June 17, 2019Presented by: Nicole Conley, Chief of Business & OperationsGeorge Gogonas, Budget Director

FY2020 Recommended Budget

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House Bill 3 Overview

Invests $6.4 billion into schools & $5.2 billion into tax rate compression over the biennium

Reduces Tier 1 Rates by 7 cents in FY 20 (from $1.00 to $0.93), with further compression in FY 21, based on district value growth

Reduces recapture by $3.5 billion over the biennium (47%)

Increases Basic Allotment to $6,160 (19.8% increase)

Recreates Chapters 41 & 42 as new Chapters 48 & 49 of the Education Code

Adds, modifies and eliminates prior law school finance funding elements

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Impact of House Bill 3 on AISD• Several “runs” with district impacts show range of differences

• TEA sent first official guidance on limited portion of bill on June 11th

• TEA staff still sifting thru bill and indicate that it will be early July before a template is released to fully calculate entitlements

• Student attendance in October and property values are anything but final

• Proxy for Comp Ed must be used as TEA creates statewide model

• Other grant elements can’t be modeled until Commissioner’s rules are developed (i.e. teacher mentor, teacher incentive, extended year etc.)

• New compliance rules may necessitate funding shifts or additional funding allocations (i.e. pre-k, comp-ed and bilingual)

• Finance staff conservatively estimate an add’l $88 M in new revenue to AISD and potential investment earnings of $5 M

• Subsequent budget amendments will be necessary since nothing is FINAL

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4

Tax Rates FY2017, FY2018, FY2019

FY2020

M&O $1.079 $1.009

I&S $0.113 $0.113

Total Tax Rate $1.192 per $100 of

taxable value

$1.122 per $100 of

taxable value

HB 3: Establishes a state compression percentage of 93 percent for Tier 1 (a $0.07 reduction in Tier 1 tax rates)

FY20 Tax Rates Under House Bill 3These numbers are illustrative only and do not constitute a legal opinion of the TEA, Districts should in all cases consult with their tax attorney before 227901AUSTIN ISDDistricts adopted TY 2018 M&O Tax Rate 1.0790Enter any additional tax rate adopted in TY 2018 in response to a disaster here (for 5 cents enter .05) 0.0000Districts TY 2019 tax rate before compression 1.07902019‐2020 school year Tier one tax rate (TR) 0.93002019‐2020 school year Golden pennies 0.07902019‐2020 school year Copper pennies 0.00002019‐2020 Additional Unequalized pennies for districts authorized by special law 0.0000Total (adopted tax rate) 1.0090

Voter Approval (Rollback) tax rate for 2019Section 26.08 (n) (A) State compression percentage  times $1.00 0.9300(B) (i) Districts 2018 M&O rate minus $1, minus any amount by which the district is required to reduce the enrichment tax rate 0.0790(B) (ii) 4 cents 0.0400Voter Approval tax rate (line 13 + greater of line 14 or line 15) 1.0090

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ATX Taxpayer Impact (Estimated for Illustration Purposes; individual tax bills will vary)

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Average$421,407

Median$341,209

Taxes due @$1.079 per $100

$4,547 $3,682

Taxes due @$1.009 per $100

$4,252 $3,443

Taxpayer Impact $(295) $(239)

2019 Preliminary Certified Taxable Homestead Values (per TCAD)

2019 Preliminary certified values provided by TCAD, April 23, 2019

The Board will approve tax rates in either Aug. or Sept. once property tax values are certified by the Chief Appraiser; and, new Truth & Taxation laws are finalized under HB3.

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FY20 Recommended Budget Overview of Revenues by Fund (in millions)

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Fund FY2019 Amended

FY2020 Recommended

$ Change % Change

General Fund $1,420.3 $1,423.1 $2.8 0.2%

Food Service $42.1 $40.9 ($1.2) (2.8%)

Debt Service $127.8 $151.6 $23.8 18.6%

Total Combined Fund Revenue

$1,590.2 $1,615.7 $25.5 1.6%

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FY20 Recommended Budget Overview of Expenditures by Fund (in millions)

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Fund FY2019 Amended

FY2020 Recommended

$ Change % Change

General Fund $1,441.8 $1,426.3 ($15.5) (1.1%)

Food Service $41.6 $40.8 ($0.8) (1.9%)

Debt Service $127.8 $151.6 $23.8 18.6%

Total $1,611.2 $1,618.7 $7.5 0.5%

Less Recapture $(673.1) $(612.2) ($60.9) (9.0%)

Total Operating Expenditures

$938.2 $1,006.5 $68.4 7.3%

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FY20 Recommended Budget Overview of General Fund (in millions)

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FY2019 Amended

FY2020 Recommended

$ Change % Change

Total Revenue $1,420.3 $1,423.1 $2.8 0.2%

Less: Recapture $(673.1) $(612.2) $(60.9) (9.0%)

Net Revenue $747.2 $810.9 $63.7 8.5%

Total Operating Expenditures

$768.7 $813.8 $45.1 5.9%

Net Change in Fund Balance

($21.5) ($3.1) $18.4 (85.6%)

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9

General Fund Functional Area(in millions)

FY2020 Rec. Budget

% of Budget

Plant Maintenance $86.9 6.1%

Security & Monitoring Services $13.9 1.0%

Data Processing Services $22.4 1.6%

Community Services $8.0 0.6%

Debt Services $0.4 0.0%

Long Term Debt Interest $0.1 0.0%

Facilities Acquisition & Construction $0.0 0.0%

Contracted Instructional Services (Recapture) $612.2 42.9%

Payments-Shared Services Arrangements $4.1 0.3%

Other Intergovernmental Charges $7.2 0.5%

Combined Fund Expenditure Total $1,426.0

General Fund Functional Area(in millions)

FY2020 Rec. Budget

% of Budget

Instruction $462.8 32.5%

Instructional Resources & Media Services $11.2 0.8%

Curriculum & Staff Development $15.6 1.1%

Instructional Administration $13.7 1.0%

School Administration $53.5 3.8%

Guidance & Counseling Services $27.0 1.9%

Attendance & Social Work Services $5.4 0.4%

Health Services $10.9 0.8%

Pupil Transportation $32.5 2.3%

Food Services

Co-Curricular Activities $14.7 1.0%

General Administration $23.6 1.7%

FY20 Recommended Budget General Fund Expenditures By Function (in millions)

Note: Other Uses are not included ($303,133)

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FY20 Recommended General Fund Budget Expenditures:Impact of Recapture

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Payroll Costs85.5%

Purchase & Contracted

Services8.8%

Supplies3.5%

Other Operating Costs

2.2%

Excluding Recapture

Payroll Costs48.8%

Recapture42.9%

Purchase & Contracted

Services5.0%

Supplies2.0%

Other Operating Costs

1.2%

Including Recapture

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Investment / Savings

Item Budget Amount (in millions)

Investments Thrive Investments: $10.63Read Investments: $2.19Excel Investments: $1.04 (compensation & legislative TRS increases shown below and

detailed on next slide)

$13.86

Reductions /Savings

Central Reductions / Savings: ($6.92)Campus Reductions / Savings: ($6.04)Districtwide Reductions / Savings: ($17.50)

($30.46)

FY2020 Prior Law Anticipated Deficit (Includes Investments & Savings) ($47.49)

Plus + House Bill 3 Estimated Entitlement Funding (Net Recapture) $88.00

Plus + Estimated Revenue from Investment Management & Earnings $5.00

Minus - FY2020 Compensation Increase (Includes TRS Increases) ($48.59)

FY2020 Deficiency of Revenue Over Expenditures ($3.08)

Investing & Paying for Budget Priorities: Thrive, Read & Excel

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FY20 Proposed Total Compensation Increase

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Employee Group Total Increase Total Cost (Base Salary + Benefits [in millions])

Qualifying Employees with more than 5 years exp. 7% $13.78

Teachers, Counselors & Librarians with 5 years or less exp. 6% $8.19

All Other Employee Types 6% $14.54

Bilingual Stipend Increase $1,000 increase $1.12

Special Education Stipend Increase $500 increase $0.50

New Pay System Structures & Related Adjustments TBD $2.65

TRS 1.5% Contribution n/a $7.81

Total Compensation Increases $48.59

HB 3: Districts must use 30% of increased formula funding per ADA to increase compensation for full-time employees (other than administrators). 75 percent must be used to increase the compensation paid to classroom teachers, librarians, and counselors prioritizing those with more than five years experience and 25 percent may be used as determined by the district to increase compensation paid to full-time employees. For AISD to comply with this mandate, 30% of new revenue per ADA or $20.1 M must be spend in accordance with the above with 75% or $15.1 M to be spent on teachers, librarians and counselors.

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Salary Increase History

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School Year(millions) Salary % increase AISD Insurance

IncreaseAISD Salary

Increase

AISD Salary + Insurance Increase

FY 20 6%, 7% *$0.0 **$48.6 $48.6

FY 19 1.5% $0.0 $8.1 $8.1

FY 18 1.5% $4.8 $8.6 $13.4

FY 17 4.0% $15.7 $20.0 $35.7FY 16 3.0% $2.8 $14.7 $17.5FY 15 2.0% $0.0 $9.7 $9.7Totals 18% $23.3 $109.7 $133.00

*For FY2020, it is estimated the district will have a one-time annual savings to the employee health-plan**Includes TRS increases

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Recapture Trends (in millions)

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$123.7$181.1

$266.1

$403.3

$540.3

$673.1$612.2

$- $100 $200 $300 $400 $500 $600 $700 $800

FY14 FY15 FY16 FY17 FY18 FY19 FY20*

AISD RECAPTURE HISTORY

$45.6$52.3$54.6$62.8$86.5$101.7$103.6

$211.3$272.7

$673.1

$- $200 $400 $600 $800

Coppell ISDLake Travis ISD

Grapevine-…Midland ISD

Spring Branch ISDEanes ISD

Highland Park ISDPlano ISD

Houston ISDAustin ISD

FY19 COMPARISON*

*estimated values

HB 3: Recapture based on the amount of local revenue that exceeds the district’s Tier 1 Entitlement plus the Available School Fund per-capita funding

Prior law would’ve cost taxpayers $120 M more in recapture

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Unassigned Fund Balance (in millions)

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$184.3 $190.3

$266.2 $277.4 $266.2 $262.9 $259.8

26% 26%

40% 36% 35% 34%32%

20% 20% 20% 20% 20% 20% 20%

0%

10%

20%

30%

40%

50%

$-

$50

$100

$150

$200

$250

$300

FY14 FY15 FY16 FY17 FY18 FY19 FY20

Unassigned Fund Balance % Unassigned Board Policy: 20%

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Enrollment Projections

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A committee comprised of Facilities, Student Services, Human Capital and Financial Services developed projected enrollment for FY2019-20. Factors utilized to establish budget projections took into account feedback from campuses, student services, demographer projections, ratio, trend and cohort data.

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Source: PIEMS actuals (2015-2018) and projected cohort survival rates for outyears.

75,397 73,956 72,965 71,336 70,428 69,515

83,067 81,650 80,032 78,400 77,821 76,812

99,561 97,929 96,61894,461 92,994 91,614

60,000

70,000

80,000

90,000

100,000

2016-17Actual

2017-18Actual

2018-19Projected

2019-20Projected

2020-21Projected

2021-22Projected

ADA Enrollment WADA

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Budget Stabilization & Outyears▰ Final estimates of AISD entitlements are not final until TEA administers rules and

student ADA and property values are known; therefore, budget amendments will be necessary

▰ The shift to “current law” property tax values makes “settle-up” volatile and reserves will be needed to satisfy final amounts and other spending compliance rules

▰ The deficit has been reduced substantially, however, there are budget pressures going into FY2021:

▻ revenue losses of $6-$8 million due to enrollment decline trends

▻ 10-12% increase in health plan costs of $4-$6 million and other inflationary factors (fuel, electricity, goods & services)

▻ Potential Salary increases (TBD)

▻ Strategic Plan initiatives (TBD)

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FY2021 Budget Reductions efforts and “School Changes” will need to be implemented to fully cure the budget shortfall and inflationary needs over time

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QUESTIONS??

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