Initial 2011-12 Budget Presentation

January 10, 2011 January 10, 2011 BOE Meeting

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 What’s happening tonight (1/10/11)? •  Initial Public Discussion of 2011-12 Budget •  Broad overview of revenues and expenditures •  Nothing cut from initial budget requests

 What happens next? •  Every BOE meeting through March—continue

deliberations and refine budget to close the gap •  Other meetings/venues

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 Eventually, at the end of the process, revenues must equal expenditures

 Current (initial) draft of 2011-12 budget has expenditures exceeding revenues by more than $6M

 Much work to be done to achieve balance

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 First, a look at REVENUES

 2010-11 Revenues totaled $76,078,607 (which equaled expenditures)

 First look at 2011-12 revenues has a total of $75,548,917 (down 0.7%), as follows:

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January 10, 2011 BOE Meeting

Source 2010-11 2011-12 $ Change % Change

Taxes $70,487,758 $71,897,513 $1,409,755 2.00%

State Aid $476,427 $476,427 $0 0.00%

Excess Surplus (per audit) $2,886,088 $1,128,418 -$1,757,670 -60.90%

Restated Insurance Payments $0 $1,650,000 $1,650,000 --

Additional Surplus Allocated $1,201,774 $0 -$1,201,774 -100.00%

Misc. Revenues $396,560 $396,560 $0 0.00%

Capital Reserve Withdrawal $630,000 $0 -$630,000 -100.00%

TOTAL: $76,078,607 $75,548,918 -$529,689 -0.70%

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Next, a look at funds retained from year to year (a.k.a. “surplus” or “reserve” funds)

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January 10, 2011 BOE Meeting

ANTICIPATED

SOURCES OF RETAINED FUNDS 6/30/09 6/30/10 6/30/11

Surplus ("Rainy Day Fund”) $1,731,008 $1,955,465 $2,000,000

Prepaid Insurance Payments $1,522,031 $1,650,000 $0

Emergency Reserve Fund $700,000 $700,000 $700,000

Capital Reserve Fund $1,329,171 $1,633,273 $1,300,000

TOTAL: $5,282,210 $5,938,738 $4,000,000

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 Next, a look at the history of health insurance “pre-payments”

 Practice began in June 2005 as a (very) conservative approach to unknown health insurance cost increases

 Each pre-payment was used in the subsequent year (and therefore they are not cumulative, since the funds were spent)

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January 10, 2011 BOE Meeting

HEALTH INSURANCE PRE-PAYMENTS

June 2005: $396,035 pre-paid (spent in 2005-06 school year)

June 2006: $930,000 pre-paid (spent in 2006-07 school year)

June 2007: $841,699 pre-paid (etc.)

June 2008: $1,215,233 pre-paid

June 2009: $1,522,031 pre-paid

June 2010: $1,650,000 pre-paid

June 2011: (practice of pre-paying will be discontinued)

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January 10, 2011 BOE Meeting

What about a FORENSIC AUDIT?

• External (cost of $50K-$100K, & no specific target) • Internal/External “Hybrid” (no cost--DONE) • New SBA (14 years experience as SBA) • New Superintendent (8 years as SBA) • Treasurer of School Monies • Auditor (new) • Asst. SBA • Insurance Agents (2)

• We found conservative, sometimes ultra conservative, budgeting practices, but nothing out of the ordinary

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 Next, a look at EXPENDITURES

 2010-11 Expenditures totaled $76,078,607 (which equaled revenues)

 First look at 2011-12 expenditures has a total of $82,009,179 (up 7.8%)

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January 10, 2011 BOE Meeting 12

Category 2010-11 2011-12 $ Change % Change

Personnel $49,080,197 $50,194,135 $1,113,938 2.27%

Benefits $14,157,074 $16,137,908 $1,980,834 13.99%

School accounts $1,482,405 $1,671,502 $189,097 12.76%

Special Services (other than salaries) $2,141,405 $2,114,404 -$27,001 -1.26%

Facilities (incl. construction) $3,922,560 $5,785,350 $1,862,790 47.49%

Other (technology, athletics, etc.) $1,919,520 $2,871,811 $952,291 49.61%

Support Services $1,377,678 $1,363,499 -$14,179 -1.03%

Transportation $1,997,868 $1,870,570 -$127,298 -6.37%

TOTAL: $76,078,707 $82,009,179 $5,930,472 7.80%

What about enrollment?

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YEAR K-5 6-8 9-12 OOD+PK TOTAL % +/-

2007-08 2131 1052 1373 115 4671 +1.94%

2008-09 2149 1113 1385 104 4751 +1.71%

2009-10 2148 1177 1406 111 4842 +1.92%

2010-11 2180 1157 1495 109 4941 +2.04%

2011-12 2198 1157 1503 109 4967 +0.52%

2012-13 2215 1147 1580 109 5051 +1.69%

2013-14 2227 1158 1624 109 5118 +1.33%

 GAP between REVENUES and EXPENDITURES in INITIAL DRAFT of 2011-12 Budget is $6,460,262

 QUESTION: How did we get to this GAP?

 QUESTION: What can be done to close the GAP between now and April?

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QUESTION: How did we get to this GAP?

•  Included all requests from budget managers •  No cuts of any sort (yet) •  Technology catch-up •  Construction projects •  Conservative budgeting approach (as compared

to ultra conservative approach in past)—this one helps NARROW the gap…

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QUESTION: What can be done to close the GAP between now and April?

•  Cull out most requests for INCREASES (will be reflected in version presented on 1/24/11)

•  Consider CUTS to existing programs (list of possible cuts will be presented on 1/24/11)

•  Maybe tweak revenues (e.g., additional surplus allocated and/or use of capital reserve)

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Opportunities for public input/comment  BOE Meetings  1/10/11 (tonight)  1/24/11  2/14/11  2/28/11  3/14/11  3/28/11 (tentative date for annual public budget hearing)

 Open Discussion Forum (Sunday, 1/30/11, Millburn Township Library, 2:30pm)

 PTO Meetings (at each school—to be scheduled)  Other meetings/venues as needed/requested

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QUESTIONS?

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