Downingtown Area School District Budget · 2015-02-06 · Downingtown Area School District Budget Fiscal Year 2014-2015 540 Trestle Place 610-269-8460 Downingtown, Pennsylvania 19335

Downingtown Area School District

Budget

Fiscal Year 2014-2015

540 Trestle Place 610-269-8460 Downingtown, Pennsylvania 19335 www.dasd.org Chester County

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Downingtown Area School District Budget 2014-2015

Table of Contents

Introductory Section ................................................................................................... 1 Board of School Directors ................................................................................... 3 Administration ..................................................................................................... 4 Buildings and Administrators .............................................................................. 5 Consultants and Advisors ................................................................................... 6 Executive Summary of the 2014-2015 Budget ................................................... 7 Organizational Section ............................................................................................. 22 The School Entity ............................................................................................. 23 Financial Structure and Reporting .................................................................... 30 Measurement Focus and Basis of Accounting for Revenue and Expenditures 31 Classification and Presentation of Revenue and Expenditures ........................ 32 Significant Laws Affecting Budget and Fiscal Administration ........................... 44 Significant Policies and Procedures Affecting Budget and Fiscal Administration ....... 48 Organization Chart ........................................................................................... 51 Mission Statement and Vision Planks ............................................................... 52 Comprehensive Education Plan ....................................................................... 53 Major Goals and Objectives.............................................................................. 54 Budget Development Process .......................................................................... 55 Financial Section ....................................................................................................... 61 Summary of All Funds ...................................................................................... 62 General Fund 64 Summary of General Fund with Prior Years Comparison ................................. 65 Detail of General Fund Revenue with Prior Years Comparison ........................ 67 Detail of General Fund Expenditures with Prior Years Comparison ................. 68 General Fund Trends and Assumptions ........................................................... 73 Capital Projects Fund 78 Summary and Detail Capital Projects Fund with Prior Years Comparison ....... 79 Capital Expenditure Budget .............................................................................. 80

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Table of Contents

Debt Legal Debt Limit and Borrowing Capacity ......................................................... 82 Schedule of Outstanding Debt .......................................................................... 83 Debt Amortization (Debt Service) Schedule ..................................................... 84 Proprietary Fund – Food Service Fund 86 Summary and Detail Food Service Fund with Prior Years Comparison ........... 87 Informational Section ................................................................................................ 88 General Fund Forecast ..................................................................................... 89 Capital Projects Fund Forecast ........................................................................ 91 Assessed and Market Value of Taxable Property ............................................. 92 Real Estate Tax Rate and Collection Data ....................................................... 93 Analysis of Property Tax Burden ...................................................................... 94 Chester County School District Property Tax Comparison ............................... 95 District’s Ten Largest Real Estate Taxpayers ................................................... 96 Enrollment Forecasting Methodology and Techniques ..................................... 97 Enrollment History and Projections ................................................................... 98 School Building Information .............................................................................. 99 Personnel Resource Allocation ....................................................................... 100 Debt Amortization (Debt Service) Schedule ................................................... 101 Performance Measurements .......................................................................... 103 Glossary ................................................................................................................... 113

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Introductory Section

Fiscal Year 2014-2015 Budget


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Association of School Business Officials International

This Meritorious Budget Award is presented to

DOWNINGTOWN AREA SCHOOL DISTRICT

For excellence in the preparation and issuance of its school entity’s budget for the Fiscal Year 2013-2014.

The budget adheres to the principles and standards

of ASBO International’s Meritorious Budget Award criteria.

Terrie S. Simmons, RSBA, CSBO John D. Musso, CAE, RSBA President Executive Director


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Board of School Directors

Jane Bertone ...................................................................................... President Barbara Hurt-Simmons. .............................................................. Vice-President Colleen Cranney. ................................................................................. Member

Carl Croft. ............................................................................................. Member Jackie Fenn .......................................................................................... Member Jaime Mehler ........................................................................................ Member Barbara Albright. .................................................................................. Member Suzanne Simonelli .............................................................................. Member Robert Yorczyk ..................................................................................... Member Virginia Warihay (non-voting member) ............................................... Secretary Richard A. Fazio (non-voting member) ............................................... Treasurer


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Downingtown Area School District Administration

Dr. Lawrence Mussoline ............................................................... Superintendent Richard A. Fazio ................................................................ Chief Financial Officer Sharon Standish .................................................... Director of Human Resources Dr. Linda MacNeal ............ Director of K-12 Curriculum, Literacy, & Assessment Dr. Robert Reed ...................................... Director of K-12 Educational Programs Dr. Karen Zerr .............................................................. Director of Pupil Services James Lill ..............................................................................Director of Facilities Colleen Yenser ................................................................. Director of Technology


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Downingtown Area School District Buildings and Administrators

Elementary Schools Beaver Creek Elementary School Bradford Heights Elementary School 601 Pennsylvania Avenue 1330 Romig Road Downingtown, PA 19335 Downingtown, PA 19335 Principal: Dr. Dawn Lawless Principal: Andy Hoffert, interim Brandywine-Wallace Elementary School East Ward Elementary School 435 Dilworth Road 435 Washington Avenue Downingtown, PA 19335 Downingtown, PA 19335 Principal: Linda Leib Principal: Nick Argonish Lionville Elementary School Pickering Valley Elementary School 526 W. Uwchlan Avenue 121 Byers Road Downingtown, PA 19335 Chester Springs, PA 19425 Principal: Shelda Perry Principal: Joseph Fernandes Shamona Creek Elementary School Uwchlan Hills Elementary School 501 Dorlans Mill Road 50 Peck Road Downingtown, PA 19335 Downingtown, PA 19335 Principal: Norma Jean Welsh Principal: Bob Giering West Bradford Elementary School Springton Manor Elementary School 1475 Broad Run Road 400 Fairview Rd. Downingtown, PA 19335 Glenmoore, PA 19343 Principal: Dr. Dina Wert Principal: Diane Boff

Marsh Creek 6th Grade Center

489 Dorlans Mill Rd. Downingtown, PA 19335 Principal: Tom Mulvey

Secondary Schools

Downingtown Middle School Lionville Middle School 115 Rock Raymond Road 550 W. Uwchlan Avenue Downingtown, PA 19335 Downingtown, PA 19335 Principal: Nick Indeglio Principal: Jonathan Ross Downingtown High School Downingtown High School West Campus East Campus 445 Manor Avenue 50 Devon Drive Downingtown, PA 19335 Exton, PA 19341 Principal: Kurt Barker Principal: Paul R. Hurley, III Downingtown STEM Academy 335 Manor Avenue Downingtown, PA 19335 Headmaster: Art Campbell


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Downingtown Area School District Consultants and Advisors

Independent Auditors

Rainer and Company 2 Campus Boulevard, Suite 220

Newtown Square, PA 19073

Legal Counsel

Lamb McErlane P.C. 24 East Market Street, PO Box 565

West Chester, PA 19381 (General Counsel)

Financial Advisor

Public Financial Management

One Keystone Plaza, Suite 300 North Front & Market Streets

Harrisburg, PA 17101

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540 Trestle Place, Downingtown, PA 19335 Dr. Lawrence J. Mussoline, Ph.D., Superintendent

Phone: 610-269-8460 www.dasd.org

Executive Summary of the 2014-2015 Budget

Members of the Board of School Directors Downingtown Area School District 540 Trestle Place Downingtown, PA 19335 Dear School Directors: Presented herein is the 2014-2015 fiscal year budget for the Downingtown Area School District. The District Superintendent, Chief Financial Officer, and Assistant Director of Finance assume responsibility for data accuracy and completeness. This budget presents the District’s finance and operation plans, and all necessary disclosures. The discussion below is an executive summary of the budget document. Budget Presentation The Downingtown Area School District strategically budgets an annual spending plan that provides quality educational programs for all students while carefully managing the District’s resources. The development, review, and consideration of the 2014-2015 budget was completed with a detailed review of revenue and expenditure items to ensure the necessary resources are available and allocated to meet the needs of the District while minimizing tax increases for the District’s taxpayers. The information included in this document is structured to meet the requirements of the Meritorious Budget Award (MBA) of the Association of School Business Officials International (ASBO). The MBA is the highest form of recognition in budgeting for school entities. Its attainment represents a significant accomplishment by a school entity and its management. The District has received the award since 2005-2006, and we believe this 2014-2015 budget document also meets the requirements to receive the MBA. However, the most important focus in the presentation of the budget data is to communicate to the community and other stakeholders the District’s financial plan to support its educational programs and services. Impact of Economy and State Funding on 2014-2015 Budget The District’s real estate tax assessment base is budgeted to increase slightly compared to last year as the economy is starting to improve and the District is seeing assessment growth. However, investment income continues to be minimal caused by historically low interest rates. The State drastically cut education funding in 2011-2012,


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and has not significantly increased the basic education or special education subsidies since then. New School – 6th Grade Center In 2014-2015 the District is opening its new Marsh Creek 6th Grade Center which will be its 16th school building. This school will relieve crowding at the District’s two middle schools by housing all of the District’s 6th grade students. Mission Statement, Comprehensive Education Plan, Goals and Objectives Mission Statement Proud of our tradition of excellence, the mission of the Downingtown Area School District is to educate all students to meet the rigorous challenges of a global society. Comprehensive Education Plan The District’s has two goals for its comprehensive education plan. Goal #1: We will ensure a system is in place within the district that promotes, enhances,

and sustains a shared vision of high expectations for all students via the creation and implementation of common formative and summative assessments and standards aligned units of study.

Goal #2: We will implement a comprehensive district-wide-system that will create a

positive school climate by ensuring students who are academically and/or socially/emotionally/behaviorally at risk are identified early and are supported by a process that provides interventions based upon student needs and includes procedures for monitoring effectiveness.

Vision Planks The District has set the following vision planks that are the drivers for the mission, comprehensive education plan, and Board of Directors goals.

1. Improve Student Achievement 2. Improve Professional Development 3. Improve Technology 4. Improve Communication 5. Improve Fiscal Responsibility and Create Development Opportunities 6. Analyze Demographics and Seek to Understand Diversity

Board of Directors Goals for the District The following table shows the Board of School Directors 2014-2015 goals for the Board and the District, and how they are linked to the Vision Planks.


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Goal Vision Plank Improve safety and security in the schools by establishing a chief security officer and upgraded video surveillance system

Vision Plank: Improve Technology

Request proposals from qualified child care provider organizations to provide before and after school programming at all 10 elementary schools and 6th grade center. Evaluate proposals and award to the winning bidder.

Vision Plank: Improve Fiscal Responsibility

Perform SWOT analysis with stakeholders to evaluate District’s current vision planks and determine long rage plans for the District.

Vision Plank: Encompasses all

The Board has also developed detailed objectives to measure success in achieving the above goals. As discussed below, human and financial resources are allocated to achieve these goals and carry out the operations and mission of the District. The budget represents how the financial and human resources are allocated to support educational programs and services defined by the District’s mission, comprehensive education plan, vision planks, and goals. Preparing the annual budget requires decisions that represent a delicate balance between the educational needs of students and the ability of the community to support the schools. Budget Process and Allocation of Resources The budget process is comprised of five phases – planning, preparation, adoption, implementation and evaluation. The process is driven by two objectives - to provide every child in the District with the best possible educational opportunities and to maximize the use of available resources. Within this framework, the Board attempts to balance the educational needs of students and the resources available to the District from local, state, and federal sources. The timeline for the beginning of the annual budget process starts in September so a preliminary budget can be adopted in February if necessary. This preliminary budget serves to identify any potential tax increase over a state mandated limit (2.1% for 2014-2015) that will need to be addressed through exceptions or voter approval before final adoption of the budget in June. If the Board of Directors adopts a resolution that it will not need to raise taxes above the state mandated limit, it can forgo the adoption of the preliminary budget.

Planning For the fiscal year that begins July 1, the planning process for budgeting starts about ten months prior in September of the previous year when the Administration develops a budget timeline that includes all of the important activities in the budgeting process. The timeline represents the guidelines for the preparation and adoption of the School District’s annual budget. Preparation The preparation of the budget is the process of defining service levels. Primary inputs into this process are identifying course offerings in the educational program and


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projecting student enrollment. With service levels defined, the District allocates resources to meet these levels by developing staffing allocations; estimating expenditure needs to support programs and services; and projecting available revenues. Adoption For the 2014-2015 budget, the District adopted a resolution that it would not raise taxes above the state mandated limit (Act 1 index) of 2.1%. This resolution was adopted in January 2014 and eliminated the need to adopt the preliminary budget for purposes of determining a tax rate increase. The budget continued to be reviewed and adjusted through June, and was adopted at the June Board meeting. Implementation Implementation of the budget is accomplished through the budget administration and management process. This involves regulating expenditures during the fiscal year to ensure that they do not exceed authorized amounts and that they are used for intended, proper, and legal purposes. This is done by monitoring expenditure account balances, monitoring purchases through a purchase order approval system, tracking revenue receipts, making corrections in expenditure allocations to reflect changes in costs, service levels, or plans; and reporting to the Board and public on fiscal operations. Evaluation The District maintains a budgetary accounting and control software information system that provides reports to assist Board Members, the Business Office staff, and responsibility cost center managers in evaluating the implementation of the budget. The accounting information system also provides detail transactional information to allow for auditing of expenditure and revenue activity compared to the budget. Information is also produced that allows for evaluating the overall financial condition of the District.


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Student Enrollment A primary input into the budget process is the projecting of student enrollment. Below is a chart that shows the District’s enrollment trend.

Enrollment History and Projections

For the budget year 2014-2015 the student enrollment is estimated to be 12,083. This is an increase of 7 students over the 2013-2014 enrollment. This is the highest enrollment in the history of the District, and the District projects larger enrollment increases in future years with residential development starting to recover and the assessment base growing. Personnel Resources The opening of the new 6th Grade Center will necessitate the addition of 28.0 new full time equivalent positions to the 2014-2015 budget for that school. In addition increased needs in special education and the secondary schools are the primary drivers for including 8.14 new full time equivalent positions for instructional staff at the other schools for 2014-2015.

District Facilities and Capital Improvement Plan The District will open the new 6th grade center building in 2014-2015 at an estimated cost of $35.7 million. The sources of funding for this project are bond proceeds from existing bond issues. The capital improvement plan also includes about $4.6 million in other facilities improvements, and $4.0 million of technology capital equipment and improvements for 2014-2015. These include improvements to school roofs, athletic facility upgrades, school security upgrades, and new computer and technology infrastructure equipment. These facility projects and the technology improvements will be funded from the capital projects fund balance.

8,500

9,000

9,500

10,000

10,500

11,000

11,500

12,000

12,500

13,000

13,500

14,000

2007-2008

2008-2009

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

2015-2016

2016-2017

2017-2018

2018-2019

Enroll

ment

Year

Actual Budget Projection


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Summary of Budgets for All Funds The following schedule presents a comparison of the total budget revenue in the current and prior year for each of the District’s funds. It represents the financial resources budgeted to be available to support the District’s programs and services from local, state, and federal sources as well as use of fund balance. The General Fund includes use of fund balance in the revenue number below. Other financing sources into the Capital Projects fund from fund transfers are not included here, but are discussed below within the overview section of that fund.

Governmental Funds:

2014-2015 Budget

2013-2014 Budget

%Change

General Fund 201,335,000$ 195,000,000$ 3.3%

Capital Projects Fund 300,000 300,000 0.0%

Total All Govermental Funds 201,635,000 195,300,000 3.2%

Proprietary Fund:

Food Service Fund 3,601,000 3,501,700 2.8%

Grand Total 205,236,000$ 198,801,700$ 3.2%

Total Budget Revenue

The following schedule presents a comparison of the total budget expenditures in the current and prior year for each of the District’s funds. It represents the total financial resources budgeted to be used in supporting the District’s programs and services.

Governmental Funds:2014-2015

Budget2013-2014

Budget%

Change

General Fund 201,335,000$ 195,000,000$ 3.3%

Capital Projects Fund 37,140,306 27,500,000 35.1%

Total All Govermental Funds 238,475,306 222,500,000 7.2%

Proprietary Fund:

Food Service Fund 3,552,600 3,534,000 0.5%

Grand Total 242,027,906$ 226,034,000$ 7.1%

Total Budget Expenditures


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General Fund Overview Revenue The General Fund budget of the School District is funded from local, state and federal sources of revenue. The primary funding source for District operated programs and services is local revenue, which accounts for 79.0% of the $201,335,000 total budgeted General Fund revenue and use of Fund Balance for the 2014-2015 fiscal year. The balance of revenue to fund operating expenditures is primarily derived from state subsidies. Federal sources are minimal and are derived primarily from federal grant money.

2014-2015 2013-2014 %Budget Budget Change

Local 158,979,430$ 155,133,106$ 2.5%

State 36,835,570 34,627,429 6.4%

Federal 1,020,000 1,419,465 -28.1%

Fund Bal. 4,500,000 3,820,000 17.8%Total 201,335,000$ 195,000,000$ 3.2%

Revenue Sources

79.0%

18.3%

0.5%

79.6%

17.8%

0.7%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

Local State Federal

Revenue Sources as a Percent of Total Revenue

2014-2015 Budget 2013-2014 Budget

Local Sources The largest portion of local revenue (84%) is derived from current taxes on real estate property. Current real estate tax revenue has increased about $1.7 million over the prior year budget due to an increase in the assessment base, as there was no increase in the tax rate for 2014-2015. For 2014-2015 the budgeted assessed real estate property value is $5.18 billion. The assessed property value is the tax base on which the District levies a real estate tax. As shown in the chart below, there has been little change in the tax base over the last four years. Increases have leveled off due to assessment appeals and a slower economy, however the District anticipates some improvement in 2014-2015 and has budgeted an increase of about $76 million, or 1.5%. Prior to 2010-2011, historical annual increases in the tax base were in the 3% to 4% range.


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Residential property accounts for about 80% of the total tax base with commercial, industrial, and agricultural property accounting for the remaining 20%. The real estate tax rate required to fund the District’s programs and services in 2014-2015 is 27.182 mills which is unchanged from 2013-2014. The District is pleased to not have a tax increase for its taxpayers in 2014-2015, the second year in a row. The chart below shows a history of the District’s tax rate.

History of Real Estate Tax Rate (Mills)

% Increase 2.90% 1.96% 1.70% 0.00% 0.00%

For 2014-2015, the property taxes due on the average assessed property value in the District is $4,736. This reflects no increase from 2013-2014 based on a consistent median assessed property value of $174,247. To help offset property tax increases, Act 1 of 2006 provides qualified homesteads a tax credit that is funded by state gaming revenue. For 2014-2015 the estimated amount of tax credit is $200 per homestead regardless of the assessed value. Prior year property tax increases have been necessary due to the growth of the District's programs and increases in costs. Also, state funding sources have only provided about 17% to 20% of District revenue over the last several years making property taxes the primary source of the District's revenue. Despite these challenges, the District has been able manage its costs and use fund balance from prior year surpluses to balance the budget without a tax increase for 2014-2015, the second year in a row.

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2010-2011 2011-2012 2012-2013 Budget2013-2014

Budget2014-2015

Assessed Real Estate Property Values(millions)

0.000

5.000

10.000

15.000

20.000

25.000

30.000

2010-11 2011-12 2012-13 2013-14 2014-15

26.21326.728

27.182 27.182 27.182


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Revenue from local sources other than current real estate taxes is primarily derived from earned income taxes, real estate transfer taxes, interim real estate taxes, and delinquent real estate taxes. The total of these sources of revenue are budgeted about $2 million higher than the 2013-2014 budget due to the improving economy. State Sources Over the past two decades, Pennsylvania school districts have experienced a substantial shift from the state to the local level to provide funding for school district budgets. The percentage of state funding in relation to total revenue sources has declined significantly over the past two decades. If the District received the same percentage of state revenue in 2014-2015 as it did for example in 1995-1996 (27.2%), state sources of revenue would be $17.9 million higher in the 2014-2015 budget. If the District could budget this additional state revenue in 2014-2015, it could permit a reduction in the real estate tax rate of 3.63 mills. This translates into a reduction in taxes of $632 for the median assessed property value in the District in 2014-2015.

The 6.4% increase in state revenue in the 2014-2015 budget compared to the 2013-2014 budget is primarily caused by the increase in the Public School Employees Retirement System (PSERS) contribution rate of which the state reimburses half. The 2014-2015 contribution rate is 21.40% of employee wages compared to 16.93% in 2013-2014. The rate is set by the state and contributions are required for all Pennsylvania school districts. Federal Sources The decrease in federal revenue in the 2014-2015 budget compared to the 2013-2014 budget is primarily due to lower anticipated federal funding for the Medical ACCESS program for special needs student expenditure reimbursements. Use of Fund Balance The District is budgeting the use of $4.5 million of fund balance for 2014-2015 which compares to $3.8 million budgeted in 2013-2014. The District has historically not needed to use fund balance to balance the budget, however, the District is using prior year surpluses again in 2014-2015 to balance the budget instead of raising taxes. Contributing to the need to use fund balance is the increase in the PSERS contribution rate which the District has planned for by assigning fund balance for these increases. Expenditures For the 2014-2015 fiscal year, total expenditures in the General Fund are budgeted to increase from $195,000,000 to $201,335,000, an increase of $6,335,000. The following table details this increase by expenditure category.


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Expenditures & Budget Budget PercentOther Uses of Funds 2014-2015 2013-2014 $ Change Change

Salaries (100) $ 87,659,110 $ 85,822,895 $ 1,836,215 2.1%Employee Benefits (200) 48,674,971 41,594,680 7,080,291 17.0%

Salary and Benefits 136,334,081 127,417,576 8,916,505 7.0%

Professional Services (300) 10,773,720 9,200,316 1,573,404 17.1%Purchased Property Services(400) 5,528,287 5,065,472 462,815 9.1%Other Purchased Services(500) 25,076,711 24,926,317 150,395 0.6%

Purch. & Prof. Svcs. 41,378,719 39,192,105 2,186,614 5.6%

Supplies (600) 5,656,907 5,388,107 268,800 5.0%

Property (700) 460,870 450,982 9,888 2.2%

Debt Service 16,190,000 15,586,000 604,000 3.9%Transfers to Other Funds 0 6,000,000 (6,000,000) -100.0%Budgetary Reserve 500,000 500,000 - 0.0%Other Expenditures 814,423 465,230 349,193 75.1%

Other Objects and Uses of Funds (800/900)

17,504,423 22,551,230 (5,046,807) -22.4%

Total $ 201,335,000 $ 195,000,000 6,335,000 3.2%

General Fund

Expenditure Analysis Salaries increased from 2013-2014 to 2014-2015 due to employee wage increases and new staff offset by lower salaries for personnel replacing higher salary retirees. The increase in employee benefit costs is primarily driven by the increase in projected healthcare costs and a state mandated increase in contributions to the Public School Employee Retirement System (PSERS) noted above in the discussion of State Source revenue. The increase in Purchased and Professional Services is primarily due to an increase in professional services for special education students, charter school tuition costs and contracted services for facilities improvement projects. The increase in Supplies is primarily due to additional educational software expenditures which are budgeted in the Supplies category per the accounting manual. Property expenditures (capital equipment) in the General Fund are budgeted to be about the same in 2014-2015 compared to 2013-2014. Debt service represents the repayment of principal and interest on debt incurred by the District from issuing bonds and notes. The proceeds from bond and note issues are


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used to fund capital projects such as the construction of new school buildings. The 2014-2015 budget includes the debt service on the outstanding amount of bonds and notes as of June 30, 2014. Budget debt service has increased due to a principal payment due on one debt issue not previously due until 2014-2015. 2013-2014 budget transfers to other funds included $4.5 million intended to build this amount into the general fund expenditure budget for future operating costs of the 6th grade center. This amount is no longer necessary in the 2014-2015 transfer to other funds budget as the 6th grade center operating costs have been incorporated into the other line items of the budget with the opening of the school in 2014-2015. 2013-2014 also included another $1.5 million in transfers to the capital fund for capital projects. This amount is not in the 2014-2015 budget. The District has budgeted $500,000 in budgetary reserve as a contingency for unforeseen expenditures in 2014-2015. This amount is consistent with 2013-2014.

Other Expenditures primarily include various dues, fees, and tax refunds paid by the District. The increase in 2014-2015 primarily represents the reclassification of fees for administering pre-college tests such as required STEM school degree exams, Advanced Placement (AP) exams, and PSAT exams. These exam costs are reimbursed by the students which is accounted for in revenue.

The chart below displays the expenditure categories discussed above as a percentage of the total General Fund expenditures for the 2014-2015 budget.

Salary and Benefits, 67.7%

Purchased Services, 20.6%

Supplies, Property & Other, 3.4% Debt

Service, 8.0%

Budgetary Reserve, 0.3%

General Fund Expenditures by Category 2014‐2015


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General Fund Budget Forecast

The District’s real estate tax base is forecasted to grow about 1.3% to 1.5% per year, and sources of local revenue other than current real estate taxes are forecasted to have minor growth. State revenue is forecasted to increase due to the 50% reimbursement of the PSERS contribution increase. For 2015-2016, the District plans to have another year without a tax increase, and once again use $4.5 million of fund balance. Beyond 2015-2016, the District forecasts a tax rate increase of about 1.95% through 2018-2019, with the continued use of fund balance to cover a portion of the District's PSERS expenditures and health care costs. Total General Fund expenditures are projected to increase around 3% to 4% per year over the next four years. A key driver of the Benefit costs increases in future years will be the District’s expense for the Public School Employee Retirement System (PSERS) contribution. The PSERS contribution rate is set by the State, and is expected to increase significantly each year from 21.40% of salaries in 2014-2015 to 31.56% in 2018-2109. Salaries are forecasted to grow about 3% each year, and other expenditures are forecasted to remain about the same. During 2014-2015 the District plans to retire debt with cash in the Capital Projects Fund which will decrease the actual debt service to $12.1 million in the General Fund, however debt service for 2014-2015 was budgeted at $16.2 million which was the debt service level at June 30, 2014. This is because the District plans to keep at least $15.5 million of debt service in its future year budgets to fund higher future year debt service levels beginning in 2018-2019. Capital Projects Fund Overview The 2014-2015 budget includes $3.5 million in expenditures for remaining payments on the construction of the 6th Grade Center. Existing bond proceeds will be used to fund these remaining costs. Other expenditures in the Capital Projects fund include about

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019

Budget Forecast Forecast Forecast Forecast

Revenue

Local Revenue 158,979,430$ 162,640,946$ 168,158,237$ 173,570,564$ 179,107,328$

State Revenue 36,835,570$ 39,268,131$ 41,401,404$ 42,258,213$ 43,158,963$

Federal Revenue 1,020,000$ 970,000$ 1,000,000$ 1,000,000$ 1,000,000$

Fund Balance 4,500,000$ 4,500,000$ 5,590,307$ 5,963,312$ 6,489,581$

Total Revenue 201,335,000$ 207,379,077$ 216,149,948$ 222,792,089$ 229,755,872$

Expenditures

Salaries 87,659,110$ 89,998,222$ 92,698,169$ 95,479,114$ 98,343,488$

Benefits 48,674,971$ 51,928,150$ 58,201,778$ 62,062,975$ 66,162,384$

Debt Service 16,190,000$ 15,500,000$ 15,500,000$ 15,500,000$ 15,500,000$

Other Expenditures 48,810,919$ 49,952,705$ 49,750,000$ 49,750,000$ 49,750,000$

Total Expenditures 201,335,000$ 207,379,077$ 216,149,948$ 222,792,089$ 229,755,872$


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$4.6 million in other facilities improvements, and $4 million of technology capital equipment and improvements for 2014-2015. These include improvements to school roofs, security systems, athletic facilities, and computer equipment and network infrastructure. These expenditures will be funded from the capital projects fund balance. The forecasted expenditures in the fund beyond 2014-2015 are forecasted to be $7 to $8 million per year and will continue to be for general facility improvements, renovations, and technology expenditures. They will also be funded with the capital projects fund balance. The District currently does not have plans for any new major construction projects such as a new school. In 2014-2015 The District will use about $25 million of cash in the Capital Projects Fund to retire two outstanding debt issues. Budgeted revenue in the Capital Projects Fund is from estimated interest income on the fund balance that has been accumulated from prior year transfers from the General Fund. Food Service Fund Overview The Food Service Fund 2014-2015 budgeted revenue of $3.60 million is higher than the prior year due to an increase in anticipated sales caused by the food service operation being able to offer expanded food choices from not participating in the federal national school lunch program and its related restrictions at the high schools. The majority of operating revenue comes from the sale of food, and the District also receives state and federal subsidies budgeted at $680,000. 2014-2015 expenditures are budgeted to be about the same as prior year. The Food Service Fund is self-supporting and receives no funding from the General Fund. The District contracts with a food service management company to manage the operations of its food service program. Overview of Debt The District has $162,369,353 of issued and outstanding debt as of June 30, 2014. The District pays debt service (principal and interest) on outstanding debt out of its General Fund. During 2014-2015 the District plans to retire debt with cash in the Capital Projects Fund which will decrease the actual debt service in the General Fund to $12.1 million, however debt service for 2014-2015 was budgeted at $16.2 million which was the debt service level at June 30, 2014. This is because the District plans to keep at least $15.5 million of debt service in its future year budgets to fund higher future year debt service levels beginning in 2018-2019. The schedule below illustrates the change in outstanding bonds from June 30, 2014 to June 30, 2015 due to principal payments and the retirement of debt.


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Increases in debt service above the $15.5 million budgeted for future years will be funded with fund balance, so no additional revenue (or reduction in other expenditures) will be needed to fund these increases. Debt service is projected to be highest in 2021-2022 at $16.8 million, with a significant decrease to $6.8 million and lower beginning in 2023-2024. The District currently does not anticipate issuing new debt in future years. Performance Measurement The District determines success of its mission and comprehensive education plan through the measurement of student performance and achievement. Performance data indicates that Downingtown Area School District students have performed considerably better in standardized evaluations of learning such as the Pennsylvania System of School Assessment (PSSA) and the Scholastic Aptitude Test (SAT), compared to other students on a state-wide basis as shown in the data below.

These tests are key elements in the calculation of Pennsylvania’s School Performance Profile score which provides the public with a comprehensive overview of student academic performance in every Pennsylvania public school building. The score is based on a 100 point system with an additional 7 points possible for students achieving an advanced ranking on tests and assessments. In 2014, Downingtown Area School District’s elementary schools and middle schools averaged a score of 89, and the high schools averaged a 98, with the STEM Academy receiving the highest score in the state of 101.4.

BondsOutstanding

June 30, 2014 162,369,353

Debt Retirement-2010A Bonds (10,465,000)

Debt Retirement-2011 Bonds (13,315,000)

2014-2015 Principal Payments (7,499,632)

June 30, 2015 131,089,721

District State2014 2014

Percent of Students Proficient or Advanced - ReadingGrade 5 Reading (%) 82 61Grade 8 Reading (%) 95 80Grade 11 Reading (%) (Keystone Exam) 95 75Percent of Students Proficient or Advanced - Math Grade 5 Math (%) 87 67Grade 8 Math (%) 89 74Grade 11 Math (%) (Keystone Exam) 87 64

District State2014 2014

Verbal 551 497Math 566 504Writing 550 480

PSSA State Performance Testing

SAT College Entrance Exam (Mean Scores)


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The budget process is driven by the number of students enrolled, and yields an instructional expenditures per student amount of $10,209 for 2014-2015, which is higher than the state average. This level of per student expenditures has allowed the District to continue providing the quality of education necessary to achieve the strong student performance shown in the chart above. Success in educating the District’s students can also be seen in the percentage of students pursuing higher education (90% for the Class of 2014) which has been significantly higher than the historical state-wide percentage (about 73%). Graduating students also receive thousands of dollars in scholarships each year. In addition, the District offers sixteen advanced placement courses with about one-third of 11th and 12th graders taking them. Over the past few years, the District has had several students who were finalists, semi-finalists, and commended in the National Merit Scholars program. The District continues to be well respected by the community it serves and is seen as one of the top performing public school districts in the region, the state, and nationally. This is evidenced by third party rankings such as the Pittsburgh Tribune who ranked the District #22 in the state for 2014 out of 500 total districts in the state. In addition, US News and World Report ranked Downingtown East and Downingtown West high schools in the top 4% of over 31,000 high schools reviewed nationally in 2014. Acknowledgements We appreciate the support provided by the Downingtown Area School District Board of School Directors and the community for the development, implementation, and maintenance of an excellent educational program for the children of the District.

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Organizational Section



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The School Entity

Geographic Location / Area Downingtown Area School District is located in southeastern Pennsylvania, 30 miles west of Philadelphia in central Chester County. The District covers an area of 82 square miles that includes a mix of suburban and rural communities with a population of approximately 68,000. The local municipalities included within the District are the borough of Downingtown and the townships of East Brandywine, East Caln, Upper Uwchlan, Uwchlan, Wallace, West Bradford, and West Pikeland. The District has experienced steady population and economic growth but that has leveled off in recent years. Legal Autonomy and Fiscal Independence The District is a legally autonomous and fiscally independent entity under the laws of Pennsylvania. The laws of Pennsylvania give the District corporate powers that distinguish it as a legally separate entity from the Commonwealth of Pennsylvania and any of its political subdivisions. The District has the power to determine its budget; to approve and modify that budget; to levy taxes, set rates and establish charges; and to issue bonded debt. The powers may be exercised without substantive approval by another government. The District is a political subdivision of the Commonwealth created to assist in the administration of the General Assembly’s duties under the Constitution of Pennsylvania to “provide for the maintenance and support of a thorough and efficient system of public education to serve the needs of the Commonwealth.” The District is governed by a board of nine school directors, who are residents of the School District and who are elected every two years, on a staggered basis for a four-year term. The Directors serve on the Board without compensation. The Board of School Directors has the power and duty to establish, equip, furnish and maintain a sufficient number of elementary, secondary and other schools necessary to educate every person residing in the District, between the ages of six and twenty-one years, who may attend. The Superintendent is the chief administrative officer and chief instructional officer of the District and is responsible for the administration and operation of the public school system and oversees all matters pertaining to instruction.


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Number of Schools The District consists of ten elementary schools (grades K-5), a sixth grade center, two middle schools (grades 7-8), and three high schools (grades 9-12) that includes the STEM Academy. These schools educate a total of 12,083 students. Education Overview At Downingtown, we believe that the education of our students should encompass much more than reading, writing and arithmetic. Our goal is to give our students the tools that they need to collaborate with others, communicate openly and honestly, and make informed decisions based on civic responsibility. For this to occur, we not only educate our students academically, we also empower them to respect diversity, take part in community service and develop a high level of ethics and integrity. Within our school district, students are provided with an environment to grow their intellect and their character. Located in Chester County – a former farming community that is now bustling with economic and residential growth – Downingtown offers students the best of both worlds. Because of the vital economy in our region, we have the resources to offer programs of a breadth and depth that many smaller districts cannot provide. Our region’s residential growth has yielded a diverse student body and faculty, allowing students the opportunity to embrace a heightened sense of cultural awareness. At the same time, our attention to the individual and respect for family and community involvement in schools means we can maintain a small-town feel in our classrooms. Downingtown students study a broad, challenging curriculum that is designed to inspire them and equip them for success outside the classroom. Students are offered a wide range of courses that are taught in creative and meaningful ways. For example, at the elementary and secondary levels, major subject areas are often creatively linked together to make the curriculum more relevant for students. Students might find that a science lesson can extend over into a language arts activity, or vice versa. These thematic approaches help children develop a deeper understanding of the topics addressed. To make sure that students are always receiving the most up-to-date, effective instruction, Downingtown administrators and teachers make it a practice to review curriculum so that it is aligned with federal and state standards, as well as with standards set by national organizations. In addition, teachers and administrators also use the curriculum review cycle to ensure that programs are being updated and monitored on a timely basis. Downingtown also remains at the forefront of educational practices because our teachers make a tremendous effort to stay current through professional development opportunities that are available inside and outside the district.


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Their commitment ensures that Downingtown students are on the receiving end of the most up-to-date, proven instructional practices in education today. Elementary Education Students begin their careers at Downingtown in integrated kindergarten classrooms, where students with varying levels of academic, social and emotional progress learn together. Half-day classes are offered in both the morning and afternoon. Downingtown recognizes the value of practices such as flexible grouping, where students are encouraged to work cooperatively in pairs, groups of two or three, or as a whole class. Such strategies are regularly employed in elementary classrooms to help students learn how to work together. Instruction in all elementary schools is child-centered and appropriate to a child’s developmental stage, ensuring that students receive the type of instruction that best suits their needs. For students with special needs, Instructional Support Teams are there to develop instructional plans that are appropriate to a student’s abilities. These teams help identify a student’s need for academic or behavioral support, determine strategies to assist the student, implement prevention strategies through a continuum of services, and monitor progress to ensure continued success. For students who are identified as gifted, the Downingtown Educational Enrichment Program (DEEP) is available to provide students with challenging classroom opportunities. Language arts instruction is literature-based and balanced, and the subjects of social studies, science and math are integrated into thematic units for depth and breadth of understanding. Technology is used on a consistent basis in all schools to support and deliver the instructional program. Downingtown elementary school students have a variety of unique learning opportunities available to them. Students have access to television studios where they can write, perform and produce their own news show each morning. Students can also write, illustrate and bind their own books through the school’s publishing center. In addition, students have exposure to learning a foreign language of their choosing by performing self-paced instruction with Rosetta Stone software on iPads. Science fairs, community service events, athletic activities and music and art programs are also key elements of the elementary curriculum, ensuring that students receive a comprehensive academic foundation that will benefit them in higher grade levels. Sixth Grade Center and Middle School Education Grades 6th through 8th can be challenging for many students. Knowing that the transition to a new school can be daunting, the faculty and staff of our sixth grade center and two middle schools go to great lengths to create a personal environment for students.


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One of the ways this is accomplished is by assigning students and teachers to teams within each school. In addition to fostering a sense of camaraderie, the use of teams allows for the overlap and integration of subject areas such as language arts, science, math and social studies between classrooms. Technology skills are honed in these grades with computer classes, and the integration of technology into regular classroom activities. 6th graders have their own iPad used for instruction that they can take home with them. Art, music, physical education and health are also important parts of the 6th – 8th grade curriculum. High School Education The wide variety of course offerings and extra-curricular activities continues once Downingtown students reach high school. In three state-of-the-art facilities, students have the opportunity to grow academically and socially while also developing a feel for their future. The emphasis on English, math, social studies and science continues at the high school level, with students exposed to a variety of learning experiences ranging from class discussions, experiments and special projects to reading assignments and homework. At the high school level, students can really begin to explore courses that will help them define their future. Many opportunities are available, including Advanced Placement courses in subjects such as German, Spanish, French, biology, calculus, English, government, U.S. history and physics; along with business education, industrial arts technology and vocational-technical courses. In addition to the rigorous curriculum, students can discover career opportunities through programs like Pupils Reaching Out, which utilizes resources within the business community to help students develop their own individuality, a sense of responsibility and the skills necessary to succeed outside of school. Through the Career Experience program, highly motivated students can spend part of their school year working at a professional job. Other options for highly motivated students include Independent Study and Early College Acceptance. In 2011-2012 the District’s Science, Technology, Engineering and Math (STEM) academy opened as the District’s third high school, and provides students an opportunity to spend their high school years at a school dedicated to preparing interested students to gain entrance into colleges and careers related to science,


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technology, engineering, and mathematics. There is an individualized learning plan for every student and the school is a state of the art facility providing students with access to cutting edge technology and resources for the 21st century. Academic Performance Students in the Downingtown Area School District are among the top performers in the state when it comes to academics. Our highly educated and dedicated teaching staff provides students with a well-rounded and balanced curriculum that is aligned with state standards, ensuring our students are prepared for the rigors of standardized testing as well as the challenges of life after high school. The desire to learn is instilled in Downingtown students at a young age, and is cultivated so that it continues to grow, long after graduation. Our students’ commitment to learning is evidenced by the number of graduates who opt to continue their education. The majority of our graduates go on to further their educational interests, most of them at four-year colleges. Downingtown students have gone on to attend institutions such as Harvard University, Princeton, University, the University of Pennsylvania, Penn State University, Temple University, West Chester University, as well as area community colleges, trade schools, and the armed services. When it comes to the standardized testing that is used to measure performance, Downingtown students’ scores are among the highest in the state. The Pennsylvania System of School Assessment (PSSA) test is used, and Downingtown students consistently meet and exceed the requirements for achievement on the PSSA, and score significantly higher than the state average. These tests are key elements in the calculation of Pennsylvania’s School Performance Profile score which provides the public with a comprehensive overview of student academic performance in every Pennsylvania public school building. It is our aim to continue this trend, even as the expectations for student achievement are raised higher. The PSSA is not the only test that we use to gauge our students’ performance. The Scholastic Aptitude Test (SAT) is another important indicator of success. The majority of our high school students opt to take this test, and they score consistently above state averages. These statistics, which are by no means the sole indicators of our district’s worth, demonstrate that our staff is fully committed to helping our students to meet state and federal standards. The number of students who continue on to post-secondary education shows that our teachers have also inspired our students to commit to learning throughout their lives, not just in Downingtown classrooms.


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Quality Teaching Staff Downingtown Area School District teachers are superior professionals who are dedicated to drawing out students’ strengths while helping them to overcome their weaknesses. Knowing that parental involvement is integral to a child’s education, teachers work closely with families to ensure student success. Our teachers are highly-qualified and experienced. About 70 percent have attained a master’s degree or higher. Their extensive schooling means our students are receiving instruction from professionals who are well-versed in their subject areas. Downingtown teachers are supportive both inside and outside the classroom. They regularly attend extra-curricular activities to support students and are heavily involved in advising and coaching students in these activities. Many of our retired teachers remain active and involved in our schools by volunteering regularly or serving as substitute teachers. This level of commitment means Downingtown students leave our schools feeling like they are part of a family. Diversity The diversity in Downingtown’s classrooms is embraced and celebrated in a number of ways. Through the Downingtown Area School District Diversity Committee, students, staff and community members are learning to foster multicultural knowledge and respect differences. The Committee aims to provide staff with training in sensitivity issues, examine curriculum to make sure that it reflects a multicultural perspective, and support minority-hiring practices. In the classroom, children are taught to respect and work out differences through peer mediation programs. Class studies examine issues like the Holocaust and civil rights, and a number of school district clubs – such as the United Nations Club, the International Club and the Black Student Union – embrace a multicultural view. The diversity of our district is also reflected in the administrative staff and faculty of the Downingtown Area School District. Our employees come from a wide variety of experiences and backgrounds, providing our district with the valuable perspectives of people from all walks of life.


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Extra-Curricular Activities While our emphasis on academics is strong, we also realize that for our students to be well-rounded, they must have more in their life than their studies. That is why we provide many opportunities for involvement in extra-curricular activities. Our commitment to the extra-curricular experience is demonstrated by the multitude of clubs and activities available to students at all levels. At the secondary level, students can participate in sports such as soccer, football, wrestling, field hockey and basketball. Clubs run the gamut, with everything from a Shakespeare Club to an Ecology Club to a Multicultural Club. For the musically inclined, students can join the band, chorus or cast of the school musical. Whether your student is interested in playing sports, acting, singing, playing chess, writing, helping the community or saving the environment, Downingtown high schools have a club or team to match it.


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Financial Structure and Reporting Fund Structure and Accounting The accounting system of the School District is organized on the basis of funds. Each fund is considered a separate accounting entity, with a set of self-balancing accounts that comprise its assets, liabilities and fund equity, revenues and expenditures or expenses, as appropriate. School District resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. The fund classifications used by the School District have been defined by generally accepted accounting standards that include three broad fund types: governmental, proprietary, and fiduciary. Governmental Funds Governmental funds are those through which most governmental functions of the District are financed. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources. The difference between governmental fund assets and liabilities is reported as fund balance. The District uses two types of Governmental Funds:

General Fund The General Fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund.

Capital Projects Fund The Capital Projects Fund is used to account for capital expenditures incurred for the renovation, acquisition or construction of major capital facilities, and the acquisition of capital equipment. Financing sources for the capital projects and equipment are also accounted for in this fund.

Proprietary Fund Proprietary fund reporting focuses on the determination of operating income, changes in net assets, financial position, and cash flows. Resources segregated into the Proprietary Fund category are those used to finance activities similar to those often found in the private sector. The activities are usually financed, at least partially, from a user charge. The District uses one Proprietary Fund: an Enterprise Fund (the Food Service Fund).

Food Service Fund The Food Service enterprise fund accounts for the financial transactions related to the food service operations of the District. The food service operations are primarily financed and operated in a manner similar to private business enterprises where the stated intent is that the cost, including depreciation and indirect costs, of providing goods or services on a continuing basis are financed or recovered primarily through user charges.


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Fiduciary Funds Fiduciary Funds account for resources held by the District as a trustee or agent for some other entity or group. The District uses two Fiduciary Fund types - Trust Funds and Agency Funds. The Trust Fund is used to account for scholarship funds held by the District in a custodial capacity, and the Agency Fund is used to account for the receipts and disbursements of monies from student activity organizations. Fiduciary Funds are custodial in nature and do not involve measurement of results of operations. The District is not required to adopt budgets for Fiduciary Funds, and no budgets are adopted. Accordingly, there is no Fiduciary Fund budget information presented in this document.

Measurement Focus and Basis of Accounting for Revenue and Expenditures Measurement Focus All Governmental Funds are accounted for using a flow of current financial resources measurement focus. With this measurement focus, only current assets and current liabilities are generally included in the balance sheet. The statement of revenues, expenditures, and changes in fund balances reflects the sources (i.e., revenues and other financing sources) and uses (i.e., expenditures and other financing uses) of current financial resources. The Proprietary Fund and Fiduciary Funds are accounted for using a flow of economic resources measurement focus. With this measurement focus, all (current and non-current) assets and liabilities associated with the operation of this fund are included on the statement of net assets. The statement of changes in revenues, expenses, and changes in net assets presents increases (e.g., revenues) and decreases (e.g., expenses) in total (current and non-current) net assets. Basis of Accounting Basis of accounting refers to the timing of recognition of revenues and expenditures or expenses in the accounts and in the financial statements, regardless of the measurement focus. The modified accrual basis of accounting is used for all Governmental Funds. Under this basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the District, available means expected to be received within sixty days of fiscal year end. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable, except for principal and interest on general long-term debt which is recognized when due. The accrual basis of accounting (full accrual) is used by the Proprietary Fund and Fiduciary Funds. Under this basis, revenues are recognized in the accounting period earned and expenses are recognized in the period incurred.


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Government Accounting Standards Board (GASB) GASB Statement No. 34 established financial reporting requirements for state and local governments throughout the United States. It significantly changed the way school districts report and present financial information in conformity with Generally Accepted Accounting Principles (GAAP). The reporting model requires that a school district’s basic financial statements include new government-wide statements. These government-wide statements display information about the school entity as a whole and recognize all assets, liabilities, revenues and expenses on the economic resources measurement focus and the full accrual basis of accounting. In addition to the government-wide financial statements, the fund financial statements will continue to provide the same information for the individual funds as discussed above under the Measurement Focus and Basis of Accounting sections. The budget information presented in this document is consistent with fund financial statement reporting. GASB Statement No. 54 effects the presentation of fund balance information and the classification of individual funds for years beginning July 1, 2010. New fund balance classifications are non-spendable, restricted, committed, assigned, and unassigned. Each category has a different level of restrictions and a different level of authority to place those restrictions. The highest level of restrictions is on the non-spendable category with restrictions decreasing in each category from “restricted” to “unassigned”. For purposes of this document, the fund balances shown in the financial information are total fund balances that include any classifications. GASB 54 also eliminated separate fund reporting for the Athletic Fund and Capital Reserve Fund. The Athletic Fund is now incorporated into the General Fund, and the Capital Reserve Fund is now incorporated into the Capital Projects Fund. Classification and Presentation of Revenue and Expenditures The Pennsylvania Department of Education has adopted a system for the classification of revenue and expenditures based on generally accepted accounting standards for school entities. The system is used for budgeting, accounting, and financial reporting in compliance with Generally Accepted Accounting Principles (GAAP), as established by the Governmental Accounting Standards Board (GASB). The classification and coding structure to record financial transactions under the accounting system provides for the identification of revenue and expenditure transactions. For each type of transaction, the specific account code is made up of a combination of dimensions. Revenue and expenditure codes used by the District are discussed below. These codes are used in presenting the detail financial information in the Financial section of this document.


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Revenue As required by the Pennsylvania Department of Education, the District classifies revenues by revenue source dimensions represented by four digit codes. Revenues are segregated into three sources: Local Sources, State Sources, and Federal Sources. Local sources include such receipts as property taxes and interest on investments. State sources consist of monies received by the District from the State of Pennsylvania among which are funds to support the basic instructional program, special education services, and the transportation of students. Federal sources are provided by the federal government to support specific programs as designated by the federal government. The following is a description of revenue source dimensions (codes) used by the District. 6000 Local Revenue Sources Revenue produced within the boundaries of the District and available to the District for its use.

6111 Current Real Estate Tax Real Estate Tax is the main source of revenue for funding the operation of the Downingtown Area School District. It is based on the assessed valuation, as determined by the Chester County Board of Assessment, of all taxable property within the School District. The District levies a real estate tax on every $1,000 of assessed property value based on a rate that is stated in mills. The number of mills levied by the District is multiplied by the assessed value divided by 1,000 to determine the real estate tax due.

6112 Interim Real Estate Tax

Interim taxes are levied under Act 544 of 1952 on the increase in assessed valuations of local property as a result of construction or improvements to that property during the school year.

6113 Public Utility Realty Tax Lands and structures owned by public utilities and used in providing their services are subject to state taxation under Act 66 of 1970. The state collects and then distributes a prescribed sum among local taxing authorities including school districts and that payment of state tax is in lieu of local taxes upon public utility realty.


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6142 Occupation Tax

Revenue received under Act 511 for flat rate assessment of occupation taxes. The flat rate occupation tax is a tax placed on the occupations of persons residing within the district.

6151 Earned Income Tax

Earned income taxes are levied under Act 511 of 1965 (Local Tax Enabling Act) at the rate of one half of one percent (.5%) of wages, salaries, commissions, net profits or other compensation of those who earn income and reside within the School District.

6153 Real Estate Transfer Tax

Transfer tax is levied under Act 511 at the rate of one half of one percent (.5%) of the value on the transferring of real estate or interest in real property situated within the boundaries of the School District.

6411 Delinquent Real Estate Taxes

Revenue received from taxes assessed and levied upon real property which have become delinquent. Delinquent taxes are taxes that were not collected during the original year of issue.

6510 Interest on Investments

Interest on investments is revenue received from the investing of School District money as it becomes available in investment vehicles as permitted by Pennsylvania law.

6710 Admissions

Revenue from patrons of a school-sponsored activity, such as a concert or athletic event.

6740 Activity Fees

Revenue from fees for participation in school sponsored activities.

6831 Revenue From Intermediary Sources – Federal Funds

Revenue received through an intermediate source as agent of the Federal Government. For the District this represents IDEA funds from the Federal Government received through the Chester County Intermediate Unit. IDEA funds support special education.


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6910 Rent of Facilities

Rent of Facilities is revenue received from various government bodies, organizations, and civic groups for the rental of the District's buildings and facilities.

6920 Contributions and Donations from Private Sources

Revenues from philanthropic foundations, private individuals or private organizations for which no repayment or special service is expected.

6940 Tuition from Patrons

Revenue received from patrons for education provided by the District.

6990 Miscellaneous Revenue

Revenue from local sources not classified elsewhere. 7000 Revenue from State Sources Revenue originating from Pennsylvania state appropriations and directly disbursed to school districts.

7110 Basic Education Subsidy

Revenue received from the State designated for Basic Education.

7140 Charter Schools Subsidy

Revenue received from the State to fund the Charter Schools initiative.

7160 Tuition for Orphans and Children Placed In Private Homes

Revenue received from the State as tuition for children who are orphans and/or children who are placed in private homes by the court.

7230 Alternative Education

Revenue received from the State as subsidy for alternative education. Alternative education is specialized educational instruction and support services to students that must be removed from regular classrooms because of disruptive


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behavior. These funds enable schools to provide students with a sound education course of study and counseling designed to modify disruptive behavior and return the students to a regular school curriculum.

7271 Special Education

Revenue received from the State for expenditures incurred in instructing school age special education students.

7310 Transportation

Revenue received from the State for pupil transportation expenditures and / or board and lodging in lieu of transportation. This account also includes transportation subsidies for nonpublic and charter school students.

7320 Rental and Sinking Fund Payments

Revenue received from the State as a full or partial payment for approved lease rentals, sinking fund obligations, or any approved District debt obligations for which the State Department of Education has assigned a lease number.

7330 Health Services

Revenue received from the State for expenditures for health services including medical, dental, and nurse services.

7501 Pennsylvania Accountability Grants

Revenue received from the State to implement research-based programs to boost student achievement.

7810 Social Security and Medicare Taxes – State Share

Revenue received from the State designated as the State’s matching share of the employer’s contribution of the Social Security and Medicare Taxes for covered employees who are not Federally funded.

7820 Retirement Contributions – State Share

Revenue received from the State designated as the State’s matching share of the employer’s contribution of Retirement Contributions for active members of the Public School Employees Retirement System.

8000 Revenue from Federal Sources Revenue originating from the Federal government.


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8514 Title I – Improving the Academic Achievement of the Disadvantaged

Revenue received for the education of disadvantaged children. Includes such programs as Comprehensive School Reform Program, Reading First, Even Start, and Improving Literacy Through Libraries.

8515 Title II – Preparing, Training and

Recruiting High Quality Teachers And Principals

Revenue received for the education of children under NCLB Title II. Improving Teacher Quality, and Eisenhower Professional Development are samples of funding.

8516 Title III – Language Instruction For Limited English Proficient And Immigrant Students

Revenue received for the education of children under NCLB, Title III. Includes Grants for English Language Acquisition, and Technology Literacy Challenge.

8518 Title V – Promoting Informed Parental Choice And Innovative Programs Revenue received for the education of children under NCLB, Title V. Includes Innovative Programs, and Smaller Learning Communities.

8810 Medical Assistance Reimbursements (ACCESS) Reimbursements received from the Federal Government through the Commonwealth of PA for eligible related health services provided to special education students as part of their Individual Education Plan (IEP). Reimbursable services include, but are not limited to, occupational therapy, physical therapy and psychological counseling.

9000 Other Financing Sources Other financing sources include governmental fund general long-term debt proceeds, fund transfers-in, proceeds from fixed asset dispositions, and other receipts. Such amounts are classified separately from revenues. Expenditures The Pennsylvania Department of Education also requires the District to classify expenditures by a combination of dimensions. The required expenditure dimensions for budget preparation are function and object. Function and object dimensions are used


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together to classify each expenditure. The function dimension (four digit code) is used to classify expenditures according to the principal purpose for which expenditures are made (e.g. Instruction and Support Services). The object dimension (three digit code) applies to the article purchased or the service obtained (e.g. Salaries, Fringe Benefits, Supplies and Equipment). The following is a description of expenditure dimensions (codes) used by the District. Functions The District uses five major function codes (1000, 2000, 3000, 4000, 5000) to record and control financial transactions. However, expenditures are not charged directly to these major function categories described below but to sub-accounts or sub-functions that provide a more detailed classification of expenditures.

1000 Instruction Activities dealing directly with the teaching of pupils, or the interaction between teacher and pupils and related costs, which can be directly attributed to a program of instruction. Teaching may be provided for pupils in a school classroom, in another location such as a home or a hospital, and in other learning situations. It may also be provided through some other approved medium. Included in this function are the salaries for teachers and assistants of any type that provide support for the instructional process. Also included in this function are equipment and supplies directly related to instruction and the instructional process.

1100 Regular Programs

Elementary and Secondary programs include activities designed to provide students (grades K through 12) with the learning experiences to prepare them for activities as citizens, family members, and non-vocational workers as contrasted with programs designed to improve or overcome physical, mental, social and/or emotional handicaps.

1200 Special Education Programs

Activities designed primarily for students having special needs. These special programs include services for the gifted, learning disabled and physically handicapped students.

1300 Vocational Education Programs

Pennsylvania Department of Education approved programs designed to prepare students to pursue occupational fields including agriculture, business, distribution, health, home economics and trade and industry.


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1400 Other Instructional Programs

Elementary and Secondary programs that provide students (grades K through 12) with learning experiences not included in the regular, special education or vocational education programs. This includes the Summer School Program, Homebound Instruction, Driver Education Classroom Instruction, and Federal Instructional Programs.

2000 Support Services

Services which provide administrative, technical, personal and logistical support to facilitate and enhance instruction. Support services exist to sustain and enhance instruction, rather than entities within themselves. They include such services as: pupil personnel, guidance, psychology, library, health, attendance, and transportation. 2100 Pupil Services

Activities designed to assess and improve the well-being of students, to supplement the teaching process, and meet the provisions of Article Xlll of the Public School Code of 1949, as amended. This includes the Director of Pupil Services, guidance counselors and psychological services.

2200 Instructional Staff Services

Those activities associated with assisting, supporting, advising and directing the instructional staff in improving the content and process of providing learning experiences for students. These activities include audio-visual/multi-media services, library operations, curriculum development and staff development.

2300 Administration

Those activities concerned with recommending new policies, administering existing policies, and the developing and implementing of procedures in connection with the operation of the School District. It also includes the services of those professional, independent, and separate agencies or individuals that are elected, appointed, or retained to assist in the administration including attorneys, accounting services and tax collection services.

2400 Pupil Health Services Programs

Activities that provide physical and mental health services which are not part of curriculum and instruction. Included are activities that provide students and staff with appropriate medical, dental, and nursing services as required by the State.


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2500 Business Services

Those activities concerned with the administering of the District’s business functions, the accounting of the District’s receipts and expenditures, and the purchasing, storage and maintenance of goods and services.

2600 Plant Operation and Maintenance

Those activities concerned with keeping the physical plant open, comfortable, and safe. This includes keeping the grounds, buildings and equipment in effective working condition and maintaining safety on all school property.

2700 Transportation

Those activities concerned with the conveyance of students to and from school, as provided by state law, including trips between home and school and trips to school activities.

2800 Central Support Services

Activities, other than general administration, which support each of the other instruction and supporting services programs. These activities include planning, research, development, evaluation, information, staff and technical services.

2900 Other Support Services

All other support services not classified elsewhere in the 2000 series. This includes amounts paid for services from the Chester County Intermediate Unit.

3000 Operation of Non-Instructional Services Activities concerned with providing non-instructional services to students, staff or the community. Expenditures accounted for in this function include student activities and community services.

3100 Food Services

Those activities concerned with providing food to students and staff. This service area includes the preparation and serving of regular and incidental meals, lunches or snacks in connection with school activities and the delivery of food.

3200 Student Activities

School sponsored activities, under the guidance and supervision of the School District’s staff, designed to provide students such experiences as motivation, enjoyment, and improvement of skills. Co-curricular activities normally


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supplement the regular instructional program and include such activities as band, chorus, speech and debate. Also, student activities involve the athletic program, which provides competition between schools.

3300 Community Services

Activities concerned with providing services for the community as a whole.

4000 Facilities Acquisition, Construction and Improvement Services Represent capital outlay for the purchase of land, buildings, service systems and built-in equipment. Expenditures include the initial purchase of land and buildings, construction remodeling and additions and improvement to buildings, initial installation, replacement or extension of service systems and other built-in equipment, as well as improvement to sites, and activities related to all of the above. 4500 Building Acquisition and Construction Services

Costs incurred to purchase or construct buildings, additions to buildings, and original or additional installation or extension of service systems and built-in equipment.

4600 Existing Building Improvement Services

Capital expenditures incurred to renovate or improve existing buildings, service systems and other built-in equipment. Capital expenditures include non-routine and substantial costs incurred to maintain or improve buildings, service systems and other built-in equipment.

5000 Other Expenditures and Financing Uses Other financing uses represent the disbursement of governmental funds not classified in other functional areas that require budgetary and accounting control. These include transfers of monies from one fund to another and budgetary reserve.

5100 Debt Service / Other Expenditures and Financing Uses

This function is used to record and accumulate expenditures incurred to retire current year principal and interest payments on long-term debt.

5200 Fund Transfers

This function provides for funds to be transferred from one fund to another fund without expectation of repayment. Transfers from the General Fund are budgeted to support the Athletic Fund and Capital Reserve Fund.


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5900 Budgetary Reserve

The District maintains a budgetary reserve account in the amount of less than one percent of budgeted expenditures in order to provide for operating contingencies. Expenditures may not be made through the budgetary reserve, but only against the line items which appear throughout the appropriations. An amount equal to the expenditure shall be transferred from the budgetary reserve into the appropriate line item. The Board of School Directors shall approve each transfer.

Objects The District uses nine major object classifications to record and control financial transactions. However, expenditures are not charged directly to these major object categories described below but to sub-accounts or sub-objects that provide a more detailed classification of expenditures.

100 Personnel Services – Salaries

Gross salaries paid to employees of the District. Salary costs are related to personnel positions, overtime, temporary employees and supplemental pay.

200 Personnel Services – Benefits

Amounts paid on behalf of employees; these amounts are not included in gross salary, but are in addition to that amount. Such payments are fringe benefit payments; and, while not paid directly to employees, are part of the cost of personnel services. Fringe benefits include health insurance, retirement plans, social security, life insurance, unemployment compensation and workers’ compensation.

300 Purchased Professional Services

Services that by their nature require persons or firms with specialized skills and knowledge. Included in this classification are contracted services such as; legal and accounting services, tax collection and administrative services, curriculum improvement and instructional services, counseling and guidance services, computer services and medical and dental services. This classification also includes fees paid to the Chester County Intermediate Unit for special education services and alternative regular education services.

400 Purchased Property Services

Services required to operate, repair, and maintain property used by the District. Also used for facility construction, renovation, and remodeling expenditures paid to contractors.


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500 Other Purchased Services

Amounts paid for services not provided by District personnel but rendered by organizations or personnel, other than Professional Services and Purchased Property Services. Such services include those for contractual agreements to transport students, printing and binding, travel, the cost of tuition at approved private schools for special education programs, costs incurred to educate adjudicated or court placed children, liability insurance, and telephone costs. This category also includes the District’s share of costs for general and administrative services received from the Chester County Intermediate Unit.

600 Supplies

Amounts paid for material items of an expendable nature that are consumed, worn out, or deteriorated in use. Such costs include textbooks and periodicals, instructional supplies and materials, general and office supplies, custodial supplies, medical supplies, maintenance and transportation materials, and energy costs for electricity and heating.

700 Property

Expenditures for the acquisition of fixed / capital assets, including expenditures for land or existing buildings and improvements of grounds; initial equipment; additional equipment and replacement of equipment.

800 Other Objects

Amounts paid for expenditures not otherwise classified in objects 100 through 700. Such expenditures include dues and fees and interest on debt. An amount for operating contingencies is also budgeted here (budgetary reserve).

900 Other Uses of Funds

Outlays from current funds to retire principal of debt service. Also used to record transfers to other funds.


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Significant Laws Affecting Budget and Fiscal Administration

The Pennsylvania Public School Code of 1949, as amended, gives local Boards the authority to conduct the financial affairs of the District. The School Code contains provisions that require the Board to perform certain acts (mandatory), provisions that provide discretion to the Board to either act or refrain from acting (permissive), and provisions where the Board is prohibited from acting either in total or until certain conditions have been satisfied (prohibited). The School Code laws affect the budget and fiscal administration of the District as discussed below. Act 1 The Pennsylvania state legislature passed Act 1 in June of 2006. Beginning in 2007-2008, the Act placed annual limits on the percentage increase in property taxes that the District can levy. This is a significant factor in the District’s ability to fund its programs and services. The limit is equal to an inflationary index calculated each year by the State (2.1% for 2014-2015), and is imposed upon all school districts in Pennsylvania in order to provide tax relief to taxpayers. There are exceptions to the limit that the District can apply to the State for, which may allow the District to increase its millage (tax rate) above the limit. If the District needs to raise its millage above the limit including any approved exceptions, it must have the increase approved by voters using a ballot question at a primary election preceding the beginning of the fiscal year. If the increase is not approved the District must cut expenditures to stay within the limit. Act 1 also allocates the state’s gaming revenue to school districts for property tax relief. In 2014-2015 the District estimates it will receive $3.8 million that would equate to a tax credit of about $200 for each approved property. Due to the potential need for voter approval of tax increases at a primary election, the timeline for the beginning of the annual budget process begins in September so that the preliminary budget can be adopted in February at the latest. Budget Statutes The School Laws of Pennsylvania, as enacted by the State legislature, mandate that public school districts approve (adopt) an annual budget prior to the start of the fiscal year. The School Code requires that a proposed budget be prepared at least thirty days prior to adoption of the final budget for the following fiscal year. The School Code also mandates that the proposed budget be available for public inspection at least twenty days prior to the date set for adoption. Districts are also required to provide public notice of final budget adoption ten days prior to any final action on the budget. The School Code requires five affirmative votes of the Board of School Directors to adopt the annual budget. The total amount of the adopted annual budget expenditures may exceed annual budget revenues, however, the expenditures may not exceed the amount of funds available to the District. In addition to revenues, funds available to the


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District may include fund balance (surpluses from prior years), and other financing sources such as borrowings. The adopted budget must be filed with the Pennsylvania Department of Education. The adopted budget becomes the approved spending plan of the District for the coming fiscal year, and the Board is prohibited from spending or obligating funds in excess of the budgeted amounts. However, the Board is authorized to transfer funds within the budget from one category to another without changing the total budget. These transfers must occur in the last nine months of the fiscal year. Accounting System The State has established a mandatory accounting system that must be used by every school entity that is based on Generally Accepted Accounting Principles (GAAP) for governmental units. The accounting system is discussed above in the Financial Structure and Reporting section. Bidding and Purchasing Statutes School Boards are required under Section 801 of the Public School Code to purchase and provide all furniture, equipment, textbooks, school supplies and other items for the use of the District to maintain the educational environment. Section 807.1 (as amended by Act 30 of 1990) sets forth the requirement for competitive bidding at $19,400 or more beginning January 1, 2015. However, any purchase of $10,500 but less than $19,400 requires three price quotations under Section 807.1. For District purchases that are subject to competitive bid, the Board must accept the lowest responsible bid (where kind, quality and material are equal). Boards may reject any and all bids or select a single item from any bid. Section 521 of the School Code permits purchases to be made through intergovernmental cooperative agreements (joint purchase agreements). School entities may also “piggy-back” on state or other government contracts following the appropriate legal requirements. Even though purchasing may require competitive bidding, Boards may establish reasonable criteria such as color, unit/size, or any other reasonable criteria specific to the District’s needs. The School Code also provides for the exemption of several items from competitive bids. The exceptions include but are not limited to: globes, maps, textbooks, educational films, and teacher demonstration devices. Services are also excluded from the competitive bidding requirement but school districts may choose to bid service agreements and contracts. Cash Management and Investments Statutes Section 440.1 of the Public School Code permits the investment of funds in (a) United States Treasury bills; (b) short-term obligations of the United States Government or its agencies or instrumentalities; (c) obligations of the United States of America or any of


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its agencies or instrumentalities backed by the full faith and credit of the United States of America; (d) obligations of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the Commonwealth; (e) obligations of any political subdivision of the Commonwealth of Pennsylvania or any of its agencies or instrumentalities backed by the full faith and credit of the political subdivision; or (f) deposits in savings accounts, time deposits or share accounts of institutions insured by the Federal Deposit Insurance Corporation to the extent that such accounts are so insured, and, for any amounts above the insured maximum, provided that approved collateral as provided by law therefore shall be pledged by the depository. Payment of Financial Obligations Section 439 and 607 of the Public School Code provide direction on the payment of financial obligations. Section 439 requires that all payments be approved by the Board of School Directors. An order to pay must be signed directly or through facsimile signature by the Board president. Bills may be paid prior to Board approval for certain conditions that include the receipt of a discount, the avoidance of a late charge, or other advantages that may accrue to the District. Section 607 requires proper documentation to support each expenditure prior to payment, and that there be sufficient funds in the treasury. Construction of Facilities Boards are charged with the requirement to provide the necessary grounds and suitable buildings to accommodate all school-age children in the district. This authority also includes the renovation and expansion of existing facilities. In most cases, school districts seeking state reimbursement are required to participate in PlanCon, an acronym for the Pennsylvania Department of Education’s Planning Construction Workbook. The process involves a number of phases, beginning with a definition of the project and justification of its need. Succeeding steps include: site approval; estimated project cost data; architectural reviews; cost data based on actual bids; and finally, approval of the bond issue or other funding mechanism. Specific requirements are detailed in regulations adopted by the State Board of Education and in standards promulgated by the Pennsylvania Department of Education. School Boards are required by Act 34 of 1973 to conduct public hearings. A second hearing is required if the bids received for a construction project exceed the initial Department of Education approved estimates by eight (8) percent. Alterations to existing buildings are excluded from this requirement. School buildings may be financed in a variety of ways that include: local authority, state authority, general obligation bonds or local funds. Audits of Financial Records All school districts are required to have an annual audit of financial records. The audit must be completed by an independent certified public accountant. The audit report must be prepared in accordance with Generally Accepted Accounting Principles (GAAP) to insure consistency. Completion of the audit and issuance of the audit report marks


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the end of the budget cycle for a single year. In addition to the requirement of an annual audit, Section 2553 of the Public School Code requires the comptroller of the Department of Education to perform regular audits and field audits and may, at his or her discretion, perform special audits to verify receipts and expenditures. Such audits are usually limited to specific use of program funds given for state and federal projects. The state Fiscal Code requires the auditor general’s office to audit the accounts and records of all school districts. Examination is made by the Auditor General of receipts and expenditures related to state payments for public education. The purpose is to verify that the monies received from the State were properly expended and that the District properly complied with all laws and regulations. There have been no findings in any of the District’s audits over the past several years.


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Significant Policies and Procedures Affecting Budget and Fiscal Administration The Board of Directors is an extension of the State Legislature with the responsibility to provide for a thorough and efficient education for the students of the District. To accomplish this responsibility, the Board of Directors is granted authority through the Public School Code and the Pennsylvania constitution to establish policy for the operation of the school system. Policies are plans and procedures that are developed to provide guidelines for desired actions. A number of these policies affect the budget and fiscal administration of the District as discussed below. Operating Budget Policy The operating budgets will be prepared within the context of the Board’s intent to provide the best possible education for students while minimizing the impact on taxpayers who provide funding for District programs and services. The District will avoid budgetary procedures such as postponing or deferring current expenditures and advancing or accruing future revenues in order to balance the operating budget. The District recognizes that such procedures do nothing more than help meet immediate needs at the expense of increased future obligations and reduced future financial resources. The District will continue to maintain an interactive on-line budgetary accounting information system that is employed as a management control device to administer the spending plan. The data in the budgetary accounting information system will be utilized to prepare management reports for fiscal control and to prepare reports for the Board of Directors that compare actual revenues and expenditures to budget amounts. The budget will be administered within applicable local, state, and federal laws. Accordingly, the District will not obligate funds in excess of the approved financial plan unless the Board amends the budget by making additional appropriations or increasing existing appropriations to meet emergencies. All expenditures will be made in accordance with approved disbursement practices and legal purchasing requirements. The delegation of budget management will be based on a philosophy that is consistent with the site-based approach to decision-making through responsibility cost centers (sites or areas of responsibility). Decision making authority is delegated to budget managers of responsibility cost centers who are accountable for the effective and efficient utilization of resources appropriated by the Board. Capital Improvement Budget Policy The District will maintain a capital expenditure plan to provide a forecast for the improvement and construction of District facilities. Proposed capital improvement projects will be specifically identified together with the proposed year of construction. Proposed projects will be prioritized based on: (1) the resolution of safety issues; (2) compliance with state and federal mandates; (3) improvement of facilities based on a report of the architect-of-record of the School District, and based on an assessment of


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improvement needs by the Director of Facilities of the District; and (4) the improvement of existing buildings as recommended by the building principals. In addition to capital improvements, the District shall also plan any new or replacement construction based on state guidelines (PlanCon) for school building utilization. The decision to undertake any new or replacement construction shall be based on the needs of the educational program, the condition of existing facilities, and the projected capacity needs of the District. The District will identify the estimated costs and potential funding sources for each new or replacement capital project before it is submitted to the Board for approval. The District will determine the least costly financing method for any new or replacement construction. Debt Policy The District will confine long-term borrowing for capital improvements to existing facilities or for the construction of new facilities. Long-term borrowing may therefore be used for the renovation or expansion of current buildings based on the needs of the educational program, the condition of the buildings and the capacity needs of the District. When the District finances capital projects through the issuance of bonds, the payback period (term of the bond issue) will not exceed the expected useful life of the asset renovated or acquired. In no case will the District use long-term debt to fund current operations. However, the District may issue debt for the purpose of refunding certain bonds provided that there is a significant present value savings in the transaction. The District will maintain communication with bond rating agencies about its financial condition. The District will follow a policy of full disclosure in every financial report and official statement provided to bond rating agencies; to legal and professional service providers for bond issues; and to investors. The District will meet all debt service obligations when due and payable. Revenue Estimation Policy The Chief Financial Officer of the District will estimate annual revenues by an objective, analytical process. Revenue estimates shall be based on objective data such as historical trend analysis and validated state estimates of sources and amounts of subsidy. Budgetary Reserve Policy The District will maintain a budgetary reserve in order to provide for operating contingencies. The maintenance of a budgetary reserve is recognized by the Department of Education to be a sound management practice given that there are certain variables over which control is not possible regardless of the care with which the budget is prepared. These variables include unpredictable changes in the cost of goods and services as well as the occurrence of events that are unanticipated during the time


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of budget preparation and require expenditures by the District during the year for which the budget is prepared. The expenditures will not be made through the budgetary reserve, but only against the line items which appear throughout the functional appropriations. The transfer from the budgetary reserve to the functional line item will be approved by the Board. Fund Balance Reserve Policy The District will maintain an unassigned General Fund balance not to exceed the amount permitted by the State of Pennsylvania, currently 8% of the expenditure budget. The District also keeps at least 12% of General Fund budget expenditures in the Captial Project Fund balance to maintain its AAA credit rating from Moody’s. The Board recognizes that the maintenance of a fund balance is essential to the preservation of the sound financial condition of the District, allows the District to contain or reduce costs through participation in self-insurance programs, and protects the bond rating of the District. In addition, the District’s fund balance will be used to improve and renovate the District’s facilities and technology, purchase capital equipment, help fund pension contributions, and help fund debt service when necessary. Accounting, Financial Reporting, and Auditing Policies The accounting system will report financial information in accordance with the Pennsylvania Department of Education requirements and Generally Accepted Accounting Principles (GAAP). Management control and Board oversight will be maintained through the use of regular reports that present financial activity by fund, function, and object as well as by responsibility cost center. An independent public accounting firm will perform an annual audit of the financial records of the District. The audit report will provide an opinion on the financial controls and records of the District.


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Organization Chart


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Mission Statement Proud of our tradition of excellence, the mission of the Downingtown Area School District is to educate all students to meet the rigorous challenges of a global society.

Vision Planks

The District has set the following vision planks that are the drivers for the mission, comprehensive education plan, and Board of Directors goals. 1) Improve Student Achievement a. Indefatigably create a 21st century school curriculum and culture fostering innovation, academic achievement, and growth for all students. b. Understand a standards-aligned system in order to guarantee that our curriculum supports national, state, and local standards of achievement. c. Create a rigorous approach to teaching and learning to insure success for all. d. Be responsive in creating interventions to insure the success of all students. e. Continually improve student achievement in all schools based on PSSA as well as other indicators. 2) Improve Professional Development a. Continually improve professionally in order to create a culture fostering the academic growth of all students. b. Able to analyze and evaluate data in order to inform our practice to understand our strengths and adjust to improve weaknesses. c. Preparation for organizational agility in a changing political world. 3) Improve Technology a. Improve the use, infrastructure, support, and communication surrounding the implementation of innovative technologies to both accelerate work and improve student achievement. 4) Improve Communication a. Create a flatter organization for stakeholder contact, collaboration, and agility. b. Over communicate both internally and externally using 21st century platforms c. Strive for transparency to improve trust within and outside of the organization. d. Check the vision through an action planning method tied to organizational goals. 5) Improve Fiscal Responsibility and Create Development Opportunities a. Determinedly manage recourses wisely.


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b. Prepare for the future. c. Create structures for alternative revenue generation. 6) Analyze Demographics & Seek to Understand Diversity a. Strive to understand cultural changes, population shifts, and demographic patterns in a growing district. b. Cohesively create and adjust for balanced organizational patterns for our K-12 children. c. Maintain a clear understanding of the traditions and historical perspective of the greater Downingtown community.

Comprehensive Education Plan

The District’s has two goals for its comprehensive education plan. Goal #1: We will ensure a system is in place within the district that promotes, enhances,





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Major Goals and Objectives The Board of School Directors has developed two goals for 2014-2015. The following table provides the goals, how successful achievement of these goals will be measured, and how they are linked to the Vision Planks.

Goal

Measures of Success / Objectives

Vision Plank

Improve safety and security in the schools by establishing a chief security officer and upgraded video surveillance system.

Hiring of Chief Security Officer Needs evaluation performed at all schools New surveillance equipment installed and working properly

Vision Plank: Improve Technology

Request proposals from qualified child care provider organizations to provide before and after school programming at all 10 elementary schools and 6th grade center.

Create and send out request for proposal (RFP) Establish RFP review committee Award the work to the winning bidder

Vision Plank: Improve Fiscal Responsibility

Perform SWOT analysis with stakeholders to evaluate District’s current vision planks and determine long rage plans for the District.

Identify stakeholders Develop questionnaire to gather the data Analyze data and prepare report

Vision Plank: Encompasses All


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Budget Development Process

The budget process is comprised of five phases – planning, preparation, adoption, implementation and evaluation. The process is driven by two objectives - to provide every child in the District with the best possible educational opportunities and to maximize the use of available resources. Within this framework, the Board attempts to balance the educational needs of students and the resources available to the District from local, state, and federal sources. Act 1 Act 1 (discussed above under the Significant Laws Affecting Budget and Fiscal Administration section) imposes a budget timeline on School Districts in addition to tax increase limits. It requires the timeline for the beginning of the annual budget process to begin in September so a preliminary budget can be adopted in February at the latest. This preliminary budget serves to identify any potential tax increases over the index that will need to be addressed through exceptions or voter approval before final adoption of the budget in June. Act 1 effects each step of the budget process, as the District needs to carefully plan and prepare the budget so that any tax increase will be within the limit imposed by Act 1. Adoption of the budget will be effected if the District needs to seek voter approval for a tax increase over the limit. Implementation and evaluation of the budget will be focused on identifying areas throughout the year that may save the District money in order to stay within future year tax increase limits. Budget Planning For the fiscal year that begins July 1, the planning process for budgeting starts about ten months prior in September of the previous year when the Administration finalizes the enrollment forecast and approves a budget timeline that includes all of the important activities in the budgeting process. Once approved, the timeline represents the guidelines for the preparation and adoption of the School District’s annual budget. Preparation of the Operating Budget (General Fund) The preparation of the budget is the process of defining service levels such as the course offerings in the educational program; projecting student enrollment; developing staffing allocations; estimating expenditure needs to support programs and services; and projecting available revenues. The process begins with a forecast of elementary and secondary enrollment which establishes an important assumption on which per pupil expenditure appropriations, instructional staffing allocations, and service levels such as the number of course sections and the number of transportation vehicles are based. The Administration establishes building budgets that are primarily based on per pupil allocations for the projected student enrollment. Building principals determine budget allocations within the buildings.


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Since salaries and employee benefits constitute more than sixty-five percent of budget expenditures, the Board gives careful consideration to staffing requirements for both instructional and non-instructional positions to provide for defined service levels. The professional staffing needed to support the educational program is a function of the projected student enrollment, the course offerings, and class size guidelines. The District has a centralized approach to the development of the salary and benefit budget. For 2014-2015 the preliminary budget was prepared in February 2014, but was not required to be adopted then because the Board instead adopted a resolution that it would not raise taxes more than the Act 1 index of 2.1%. This preliminary budget was then refined until finalized for adoption in June 2014. Preparation of the Capital and Other Budgets Capital Budget Each year the District updates its capital expenditure plan that provides a forecast for the improvement and construction of District facilities. Proposed capital improvement projects will be specifically identified together with the proposed year of construction. Projects are prioritized based on resolution of safety matters, compliance with state and federal statutes, and the assessment of improvement needs. In the update of the plan, the Administration considers recommendations from the Director of Facilities, the Board’s Finance and Facilities Committees, and building principals. Capital improvement projects are budgeted in the Capital Projects Fund and funded with existing fund balance. New construction projects or major building renovations are planned based on the needs of the educational programs, capacity needs derived from enrollment forecasts, and the physical condition of the buildings. New construction projects are budgeted in the Capital Projects Fund and are funded with bond proceeds or existing fund balance. Food Service Budget The Food Service Fund budget is formulated from an estimation of the participation levels in each school based on projected enrollments. The District contracts with a food service company and these management costs are contractually determined. Costs for food are estimated by the food service company based on the number of meals to be provided. Revenue is based on projected sales to students and staff as well as estimated state and federal support for the meal programs.


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Budget Adoption For 2014-2015 the preliminary budget was prepared in February 2014, but was not required to be adopted then because the Board instead adopted a resolution that it would not raise taxes more than the Act 1 index of 2.1%. This preliminary budget was then refined until finalized for adoption in June 2014. Budget Timeline September-October Administration finalizes enrollment forecast

Per pupil budget allocations per school, and administrative department budget allocations determined

October-November Building and department operating budget allocations

given to budget owners with budget account spreadsheet

Revenue budget developed by Business Office

November - December

Building and department operating budget spreadsheets are submitted, reviewed and compiled.

Salary / benefit budget and new staff budgets developed

January - February Preliminary Budget adopted by the Board OR Resolution adopted to not increase taxes above Act 1 index.

Act 1 exceptions are applied for if necessary

March - May Preliminary Budget is refined by Administration Proposed Final Budget Adopted by Board in May

June Board adopts Final Budget

Implementation - Budget Administration and Management Process Budget administration and management is the process of regulating expenditures during the fiscal year to ensure that they do not exceed authorized amounts and that they are used for intended, proper, and legal purposes. The management of the budget is accomplished in a variety of ways: controlling expenditures; tracking revenue receipts; making corrections in expenditure allocations to reflect changes in costs, service levels, or plans; and reporting to the Board and public on fiscal operations.


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The budget serves as the vehicle for planning and resource allocation decisions in the District. After the Board adopts the budget in June and the appropriations are made to the various accounts, the budget becomes the major fiscal management tool for administering and controlling expenditures. There are however other budget administration and management issues important to the budget process that are discussed below. Organization for Budget Management The overall spending and revenue plans are coordinated by the administrative budget team to keep the District’s total expenditures within available revenues and other financing sources. This team includes the Superintendent, Chief Financial Officer and the other executive Directors along with the Business Office staff. Decisions on budgetary allocations to responsibility cost centers are primarily determined by the budget team. Allocations are provided in an unrestricted lump-sum amount, and decisions on how to spend these monies are primarily made at the site or department level. Salary costs are primarily determined by contractual agreements and budgeted on a centralized basis. Expenditure Control and Approvals All of the fund budgets of the District are controlled by a combination of District level oversight and building or department level management. The operating budget (General Fund) of the District is disaggregated into responsibility cost centers. A budget manager (an administrator or coordinator such as a building principal) is accountable for the management of the financial resources budgeted in their cost center. In addition, the Food Service Director is assigned as the budget manager for Food Service Fund. The Chief Financial Officer and Director of Facilities are the budget managers for the Capital Project Fund. Overall management and control of fund and responsibility cost center budgets resides at the District level with the Business Office. The Business Office monitors spending and manages expenditures within the context of the accounting structure, focusing on the appropriate function and object classification. Revenue is controlled and managed by the Business Office, ensuring that it is properly recognized and correctly classified by source. Each of the budget managers is authorized to approve the expenditure of funds within their respective responsibility cost center appropriations, provided that funds are expended in accordance with District purchasing procedures and legal requirements. Administrative regulations require that all purchase orders be approved by the Business Office in addition to the appropriate responsibility cost center approval to verify availability of funds, proper account coding, and compliance with legal purchasing procedures. All bid awards and contracts must be approved by the Board of Directors. The Chief Financial Officer also carefully monitors comparisons between budget and actual expenditures to maintain cost control and to ensure against overspending.


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Encumbrance Control Another important component in the District’s financial control and reporting system is the encumbrance of funds. Encumbrances are obligations in the form of purchase orders, contracts, or salary commitments chargeable to an appropriation and for which part of the appropriation is reserved and not yet spent. The purpose for the encumbrance of funds is to ensure that obligations are recognized as soon as financial commitments are made. Otherwise, the accounting system would only record actual amounts entered into the expenditure accounts, not those that are planned or anticipated. In short, the encumbrance of funds is an important control measure to prevent the inadvertent over-expenditure of budget appropriations due to the lack of information about future commitments. For budgetary purposes, appropriations lapse at fiscal year-end and outstanding encumbrances at year-end are canceled. Transfers Between Budget Accounts The budget is a spending plan based on a series of assumptions and estimates. Rarely, if ever, will all of the actual expenditures be equal to the detailed budget estimates. As actual expenditures are incurred, adjustments are required in the budget between accounts to cover higher than expected costs or to provide for an unanticipated expense. However, District controls on the transfer of funds ensure that expenditures do not exceed available financial resources. Transfers between accounts can be requested by responsibility cost center managers, but are executed at a centralized level by Business Office staff. This allows for additional control over the appropriateness of the transfers. The Business Office staff also monitors budget accounts and initiates transfers when appropriate. Evaluation - Management Information and Financial Reporting The District maintains a budgetary accounting and control software information system that provides information and reports to assist Board Members, the Business Office staff, and responsibility cost center managers in administering, monitoring and evaluating the implementation of the budget. The information from the accounting information system is important and relevant in evaluating the financial condition of the District and the fiscal performance of responsibility cost center managers. The reports produced from the information system are designed for specific District needs and to meet state and federal reporting requirements. They include management control reports that detail expenditure and budget status by responsibility cost center, and by function and object. Revenue reports are also prepared that track receipts against budget. The information system is interactive and provides users with the ability to review up to date accounting information on their computer.


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The District produces annual financial statements that are audited by an independent public accounting firm. These financial statements reflect the actual financial activity for the fiscal year. The budget is evaluated against these financial statements which are then used as a tool to begin development of the next year’s budget.

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Financial Section



Summary of All Funds

General Fund

Capital Projects Fund

Total Governmental

FundsProprietary

FundTotal All Funds

RevenueLocal Sources 158,979,430$ 300,000$ 159,279,430$ 2,921,000$ 162,200,430$ State Sources 36,835,570 - 36,835,570 80,000 36,915,570 Federal Sources 1,020,000 - 1,020,000 600,000 1,620,000

Total Revenue 196,835,000 300,000 197,135,000 3,601,000 200,736,000

ExpendituresInstructional 123,354,334 - 123,354,334 - 123,354,334 Support Services 56,465,568 - 56,465,568 - 56,465,568 Non-Instructional Operations 4,765,097 - 4,765,097 3,552,600 8,317,697 Facilities Construction & Improvement - 12,140,306 12,140,306 - 12,140,306 Other Expend. and Financing Uses 16,750,000 25,000,000 41,750,000 - 41,750,000

Total Expenditures 201,335,000 37,140,306 238,475,306 3,552,600 242,027,906

Excess of Revenue Over (Under)Expenditures (4,500,000) (36,840,306) (41,340,306) 48,400 (41,291,906)

Other Financing Sources - 6,000,000 6,000,000 - 6,000,000

Net Change in Fund Balance (4,500,000) (30,840,306) (35,340,306) 48,400 (35,291,906)

Fund Balance July 1 25,778,476 129,602,840 155,381,316 1,435,600 156,816,916

Fund Balance June 30 21,278,476$ 98,762,534$ 120,041,010$ 1,484,000$ 121,525,010$

Governmemtal Funds

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Downingtown Area School DistrictBudget 2014-2015

Percentage of All Fund Expenditures

63

General Fund83.2%

Capital Projects Fund15.3%

Proprietary Fund1.5%

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General Fund

The General Fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. The General Fund is the primary fund of the District, and is where the operating revenue and expenditures of the District are budgeted and recorded.


Summary of General Fund with Prior Years Comparison

2014-2015 Budget

2013-2014 Budget

2012-2013 Actual

2011-2012 Actual

2010-2011 Actual

RevenueLocal Sources 158,979,430$ 155,133,106$ 159,009,602$ 154,383,256$ 151,077,681$ State Sources 36,835,570 34,627,429 32,022,157 32,352,100 33,546,227 Federal Sources 1,020,000 1,419,465 3,012,007 3,140,125 3,177,700

Total Revenue 196,835,000 191,180,000 194,043,766 189,875,481 187,801,608

ExpendituresInstructional 123,354,334 117,246,005 102,566,445 100,946,541 101,266,153 Support Services 56,465,568 52,142,591 47,672,424 46,149,162 48,032,336 Non-Instructional Operations 4,765,097 3,465,405 3,405,943 3,234,835 3,353,500 Other Expend. and Financing Uses 16,750,000 22,146,000 49,500,522 51,822,214 24,707,930


Net Change in Fund Balance (4,500,000) (3,820,000) (9,101,569) (12,277,270) 10,441,690



The Fund Balance at June 30, 2015 includes $5 million assigned for future PSERS costs and $5 million assigned for future health care costs (including retiree health care costs).

65


Summary of Revenue and Expenditures - General Fund

Local Sources79%

State Sources18%

Federal Sources &

Fund Balance3%

REVENUE

Instructional61%

Support Services

28%

Non-Instructional Operations

3%

Other Financing Uses

8%

EXPENDITURES

66


Detail of General Fund Revenue with Prior Years Comparison

REVENUE 2014-2015

Budget 2013-2014

Budget 2012-2013

Actual 2011-2012

Actual 2010-2011

Actual

Source

Code LOCAL SOURCES

6111 Current Real Estate Tax 134,285,032$ 132,597,601$ 133,235,540$ 130,264,004$ 127,753,443$ 6112 Interim Real Estate Tax 1,800,000 1,800,000 1,752,473 1,792,941 1,736,256 6113 Public Utility Taxes 190,000 190,000 189,265 197,693 196,179 6142 Act 511 - Local Services Tax 175,000 175,000 170,459 209,436 164,639 6151 Act 511 - Earned Income Tax 14,000,000 12,750,000 14,065,246 12,845,110 12,550,773 6153 Act 511 - Real Estate Transfer Tax 2,500,000 2,000,000 2,678,500 2,067,424 1,734,999 6411 Delinquent Real Estate Tax 3,200,000 3,000,000 3,379,685 3,486,927 2,997,765 6510 Interest on Investments 300,000 300,000 377,824 419,429 741,421 6700 Student Activities 543,777 555,000 947,375 970,808 576,867 6831 Intermediary Sources - IDEA 1,450,000 1,362,525 1,682,844 1,563,822 1,474,452 6910 Rentals 125,000 125,000 158,046 151,911 93,811 6940 Tuition from Patrons 65,000 65,000 77,561 70,758 59,311 9201 Capital Lease - PV of Payments - - - - 713,040 6990 Miscellaneous Revenue 345,621 212,980 294,784 342,994 284,725

TOTAL LOCAL SOURCES 158,979,430 155,133,106 159,009,602 154,383,256 151,077,681

STATE SOURCES

7110 Basic Education Subsidy 13,509,704 13,062,583 13,062,583$ 13,062,584 14,276,449 7140 Charter Schools Subsidy - - 935,411 7160 Tuition for Court Placed Students 170,000 200,000 131,695 437,805 198,057 7271 Special Education Subsidy 4,975,437 4,975,437 5,310,990 5,211,893 5,226,233 7310 Transportation Subsidy 3,700,000 3,700,000 3,649,538 3,653,543 3,715,525 7320 Rentals & Sinking Fund Payments 1,190,000 1,800,000 1,541,547 3,193,178 2,909,754 7330 Health Services Subsidy 280,000 280,000 308,513 287,491 288,145 7360 Safe Schools - - 13,434 13,656 - 7501 PA Accountability Grants 264,742 260,000 264,742 264,742 673,836 7502 Dual Enrollment Grants - - - - 46,405 7810 Social Security Tax - State Share 3,356,437 3,221,032 2,890,657 2,862,912 2,995,144 7820 Retirement Contribution-State Share 9,389,250 7,128,377 4,848,458 3,313,297 2,281,268 7920 Other Grants - - - 51,000 -

TOTAL STATE SOURCES 36,835,570 34,627,429 32,022,157 32,352,100 33,546,227

FEDERAL SOURCES

8514 Title I - Grant - Low income 250,000 271,025 253,603 257,547 286,555 8515 Title II - Grant - Imprv Teach quality 150,000 159,840 138,074 196,466 188,221 8516 Title III - Grant - English Language 20,000 20,600 33,528 40,114 38,075 8518 Title V - Grant- Innovative Education - - - - 10,064 8701 American Recovery Stimulus - IDEA - - - - 1,183,281 8732 American Recovery Stimulus - QSCB - - 1,965,689 1,586,545 603,774 8670 Drug Free Schools Grant - - 700 14,168 42,867 8810 Medical Assistance Reimbursement 600,000 968,000 620,413 1,045,285 824,863

TOTAL FEDERAL SOURCES 1,020,000 1,419,465 3,012,007 3,140,125 3,177,700

9000 Use of Fund Balance 4,500,000 3,820,000

GRAND TOTAL REVENUE 201,335,000$ 195,000,000$ 194,043,766$ 189,875,481$ 187,801,608$

67


Detail of General Fund Expenditures with Prior Years Comparison

Function

Object 2014-2015

Budget 2013-2014

Budget 2012-2013

Actual 2011-2012

Actual 2010-2011

Actual

1100 Regular Programs

100 Personnel Services - Salaries 50,539,732 49,409,368 44,970,224 44,261,472 45,585,679

200 Personnel Services - Employee Benefits 28,388,502 24,053,619 18,037,398 15,624,042 14,630,953

300 Purchased Professional Services 1,472,841 1,395,750 1,212,319 1,361,676 1,287,546

400 Purchased Property Services 443,122 1,257,476 1,223,286 979,880 1,024,343

500 Other Purchased Services 6,619,390 6,475,626 5,587,510 5,472,448 4,572,981

600 Supplies 2,363,568 2,002,648 2,412,107 1,645,815 1,467,600

700 Property 246,070 189,723 436,706 2,444,030 979,378

800 Other Objects 213,064 58,654 45,893 238 -

Total Regular Programs 90,286,288 84,842,865 73,925,443 71,789,601 69,548,479

1200 Special Programs



300 Purchased Professional Services 5,215,944 4,327,280 4,526,461 4,584,978 6,216,020

400 Purchased Property Services - - 2,938 1,567 8,216


600 Supplies 578,300 411,600 223,186 209,732 310,127

700 Property 72,000 38,420 44,491 22,363 25,920

800 Other Objects 23,700 15,250 6,506 1,479 603

Total Special Programs 25,849,778 24,118,246 21,085,194 21,050,519 23,042,260

1300 Vocational Education



300 Purchased Professional Services - - - - -

400 Purchased Property Services 2,025 2,398 2,073 2,103 3,154


600 Supplies 89,123 83,953 78,886 68,659 75,202

700 Property 350 1,704 - 370 2,371

800 Other Objects - - - - -

Total Vocational Education 5,394,046 6,302,374 6,176,446 6,538,896 7,045,387

1400 Other Instructional Programs

100 Personnel Services - Salaries 710,249 689,210 627,941 623,952 711,236

200 Personnel Services - Employee Benefits 391,222 340,061 283,587 243,440 221,854

300 Purchased Professional Services 29,800 139,400 11,508 84,395 125,011

400 Purchased Property Services - - - - -

500 Other Purchased Services 686,700 789,000 435,860 607,711 563,106

600 Supplies 6,001 7,600 7,060 8,026 8,821

700 Property - - - - -

800 Other Objects 250 250 12 - -

Total Other Instructional Programs 1,824,222 1,965,520 1,365,969 1,567,525 1,630,027

1500 Non-Public Schools

300 Purchased Professional Services - 17,000 13,394 - -

Total Instruction 123,354,334 117,246,005 102,566,445 100,946,541 101,266,153

68



Function

Object 2014-2015

Budget 2013-2014

Budget 2012-2013

Actual 2011-2012

Actual 2010-2011

Actual

2100 Support Services - Pupil Personnel




400 Purchased Property Services 1,000 - 13,568 18,930 17,037


600 Supplies 97,187 197,195 157,991 145,503 90,978

700 Property 2,000 1,000 1,620 890 10,698

800 Other Objects 145,850 8,600 2,230 2,732 1,507

Total Support Services - Pupil Personnel 6,646,434 6,099,362 5,728,429 5,298,326 5,264,519

2200 Support Services - Instructional Staff


200 Personnel Services - Employee Benefits 1,734,447 1,427,647 1,052,905 892,741 928,892




600 Supplies 356,347 605,443 270,167 634,405 570,166

700 Property 13,000 27,500 79 51,345 40,466

800 Other Objects 8,500 6,500 2,692 1,289 3,862

Total Support Services - Instructional Staff 5,608,033 5,463,141 4,460,466 4,289,526 4,752,581

2300 Support Services - Administration



300 Purchased Professional Services 1,291,960 1,006,660 1,383,922 962,410 1,238,632



600 Supplies 176,200 160,924 122,519 149,932 98,028

700 Property 41,700 136,177 55,461 81,335 382,800

800 Other Objects 164,419 132,348 65,385 58,608 43,693

Total Support Services - Administration 10,821,188 9,970,156 8,826,274 8,290,794 9,139,590

2400 Support Services - Pupil Health



300 Purchased Professional Services 1,140,975 1,093,075 1,029,782 1,007,963 3,378

400 Purchased Property Services - - - 702 1,900

500 Other Purchased Services 625 560 182 132 215

600 Supplies 27,750 17,439 13,227 10,277 13,100

700 Property 5,400 5,400 18,671 1,460 1,457

800 Other Objects 450 450 - - -

Total Support Services - Pupil Health 3,010,261 2,829,823 2,633,840 2,516,052 1,473,162

2500 Support Services - Business






600 Supplies 72,500 39,500 37,416 27,155 55,595

700 Property 29,000 32,000 71,995 2,523 17,487

800 Other Objects 42,500 42,500 18,185 36,529 4,835

Total Support Services - Business 1,563,524 1,411,977 1,298,612 1,137,795 1,215,356

69



Function

Object 2014-2015

Budget 2013-2014

Budget 2012-2013

Actual 2011-2012

Actual 2010-2011

Actual

2600 Operation & Maintenance of Plant Services




400 Purchased Property Services 2,967,160 3,011,060 2,556,885 2,681,468 3,107,742


600 Supplies 1,302,750 1,208,865 1,349,207 1,349,125 1,496,732

700 Property 10,000 - 82,913 38,214 66,897

800 Other Objects 5,000 3,500 4,677 2,737 4,478

Total Operation & Maintenance of Plant Services 13,604,301 12,681,293 11,694,446 11,409,836 13,121,864

2700 Support Services - Student Transportation






600 Supplies 110,400 110,657 147,804 79,840 61,350

700 Property 2,000 2,000 522 409,930 30,913

800 Other Objects 2,350 2,350 1,360 499 971

Total Support Services - Student Transportation 11,118,147 10,048,899 9,572,089 9,900,783 9,613,066

2800 Support Services - Central






600 Supplies 383,600 446,051 477,588 230,461 620,328

700 Property 19,350 4,000 740 642,909 321,380

800 Other Objects 10,340 8,540 13,855 5,803 11,638

Total Support Services - Central 4,000,680 3,544,940 3,365,975 3,213,549 3,352,551

2900 Other Support Services

100 Personnel Services - Salaries - - - - -

200 Personnel Services - Employee Benefits - - - - -


400 Purchased Property Services - - - - -


600 Supplies - - - - -

700 Property - - - - -

800 Other Objects - - - - -

Total Other Support Services 93,000 93,000 92,293 92,500 99,647

Total Support Services 56,465,568 52,142,591 47,672,424 46,149,162 48,032,336

70



Function

Object 2014-2015

Budget 2013-2014

Budget 2012-2013

Actual 2011-2012

Actual 2010-2011

Actual

3200 Student Activities100 Personnel Services - Salaries 1,936,855 1,937,100 1,901,382 1,859,729 1,919,124 200 Personnel Services - Employee Benefits 627,737 538,040 430,949 354,563 306,555 300 Purchased Professional Services 202,790 178,981 218,801 207,446 220,113 400 Purchased Property Services 19,500 21,000 17,585 19,637 19,285

500 Other Purchased Services 210,029 205,705 300,250 649,431 698,661 600 Supplies 93,182 96,232 125,377 90,575 104,481 700 Property 20,000 13,058 41,314 12,569 17,604 800 Other Objects 134,500 124,288 341,406 9,189 10,117

Total Student Activities 3,244,593 3,114,405 3,377,064 3,203,139 3,295,941

3300 Community Services




400 Purchased Property Services - - 1,175 650 -

500 Other Purchased Services - - - - -

600 Supplies - - 1,094 480 72

700 Property - - - - -

800 Other Objects 3,500 2,000 3,261 1,466 16,086

Total Community Services 52,250 51,000 28,879 31,696 57,558

4000 Building Improvement Services / Site Acquisition

400 Purchased Property Services 1,468,255 300,000 - - -

700 Property - - 1,558,131 3,000,000 -

Total Operation of Noninstructional Services 4,765,097 3,465,405 3,405,943 3,234,835 3,353,500

5000 Other Financing Uses

5100 800 Other Objects (Debt Service, other) 5,550,000 5,946,000 7,902,371 8,498,512 7,728,646

5100 900 Other Uses of Funds (Debt Service, other) 10,700,000 9,700,000 19,294,882 18,392,495 10,605,000

5200 900 Other Uses of Funds - Transfers - 6,000,000 20,745,138 21,931,206 6,374,284

5900 800 Budgetary Reserve 500,000 500,000 - - -

Total Other Financing Uses 16,750,000 22,146,000 47,942,391 48,822,214 24,707,930

Grand Total 201,335,000 195,000,000 203,145,335 202,152,751 177,359,918

71


Detail of General Fund Expenditures by Object with Prior Years Comparison

2014-2015 Budget

2013-2014 Budget

2012-2013 Actual

2011-2012 Actual

2010-2011 Actual

100 Personnel Services - Salaries 87,659,110 85,822,895 78,895,069 77,312,751 81,514,897 200 Personnel Services - Employee Benefits 48,674,971 41,594,680 31,776,902 27,747,725 26,587,088 300 Purchased Professional Services 10,773,720 9,200,316 9,395,930 8,880,492 9,652,983 400 Purchased Property Services 5,528,287 5,065,472 4,286,340 3,990,579 4,485,283 500 Other Purchased Services 25,076,711 24,926,317 22,606,968 23,920,497 23,443,997 600 Supplies 5,656,907 5,388,107 5,423,630 4,649,986 4,972,579 700 Property 460,870 450,982 2,312,644 6,707,939 1,897,371 800 Other Objects 6,804,423 6,851,230 8,407,833 8,619,082 7,826,436 900 Other Uses of Funds 10,700,000 15,700,000 40,040,020 40,323,701 16,979,284

201,335,000$ 195,000,000$ 203,145,335$ 202,152,751$ 181,641,257$

Expenditures by Object as a Percent of Total

2014-2015 Budget

2013-2014 Budget

2012-2013 Actual

2011-2012 Actual

2010-2011 Actual

100 Personnel Services - Salaries 44% 44% 38% 38% 45%200 Personnel Services - Employee Benefits 25% 21% 16% 14% 15%300 Purchased Professional Services 5% 5% 5% 5% 5%400 Purchased Property Services 3% 3% 2% 2% 3%500 Other Purchased Services 12% 12% 11% 12% 13%600 Supplies 3% 3% 3% 2% 3%700 Property 0% 0% 1% 3% 1%800 Other Objects 3% 4% 4% 4% 5%900 Other Uses of Funds 5% 8% 20% 20% 10%

100% 100% 100% 100% 100%

Expenditures by Object

Total

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2014‐2015Budget

2013‐2014Budget

2012‐2013Actual

2011‐2012Actual

2010‐2011Actual

Personnel Services ‐ Salaries

Personnel Services ‐ Employee Benefits

Purchased Professional Services

Purchased Property Services

Other Purchased Services

Supplies

Property

Other Objects

Other Uses of Funds

72


73

General Fund Trends and Assumptions Revenue The General Fund budget of the School District is funded from local, state and federal sources of revenue. The primary funding source for District operated programs and services is local revenue, which accounts for 79.0% of the $201,335,000 total budgeted General Fund revenue and use of Fund Balance for the 2014-2015 fiscal year. Use of fund balance budgeted for 2014-2015 is $4.5 million. The balance of revenue to fund operating expenditures is primarily derived from state subsidies. Federal sources are minimal and are derived primarily from federal grant money. The percentage of revenue from each source is consistent with prior years, however the District forecasts that the percentage from local sources will increase in future years as the District will need to rely more on local sources. Most of the local source increase will need to be from increases in the property tax millage rate or growth in the assessment base.

0.0%

20.0%

40.0%

60.0%

80.0%

Local State Federal

79.0%

18.3%

0.5%

Revenue Sources as a Percent of Total Revenue and Use of Fund Balance

2014‐2015 Local Sources The largest portion of local revenue (84%) is derived from current taxes on real estate property. Current real estate tax revenue has increased about $1.7 million over the prior year budget due to an increase in the assessment base, as there was no increase in the tax rate for 2014-2015. For 2014-2015 the budgeted assessed real estate property value is $5.18 billion. The assessed property value is the tax base on which the District levies a real estate tax. As shown in the chart below, there has been little change in the tax base over the last four years. Increases have leveled off due to assessment appeals and a slower economy, however the District anticipates some improvement in 2014-2015 and has budgeted an increase of about $76 million, or 1.5%. Prior to 2010-2011, historical annual increases in the tax base were in the 3% to 4% range.


74

Residential property accounts for about 80% of the total tax base with commercial, industrial, and agricultural property accounting for the remaining 20%. The real estate tax rate required to fund the District’s programs and services in 2014-2015 is 27.182 mills which is unchanged from 2013-2014. The District is pleased to not have a tax increase for its taxpayers in 2014-2015, the second year in a row. The chart below shows a history of the District’s tax rate.

History of Real Estate Tax Rate (Mills)

% Increase 2.90% 1.96% 1.70% 0.00% 0.00%

Prior year property tax increases have been necessary due to the growth of the District's programs and increases in costs. Also, state funding sources have only provided about 17% to 20% of District revenue over the last several years making property taxes the primary source of the District's revenue. Despite these challenges, the District has been able manage its costs and use fund balance from prior year surpluses to balance the budget without a tax increase for 2014-2015, the second year in a row. The District’s real estate tax base is forecasted to grow about 1.3% to 1.5% per year, and sources of local revenue other than current real estate taxes are forecasted to have minor growth. For 2015-2016, the District plans to have another year without a tax increase, and once again use $4.5 million of fund balance. Beyond 2015-2016, the District forecasts a tax rate increase of about 1.95% through 2018-2019,


75

with the continued use of fund balance to cover a portion of the District's PSERS expenditures and health care costs. State Sources Over the past two decades, Pennsylvania school districts have experienced a substantial shift from the state to the local level to provide funding for school district budgets. The percentage of state funding in relation to total revenue sources has declined significantly over the past two decades. If the District received the same percentage of state revenue in 2014-2015 as it did for example in 1995-1996 (27.2%), state sources of revenue would be $17.9 million higher in the 2014-2015 budget. If the District could budget this additional state revenue in 2014-2015, it could permit a reduction in the real estate tax rate of 3.63 mills. This translates into a reduction in taxes of $632 for the median assessed property value in the District in 2014-2015. Revenue from the state primarily includes subsidies for basic education, special education, transportation, debt service, and reimbursement of PSERS contributions. Except for the PSERS contribution reimbursement, all of these other state sources of revenue in 2014-2015 are expected to remain about the same as 2013-2014. The forecast beyond 2014-2015 also assumes these sources remain constant. As noted, the exception is the PSERS contribution reimbursement which is increasing significantly, but that is caused by the increase in the PSERS contribution expenditures. The 2014-2015 contribution expenditure rate is 21.40% of employee wages compared to 16.93% in 2013-2014. The rate is set by the state and contributions are required for all Pennsylvania school districts. The state reimburses 50% of the contribution. For 2014-2015 this equates to about $9.4 million in revenue compared to $7.3 million in 2013-2014. As shown in the chart in the Expenditures section below, the PSERS contribution rate is expected to grow to 31.56% by 2018-2019. Federal Sources The District receives federal money in the form of grants to fund specific programs such as the recruitment and training of high quality teachers and reimbursements for health services provided to special education students. Federal revenue has remained minimal over the years and is projected to remain constant, accounting for a very small percentage of total revenue. Expenditures About 44% of the District’s expenditures are for salaries of employees in 2014-2015. The growth in salary expenditures is primarily driven by the annual increase in wages for existing employees. Wage increases for teachers and certain support staff are tied to bargaining unit agreements. Prior year actual salary expenditures have increased in the 3% range, depending on the number of new hires and retirements. For 2014-2015


76

salary expenditures have increased from the prior year due to employee wage increases and new staff offset by lower salaries for personnel replacing higher salary retirees. For 2015-2016 and beyond, the forecasted increase in salary expenditures is about 3%. Employee benefit expenditures are a function of salary expenditures and have historically been about 35% to 45% of salary expenditures, and 15% to 20% of total expenditures. These percentages are higher in 2014-2015 and expected to increase in future years driven by an increase in projected health care benefit costs and the significant projected increase in the District’s contributions to the Public School Employee’s Retirement pension system (PSERS). The chart below shows the forecasted employer contributions to PSERS as a percentage of total salaries. The percentage contribution is mandated by the State, and is the same for all District’s in the State. The 2014-2015 contribution rate of 21.40% equals a budgeted expenditure of $18.8 million in 2014-2015.

PSERS Employer Contribution Rate (% of Total Salaries)

21.40%

25.84%

29.69%30.62%

31.56%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

2014‐2015Budget

2015‐2016Forecast

2016‐2017Forecast

2017‐2018Forecast

2018‐2019Forecast

Purchased services, supplies, and minor property expenditures are forecasted with minor growth in future years as the District will need to control these expenditures in light of little or no revenue growth other than through increased taxes.


77

During 2014-2015 the District plans to retire debt with cash from the Capital Projects fund which will decrease the actual debt service in the General Fund to $12.1 million, however debt service for 2014-2015 was budgeted at $16.2 million which was the debt service level at June 30, 2014. This is because the District plans to keep at least $15.5 million of debt service in its future year budgets to fund higher future year debt service levels beginning in 2018-2019. Increases in debt service above the $15.5 million budgeted for future years will be funded with fund balance, so no additional revenue (or reduction in other expenditures) will be needed to fund these increases. Debt service is projected to be highest in 2021-2022 at $16.8 million, with a significant decrease to $6.8 million and lower beginning in 2023-2024. The District currently does not anticipate issuing new debt in future years.

The budgetary reserve, which is a contingency amount for unanticipated expenditures, and debt service are included in the expenditure object categories “Other Objects” and “Other Financing Uses” in the General Fund budget. The budgetary reserve amount for 2014-2015 is $500,000 which is consistent with prior year budgets. Other Financing Uses also includes transfers to the Capital Project Fund. For 2014-2015 there are no transfers budgeted, however the District has experienced actual surpluses in prior years from revenue exceeding expenditures. This has resulted in transfers of these surpluses to the Capital Projects Fund in prior years. The District will continue to transfer any future surpluses to the Capital Projects Fund to fund capital improvements and capital equipment expenditures.

78


Capital Projects Fund The Capital Projects Fund is used to account for capital expenditures incurred for the renovation, acquisition or construction of major capital facilities, and the acquisition of capital equipment. Financing sources for the capital projects and equipment are also accounted for in this fund. The 2014-2015 budget includes $3.5 million in expenditures for remaining payments on the construction of the 6th Grade Center. Other expenditures in the Capital Projects fund include about $4.6 million in other facilities improvements, and $4 million of technology capital equipment and improvements for 2014-2015. In 2014-2015 The District will use about $25 million of cash in the Capital Projects Fund to retire two outstanding debt issues.


Capital Projects Fund with Prior Years Comparison

2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Budget Budget Actual Actual Actual

Revenue

Local Revenue 300,000$ 300,000$ 204,352$ 280,603$ 582,195$

Expenditures

Site Acquisition - - - - - Building and Construction Svcs. 12,140,306 27,500,000 11,863,008 6,954,517 16,942,012 Other Expenditures and Financing Uses 25,000,000 - - - 11,531,177


Excess of Revenue Under Expenditures (36,840,306) (27,200,000) (11,658,656) (6,673,914) (27,890,994)

Other Financing Sources 6,000,000 7,400,000 20,745,138 35,336,201 36,580,635

Net Change in Fund Balance (30,840,306) (19,800,000) 9,086,482 28,662,287 8,689,641



Source/Function 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Object Budget Budget Actual Actual Actual

Revenue

Local Sources

6510 Interest on Investments 300,000$ 300,000$ 204,352$ 280,603$ 582,195$

Total Revenue 300,000 300,000 204,352 280,603 582,195

Expenditures

4100 Site Acquisition Services700 Property

4500 Building and Construction Svcs.400 Purchased Property Services 8,140,306 20,600,000 11,863,008 6,954,517 16,942,012 700 Property and Equipment 4,000,000 6,900,000

5100 Other Expenditures and Financing Uses800/900 Debt Service - Refund / Retirement 25,000,000 - - - 11,531,177



9000 Other Financing SourcesSale of Bonds 11,766,000 28,303,000 Sales of Assets and Other 1,400,000 1,638,995 1,903,351 Interfund Transfers In 6,000,000 6,000,000 20,745,138 21,931,206 6,374,284

Net Change in Fund Balance (30,840,306) (19,800,000) 9,086,482 28,662,287 8,689,641



Detail Budget

Summary Budget

79

80


Capital Expenditure Budget

The 2014-2015 capital expenditure budget includes $3.5 million in expenditures for remaining payments on the construction of the 6th Grade Center. Other capital budget expenditures include about $4.6 million in other facilities improvements, and $4 million of technology capital equipment and improvements for 2014-2015. The Capital Projects Fund is used to account for capital expenditure budget and the sources of financing. The following page details the District’s current and future capital expenditures and discusses the impact of these expenditures on the District and its current and future operating budgets.


Capital Expenditure Budget

6th Gr Ctr Total

6th Gr Ctr Expended

Prior 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019Project Cost to 2014-2015 Budget Forecast Forecast Forecast Forecast

Projects:

6th Grade Center 35,705,702$ 32,175,396$ 3,530,306$

Other Facility Improvements 4,610,000 5,000,000$ 5,000,000$ 5,000,000$ 5,000,000$

Technology Equip. & Improv. 4,000,000 3,000,000 2,000,000 2,000,000 2,000,000

Total Project Cost 35,705,702$ 32,175,396$ 12,140,306$ 8,000,000$ 7,000,000$ 7,000,000$ 7,000,000$

Funding Source:

Bond Proceeds - 2010 QSCB 12,000,000$ 12,000,000$

Bond Proceeds - 2011 QSCB 11,766,000 11,766,000$

Bond Proceeds - 2010 11,939,702 8,409,396 3,530,306$

Fund Balance 8,610,000 8,000,000$ 7,000,000$ 7,000,000$ 7,000,000$

Total Funding Sources 35,705,702$ 32,175,396$ 12,140,306$ 8,000,000$ 7,000,000$ 7,000,000$ 7,000,000$

6th Grade Center

Other Facility Improvements; Technology Equipment and Improvements

Bond Proceeds

Description of Project and Future Impact

Discussion of Funding Sources and Effect on Current and Future Operating Budgets

The effect of the funding sources for these projects on the District's current and future General Fund operating budgets is discussed below. The

This new 6th Grade Center building will help alleviate the crowding at the two middle schools where enrollment has become unsustainable. It will be the District's 16th school building, and is scheduled to open for the 2014-2015 school year. Providing students with the best and most modern facilities as possible and addressing enrollment needs are the driving forces behind the construction of new schools. By building the 6th Grade Center, the District is addressing the need for additional capacity at the middle schools, and allowing students to be educated in the best possible facilities with the smallest class sizes possible. The addition of this school will add approximately $1.0 million to the General Fund operating budget, however the District has been phasing this amount into the General Fund budget over the last few years to minimize the impact.

2010 QSCBIn October 2010, the District received $28,303,000 of Qualified School Construction Bond (QSCB) proceeds which are Federally funded and interest reimbursable. $12,000,000 of these proceeds were spent on the 6th Grade Center. The remaining proceeds were spent on renovation of the STEM Academy in 2010-2011 and 2011-2012. These bonds are effectively interest free, and the debt service is about $1.7 million per year over 17 years beginning in 2011-2012. The $1.7 million of debt service is already built into the District's 2014-2015 debt service budget, so there will be no increase in future year debt service budgets for this Bond.

2011 QSCBIn November 2011, the District received $11,766,000 of Qualified School Construction Bond (QSCB) proceeds which are Federally funded and interest reimbursable. These bonds are effectively interest free, and the debt service is about $735,000 per year over 16 years beginning in 2014-2015. This debt service is already built into the District's 2014-2015 debt service budget, so there will be no increase in future year debt service budgets for this Bond.

2010 Bond$11.9 million of the 2010 Bond proceeds will also be used to fund the 6th Grade Center. The debt service for these bonds is about $1.8 million per year through 2029-2030. The $1.8 million of debt service is already built into the District's 2014-2015 debt service budget, so there will be no increase in future year debt service budgets for this Bond.

Capital Projects Fund BalanceThe Capital Projects Fund balance (excluding bond proceeds) is primarily from prior year transfers into the fund from the General Fund. This fund balance will be used to fund the other facility and technology improvements and equipment discussed above. Existing fund balance and any future General Fund surplus transferred to the Capital Projects Fund will fund the 2014-2015 budget and forecasted years' capital expenditure budget.

These include roof replacement and restoration on buildings throughout the District, security equipment upgrades and improvements throughout the District, and upgrades to athletic facilities. Technology equipment includes replacing computer equipment used throughout the District and upgrading the District's technology infrastructure. These expenditures will be funded from the Capital Projects fund balance and will not have an effect on the General Fund operating budget.

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Legal Debt Limit and Borrowing Capacity

2011-2012 2012-2013 2013-2014Actual Actual Actual

Total General Fund Revenue 189,815,520$ 194,028,339$ 199,915,160$

Less: Required Deductions if Includedin Total Revenue

- Rental and Sinking Fund reimbursement 3,193,177 1,541,547 1,892,129

Net Revenue 186,622,343 192,486,792 198,023,031

Total Net Revenue for Three Years 577,132,166

Borrowing Base - Average Net Revenue for Three Year Period 192,377,389

Multiplier 225%

Total Nonelectoral Debt Limit 432,849,125

Less: Amount of Debt Issued and Outstanding (as of 6/30/14) 162,369,353

Total Debt Margin (Remaining Borrowing Capacity) 270,479,772$

Total Debt Margin Percentage (Remaining Borrowing Capacity) 62.49%

The Local Government Unit Debt Act (Act 52 of 1978, re-enacting and amending Act 185 of 1972) imposes debt limits for all local government units in Pennsylvania. Act 50 of 1998 amended the Debt Act resulting in a debt limit of 225% of the District's borrowing base. The "Debt Act" is administered by the Pennsylvania Department of Community Affairs.

Below is the calculation prescribed by the Debt Act in determining the District's debt limit and remaining borrowing capacity. It uses the three most recent actual annual revenue amounts as the primary basis for the calculation. Therefore this calculation will change in future years as future year's revenue changes.

82


Schedule of Outstanding Debt

FiscalYearEnded

2006 A Notes

2006 C Notes

2009 AA Bonds

2010 Bonds2010 A Bonds

2010 QSCB Bonds

2011 QSCB Bonds

2011 BondsTotal

OutstandingDebt

06/302014 19,300,000 15,200,000 49,175,000 19,850,000 10,465,000 23,308,353 11,756,000 13,315,000 162,369,3532015 19,200,000 15,200,000 45,050,000 18,975,000 21,643,471 11,021,250 131,089,7212016 19,100,000 15,200,000 40,720,000 18,065,000 19,978,588 10,286,500 123,350,0882017 19,000,000 15,200,000 36,190,000 17,110,000 18,313,706 9,551,750 115,365,4562018 18,900,000 15,200,000 31,445,000 16,115,000 16,648,824 8,817,000 107,125,8242019 18,800,000 15,200,000 22,705,000 15,075,000 14,983,941 8,082,250 94,846,1912020 11,400,000 15,200,000 21,000,000 13,985,000 13,319,059 7,347,500 82,251,5592021 3,700,000 15,200,000 19,230,000 12,850,000 11,654,177 6,612,750 69,246,9272022 9,600,000 17,395,000 11,660,000 9,989,294 5,878,000 54,522,2942023 15,490,000 10,415,000 8,324,412 5,143,250 39,372,6622024 13,515,000 9,115,000 6,659,529 4,408,500 33,698,0292025 11,465,000 7,760,000 4,994,647 3,673,750 27,893,3972026 9,335,000 6,340,000 3,329,765 2,939,000 21,943,7652027 7,130,000 4,860,000 1,664,882 2,204,250 15,859,1322028 4,840,000 3,310,000 1,469,500 9,619,5002029 2,465,000 1,690,000 734,750 4,889,7502030

BondsOutstanding

June 30, 2014 162,369,353

Debt Retirement-2010A Bonds (10,465,000)

Debt Retirement-2011 Bonds (13,315,000)

2014-2015 Principal Payments (7,499,632)

June 30, 2015 131,089,721

Series

Most of the District's outstanding debt issues were incurred primarily for the refunding of older outstanding issues to take advantage of lower interest rates. The 2010 Bonds, and 2010 QSCB and 2011 QSCB Bonds are "new money" bonds that have funded the renovation of the STEM Academy and the construction of the 6th Grade Center Building.

The District's bond rating is AAA with Moddy's rating service which is the highest rating given by Moody's. This strong rating allows the District to minimize borrowing / interest costs when it needs to issue new bonds.

The schedule below illustrates the change in outstanding bonds from June 30, 2014 to June 30, 2015 due to principal payments and debt retirement in 2014-2015. The District will use cash in the Capital Projects Fund to retire the 2010A and 2011 bonds resulting in $4.6 million in future interest savings.

83


Debt Amortization (Debt Service) Schedule

Fiscal YearEnded06/30

Interest Principal Total Interest Principal Total Interest Principal Total Interest Principal Total

2015 833,833 100,000 933,833 658,616 0 658,616 2,222,763 4,125,000 6,347,763 826,733 875,000 1,701,7332016 829,500 100,000 929,500 658,616 0 658,616 2,029,688 4,330,000 6,359,688 790,290 910,000 1,700,290

2017 825,167 100,000 925,167 658,616 0 658,616 1,826,488 4,530,000 6,356,488 752,389 955,000 1,707,3892018 820,834 100,000 920,834 658,616 0 658,616 1,616,925 4,745,000 6,361,925 712,614 995,000 1,707,6142019 816,501 100,000 916,501 658,616 0 658,616 1,303,813 8,740,000 10,043,813 671,174 1,040,000 1,711,1742020 634,303 7,400,000 8,034,303 658,616 0 658,616 1,048,650 1,705,000 2,753,650 627,859 1,090,000 1,717,8592021 306,352 7,700,000 8,006,352 658,616 0 658,616 966,038 1,770,000 2,736,038 582,461 1,135,000 1,717,4612022 70,170 3,700,000 3,770,171 522,172 5,600,000 6,122,172 875,913 1,835,000 2,710,913 535,190 1,190,000 1,725,1902023 182,064 9,600,000 9,782,064 782,413 1,905,000 2,687,413 485,627 1,245,000 1,730,6272024 685,413 1,975,000 2,660,413 433,774 1,300,000 1,733,7742025 592,475 2,050,000 2,642,475 379,631 1,355,000 1,734,6312026 502,319 2,130,000 2,632,319 323,196 1,420,000 1,743,1962027 406,113 2,205,000 2,611,113 264,055 1,480,000 1,744,0552028 299,250 2,290,000 2,589,250 202,414 1,550,000 1,752,4142029 182,625 2,375,000 2,557,625 137,858 1,620,000 1,757,8582030 61,625 2,465,000 2,526,625 70,387 1,690,000 1,760,387

Totals 5,136,658 19,300,000 24,436,658 5,314,548 15,200,000 20,514,548 15,402,506 49,175,000 64,577,506 7,795,652 19,850,000 27,645,652

2010 General Obligation Bonds$23,680,000

2009AA General Obligation Bonds$67,070,000

2006A General Obligation Notes$19,900,000

2006C General Obligation Notes$15,200,000

84




20152016

20172018201920202021202220232024202520262027202820292030

Totals

<<< continued from previous page

Interest Principal Total Interest Principal Total Interest Principal Total48,115 1,664,882 1,712,997 0 734,750 734,750 4,590,059 7,499,632 12,089,69148,115 1,664,882 1,712,997 0 734,750 734,750 4,356,208 7,739,632 12,095,840

48,115 1,664,882 1,712,997 0 734,750 734,750 4,110,774 7,984,632 12,095,40748,115 1,664,882 1,712,997 0 734,750 734,750 3,857,104 8,239,632 12,096,73648,115 1,664,882 1,712,997 0 734,750 734,750 3,498,218 12,279,632 15,777,85048,115 1,664,882 1,712,997 0 734,750 734,750 3,017,543 12,594,632 15,612,17548,115 1,664,882 1,712,997 0 734,750 734,750 2,561,581 13,004,632 15,566,21448,115 1,664,882 1,712,997 0 734,750 734,750 2,051,560 14,724,632 16,776,19248,115 1,664,882 1,712,997 0 734,750 734,750 1,498,219 15,149,632 16,647,85148,115 1,664,882 1,712,997 0 734,750 734,750 1,167,302 5,674,632 6,841,93448,115 1,664,882 1,712,997 0 734,750 734,750 1,020,221 5,804,632 6,824,85348,115 1,664,882 1,712,997 0 734,750 734,750 873,630 5,949,632 6,823,26248,115 1,664,882 1,712,997 0 734,750 734,750 718,282 6,084,632 6,802,91524,058 1,664,882 1,688,940 0 734,750 734,750 525,722 6,239,632 6,765,354

0 734,750 734,750 320,483 4,729,750 5,050,2330 734,750 734,750 132,012 4,889,750 5,021,762

649,554 23,308,353 23,957,907 0 11,756,000 11,756,000 34,298,917 138,589,353 172,888,270

Grand Total2010 Qualified School Construction (QSCB) Bonds$28,303,000

2011 Qualified School Construction (QSCB) Bonds$11,766,000

Effect of Debt Level on Current and Future Budgets

The District pays debt service (principal and interest) on outstanding debt out of its General Fund. During 2014-2015 the District plans to retire debt with cash in the Capital Projects Fund which will decrease the actual debt service in the General Fund to $12.1 million as shown above, however debt service for 2014-2015 was budgeted at $16.2 million which was the debt service level at June 30, 2014. This is because the District plans to keep at least $15.5 million of debt service in its future year budgets to fund higher future year debt service levels beginning in 2018-2019. Increases in debt service above the $15.5 million budgeted for future years will be funded with fund balance, so no additional revenue (or reduction in other expenditures) will be needed to fund these increases The District currently does not anticipate issuing any new debt.

Note that the 2010 QSCB and 2011 QSCB bonds are Federally funded and interest reimbursable. The 2010 QSCB bonds carry a minimal interest cost and the 2011 QSCB bonds are fully reimbursed causing the interest on these bonds to be zero.

85

86


Proprietary Fund – Food Service Fund

The District contracts with a food service company to provide breakfast and lunch for all students and staff who wish to participate. The current food service vendor is ARAMARK. The Food Service Fund is self-supporting, receiving no aid from the General Fund in its operating budget. For 2014-2015 food service operation will be able to offer expanded food choices from not participating in the federal national school lunch program and its related restrictions at the high schools (grades 9-12). This change is expected to increase participation and offset any subsidy loss for those meals. All funding for the food service operation is through the sale of food and reimbursements from the state and federal government. The 2014-2015 reimbursement rates per meal for grades Kindergarten through 8th are:

Federal Reimbursement State Reimbursement Breakfast

Paid $0.28 $0.10 Reduced price $1.32 $0.10 Free $1.62 $0.10 Lunch Paid $0.34 $0.12 Reduced price $2.64 $0.12 Free $3.04 $0.12

School lunch prices for the 2014-2015 school year are $2.25 at the elementary level, and $2.50 at the 6th grade center and middle school level. Breakfast is also offered at the 6th grade center, middle schools, and elementary schools for $1.00. At the high school there are many a la carte options and meal bundles that range from $3.10 to $4.50 on average. Breakfast options are also available for around $1.65.


Proprietary Fund - Food Service Fund with Prior Years Comparison

2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Budget Budget Actual Actual Actual

Operating Revenue

Local Sources 2,920,000$ 2,820,000$ 2,660,192$ 3,018,391$ 2,615,656$

Operating Expenses

Non-Instructional Operations 3,552,600 3,534,000 3,326,204 3,526,198 3,218,065

Operating Loss (632,600) (714,000) (666,012) (507,806) (602,409)

Non-operating RevenueNon-Operating Revenue 681,000 681,700 646,395 642,114 601,514

Change in Net Assets 48,400 (32,300) (19,617) 134,308 (894)

Total Net Assets July 1 1,435,600 1,467,900 1,487,517 1,353,210 1,354,104

Total Net Assets June 30 1,484,000$ 1,435,600$ 1,467,900$ 1,487,517$ 1,353,210$

Source/Function 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011Object Budget Budget Actual Actual Actual

Operating Revenue

Local Sources

6600 Food Service 2,920,000$ 2,820,000$ 2,660,192$ 3,018,391$ 2,615,656$

Operating Expenses

3100 Food Services

100 Personnel Svcs - Salaries 124,000 120,000 116,550 113,115 110,096

200 Personnel Svcs - Employee Benefits 80,600 78,000 75,957 73,525 71,562


600 Supplies 28,000 26,000 24,256 23,546 21,765

800 Other Objects 20,000 20,000 21,828 1,762 4,977

Depreciation 80,000 80,000 78,987 95,351 124,728

Total Operating Expenses 3,552,600 3,534,000 3,326,204 3,526,198 3,218,065

Operating Loss (632,600) (714,000) (666,012) (507,806) (602,409)

Non-operating Revenue

6510 Interest on Investments 1,000 700 1,615 2,019 4,082

7000 State Sources 80,000 81,000 79,330 98,635 91,853

8000 Federal Sources 600,000 600,000 565,450 541,460 505,579

Total Non-Operating Revenue 681,000 681,700 646,395 642,114 601,514

Change in Net Assets 48,400 (32,300) (19,617) 134,308 (894)

Total Net Assets July 1 1,435,600 1,467,900 1,487,517 1,353,210 1,354,104

Total Net Assets June 30 1,484,000$ 1,435,600$ 1,467,900$ 1,487,517$ 1,353,210$

Detail Budget

Summary Budget

87

88


Informational Section



General Fund Forecast

2014-2015 2015-2016 2016-2017 2017-2018 2018-2019Budget Forecast Forecast Forecast Forecast

RevenueCurrent Real Estate Tax 134,285,032$ 136,257,386$ 141,058,237$ 145,695,564$ 150,457,328$ Interim Real Estate Tax 1,800,000 2,000,000 2,100,000 2,125,000 2,150,000 Earned Inome Tax 14,000,000 15,000,000 15,500,000 16,000,000 16,500,000 Other Local Revenue 8,894,398 9,383,560 9,500,000 9,750,000 10,000,000 State Sources 36,835,570 39,268,131 41,401,404 42,258,213 43,158,963 Federal Sources 1,020,000 970,000 1,000,000 1,000,000 1,000,000

Total Revenue 196,835,000 202,879,077 210,559,641 216,828,777 223,266,291

Expenditures 185,145,000 191,879,077 200,649,948 207,292,089 214,255,872 Debt Service 16,190,000 15,500,000 15,500,000 15,500,000 15,500,000


Net Change in Fund Balance (4,500,000) (4,500,000) (5,590,307) (5,963,312) (6,489,581)

Transfer from Capital Projects Fund 2,000,000


Fund Balance June 30 21,278,476$ 16,778,476$ 11,188,169$ 5,224,857$ 735,276$

Value of 1 Mill to the District 4,940,219$ 5,012,780$ 5,090,150$ 5,157,000$ 5,223,850$

Millage Increase 0.000 0.000 0.530 0.540 0.550

Total Millage 27.182 27.182 27.712 28.252 28.802

Total Millage - % Increase 0.00% 0.00% 1.95% 1.95% 1.95%

1 Mill = $1 of property tax due for every $1000 of assessed property.Average Assessed Home Value in the District = $174,247Property Tax due on Average Assessed Home Value at 2014-2015 millage of 27.182 = $4,736

The District plans to use fund balance in 2014-15 through 2018-19 primarily to fund a portion of the District's PSERS Retirement fund contribution expenditures and health care costs.

89


General Fund Expenditure Forecast by Object

Object 2014-2015

Budget 2015-2016 Forecast

2016-2017 Forecast

2017-2018 Forecast

2018-2019 Forecast

100 Personnel Services - Salaries 87,659,110$ 89,998,222$ 92,698,169$ 95,479,114$ 98,343,488$ 200 Personnel Services - Employee Benefits 48,674,971$ 51,928,150 58,201,778 62,062,975 66,162,384 300 Purchased Professional & Technical 10,773,720$ 10,845,796 10,800,000 10,800,000 10,800,000 400 Purchased Property Services 5,528,287$ 5,528,287 5,500,000 5,500,000 5,500,000 500 Other Purchased Services 25,076,711$ 26,076,711 26,000,000 26,000,000 26,000,000 600 Supplies 5,656,907$ 5,726,617 5,700,000 5,700,000 5,700,000 700 Property 460,870$ 460,870 450,000 450,000 450,000 800 Other Objects (incl debt interest) 6,804,423$ 6,814,424 6,800,000 6,800,000 6,800,000 900 Other Financing Uses (incl debt principal) 10,700,000$ 10,000,000 10,000,000 10,000,000 10,000,000

Total Expenditures 201,335,000$ 207,379,077$ 216,149,948$ 222,792,089$ 229,755,872$

$140,000,000

$150,000,000

$160,000,000

$170,000,000

$180,000,000

$190,000,000

$200,000,000

$210,000,000

$220,000,000

$230,000,000

$240,000,000

2014-2015Budget

2015-2016Forecast

2016-2017Forecast

2017-2018Forecast

2018-2019Forecast

$201,335,000

$207,379,077

$216,149,948

$222,792,089

$229,755,872

Total Forecast Expenditures

90


Capital Projects Fund Forecast

Source/Function 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019Object Budget Forecast Forecast Forecast Forecast

Revenue

Local Sources

6510 Interest on Investments 300,000$ 300,000$ 300,000$ 300,000$ 300,000$

Total Revenue 300,000 300,000 300,000 300,000 300,000

Expenditures

4500 Building and Construction Svcs.400 Purchased Property Services 8,140,306 5,000,000 5,000,000 5,000,000 5,000,000 700 Property 4,000,000 3,000,000 2,000,000 2,000,000 2,000,000

5100 Other Expenditures and Financing Uses800/900 Debt Retirement 25,000,000



9000 Other Financing SourcesInterfund Transfers In 6,000,000 1,500,000 1,500,000 1,500,000 1,500,000

Net Change in Fund Balance (30,840,306) (6,200,000) (5,200,000) (5,200,000) (5,200,000)



The 2014-2015 expenditures include the remaining 6th grade center construction costs and other facility and technology improvements. After completion of the 6th grade center, the District does not have any large construction projects planned. The forecasted expenditures in the fund beyond 2014-2015 are for general facility improvements and renovations, and technology expenditures.

The District also has budgeted $25 million to retire existing debt early. The District has determined that this is a prudent use of capital projects fund balance that will save the District approximately $4.6 million over the 15 remaining years on the bonds.

91


Assessed and Market Value of Taxable Property

(a)District % Increase in STEB Total Implied % Increase in Fiscal Total Assessed Assessed Common Level Market Value Market ValueYear Value Billed Value Billed Ratio (CLR) (b) using CLR (b) using CLR

2014-15 5,183,860,341 (1) 0.35% 0.577 8,984,160,036 4.7%

2013-14 5,165,841,057 0.75% 0.602 8,581,131,324 -1.3%

2012-13 5,127,224,052 0.33% 0.590 8,690,210,258 -4.8%

2011-12 5,110,335,248 0.1% 0.560 9,125,598,657 -1.0%

2010-11 5,106,774,914 -0.6% 0.554 9,218,005,260 -4.9%

2009-10 5,138,824,590 1.5% 0.530 9,695,895,453 1.5%

2008-09 5,061,333,674 2.7% 0.517 9,549,686,177 0.2%

2007-08 4,929,607,031 4.5% 0.518 9,535,023,271 4.7%

2006-07 4,718,724,908 4.3% 0.549 9,109,507,544 10.5%

2005-06 4,524,421,116 4.8% 0.608 8,241,204,219 16.0%

2004-05 4,318,300,966 3.5% 0.680 7,102,468,694 15.8%

(a) Source: Pennsylvania State Tax Equalization Board (STEB)

(b) The Common Level Ration (CLR) is calculated by STEB and used to calculate the ratio of assessed value to market value. Above, the CLR is used to calculate the implied market value of taxable property in the District by dividing the total assessed value billed by the CLR.

(1) 2014-15 Assessed Value Billed represents the budgeted amount.

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Real Estate Tax Rate and Collection Data

Assessed Value Billed

Tax Rate stated in Mills (a) Tax Levy (b)

Tax Collection (c)

% of Levy Collected

5,183,860,341 27.182 140,907,692$ 134,285,030 95.30%

5,165,841,057 27.182 140,417,892$ 134,090,408 95.49%

5,127,224,052 27.182 139,368,204$ 133,235,540 95.60%

5,110,335,248 26.728 136,589,041 130,264,005 95.37%

5,106,774,914 26.213 133,863,891 127,753,443 95.44%

5,138,824,590 25.475 130,911,556 125,192,075 95.63%

5,061,333,674 24.850 125,774,142 119,981,188 95.39%

4,929,607,031 24.050 118,557,049 112,218,749 94.65%

4,718,724,908 23.150 109,238,482 105,213,830 96.32%

4,524,421,116 22.400 101,347,033 97,462,514 96.17%

4,318,300,966 21.650 93,491,216 90,344,175 96.63%

(1) Budgeted

(a) One mill of tax is equal to $1.00 for every $1,000.00 of assessed valuation ofreal estate property. One mill is budgeted to generate $4,940,219 in taxescollected in 2014-2015

(b) Tax bills (Tax Levy) are mailed on July 1 and may be paid at a two percent discount during the months of July and August. After October 31, a ten percent penalty is added and all taxes not paid by December 31 are turned over to the Chester County Tax Claim Bureau for collection.

(c) Does not include delinquent taxes collected or interim taxes collected.

2012-2013

Year

2005-2006

2007-2008

2006-2007

2014-2015 (1)

2013-2014

2011-2012

2004-2005

2008-2009

2010-2011

2009-2010

93


Analysis of Property Tax Burden

2010-11 2011-12 2012-13 2013-14 2014-15Median AssessedProperty Value $174,247 $174,247 $174,247 $174,247 $174,247

Tax Rate (Mills) 26.213 26.728 27.182 27.182 27.182Tax Rate % Increase 2.90% 1.96% 1.70% 0.00% 0.00%

Property Tax Due $4,568 $4,657 $4,736 $4,736 $4,736

Change in Average $129 $89 $79 $0 $0Property Tax

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

2010-11 2011-12 2012-13 2013-14 2014-15

$4,568 $4,657

$4,736 $4,736 $4,736

Property Tax on Median Assessed Homestead Value

2014-2015 will be the 2nd year in a row that the District has been able to fund its budget without an increase in property taxes. The District has budgeted the use of fund balance again in 2014-2015 to supplement the revenue budget. Prior year property tax increases have been necessary due to the growth of the student enrollment and the District's programs along with increases in costs. Also, state funding sources have only provided 17% to 20% of the budgeted revenue for the years shown making property taxes the primary source of the District's revenue.

The Pennsylvania State legislature has passed a law (Act 1) that places annual limits on the amount of millage %. The limit is equal to an inflationary index calculated each year by the State, and is imposed upon all school districts in Pennsylvania. For 2014-2015 the % increase limit index is 2.1%.

In 2014-2015 the state will be allocating $3.8 million of gaming revenue to the District to fund tax relief per Act 1. This amount will be equally allocated to approved residential property owners and will result in an estimated $200 credit on their 2014-2015 tax bill.

94


Chester County School District Property Tax Comparison

The chartabove shows the 2014‐2015 percentage increase in property tax (millage) for each school district in Chester County.

19.2100 20.0000 20.2171

26.4400 27.1820 27.4990 27.9410 28.2888 28.8900 30.2324

32.0036

36.6600

‐

5.0000

10.0000

15.0000

20.0000

25.0000

30.0000

35.0000

40.0000

Millage

The chart above shows the 2014‐2015 millage rate for assessing property tax for each school district in Chester County. 1 mill = $1 for every $1000 of assessed valuation of real estate property.

0.0% 0.0%

0.6%

0.9%

1.8%

2.0%2.1%

2.6%2.8% 2.8%

2.9%

3.2%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

Tax Increase

95


District's Ten Largest Real Estate Taxpayers

Assessed Owner Property Property Value Taxes Due

Brandywine Square Associates Shopping Complex 46,620,000$ 1,267,225$

Morris Ashbridge Assoc. LP Shopping Complex 25,703,150 698,663

Marchwood Associates Apartments 17,250,290 468,897

Lion Associates Office Complex 15,784,630 429,058

Kensey Nash Corp Office Complex 14,594,730 396,714

Cornerstone Terrace Vanture LP Apartments 13,991,490 380,317

Claremont Apartments LP Apartments 12,852,500 349,357

505 Eagleview Blvd. Assoc. Office Complex 11,342,000 308,298

Uni-Tech PA LP Office Complex 10,163,660 276,269

SBH Associates LP Office Complex 8,991,260 244,400

Total 177,293,710$ 4,819,198$

Percent of Total Budget 3.5% 3.6%

This table shows the ten largest taxpayers in the District who have the highest value of assessed property, which correlates to the amount of taxes paid. As shown above these ten taxpayers account for 3.5% of the total assessed property value in the District and 3.6% of the total real estate tax revenue.

The District has about 20% of its tax base come from commercial property such as these ten properties. Commercial property generates higher assessed values than residential propertywhich presents a challenge for the District in generating tax revenue because the District needs to generate 80% of its tax revenue from residential property owners, thus placing more tax burden on them.

96

97


Enrollment Forecasting Methodology and Techniques

The District uses the cohort-survival method to forecast enrollment. This is a standard forecasting method that is used by many school districts. It has a good record of reliability, the calculations are straightforward, and the data requirements are reasonably fulfilled. The use of a reliable forecasting methodology such as cohort-survival combined with extensive knowledge of the community allows the District to feel confident in its enrollment forecast. A detailed description of the cohort-survival method is discussed below. The Cohort-Survival Method The basic assumption of the cohort-survival method for projecting school enrollments is that what has happened in the past will, to a large extent, continue to occur in the future; that is, given the number of births, the net effect of all other influences on enrollment will remain proportionately similar, and the percentage of students “surviving” to subsequent grades will be consistent with prior years. The basic technique requires calculating the ratio of the number of children in one grade in one year, compared to the number of children who “survive” the year and enroll in the next grade, the following year. Fluctuations in such data from year to year create a pattern from which an average survival rate can be calculated to project an enrollment. Thus, if over a period of years, an average of 96 percent of the enrollment in Grade 3 goes on to Grade 4 and if 300 children are enrolled in Grade 3, then next year’s Grade 4 enrollment may be estimated at 96 percent of 300 or 288 students. Eleven average rates of survival are calculated for a system with twelve grades. These rates can then be applied to the present enrollment and used to project enrollments for each succeeding year. Thus if the average survival rate from Grade 4 , with 288 students, to Grade 5 is 1.10 or 110 percent, then for the second projected year the estimate for Grade 5 is 1.10 times 288 or 317 students. Forecasts for successive years must take as their starting point an estimate of the number of children entering kindergarten or first grade. An average birth survival rate may be obtained by comparing known enrollments in kindergarten or first grade with birth data five or six years earlier. This rate may then be used to project enrollments for the initial school years from birth. Thus, if an average birth survival rate, births to Grade 1, was found to be 1.17 or 117 percent in recent years, reflecting a net influx of pre-school age children, the District could reasonably project future first grade enrollment from the number of recent births.


Enrollment History and Projections

Year K 1 2 3 4 5 6 7 8 9 10 11 12 K thru 5 6 thru 8 9 thru 12 Total Change % Change

2003-2004 754 831 831 813 800 879 875 925 946 898 820 780 751 4,908 2,746 3,249 10,903 485 4.66%

2004-2005 731 833 784 841 827 812 895 905 928 978 905 829 743 4,828 2,728 3,455 11,011 108 0.99%

2005-2006 793 849 860 808 895 846 854 911 920 926 981 905 806 5,051 2,685 3,618 11,354 343 3.12%

2006-2007 803 875 858 898 852 939 863 864 926 911 935 998 874 5,225 2,653 3,718 11,596 242 2.13%

2007-2008 790 890 903 869 919 878 959 891 878 952 912 942 960 5,249 2,728 3,766 11,743 147 1.27%

2008-2009 794 920 926 916 900 934 886 988 893 905 959 913 919 5,390 2,767 3,696 11,853 110 0.94%

2009-2010 702 951 919 922 933 924 943 911 980 902 895 934 891 5,351 2,834 3,622 11,807 (46) (0.39%)

2010-2011 717 836 949 921 930 936 953 951 917 982 916 875 933 5,289 2,821 3,706 11,816 9 0.08%

2011-2012 721 846 856 968 938 942 944 954 956 917 975 902 880 5,271 2,854 3,674 11,799 (17) (0.14%)

2012-2013 692 877 880 878 989 936 975 970 962 963 925 968 902 5,252 2,907 3,758 11,917 118 0.85%

2013-2014 640 861 930 911 908 1,011 954 979 1,029 992 964 921 976 5,261 2,962 3,853 12,076 159 2.35%

2014-2015 641 776 921 958 935 935 1,047 994 998 1,007 990 961 920 5,166 3,039 3,878 12,083 7 0.06%

2015-2016 680 834 887 941 955 954 961 1,069 1,005 1,033 1,005 976 959 5,251 3,035 3,973 12,259 176 1.46%

2016-2017 672 847 862 912 967 978 983 986 1,081 1,024 1,039 995 975 5,238 3,050 4,033 12,321 62 0.51%

2017-2018 697 847 880 887 937 989 1,006 1,008 997 1,099 1,028 1,028 993 5,237 3,011 4,148 12,396 75 0.61%

2018-2019 703 857 878 880 935 985 1,001 1,006 1,008 1,108 1,030 1,028 1,002 5,238 3,015 4,168 12,421 25 0.20%

2014-15 2013-14 2012-13 2011-12 2010-11

Beaver Creek Elementary 421 467 469 445 433

Bradford Heights Elementary 517 506 495 504 497

Brandywine-Wallace Elementary 478 431 382 397 378

East Ward Elementary 564 573 561 573 588

Lionville Elementary 600 668 636 626 603

Pickering Valley Elementary 491 677 675 673 687

Shamona Creek Elementary 578 415 463 498 516

Springton Manor Elementary 433 398 433 454 456

Uwchlan Hills Elementary 502 528 540 536 559

West Bradford Elementary 582 598 598 565 572

Marsh Creek 6th Grade Center 1,047

Downingtown Middle School 926 1,352 1,307 1,283 1,313

Lionville Middle School 1,066 1,610 1,600 1,571 1,508

STEM Acadedmy 789 767 604 425 not open

Downingtown High School East 1,681 1,618 1,659 1,750 1,984

Downingtown High School West 1,408 1,468 1,495 1,499 1,722

12,083 12,076 11,917 11,799 11,816

Pro

ject

ed

5 Year Historical Information by School

Act

ual E

nrol

lmen

t

not open

98


School Building Information

OriginalConstruction Renovation Square Student

Building Date Dates Footage Grades Capacity

Beaver Creek Elementary School 1960 1988, 2004 57,794 K-5 525

Bradford Heights Elementary School 1990 65,566 K-5 550

Brandywine-Wallace Elementary School 1960 1965, 1982 45,905 K-5 5502008

East Ward Elementary School 1968 1997 74,300 K-5 650

Lionville Elementary School 1960 1964, 1997 84,405 K-5 600

Pickering Valley Elementary School 2006 86,926 K-5 650

Shamona Creek Elementary School 1990 2006 62,603 K-5 675

Springton Manor Elementary School 2008 87,782 K-5 650

Uwchlan Hills Elementary School 1972 2004 63,443 K-5 575

West Bradford Elementary School 1966 1980, 2006 66,864 K-5 575

Marsh Creek 6th Grade Center 2014 150,000 6 1,200

Downingtown Middle School 1997 2006 158,000 7-8 1,350

Lionville Middle School 1997 2006 158,000 7-8 1,350

Downingtown High School-East Campus 1968 1988, 2000 253,000 9-12 1,700

Downingtown High School-West Campus 1959 1964, 1978, 265,600 9-12 1,8001988, 2002

STEM Academy 1932 1952, 1977 119,000 9-12 8002011

99


Personnel Resource Allocation

Personnel Type

Regular Ed.1100

Special Ed.

1200Voc Ed.

1300Other Ed.

1400

Pupil Srvs2100

Instr Supp2200

Admin2300

Health2400

Business2500

Maint2600

Transp2700

Central Svcs2800 Total

Teachers & Specialists 676.03 104.07 41.00 6.00 34.80 14.50 15.00 891.40

Administrators - Educational 32.10 32.10 - All Other 5.70 17.00 9.20 6.00 6.00 2.00 15.00 60.90

Total Administrators 93.00

Support Staff - Secretarial / Clerical 2.00 14.00 2.00 42.25 3.20 3.00 3.50 69.95 - Custodial 76.97 76.97 - Maintenance 18.00 18.00 - Computer Tech 10.00 10.00 - Aides 92.98 150.56 2.86 10.93 9.20 266.53

Total Support Staff 441.45

Function Totals 769.01 262.33 41.00 8.86 65.80 46.63 74.35 24.20 9.20 103.97 2.00 18.50 1,425.85

Year2009-2010

2010-20112011-20122012-20132013-2014

2014-2015 Budget870.83 91.00 427.88 1,389.71 14.60863.23 88.00 423.88 1,375.11 -1.35

1,425.85 36.14891.40 441.4593.00

2014-2015 Budget - Amounts represent Full Time Equivalents (FTEs)FUNCTION

Teachers & Specialists Administrators Support Staff Total Change

1,432.80 -22.54

History of Staffing by Personnel Type (FTEs)

16.82

862.13 85.00 429.33 1,376.46 -56.34

866.33 91.00 498.01 1,455.34

865.13 88.00 479.67

100




Interest Principal Total Interest Principal Total Interest Principal Total Interest Principal Total

2015 833,833 100,000 933,833 658,616 0 658,616 2,222,763 4,125,000 6,347,763 826,733 875,000 1,701,7332016 829,500 100,000 929,500 658,616 0 658,616 2,029,688 4,330,000 6,359,688 790,290 910,000 1,700,290

2017 825,167 100,000 925,167 658,616 0 658,616 1,826,488 4,530,000 6,356,488 752,389 955,000 1,707,3892018 820,834 100,000 920,834 658,616 0 658,616 1,616,925 4,745,000 6,361,925 712,614 995,000 1,707,6142019 816,501 100,000 916,501 658,616 0 658,616 1,303,813 8,740,000 10,043,813 671,174 1,040,000 1,711,1742020 634,303 7,400,000 8,034,303 658,616 0 658,616 1,048,650 1,705,000 2,753,650 627,859 1,090,000 1,717,8592021 306,352 7,700,000 8,006,352 658,616 0 658,616 966,038 1,770,000 2,736,038 582,461 1,135,000 1,717,4612022 70,170 3,700,000 3,770,171 522,172 5,600,000 6,122,172 875,913 1,835,000 2,710,913 535,190 1,190,000 1,725,1902023 182,064 9,600,000 9,782,064 782,413 1,905,000 2,687,413 485,627 1,245,000 1,730,6272024 685,413 1,975,000 2,660,413 433,774 1,300,000 1,733,7742025 592,475 2,050,000 2,642,475 379,631 1,355,000 1,734,6312026 502,319 2,130,000 2,632,319 323,196 1,420,000 1,743,1962027 406,113 2,205,000 2,611,113 264,055 1,480,000 1,744,0552028 299,250 2,290,000 2,589,250 202,414 1,550,000 1,752,4142029 182,625 2,375,000 2,557,625 137,858 1,620,000 1,757,8582030 61,625 2,465,000 2,526,625 70,387 1,690,000 1,760,387

Totals 5,136,658 19,300,000 24,436,658 5,314,548 15,200,000 20,514,548 15,402,506 49,175,000 64,577,506 7,795,652 19,850,000 27,645,652

2010 General Obligation Bonds$23,680,000

2009AA General Obligation Bonds$67,070,000

2006A General Obligation Notes$19,900,000

2006C General Obligation Notes$15,200,000

101




20152016

20172018201920202021202220232024202520262027202820292030

Totals

<<< continued from previous page

Interest Principal Total Interest Principal Total Interest Principal Total48,115 1,664,882 1,712,997 0 734,750 734,750 4,590,059 7,499,632 12,089,69148,115 1,664,882 1,712,997 0 734,750 734,750 4,356,208 7,739,632 12,095,840

48,115 1,664,882 1,712,997 0 734,750 734,750 4,110,774 7,984,632 12,095,40748,115 1,664,882 1,712,997 0 734,750 734,750 3,857,104 8,239,632 12,096,73648,115 1,664,882 1,712,997 0 734,750 734,750 3,498,218 12,279,632 15,777,85048,115 1,664,882 1,712,997 0 734,750 734,750 3,017,543 12,594,632 15,612,17548,115 1,664,882 1,712,997 0 734,750 734,750 2,561,581 13,004,632 15,566,21448,115 1,664,882 1,712,997 0 734,750 734,750 2,051,560 14,724,632 16,776,19248,115 1,664,882 1,712,997 0 734,750 734,750 1,498,219 15,149,632 16,647,85148,115 1,664,882 1,712,997 0 734,750 734,750 1,167,302 5,674,632 6,841,93448,115 1,664,882 1,712,997 0 734,750 734,750 1,020,221 5,804,632 6,824,85348,115 1,664,882 1,712,997 0 734,750 734,750 873,630 5,949,632 6,823,26248,115 1,664,882 1,712,997 0 734,750 734,750 718,282 6,084,632 6,802,91524,058 1,664,882 1,688,940 0 734,750 734,750 525,722 6,239,632 6,765,354

0 734,750 734,750 320,483 4,729,750 5,050,2330 734,750 734,750 132,012 4,889,750 5,021,762

649,554 23,308,353 23,957,907 0 11,756,000 11,756,000 34,298,917 138,589,353 172,888,270

Grand Total2010 Qualified School Construction (QSCB) Bonds$28,303,000

2011 Qualified School Construction (QSCB) Bonds$11,766,000

Effect of Debt Level on Current and Future Budgets

The District pays debt service (principal and interest) on outstanding debt out of its General Fund. During 2014-2015 the District plans to retire debt with cash in the Capital Projects Fund which will decrease the actual debt service in the General Fund to $12.1 million as shown above, however debt service for 2014-2015 was budgeted at $16.2 million which was the debt service level at June 30, 2014. This is because the District plans to keep at least $15.5 million of debt service in its future year budgets to fund higher future year debt service levels beginning in 2018-2019. Increases in debt service above the $15.5 million budgeted for future years will be funded with fund balance, so no additional revenue (or reduction in other expenditures) will be needed to fund these increases The District currently does not anticipate issuing any new debt.

Note that the 2010 QSCB and 2011 QSCB bonds are Federally funded and interest reimbursable. The 2010 QSCB bonds carry a minimal interest cost and the 2011 QSCB bonds are fully reimbursed causing the interest on these bonds to be zero.

102


103

Performance Measurements The District determines success of its mission and comprehensive education plan through the measurement of student performance and achievement. The mission of the Downingtown Area School District, proud of our tradition of excellence, is to educate all students to meet the challenges of a global society. In support of this mission, the District has developed a Comprehensive Education Plan with two goals. Goal #1: We will ensure a system is in place within the district that promotes, enhances,




The District believes its mission and comprehensive education plan have been successful based on student performance and achievement data. Performance data indicates that Downingtown Area School District students have performed considerably better in standardized evaluations of learning such as the Pennsylvania System of School Assessment (PSSA) and the Scholastic Aptitude Test (SAT), compared to other students on a state-wide basis. Success in educating the District’s students can also be seen in the percentage of students pursuing higher education (90% for the Class of 2014) which has been significantly higher than the state-wide percentage (about 73%). These students have also received several thousands of dollars in scholarships. The District offers sixteen advanced placement courses with about one-third of 11th and 12th graders taking them. Over the past few years, the District has had several students who were finalists, semi-finalists, and commended in the National Merit Scholars program. The budget process is driven by the number of students enrolled, and yields an instructional expenditures per student amount of $10,209 for 2014-2015, which is higher than the state average. This level of per student expenditures has allowed the District to continue providing the quality of education necessary to achieve the strong student performance shown in the chart above.


104

PSSA assessment One of the main student performance measures for Pennsylvania school districts is the PSSA assessment. The annual Pennsylvania System of School Assessment (PSSA) is a standards based criterion-referenced assessment used to measure a student's attainment of the academic standards while also determining the degree to which school programs enable students to attain proficiency of the standards. Every Pennsylvania student in 5th and 8th grade is assessed in reading and math. In 2013 11th graders started taking a similar test called the Keystone Exam. There are four performance levels defined by the PSSA: Advanced, Proficient, Basic, and Below Basic. The District strives to enable its students to perform at the Advanced and Proficient levels. These higher levels are defined as follows: Advanced - The Advanced Level reflects superior academic performance. Advanced work indicates an in-depth understanding and exemplary display of the skills included in the Pennsylvania Academic Content Standards. Proficient - The Proficient Level reflects satisfactory academic performance. Proficient work indicates a solid understanding and adequate display of the skills included in the Pennsylvania Academic Content Standards. The percent of District students achieving advanced and proficient scores on the PSSA tests are seen on the following pages and compared to state percentages. SAT Test Another performance measure that the District uses to determine the success of its mission and strategies is the SAT test. The SAT test is a measure of the critical thinking skills needed for academic success in college. The SAT assesses analysis and problem solving skills in three areas – critical reading, mathematics, and writing. Each areas is scored on a scale of 200—800. The test is typically taken by high school juniors and seniors. The average SAT test scores for the District’s students is shown on a following page and compared to state average scores.


105

District Recognition and Communication The PSSA and SAT tests are key elements in the calculation of Pennsylvania’s School Performance Profile score which provides the public with a comprehensive overview of student academic performance in every Pennsylvania public school building. The score is based on a 100 point system with an additional 7 points possible for students achieving an advanced ranking on tests and assessments. In 2014, Downingtown Area School District’s elementary schools and middle schools averaged a score of 89, and the high schools averaged a 98, with the STEM Academy receiving the highest score in the state of 101.4. The District continues to be well respected by the community it serves and is seen as one of the top performing public school districts in the region and nationally. This is evidenced by third party rankings such as the Pittsburgh Tribune who ranked the District #22 in the state for 2014 out of 500 total districts in the state. In addition, US News and World Report ranked Downingtown East and Downingtown West high schools in the top 4% of over 31,000 high schools reviewed nationally in 2014. Our communication efforts have allowed us to keep in close contact with all of our stakeholders. Our efforts include direct e-mailing of regular newsletters throughout the year, Superintendent communication with the public, and extensive web-site communication including blogs. These blogs on various issues have yielded tremendous feedback from parents, students, and taxpayers that let the District know what these stakeholders are happy with, what they would like to see changed, and what recommendations they may have. This feedback has allowed the District to feel that its stakeholders are generally very positive about the District’s performance. Perhaps the most important communication tool is the open culture in our schools among teachers, principals, students, and parents that promote effective communication to provide the best education possible.

106


Budget 2014‐2015

Performance Measurements

Grade 5 PSSA Testing

% of DASD Students Advanced and Proficient

Comparative State Percentages Mathematics Reading

83%79%

88%

80%

90%86%88% 86%

89%85%87%

82%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MATHEMATICS READING

2009 2010 2011 2012 2013 2014

2009 2010 2011 2012 2013 2014

DASD 83% 88% 90% 88% 89% 87%

PA 73% 74% 76% 73% 69% 67%

2009 2010 2011 2012 2013 2014

DASD 79% 80% 86% 86% 85% 82%

PA 64% 64% 67% 65% 61% 61%

107


Budget 2014‐2015


Grade 8 PSSA Testing



84%

94%

88%92%92% 94%

89%93%

90% 91%89%

95%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MATHEMATICS READING

2009 2010 2011 2012 2013 2014

2009 2010 2011 2012 2013 2014

DASD 84% 88% 92% 89% 90% 89%

PA 71% 75% 76% 76% 74% 74%

2009 2010 2011 2012 2013 2014

DASD 94% 92% 94% 93% 91% 95%

PA 80% 82% 81% 79% 78% 80%

108


Budget 2014‐2015


Grade 11 Results

(2009‐2012 PSSA and 2013‐2014 Keystone Exams)



70%

81%79%82%83%

87%85%89%

84%

92%87%

95%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

MATHEMATICS READING

2009 2010 2011 2012 2013 2014

2009 2010 2011 2012 2013 2014

DASD 70% 79% 83% 85% 84% 87%

PA 55% 60% 60% 59% 64% 64%

2009 2010 2011 2012 2013 2014

DASD 81% 82% 87% 89% 92% 95%

PA 65% 67% 69% 67% 75% 75%

109


Budget 2014‐2015


School Performance Profile (SPP) Building Level Academic Scores

Pennsylvania’s School Performance Profile score provides the public with a comprehensive overview of

student academic performance in every Pennsylvania public school building. The score is based on a

100 point system with an additional 7 points possible for students achieving an advanced ranking on

tests and assessments. This is the State’s accountability measure for schools which meets the National

standards.

2013 SPP 2014 SPP

Beaver Creek Elem 86.3 78.4

Bradford Hgts Elem 96.1 85.2

Brandywine‐Wallace Elem 88.7 94.3

East Ward Elem 79.4 86.1

Lionville Elem 87.3 86.3

Pickering Valley Elem 94.9 90.7

Shamona Creek Elem 97.7 90.4

Springton Manor Elem 94.5 97.0

Uwchlan Hills Elem 91.6 91.5

West Bradford Elem 91.8 83.5

Downington Middle 91.2 90.9

Lionville Middle 91.9 94.9

Downingtown HS East 95.5 97.3

Downingtown HS West 93.0 94.1

Downingtown STEM 101.4** 101.4**

** STEM Academy received the highest score in the state

110


Budget 2014‐2015


DASD Mean SAT Scores

Comparative State Percentages Mathematics

Verbal

Writing

The Scholastic Aptitude Test (SAT) is a standard college‐board examination taken

by students interested in pursuing higher education.

545525 521

546530 524

551533 524

557536 535

556535 527

566551 550

0

100

200

300

400

500

600

MATHEMATICS VERBAL WRITING

2009 2010 2011 2012 2013 2014

2009 2010 2011 2012 2013 2014

DASD 545 546 551 557 556 566

PA 500 483 481 480 480 504

2009 2010 2011 2012 2013 2014

DASD 525 530 533 536 535 551

PA 489 473 473 471 470 497

2009 2010 2011 2012 2013 2014

DASD 521 524 524 535 527 550

PA 478 459 450 456 450 480

111


Budget 2014‐2015


% of DASD Graduates Pursuing Higher Education

Comparative State Percentages

91%94%

92%94%

90% 90%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013 2014

2009 2010 2011 2012 2013 2014

DASD 91% 94% 92% 94% 90% 90%

PA 75% 75% 75% 71% 67% 67%

112


Budget 2014‐2015


DASD Number of Dropouts

Dropout Rate is calculated by dividing the number of dropouts per grade by the total enrollment for that grade.

DASD Dropout Rate

District Rate PA Rate

2009 0.4% 2.0%

2010 0.3% 1.8%

2011 0.4% 1.8%

2012 0.5% 1.9%

2013 0.8% 1.4%

2014 0.4% Not avail. yet

0

5

10

15

20

25

30

GRADE 12 GRADE 11 GRADE 10 BEFORE GRADE 10

2009 2010 2011 2012 2013 2014

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

GRADE 12 GRADE 11 GRADE 10 BEFORE GRADE 10

2009 2010 2011 2012 2013 2014


Glossary

113

The District has tried to define or explain most terms in the document when they have been used. This glossary serves as a supplemental reference and contains definitions of certain terms used in the budget to provide a common understanding of financial accounting procedures for schools. The glossary is arranged alphabetically. Accounting System - The total structure of records and procedures which discover, record, classify, and report information on the financial position and operations of a school district or any of its funds, accounts, and organizational components. Act 1 - This Act places annual limits on the percentage increase in property taxes that the District can levy. The limit is equal to an inflationary index calculated each year by the State. When state gaming revenue is allocated to the District, it will also fund property tax reductions to homeowners. Act 511 - The local tax enabling act of 1965 that allows public school districts to levy certain taxes in order to obtain funding from local sources. For the District, these taxes include Occupation Tax, Earned Income Tax, and Real Estate Transfer Tax. Appropriation - An authorization granted by a legislative body to make expenditures and to incur obligations for specific purposes. An appropriation is usually limited in amount and as to the time when it may be expended. Assessed Value - The value placed on property, both land and building, by the Chester County Board of Assessment Appeals. This is the value upon which the District levies a property tax. Board Of School Directors - The elected or appointed body which has been created according to state law and vested with responsibilities for educational activities in a given geographical area. The District is governed by a Board of School Directors. Bond - A written promise to pay specified amounts of money that have been borrowed. The repayment is at certain times in the future, and there is a principal and interest component to the amounts paid. The obligation to pay is backed by the taxing authority of the District. The proceeds (money borrowed) are primarily used to pay for capital projects and improvements. Budget - A plan of financial operation embodying an estimate of proposed expenditures for a given period or purpose and the proposed means of financing them. Budgetary Control - The control or management of the business affairs of the District in accordance with an approved budget with a responsibility to keep expenditures within the authorized amounts. Budgetary Reserve - A budget account to provide for contingency expenditures.


Glossary

114

Capital Expenditures - Expenditures which result in the acquisition of, or addition to, fixed assets. Examples are expenditures for buildings, equipment, and substantial improvements to such assets. Contracted Services - Labor, material and other costs for services rendered by personnel who are not on the payroll of the District. Debt Limit - The maximum amount of debt that the District is legally permitted to have outstanding. Limit is imposed by Pennsylvania state law on all local government units in the state. Debt Service - Repayment of all borrowings of the District (such as bonds) that includes both principal and interest. Dropout - A student who chooses to leave school before graduation without transferring to another school / institution. Encumbrances - Purchase orders, contracts, and/or other commitments, which are chargeable to an appropriation. Encumbrances are not liabilities and therefore are not recorded as expenditures until receipt of the goods or services. Encumbrances are used in the accounting records for budgetary control. Expenditures - Charges incurred, whether paid or not paid, which benefit the current period. Fiscal Year - A twelve month period of time to which the annual budget applies, and at the end of which, the District determines its financial position and results of its operations. Function - An expenditure account dimension used to denote the expenditure activity or service aimed at accomplishing a certain purpose. Examples include Regular Instruction Programs, Plant Operation and Maintenance, and Instructional Staff Services. Fund - A fiscal and accounting entity, with a self-balancing set of accounts recording cash and other financial resources. It also contains all related liabilities and residual equities or balances or changes therein. Fund Balance - The excess of assets of a fund over its liabilities and reserves. Fund Transfers - The transfer of funds from one fund to another.


Glossary

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Levy - To impose taxes or special assessments. Mill - Property tax rate per thousand dollars of assessed value. One mill is equal to $1.00 per $1,000 of assessed value. Object - An expenditure account dimension used to describe the service or commodity obtained as the result of a specific expenditure. Examples include Personnel Services, Professional Services, Supplies, and Property. PSERS – Acronym for Pennsylvania School Employees Retirement System. This is the pension plan for school employees that the District is required to contribute to. Revenue - Monies received from taxes, fees, state and federal subsidies, and other sources that are available to the District to fund expenditures. Taxes - Compulsory charges levied by a governmental unit for the purpose of financing services performed for the common benefit.

Documents

Downingtown Area School District Budget · 2015-02-06 · Downingtown Area School District Budget Fiscal Year 2014-2015 540 Trestle Place 610-269-8460 Downingtown, Pennsylvania 19335