Fiscal Year 2016 Budget Outlook

December 8, 2014

Recap of FY10, 11, 12 and 13 Budgets

• State revenue down $9.2m (14.2%) or $11.7m (18%) if including effect of VRS increased costs

• Total operating budget reduced $4m (3.2%) or $6.5m (5.2%) if including effect of VRS increased costs

• Cut 124 permanent positions (not temporary positions) by attrition and layoffs

• Provided no raises, no step increases and no position re-grades

2

Recap of FY14 Budget • State revenue increased $0.3m or 0.6% • County operating contribution increased $1.2m or 2.4% • Total operating budget increased by $1.2m or 1% • Health insurance rates increased 17.2% or $1.9m • Provided 2.0% or $1.9m in raises (4.2% if VRS shift to

employees is included) and no step increases • Cut 19 permanent positions (not temporary positions) by

attrition and other reductions

3

Recap of FY15 Budget

• State revenue increased $2.9m or 5.2%

• State mandated VRS rate increase $1.8m

• County operating contribution increased $.88m or 1.76%

• Total operating budget increased by $4.0m or 3.2%

4

Recap of FY15 Budget (continued)

• Health ins. rates decreased 3% (saved $.318m) • Provided 3.1% or $2.5m in raises (4.1% if VRS shift to

employees is included). Includes 1 step for all eligible, scale adjustment, and new pay plan for teachers

• Cut 16 permanent positions (not temporary positions) by

attrition and other reductions

5

Operating Budget Comparisons (Does Not Include Federal Stimulus Allocations)

6

$104,413,915

$115,102,150 $116,630,009

$124,462,107

$121,659,527

$115,027,267

$116,797,819

$120,485,299

$122,547,234

$126,532,845

103,000,000104,500,000106,000,000107,500,000109,000,000110,500,000112,000,000113,500,000115,000,000116,500,000118,000,000119,500,000121,000,000122,500,000124,000,000125,500,000127,000,000

06 07 08 09 10 11 12 13 14 15

Op

era

tin

g B

ud

get

Am

ou

nt

$104,413,915

$115,102,150

$116,630,009

$124,462,107

$121,659,527

$115,027,267

$116,797,819

$120,485,299

$122,547,234

$126,532,845

$123,602,107

$121,032,747

$111,290,937

$115,150,439

$113,856,872

$120,347,732

$124,590,927

$106,950,590

$102,000,000

$107,000,000

$112,000,000

$117,000,000

$122,000,000

$127,000,000

$132,000,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Actual unadjusted operating budget

Operating budget adjusted for increases in VRS and health insurance

Comparison of FY09 base year to FY15 after adjusting FY15 for the cumulative impact of VRS and health insurance increases during the same period. Total adjustment is$17,640,337. 7

Operating Budget Comparisons (Does Not Include Federal Stimulus Allocations)

YCSD State Operating Fund Revenue

8

40,000,000

42,500,000

45,000,000

47,500,000

50,000,000

52,500,000

55,000,000

57,500,000

60,000,000

62,500,000

65,000,000

67,500,000

03 04 05 06 07 08 09 10 11 12 13 14 15

FY16 ADM Projection

• FY15 Budgeted ADM 12,420*

• FY16 Projected ADM 12,670*

• Projected Increase 250

*County Planning Department Estimates

9

State Revenue - Backdrop

• State revenue growth for FY15 and FY16 is short of

state projections

• State budget reductions are planned for FY16

• FY16 is the 2nd year of the biennium. Short

session (45 days) for General Assembly

• Possible K-12 education funding will be reduced

10

State Revenue – Backdrop (cont’d)

• Changes in SOQ’s (?) • No re-benchmarking of SOQ’s • No VRS rate increases for FY16

• Must shift another 1% of VRS to employee in FY16

11

State Revenue – Backdrop (cont’d)

• The Local Composite Index will not change:

FY15 .4026

FY16 .4026

(LCI is the measure of local ability to pay)

(In FY14 increased from .3727 to .4049. Reduced State funding by over $2.2 million.)

12

FY16 local composite index for Hampton Roads comparator school divisions Williamsburg 0.8000 James City County 0.5632 Virginia Beach 0.4034 York 0.4026 Chesapeake 0.3610 Suffolk 0.3490 Norfolk 0.3123 Hampton 0.2978 Newport News 0.2908 Portsmouth 0.2678 13

State Revenue – Key Dates

• Governor releases his proposed FY16 budget on

December 17, 2014

• General Assembly convenes on January 14, 2015

• General Assembly scheduled to close session on or about

February 27, 2015

14

Federal Impact Aid/DoD for FY16

• FY15 – currently under a Continuing Resolution that ends December 11, 2014

• Last year to count students displaced by renovations at Bethel Manor

• FY16 impact aid preliminary estimate is $9.15 million or $300k less than FY15 budget

• Projecting an increase of $71.45k in heavily impacted funds from DoD

15

Federal Revenue for FY16 (cont’d)

• Sequestration may return in FY16

• Under sequestration other federal grants such as Title I would be cut

16

FY16 County Funding

• Unknown at this time

• There is no funding formula for the County

17

State (possible range of 2% increase to 3% reduction) $1.3m to ($1.9m) Federal Impact Aid $(300k) Federal (DoD Heavily Impacted) $71.45k County ? --------------- One possibility for range in federal and state revenue changes $1.071m to (2.12m) Based on information available.

FY16 Revenue Outlook

18

FY16 Employee Compensation

VRS Contribution (each 1% shift to EE = $150,000) ER Cost if 1% VRS were shifted to EE $150,000 Approx. cost to hold EE harmless (.1%) $76,000 VRS Professional and Non-Professional Groups - No rate increases

19

FY16 Employee Compensation (cont’d)

Health Insurance (each 1% for employer = $106,000)

3.6% reduction in rates $ (381,600)

Cost of one step for all eligible staff $1,250,000

Market Adjustment (each 1% for all EE’s) $760,000

20

EXAMPLES:

• Staff compensation

• Technology, replacement buses, vehicle parts

• Special Education teachers

• Teachers, Para-educators, materials for additional enrollment

• Textbooks, educational materials

School Division New Funding Requirements

21

Key Dates in Jan / Feb (as of Dec. 8, 2014)

• January 5, 2015 School Board Work Session on FY15E and FY16 Operating Budget • January 26, 2015 Public Forum on FY16

Operating Budget • February 3, 2015 Joint work session with

Board of Supervisors 22

Fiscal Year 2016 Budget Outlook

December 3, 2014