School Committe Mayoral Academy Presentation 8-29-2011 Rev 1

8/4/2019 School Committe Mayoral Academy Presentation 8-29-2011 Rev 1

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Cranston Public Schools

Achievement First Mayoral Academy

Fiscal Impact Rebuttal

August 29, 2011

Cranston School Committee


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CPS Mayoral Academy Fiscal Impact Rebuttal

Comprehensive Fiscal Impact Analysis Fiscal impact statement as prepared by the Mayor is seriously misleading,

utilizing a flawed budgeting methodology.

The Mayor has presented a distorted view of the Districts finances, only looking at theadditional revenue that is to be received under the RI Education fair funding formulato make his case that the Mayoral Academy will not have a fiscal impact on the SchoolDistrict.

What matters is not how much additional money the School District will be receiving

from the State (an uncertain proposition, since the state could change its mind insubsequent years), but how does the receipt of that additional money affect theoverall finances of the School District.

By analogy, take a Rhode Island family with both husband and wife working,who are considering the affordability of purchasing a new car. While making

the showroom rounds, the husband is laid off and the wife receives a raise.How would you make the decision? Would you make it solely based upon thewifes raise, or would you take a look at the big picture? More importantly,does the wifes raise exceed the loss in income from the husbands layoff?


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Comprehensive Fiscal Impact Analysis The Mayors fiscal analysis ignores the context of the Citys and

Districts overall finances: Can the School District and the City afford

the loss of revenue to the Mayoral Academy. Are there enough costsavings to mitigate the loss of revenue?

Our goal tonight is to remedy this deficiency by presenting the contextin which the Mayoral Academy impacts the finances on the SchoolDistrict and the City.


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Comprehensive Fiscal Impact Analysis Overview of Cranston Public Schools Adopted Budget, submitted to the Mayor

on March 9, 2011. This report contained a six year forecast of the Districts

operating budget for the years FY 2013 through FY 2018 which will become thebaseline for this presentation.

In March 2011, the Mayor retained two auditors to review this budget and issue a report. Thereport was complimentary of the submitted budget and praised the suggested funding proposals forpromoting dialogue.

The report did not contain any criticism of the forecasted budget projections.

Reconciled Adopted Budget for 2011-2012, as of August 18, 2011, incorporatingappropriations from the 2011-2012 adopted budget of the City Council,additional expense adjustments adopted by the School Committee as of June30, 2011, and additional information since June 30.

Comprehensive Fiscal Impact Analysis combining the School DistrictsReconciled Adopted Budget and the relevant information from the MayorsFiscal Impact Analysis.


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Relevant Information from Report

The Mayors Fiscal Impact Report contains two relevant pieces ofinformation for assessing the impact of the Mayoral Academy on theCranston School District and the City of Cranston:

The Increase in State Aid that the District will receive under the fair fundingformula. In fiscal 2012 and into the future, this is projected at $2,349,234.

The revenue that will follow each child that exits the Cranston School

District and enrolls in the Mayoral Academy. This starts at $1,046,945 inFY 2013 and grows to $6,240,406 by FY 2017 (See table that follows).While the per pupil costs are subject to future change, the estimatesappear reasonable and will be used in this Fiscal Impact analysis.

The rest of the report is irrelevant. The analysis and conclusions areflawed, as discussed earlier.


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Relevant Information from Report

FY2013 FY2014 FY2015 FY2016 FY2017

State share ($):Low-income student

5,791 5,791 5,791 5,791 5,791

State share ($):Non low-income student

4,137 4,137 4,137 4,137 4,137

Local share ($):

Each student 6,685 7,241 7,798 8,354 8,354

Total Per Pupil ($):Low-income student

12,476 13,032 13,589 14,145 14,145

Per Pupil ($):Non low-income student

10,822 11,378 11,935 12,491 12,491

Enrolled Non Low-Income

(35% ):

31 77 106 133 161

Enrolled Low-Income (65% ): 57 142 196 246 299

Total Cranston Enrollment: 88 219 302 379 460

Total Funding for CranstonStudents Attending AFMA ($):

1,046,945 2,727,229 3,929,050 5,141,552 6,240,406

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

2,349,234 4,698,468 7,047,702 9,396,936 11,746,170 14,095,404 16,444,638


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Adopted Budget submitted March 9, 2011

The School Committee presented, to the Mayor, a balanced budget for 2011-2012 forecasting deficits into the future for the next six years. The futureforecasts were based upon prior expense history, existing contracts, andrevenue increases as follows:

Increase in State Aid under the fair funding formula of $1,500,000 per year for seven years, basedupon initial projections from the Governors office and beginning in the current fiscal year.

The City to bear increases for the current and future fiscal years for pension increases and 75% ofspecial education tuition increases, as these were non-controllable expenses to the School District.For the current fiscal year, these increases were recommended by the Mayor and adopted by theCity Council.

The Budget contained an additional request of $1,040,000 as an increase in the maintenance ofeffort, which was denied by the Mayor and City Council. Additionally, the budget requests abovewere also diminished by $392,000 as recommended by the Mayors budget audit report.

None of the forecasted expense assumptions were challenged by the auditreport as being unreasonable.

Proposed Adopted Forecasted2011-2012 Amendments 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

Surplus / (Deficit)

(2,103,062) 2,103,062 - (1,978,096) (2,704,996) (3,487,473) (2,062,155) (1,750,167) (1,464,142)


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Adopted Proposed Adopted

2010-2011 2011-2012 Amendments 2011-2012 Increase %

REVENUES

State General Aid 24,495,325 24,495,325 - 24,495,325 - 0.00%

State Aid, Increase for RI FundingFormula - 2,349,234 - 2,349,234 2,349,234 -

State Aid, other 7,234,421 7,197,279 - 7,197,279 (37,142) -0.51%

Federal Thru State 1,600,000 1,600,000 200,000 1,800,000 200,000 12.50%

City of Cranston Appropriation 89,213,637 93,005,217 (2,122,565) 90,882,652 1,669,015 1.87%

City carryovers - - - - - -

Other revenue 2,440,995 2,327,533 - 2,327,533 (113,462) -4.65%

Total 124,984,378 130,974,588 (1,922,565) 129,052,023 4,067,645 3.25%

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Revised Adopted Budget, as of August 18, 2011


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Adopted Proposed Adopted

2010-2011 2011-2012 Amendments 2011-2012 Increase %SUMMARY EXPENSES BY CATEGORY

Faculty Salaries 66,572,176 68,697,789 (1,789,783) 66,908,006 335,830 0.50%

Custodian Salaries / Wages 3,638,669 3,663,550 - 3,663,550 24,881 0.68%

Bus Driver / Monitor Wages 2,939,858 3,124,655 - 3,124,655 184,797 6.29%

Secretary Salaries / Wages 2,343,749 2,460,587 (90,966) 2,369,621 25,872 1.10%

Administrative Salaries 5,144,750 5,148,723 (6,269) 5,142,454 (2,296) -0.04%

Benefits / Taxes 20,845,810 22,766,205 (839,161) 21,927,044 1,081,234 5.19%

Certified Pension 7,230,170 9,213,560 (187,364) 9,026,196 1,796,026 24.84%

Tuitions, Special Education 5,299,792 6,342,134 (732,100) 5,610,034 310,242 5.85%

Tuitions, Other 1,031,350 1,227,948 - 1,227,948 196,598 19.06%

Instructional Consumables 1,645,634 1,728,831 - 1,728,831 83,197 5.06%

Overheads 6,027,751 6,346,827 (793,961) 5,552,866 (474,885) -7.88%

Utilities 2,264,669 2,275,571 - 2,275,571 10,902 0.48%

Deficit Reduction - - 1,573,891 1,573,891 1,573,891 -

Deficit Restructuring - - (1,078,644) (1,078,644) (1,078,644) -

Total 124,984,378 132,996,380 (3,944,357) 129,052,023 4,067,645 3.25%

Surplus / (Deficit) - (2,021,792) 2,021,792 - - -




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Forecasted

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

REVENUES

State General Aid 24,495,325 24,495,325 24,495,325 24,495,325 24,495,325 24,495,325

State Aid, Increase for RI FundingFormula 4,698,468 7,047,702 9,396,936 11,746,170 14,095,404 16,444,638

State Aid, other 5,667,015 5,667,015 5,667,015 5,667,015 5,667,015 5,667,015

Federal Thru State 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000

City of Cranston Appropriation 92,537,502 94,220,741 95,932,957 98,100,904 100,799,859 103,556,098

City carryovers - - - - - -

Other revenue 2,363,000 2,363,000 2,363,000 2,363,000 2,363,000 2,363,000

Total 131,561,310 135,593,783 139,655,233 144,172,414 149,220,603 154,326,076




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ForecastedSUMMARY EXPENSES 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 % Inc.

Faculty Salaries 67,911,626 68,930,300 69,964,255 71,013,719 72,078,925 73,160,108 1.50%

Custodian Salaries / Wages 3,700,186 3,737,187 3,774,559 3,812,305 3,850,428 3,888,932 1.00%

Bus Driver / Monitor Wages 3,155,902 3,187,461 3,219,335 3,251,529 3,284,044 3,316,884 1.00%

Secretary Salaries / Wages 2,393,317 2,417,250 2,441,423 2,465,837 2,490,495 2,515,400 1.00%

Administrative Salaries 5,193,879 5,245,817 5,298,275 5,351,258 5,404,771 5,458,819 1.00%

Benefits / Taxes 22,596,451 23,495,239 24,425,827 25,135,410 25,864,726 26,614,352

Certified Pension 10,384,429 11,763,035 13,162,320 14,582,594 16,024,172 17,487,375

Tuitions, Special Education 5,834,435 6,067,813 6,310,525 6,562,946 6,825,464 7,098,483 4.00%

Tuitions, Other 1,240,227 1,252,630 1,265,156 1,277,808 1,290,586 1,303,492 1.00%

Instructional Consumables 1,746,119 1,763,581 1,781,216 1,799,028 1,817,019 1,835,189 1.00%

Overheads 5,719,452 5,891,036 6,067,767 6,249,800 6,437,294 6,630,412 3.00%

Utilities 2,298,327 2,321,310 2,344,523 2,367,968 2,391,648 2,415,564 1.00%

Deficit Reduction 1,573,891 1,573,891 1,573,891 - - -

Deficit Restructuring 1,078,644 - -

Total 133,748,240 137,646,549 141,629,073 144,948,846 147,759,571 151,725,011

Surplus / (Deficit) (2 ,186 ,930 ) (2 ,052 ,766 ) (1 ,973 ,840 ) (776 ,432 ) 1 ,461 ,032 2 ,601 ,065



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Revised adopted Budget, as of August 18, 2011 Changes to original Forecast submitted March 9. 2011

Projected state revenue for the current year within approximately $10,000 of funding adopted bythe General Assembly.

State Aid adjusted to $2,324,349 in future forecasts

School Committee is working on negotiating concessions from its collective bargaining groups forFY2012 and FY2013. As of this date about $2.6 million have been obtained. Additional concessionsare expected to allow for a partial payment against the deficit reduction plan in FY2012.

Forecast includes Deficit Reduction plan deferrals and repayments.

School Committee has implemented all recommendations of the Performance audit, excepttransportation and custodial services, both of which are under review.

Deficits amounting to approximately $2 million are projected for FY2013,FY2014, and FY2015. In FY2016, the Deficit narrows to about $750,000.Beginning in FY 2017, the School District is expected to be in surplus.

To balance the budget, the School committee will need to implement all orsome of the following:

Additional cost cutting measures (which are limited and are in process),

Obtain additional concessions from its bargaining groups, and/or

Defer repayment on the deficit reduction plan.


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Mayoral Academy Fiscal Impact To evaluate the fiscal impact, the information from the Mayors Fiscal

Impact analysis will now be combined with the School Districts budget

forecasts.

However, first potential costs savings from readjustment of the

Districts classroom will be evaluated and quantified as suggested inthe Mayors analysis.


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Potential Classroom ReadjustmentsPROJECTED ENROLLMENT AND LOST STUDENTS PER GRADE

Mayoral Academy Projected Enrollment

2013 2014 2015 2016 2017

K 44 73 75 75 77

1 44 73 75 75 77

2 73 76 76 77

3 76 76 77

4 47 76

5 76

6Total 88 219 302 349 460

Lost Students per Class per Grade

2013 2014 2015 2016 2017

K 1.3 2.1 2.1 2.1 2.21 1.3 2.1 2.1 2.1 2.2

2 - 2.1 2.2 2.2 2.2

3 - - 2.2 2.2 2.2

4 - - - 1.3 2.2

5 - - - - 2.2

6 - - - - -


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Potential Classroom Readjustments THE SCHOOL COMMITTEE DOES NOT BELIEVE THAT THE

AFORMENTIONED SAVINGS FROM REALIGNMENT OF THE

CLASSROOMS AND INTENERANTS ARE ACHIEVABLE, AS CURRENTHIGH CLASSROOM SIZES WILL NOT RESULT IN THE CLOSURE OFCLASSROOMS, OR THE ELIMINATION OF ITINERANTS.

HOWEVER, FOR CONSERVATISM AND REASONABLENESS, THESECOSTS SAVINGS WILL BE INCLUDED IN OUR FISCAL IMPACTREBUTTAL.


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Mayoral Academy Fiscal ImpactForecasted

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

Revenues 131,561,310 135,593,783 139,655,233 144,172,414 149,220,603 154,326,076

Expenses 133,748,240 137,646,549 141,629,073 144,948,846 147,759,571 151,725,011

Surplus / (Deficit), Forecasted (2,186,930) (2,052,766) (1,973,840) (776,432) 1,461,032 2,601,065

ADJUSTMENTS TO FORECAST

Cost cutting measures

Transportation 416,389 416,389 416,389 416,389 416,389 416,389

Other Estimated 350,000 350,000 350,000 350,000 350,000 350,000

Subtotal, School District AdjustedForecast

(1,420,541) ( 1,286,377) ( 1,207,451) (10,043) 2,227,421 3,367,454

Impact of Mayoral Academy

Loss of Revenue to Mayoral Academy (1,046,945) (2,727,229) (3,929,050) (5,141,552) (6,240,406) (6,240,406)Offset cost reduction measures - 214,500 429,000 572,000 786,500 1,022,500

Forecasted Impact of MayoralAcademy on Cranston School District

(2 ,467,486 ) (3 ,799,106 ) (4 ,707 ,501 ) (4 ,579 ,595 ) (3 ,226 ,485 ) (1 ,850 ,452 )

Other Potential Expenditures

Additional Increase in pension costs (5,598,546) (5,718,347) (5,696,619) (5,728,082) (5,706,243) (5,684,079)

Opening of full day kindergarten (1,234,400) (1,252,900) (1,271,700) (1,290,800) (1,310,200) (1,329,900)

BEP underfunding (3,900,000) (3,900,000) (3,900,000) (3,900,000) (3,900,000) (3,900,000)

Capital Projects

Renovate Middle School Science Labs (282,000) (282,000) (282,000) (282,000) (282,000) (282,000)

Repairs / Maintenance to schoolBuildings

(718,000) (1,478,000) (2,178,000) (2,618,000) (2,618,000) (2,618,000)

Worst Case financial impact onCranston School District and City

(14 ,200,432) (16 ,430,352) (18 ,035,819) (18 ,398,478) (17 ,042,928) (15 ,664,431)


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2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

Revenues 131,561,310 135,593,783 139,655,233 144,172,414 149,220,603 154,326,076

Expenses 133,748,240 137,646,549 141,629,073 144,948,846 147,759,571 151,725,011Surplus / (Deficit),Forecasted

(2,186,930) (2 ,052,766 ) (1 ,973,840) (776,432) 1,461 ,032 2 ,601,065

Adjustments to Forecast

Cost cutting measures

Transportation 416,389 416,389 416,389 416,389 416,389 416,389

Other Estimated 350,000 350,000 350,000 350,000 350,000 350,000

Subtotal, School DistrictAdjusted Forecast

(1,420,541) (1,286,377) (1,207,451) (10,043) 2,227,421 3,367,454

Impact of Mayoral Academy

Loss of Revenue to Mayoral

Academy

(1,046,945) (2,727,229) (3,929,050) (5,141,552) (6,240,406) (6,240,406)

Offset cost reductionmeasures

- 214,500 429,000 572,000 786,500 1,022,500

Forecasted Impact ofMayoral Academy onCranston School District

(2,467,486) (3,799,106) (4,707,501) (4,579,595) (3,226,485) (1,850,452)


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2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018

Forecasted Impact of MayoralAcademy on Cranston SchoolDistrict

(2 ,467,486 ) (3 ,799,106 ) (4 ,707 ,501 ) (4 ,579 ,595 ) (3 ,226 ,485 ) (1 ,850 ,452 )

Other possible adjustments

Additional Increase in pensioncosts

(5,598,546) (5,718,347) (5,696,619) (5,728,082) (5,706,243) (5,684,079)

Opening of full day kindergarten (1,234,400) (1,252,900) (1,271,700) (1,290,800) (1,310,200) (1,329,900)

BEP underfunding (3,900,000) (3,900,000) (3,900,000) (3,900,000) (3,900,000) (3,900,000)

Capital Projects

Renovate Middle School Science

Labs(282,000) (282,000) (282,000) (282,000) (282,000) (282,000)

Repairs / Maintenance to schoolBuildings

(718,000) (1,478,000) (2,178,000) (2,618,000) (2,618,000) (2,618,000)

Worst Case financial impact onCranston School District and City (14,200,432) (16,430,352) (18,035,819) (18,398,478) (17,042,928) (15,664,431)


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Fiscal Impact Conclusions Loss of funding to the Mayoral Academy results in the following consequences

to the School District AND the City:

The School District is driven into deficit in the fiscal years FY2013 through FY 2018from $2.4 million to $4.7 million until the deficit reduction plan is completed. After thedeficit reduction plan is completed, the deficit narrows, but does not go below $1.8million. Future cost cutting within the District is limited, these deficits will be financedeither through additional concessions or tax increases.

Inhibits the ability of the District/City to fund full day kindergarten. Estimated

additional cost: $1.25 million Inhibits the ability of the District/City to comply fully with BEP requirements. Current

underfunding estimated at $3.9 million.

Inhibits the ability of the City to implement asset protection and renovate science labson School District facilities. Estimated cost ranges from $1.0 million to $2.9 millionper year in future years.

Uncertainty regarding pension reform may impact the School District, andultimately the City with additional costs in FY 2013 of $5.6 million, over analready budgeted increase of $1.46 million. Without pension reform, the SchoolDistrict faces an increase of $7.0 million in FY2013.


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Fiscal Impact ConclusionsBOTTOM LINE

The School District and the City cannot afford the loss of revenue to

the Mayoral Academy. The School Committee prepared a budget tofund its operations internally and fulfill the deficit reduction plan,excepting pensions and special education tuitions (being controlled andmandated at the State level).

Although the School District will be receiving additional funding fromthe State, it is not available to fund a Mayoral Academy, but rather it isthe minimum needed to maintain the current educational level and fullits deficit reduction obligations.

The loss of revenue places greater financial strain on the City and its

taxpayers in maintaining School District asset protection requirements,RIDE current and future mandates (BEP requirements and full daykindergarten), and potential increased pension contributions.Necessitating tax increases or withdrawals from the General Fund topay for the resulting deficits.


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Cranston Public Schools

Achievement First Mayoral Academy

Fiscal Impact Rebuttal

August 29, 2011

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Documents

School Committe Mayoral Academy Presentation 8-29-2011 Rev 1