SUPERINTENDENT’S BUDGET MESSAGE FOR FISCAL YEAR 2017-18

As Presented to the Budget Committee on June 6, 2017

Introduction

I would like to welcome the Budget Committee, staff members, and members of the public attending today’s Budget Committee meeting. This is the first Budget Committee meeting to review the proposed 2017-2018Grants Pass School District No. 7 (“District”) budget.

On June 1, 2017, the Oregon Legislature’s Joint Ways and Means Education Subcommittee passed an $8.2 billion State School Fund bill, which will now move to the full Ways and Means Committee for consideration for the 2017-2019 biennium. This funding level does not include potential funding for ballot measure 98, targeted to support expanding Career and Technical Education, increasing dual credit opportunities, and drop-out prevention efforts. Likewise, this funding level also does not include potential targeted funding for ballotmeasure 99 in support of ensuring all students in grades 5 or 6 have access tooutdoor education programs.

Education advocates have stated that a budget of $8.4 billion is necessary to maintain current service levels but would continue to fall well short of the Quality Education Model funding level of $9.971 billion as determined by state of Oregon’s Quality Education Commission. The final funding levels, as determined by the legislature and governor, are not completely known at this time, and as a result, this budget document reflects opportunities for potential contingencies and re-appropriations pending the decided funding levels.

The District will continue to face increasing costs as a result of collective bargaining obligations, additional staffing costs, as well as increasing costs for utilities, insurance, certified substitutes and other recurring expenditures. Additionally, while the legislature continues to seek opportunities for PERS reform and new revenue streams,the anticipated district obligation for the unfunded PERS liability continues to project more than $14 million in increased employer costs from 2017 through 2023.

In spite of the continued funding challenges, it is important for the District to remain focused on investing in our students in the most meaningful ways including support through community partnerships. It is important to note that community partners such as Evergreen Federal Bank, All Care Health, Primary Health, Ford Family Foundation, College Dreams, Southern Oregon Early Learning Systems, and Grants Pass Booster Club have been tremendously supportive through financial commitments to our schools, students, and community.

The proposed 2017-2018 budget presented to the Budget Committee for consideration this evening, strives to strike a balance by:

  • Allocating available resources to address rising staffing and other costs;
  • Maintaining reserves to address anticipated employer PERS cost increases and potential future state school funding shortfalls; and
  • Continuing to expand our efforts to strategically address the needs of our students and families so they can take full advantage of the outstanding educational, extracurricular and college/career readiness opportunities our District offers.

Based on these priorities, the proposed 2017-2018budget is intended to achieve the following specific objectives:

  • Preserve a full school year and maintain all current programs for our students;
  • Provide adequate resources to meet the District’s anticipated collective bargaining obligations (including associated FICA and PERSemployer costs);
  • Provide funding for estimated non-salary related cost increases including utilities, insurance,technology and professional services;
  • Maintain PERS reserve levels to help protect against anticipated PERS employer rate increases scheduled to begin July 1, 2017;
  • Add an additional special education teacher;
  • Provide funding for textbooks to accommodate the middle school and high school textbook adoptions and purchases;
  • Increase opportunities for students and teachers to access technology for teaching and learning;
  • Sustain funding for the Capital Projects Fund tomeet the District’s elementary classroom construction debt obligations and to address critical deferred maintenance and capital equipment needs;
  • Fund the following strategic initiatives to help improve student outcomes:

Expand AVID elective opportunities at Grants Pass High School

Add an additional modular at Gladiola to support more alternative education students currently placed in other facilities in our community

Expand the number of at-risk students supported and mentored by College Dreams

Provide a ‘Graduation Coach’ to support students in our alternative high school programs

Provide a ‘Dropout Prevention Coordinator’ at Grants Pass High School

Support the implementation of Collaborative Learning for Educational Achievement and Resiliency (CLEAR) at the elementary level and Gladiola

Begin replacing an aging bus fleet that must be off the road by 2025 as mandated by statute

District General Fund[1]

The following table summarizes the net increase in the District’s estimated 2017-2018General Fund available resources:

General Fund Available Resources / Amount
Beginning Fund Balance Increase/(Decrease) / ($2,300,000)
SOESD Flow through Increase/(Decrease) / $0
Other Revenue Increase/(Decrease) / $19,258
State School Fund Increase/(Decrease) / $3,351,822
TOTAL / $1,071,080

The following table shows how the District’s estimated2017-2018 General Fund budget allocates these additional resources:

General Fund Budget Expenditure Variances / Amount
Net staff salary & associated payroll cost increases / $3,054,584
Central services & site allocation increases / $650,000
Contingency and Transfers / ($1,110,513)
Ending Fund Balance Increase/(Decrease) / ($1,522,992)
TOTAL / $1,071,079

The following tableshighlights the components of the salary and associated payroll cost increases:

Staff Salary & Associated Payroll Cost Increases / Amount
2017.2018 Step increases (including PERS & FICA) / $549,334
2017.2018 PERS increase / $1,681,739
Health Care Adjustment / $0
Staff Attrition and Early Retirement / ($271,278)
Additional teacher for PALS classroom and Summer School resources / $120,931
Staff additions and other salary related adjustments from 2016.2017 / $973,858
Total Staff Salary & Associated Payroll Cost Increases / $3,054,584

The following table summarizes the General Fund resource/useincreases (decreases) in the proposed budget in comparison to the last several budget years:

District General Fund Budgeted Amounts / 2014.2015 / 2015.2016 / 2016.2017 / 2017.2018 / Increase
Adopted / Adopted / Adopted / Proposed / (Decrease)
Resources
Beginning Fund Balance / $2,800,000 / $5,500,000 / $5,500,000 / $3,200,000 / ($2,300,000)
State School Fund Grant / $46,501,228 / $52,882,811 / $52,882,811 / $56,234,633 / $3,351,822
State School Stabilization / $0 / $0 / $0 / $0 / $0
Net State School Fund / $46,501,228 / $52,882,811 / $52,882,811 / $56,234,633 / $3,351,822
Other Revenue / $2,333,892 / $2,683,892 / $2,683,892 / $2,703,150 / $19,258
Transfers / $0 / $0 / $0 / $0 / $0
Total Resources / $51,635,120 / $61,066,703 / $61,066,703 / $62,137,783 / $1,071,080
Uses
Salaries / $29,075,927 / $30,630,653 / $32,040,558 / $33,109,993 / $1,069,435
Associated Payroll Cost / $15,515,731 / $14,602,777 / $15,515,731 / $17,578,888 / $2,063,157
Purchased Services / $2,535,469 / $2,686,469 / $3,061,830 / $3,149,635 / $87,805
Supplies & Materials / $1,933,507 / $1,811,914 / $2,398,297 / $2,527,264 / $128,967
Capital Outlay / $0 / $325,000 / $0 / $350,000 / $350,000
Insurance. Taxes, Dues & Fees / $342,173 / $349,888 / $342,173 / $346,886 / $4,713
Transfers / $2,450,000 / $1,550,000 / $2,450,000 / $650,000 / ($1,800,000)
Contingency / $750,000 / $775,000 / $750,000 / $1,440,000 / $690,000
Total Expenditures / $52,602,807 / $52,731,701 / $56,558,589 / $59,152,666 / $2,594,077
Ending Fund Balance / $4,508,109 / $3,227,191 / $4,508,114 / $2,985,117 / ($1,522,997)
Total Uses / $57,110,916 / $55,958,892 / $61,066,703 / $62,137,783 / $1,071,080
Ending Fund Balance / 8.57% / 6.12% / 7.97% / 5.05%

Other Funds

Significant points in the 2017-2018proposedbudget for other District funds are as follows:

  • Federal Programs Fund – It is anticipated, based on the Presidents proposed federal budget, that Title IA and IDEA are going to increase for 2017.2018.Title IIA professional development federal funding is projected to be flat. This budget allows sufficient appropriate flexibility should the State receive additional federal funding.
  • Student Body Funds –The proposed budget provides sufficient appropriation to allow site based student body funds to spend the approximately $2.5million in student body funds estimated to be raised for2017-2018;
  • Food Service Fund – With the implementation of the Community Eligibility Program (CEP), the District has seen an increase in participation; the 2017-2018 budget will reflect this increase. The Food Service Fund continues to operate with a net surplus which must be reinvested into the District’s Food Service Program;
  • Cool Schools Fund – This fund accounts for revenue received and projects accomplished through SB1149 funding. These funds are to be used specifically for projects that increase energy efficiency. Director Ely will be reviewing the list of projects during the budget presentation;
  • Measure 98 – A special revenue fund has been included in this proposed budget in the event that Measure 98 funds are made available to Districts. The proposed use of these funds will be reviewed by Director Evens during the budget presentation.
  • School Improvement Fund – The District has spent out this fund based on a GASB ruling that requires any special revenue fund to show a funding stream other than a transfer from the General Fund;
  • PERS Reserve Fund –Due to the increase in PERS rates for 2017.2018; the uncertainty of the level of State School Funding, and considering that the District is still engaging in compensation negotiations with the Licensed and Classified staff, this budget does not have a budgeted transfer from the General Fund to the PERS reserve. However, additional funds have been budgeted into Contingency should additional funding become available.
  • Capital Projects Fund – The proposed budget includes a $650,000 transfer from the General Fund to the Capital Projects Fund in order to fund various capital improvement and deferred capital maintenance needs of the District. This proposed budget also includes $6 million to reflect the seismic rehabilitation grants the District has been awarded. It should also be noted that this fund is used to service the District’s elementary classroom construction debt incurred over the past year. The list of anticipated capital projects will be reviewed in greater detail by Business Director Ely during the budget presentation;
  • Insurance Reserve Fund – This fund is used to pay the claims submitted for those employees who participate in the District’s Health Reimbursement Account – this is a benefit the District provides for those employees who don’t otherwise qualify for a Flexible Spending Account or Health Savings Account;
  • Unemployment Fund – The District is self-insured for unemployment expense and this fund is used to pay those expenses. The proposed budget provides for a $25,000 General Fund subsidy for this fund;

Conclusion

In writing my first budget message as your Superintendent, I have reflected on the sixteen years for which I have had the privilege to be a teacher, coach, and administrator in Grants Pass School District #7, as well as watch my own children have the opportunity to experience tremendous educational, co-curricular, and extra-curricular opportunities. The financialforethoughtdemonstrated by our school board, budget committees, and district leadership have allowed the District to recruit and retainhigh quality staff, maintain a full instructional year, and retain and expand educational and extracurricular programs for our students and families.

In closing, I would like to thank the staff (particularly Business Director Ely and her team) for their efforts in preparing the proposed 2017-2018budget. In addition, I would like to thank the Board and Budget Committee members for their ongoing commitment to our students, our staff and the programs that make our District successful.We have so much to be thankful for as we continue to foster hope and engagement for students, families, and our community.

Respectfully submitted,

Kirk Kolb

Superintendent of Schools

Grants Pass School District 7

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[1] The General Fund described in this section refers to the District’s main operating fund and does not include site general fund amounts raised and spent at each location which are estimated to total approximately $2.1 millionfor 2016-17.