MISSOURIS FOUNDATION FORMULA & JCPS PRELIMINARY BUDGET SHIFTING MONEY AROUND THE STATE.
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Transcript of MISSOURIS FOUNDATION FORMULA & JCPS PRELIMINARY BUDGET SHIFTING MONEY AROUND THE STATE.
MISSOURI’S FOUNDATION FORMULA & JCPS
PRELIMINARY BUDGET
SHIFTING MONEY AROUND THE STATE
Current Reality
• Current formula implemented in 2006-07• Designed to be phased in over 7 years
– Fully funded 2012-13• Requires about $120m each year to be phased in• Shortfall has existed in each of the last 3 years, and will next
year• Stimulus funds softened some of the blow ($153m in FY13)• Every year the formula becomes more expensive
o Increasing Costs + Flat Appropriations = More Withholdings• DESE is currently applying a straight reduction to every district,
because there is no legislative guidance to the contraryo Legislation Prohibits Adjusting SAT During Phase-In
Funding Formula
Weighted Average Daily Attendance (WADA)X State Adequacy Target (SAT)-Set to increase in FY13 & FY14X Dollar Value Modifier (DVM) - This is decreasing in FY13−− Local Effort based on 2005 Assessed Valuation= Formula funding if +, but if – then hold harmless Also HH if payment per WADA < 2005 payment per WADA
Many Changes in FY13
• Final Year of Phase In – $100 Million State Wide Increase in Cost– $1.1 Million New Funding JCPS
• Recalculation of DVM– $29 Million State Wide Decrease in Cost– $200,000 Lost Funding for JCPS
• JCPS DVM Going From 1.038 to 1.034.
• Recalculation of WADA Thresholds– No Official Calculation on State Impact but Will Decrease the
Cost– $300,000 Lost Funding for JCPS
WADA Threshold Changes2011-12 2012-13 Difference
Total ADA (Includes SS) 8,097 8,147 50
F&R Lunch Threshold % 32.0% 38.8%
F&R Lunch Threshold # 2,591 3,161F&RL Students 4,225 4,225 0
F&RL WADA 408 266 -142
LEP Threshold % 0.9% 1.8%
LEP Threshold # 73 147
LEP Students 195 195
LEP WADA 73 29 -44
Total WADA 8578 8442 -136
Even though we gained 50 students our WADA count goes down by 136. We will be paid on the prior year. JCPS misses out on $300,000 in funding for those 50 students, if the thresholds did not change
Many Changes in FY13-Huge SAT Increase
• Recalculate Every 2 Years– Original SAT Calculation = $6,117 – 1st SAT Recalculation = $6,117
• Actually went down but law won’t allow reduction
– 2nd SAT Recalculation = $6,131 (0.23% Increase)– 3rd SAT Recalculation = $6,716 (9.54% Increase)
• $6,423 in FY13 – Phase in ½ of the increase• Removed 5% “Throttle” on growth in 2009 in anticipation
of increased gaming money from the passage of Prop A.
Many Changes in FY13-Huge SAT Increase
• In FY13 the SAT goes from $6,131 to $6,423, which increases the cost of the formula by $292 million.
• In FY14 the SAT goes from $6,423 to $6,716, which increases the cost of the formula by $238 million.
• These Increases Make the Formula About $700 Million Underfunded.
Many Changes in FY13-But Not Funding
• While there are changes that increase the cost of the formula by nearly $400 Million in FY13
• Initial FY13 Budget shows $5 Million Increase– 0.1% Increase – Record Appropriation
• With this many changes in the formula and no new money, there are massive shifts of money from district to district all over the state.
As If That Wasn’t Bad Enough
• DESE is currently applying a straight reduction to every district, because there is no legislative guidance to the contrary– During the Phase-In, SAT Adjustments are Prohibited
• When the formula is fully phased-in in FY13 “The state adequacy target may be adjusted to accommodate available appropriations”– Only place in current legislation that addresses how to
deal with a short fall.– Does “May” mean “Shall”?
Current Options–If No Legislation Passes• Currently All Districts Receiving About 94%
Funding.• Option 1 – Continue to Prorate All Districts
– Proration drops to 86.39% – JCPS GAINS $1.9 Million (+12.2%)
• Option 2 – Adjust SAT– SAT Drops from $6,423 to $5,749– JCPS LOSES $1.3 Million (-8.5%)– Hold Harmless Districts Receive 100% Funding.
• Roughly a 6% Increase
We Saw This Coming Years Ago
FY 13 MAY vs. SHALL
Proposed Legislative Fix
• SB 454 – Sen. Pearce– All Districts Share in the Underfunding– HH Districts Get 1/2 the Reduction as Formula Dist.
• Formula Proration – 84.8%• HH Proration – 92.4%
– JCPS Gains $1.6 Million (10.2%)
Proposed Legislative Fix
• HB 1043 – Rep Thompson - Original– All Districts Share in the Underfunding– HH Districts Get 1/3 the Reduction as Formula Dist.
• Formula Proration – 84.1%• HH Proration – 94.7%
– JCPS Gains $1.25 Million (8.2%)
Concerns with Current Proposals
• Both HB1043 and SB 454 Treat JCPS Very Well• If total school funding is flat and we get more
money, it is coming at the expense of another district.– SB Shifts About $35 Million in FY13– HB Shifts About $27 Million in FY13
Concerns with Current Proposals
• SAT goes up again in FY14 which increases the cost of the formula another $238 Million
• Not expecting school funding to grow that much• Shifting money around the state again• If total school funding is flat and we get more
money, it is coming at the expense of another district.– SB Shifts About $25 Million in FY14– HB Shifts About $19 Million in FY14
Concerns With Current Proposals• Baring any other guidance except the statement that
DESE may adjust the State Adequacy Target next year, most believe that is the position DESE will take. – Remember this is the only option where JCPS loses
money, but is the most likely to occur.• Under this scenario HH districts go to 100% funding.• Under either of the “fix” bills HH districts continue to
participate in the underfunding and actually get much less money due to huge increase in SAT.
• Why would they allow this legislation to pass?
Benefits of Current Proposal
• Targets for future funding– Goals to get to full funding– Without targets it is too easy to shortchange
education funding – Original bills have unrealistic funding targets
• Smoothing of DVM calculation– 3 year average– Will reduce wild swings in funding
• HB 1043 Amended – Rep Thompson– All Districts Share in the Underfunding– HH Districts Get 1/3 the Reduction as Formula Dist.
• Formula Proration – 88.9%• HH Proration – 96.3%
– Reinstate 5% “Throttle” on SAT growth• Reduces Massive Shift of $
– JCPS Gains $600,000(4.0%)– Chance of support from Formula and HH districts– Realistic Funding Targets
Proposed Legislative Fix
Straight Prorate SAT Reduction SB454 HB1043 HB1043 & 98% Floor0
100
200
300
400
500
10%+6% to 10%2% to 6%+ or – 2%-2% to -6%-6% to -10%-10%+
Summary of How Districts Are Impacted
Straight Proration
Reduce SAT SB454 HB1043
Amd
Change In $ $1,903,990 -$1,321,662 $1,592,390 $621,634
Change In % 12.2% -8.5% 10.2% 4.0%
Summary of Possibilities for JCPS
If No Legislation Passes
Description of Revenue Changes $ Amount
LOCAL PROPERTY TAX-$9 Million New Construction $300,000
STATE AID-Reduce SAT to Accommodate Formula Underfunding * -$550,000
PROP C – Increased State Collections and Increased Students $150,000
Interest Income (90 day T-Bill has to go higher than 0.1% Someday) $100,000
County Stock Insurance -$300,000
TOTAL CHANGE IN REVENUE -$300,000
FY13 PRELIM BUDGET-Revenue Changes
* Move $740,000 of State Aid back into Operating Funds after we move our Debt Service Levy back up to $.222. We are really losing $1.3 Million in State Aid.
FY13 PRELIM BUDGET-Expense Changes
Description of Expenditure Changes $ Amount
Salary-Operate Teacher Schedule & 1.8% to All Other Classes $872,400
Benefits Associated with Raises (Retirement, Medicare, OASDI) $143,886
Health Insurance-5% Increase in Board Contribution $300,000
Staff Retirements -$250,000
Increase Summer School Pay for $2,500 to $2,700 $60,000
PSRS/PEERS Rate Increases (Remain at 14.5% & 6.86%) $0
Transportation -$100,000
Energy-Increase by 10% (Electricity, Natural Gas, Diesel Fuel) $202,400
TOTAL CHANGE IN EXPENDITURES $1,228,686
FY13 PRELIM BUDGET-Fund Balance
Description of Fund Balance Change $ Amount
FY2012 Change in Fund Balance -$300,786
+ Change in Revenues FY13 vs. FY12 -$300,000
- Change in Expenditures FY13 vs. FY12 $1,228,686
- Change In Transfers Out of Operating Fund FY13 vs. FY12 -$400,000
TOTAL CHANGE IN FUND BALANCE FY2013 -$1,429,472
• REVENUES CONTINUE TO BE VERY DIFFICULT TO BUDGET
• CHANGES MADE IN HEALTH INSURANCE, RETIREMENT, & TRANSPORTATION HAVE BEEN HUGE IN ALLOWING US TO MAINTAIN OUR CURRENT LEVELS OF EDUCATION
• FUTURE FISCAL STABILITY REMAINS POSSIBLE
SUMMARY