South Kingstown Public Schools Memo

Date:            1/13/2005

TO:                 school committee

From:           Robert Hicks

CC:                  administrators

RE:                 2005-06 recommended budget

With this memorandum is the recommended budget for the 2005-06 school year.  The budget is one that has both a significant increase as well as significant cost reductions.  This is primarily due to the structural increases in the budget, including retirement costs, charter school tuition, and contractual increases.  A summary of the budget follows.

·         The recommended budget totals $52,574,306, an increase of $3,760,429, or 7.7% over the current year’s budget.

·         The proposed budget recommends the closure of South Road Elementary School and the savings associated with the closure are part of the budget.  Closing the school saves the district $229,413, and the placement efficiency gains that come with the closing and consequently avoid spot redistricting save an additional $227,921 for a total of $457,334.

·         The budget is built on the Board of Regents proposal providing a 1.4% increase in state aid.

·         Funding the recommended budget will require a Property Tax Assessment (PTA) in excess of the 5.5% cap.  As presented, the required PTA is $41,512,681, an increase of $3,879,543, or 10.3%.

·         To bring the budget to the level in which the required PTA would increase by 5.5% over the current level ($39,702,961) a combination of budget reductions and other revenue increases totaling $1,809,720 is required.

·         Retirement contributions increase slightly over $1 million.  This is overwhelmingly driven by increases in local contribution rates (teachers from 8.72% to 11.84% and non-certified from 0.32% to 3.06%).

·         Charter school tuition increases by $700,000 over budget and $275,000 over expenditure.

·         The cost of the 3.75% teacher salary increase and professional development stipends is $814,234, and with retirement and FICA added totals $977,610.

·         Changes in health care including the co pay and plan changes generate savings of $261,035.

·         The proposed budget reduces staff by 17.9 personnel, mostly by increases in elementary placement efficiency and the closing of South Road School.

 

South Kingstown Public Schools

Superintendent’s 2005-2006 Budget Request

 

 

Budget Context

This year the school district faces difficult budget decisions.  The School Committee devoted much of its meeting time this fall to the budget, discussed it in a joint meeting with the Town Council, and held its first budget workshop in December to create public information and dialogue.  In short, the school district is facing a sizeable budget shortfall in 2005-06 due to several factors:

·        An additional million dollar contribution to the state’s retirement fund;

·        An increase in budgeted charter school tuition of $725,000; and,

·        Lingering effects from last year’s $1.2 million budget cut, including the use of undesignated funds to offset the reduction.

·        The decreasing share of the budget supported by state aid, which has increased by only 1.7% since 2002-03.

 

While facing these budget issues, the district is also seeing its enrollment decline.  The drop in the number of students will force the district to become more efficient in how it organizes itself, and these organizational issues arise in the budget discussion.  The challenge before the district is to maintain South Kingstown’s high quality of education and student performance while becoming more efficient.

There are several critical issues and questions that arise in this budget environment.  Those issues relate not only to how do we maintain the quality of education in South Kingstown, but also how we demonstrate that the school district is wisely using its allocated resources.  Consequently, this budget looks at specific issues related to its use of funds, including staffing, both historical and budgeted; special education expenditures, and efficiency with respect to enrollments.

Due to fiscal limitations, all new mandates and required initiatives, such as the literacy teacher at the high school and the elementary mathematics support teacher will be met through personnel reassignment.  There are no increased FTE’s in the budget or budget enhancement requests.

 

Revenues

The school district’s revenue history shows an increasing reliance on local property tax revenue.  This is consistent will all suburban districts as the state has prioritized aid to urban areas.  The share of the budget covered by state aid has decreased from 24.5% in 1999-00 to 19.9% in 2004-05 and absorbed by local property taxes.

 

 

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

PTA

72.6%

72.2%

75.2%

75.4%

76.8%

76.8%

State Aid

24.5%

24.2%

22.2%

21.4%

20.5%

19.9%

Other

2.9%

3.6%

2.6%

3.2%

2.7%

3.3%

 

Given state budget limitations, a substantive increase in state aid is not expected.  The budget is built on the Board of Regents proposal that would provide for a 1.4% increase. State aid did not increase in the 2004-05 year and increased only 1.7% since 2002-03.  Funding the recommended budget will require a Property Tax Assessment (PTA) in excess of the 5.5% cap.  As presented, the required PTA is $41,512,681, an increase of $3,879,543, or 10.3%.  To bring the budget to the level in which the required PTA would increase by 5.5% over the current level ($39,702,961) a combination of budget reductions and other revenue increases totaling $1,809,720 is required.

 

Expenditures

The recommended budget totals $52,574,306, an increase of $3,760,429, or 7.7% over the current year’s budget.  There are elements of the budget that drive the increase.  These include expenses both within and without of the district’s locus of control.  Prominent are retirement contributions, charter school tuition, salary expenses, health care, and operational costs including fuel and insurance.  A listing of those elements and their budget impact follows:

 

AREA

INCREASE

% OF ITEM

% of BUDGET

Health care

$280,510

5.30%

0.57%

Retirement

$1,001,784

48.10%

2.10%

Transportation

$237,923

9.40%

0.49%

Charter school tuition

$701,673

118.50%

1.40%

Teacher step increases

$433,635

2.00%

0.89%

Teacher wage increases

$665,412

3.10%

1.36%

Pupil use materials

$78,120

9.40%

0.16%

Utilities

$111,373

17.60%

0.23%

Capital 5200

$115,000

88.50%

0.24%

TOTAL

$3,625,430

 

7.4%

 

Of concern has been the school district’s expenditure of funds beyond its allocated budget.  In some circumstances, this results from required and reimbursed expenditures, where additional services are provided and then reimbursed to the district through Medicaid, for example.  This results in additional expenditures along with offsetting revenues.  That is not the only over expenditure, however, as circumstances have resulted in the district spending unanticipated state aid.

In 2004-05, charter school tuition drove expenditures beyond budget, where both the number of students and the tuition rate exceeded budget projection.  Charter school tuition, per pupil, rose 65% over a three year period and the district is not informed of the rate until after the fiscal year has begun.  In 2004-05 the district absorbed $400,000 in unbudgeted charter school tuition.  The school district budget in recent years has been left with no ability to absorb unanticipated expenses, this because the district was reluctant to make program reductions necessary to create such capacity, keeping as much of the district intact as possible.

The table below shows budgeted and actual expenditures in recent years as well as the district’s overall financial position for the year, including offsetting revenue.  The table illustrates that the district moved closer to its target expenditure and maintained a positive net financial position as required by state law.

 

Actual

Actual

Actual

Actual

Projected

 

2000-01

2001-02

2002-03

2003-04

2004-05

Budgeted

 $ 36,187,338

 $ 41,582,164

 $44,100,563

 $47,404,597

 $48,813,877

Expended

 $ 36,864,477

 $ 41,256,687

 $44,650,202

 $47,671,022

 $49,005,576

$ over expend

 $      677,139

 $    (325,477)

 $     549,639

 $     266,425

 $     191,699

% over expend

1.9%

-0.8%

1.2%

0.6%

0.4%

Net Total

 $      (82,569)

 $      413,210

 $     209,282

 $        1,355

 $      31,487

 

Pupil Use Materials

In recent years, pupil use materials (texts, supplies, technology, etc.) bore the brunt of both reductions and freezes.  In 2003-04 progress was made in restoring those accounts to levels that approximated the state average.  As part of the 2004-05 budget reduction pupil use material accounts were reduced by approximately 20% and an additional 8% frozen during the year as part of the effort to protect the budget against over expenditure against increases in charter school tuition.  For 2005-06 the per pupil allocation originally budgeted for 2004-05 was carried forward.  Since enrollment is down, the total budgeted amount is decreased.  However, the operational amount in the final 2004-05 budget is inadequate to sustain the program.  As a result, the total increase for pupil use materials is $78,120.

Original 2004-05 budget

Final 2004-05 budget

Requested 2005-06 budget

$958,318

$834,645

$912,765

 

 

Special Education

Special education expenditures have historically impacted the district budget in several ways.  Two of the most visible are expenses for out of district tuition and one to one aides.  Both of these areas frequently exceeded budgeted allocations and were growing at a rate that exceeded overall budget growth.  To a large degree, this was a result of lack of administrative stability in special education, although these areas, particularly tuitions, impact school districts across the state and nation.  There is progress to report in both of these areas.

Through the 2002-2003 year, out of district tuitions grew at an annual rate of 28%.  The administrative goal, articulated last year, was to cap the growth in tuition.  That goal has been met and exceeded, as expenditures are turned in a positive direction.  The history of this expenditure area is below.

Actual

Actual

Actual

Actual

Projected

Budgeted

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

 $    1,431,974

 $      1,838,168

 $      2,013,003

 $      1,958,024

 $      1,766,869

 $      1,800,000

 

There is also progress in the growth of one-to-one aides.  This was seen not only in growth in the employment category, but also in appointments beyond the budgeted allocations for the positions.  In the table below is a breakout of the staffing table below indicating that not only has the growth subsided, but staffing now falls within budget. (Note: the 2001-02 budget FTE adjusts for the movement of 8.3 positions to the clerical category to provide an accurate comparison.)

Teacher Assistant FTE

2001-02

2002-03

2003-04

2004-05

Budget

Actual

Budget

Actual

Budget

Actual

Budget

Actual

90.3

93.3

97.2

105.0

105.0

104.2

105.2

103.2

 

Overall, South Kingstown is part of a statewide trend that an increasing share of the budget is expended on special education.  The district exceeded the statewide share of this measure according to In$ite state financial data (02-03 is the most recent data available).  The comparative data indicating the percent of the budget devoted to special education for the district and state is in the table below.

 

98-99

99-00

00-01

01-02

02-03

RI

19.0%

19.4%

20.2%

21.3%

22.0%

SK

21.8%

20.7%

22.5%

23.5%

24.8%

Difference

2.8%

1.3%

2.3%

2.2%

2.8%

 

Elementary Student Placement

In 2004-05 our elementary student placement efficiency rate is 80%, meaning that we utilized 8 of 10 available places.  Among individual schools, efficiency ranges from 90% at Peace Dale to 72% at South Road.  Peace Dale is more efficient due to its larger size.  Additionally, we have highly disparate class sizes, ranging from 12 to 27, even though our average class size 20.  This results from a combination of declining enrollment and student assignment to neighborhood schools.  Two major impacts of this outcome are: (1) an increase in per pupil cost or an inability to recapture savings from enrollment decline; and, (2) inequity in educational experience for our students based on differing class sizes.  Current placement efficiency is in the table below.

 

 

Classes

Low

High

Average

Efficiency

K

11

12

23

19

75%

1

14.5

14

23

18

71%

2

14

18

22

20

79%

3

12

18

23

21

85%

4

13

18

23

22

82%

5

13.5

20

27

24

88%

Total

78

12

27

20

80%

 

In order to capture savings from enrollment declines and to provide equity among class sizes it will be necessary to change how students are assigned.  For example, we currently have 78 elementary classes.  If we keep our current alignment and roll forward with next year’s projected enrollment, we will need 76 classrooms, a reduction of two.  That alignment is below.  As can be seen, we will keep approximately the same overall efficiency rate, but it will again vary greatly by school, with a high of 92% at Peace Dale and a low of 69% of South Road.  In fact, the discrepancy in efficiency rates, and accordingly equity, will grow.  The reduction in two classes would reduce the budget by $90,000.

 

 

PDES

SRES

WES

MES

WKES

TOTAL