Five-Year Fiscal Forecast FY FY 2021

Transcription

1 Five-Year Fiscal Forecast FY FY 2021 September 24, 2015 Every Student Succeeds

2 Essential Questions Economic Outlook Fiscal Forecast Agenda Fiscal Forecast Model Key Assumptions / Drivers Projected Revenues, Expenditures and Operating Gap Implications for FY 2017 Operating Fund Budget Drivers of Growth in Expenditures Unrestricted Fund Balance Next Steps 2

3 Essential Questions What methodology should ACPS use to determine funding levels that accurately reflect the goals and needs of the school division? What strategies should be considered to respond to increases in expenditures and make funds available to address school division needs? Compensation model Benefits packages Outsourcing Program Review Revenue enhancements How does the fiscal forecast inform the development of the FY 2017 budget? 3

4 Economic Outlook An Overview City of Alexandria Pros High per capita income Low unemployment High ratio of jobs to residents Cons Projecting slow growth in the local economy Private economy is same size as before the 2008 recession Rising commercial real estate vacancy rates Increasing reliance on public sector jobs, and federal spending has been flat since 2009 Current 5-year forecast (released as part of the City s FY 2016 budget) projects deficits by FY 2021 ranging from $36 million to $49 million 4

5 Economic Outlook An Overview State of Virginia Revenue growing at 1.6 percent per year since 2007 Virginia s revenue as a share of personal income has declined to approximately 4 percent, which is a reduction of 0.5 percent from the pre-recession average State funding of public education is down 14 percent ($883 million) since 2007 Federal Government Congressional Budget Office projects discretionary, nondefense spending (the category containing federal entitlement grants) will decrease from 3.2 percent of budget to 2.5 percent of budget by

6 Operating Fund: Key Assumptions Revenue City of Alexandria appropriation per student remains at the FY 2016 level of $13,483 per student. State revenues grow in total by 3.2% per year based on projected education spending in the state budget through FY Source FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 City Appropriation Per Student State Funding Per Student $13,483 $13,483 $13,483 $13,483 $13,483 $13,483 $2,388 $2,376 $2,380 $2,402 $2,421 $2,

7 Number of Students Operating Fund: Key Assumptions Enrollment (Projections Based on Data as of October, 2014) 18,000 16,000 14,000 12,000 10,000 8,000 16,784 16,449 16,059 15,702 14,745 15,234 4,100 4,113 4,221 4,301 3,650 3,690 2,836 2,827 2,950 3,238 3,310 3,380 Growth % % 6,000 4,000 7,861 8,035 8,226 8,275 8,476 8,650 K % 2, Elementary Middle School High School PreK Special Placement Total 13.8% 7

8 Number of Students Operating Fund: Key Assumptions Enrollment Within the overall enrollment is continued growth in the number of children with additional needs. Projections assume that the FY 2016 percentages of total enrollment for each subgroup remain constant. 12,000 10,000 9,183 9,488 9,779 10,001 10,244 10,453 8,000 6,000 4,000 4,400 4,540 4,672 4,745 4,861 4,960 2,000 1,591 1,644 1,694 1,733 1,775 1, Special Education English Language Learners Free & Reduced Price Meals-Eligible

9 Number of ELL Students Operating Fund: Key Assumptions ELL Enrollment Considerations The forecast projects the number of ELL students by holding the percentage of total enrollment constant. The number of ELL students by FY 2021 could be significantly greater if recent trends in the rate of increase continue. 7,000 6,000 5,000 4,000 3,000 2,000 2, % ELL 24.6% 25.4% 28.2% 4, % 37.8% ELL 6,351 4, % ELL History % ELL Remains at 2016 Level % ELL Continues To Rise Potential increase of 1,391 students requiring ELL Services, at a projected additional cost of $5.6m 9

10 Operating Fund: Key Assumptions Staffing Student-to-Staff ratios are held constant at FY 2016 levels. FTEs modeled with this method include: Elementary Homeroom Teachers Elementary Enrichment Teachers Middle School and High School Core Subject Teachers Middle School and High School Elective Teachers Instructional Coaches English Language Learner Teachers Special Education Teachers Kindergarten Paraprofessionals Special Education Paraprofessionals Counselors, Psychologists, & Social Workers Technology Integration Specialists Bus Drivers and Monitors 10

11 Operating Fund: Key Assumptions Class Size Caps and Student : Teacher Ratios Grade ACPS Class Size Caps ACPS FY2016 Budget Student : Teacher Ratio Average State SOQ* Max Pre-K 18 14:1 NA NA Kindergarten 22 21:1 24:1 29:1 1st 24 22:1 24:1 30:1 2nd 24 21:1 24:1 30:1 3rd 26 23:1 24:1 30:1 4th 26 22:1 25:1 35:1 5th 26 23:1 25:1 35:1 * Class sizes prescribed in the Standards of Quality are division-wide standards, per the Code of Virginia. 11

12 Number of FTEs Operating Fund: Key Assumptions Operating Fund FTEs Average Enrollment Increase: 2.6% Average Increase in FTEs: 2.1% 3,000 2,500 2,214 2,268 2,325 2,368 2,414 2,452 2,000 1,500 1, Elementary Middle School High School English Language Learners Special Education Transportation Central Office 12

13 Operating Fund: Key Assumptions Grant-Funded FTEs The model assumes the following grant-funded FTEs will remain so. If grant funding diminishes or is eliminated, these FTEs may need to be moved into the Operating Fund. Grant Population Served Current FTEs Title I Children from Low-Income Families 15 Title II Professional Development 1 Title III English Language Learners 2 IDEA Special Education 25 Total

14 Operating Fund: Key Assumptions Other Expenditure Considerations Category FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Compensation Rate Increases Full-Step 2.8% Full-Step 2.8% Full-Step 2.8% Full-Step 2.8% Full-Step 2.8% Retirement (VRS Professional Rate as a % of Salaries) 15.9% 15.9% 18.2% 18.2% 18.2% OPEB Contribution* 43.6%* -0.8% -0.7% -0.6% -0.6% Supplemental Retirement** Non-labor Inflation Rate *** $0 $0 $0 $0 $0 2.37% 2.54% 2.33% 2.31% 2.31% * $600k paid from health benefits fund in FY The full contribution will be absorbed by the operating budget in FY 2017 ** Employees currently contribute 1.5% of salary, which meets the current Annual Required Contribution. Changes in economic conditions may warrant contributions from ACPS *** Source: Projected Annual Inflation Rate in United States from IMF s World Economic Outlook Database April

15 Operating Fund: Key Assumptions Textbook Adoption Textbook adoption is a significant financial event that is not an annual expenditure. The forecast assumes adoptions from FY 2017 through FY Subject FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 English/Reading $1,125 Secondary Mathematics $220 $55 Elementary Music $180 Science $675 Social Studies $1,240 World Languages $550 Total $1,625 $1,180 $1,240 $ in 000s 15

16 Operating Fund: Key Assumptions Strategic Plan Implementation Expenditures The forecast includes placeholders for expenditures associated with implementation of the Strategic Plan. Examples include: Elementary School World Language Program Leased classroom space for capacity expansion Expanded Summer Learning Program Student and Staff Surveys Increased investment in Information Technology Infrastructure Expanded Wellness Programs Expenditure FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Strategic Plan Implementation $1,000 $3,020 $3,514 $4,229 $5,166 $ in 000s 16

17 Operating Fund: Key Assumptions Other Financing Sources and Uses (Excluding Operating Fund Balance) The Operating Fund supports the Virginia Preschool Initiative (VPI) program, and is supported by transfers from the E-rate and Medicaid funds. The VPI transfer grows as the number of Pre-K classes grows. The Medicaid fund and E-rate funds are forecasted to be fully depleted after FY Source / (Use) FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Transfer to VPI ($1,424) ($1,574) ($1,724) ($1,874) ($2,024) ($2,024) Transfer from E-rate Transfer from Medicaid Transfer from Health Benefits Fund Total Other Financing Sources / (Uses) , $678 ($1,024) ($1,724) ($1,874) ($2,024) ($2,024) $ in 000s 17

18 $350.0 $325.0 $300.0 $275.0 $250.0 $225.0 $200.0 $240.3 $240.3 $242.9 Operating Fund Revenues vs. Expenditures $ in Millions $257.7 $272.3 $249.8 $288.4 $255.7 $300.4 $262.1 $313.5 $267.9 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Revenues (net of other financing) Expenditures The preliminary gap between revenue and expenditures grows from $14.8 million in FY 2017 to $45.6 million in FY The gap between revenue and expenditures represents the budget shortfall that must be addressed through revenue enhancement and expenditure reductions Note: FY 2016 Revenues include approved $3.3M use of Unrestricted Fund Balance

19 Operating Fund Expenditures Estimated Drivers of Change Between FY 2016 and FY 2017 $ in Millions Total Expenditures : FY 2016 $240.3 Enrollment-driven Costs 5.4 Salary Increases 5.2 Benefit Rate Increases 3.4 Non-Labor Inflation 0.8 Textbook Adoption 1.6 Strategic Plan Implementation 1.0 Total Expenditures : FY 2016 $

20 Unrestricted Fund Balance History $ in Millions $20.0 $16.0 $15.2 $12.0 $12.2 $10.1 $12.5 $12.0 $8.0 $4.0 $ prelim 2016 target Unrestricted Fund Balance Target fund balance is set at 5% of annual operating expenditures. The City and ACPS are currently working together to develop a fund balance policy and plan to make progress towards industry best practices. 20

21 Next Steps Develop consensus on the financial forecast The fiscal forecast may be a topic for discussion at the joint meeting between the ACPS Budget Advisory Committee and the City of Alexandria s Budget and Fiscal Affairs Advisory Committee to be held in October, 2015 Transform the financial forecast into a financial plan Evaluate the assumptions Provide guidance on the Essential Questions Incorporate elements of the Strategic Plan Perform Sensitivity Analysis Identify operational changes to create a roadmap to maintain financial stability through the projection period 21

22 Questions Stacey Johnson Chief Financial Officer Andrew Hullinger Director of Budget and Financial Systems Superintendent Dr. Alvin L. Crawley School Board Karen A. Graf, Chair Christopher J. Lewis, Vice Chair Kelly C. Booz Ronnie Campbell William E. Campbell Patricia Ann Hennig Stephanie A. Kapsis Justin Keating Marc Williams 22