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1
Understanding Princeton
School Finances
Princeton BOE Finance Committee
Princeton Public Library
May 14, 2018
2
Outline of Discussion
• Financial Role of the Board and Others in Financial Decision-Making
• School Tax Overview/Tax Impact
• Operating Budget
• Our Schools – What Taxes Support
• Further Information
3
The Financial Role Of The Board
10 elected community volunteers
• Ensure the financial integrity of the district by providing a “thorough and efficient”
education at a price the community can afford
Finance Committee – 4 Board members, reappointed annually, who
recommend to the full Board how best to:
• Develop policies to ensure strong financial oversight and integrity
• Accept yearly Comprehensive Annual Financial Report (CAFR)
• Approve corrective action plan, if any, and monitor progress
• Review and approve/reject any potential contract or bid
• Enhance financial transparency and public communication
4
Others Involved in Financial Decision-Making
Community:
• Taxpayers
• Municipal Government
NJ Department of Education:
• Commissioner
• Executive County Superintendent
Princeton Public Schools:
• Board of Education
• Superintendent
• Business Administrator/Treasurer
• Outside Auditors
5
2017 Princeton Property Taxes = $161M
Source: 2017 Princeton Budget Newsletter, PPL CFAC presentation.
Princeton Public Schools
48%
Mercer County 29%
Municipality of Princeton
21%
Open Space 2%
6
2017 School Tax: Two Separate Levies = $78.6M
General Fund Levy ≅ $73.1M
• Funds annual operating budget
• Subject to 2% cap with waivers for
pension, enrollment and certain
healthcare costs
Debt Service Levy ≅ $5.5M
• Funds long-term capital projects
• Approved by taxpayers via referendum
• $22.2M debt outstanding, paid off by 2023
General Fund (93%)
Debt Service (7%)
7
Flow Chart: From Property Taxes To School Expenses – 2017
$ Millions & %
8
Calculating the 2018 School Tax Levy
2017-18 TOTAL School Tax Levy:
$73.1M General Fund Levy
+$5.5M Debt Service Levy
= $78.6M
2018-19 General Fund Levy:
($73.1M x 1.02) + NJ State waivers:
$1.1M for rising enrollment
+$0.6M from a “banked waiver” (last year before it expired)
= $76.2M
2018-19 TOTAL School Tax Levy:
$76.2M General Fund Levy
+ $5.2M Debt Service Levy
= $81.4M*
*Actual tax levy of $80.0M reflects split calendar year: 50/50 of current/prior year rate.
9
Taxpayer Impact
• Actual 2018 total school levy of $80.0M
• Tax rate increases from 1.101 to 1.120 per $100 assessed property value*
– Princeton 2018 tax base (ratables) of $7,129M**
– Tax base increased 2% from 2017 – 2018, which means tax levy shared across more
total assessed value
• $9,375.54 for average assessed home/year ($837,074)
• Increase of 1.73% or $159/average home over 2017
*estimate provided by PPS
**2018 ratables provided by Princeton tax assessor
10
2018 School Tax Levy Funds 85% of Total Operating Budget
Tax Levy85%
Cranbury Tuition6%
State Aid 5%
Fund Balance3%
Other1%
11
Debt Service Levy Pays for Long-Term Debt
2001 bonds – PAC, PHS arts wing, JW & 4 elementary additions, renovations, JW pool
• $16.4M long-term debt outstanding (@4%)
• 2018/19 principal = $3.8M, interest = $354,800
• Total amount approved = $81.5M (equivalent to $115M today)*
• Amount bonded = $60.9M (taxpayers paid less than approved)
• Matures 6/30/22
2012 bonds – JW Learning Commons, auditorium and other upgrades, generator,
windows and other District maintenance projects
• $5.8M long-term debt outstanding (@1.25%)
• 2018/19 principal = $1.1M, interest = $45,475
• Total amount approved & bonded = $11M
• Matures 6/30/23
*Bureau of Labor Statistics calculator
12
2018 Operating Budget: How It’s Spent -
Non-Discretionary vs. Discretionary Expenses
Non-Discretionary Costs – 85%
• Salaries 57%
• Health Benefits 12%
• Charter School 7%
• Other (e.g. insurance) 8%
Non-Discretionary Costs: Salaries57%
Non-Discretionary Costs: Health Benefits
12%
Non-Discretionary Costs: Charter School
8%
Other Non-Discretionary8%
Discretionary Cost15%
Discretionary Costs – 15%
• Student Services/SE 6%
• Transportation 3%
• School Budgets 2%
• Facilities & Maintenance 1.4%
• Technology 1.2%
• Curriculum & Instruction 1%
• Athletics 1%
• Other Central Office 0.7%
13
Cost Drivers: Increasing Enrollment
Source for enrollment, FTE teaching staff - 2017 CAFR Schedule J-17, except 2018 = 361 (PPS)
352 354 324 328 344
3,366 3,340 3,378 3,4223,553
3,763
2008 2010 2012 2014 2016 2018
Enrollment vs. Teaching Staff
Teaching Staff Enrollment
+ 12%
increase in
enrollment
+2.3% increase
in
FTE teaching
staff
14
Cost Drivers: Diversity Of Needs
State Aid Formula adds additional “weights” to reflect increased costs of educating a variety of students:
Base = 1.0 (cost of educating an elementary school student)
Additional weights:
Middle School = .04
High School = .16
At-Risk Factors:
Free/Reduced Lunch = .42
English as Second Language = .46
Both = .56
• For 2018-19, for State Aid and waiver purposes:
• NJ Dept. of Education calculated Princeton’s increased student population as 196 students
• 196 = 137 actual students + 59 additional equivalent students, due to the weights
State Aid also pays for 2/3rds of most of district’s state-determined special education costs:
• Because State uses the average classification percentage across all districts, districts like Princeton, who provide services to a greater percentage of their students, are underfunded
When comparing districts, consider that student population diversity impacts educational costs
For further information, see: New Jersey School Board Association, "School Finance 101," available at: https://www.njsba.org/news-information/parent-connections/school-finance-101/
15
Cost Drivers: Salaries – 57% = $51.6M
Contractual Obligations
• Negotiated contracts with three labor unions – PRESSA, PREA, PAA
• Annual increases of 2.63%
• All contracts continue through June, 2020
• Recent negotiations were open, amicable and student-focused
Additional costs:
Actual salary/pay expenses rose by 4.83% over 2017/18 due to:
• Staff receipt of advanced degrees
• New hires required for rising enrollment
• Increase in aides for instruction, special education
• Retirement payouts
16
Cost Drivers: Health Benefits – 12% = $10.9M
6,737
7,892
8,9309,275
9,868
10,900
2008 2010 2012 2014 2016 2018
Health Benefit Costs 2008-2018($ Millions)
Source: PPS Administration, health benefit costs net of staff contributions
+62% increase
over 10 years
17
Cost Drivers: Charter Tuition – 7% = $6.4M
2,664
4,431 4,4834,729
4,907
6,352
2008 2010 2012 2014 2016 2018
Charter School Tuition 2008-2018($ Millions)
+ 58%
increase in
tuition over 10
years
Source of data: 2017 CAFR Schedule B-2
Many districts, like Millburn, Montgomery, and West Windsor-
Plainsboro, do not have charter schools, which impacts cost
comparisons
(per head tuition approximately $15,300)
18
2018 Operating Budget - Process
Budget Workshop – March 6
& 13
Board Approved Tentative Budget –March 20
Tentative Budget
Submitted to County – March
21
Budget Feedback & Adjust-
ments, BOE
Meeting & After if
Possible
Public Hearing/
Final Board
Approval – April 24
19
2018 Operating Budget - Challenges
2018-19 Budget – General Fund of $76.2M
• No new staff included (rising enrollment)
• Health benefit increase of only 0.9% budgeted
• State funding level not final– may change once State Budget adopted
Longer Term
• Increasing enrollment/space needs
• Increasing salary costs above 2%
• Increasing health benefit costs
• Maintenance costs of aging facilities
• Impact of projected decrease in Cranbury students attending high school
• Impact of the Princeton Charter School expansion by 76 students
• Uncertain fiscal and political environment at both the state and federal levels
20
Princeton Public Schools – What Taxes Support
Among best public school districts in NJ and the nation (US News 2018, Niche 2017)
PPS available to any child residing in Princeton:
• 6 schools, including PHS; JW Middle School; 4 neighborhood elementary schools
• Over 3700 diverse students, pre-K to Grade12
– 54% White; 19% Asian; 14% Hispanic; 7% African American, 6% multiracial*
– 22% speak a language other than English at home (more than 50 languages total)
– 5% of students are English Language Learners
– 16% are students with special needs (20% if include students with 504 plans)
– 13% are from low-income families (free/reduced school lunch eligible)
• 755 staff
– Student/teacher ratio average of 11:1
– 13 years average teaching experience
– More than 72% have advanced degrees
– Last year, 44% of new staff hires were educators of color
*2017/18 NJ DOE Enrollment District Reported Data
21
A Wide Range of Offerings at 4 Elementary & 1 Middle School:
Four neighborhood elementary schools
• 2 offer pre-K for all families
• All offer full-day Kindergarten for all families
• All elementary students begin Spanish no later than 2nd grade
• 1 elementary school offers award-winning Dual Language Immersion
• All schools offer weekly art, music, & library instruction,
A middle school for all
• Offering 3 world languages: Spanish, French, and Mandarin
• Wide array of after-school sports and clubs
• Students are involved in drama, video production, art, band, choir, orchestra
In addition, taxes support tuition for 422 students at Princeton Charter School (K-8)
22
A Comprehensive Range of Options at Princeton High School
Rigorous, wide-ranging course offerings
• 98% graduation rate
• 270 course offerings
• 70% of students take at least 1 accelerated/AP class
• 89% of students taking an AP exam score 3 or higher
• 6 foreign languages at PHS
• Designated as a NJ Model School in the Arts
• Students have option to take courses elsewhere, including vocational courses, Mercer
County Community College & Princeton University
• Among top public high schools in nation – U.S. News
Rich range of extracurricular offerings
• Over 100 clubs and 40 community service groups
• Over 25 sports programs and teams at the freshman, JV, and varsity levels
• No student denied participation due to family’s inability to pay
23
Further Information
Attend/watch BOE meetings on YouTube
Experience school events – concerts, plays, athletic events
Be involved at the local, state, and federal levels
Learn more
– 2018-19 Budget: http://princeton.ss16.sharpschool.com/district/about_us/board/
– 2017-18 User Friendly Budget: http://www.nj.gov/education/finance/fp/ufb/
– June 30, 2017 CAFR (audited financials – 2 year delay):
http://www.nj.gov/education/finance/fp/cafr/search/17/4255.pdf
– Referendum information:
http://www.princetonk12.org/district/about_us/facilities_referendum/
– New Jersey School Board Association, "School Finance 101," available
at: https://www.njsba.org/news-information/parent-connections/school-finance-101/
24
Princeton Public Schools Mission
Our Mission
Preparing all
students to lead lives
of joy and purpose
as knowledgeable,
creative, and
compassionate
citizens of a global
society.
EVERY CHILD
KNOWN• Relationships
• Differentiated
Learning
• Community
• Homework
• AP Options
• Time management
• Mental health
• Nutrition/drugs, etc.
WELLNESSEnhancing Balance
• Vision & expectations
• Internal/external
• Athletics
• Alumni & new families
• Community, crisis, board
CONNECTEDNESSCommunication & Caring
• Problem-based learning
• Technology• Assessment
• Mindset
• Ideas to disrupt
INNOVATIONExploring New Ideas
• Cultural
responsiveness
• Outreach
• Equity and access
• Early literacy
ACHIEVEMENTClosing the Gap