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HomeMy WebLinkAboutAgenda- 05-14-20; Item 1 - FY2020-21 Budget Work Session with Durham Tech Comm. College, Chapel-Hill Carrboro City Schools, Orange County Schools ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: May 14, 2020 Action Agenda Item No. 1 SUBJECT: FY 2020-21 Budget Work Session with Durham Technical Community College, Chapel Hill-Carrboro City Schools, and Orange County Schools DEPARTMENT: County Manager and Finance and Administrative Services ATTACHMENT(S): INFORMATION CONTACT: A. Public School Forum Local School Bonnie Hammersley, (919) 245-2300 Finance Study Travis Myren, (919) 245-2308 B. NC Public Schools/DPI-Per Pupil Paul Laughton, (919) 245-2152 Allocations by County Gary Donaldson, (919) 245-2453 C. Historical Per Pupil Appropriation D. Historical CHCCS District Tax E. School Districts Local Current Expense Fund Balance Policy F. Schools Capital Projects Summary (revised) PURPOSE: To review and discuss the Durham Technical Community College, Chapel Hill- Carrboro City Schools, and Orange County Schools FY 2020-21 Operating and Capital Investment Plan Budgets. BACKGROUND: The County Manager presented the FY 2020-21 recommended budget on May 5, 2020. Since that time, the Board has conducted one public hearing 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$113.9 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, school related debt service, school health and safety service contracts, and schools deferred maintenance funds. Total Funding for Local School Districts: 2016-17 2017-18 2018-19 2019-20 2020-21 Original Budget $102,727,141 $104,274,757 $109,141,519 $113,480,859 $113,966,047 *Recommended Budget Student Enrollment Projections for the Chapel Hill-Carrboro City Schools: Based on DPI projections, the Chapel Hill-Carrboro City School District enrollment for fiscal year 2020-21 totals 12,312, reflecting a decrease of 43 students when compared to the March 2019 projections. The district has a current enrollment, as of March 2020, of 166 charter students, which represents a decrease of 3 students from March 2019. Out of district students are budgeted at 251, 1 more than budgeted in the current fiscal year. This brings the total district enrollment to 12,227 for FY 2020-21. Student Enrollment Projections for the Orange County Schools: Based on DPI projections, the Orange County School district enrollment for fiscal year 2020-21 totals 7,381, a decrease of 7 students from the March 2019 projections. The district continues to experience a growing number of charter students, with a current enrollment, as of March 2020, of 885 students, which represents an increase of 42 students from March 2019. Out of district students are budgeted at 110 students; 13 more than budgeted in the current fiscal year. This brings the total district enrollment to 8,156 for FY 2020-21. 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 $8,394 in FY 2020-21. This includes an increase in per pupil funding from $4,352.25 to $4,358, a $5.75 increase for each of the 20,383 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. 2020-21 Enrollment Projections CHCCS OCS Total March 2020 Department of Public Instruction ADM Allotment#s 12,312 7,381 19,693 Less: Out of District (251) 1( 10) (361) 12,061 7,271 19,332 Plus: Budgeted Charter Students 166 885 1,051 Total Budgeted Students 12,227 8,156 20,383 59.99% 40.01% 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 2020-21 includes $1,799,700 for Chapel Hill- Carrboro City Schools and $1,200,300 for Orange County Schools. For FY 2020-21, as was the case in FY 2019-20, debt financing will be utilized, instead of pay-as-you-go funding for Recurring capital. 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 2020-21 includes $2,455,016 for Chapel Hill-Carrboro City Schools and $1 ,637,359 for Orange County Schools, for a total of $4,092,375, which represents an increase of $80,243 from FY 2019-20. A 2% annual growth rate is included throughout the years of the CIP related to Long Range Capital. For FY 2020-21 , as was the case in FY 2019-20, debt financing will be utilized, instead of pay-as-you-go funds for Long Range Capital projects. 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 $18,507,336 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 $3,629,597 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. Deferred Maintenance Funds for School Capital Projects The recommended budget includes $3,000,000 allocated by ADM towards deferred maintenance needs as addressed in both school districts' assessment of older facilities in the following amounts: Chapel Hill-Carrboro City Schools appropriation of $1,799,700, and Orange County Schools appropriation of $1,200,300. Supplemental Deferred Maintenance Program The FY2020-21 CIP introduces a supplemental funding program for deferred maintenance and life and safety improvements in schools. The program would involve an expenditure of$30 million over the next three years to expedite each School District's backlog of deferred maintenance projects in anticipation of a potential general obligation bond referendum in future years. The total amount is divided between the Districts on the basis of average daily membership for this fiscal year. As a result, Chapel Hill-Carrboro City Schools is allocated 59.99% or$17,997,000 of the $30 million total while Orange County Schools is allocated 40.01% or $12,003,000 of the total amount. Given this allocation, each District was asked to provide a three year plan for these expenditures. Chapel Hill-Carrboro City Schools requested $1,800,000 in year 1, to upgrade security cameras, radios and intercom systems in schools; and design and engineering services for large capital projects scheduled in years 2 and 3, $10,000,000 in year 2 and $6,197,000 in year 3. Orange County Schools requested $4,150,000 in year 1, primarily for continuation of their district-wide Safety and Security Plan, and upgrades/renovations to restrooms and the main hall at Orange High School, $3,600,000 in year 2, and $4,253,000 in year 3. School Districts Budget Requests Both School Districts requested increases in per pupil funding for FY 2020-21. Chapel Hill-Carrboro City Schools requested an increase of $500.73. This requested increase in the local per pupil allocation for current expenses would increase the per pupil allocation to $4,852.98. This funding level would represent an increase of $6,165,000 in the current expense for Chapel Hill-Carrboro City Schools. Orange County Schools requested an increase of $321 . This requested increase in the local per pupil allocation for current expenses would increase the per pupil allocation to $4,673.25. This funding level would represent an increase in the current expense for Orange County Schools of $2,398,150. Orange County Schools also requested one-time funding of $1,027,000 for staff bonuses, outside of the current expense funding. 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 $723,256, recurring capital of $75,000, and debt service payments of $233,634. 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. Capital Investment Plan The FY 2020-21 Manager Recommended Capital Investment Plan included funding of $10,460,944 in FY 2020-21, and a 5-Year total of $54,611,404, for Chapel Hill-Carrboro City Schools; and funding of$9,926,369 in FY 2020-21, and a 5-Year total of$46,526,909 for Orange County Schools. Note: these amounts have been revised from the Original Recommended Capital Investment Plan to reflect the revised ADM%, as included in the FY 2020-21 Manager Recommended Operating Budget. The Manager Recommended Capital Investment Plan includes funding of $26,547,911 for a new Academic Building and parking in Years 6-10 for Durham Technical Community College — Orange County Campus. 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 151. 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 and B 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 C provides a history of the Per Pupil Appropriation; Attachment D provides a history of the Chapel Hill-Carrboro City Schools District Tax, Attachment E represents the School Districts Local Current Expense Fund Balance Policy, and Attachment F represents the revised Capital Investment Plan Schools Projects Summary to reflect the revised ADM%, as included in the FY 2020-21 Manager's Recommended Operating Budget. FINANCIAL IMPACT: Included in the Background Section. SOCIAL JUSTICE IMPACT: There are no Social Justice Goal impacts associated with this item. ENVIRONMENTAL IMPACT: There are no Orange County Environmental Responsibility Goal impacts associated with discussion of this item. RECOMMENDATION(S): The Manager recommends that the Board discuss the topics noted and provide direction to staff, as appropriate.