Early Budget Preparation

1. Early Budget Preparation Chesapeake School Board Meeting November 29, 2010

2. Early Budget Preparation Purpose of Presentation Provide a brief historical perspective Prepare Board for budget process

3. Early Budget Preparation • Funding from State – JLARC • Lottery • Recent state reductions • Impact on Chesapeake • Budget schedule

4. Early Budget Preparation • Constitutional Responsibility of General Assembly • “Provide for a system of free public elementary and secondary schools for all children” and “seek to ensure that an educational program of high quality is established and continually maintained” • “Determine the manner in which funds are to be provided for the cost of maintaining an educational program meeting the prescribed Standards of Quality” • “Provide for the apportionment of the cost of such program between the Commonwealth and the local units of government…” • (from JLARC report of 2001)

5. Early Budget Preparation • JLARC – Joint Legislative and Audit Review Commission – Oversight agency of the Va. General Assembly – Evaluates the operations and performance of state agencies and programs • JLARC Study 1985-86 – Requested by General Assembly to provide full funding of the Standards of Quality • Implemented in 1986-88 Biennial Budget • New study commissioned in 2000 – results published in 2001

6. Early Budget Preparation • 2001 JLARC Study: • How is the State estimating SOQ costs? Are all localities fully funding their share of SOQ costs? • Are there any adjustments to the SOQ methodology that appear appropriate? • Are there “funding gaps” for State-mandated or sponsored programs? • To what extent is funding distributed based on local ability to pay?

7. Early Budget Preparation • 2001 JLARC Study: • In what ways are localities exceeding SOQ costs? • If the General Assembly wishes to enhance the level of State support, what options are available and what are the associated costs? • What factors should be considered in assessing the priority to give to various options for increasing State support?

8. Early Budget Preparation • Some key findings of JLARC 2001: • In FY 2000, local school divisions were spending far more money on expenditures than the amount required to meet the SOQ matching amount. • Reasons for the size of local operating cost exceeding the SOQ required match include the following: • Staffing - State standards for instructional staff recognize fewer positions than are provided by most school divisions. • Teacher Salaries – Larger school divisions pay salaries higher than the “average” used in the state calculation of costs.

9. Early Budget Preparation • JLARC Study Recommendations from 2001: • To fix problems, update for inflation, and make salaries more current…..$1.06 Billion. • Localities are providing much more than the minimum standard program funded by the state. • Virginia was 43rd in the nation in comparison to other states in funding for K-12 education.

10. Early Budget Preparation • Lottery: • Approved by voters in 1987. • In 2000, voters approved a constitutional amendment calling for all Lottery profits to go to K-12 public education. • First year of implementation of amendment (2003) $243M of $401M (60 percent) used to “fund the state’s share of Basic Aid Payments” – remaining 40 percent distributed using a per pupil amount (total funds divided by total enrollment).

11. Early Budget Preparation • Lottery: • Since 2008-09 school year, the 40 percent provided directly to schools has now been shifted to cover costs for categorical areas such as: • English as a Second Language, • Textbooks (partially), • Career and Technical Education, • the Early Reading Intervention Program, • the Virginia Preschool Initiative, • the Algebra Readiness Program, • the K-3 Class Size Reduction Program, • the Remedial Summer School Program, • the Mentor teacher program, • Foster Care, • Special Education Regional Tuition, • the At Risk Program, and • the School Breakfast Program.

12. Early Budget Preparation CAREER & TECHNICAL EDUCATION 164.8 MILLION SPECIAL ED REGIONAL TUITION VIRGINIA PRESCHOOL INITIATIVE EARLY READING INTERVENTION MENTOR TEACHER PROGRAM K-3 CLASS SIZE RATIO ENGLISH AS A SECOND LANGUAGE REMEDIAL SUMMER SCHOOL AT RISK FUNDING ALGEBRA READINESS TEXTBOOKS (PARTIAL) FOSTER CARE SCHOOL BREAKFAST PROGRAM ALL NOW FUNDED FROM LOTTERY PROCEEDS. IN DECEMBER 2007 – GOVERNOR’S PROPOSED BUDGET FOR 2008-2010 SHOWED ALL FROM STATE GENERAL FUND

13. State General Fund Revenue Minus Education Funding Lottery Funding 40% 60% 2003-2004 2008-2010 and 2010-12 Basic Aid All other State Aid State Education Funding

14. Early Budget Preparation • Cuts made to the 2010-2011 State budget for K-12 Education were severe. • Many details of the cuts were overshadowed by the efforts of localities to look at the expenditure side. • On top of the cuts on the following slides, $68.9 million was shifted from the Federal Stimulus money to cover Basic Aid costs for the Biennium. • Also not shown here are the funds cut in the previous year by elimination of many support positions (cap on those positions implemented)

15. Early Budget Preparation Summary of some of the reductions: • $244 million from Basic Aid funding over two years by removing certain expenditures normally included in Basic Aid calculations (includes “other benefits,” certain capital outlay items other than technology, and certain lease payments) • $169.2 million over two years by recalculating health care payments • $164.8 million eliminated from the General Fund over two years by transferring certain accounts to LOTTERY • $34.1 million reduction to the state textbook fund for FY 2010 • $78.7 million reduction for support staff funding by including zeroes in the linear weighted average for support non-personnel costs

16. Early Budget Preparation • $67.1 millionin state support for school construction over two years (completely eliminating support) • $61.3millionfrom re-benchmarking update in FY 2010 • $34 millionover two years by updating the “Federal Deduct” calculations • $19.4 millionin school bus replacement funding by extending the replacement cycle from 12 to 15 years • $16.1 millionin state support over two years for the Enrollment Loss provision • $9.4 millionin the biennial budget by eliminating the re-benchmarking update for inflation

17. Early Budget Preparation • Total amount of the two slides: • $733 million • SFSF funding substitution not included

18. FY 09/10 $ 31,293,632 reduction Hiring freeze and vacancies eliminated Positions transferred to ARRA and SFSF Tuition increases – Summer School and Driver’s Ed 50% reduction in tuition reimbursements, professional leave days and travel Reorganization and reduction of summer school services Decrease in extended contracts No bus replacements FY 10/11 $ 29,044,148 reduction Hiring freeze and vacancies eliminated Positions transferred to ARRA and SFSF Tuition increases – Summer School, Adult Ed and Gold Card fees Computer Equipment replacements transferred to SFSF Decrease in extended contracts Reduction in fees paid for AP testing and dual enrollment No bus replacements Impact on Chesapeake$60,337,780 reduction since FY 08/09

19. Early Budget Preparation • Constitutional Responsibility of General Assembly • “Provide for a system of free public elementary and secondary schools for all children” and “seek to ensure that an educational program of high quality is established and continually maintained” • “Determine the manner in which funds are to be provided for the cost of maintaining an educational program meeting the prescribed Standards of Quality” • “Provide for the apportionment of the cost of such program between the Commonwealth and the local units of government…” (from JLARC report of 2001)

20. January 31, 2011 Superintendent’s Proposed FY 2011/12 Operating Budget February 3, 2011 Work Session February 14, 2011 Public Hearing and Work Session February 28, 2011 Public Hearing, Work Session and Action on School Board’s Proposed FY 2011/12 Operating Budget April 1, 2011 Deadline for City Manager’s Proposed Budget to Council May 15, 2011 Deadline for City Council to Adopt FY 2011/12 Budget May 23, 2011 Final action and approval of School Board’s Operating Budget for FY 2011-2012 Budget Schedule