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HomeMy WebLinkAboutAgenda - 05-26-2016 - 2 - FY2016-17 Budget Discussion with DTCC, OCS, CHCCS ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 26, 2016 Action Agenda Item No. 2 SUBJECT: FY2016-17 Budget Work Session with Durham Technical Community College, Orange County Schools, and Chapel Hill-Carrboro City Schools DEPARTMENT: County Manager and Finance and Administrative Services ATTACHMENT(S): A. North Carolina Association of County INFORMATION CONTACT: Commissioners — FY 2015-16 Budget Bonnie Hammersley, (919) 245-2300 and Tax Survey Travis Myren, (919) 245-2308 B. Public School Forum Local School Paul Laughton, (919) 245-2152 Finance Study Gary Donaldson, (919) 245-2453 C. NC Public Schools/DPI-Per Pupil Allocations by County D. Historical Per Pupil Appropriation E. Historical CHCCS District Tax F. School Districts Local Current Expense Fund Balance Policy PURPOSE: To review and discuss the Durham Technical Community College, Orange County Schools, and Chapel Hill-Carrboro City Schools FY2016-17 Budgets. BACKGROUND: The County Manager presented the FY2016-17 recommended budget on May 5, 2016. Since that time, the Board has conducted two public hearings to receive residents' comments regarding the proposed funding plan. Tonight's work session is the first opportunity the Board has had to discuss next year's recommended funding plan related to Education funding. County Support of Local Boards of Education The recommended funding level represents a total appropriation for both school districts of $99.8 million, which is 49.4 percent of General Fund revenues, 1.3 percent above the target of 48.1 percent established by the Board of County Commissioners. This includes funding for current expense, recurring capital, long-range capital, school related debt service, and school health and safety service contracts. Total Funding for Local School Districts: 2012-13 2013-14 2014-15 2015-16 2016-17 Original Budget $87,362,927 $91,346,154 $97,722,771 $98,488,469 $99,848,327 Student Enrollment Projections for the Orange County Schools: Based on DPI projections, the Orange County School district enrollment for fiscal year 2016-17 totals 7,551, an increase of 25 students from the March 2015 projections. The district has experienced a growing number of charter students, with a current enrollment of 519 students. The Commissioner Approved FY 2015-16 Budget included phasing in over a two year period to cover the growth of charter students, by funding an additional 110 charter students in FY 2015- 16, and completing the planned phasing in of the additional charter school students in FY 2016- 17, which amounts to an additional 155 charter students. The cost to fully fund the 519 charter students in Orange County Schools in FY 2016-17 is $1,931,718. Out of district students are budgeted at 104 students; 15 more than budgeted in the current fiscal year. This brings the total district enrollment to 7,966 for FY 2016-17. Student Enrollment Projections for the Chapel Hill-Carrboro City Schools: The Chapel Hill-Carrboro City School District DPI projections total 12,017, reflecting a decrease of 186 when compared to the March 2015 projections. The district has experienced a growing number of charter students, with a current enrollment of 217 students. The Commissioner Approved FY 2015-16 Budget included phasing in over a two year period to cover the growth of charter students, by funding an additional 50 charter students in FY 2015-16, and completing the planned phasing in the additional students in FY 2016-17, which amounts to an additional 50 charter students. The cost of fully fund the 217 charter students in Chapel Hill-Carrboro City Schools in FY 2016-17 is $807,674. Out of district students are budgeted at 241; 110 more than budgeted in the current fiscal year. This brings the total district enrollment to 11,993 for FY 2016-17. The General Assembly requires school systems to pay a per pupil allotment to support charter students within their district. Current Expense The recommended appropriations for Chapel Hill-Carrboro City and Orange County Schools increases the current expense funding by $189,932 in FY 2016-17. This includes an increase in per pupil funding from $3,697.50 to $3,722, a $24.50 increase for each of the 19,959 students in the two school systems. Local Current Expense funding supplements State and Federal funds received by each district for the day-to-day operation of schools. Examples of expenses paid from these funds include salaries and benefits for locally paid teachers and utilities. North Carolina statutes mandate boards of county commissioners to provide local current expense monies to school districts. Counties having more than one school administrative unit, as is the case in Orange County, are required to provide equal per pupil appropriations to each system. 2016-17 Enrollment Projections CHCCS OCS Total March 2016 Department of Public Instruction ADM Planning #s 12,017 7,551 19,568 Less: Out of District 241 104 345 11,776 7,447 19,223 Plus: Budgeted Charter Students 217 519 736 Total Budgeted Students 11,993 7,966 19,959 60.09% 39.91% Recurring Capital Recurring capital for both School districts remains the same as the prior year appropriation of $3 million dollars. Recurring capital pays for facility improvements, equipment, furnishings, and vehicle and bus purchases. State statutes mandate counties to fund recurring capital. However, the amount of money counties allocate to this function is discretionary and varies from county to county. Long Range Capital The long range/pay-as-you go capital expense for the local school districts increases by $74,497, to a total appropriation of $3,799,346 million. Long-Range Capital supports school capital projects through the County's Capital Investment Plan (CIP). Capital projects are funded through a combination of State and local bonds, non-bond financing and pay-as-you-go funding sources. Pay-as-you-go funding includes dedicated half-cent sales tax revenues and property tax earmarked under the Board's April 5, 2011 Capital Funding Policy. The Capital Policy also allows School Construction Impact Fees to offset School related debt service. Similar to Local Current Expense funding, the amount of money counties allocate to long-range capital expenditures is discretionary and varies from county to county. Per the April 5, 2011 Commissioner approved County Capital Funding Policy, it is the intent of the Board of County Commissioners to continue a capital funding policy that reflects the implementation of the Board of Commissioners' resolution of November 16, 2004 that the Board "does hereby adopt in principle a policy of allocating a target of 60 percent of capital expenditures for school projects and 40 percent of capital expenditures for county projects over the decade beginning in calendar year 2005". The Policy further states, "However, there will be times when the County will be bound fiscally and unable to achieve full funding. During those times, Commissioners may find it necessary to depart from the Policy." School Debt Service The recommended budget provides for $15,372,383 in School Related Debt Service, which represents repayment of principal and interest on School related debt, including general obligation bonds and private placement loans. North Carolina statutes require counties to pay for school related capital items such as acquisition and construction of facilities. In instances where counties borrow funds to pay for such items, the State mandates counties to repay the debt. The amount of money counties borrow for school related projects is discretionary and varies from county to county. Health and Safety Service Contracts (Replaces Fair Funding) The recommended budget replaces the Fair Funding program with Health and Safety Service Contracts. The Fair Funding program was created in FY 2006-07 to direct County funds to particular purposes and to provide an equal amount of funding to each District for those purposes. Under this new model, the County will contract with each School District to provide and fund School Resource Officers in each middle school and high school, and provide one public health nurse for each school facility. The Districts currently use a variety of funding to pay for these services. This budget will fully fund each District for health and safety services by adding approximately $1.4 million to the existing $1.9 million formerly used in the Fair Funding program. State Mandates for Retirement and Health Insurance In addition to the funds recommended for Health and Safety Service Contracts and Charter Students, the recommended budget includes a recommendation to fund State mandated retirement and health insurance contributions for school employees. These mandates total $484,562, and are funded through the Current Expense appropriation. Per Pupil Equivalent Based on the structure of the additional funds, recommended for schools, the per pupil amount increases by $24.50, to $3,722. This is because the Health and Safety Service Contracts will be administered outside of the current expense budget, and funding for charter students does not add to the per pupil amount. If the total increase of $2,656,421 were calculated in per pupil equivalent terms, the increase would be approximately $133 per pupil. School Districts Budget Requests Both School Districts requested increases in per pupil funding for FY 2016-17. Orange County Schools requested an increase of $390.50, plus funding for an additional 155 charter students. This requested increase in the local per pupil allocation for current expenses would increase the per pupil allocation to $4,088. This funding level would represent an increase in the current expense for Orange County Schools of $3,786,240. This would represent a tax rate equivalent of approximately 2.26 cents on the current property tax rate. Chapel Hill-Carrboro City Schools requested an increase of $446.76, plus funding for an additional 50 charter students in the district. This requested increase in the local per pupil allocation for current expenses would increase the per pupil allocation to $4,144,26. This funding level would represent an increase of $4,465,203 in the current expense for Chapel Hill- Carrboro City Schools. This would represent a tax rate equivalent of approximately 2.66 cents on the current property tax rate. County Support of Orange County Campus of Durham Technical Community College The recommended funding for the Orange County Satellite Campus of Durham Technical Community College, located at the Waterstone Development in Hillsborough, provides current expense funding of $628,929, recurring capital of $75,000, and debt service payments of $266,001. In addition, the recommended budget includes $50,000 for 50 scholarships (student tuition for Orange County Residents), which will be paid from Article 46 Sales Tax proceeds instead of through Current Expenses. As with local school districts, counties in North Carolina are responsible for supplementing state and federal appropriations to community colleges. For the most part, counties are responsible for day-to-day operating costs such as utilities, security and custodial services. The Counties are not responsible for funding of teaching staff. Details regarding recommended funding levels for local school districts and Durham Technical Community College are located in the Education section of the budget document, beginning on Page 145. During tonight's work session, Commissioners will have the opportunity to dialogue with the Durham Technical Community College, Chapel Hill-Carrboro City Schools, and Orange County Schools about county funding and anticipated State funding for schools next year. Attachments A, B, and C provide additional information of how Orange County compares with other counties within North Carolina related to Current Expense funding per pupil and other educational related funding issues; Attachment D provides a history of the Per Pupil Appropriation; Attachment E provides a history of the Chapel Hill-Carrboro City Schools District Tax, and Attachment F represents the School Districts Local Current Expense Fund Balance Policy. FINANCIAL IMPACT: Included in the Background Section. SOCIAL JUSTICE IMPACT: There are no Social Justice Goal impacts associated with this item. RECOMMENDATION(S): The Manager recommends that the Board discuss the topics noted and provide direction to staff, as appropriate.