation Allowance Increase
FY 2008 - 2010FY 2008 - 2010
Item Description 2008 2009 2010
Blended Count: 16,553 16,497 16,422
TOTAL REVENUE $179.75 $180.98 $182.05
EXPENDITURES:
Basic Expenditures $187.32 $189.29 $187.02
REDUCTIONS: Salary Differential Savings Proposals Health Care Savings
TOTAL EXPENDITURES $187.32 $189.29 $187.02
Balance / Deficit ($7.57) ($8.31) ($4.97)
Fund Equity - Beginning Balance $23.29 $15.72 $7.41
Fund Equity - Ending Balance (Est.) $15.72 $7.41 $2.44
Estimated Per Pupil Funding Estimated Per Pupil Funding Needed to Cover Annual Needed to Cover Annual Expenditure IncreasesExpenditure Increases
Example:Example: Per Pupil Per Pupil Increase Increase
Needed Each Needed Each YearYear
Total Cost Total Cost Increase Each Increase Each
YearYear
Cost of a 2% Cost of a 2% raiseraise $172$172 $2,850,000$2,850,000
Cost of StepsCost of Steps $115$115 $1,900,000$1,900,000
Mandated Mandated Increase in Increase in Retirement from Retirement from 17.74% to 18.56% 17.74% to 18.56% of Payrollof Payroll $56$56 $931,200$931,200
Health Premiums Health Premiums Go Up 10%Go Up 10% $103$103 $1,700,000$1,700,000
ESTIMATED ESTIMATED TOTALTOTAL $446$446 $7,381,200$7,381,200
What Have We Done to Reduce What Have We Done to Reduce Costs?Costs?
• Reduce costs by over 8 million Reduce costs by over 8 million dollars over the past two years:dollars over the past two years:– Eliminated positionsEliminated positions– Self-funding of health and dental Self-funding of health and dental insurance benefits for some employee insurance benefits for some employee groups and capped district contribution to groups and capped district contribution to employees for MESSA health insurance at a employees for MESSA health insurance at a 5% increase annually5% increase annually
– Reduced Property and Liability Insurance Reduced Property and Liability Insurance Costs by over $500,000Costs by over $500,000
What We are Doing to Reduce What We are Doing to Reduce Costs?Costs?
• Continuing to look at ways to reduce health Continuing to look at ways to reduce health insurance costsinsurance costs
• Reducing legal expensesReducing legal expenses
• Restructuring middle school programRestructuring middle school program
• Reducing contracted services costsReducing contracted services costs
• Looking for opportunities to consolidate Looking for opportunities to consolidate services county-wideservices county-wide
Where Do We Go From Here?Where Do We Go From Here?
• Possible Means to Address/Manage DeficitPossible Means to Address/Manage Deficit
– Increase Student EnrollmentIncrease Student Enrollment• 100 new students equals $961,900 in additional 100 new students equals $961,900 in additional revenuerevenue
• Approximately 1,274 K-12 students live in AAPS Approximately 1,274 K-12 students live in AAPS district and attend charter schools and other district and attend charter schools and other public schools within the countypublic schools within the county
– Lobby the State for Change in the Way Lobby the State for Change in the Way Schools are FundedSchools are Funded• Increased local control over school fundingIncreased local control over school funding• Changes to the funding of retirement costsChanges to the funding of retirement costs
Where Do We Go From Here?Where Do We Go From Here?
– County-wide Enhancement MillageCounty-wide Enhancement Millage• 1 mill equals approximately 4.5 million dollars 1 mill equals approximately 4.5 million dollars per year in additional funding for AAPSper year in additional funding for AAPS
• 1 mill equals approximately $150 per year in 1 mill equals approximately $150 per year in additional taxes on a home with a $150,000 additional taxes on a home with a $150,000 taxable valuetaxable value
– Renew Sinking FundRenew Sinking Fund• 1 mill sinking fund expires in 20091 mill sinking fund expires in 2009• Sinking fund generates approximately 6.8 million Sinking fund generates approximately 6.8 million dollars per yeardollars per year
• Sinking fund can be renewed without increasing Sinking fund can be renewed without increasing taxes beyond current leveltaxes beyond current level
• Sinking fund dollars can be used to fund repairs Sinking fund dollars can be used to fund repairs and renovations currently funded through general and renovations currently funded through general fund dollarsfund dollars
Where Do We Go From Here?Where Do We Go From Here?
– Private GivingPrivate Giving• Seek private funding (donations and Seek private funding (donations and grants) for programsgrants) for programs
• Work of PTO’s, Booster Clubs, Ann Work of PTO’s, Booster Clubs, Ann Arbor Educational Foundation…Arbor Educational Foundation…
– Make ReductionsMake Reductions
Ann Arbor Public Ann Arbor Public SchoolsSchools