2019-2020 Proposed Final Budget

May 14, 2019 Budget & Finance Committee

How are Pennsylvania Schools Doing Financially?

Ø61% of School Districts respondedØBased on actual financial data reported to the Pennsylvania Department

of Education

School Budget Revenue Challenges Act 1 of 2006

How is the 2019-2020 Budget Funded?

Property Taxes74%

Other Local Revenue3%

Basic Aid6%

Other State Revenue15%

Federal Revenue1% Other Financing Sources

1%

2020 Budgeted Revenues by Source

Property Taxes Other Local Revenue Basic Aid Other State Revenue TOTAL FEDERAL REVENUE OTHER FINANCING SOURCES

Developing School Budgets Under Act 1

• Tax increase is limited to an established index.

• The index is based on the Statewide Average Weekly Wage of SAWW & Employment Cost Index

• Since UM relies on 76% of local taxes, this severely limits recurring spending.

The amount any local of local tax increases is limited to around 3% for the foreseeable future

If Expenditures Exceed Revenues

ØDistrict can apply for exceptions only related to retirement and special education costs as it did for 2019-20

ØCut programs and staffing ØReceive voter approval to increase taxes

2019-2020 Proposed Final Budget Summary

2019-2020 Budget Highlights 2019-2020

Tax Rate 31.7559

Increase 2.9%

Median Assessed Value $128,280

Est. Median Assessed Value Tax Bill $4,074 (Estimated $115 increase over 2018-19)

Homestead Exclusion $262 (subtracted from median assessed tax bill)

Properties Eligible for Homestead Exclusion 5,073

$1,420,000,000

$1,430,000,000

$1,440,000,000

$1,450,000,000

$1,460,000,000

$1,470,000,000

$1,480,000,000

$1,490,000,000

2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009

Upper Moreland Assessed Value Trends

Drop in assessment value for 2019 YTD means less revenue is generated from local taxes when the same millage rate is applied.

Fiscal Year 2019 versus 2020 Budget

Salaries and Benefits increases are offset by reductions in other areas

Local revenues increase less than the Act 1 index due to reductions in tax base.

2019-2020 Budget deficit of revenues to expenditures, but less than 2018-2019

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$1.50

2015 2016 2017 2018 2019 2020

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Fiscal Year Surplus / Deficit

What are significant challenges to balancing a budget?

Below Average Fund Balance & Low “Unassigned” Fund Balance

Upper Moreland SD’s low fund balance prohibits the ability to access reserves for operating budget expenditures

Green dot represents % of fund balance compared to budget.

State Mandated Pension Costs

PA School Districts are mandated to pay over 34% in addition to other payroll taxes and medical and prescription costs for all employees. The cost has added significant expenditures since 2010 totaling over $3.4 million of new expenditures for pension costs.

Benefit Costs Increase Faster than Salary

2009 2018Salary 23,687,156$ 76% 30,063,385$ 64%Benefits 7,633,542$ 24% 17,155,991$ 36%

31,322,707$ 47,221,394$

Salaries grew an average of 2.69% a year

Benefits grew an average of 12.47 % a year from mandated increases to pension contributions and participation in a benefit consortium that Upper Moreland consistently funded the bad experience and more generous healthcare plans of the other school districts.

Lack of State Funding for Special Education

Special Education costs are over 70% funded by local taxes since state and federal revenues only account for 30% of the cost. There is no foreseeable significant increase in revenue from state and federal sources for Special Education.

Lack of State Funding for Transportation

Upper Moreland SD transports students based on state mandates to public and to over 65 non-public schools over 510,000 miles annually. Despite the mandate, state funding is less than 10% of costs.

Below Average Basic Education Funding from State of Pennsylvania

$454.63$578.25$591.91$595.56

$652.55$747.85

$786.02$846.97

$918.73$1,025.60

$1,092.02$1,149.91$1,152.51$1,173.15

$1,247.35$1,375.51$1,398.77

$1,517.36$2,414.09

$2,566.16$3,092.25

$0.00 $500.00 $1000.00 $1500.00 $2000.00 $2500.00 $3000.00 $3500.00

Lower Merion SDWissahickon SD

Upper Merion Area SDSpringfield Township SD

Colonial SDUpper Dublin SD

North Penn SDAbington SD

Lower Moreland Township SDHatboro-Horsham SD

Cheltenham SDUpper Moreland Township SD

Perkiomen Valley SDSpring-Ford Area SD

Jenkintown SDMethacton SD

Souderton Area SDNorristown Area SD

Pottsgrove SDUpper Perkiomen SD

Pottstown SD

State Basic Education Funding Per Student for Montgomery County

Upper Moreland ranked #52/500 school districts as under funded per pupil by $1,029 – Equity First 4/5/2018

Upper Moreland ranked #1/52 underfunded school districts for the highest reliance on local revenue per ADM of $15,507 (Minimum $2,374 –Median $10,040 – Max $15,507)

Student tuition (including cyber charters) and Intermediate Unit Service Costs Ten Year Comparison

Tuition expenditures for student placements & cyber charter tuition payments out of district

Student services provided by Intermediate Units billed to Upper Moreland

$3.4 million increase over ten years

2019-2020 UMTSD Revenue Highlights

• Increased local revenues associated with tax rate increase offset change in assessments

• Other local revenues increased/decreased with trends• Assumes proposed state revenue increases • Assumes consistent federal revenues with prior year

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Historical Revenue by Source

Local Sources State Sources Federal Sources Other Financing Sources

2019-2020 UMTSD Expenditure Highlights

• Salaries & Benefits per contractual agreements, but reduced due to attrition since preliminary budget

• Increased Charter School Costs • Continued debt service payments and bus lease • Continued capital reserve transfer

Fixed & Mandated Expenditures

Salaries & Benefits Per Contractual Agreements including Mandated State Pension Costs

$48,286,866

Federally Mandated Student Placements $1,954,825

State Mandated Charter School Payments $650,000

Obligated Debt Service & Bus Lease $7,896,104

Utilities for Buildings & Fuel $854,197

Mandated Eastern Center Tuition $1,511,507

Total Fixed & Mandated Expenditures $61,163,499

88% of Upper Moreland’s Expenditures are Fixed year to year

Discretionary Expenditures – 12% of Budget

$7.5 million is discretionary and includes: qStudent Curricular Materials (books, supplies, computer applications, resources for

new courses)qTechnology (Chromebooks, servers, internet, software licenses) qSupplies (toilet paper, trash bags, cleaning, office, library and classroom supplies)qReplacement desks, cafeteria tables qLegal, Tax Collector, Audit Services qAthletics & Activities costs qFacilities maintenance, repair and equipment costs such as Scrubbers qCapital reserve transfer q Replacement buses and maintenance vehiclesqFacilities use by outside groups

Salaries44%

Benefits26%

Supplies3%

Purchases13%

Property1%

Other Objects1%

Other Financing Uses12%

2020 Budgeted Expenditures by Object

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2017 2018 2019 2020

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Historical Expenditures by Sub-Function

Instruction Support Services Non-Instructional Capital Improvement Debt Services / Other

Instruction55%

Support Services31%

Non-Instructional1%

Debt Sevice / Other13%

2020 Budgeted Expenditures by Sub-Function

Personnel Services - Salaries1.4% Official / Administrative

11.5%

Professional - Educational62.3%

Professional - Other3.9%

Technical0.3%

Office / Clerical4.3%

Crafts and Trades1.8%

Operative and Laborer9.5%

Instructional Assistant5.0%

2020 Salaries by Sub-Object

Personnel Services - Employee Benefits1.8%

Group Insurance - Contracted Provider0.3%

Social Security Contributions13.0%

Retirement Contributions55.2%

Tuition Reimbursement0.3%

Unemployment Compensation1.6%

Workers' Compensation2.6%

Group Insurance - Self Insurance24.8%

Other Current Employee Benefits0.5%

2020 Benefits by Sub-Object

Upcoming UMTSD Budget Milestones

üMay 28, 2019 Approve Proposed Final Budget

üJune 18, 2019 Final Budget Update & Long-term forecast at Budget & Finance Committee

üJune 25, 2019 Final Budget Approval

Upper Moreland School DistrictProposed Final 2019-2020 Budget Detail

2015 2016 %∆ 2017 %∆ 2018 %∆ 2019 %∆ 2020 %∆REVENUE

Local $45,719,636 $44,938,939 -1.71% $48,319,633 7.52% $49,456,806 2.35% $50,193,674 1.49% $51,306,328 2.22%State $11,057,224 $11,496,422 3.97% $13,142,817 14.32% $13,268,214 0.95% $13,883,138 4.63% $14,264,100 2.74%

Federal $442,775 $462,875 4.54% $556,390 20.20% $500,346 -10.07% $480,703 -3.93% $601,000 25.03%Other Financing Sources $87,282 $161,153 84.63% $2,826,051 1653.65% $51,212 -98.19% $500,001 876.34% $500,001 0.00%

TOTAL REVENUE $57,306,917 $57,059,389 -0.43% $64,844,891 13.64% $63,276,578 -2.42% $65,057,516 2.81% $66,671,429 2.48%

EXPENDITURESSalary and Benefit Costs $38,377,403 $40,557,450 5.68% $42,688,725 5.25% $44,554,525 4.37% $47,219,376 5.98% $48,286,866 2.26%

Other $18,058,807 $19,590,596 8.48% $22,104,424 12.83% $21,615,190 -2.21% $20,252,697 -6.30% $20,446,948 0.96%TOTAL EXPENDITURES $56,436,210 $60,148,046 6.58% $64,793,148 7.72% $66,169,715 2.12% $67,472,073 1.97% $68,733,814 1.87%

SURPLUS / DEFICIT $870,707 ($3,088,657) $51,743 ($2,893,137) ($2,414,557) ($2,062,385)

BEGINNING FUND BALANCE $11,121,685 $11,992,392 $8,903,735 $8,955,478 $6,062,341 $3,647,784

YEAR END BALANCE* $11,992,392 $8,903,735 $8,955,478 $6,062,341 $3,647,784 $1,585,399

FUND BALANCE AS % OF EXPENDITURES 21.25% 14.80% 13.82% 9.16% 5.41% 2.31%FUND BALANCE AS # OF MONTHS OF EXPEND. 2.55 1.78 1.66 1.10 0.65 0.28

* Year End Balances are provided by the district and may not reflect the net change presented in revenues and expenditures.

General Fund │ Historical SummaryUpper Moreland School District 2019-2020 Budget 2.9% Tax Increase with Exceptions for Pension and Special Education

BUDGETACTUAL REVENUE / EXPENDITURE

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Revenues vs. Expenditures

Revenues Expenditures

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Fiscal Year Surplus / Deficit

2017 2018 2019 2020 %∆

REVENUE FROM LOCAL SOURCESTaxes Levied $46,494,746 $47,485,509 $48,397,670 $49,199,328 1.66%

Delinquency on Taxes Levied $755,451 $767,619 $770,000 $770,000 0.00%Earnings on Investments $163,375 $271,439 $200,000 $500,000 150.00%

Food Service $0 $0 $0 $0District Activities $84,944 $101,214 $99,000 $110,000 11.11%

Intermediary Sources $524,614 $523,458 $530,000 $530,000 0.00%Other Revenue $296,504 $307,567 $197,004 $197,000 0.00%

TOTAL LOCAL REVENUE $48,319,633 $49,456,806 $50,193,674 $51,306,328 2.22%

REVENUE FROM STATE SOURCESBasic Aid $3,596,850 $3,696,264 $3,700,614 $4,208,696 13.73%

Specific Education Programs $1,513,735 $1,536,642 $1,565,203 $1,606,133 2.61%Non-Education Programs $2,562,206 $2,022,492 $2,310,157 $2,299,271 -0.47%

Vocational Training $0 $0 $0 $0Milk Lunch and Breakfast Programs $0 $0 $0 $0

Nonpublic Program Subsidy $0 $0 $0 $0Commonwealth of PA $5,261,515 $5,613,181 $6,120,000 $6,150,000 0.49%

Technology $0 $0 $0 $0Other Revenue $208,512 $399,636 $187,164 $0 -100.00%

TOTAL STATE REVENUE $13,142,817 $13,268,214 $13,883,138 $14,264,100 2.74%

REVENUE FROM FEDERAL SOURCESUnrestricted Grants-in-Aid - Federal Governement $0 $0 $0 $0Unrestricted Grants-in-Aid - Commonwealth of PA $0 $0 $0 $0

Restricted Grants-in-Aid - Federal Governement $0 $0 $0 $0Restricted Grants-in-Aid - IDEA $413,273 $383,054 $374,703 $384,000 2.48%Restricted Grants-in-Aid - Other $0 $0 $0 $0

ARRA Grants $0 $0 $0 $0Medical Assistance Reimbursements $143,117 $117,292 $106,000 $217,000 104.72%

Other Federal Sources $0 $0 $0 $0TOTAL FEDERAL REVENUE $556,390 $500,346 $480,703 $601,000 25.03%

OTHER FINANCING SOURCESSale of Bonds $0 $0 $0 $0

Proceeds from Extended Term Financing $0 $0 $0 $0Interfund Transfers $125,000 $50,000 $150,000 $150,000 0.00%

Sale of or Compensation for Loss of Fixed Assets $1,051 $1,212 $0 $0Capital Contributions $0 $0 $0 $0

Other Financing Sources $2,700,000 $0 $350,001 $350,001 0.00%TOTAL OTHER FINANCING SOURCES $2,826,051 $51,212 $500,001 $500,001 0.00%

TOTAL REVENUE FROM ALL SOURCES $64,844,891 $63,276,578 $65,057,516 $66,671,429 2.48%

General Fund │ Revenue Detail

ACTUAL REVENUES BUDGET

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Historical Revenue by Source

Local Sources State Sources Federal Sources Other Financing Sources

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Historical Total Revenue

2017 2018 2019 2020 %∆

INSTRUCTIONRegular Programs $24,114,257 $25,033,872 $26,021,178 $26,897,740 3.37%Special Programs $8,777,805 $9,217,833 $9,816,458 $9,660,853 -1.59%

Vocational Education $1,473,307 $1,550,380 $1,617,160 $1,511,507 -6.53%Non-Instructional Programs $52,752 $38,407 $49,800 $50,830 2.07%

Nonpublic School Programs - IU $4,832 $17,935 $0 $0Adult Education Programs $0 $0 $0 $0

Higher Education Programs $0 $0 $0 $0Pre-Kindergarten $0 $0 $0 $0

TOTAL INSTRUCTION $34,422,954 $35,858,426 $37,504,597 $38,120,930 1.64%

SUPPORT SERVICESSupport Services - Students $1,953,412 $2,006,680 $2,005,961 $2,055,733 2.48%

Support Services - Instructional Staff $1,511,596 $1,540,290 $1,460,584 $1,504,572 3.01%Support Services - Administration $4,300,657 $4,447,605 $4,741,695 $4,823,196 1.72%

Support Services - Pupil Health $417,635 $448,038 $488,754 $510,831 4.52%Support Services - Business $2,808,868 $1,679,003 $1,536,555 $1,687,653 9.83%

Operation and Maintenance of Plant Services $4,215,710 $4,567,577 $4,564,299 $4,768,691 4.48%Student Transportation Services $6,050,739 $3,263,419 $4,562,353 $4,125,161 -9.58%

Support Services - Central $1,451,115 $1,465,061 $1,464,435 $1,584,076 8.17%Other Support Services $40,888 $40,658 $44,260 $43,423 -1.89%

TOTAL SUPPORT SERVICES $22,750,620 $19,458,331 $20,868,896 $21,103,336 1.12%

NON-INSTRUCTIONAL SERVICESFood Services $0 $0 $0 $0

Student Activities $750,410 $783,575 $645,718 $803,444 24.43%Community Services $0 $0 $0 $0

Scholarship and Awards $0 $0 $0 $0TOTAL NON-INSTRUCTIONAL SUPPORT SERVICES $750,410 $783,575 $645,718 $803,444 24.43%

FACILITIES ACQUISITION, CONSTRUCTION, IMPROVEMENT $0 $79,180 $0 $0

DEBT SERVICES / OTHERDebt Service / Other Expenditures and financing Uses $55,201 $134,161 $50,000 $50,000 0.00%

Interfund Transfers-Out $6,813,963 $9,856,042 $8,052,861 $8,056,104 0.04%Budgetary Reserve $0 $0 $350,002 $600,000 71.43%

TOTAL DEBT SERVICES / OTHER $6,869,164 $9,990,203 $8,452,863 $8,706,104 3.00%

TOTAL EXPENDITURES $64,793,148 $66,169,715 $67,472,073 $68,733,814 1.87%

General Fund │ Expenditures by Sub-Function

ACTUAL EXPENDITURES BUDGET

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$45.00

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Historical Expenditures by Sub-Function

Instruction Support Services Non-InstructionalCapital Improvement Debt Services / Other

Instruction55%

Support Services31%

Non-Instructional1%

Capital Improvement

0%

Debt Sevice / Other13%

2020 Budgeted Expenditures by Sub-Function

2017 2018 2019 2020 %∆

SALARIESPersonnel Services - Salaries $0 $0 $1,757,500 $434,000 -75.31%

Official / Administrative $3,513,585 $3,501,498 $3,559,675 $3,501,159 -1.64%Professional - Educational $17,733,561 $18,175,905 $18,468,337 $19,030,617 3.04%

Professional - Other $989,988 $1,001,116 $985,705 $1,206,485 22.40%Technical $91,595 $93,755 $92,113 $94,784 2.90%

Office / Clerical $1,252,962 $1,231,810 $1,287,344 $1,326,669 3.05%Crafts and Trades $500,518 $525,824 $560,605 $537,196 -4.18%

Operative and Laborer $2,243,000 $2,277,031 $1,974,466 $2,891,209 46.43%Service Work $0 $0 $0 $0

Instructional Assistant $1,328,992 $1,360,725 $1,377,641 $1,522,483 10.51%TOTAL SALARIES $27,654,201 $28,167,663 $30,063,385 $30,544,603 1.60%

BENEFITSPersonnel Services - Employee Benefits $0 $0 $524,004 $316,854 -39.53%

Group Insurance - Contracted Provider $58,677 $58,411 $57,196 $56,480 -1.25%Social Security Contributions $2,039,056 $2,078,754 $2,166,710 $2,302,971 6.29%

Retirement Contributions $8,216,142 $9,064,934 $9,398,098 $9,787,641 4.14%Tuition Reimbursement $60,556 $71,178 $0 $50,000

Unemployment Compensation $143,364 $282,777 $282,842 $287,085 1.50%Workers' Compensation $237,445 $421,590 $424,705 $459,696 8.24%

Group Insurance - Self Insurance $4,201,330 $4,326,676 $4,247,837 $4,392,956 3.42%Other Post Employment Benefits $0 $0 $0 $0Other Current Employee Benefits $77,956 $82,542 $54,600 $88,580 62.23%

TOTAL BENEFITS $15,034,524 $16,386,862 $17,155,991 $17,742,263 3.42%

OTHER EXPENDITURESPurchased Professional and Technical Services $3,403,547 $2,938,923 $2,779,269 $3,000,005 7.94%

Purchased Property Services $1,074,113 $1,113,535 $1,055,847 $1,182,912 12.03%Other Purchased Services $4,129,497 $4,460,317 $4,859,153 $4,466,667 -8.08%

Supplies $1,906,403 $1,755,156 $1,842,308 $1,837,220 -0.28%Property $3,512,994 $667,024 $619,939 $542,900 -12.43%

Other Objects $130,786 $310,114 $529,242 $846,140 59.88%Other Financing Uses $7,947,083 $10,370,120 $8,566,939 $8,571,104 0.05%

TOTAL OTHER EXPENDITURES $22,104,424 $21,615,190 $20,252,697 $20,446,948 0.96%

TOTAL EXPENDITURES $64,793,148 $66,169,715 $67,472,073 $68,733,814 1.87%

General Fund │ Expenditures by Sub-Object

ACTUAL EXPENDITURES BUDGET

Personnel Services - Salaries

1.4%

Official / Administrative

11.5%

Professional -Educational

62.3%Professional -Other3.9%

Technical0.3%

Office / Clerical4.3%

Crafts and Trades1.8%

Operative and Laborer9.5%

Service Work0.0%

Instructional Assistant

5.0%

2020 Salaries by Sub-Object

Personnel Services -Employee Benefits

1.8%Group Insurance -

Contracted Provider

0.3%

Social Security Contributions

13.0%

Retirement Contributions

55.2%

Tuition Reimbursement

0.3%

Unemployment Compensation

1.6%

Workers' Compensation

2.6%

Group Insurance -Self Insurance

24.8%

Other Post Employment

Benefits0.0%

Other Current Employee Benefits

0.5%

2020 Benefits by Sub-Object