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HomeMy WebLinkAboutAgenda - Item 1 - FY 2018-19 Budget Work Session with DTCC, OCS, and CHCCS ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 24, 2018 Action Agenda Item No. 1 SUBJECT: FY2018-19 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 Commissioners – FY 2017-18 Budget and Tax Survey B. Public School Forum Local School Finance Study 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. Durham Technical Community INFORMATION CONTACT: Bonnie Hammersley, (919) 245-2300 Travis Myren, (919) 245-2308 Paul Laughton, (919) 245-2152 Gary Donaldson, (919) 245-2453 College FY 2018-19 Budget Request PURPOSE: To review and discuss the Durham Technical Community College, Orange County Schools, and Chapel Hill-Carrboro City Schools FY2018-19 Budgets. BACKGROUND: The County Manager presented the FY2018-19 recommended budget on May 1, 2018. 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 $109.1 million, which is 50.1 percent of General Fund revenues, 2.0 percent above the target of 48.1 percent established by the Board of County Commissioners. This includes funding for current expense, school related debt service, school health and safety service contracts, and schools deferred maintenance funds. Total Funding for Local School Districts: 2014-15 2015-16 2016-17 2017-18 2018-19* Original Budget $97,451,679 $98,488,469 $102,727,141 $104,274,757 $109,141,519 *Recommended Budget Student Enrollment Projections for the Orange County Schools: Based on DPI projections, the Orange County School district enrollment for fiscal year 2018-19 totals 7,345, a decrease of 199 students from the March 2017 projections. The district continues to experience a growing number of charter students, with a current enrollment, as of March 2018, of 769 students, which represents an increase of 152 students from March 2017. Out of district students are budgeted at 103 students; 14 more than budgeted in the current fiscal year. This brings the total district enrollment to 8,011 for FY 2018-19. Student Enrollment Projections for the Chapel Hill-Carrboro City Schools: The Chapel Hill-Carrboro City School District DPI projections total 12,474, reflecting an increase of 235 when compared to the March 2017 projections. The district has a current enrollment, as of March 2018, of 155 charter students, which represents a decrease of 7 students from March 2017. Out of district students are budgeted at 242. This brings the total district enrollment to 12,387 for FY 2018-19. 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 $4,211,823 in FY 2017-18. This includes an increase in per pupil funding from $3,991 to $4,165, a $174 increase for each of the 20,398 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, and increases in Retirement and Health Insurance for FY 2018-19. 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. 2018-19 Enrollment Projections CHCCS OCS Total March 2018 Department of Public Instruction ADM Planning #s 12,474 7,345 19,819 Less: Out of District (242) (103) (345) 12,232 7,242 19,474 Plus: Budgeted Charter Students 155 769 924 Total Budgeted Students 12,387 8,011 20,398 60.73% 39.27% Recurring Capital Recurring capital for both School districts remains the same as the prior year appropriation of $3 million dollars. The recommended budget for FY 2018-19 includes $1,821,900 for Chapel Hill- Carrboro City Schools and $1,178,100 for Orange County Schools. For FY 2018-19, instead of funding the Recurring capital from pay-as-you-go funds, debt financing will be utilized. 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 2018-19 includes $2,388,792 for Chapel Hill-Carrboro City Schools and $1,544,671 for Orange County Schools, for a total of $3,933,463, which represents an increase of $77,127 from FY 2017-18. Historically, a 1.5% annual growth rate has been used for Long Range Capital. Beginning in FY 2018-19, and throughout the years of the CIP, a 2% annual growth rate is included. For FY 2018-19, instead of funding the long-range capital from pay-as-you-go funds, a combination of two-thirds net debt bond financing and regular debt financing will be utilized in FY 2018-19. 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. School Debt Service The recommended budget provides for $17,625,421 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 $3,558,428 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 2018-19. Orange County Schools requested an increase of $396.00. This requested increase in the local per pupil allocation for current expenses would increase the per pupil allocation to $4,387. This funding level would represent an increase in the current expense for Orange County Schools of $3,180,965. Chapel Hill-Carrboro City Schools requested an increase of $253.00. This requested increase in the local per pupil allocation for current expenses would increase the per pupil allocation to $4,244. This funding level would represent an increase of $4,069,615 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 Campus of Durham Technical Community College, located at the Waterstone Development in Hillsborough, provides current expense funding of $655,144, recurring capital of $75,000, and debt service payments of $251,080. 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 152. 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, Attachment G provides the FY 2018-19 Budget Request from Durham Technical Community College – Orange County Campus. 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.