Koca presents budget to School Board

Board of Education. Board members present were: Darrell Eason – President. Greg Beydler- Vice President, Benny Brower Mark Burley. Terry Shepard and Chad Whitesell. Board member Josh Floyd was absent

FY19 Budget Message

El Dorado Springs R-II School District

In compliance with Missouri Public School Law, section 67.010, as set forth by the Department of Elementary and Secondary Education (DESE), and the Missouri State Board of Education, the following Budget Document has been developed by the superintendent, in cooperation with administration, staff, and the El Dorado Springs R-II Board of Education.

RECAP FY 18

• El Dorado Springs R-2 Schools continues to be in relatively good financial shape.  FY 18 will end with the district having approximately $2.85 million in reserves collectively in funds 1, 2 and 4 and another $2.276 million in bond funds that are currently invested with the MOSIP organization and Mid Missouri Bank until needed for construction.

• Fund 3 (Debt Service) Balances dropped in this first year of the new Bond Issue payments and will do so again next year due to the District’s promise to hold the Debt Service levy at $0.54.  Balances will begin to grow when the 2011 bonds are paid off in 2019.

• Enrollment grew slightly for the 17-18 SY at around 1100 students but is still about 35 students lower than the 14-15 SY.

• Teacher turnover continued to be a slight problem with 10 new certified staff members joining the staff for the FY 18 school year. One certified staff member retired this year.  The Board took action to provide for annual steps on the salary schedule and raise the base from $31,000 to $31,500. The district continues to fund the Career Ladder Program at 50% at a cost of about $145,000.

• The district continues to be a member of the OSBA Health Insurance consortium this past year.  This was the second year that El Dorado R-2 participated in this program as a regular member with no premium added to the regular rate as a new member.  Rates were $424 PMPM and the previous $14.50 PMPM “fee” has gone away which resulted in a savings of over $30,000.  The Board continues to pay the full amount of the employee health insurance and the membership fee.

• Revenue from investments is up slightly due to the new banking contract with Mid Missouri Bank.

• Capital projects and purchases for FY 18 included more roofing at the elementary, more asbestos removal in the HS, improved drainage at the 3rd grade entrance, re-routing of the HS sewer line, replacement of fixtures in the MS boys bathroom, carpet in several rooms, purchase of a new ice machine, 7 replacement rooftop HVAC units, new roof on the old maintenance building asphalt sealing by Old gym, and the purchase of a new mower. A project that was not originally budgeted for was the utilization of construction excavated fill to rework the east side of the track for parking and improved drainage ($65,000).  Additionally, the District incurred expenses associated with the beginning of the construction project at the HS which included moving the LED sign, purchase of a storage container for classroom equipment, rental of a mobile classroom and various temporary projects.

• The Early Childhood Center has posted its first full year in operation this year.  Prices for daycare were set to match other daycare facilities in the area, but the District carries the additional burden of retirement and benefits as required by the state for our employees. As a result, the program operated at a loss for FY 17-18.  An adjustment to prices will be made for FY 18-19 in an attempt to mitigate these losses.

• Construction on the High School Addition began in October 2017, and is expected to be completed in the fall of 2018.  This project includes a new Middle School gym, locker rooms, replacement weight room for the one that had to be move, a new band room, new choir room, and an elevator which will serve all parts of the building.  Quite a bit of reconfiguration of the existing High School building was required to provide 100% ADA accessibility.  The District has expended about $3.6 million of its available funds on the project at the end of the fiscal year.

• The district scored 127 of 140 or 90.7% on the Annual Performance Review this year.  This is down slightly from 129.5 last year.  This keeps the district easily within the fully accredited margin.  APR’s from year to year are not really comparable as significant parts of the student exams have changed each year.

• The District continued to participate for a fourth year in the “Community Eligibility Provision” through the USDA food service program.  This program provides free breakfast and lunch for all students K-12.  The district went into this with the assumption that there would be a loss to the district with this program, but the losses have been negligible due to greater participation by the students.  The district is still struggling with spending down excess food service balances.

• The energy savings project, as presented at the May Board meeting has matched the promise of savings to the district.  360 Energy Engineers report estimates a total savings of approximately $57,000.

Looking Ahead to FY 19

The District’s FY18 budget has been developed with the consideration of levying the tax rate ceiling.

Chapter 165, RSMo, provides that all school monies must be accounted for within a framework of funds:  Incidental Fund; Teachers Fund: Debt Service Fund; and Capital Projects Fund.  The District currently maintains revenues and expenditures through the following funds:

• Fund I – General (Incidental) Fund:  All of the District’s basic services are included in the Incidental Fund, which general focus is on (1) how cash and other financial assets that can readily be converted to cash flow in and out, and (2) the balances left at year-end that are available for spending.

• Fund II – Special (Teacher) Fund:  The Special (Teachers) Revenue Fund is used to account for revenue sources legally restricted to expenditures for the purpose of teacher salaries and benefits, and tuition payments to other school districts.

• Fund III – Debt Service:  The Debt Service fund is used to account for all revenue and expenditures relating to voter approved general obligation bond propositions generally in the form of new construction and renovation.

• Fund IV – Capital Projects:  This fund is used to account for all facility acquisition and construction, all lease-purchase payments of principal and interest, and all other capital outlay expenditures with the exception of certain expenditures for classroom instructional capital outlay as allowed under Section 165.011, RSMo.

• For the 2019 fiscal year, El Dorado Springs R-II School District will operate under an estimated $3.74 tax levy: $3.20 Operating Levy and $0.54 Debt Service Levy.  Fund placement requires 75% of Formula Money, and 75% of 1⁄2 Proposition C monies be placed in Fund II.  All (100%) of the State Transportation monies are to be placed in Fund 1.  Senate Bill 291 passed in the 2009 legislative session states the following provision in Section 163.043.5:  “For the 2010-11 school year and for each subsequent year, all proceeds a school district receives from the classroom trust fund in excess of the amount the district received from the classroom trust fund in the 2009-10 school year shall be placed to the credit of the district’s teachers’ and incidental funds.”  For FY19, 100% of the District’s Classroom Trust Fund monies will be place in the Incidental Fund.

• Local tax revenue is calculated on the estimated total assessed valuation (AV) of $96,690,310 (3% increase) with the tax rate of $3.74 per $100 of AV.  Conservatively, revenues are projected on 89 percent and 11 percent collection for current and delinquent taxes, $3,218,692, and $397,816 respectively. The total local receipts are estimated at $5,323,755 or approximately 42.48 percent of the total district revenues.  Receipts from non-current and other revenue sources are estimated at $1500 or less than 1%.

• County receipts are generated from fines, forfeitures, railroads, and utilities.  It is estimated that $228,000 or 1.82% of the projected revenues will come from this source.

• State revenues, most of which come through the State Formula, should total approximately $5,387, 2018

• which is about 42.99 percent and amounts to small increase as compared to last year’s budget. Other sources of state revenue come from Classroom Trust Fund, Transportation; Early Childhood Special Education; Vocational Education Reimbursements; and State Food Service.

• The federal receipts for the current budget year are estimated at $1,585,034 or about 12.65 percent of total revenues.  This is slightly higher than last year.  The majority of these monies are generated for reimbursement of Title Programs, Early Childhood Education, and food service.

As of July 1, 2018, all funds supported an estimated beginning balance of $2,885,800 in funds 1, 2, and 4.  The 2018-19 budget currently represents total projected revenues of $12,532,491 and expenditures of $12,511,510

(+ $20,981) These figures project a year-end balance of $3,013,484 as of June 30, 2019 (Funds 1,2,4) or 22.63% unrestricted fund balance

Major Impacts on the budget for FY 19:

• 4.9% increase in health insurance premiums.  This is our fourth year with OSBA’s self-funded consortium.  The cost PMPM has still not reached the level of cost from our previous consortium.  OSBA is in good financial shape and continues to be very competitive in the market.

• We are now in the second year of Formula calculations which include the loss of students experienced 3 years ago.  The effect of this loss of students has had a significant impact on the budget (around -$250,000 annually).  The district will need to adjust staffing levels in the near future to deal with this issue.  This will partially be offset by the “fully funding” of the Foundation Formula which will see the State Adequacy Target rise to $6300 per Weighted Average Daily Attendance.  This increase will net about $169,000 in additional revenue

• Greater Career Ladder participation—the district contribution to Career Ladder has reached nearly $150,000.  This is having an adverse effect on base salaries and the board may have to consider capping the amount it will pay in the near future.  El Dorado Springs is one of very few schools that still supports a Career Ladder Program.

• A number of employees are taking graduate classes and moving over on the salary schedule.

• The District has completed its fourth year with the Community Eligibility Provision for student lunches.  This program has been at a slight loss to the District.  Unfortunately, the Direct Certification numbers from April did not qualify the District to participate fully in the program.  Options available to the district include:  Operating under a “grace year” with the CEP, moving to Provision II lunch program, or returning to traditional paid, free, reduced lunch program.  Because of the Paid Lunch Equity regulation, the district would have to increase lunch prices by $.50 if returning to the paid program.  After consideration, the Board moved to operate under Provision II and will continue to provide free breakfast and lunch for all students.  This will come at a larger district loss, which in part can be mitigated by a high percentage of returns of the Free and Reduced lunch applications.  The District still has what the USDA consider an “excess balance” in food service that must be spent down and the Provision II program will help with this process.  This program will be evaluated for 1 year and a decision will have to be made in May 2019, as to whether the District can continue to operate under this program.

• Student transportation will continue to be a major expense for the district—the change in the contract to utilize older busses has kept costs down, but the tradeoff has been a slightly higher number of bus problems.  The state has threatened cuts in transportation reimbursement, but so far this has not come to pass. Currently the cost of student transportation (athletics and field trips excluded) is about $636,000.  Expected State reimbursement for this is $105,000 or about 16.5%.  In the mid 2000’s reimbursement was at 75%, so student transportation is taking a larger and larger share of the budget.  Costs could be reduced here by eliminating a route and picking up fewer kids that live less than a mile from school.

• Costs associated with taking possession of the new addition at the High School will be significant.  Purchase of furniture, signage, network equipment, intercom and fire equipment, sound equipment, increased utility costs, etc., could easily amount to $100,000.  Additionally the total cost of the contract is about $190,000 more than is available in the bond funds.

• Replacement rooftop HVAC units will be an ongoing expense annually for the foreseeable future.

• Capital projects for the upcoming year will include: replacement of pole vault mats, sidewalk repairs, bleachers for the new building and the aforementioned costs associated with occupying the new building.

• Teacher turnover is lower than past years with 6 staff members leaving.  The FY 19 budget includes annual steps being granted on the salary schedule and the board picked up the full employee health insurance again for next year.  Teacher base salary will remain at 31,500 this year.

El Dorado Springs R-II has a proven record of success as evidenced of 5 years of Annual Performance Ratings above 90% (75% required for full accreditation).  The District has also demonstrated fiscal conservatism by maintaining unrestricted fund balances above 20% for the last 10 years without significant increases in tax levies.  The recent additions to the school campus will make the school and even better place for students to attend and demonstrate the school and community moving forward together.

For the 18-19 school year, the adoption of this proposed budget will set an approved spending plan for the operation of the district and the day-to-day fiscal transactions.  As need arises, budget amendments may be needed.

The board amended FY 18 budget figures to actual expenditures,

The board approved the transfer of up to the maximum amount under the 7% transfer making the budget end at 22% approximately $250,000.

The board approved the FY 19 budget as presented.

In closed session he board hired Kim Cox as Middle School Ed. Speciast.

The board accepted the resignation of Tiffany Bahr as MS Counselor.