sy 2017–18 q3 finance update...b. c. board-appropriated funds . 3 sy 2017–18: july–march 2018...

SY 2017–18 Q3 FINANCE UPDATE

Weston Young, CPA – Chief Financial Manager

April 26, 2018

overview and purpose

2

1

2

3

4

5

A B C

board-appropriated funds

3 SY 2017–18: july–march 2018

* Revenues for debt service, capital projects, transportation and bus replacement are received semiannually.

$172,876,331 $183,439,565 $192,068,467

$34,175,340 $36,271,697 $9,847,940

$18,231,179 $19,800,001

$16,962,712

$16,430,868

$19,874,553

$18,395,344 $3,416,905

$6,466,137

$5,619,629

$191,532,594 $201,998,549 $202,699,589

$27,001,275 $28,625,501 $26,704,974

$29,836,024

$41,831,834 $27,588,317

$24,109,566

$31,018,855

$23,799,374 $7,536,327

$9,971,431

$6,726,936

BusReplacement

Transportation

Capital Projects

Debt Service

General Fund

SY 2016-17 YTD SY 2017-18 YTD Projection

SY 2017-18 YTDActual

Revenue$245,130,623

Expenditure$280,015,786

Revenue$265,851,953


Revenue$242,894,092


supplier diversity

4

3% 3% 0%3%

2%

89%

January–March 2018

Total Eligible Expenditures$14,800,000

Total Eligible Expenditures$17,800,000

4%*5%

1%

1%

1%

88%

January–March 2017

5

• Gain understanding of staffing and systems required to support long-term implementation

• Preparation and alignment to comply with federal Every Student Succeeds Act (ESSA) “funding per pupil” reporting requirements, which begin in SY 2018–19

• Execute grade configuration and Facilities Utilization Plan• System upgrades and process improvements• Transportation efficiencies

• Implemented spending limits one month earlier than planned• Reduced staffing and hiring for remainder of school year

budget updates

2017–18 budget planning

budget updates

6

• Revised allocations to school and Central Services budgets• Balance conserving cash and maintaining essential services

• Staffing• Capital improvements and renovations• Support from business and foundation community

• Increased flexibility in use of federal funds• 1 of 5 districts who applied, out of 14,000 districts in U.S.

2018–19 budget planning

7

financial landscape

A B C D E F

Funds RequestedLevy

Projected Circuit Breaker

Projected Net Revenue

ProjectedExpenditures

ProjectedDeficit

1 General n/a n/a $242,700,000 ($269,000,000) ($26,300,000)

2 Capital Projects $38,200,000 ($10,600,000) $27,600,000 ($32,000,000) ($4,400,000)

3 Transportation $38,200,000 ($11,200,000) $27,000,000 ($37,700,000) ($10,700,000)

4 Bus Replacement $12,400,000 ($4,700,000) $7,700,000 ($11,400,000) ($3,700,000)

Total Projected Operating Funds Deficit ($45,100,000)

SY 2018–19 revenues and expenditures

Subject to change due to state, federal or local funding fluctuations

Recommended appropriations project structural deficits

Content updated 2.12.2018

8 2018–19 budget planning

budget reduction summary

$22.4M in budget reductions are planned to

reduce projected operating deficit and conserve cash

during SY 2018–19.

Depending on outcome of planned November 2018

referendum, additional cuts may be required to fully

balance the budget to align with available revenues and

maintain adequate cash reserves to carry out essential operations.

• Close vacancies and resignations• Freeze external hiring• Early retirement• RIF by license• Locked resources

• Reduce substitute teacher contracts• Reduce custodial services• Real-estate sale proceeds• Freeze salaries• Reduce service contracts

• Reduce contracted services• Adjust staffing ratios

• Reduce extracurricular trips, field trips and after-school activities

9

financial landscape


FundsProjected Balance

6.30.2018Projected

Net Cash Flow

Projected Balance

6.30.2019

Projected Budget ReductionsSY 2018-19

Adjusted Projected Balance

6.30.2019

General $18,700,000 ($26,300,000) ($7,600,000) $20,900,000 $13,300,000

Capital Projects

$10,000,000 ($4,400,000) $5,600,000 $0 $5,600,000

Transportation $0 ($10,700,000) ($10,700,000) $1,500,000 ($9,200,000)

Bus Replacement

$1,000,000 ($3,700,000) ($2,700,000) $0 ($2,700,000)

Subtotal $29,700,000 ($45,100,000) ($15,400,000) $22,400,000 $7,000,000

Cash flows based on proposed budget appropriations and proposed budget reductions

SY 2018–19 projected cash flows

10

budget reductions


FundsProjectedBalance

6.30.2018

ProjectedNet Cash Flow

Projected Budget

ReductionsSY 2018-19

Rainy-Day Fund

Projected Balance with Additional

Funds6.30.2019

Fund Balance % (1)

General $18,700,000 ($26,300,000) $20,900,000 $2,969,896 $16,269,896 6%

Capital Projects $10,000,000 ($4,400,000) $0 $0 $5,600,000 18%

Transportation $0 ($10,700,000) $1,500,000 $12,275,000 $3,075,000 8%

Bus Replacement $1,000,000 ($3,700,000) $0 $3,675,000 $975,000 8%

Total $29,700,000 ($45,100,000) $22,400,000 $18,919,896 $25,919,896 7%

projected SY 2018-19 cash flows

Including budget reductions and rainy-day funds

Notes:(1) – Fund Reserve Balance Policy (Board Policy 6227) provides guidance on retaining reserves equal to at least 1 to 3 months or 8% to 25% of annual expenditures.

flexibility in use of funds

11

Student-Based Allocation in SY 2017–18

Indiana HEA 1009 Consolidation of Operations Funds in SY 2019–20

FLE

XIB

ILT

Y

U.S. Department of Education Weighted Student-Formula Pilot in SY 2018–19

Strategic Plan 2015 outlined a goal to allocate resources to schools and provide school leaders with the ability to decide how to utilize resources to meet students’ needs.

Alignment of IPS’ desire to provide school leadership with the ability to decide how best to align FEDERAL resources to meet students’ needs.

IPS will benefit from the ability to utilize local property-tax funds to meet operational needs without restrictions limiting the use of capital projects or transportation funds.

IPS pursuit of more strategic resource leveraging

L E G E N D

State Mandate

IPS Initiative

12

financial accountability

IPS pursuit of improved governance and reporting

Initiative SY 2015–16 SY 2016–17 SY 2017–18 SY 2018–19

Bond Markets(Market Mandate)

Annual ReviewMonitor Financial Reporting and Cash Flow

Quarterly Finance Updates to Board(IPS Initiative)

Implemented and EnhancedRecommendation from Third-Party Reviews

Finance Committee(IPS Initiative)

Established Adopt Policy Monitor PolicyOversee Cash Management, Debt Management and Internal Controls

External Bi-Annual Audit by SBOA(State Mandate)

Completed SY 2012–13 and SY 2013–14

Begin SY 2014–15 and SY 2015–16

Completed SY 2014–15 and SY 2015–16

SBOA Standard Practice is Bi-Annual

External Annual Audit by SBOA(IPS Initiative)

In Progress SY 2016–17

SBOA Granted IPS’ Request for Annual Audit

Audit Committee(IPS Initiative)

Unavailable to Schools due to Statute EstablishedProcure CPA Firm

Statutory Guidance on Formation and Process

External Annual Audit by CPA Firm(IPS Initiative)

Unavailable to Schools due to StatuteFiled for External Waiver and Procured Firm

Complete SY 2017–18

First Available in Statute for Schools Effective 7/1/17

ESSA School by School Reporting(Federal Mandate)

SBA Implementation Prepares IPS to Comply and Also Informs Decision-making

Required by All School Districts

Indiana Chart of Accounts Added Location Code Effective 7/1/18

SY 2017–18 Q3 finance update

13 key messages

Districtwide budget reductions for SY 2018–19 are required to align available funding with the district’s essential services.

No matter the amount of funding, IPS continues to pursue and develop frameworks of support to leverage available resources with more flexibility.

Continue pursuit of best practice governance framework to provide enhanced accountability and transparency.

The Appendix contains additional details on financial matters which have previously been presented to the

Board of School Commissioners or have been reviewed and discussed by the Board’s Finance Committee.

14 APPENDIX

general fund

15

Original appropriation: $260,000,000 State tax revenue received monthly 2017–18 expenditures include investments for strategic priorities and compensation

$172,876,331 $183,439,565 $192,068,467 $191,532,594

$201,998,549 $202,699,589

SY 2016–17 YTD ACTUAL SY 2017–18 YTD PROJECTED SY 2017–18 YTD ACTUAL

General FundJuly 2017–March 2018

Revenue Expenditures

general fund

16

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

General Fund and Related Supporting FundsCalendar Year 2010 Through SY 2017–18 Projected

Education JobsRevenue

Fiscal StabilizationRevenue

Other LocalRevenue

Tuition SupportRevenue

Total Expenditures

General FundCash Balance

debt service fund

17

Local property-tax revenues received semiannually Payments represent loan payments All other payments are semiannual

$34,175,340 $36,271,697

$9,847,940

$27,001,275 $28,625,501

$26,704,974


Debt Service FundJuly 2017–March 2018


debt service funds

18

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

Debt Service FundsCalendar Year 2010 Through SY 2017–18 Projected

Other LocalRevenue

Misc. TaxRevenue

Property TaxRevenue

TotalExpenditures

Cash Balance

capital projects fund

19

Local property-tax revenues received semiannually Property-tax caps decrease receipts, reducing available cash Includes utility payments and facilities maintenance projects

$18,231,179 $19,800,001$16,962,712

$29,836,024

$41,831,834

$27,588,317


Capital Projects FundJuly 2017–March 2018


capital projects fund

20

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

Capital Projects FundCalendar Year 2010 Through SY 2017–18 Projected

Other LocalRevenue

Misc. TaxRevenue

Property TaxRevenue

TotalExpenditures

Cash Balance

transportation operating fund

21

Local property-tax revenues received semiannually Property-tax caps decrease receipts, reducing available cash

$16,430,868 $19,874,553

$18,395,344

$24,109,566

$31,018,855

$23,799,374


Transportation Operating FundJuly 2017–March 2018


transportation operating fund

22

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

$40,000,000

Transportation Operating FundCalendar Year 2010 Through SY 2017–18 Projected

TemporaryLoans

Other LocalRevenue

Misc. TaxRevenue

Property TaxRevenue

TotalExpenditures

Cash Balance

bus replacement fund

23

Local property-tax revenues received semiannually Property-tax caps decrease receipts, reducing available cash

$3,416,905

$6,466,137 $5,619,629

$7,536,327

$9,971,431

$6,726,936


Bus Replacement FundJuly 2017–March 2018


bus replacement fund

24

($10,000,000)

($5,000,000)

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Bus Replacement FundCalendar Year 2010 Through SY 2017–18 Projected

TemporaryLoans

Other LocalRevenue

Misc. TaxRevenue

Property TaxRevenue

TotalExpenditures

Cash Balance

rainy-day fund

25

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Rainy-Day FundCalendar Year 2010 Through SY 2017–18 Projected

TemporaryLoans

Other LocalRevenue

Misc. TaxRevenue

Property TaxRevenue

TotalExpenditures

Cash Balance

supplier diversity

26

January–March 2018 January–March 2017 Change

Total Eligible Expenditures $17.8M $14.8M

$3.0M+20.1%

Expenditures to Minority Owned

$502K2.8%

$611K4.1%

$109K-1.3%

Expenditures to Women Owned

$585K3.3%

$728K4.9%

$143K-1.6%

Expenditures to Veteran Owned

$13.1K0.1%

$159K1.1%

$146K-1.0%

Expenditures to Minority-Women Owned

$426K2.4%

$174K1.2%

$252K+1.2%

Total Certified MWBE Owned

$1.53M8.6%

$1.67M11.3%

$144K-2.7%

Expenditures to Noncertified

$367K2.1%

$190K1.3%

$177K+0.8%

long-term budget planning

27


28

• Per-pupil funding considerations• Special education and English learners

• Compensation and health insurance benefits• Textbook adoptions• Technology

• Property tax cap impact• Deferred maintenance vs. strategic initiatives

33,408 32,595 30,557 30,496 29,570

27,988 26,145

24,032

--

- --

539 1,762

2,897

850 1,398 3,425

--

1,986 1,974 1,903 1,602 1,616

1,563

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

SY 2010-11 SY 2011-12 SY 2012-13 SY 2013-14 SY 2014-15 SY 2015-16 SY 2016-17 SY 2017-18

IPS Operations Innovation-LEA Innovation-Non-LEA Turnaround


29

32,47031,473 30,979 30,921

31,91732,54333,408 32,595

historical perspective: enrollment


30

$7,367 $7,332

$7,209 $7,265

$7,058

$6,732

$6,971

$6,934

$6,400

$6,600

$6,800

$7,000

$7,200

$7,400

$7,600

2010–11 2011–12 2012–13 2013–14 2014–15 2015–16 2016–17 2017–18


historical perspective: state fund budget $ per pupil


31

$9,086,317,992 $9,024,119,677

$9,745,667,423 $9,667,203,109

$10,045,427,309

$10,738,720,168

$8,000,000,000

$8,500,000,000

$9,000,000,000

$9,500,000,000

$10,000,000,000

$10,500,000,000

$11,000,000,000

2013 2014 2015 2016 2017 2018


historical perspective: certified assessed value


32

Percent Change in Gross Assessed Value of All Indiana Property 2008–16


33 certified tax rates

2013 2014 2015 2016 2017 2018Referendum Debt $0.2433 $0.0790 $0.1621 $0.2025 $0.0777 $0.1232Retirement/Severance $0.0365 $0.0283 $0.0325 $0.0362 $0.0140 $0.0229Debt Service $0.4249 $0.4014 $0.3958 $0.4654 $0.0983 $0.2516School Bus Replacement $0.1108 $0.1145 $0.1089 $0.0735 $0.1125 $0.1094Transportation $0.2954 $0.2929 $0.3036 $0.3478 $0.3323 $0.3036Capital Projects $0.3720 $0.3728 $0.3475 $0.2916 $0.3387 $0.3229

$0.0000

$0.2000

$0.4000

$0.6000

$0.8000

$1.0000

$1.2000

$1.4000

$1.6000$1.4829

$1.2889$1.3504 $1.4170

$0.9735

$1.1336


34 indiana forecast revenues 2017–19

Budget 2017

Budget 2018

Budget 2019

Average Change2017–19

Revenues 15,389 15,780 16,378 3.2%

Sales Tax 7,433 7,630 7,886 3.0%

Indiana Income Tax

5,473 5,661 5,997 4.7%

Corporate Income Tax

914 949 975 3.2%

Gaming 432 419 402 -3.6%

All Other 1,137 1,121 1,119 -0.8%


35

Indiana State Appropriationsas Percent of Indiana Total Personal Income (estimated 2017–19)


36 indiana budget appropriations 2017–19

Budget 2017

Budget 2018

Budget 2019

Average Change2017–19

Appropriations 15,989 15,861 16,430 1.4%

K–12 Education 8,117 8,218 8,375 1.6%

Higher Education 1,902 1,935 1,962 1.6%

Medicaid 2,242 2,107 2,365 2.7%

Health/Social Services

1,267 1,353 1,407 5.4%

Public Safety 983 1,003 1,021 1.9%

All Others 1,478 1,246 1,300 -6.2%


37


38 estimated fund balances

Fund Balances 6.30.2016 6.30.2017 6.30.2018 6.30.2019

General and Rainy Day $72,000,000 $52,000,000 $33,000,000 $3,000,000

Debt Service Funds $35,000,000 $26,000,000 $40,000,000 $39,000,000

School Lunch $30,000,000 $26,000,000 $20,000,000 $15,000,000

CPF/Transportation $33,000,000 $29,000,000 $12,000,000 $0

Other Funds $30,000,000 $24,000,000 $16,000,000 $14,000,000

Total Funds $200,000,000 $157,000,000 $121,000,000 $71,000,000

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

6.30.2016 6.30.2017 6.30.2018 6.30.2019

General and Rainy Day

Debt Service Funds

School Lunch

CPF/Transportation

Other Funds


example allotments

39 example: traditional school funding

Local State Federal Combination


Funds Distributed to School Through IPS

School Admin. & Choice

Programming

Title I Program

Student-Based

Allocation

Funds Distributed Directly to School

Services Provided to School

Food Services

Facilities &

Transportation

Special Education

& EL

example allotments

40 example: traditional school funding


Through SBA

Outside SBA

Allocation Source (Under SBA) $ PP Students Dollars Base Allocation $3,758 349 $1,311,542Grade Weight $400 161 $64,400Poverty Weight $500 302 $151,000Baseline Supplement $45,000Transition Adjustment $120,000Strategic Support -

Total: $1,691,942

Restricted Funds (not comprehensive)

Title I Allocation $124,238

Title II/III Allocation $16,799

Total: $141,000

Locked Resources (not comprehensive)

Custodial Services $120,338

Food Service $218,695

Special Education $342,000

English Learners $78,987

School Admin. and Central Services $253,251

Choice Programming $0

Transportation Services $400,695

Facilities Maintenance $500,695

Total: $1,915,000

example allotments

41 example: innovation-lea school funding

Funds Distributed to School Through IPS

School Admin. & Choice

Programming

Title I Program

Student-Based

Allocation

Funds Distributed Directly to School

Services Provided to School

Food Services

Facilities &

Transportation

Special Education

& EL



example allotments

42 example: innovation-lea school funding


Allocation Source (Under SBA) $ PP Students Dollars Base Allocation $3,758 349 $1,311,542Grade Weight $400 161 $64,400Poverty Weight $500 302 $151,000Baseline Supplement $45,000Transition Adjustment $120,000Strategic Support -

Total: $1,691,942




Total: $141,000


Custodial Services $120,338




School Admin. and Central Services $253,251

Choice Programming $0

Transportation Services $400,695

Facilities Maintenance $500,695

Total: $1,915,000

Per-Pupil Agreement

Services and OperationsPer Agreement

example allotments

43 example: innovation-non-lea school funding



Funds Distributed toSchool Through IPS

State Tuition &

Complexity Support

State Special

Education Support

Funds DistributedDirectly to School

Title Programs

Special Education

& EL

Food Service

Services Provided to School(if elected in agreement)

Food Service

Facilities &

Transportation*

Special Education

& EL

*Non-LEA innovation schools may utilize state tuition dollars to fund transportation and facilities; however, some innovation operators are provided transportation and facilities due to access to IPS property-tax funded services. See individual non-LEA innovation agreements for more details.

example allotments

44 example: innovation-non-lea school funding

Allocation Source $ PP Students Dollars

Tuition Support $5,088 349 $1,775,712

Complexity Index Support $1,661 349 $579,689

Special Education Support – Level 1 $500 10 $5,000

Special Education Support – Level 2 $2,300 3 $6,900

Special Education Support – Level 3 $8,976 1 $8,976

Equity Retainer -

Total: $2,376,277

Per-Pupil Agreement

Services and OperationsPer Agreement




Total: $141,000


Custodial Services ($120,338)




School Admin. and Central Services ($253,251)

Transportation Services* ($400,695)

Facilities Maintenance* ($500,695)

Total: ($656,000)

*Non-LEA innovation schools may utilize state tuition dollars to fund transportation and facilities; however, some innovation operators are provided transportation and facilities due to access to IPS property-tax funded services. See individual non-LEA innovation agreements for more details.


sy 2017–18 q3 finance update...b. c. board-appropriated funds . 3 sy 2017–18: july–march 2018...

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