School
Department Budget for 2008-2009
Superintendent’s
Recommended Budget
January 8, 2008
Introduction
This memorandum covers the Superintendent’s recommended budget for the South Kingstown public schools for the 2008-2009 year. This year’s budget is the second that was developed to fit within the state’s property tax cap. Prior budgets were a prioritized expression of needs. This budget fits prioritized needs into fixed revenue. Senate 3050 prohibits the School Committee from adopting a budget that requests more of the town than the tax cap permits, specifically 105% of the dollar amount received in 2007-08. Consequently, it would make no sense for this budget to do otherwise.
The 5% increase in local appropriation is less than requested for 2007-2008, for which 5.25% was requested. The cap on the local appropriation decreases by 0.25% each year until it reaches 4%. Consequently, the appropriation for 2009-2010 may increase no more than 4.75% over what is appropriated for 2008-2009; 2010-2011 may not increase by more than 4.5% over the prior year, 2011-2012 by 4.25%, and, finally, the 2012-2013 property tax request, and those that follow, may increase by no more than 4% over the prior year’s appropriation.
There are several points I would bring to the forefront concerning the 2008-2009 budget.
1. The budget is based on an available revenue increase of 3.37% over the current year, an increase of $1,953,790 of the current budgeted revenue. Key revenue elements include:
a. State aid level with the current year in the amount of $10,548,698.
b. A 5% increase in the appropriation from the town, the maximum available under the tax cap.
c. A drop in Medicaid revenue to $801,223, $100,000 less than projected for this year and $200,000 less than budgeted. This is caused by changes in Medicaid rules designed to reduce federal expenditures.
d. The budget again utilizes $335,000 in undesignated funds to support the operating budget and an additional $85,000 to support capital projects.
2. The expense budget was developed to fit within the available revenue. Key expenditure elements include:
a. The contraction of a team at Curtis Corner Middle School. It is the last part of our middle school reorganization to deal with declining enrollment at that level.
b. Retirement costs consume $631,011, or 32% of the available new revenue.
c. Health insurance costs are projected to increase 10%.
d. All three of the district’s collective bargaining agreements are up for negotiation.
The superintendent’s budget will be reviewed by the School Committee at two workshops and one special meeting. The School Committee will also meet with the Town Council on its budget and join the Town Council for Public Budget hearings. These will occur according to the following schedule:
Date |
Meeting |
Activity |
January 8 |
Regular
School Committee Meeting |
Budget
Delivered To SC |
January 17 |
Budget
Workshop |
Budget
Presentation |
January 22 |
Regular
School Committee Meeting |
Agenda Item |
January 23 |
Joint Town
Council/School Committee |
Capital
Budget Review |
January 29 |
Budget
Workshop |
Budget
Presentation |
February 5 |
Special
Budget Meeting |
Budget
Adoption |
February 14 |
School
Department Budget due to Town Manager |
Budget
Delivered |
March 12 |
Town Council
Budget Session |
Review
School Budget |
April 9 and
10 |
Public
Budget Hearings |
Public
Comment |
The budget memorandum includes the following sections:
District
Goals The
goals of the school district and how they are used to set budget priorities
Budget Drivers The items that have the most substantive impact on budget increases
Enrollments Enrollment
projections and their budget impact
Undesignated
Funds Unspent
funds remaining from previous years, how they were accumulated, and their
impact on future budgets with added information on the district’s ability to
stay within the FTM appropriation
Personnel Staffing
patterns, history, and plans for 2008-2009
P-Accounts Our supply and equipment accounts that are allocated to schools to support their operation
State
Aid The
role of state aid in the budget, its historical share, and the expectation for
2008-09
Revenue
Assumptions The
revenues assumptions that were used in developing the budget
District Goals
The
prioritized work of the school department is guided by its strategic plan. This strategic plan builds on the prior
plan that covered the period 2002 to 2006. That plan was assessed through periodic progress reports in
2004 and 2005 with a de novo review in 2006. The 2006 review integrated the strategic planning process
with the school committee goal setting process. The goal setting process is grounded in the district’s
accountability system the reviews of the district’s progress during the summer
of 2006 and 2007. These reviews
were based on quantitative data from the accountability system and focus group data
gathered by the school committee.
The School Committee’s work was then reviewed by the administration,
whose action step recommendations were in turn reviewed by the School Committee. The plan is the result of that work. Additionally, the School Committee’s
review of the plan and district progress in the summer of 2007 resulted in a
goals update that is included below.
Strategic Plan Goals
1. Continue
Accountability Work – the work of the subcommittee this past year
provided a solid beginning in creating an accountability structure for the
district. This work should
continue and accountability should be a component of all our work.
2. Improve
Communication Across the School System – to date the committee’s
communication work has been focused on the district level. Communication should be a system-wide
goal permeating every facet of the school system, including, for example, how
someone is greeted when they walk in the door, the technology systems we put in
place, consistency in implementation, clarified expectations, and policies.
3. Improve
High School Success For All Students – continues a goal from last
year and is amplified by the state requirements for proficiency
graduation. The committee
expressed interest: in learning more about why students drop out; looking for
options that intervene early when signs of failure appear; how the K-8 system
can support high school success, seeking solutions that both retain students
and improve school safety; and resolving the limitations imposed by the high
school schedule on flexible programming, most notably internships and work site
learning.
4. Supporting
Innovative Strategies for Student Achievement –the committee is
interested in what policy initiatives would promote innovative programming in
the district. This work will need
to address the innovation and consistency balance, budgeting for innovation,
and necessarily supportive cultural shifts.
In the summer of 2007, the validity and importance of the
goals established in 2006 were affirmed.
The review of these goals in July, 2007 showed important progress that
the committee recognizes and commends.
This includes substantive improvement in
o
the achievement of high school special needs students
o
improved graduation rate
o
more graduates completing college prep programs
o
greater elementary and middle school parent
satisfaction
o
improved professional development
o
gains in middle schoolers’ resistance to drugs
o
achievement growth that exceeds the state’s
In spite of the progress and multiple signs of success,
there remains an issue of success for some student subgroups - specifically
special needs and disadvantaged students - whose achievement lags. Additionally, there is significant
overlap between these populations, bringing commonality to their situation.
The importance of these goals was emphasized by last year’s classifications of the high school and school district. Specifically, the Rhode Island Department of Education labeled the high school as making Insufficient Progress because of missed subgroup targets. Under NCLB schools and districts are no longer accountable only for aggregate student achievement, but also for the achievement of individual subgroups of students. At the high school, students on Free and Reduced Lunch and students with IEP’s missed targets. Similarly, even though all elementary schools were classified as High Performing, when the scores of students with IEP’s were aggregated to the district level a target was missed. These two factors, when combined, caused South Kingstown to enter intervention status with RIDE.
In the
current classification by RIDE, the district is no longer in intervention. Because all district middle and
elementary targets were met we will remain on watch for a year and then exit
the system if data from the 2007 assessments follows the same pattern. Also, the high school, which missed
three targets in 2006, missed only one this time, with free and reduced lunch
students meeting all targets and only missed the math target for students with
IEP’s. The district was pleased
with the results, especially the growth in Language Arts scores at the high
school. This growth was expected,
however, as the assessed students were the first to have gone through the
district’s revised literacy program (see table below).
South Kingstown High School
Schoolwide and Subgroup NSRE Index Scores, 2003-2007 |
||||||||
|
ELA |
MATH |
||||||
|
AMO |
SW |
FRL |
IEP |
AMO |
SW |
FRL |
IEP |
2003 |
62.60 |
81.38 |
54.46 |
62.60 |
44.80 |
70.22 |
41.37 |
39.25 |
2004 |
62.60 |
90.53 |
61.92 |
59.03 |
44.80 |
82.42 |
43.97 |
43.86 |
2005 |
68.80 |
86.98 |
61.07 |
63.85 |
54.00 |
81.08 |
49.58 |
49.33 |
2006 |
68.80 |
87.65 |
58.38 |
67.89 |
54.00 |
80.16 |
50.34 |
50.94 |
2007 |
68.80 |
91.90 |
72.84 |
71.35 |
54.00 |
80.97 |
56.25 |
47.92 |
Budget Drivers
The increase in the school department budget for 2008-09 over 2007-08 is driven by several factors, including contractually negotiated salaries, state and federal requirements, increases in contracted services, benefit cost increases, and program decisions. Below is a breakout of key budget drivers and their cost impact with respect to available funds.
Budget
Drivers as Compared to Available revenue |
||
Available
Revenue Increase |
$1,953,790 |
|
Wages (estimate - all three
collective bargaining agreements are up for negotiation) |
Staffing in budget |
$556,014 1.66% |
Health Insurance |
Projected 10% health rate increase |
$655,687 10.81% |
Pensions |
Local Contribution: Certified - 13.04 to 14.86 Non-certified – 6.68 to 7.81 |
$631,011 15.84%
certified 18.57%non-certified
|
Total (of listed budget drivers) |
$1,842,712
|
|
Remaining (funding available for
balance of the budget) |
$111,078 |
Additional items that are cost increases to the district, but at the lesser level than the ones in the table above include:
o The addition to Compass Charter School projected at 5 students, or $48,900
o The capital improvement line was increased by $95,000, predominately for parking lot repair, but is offset by an $85,000 transfer from undesignated funds.
o Contractual services increased primarily for job coaching and reading tutorials.
o Purchase assessment tools to assist in student progress monitoring at a cost of $20,000
Enrollments
We remain in a period of
enrollment decline. Enrollment peaked in the period from 02-03 to 04-05 and has
been declining since. Elementary
enrollment peaked in 98-99. Middle
school enrollment peaked in 02-03 and the high school reached its peak in
04-05. The largest enrollment
declines hit the elementary school between 02-03 and 05-06, began in the middle
schools in the last few years, and have not yet started at the high school. This was reflected in the district’s
organization as an elementary school was closed in 04-05; middle schools were
reorganized in 07-08 and 08-09, and have yet to be faced at the high school.
In future years, the high
school will face the largest enrollment drop, losing 300 students between 08-09
and 16-17, with the bulk of the drop coming between 10-11 and 14-15, when the
school is projected to have 910 students.
Managing the enrollment drop will create curricular and organizational
decisions.
Of concern is the current
(07-08) kindergarten enrollment.
Kindergarten enrollments are projected from births five years
preceding. In 06-07, the first
year of full day kindergarten, 252 births yielded 245 kindergarteners, a ratio
of .97. This year, 262 births
yielded 215 kindergarteners, a ratio of .82. It is possible that this is an artifact of the change in
kindergarten entry age, from 12/31 to 9/1 birthdates, however, that took effect
in 06-07, although we granted some flexibility for September births that year,
so the impact was planned to be absorbed before 07-08. If that trend continues, it would mean
that we have not, as had been thought, reached stable enrollment in the
elementary grades. Also we see a
drop in our grade 8 to 9 cohort retention. This is attributed to the expansion of the local parochial
high school.
Undesignated
Funds/Expenditures within Budget
The school department has worked to maintain its expenditures within the appropriation and to honor the “Handshake Agreement” with Town Council by not spending unanticipated revenue. The record of meeting this goal has improved substantially in recent years in spite of unanticipated expenses and revenue shortfalls. The school department has lived within its budgeted appropriation each of the last three years and projects to do so again in the current year. The history is in the table below.
Budget to Actual Expenditures and
End-of-Year Balances
|
Actual |
Actual |
Actual |
Actual |
Projected |
|
2003-04 |
2004-05 |
2005-06 |
2006-07 |
2007-08 |
Budgeted |
$47,404,597 |
$48,813,877 |
$51,925,052 |
$55,521,024 |
$57,913,224 |
Expended |
$47,671,022 |
$48,417,267 |
$51,030,594 |
$54,933,582 |
$57,127,433 |
Balance |
($266,425) |
$396,610 |
$894,458 |
$587,442 |
$785,811 |
% expenditure |
100.6% |
99.2% |
98.3% |
98.9% |
98.6% |
Net
Total |
$1,355 |
$444,181 |
$992,061 |
$577,733 |
$473,176 |
Expenditures within the current (2007-08) year are running below budget for two major reasons. The most significant is an under expenditure of tuition accounts for both charter and special education placements. Enrollment in both of these accounts is lower than budgeted and accounts for approximately two-thirds of the under expenditure. Secondarily, salary and benefit accounts are under budget and account for approximately one-third of the total.
The anticipated balance, however, is less than the under expenditure due to a drop in revenue. This results from three revenue sources, tuition payments to the district, Medicaid, and state aid. In total, revenue is running slightly more than $300,000 under budget.
As the school department moves into a fiscal environment changed by the tax cap, and pressured to reduce budgets to conform to restricted revenue, the role of the undesignated funds should be understood. The schools, as a department of the town, are not required to maintain undesignated funds in the same way as a town. The schools are not financially independent such as is a regional school district. However, the school department is separately required to balance its own budget and receives allocated funds in the form of state aid, grants, and Medicaid. Consequently, it is prudent for the schools to retain undesignated funds to protect against unexpected expenditures or revenue shortfalls, or to smooth spikes in revenues or expenditures.
Consequently, while available, it would be imprudent for the school department to drain its undesignated fund balance to fund a budget shortfall, especially one that is not one-time, but is part of the operational base. If this is done, an even larger shortfall occurs in the ensuing year. The operational budget is increased to a level not supported by reliable revenues, and undesignated funds are no longer available, leaving a double gap, lower revenues and higher expenditures.
The table below shows how undesignated funds may be used through the 2009-2010 budget, adding in the projected balance for the current year. It shows that the school department can keep to its informal policy of using no more than a third of undesignated funds in any one year. However, undesignated funds would need to be replenished in either 2008-09 or 2009-10 to keep this revenue stream available.
Additionally, the school department faces a liability for retiree benefits, commonly referred to as OPEB (Other Post Employment Benefits). At this time, the scope of the liability is undefined; however an audit report that establishes it is expected soon. Certified personnel are now eligible for 5 years of insurance coverage post retirement. OPEB is now funded on a “pay-as-you-go” basis, but new accounting rules require the cost to be recorded as the benefit is earned. This is intended to eventually establish a fund that supports the benefit upon retirement. It has two components, the already incurred liability for those in the system, and an annual contribution that would build the fund over time. There is no obligation to fund the benefit, but it must be accounted for and, if not funded, would reflect on the financial standing of the town. At this time we do not yet know what would be required to fund a reserve for future retiree benefits, but undesignated funds are a potential funding source and would therefore impact their availability to support the operations budget.
Available and Budgeted Undesignated Funds |
||
Available
6/30/06 |
|
$1,043,686 |
2006-07
Fund Balance |
$577,733 |
$1,621,419 |
Applied
to 2007-08 |
$(335,000) |
$1,286,419 |
Projected
Balance 07-08 |
$473,176 |
$1,759,595 |
Reserves
and Adjustments |
$13,797 |
$1,773,392 |
08-09
Recommended Operations |
$(335,000) |
$1,438,392 |
08-09
Recommended Capital |
$(85,000) |
$1,353,392 |
Projected
6/30/09 |
$1,353,392 |
|
Available
for 2009-2010 (one-third of total) |
$451,131 |
Personnel
The recommended budget is based on 594.6 personnel in the district or 6.7 less than is budgeted for the current year. The reduction comes primarily from the contraction of a team at CCMS, consisting of six positions. One of the six positions is being retained for the elementary school configuration, for a net reduction of five FTE. The team contraction is the final step in our reorganization of the middle schools to address the decline in enrollment. This configuration will accommodate all middle school student groups now in the system. The current configuration has two teams each in seventh and eighth grade with four sections on each team, totaling 16 sections. The new configuration, implemented this year at BRMS, has three teams, each with two sections of seventh and eighth graders, totaling 12 sections.
Middle School Team Contraction
Planned For 2008-2009 |
|||||||||||||
|
2007-2008 |
|
2008-2009 |
||||||||||
|
7th |
8th |
7/8 |
Team |
Sect |
Class |
|
7th |
8th |
7/8 |
Team |
Sect |
Class |
BRMS |
135 |
146 |
281 |
3 |
12 |
23.4 |
|
131 |
135 |
266 |
3 |
12 |
22.2 |
CCMS |
156 |
171 |
327 |
4 |
16 |
20.4 |
|
148 |
156 |
304 |
3 |
12 |
25.3 |
The teaching position to be transferred to the elementary schools will be used to implement the organization in the table below, with one more section than is currently in place and which has two split classes, one less than current. If enrollment projections hold, it is possible that this section could be recovered from kindergarten, but that is not known at this time. A more comprehensive version of this table is in the budget backup documents.
Elementary Classroom
Organization For 2008-2009 |
||||||||
|
Kind |
1st |
2nd |
3rd |
4th |
5th |
TOTAL |
|
|
Sect |
Sect |
Sect |
Sect |
Sect |
Sect |
Sect |
Size |
MES |
3.0 |
3.0 |
3.0 |
3.0 |
2.5 |
2.5 |
17.0 |
19.8 |
PDES |
4.0 |
4.0 |
4.0 |
4.0 |
4.0 |
4.0 |
24.0 |
21.5 |
WES |
2.0 |
2.0 |
2.0 |
2.0 |
3.0 |
2.0 |
13.0 |
21.1 |
WKES |
3.0 |
3.0 |
3.0 |
3.0 |
2.5 |
2.5 |
17.0 |
21.1 |
TOTAL |
12.0 |
12.0 |
12.0 |
12.0 |
12.0 |
11.0 |
71.0 |
20.9 |
The district staffing table with historic, current, and budgeted FTE counts is below. A more comprehensive table is in the budget backup materials
School Department FTE Counts -
Historic, Current, and Budgeted |
||||||||
|
02-03 |
03-04 |
04-05 |
05-06 |
06-07 |
07-08 |
07-08 |
08-09 |
Description |
actual |
actual |
actual |
actual |
actual |
budget |
actual |
budget |
total
administrators |
23.0 |
22.0 |
22.0 |
21.0 |
21.5 |
20.5 |
21.5 |
21.5 |
total
certified |
385.3 |
382.4 |
379.2 |
373.1 |
380.1 |
373.1 |
373.3 |
368.3 |
total
non-certified |
212.4 |
210.5 |
203.5 |
198.8 |
208.5 |
207.7 |
204.3 |
204.8 |
Total all
F.T.E.'s |
620.6 |
614.8 |
604.7 |
592.9 |
610.1 |
601.3 |
599.1 |
594.6 |
P-Accounts
These accounts are called P-accounts because they are allocated to Principals for use in supplying their buildings. Building administrators typically have discretion in how these funds are used to support teaching and learning, but are required to follow district curricula and there within purchase the necessary materials. These accounts are allocated to schools based on their student counts. In this budget, the per pupil allocations were increased by 3% and allocated to schools based on their October 1, 2007 enrollments. A detail of the P-account allocations is in the budget backup materials.
|
|
State Aid
A substantial, but decreasing portion of the school department budget is funded by state aid. In 1995-96 nearly 30% of the budget was funded by state aid, a proportion that dropped to under 20% in 2006-07 and sits at 18.2% in the current year.
Historic and Budgeted State Aid |
||
Year |
Aid |
% of Budget |
1995-1996 |
$7,433,939 |
28.9% |
1998-1999 |
$7,925,315 |
25.3% |
2001-2002 |
$9,221,139 |
22.3% |
2004-2005 |
$9,976,903 |
20.2% |
2006-2007 |
$10,428,698 |
18.8% |
2007-2008 |
$10,548,698 |
18.2% |
2008-2009* |
$10,548,698 |
17.6% |
*level state aid projection |
For the 2008-09 budget the level of state aid remains critical. Since the 1990’s, when the aid formula was abandoned, suburban districts, like South Kingstown, have had to assume an increasing share of education budgets as both the proportion of school costs born by the state decreased, and that decreasing share of costs was prioritized to urban districts with less capacity to absorb the reduced state aid share.
With the change in the tax cap communities are no longer able to step up and absorb a decreasing state aid share, meaning that budgets are more dependent on state aid. The same statute that creates the tax cap also commits the state to “aggressively” increase its share of education costs, currently less than 40%, to 50%. While a state aid increase will likely not be feasible in the state’s budget crisis, level aid is budgeted. While the district can sustain itself given a second consecutive aid freeze combined with another substantial pension increase, either a state aid cut for 2008-09 or a third straight year of frozen state aid in 2009-10 would assuredly result in programmatic reductions.
Revenue Assumptions
This budget is based on previously described assumptions that may or may not materialize. A school department budget includes elements, especially in revenue, outside of its control, and this year is no exception. Following is a listing of revenue assumptions that will impact the final budget and their scope and description.