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HomeMy WebLinkAboutAgenda - 05-25-2017 - 1. FY2017-18 Budget Work Session with DTCC, OCS, and CHCCS ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 25, 2017 Action Agenda Item No. 1 SUBJECT: FY2017-18 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): INFORMATION CONTACT: A. North Carolina Association of County Commissioners — FY 2016-17 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 G. Chapel Hill-Carrboro City Schools PowerPoint Presentation H Orange County Schools PowerPoint Presentation PURPOSE: To review and discuss the Durham Technical Community College, Orange County Schools, and Chapel Hill-Carrboro City Schools FY2017-18 Budgets. BACKGROUND: The County Manager presented the FY2017-18 recommended budget on May 2, 2017. 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 $102.2 million, which is 48.8 percent of General Fund revenues, 0.7 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: 2013-14 2014-15 2015-16 2016-17 2017-18 Original Budget $91,346,154 $97,722,771 $98,488,469 $99,848,327 $102,174,757 Student Enrollment Projections for the Orange County Schools: Based on DPI projections, the Orange County School district enrollment for fiscal year 2017-18 totals 7,544, a decrease of 7 students from the March 2016 projections. The district has experienced a growing number of charter students, with a current enrollment, as of March 2017, of 617 students. Out of district students are budgeted at 89 students; 15 less than budgeted in the current fiscal year. This brings the total district enrollment to 8,072 for FY 2017-18. Student Enrollment Projections for the Chapel Hill-Carrboro City Schools: The Chapel Hill-Carrboro City School District DPI projections total 12,239, reflecting an increase of 222 when compared to the March 2016 projections. The district has a current enrollment, as of March 2017, of 162 charter students. Out of district students are budgeted at 241. This brings the total district enrollment to 12,160 for FY 2017-18. 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 $3,544,435 in FY 2017-18. This includes an increase in per pupil funding from $3,868 to $3,991, a $123.00 increase for each of the 20,232 students in the two school systems. This increase is to help cover the cost of both school systems for mandated increases related to State mandated teacher pay raises and all other locally paid school employees, increases in Retirement and Health Insurance for FY 2017-18, and the effects of House Bill 13, which reduces the class size for K-3. 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. 2017-18 Enrollment Projections CHCCS OCS Total March 2017 Department of Public Instruction ADM Planning #s 12,239 7,544 19,783 Less: Out of District (241) (89) (330) 11,998 7,455 19,453 Plus: Budgeted Charter Students 162 617 779 Total Budgeted Students 12,160 8,072 20,232 60.10% 39.90% 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 County plans and programs long-range school capital funding through the County's Capital Investment Plan (CIP). The recommended budget for FY 2017-18 includes $2,317,658 for Chapel Hill-Carrboro City Schools and $1,538,678 for Orange County Schools, for a total of $3,856,336, which represents an increase of $56,990 from FY 2016-17. For FY 2017-18, instead of funding the long-range capital from pay-as-you-go funds, two-thirds net debt bond financing will be utilized in FY 2017-18. 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 $15,074,910 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 The recommended budget includes $3,354,000 for the Health and Safety Service Contracts for both school districts to cover the costs of School Resource Officers in every middle and high school, and a School Health Nurse in every elementary, middle, and high school in both school systems. School Districts Budget Requests Both School Districts requested increases in per pupil funding for FY 2017-18. Orange County Schools requested an increase of $417.00, plus funding for an additional 192 charter students. This requested increase in the local per pupil allocation for current expenses would increase the per pupil allocation to $4,285. This funding level would represent an increase in the current expense for Orange County Schools of$4,182,015. Chapel Hill-Carrboro City Schools requested an increase of $377.50. This requested increase in the local per pupil allocation for current expenses would increase the per pupil allocation to $4,245.50. This funding level would represent an increase of$5,469,806 in the current expense for Chapel Hill-Carrboro City Schools. 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 $641,751, recurring capital of $75,000, and debt service payments of $260,384. In addition, the recommended budget includes $200,000 for 200 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 147. 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, Attachment F represents the School Districts Local Current Expense Fund Balance Policy, Attachments G and H include both school systems PowerPoint presentations. Durham Technical Community College will provide handouts at the meeting. 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.