2010-2011 Annual Meeting Financials

KIMBERLY AREA SCHOOL DISTRICT

2010 ANNUAL MEETING

Monday September 27, 20106:30 PM - Budget Hearing7:00 PM - Annual Meeting

KIMBERLY HIGH SCHOOLW2662 Kennedy Avenue

Kimberly WI 54136


BUDGET HEARING

Presented by:

Gary Kvasnica

Director of Business Services


BUDGET MESSAGE

THE YEAR IN REVIEW – 2009/10


BUDGET MESSAGE


The Kimberly Area School District continues to provide our community with great value

STUDENT ACHIEVMENT

High Achieving

Low Spending


BUDGET MESSAGE


Compiled by the Wisconsin Tax Payers Alliance

Wisconsin Knowledge and Concepts Exam Results

4th GradeState Avg 81% 81%Kimberly 90% 3 92% 2

8th GradeState Avg. 84% 78%Kimberly 93% 2 86% 4

10th GradeState Avg. 77% 71%Kimberly 90% 1 85% 2

Reading Math

*Pct. **Decile *Pct. **Decile

*Pct. - Percentage of students who test advanced or proficient

**Decile - Ranking of 1 through 10 with 1 being the highest


BUDGET MESSAGE


Compiled by the Wisconsin Tax Payers Alliance

DISTRICT PER STUDENT EXPENDITURES 2009-10 BUDGET

Instruction Comparative Exp.

Salary & Pupil Instr. Bldg. PupilCapital

Exp/ Total

Name Total Fringe Serv. Supp. Admin. Grds. Trans. Debt Exp. Amt. Decile

K12 District Avg. $ 7,244 $ 6,067 $ 544 $ 617 $ 908 $ 1,152 $ 485 $ 791 $ 12,366 $ 10,465

Kimberly $ 6,472 $ 5,271 $ 464 $ 511 $ 704 $ 968 $ 292 $ 1,115 $ 11,248 $ 9,118 $ 10

Kimberly Vs. State $ (772) $ (796) $ ( 80) $ (106) $ (204) $ (184) $ (193) $ 324 $ (1,118) $ (1,347)

% K12 State Avg. -10.66% -13.12% -14.71% -17.18% -22.47% -15.97% -39.79% 40.96% -9.04% -12.87%


YEAR IN REVIEW - 2009/10STATE BUDGET SHORTFALL

Cost-of-Living Increase under Revenue Controls decreased by $75 per student or approximately $308,000

Less Money to Operate

State aid reduced by approximately2.5%

Under Revenue Controlsdecreases in State Aid resultin increased taxes

Taxes increased by 8.38% in 09/10


YEAR IN REVIEW - 2009/10NEW LABOR LEGISLATION

Qualified Economic Offer (QEO) Eliminated from Teacher Contracts- Under QEO District could offer a total compensation

package (salary & benefits) of 3.8% without having to go to

arbitration- Helped keep labor costs in line with state imposed revenue controls

Arbitration rules revised

- Ability to pay and local economic conditions no longer given greatest weight in awarding arbitration decisions


THE YEAR IN REVIEW- 2009/10Increase in Wisconsin Retirement System Contributions

As a result of the economic downturn, investments used to pay retirement benefits for state employees had a significant decline in value

To make up for losses, the Wisconsin Retirement System increased required contributions by .6% to 11% of an employee’s salary

Fortunately -

District paid off unfounded portion of the WisconsinRetirement System liability in 08/09 thereby lessening the impact of the increase

Additional cost to the District of $234,196


FEDERAL STIMULUS FUNDING

Purpose:

Stimulate Economy & Aid Financially Strapped School Districts

American Recovery and Reinvestment Act (ARRA)

District received a one-time grant of $946,414 to be used over the 9/10 and 10/11 school years to help implement student achievement initiatives for our special education students

YEAR IN REVIEW - 2009/10


YEAR IN REVIEW 2009/10

Energy Conservation

The one-time freed up funding was then used to implemented several energy conservation projects that will help reduce future operating costs

District funds that would have been used for special education related costs were reduced because of Federal Stimulus Funding

ENERGY CONSERVATION

Replaced an older boiler at Sunrise with a new energy efficient system

Retrofitted lighting Systems at Sunrise



Implemented additional automated energy controls

Replaced windows at Janssen

Replaced an older boilers at Westside with a new energy efficient system



Janssen Lunch Room Windows

Before

After


Budget Message

THE YEAR IN REVIEW - 2009/10

OTHER FACILITY IMPROVEMENTS


WHAT'S NEW IN 2009/10

Westside School Improvements

Final Year of a 3-Year Carpet Replacement Plan

08/09

09/10




Deteriorated Concrete and Asphalt in Front Drive Replaced

Before

After



Janssen Improvements

Replaced original Sinks, Faucets and Water Fountains

Before

After



Janssen Improvements

Replaced antiquated Clocks with Automated Clocks

Before

After



Sunrise School Improvements

Asphalt in North Playground Milled and Replaced

Before After



Mapleview Improvements

Widened Receiving Room Door

Before

After

Easier more Efficient Egress for Distributing Supplies



Water Line Improvements

Replaced deteriorated Water Main at Middle School

Connected Water Line to the Woodland Field Irrigation System



JRG Middle School Improvements

Before

After

Replaced old Locker Room Doors




RE-ROOFED SECTION OVER TECH ED AND ART ROOM


FACILITIES

The improvements just listed have been paid for out of CapitalImprovements Fund

Helps insure that Capital Improvements donewhen needed

Tax Levy for this Fund is included withinRevenue Limits

Separate Fund that can only be used for Capital Improvements


THE YEAR IN REVIEW - 2009/10

TECHNOLOGY IMPROVEMENTS

Replaced old Computers at the Middle School

Added Hardware and Software to improve interoperability between different software products

Replaced Network Switches to increase performance

Installed video projectors at High School and Middle School to enhance learning

Increased Storage Capacity

Implemented Mobile Computer Lab at Middle School to enhance learning



Post Retirement Benefits Paid Health & Dental Benefits for certain staff retiring after age 55

Negotiated as a cost saving measure many years ago

•Cost of Insurance has risen dramatically

Several recent developments have Impacted

•New Accounting Requirements requiring Districts to pre-fund this Liability

The costs of these future retirement benefits will be substantial

To help fund this future liability the District established a Trust in 2002/03

Post Retirement Benefits



09/10 Contributions

Amount in Trust if debt not included

Post Retirement Benefit Trust

Disbursements

Interest Earned

$2,042,275

$811,933

$ 37,777

$3,633,601

CDO Investment Portion of Trust Defaulted in 09/10

There is $4,178,630 in debt is associated with the CDO Investment

Although we are not legally require to repay this debt, it is

currently accounted for in the TrustIncluding debt the Trust has a -$545,029 Fund

Balance



Settled Labor Agreements

Para-Professionals Association

Custodial and Maintenance Association

Continued HealthInsurance Cost Containment


YEAT IN REVIEW – 2009-10

Our Non-Teaching Staff moved from a Point-of-Service Network to a Single Provider System (HMO)

The rising cost of health Insurance continues to be a major concern in this era of revenue controls

Cost of a Family Plan approximately $2,000 less than would have been under the old plan



Enrollment continued to Grow

An increase of 45 Full Time Equivalent (4K and 5K count as .5) in students 09/10 vs. 132 in 08/09

At Slower Rate


WHAT’S NEW IN 2010/11!


BUDGET MESSAGE

WHAT’S NEW IN 2010/11

STUDENT ACHIEVMENTKimberly High School was recently recognized by Newsweek

Magazineas one of the Best High Schools in America

America's Best High Schools: The List Each year, NEWSWEEK picks the best high schools in the country based on how hard school staffs work to challenge students with advanced-placement college-level courses and tests. Just over 1,600 schools—only 6 percent of all the public schools in the U.S.—made the list. This year's rankings have some fantastic new interactive features. We’ve teamed up with a data company called Factual to create individual profile pages for each school where students and faculty can comment and contribute. Check out the profiles by clicking on the name of any school in the list. And don't miss this photo gallery of the top 20 schools, the list of the public schools that are too elite for our rankings, a quiz about celebrity nerds, and a gallery of the 13 best movies about high school. (For more information about how our rankings are calculated, see our FAQ.)

Wisconsin Schools In Newsweek’s - 2010 Best High Schools in America

Arrowhead Muskego Brookfield Central Nathan Hale Brookfield East New Berlin Eisenhower Cedarburg New Berlin West Eau Claire Memorial Nicolet Union Gibraltar Area Oak Creek Grafton Pewaukee Greendale Riverside University Homestead Waukesha North Kettle Moraine Waukesha South Kimberly Waukesha West Marshfield Wauwatosa East Middleton West Bend East Milwaukee School of Languages West Bend West Mukwonago Westosha Central

Whitefish Bay


WHAT’S NEW IN 2010/11CONTINUED STATE BUDGET SHORTFALL

Approximately $650,000 less as a result of the cost-of-living decrease under Revenue Controls

Less Money to Operate

Increased taxes Under Revenue Controls less State Aid results in increased taxes


FEDERAL EDUCATION JOBS BILL

To save and create jobs for financially strained school districts

Signed into law in late August


Kimberly will be receiving $758,168 over a two year period

We will be using approximately $250,000 in 10/11 to recall laid off para-professionals and hire additional limited term teachers to help reduce class sizes

The published budget does not include this amount as we not aware of how to account for this funding before the budget had to be published

The $250,000 will be accounted for when the budget is finalized in OctoberThe additional funding will have no impact on the tax levy


WHAT’S NEW IN 2010/11Increase in Wisconsin Retirement System Contributions

To make up for losses in investments used to pay retirement benefits

The Wisconsin Retirement System has once again increased required contributions by .6% to 11.6% of an employee’s salary

Additional cost to District of $200,731



FACILITY IMPROVEMENTS




Deteriorated Asphalt in upper playground Replaced

Before

After




First Year of a 3-Year Carpet Replacement Plan

Before

After




RE-ROOFED SECTION “C” OF BUILDING




Improved Drainage




Theatre upgrade



High School Improvements

Refinished Gym Floor



Resurfaced Football Stadium Track



Energy Conservation

With the Installation of a new heating system and lighting retrofit at Sunrise Elementary all of our schools should have above average energy efficiency

To reduce paper consumption, toner costs and energy consumption, the District will be implementingan automated Copier/Print System at the High SchoolEstimate a 20% reducing in paper consumption

122,505 pages or

8,697 lbs of CO2



TECHNOLOGY IMPROVEMENTS

Installation of various equipment forwireless computer network to improve access and enhance learning

Student Response System that will allow teachers to create interactive real-time student assessments to improve instruction

Digital Distribution System for TV/Cable Access at Westside



Settled Labor Agreement

Board ratified our 09-11 TeacherContract on September 13, 2010

Provides fair compensation in difficult economic timesHelps reduce future post retirement benefit costs

Health and Wellness



Our Food Service Program will be participating in the Michele Obama HealthierUS School Challenge at JR Gerritts Middle School by providing meals that exceed current federal nutritional standards

All but one of our labor groups have an incentiveto participate in the District’s Wellness Program

KIMBERLY AREA SCHOOL DISTRICTWHAT’S NEW IN 2010/11

Post Retirement CDO Investment and Lawsuit

In District believes it was mislead in its Collateralized Debt Obligation (CD) investment made in 2006 and has filed a lawsuit along with 4 other Wisconsin School Districts seeking rescission, damages and attorney fees

The District is not legally obligated to repay this debt

If not settled, we anticipate a court date in 2011 or 2012

In conjunction with investment, the District issued $4,300,000 in asset backed notes (debt)

At the July 12, 2010 Board Meeting, the board elected not to include an appropriation in the 10/11 Budget for the $4,178,000 remaining debt at this time because of our outstanding lawsuit

KIMBERLY AREA SCHOOL DISTRICTWHAT’S NEW IN 2010/11

Post Retirement CDO Investment and Lawsuit

As a result of Districts action not to repay any of the outstanding debt at this time, Moody’s Investors Service , a credit rating agency has downgraded the District’s bond ratting

We don’t anticipate it having any impact on our borrowing costs as we have no immediate expansion plans and our short-term cash flow borrowing is minimal

Went from Aa2 to Aa3 with a stable outlook

Aa3 is considered high quality

Enrollment



The District projects continued growth at a slower rate


THE FUTURE


THE FUTUREThe District receives a large percentage of its funding from the State

State has had difficulty balancing its Budget over the past several yearsExpected to worsen with recent economic decline and continued structural imbalances of the budget

District will need to remain diligent to maintain its strong financial position

It is likely that there will be even more restrictive revenue controls and further reductions in state aid

Enrollment Growth


THE FUTURE

The District receives significantly less revenue per student than the state average

Offset in past by the District’s rapid enrollment growth

As growth and corresponding revenue increases lessen, we will need to adjust our spending accordingly


THE FUTUREWisconsin Retirement System Contributions

As a result of the recent economic downturn, investments used to pay retirement benefits for state employees have declined substantially

To make up for these losses, School Districts will need to substantially increase contributions over the next several years

We need to work with our labor groups to have themhelp share the financial burden of these increases


THE FUTURE

Health Insurance

The District, our Labor Unions, Health Care Providers, Insurance Carriers, State and Federal Government must all work together to address issues!

Costs continue to rise

Recent National Health Care Legislation is likely to accelerate cost increases in the short-term


THE FUTURELabor Relations

With the elimination of labor cost controls (QEO) and more restrictive revenue limits

The District will need to work closely and creatively with our laborgroups to provide fair compensation without eroding the qualityof education


THE FUTURE

Energy Costs

Less money will be available to educatechildren unless we continue to find ways to reduce energy consumption

Energy Costs are rising at a faster rate then our Revenue

The District has been a leaderin Energy Conservation


THE FUTURE CHALLENGE

With further limitations on revenue and increasing costs

Difficult choices may need to be made

District is currently in good Financial Shape

We will need to prioritize what is most important


BUDGET MESSAGETAX DEFINITIONS

• Tax Levy

• Tax Rate The amount a homeowner would pay for every $1,000 of Equalized Property Value

If the Tax Rate were $9.00 per $1000 of Equalized Valuation and an individuals property had an equalized value of $100,000 the tax rate would be $900

Total Amount of Tax Revenue to be collected

Assessed Value is the property value as determined by the individual Municipality

Equalized Value is total Fair Market Value of all properties within the District. This includes several municipalities.


BUDGET MESSAGEASSUMPTIONS AFFECTING TAX LEVY AND RATE FOR 2010/11

- 35 Additional Students

- If more Students, Revenue Cap and Tax Levy will increase

• Revenue Limit

• Property Valuation- Estimated at 0% increase. If higher, Tax Rate will decrease

The above estimates should be finalized in October!

• Equalization (State) Aide reduction- If more than projected, Tax Levy will increase• Business Computer Valuation- If higher than projected, Tax Levy will decrease

- Cost of Living Increase of $200 per student

KIMBERLY AREA SCHOOL DISTRICTBUDGET HIGHLIGHTS

TAX LEVYGENERAL FUNDDEBT SERVICECAPITAL IMPROVEMENTS*COMMUNITY SERVICE

TOTAL

Actual 2009-10$11,069,298 $4,049,080 $531,000 $31,516

$15,680,894

Budget Dollar Percent 2010-11 Change Change$12,065,672 $ 996,374 9.00%

$462,900 -$68,100 -12.82%

$16,672,024 $ 991,130 6.32%

$4,128,558 $79,478 1.96%

$14,894 -$16,622 -52.74%

KIMBERLY AREA SCHOOL DISTRICTBUDGET HIGHLIGHTS

--

State AidRevenue Limit = Tax Levy

Revenue Limit State Aid Tax LevyLimit Increase Aid Increase Levy Increase

2006-07 $ 33,267,925

2007-08 $ 35,349,853 $ 2,081,928

$ 22,347,729

$ 24,863,053 $ 2,515,324

$ 10,920,196

$ 10,486,800 $ - 433,396)

2008-09 $ 37,652,963 $ 2,303,110 $ 26,837,852 $ 1,974,799 $ 10,815,111 $ 328,311

2009-10 $ 39,381,230 $ 1,728,267 $ 27,344,853 $ 507,001 $ 12,036,377 $ 1,221,266

2010-11 $ 40,857,767 $ 1,476,537 $ 27,975,861 $ 631,008 $ 12,881,906 $ 845,529

TAX RATE PER $1,000 OF EQUALIZED ASSESSED VALUATION

GENERAL FUNDDEBT SERVICECAPITAL IMPROVEMENTS COMMUNITY SERVICE

TOTAL

Actual 2009-10 $6.63 $2.42 $0.32 $0.02

$ 9.39

Budget DOLLAR PERCENT2010-11* CHANGE CHANGE$7.28 $0.59 9.05%

* Tax rate is estimated. The actual rate can not be determined until property valuation is certified by the Department of Revenue in October.

$0.28 -$0.04 -15.63% $0.01 -$0.01 -50.00%

$9.98 $0.59 6.28%

$2.47 $0.05 2.07%

Increased Tax Rate Impact ExamplesIncreased Tax Rate Impact Examples Assuming a Tax Rate increase of $.59 per $1,000 Assuming a Tax Rate increase of $.59 per $1,000

of Equalized (Market) Valueof Equalized (Market) Value

Home Value Tax Increase

$100,000 $59.00

$150,000

$88.50

$200,000 $118.00

* 2010-10 Property Valuations and the corresponding Tax Rate are estimated. Actuals can not be determined until property valuation is certified by the Department of Revenue in October.

$0

$2

$4

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$16

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94

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95

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99

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00

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20

01

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-11

15.90

14.52

11.21

10.3810.11

11.72

10.9110.2610.11

9.66 9.569.08

9.599.25

8.949.39

9.98

Ra

te

School Year

TAX RATE PER $1,000 OF EQUALIZED PROPERTY VALUE

How much are the taxes for myHow much are the taxes for my

home going to increase? home going to increase?

The tax levy and rates can not be finalized until 3rd Friday in September enrollment numbers are finalized and approved by the State in October.

Municipalities are tax based on assessed value not market value. The assessed value will vary between the 5 municipalities within the District’s boundaries.

The tax rate is based on the gross school levy (tax). You need to subtract outthe “School Levy Credit” to determine the net school levy.The school levy credit for each municipality is not determined until December.

Tax rate increases are based on equalized (market) value. Equalized values will not be available until mid-October.

Nobody can tell you now!

What is the School Levy CreditWhat is the School Levy Credit??

The School Levy Credit is a “below the line” credit on the property tax statementinitially paid to the municipality to lower school taxes.

What is the School Levy CreditWhat is the School Levy Credit??

Favors high spending, property wealthy districts.

Kimberly is a low spending district with below average property wealth per student.

Per a February 2, 2010 study by the Legislative Fiscal Bureau, the Kimberly School District’s levy would have been $227,442 less if general state aid was used instead of the levy credit

Distributed based on each municipalities share of statewide school levies during the preceding 3 years

While traditional general state school aide to Districts has been flat thepast few years, the levy credit has increased dramatically

FUND ACCOUNTING

• District is required by law to account for money in separate accounting entities called funds.• Each fund has a specific purpose.

• Each Fund accounts for money received (Revenue) and money spent (Expenses)

General Fund

•Operating Budget

•By far the Largest Fund

•Money comes primarily from State Aid and the Property Tax Levy

Unaudited 2010-11 Dollar Percent GENERAL FUND 2009-10 Budget Change Change

Revenue(Money Coming In)

$40,802,373

$42,801,217

$1,998,844 4.90%

The increase in total revenue is primarily related to an estimated $996,374 increase in Property Taxes as a result of a reduction in General State Aid. General State Aid is projected to increase by $631,008. The other significant increase is $300,614 for Revenue from other school districts for their children attending our District under Open Enrollment

Salary and Benefit Expenses are budgeted to increase by $1,278,686

Unaudited 2010-11 Dollar Percent GENERAL FUND 2009-10 Budget Change ChangeExpenses

(Money Going Out)

$40,638,434

$42,801,217

$2,162,783

5.32%

KIMBERLY AREA SCHOOL DISTRICT 2010-11 STAFFING

Additional Staff added with funding from the recently enacted “Education Jobs” law are not included above.

Net Decrease of -1.9 Employees

Staffing Additions Include: (1)Special Education Teacher(1) Elementary Teacher(.5) School Year Nurse

Staffing Reductions Include(1) Assistant High School Principal(.5) HS Librarian(.4) School Year Secretary(3) .5 Para Professionals(1) Maintenance Supervisor

SIGNIFICANT GENERAL FUND EXPENSE INCREASES

• Interfund Transfer to the Special Education Fund as result of a reduction in Federal Stimulus Funding and increased Special Education Staff Salaries and Benefits

• Tuition Costs for Kimberly Residents attending other School Districts

+ $1,048,781

+ $290,000

• Benefits for New and Existing Staff including increased contributions for Retirement Benefits

+ $605,349

• Salaries for New and Existing Staff +673,337

Kimberly Area School District

SIGNIFICANT CAPTIAL EQUIPMENT PURCHASES

Copier/Printer Replacements

$78,000

$17,000

Various Equipment for Wireless Computer Networks

Various Electronic devices to replace Textbooks

Digital Distribution for TV/Cable Access at Westside

$239,000

Student Response System forInteractive Real-time Assessments

$40,000

$15,000

SIGNIFICANT GENERAL FUND EXPENSE DECREASES

One Time money used for Energy Conservation Projects

- ($450,000)

Utility Costs - ($133,000)

Budget includes the same dollar allotment per student as last several years in non-salaried expenditures where practical

2010 ANNUAL MEETING

Motion will be made to adopt a Tax Levy of $16,672,024as presented to you, the electorate


More detailed information is available in the Annual Meeting Booklet or can be obtained at the Administrative Offices on 217 E. Kimberly Avenue

Do you have any questions?

Gary Kvasnica, the Director of Business Services, can be reached at 788-7900.

Thank You!