2:30 p.m.

Background Information:

FY18 Preliminary General Fund Budget

Revenue

State of Alaska revenue projections for FY18 was created using $5,930 as the Base Student Allocation (BSA) in the State of Alaska Foundation Funding Formula that is reflected in the Governor’s current budget.

The student enrollment projection of 8,781 for FY18, listed in the Five Year Enrollment Projection document, was used in the Foundation Formula to calculate estimated state revenue.

State revenues include $79,228,895 for Foundation Funding and $286,147 for Quality Schools funding, a total of $79,515,042.

Administration has budgeted KPB support in the amount of $48,238,432, which is the same amount as the borough had provided in FY16 and FY17. This budgeted KPB revenue amount is $3,043,762 less than the projected maximum allowable local contribution for FY18 of $51,282,194 with the BSA at $5,930.

Total General Fund Revenue available for FY18, not including the use of fund balance, is estimated to be $137,381,321.

Expenditures

The expenditure budget was developed using the current staffing formulas and the projected enrollment for FY18. Expenditure projections for salaries include step increases for current employees. Adjustments were made to healthcare based on the current number of employees that have selected the HDHP, or opted out, and recommendations by the District’s Health Care broker. Salaries and benefits comprise approximately 80% of total expenditures.

Adjustments to instructional and custodial budgets were made based on a formula that includes projected enrollment and building size. District office budgets were adjusted based on input from administration.

Included in the primary budget is a transfer to Food Service in the amount of $1,100,000. Which is a reduction of $100,000 from FY17. The total of all expenditures and transfers for the FY18 Preliminary General Fund budget is $140,833,901.

Use of Fund Balance

The Preliminary FY18 budget has a deficit of $3,452,580. Using one-third of the unassigned fund balance of $1,132,338 would leave a remaining deficit of $2,320,242.

Deficit Resolution

At the budget work session on January 16, 2017, we took a closer look at the remaining budget deficit and possible increased or decreased funding at the state and local levels, along with possible ramifications to staffing and expenditure reductions.

Administration has developed a plan for the reduction of the status quo deficit.

Revenue	$ 137,381,321
Expenditures	140,833,901
Status Quo Deficit 1/16/17	(3,452,580)

Use of 1/3 Fund Balance	1,132,338
Status Quo Remaining Deficit	(2,320,242)

Administration Reductions 1/23/17
5.0 FTE Unallocated for Class Size adjustment	(500,000)
1.0 FTE Pupil Services Coordinator	(140,696)
One Accounting Specialist from 12 to 10 months	(9,703)
Extra Curricular safety funds	(10,000)
Total Administration Reductions 1/23/17	(660,399)

Adjusted Status Quo Remaining Deficit	(1,659,843)

Additional Administration Reductions 1/30/17
ELL Tutors	(624,302)
Custodians	(500,000)
6.50 FTE Reduction from High Schools with an increase of +2 PTR	(650,000)
10 Month Accounting Specialist position eliminated	(50,000)
Total Additional Administration Reductions	(1,824,302)

Deficit Excess/(Deficiency)	$ 164,459

State Revenue Scenarios

Additional cuts in State foundation revenue is likely. A 1% change to the Base Student allocation would result in a loss of revenue in the amount of $1,055,166.

Items under consideration to cover the additional deficit, would include increasing the PTR, which is in addition to the +2 PTR change at the High Schools already included in the administration reductions.

1.0 FTE Reduction from Middle schools with an increase of +1 PTR
3.5 FTE Reduction from Elementary schools with an increase over 250 +1 PTR
2.0 FTE Reduction from Elementary schools under 250 with an increase of +1 PTR

The changes to the PTR would result in approximately $650,000 in reductions. Additional reductions in the amount of $405,166 would need to be identified.

Kenai Peninsula Borough Revenue

As mentioned above, with the increased in assessed taxable valuation, the Borough has the ability to provide additional revenue in the amount of $3,043,762.

We will be prepared to discuss this information further at the worksession.

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