Expense History
The next slide shows the breakdown of expenses by category.
Expenses by Category
This report shows the difference in expenses over the last decade. It also shows that 88% of total expenses can be accounted for in 11 lines.
An expense difference that is interesting to note is the amount of Salary expense to the total for that year. In 2003/04, Salaries made up about 54% of the expenses. That has dropped to 40% for the preliminary 2013/14 budget. Since Salaries are virtually fixed by contract, their percentage of total expenses may increase dependent on what other expenses get cut. If the District is able to decrease non-Salary expenses significantly, then Salaries will be a bigger portion of the total expenses.
Salaries & Benefits History
Although Healthcare expenses have increased significantly, the District has been able to slow the increase by becoming self-insured for medical, dental, vision and prescription. Two years ago, healthcare expenses were approximately $2.5 million. The downside to self-funding is the risk of large claims. The District pays for everything up to $175,000. They have stop-loss insurance which covers everything between $175,000 and $ 2,000,000. Over $2,000,000, it reverts back to the District. There have not been any claims over the $2,000,000 so far.
PSERS (Public School Employee Retirement System) is a significant cost to the District. Since it is the State system, the District has very little control over this expense. The only way the District can make any change to this is by decreasing staff. The District has eliminated about 40 positions and decreased hours for support staff. It was noted that the decrease in hours for support staff has negatively impacted their pension credits. They are not receiving a full year's credit. Also eliminated were 17 custodial positions. However, the expense for those positions that were outsourced fall on another line item.
The following slide shows the PSERS Actual and Projected rates. You'll notice that the rate increases significantly over the next few years. When investment rates were high, the State decreased the amount they collected from Districts. FY 2000/01 and 2001/02 had a negative rate of return and 2002/03, while positive was still below actuarial assumptions. More information can be found here concerning the history of PSERS underfunding.
Teachers are required by law to make contributions to their retirement accounts. The rate withheld is determined by the State and varies dependent on the membership class.
PSERS Actual & Projected Rates
PSERS Actual & Projected Net Costs
Public Charter School Expenses are another area where the District has no control. The State determines the formula used for the per student rate. The District has no control over which students apply to a charter school and which ones get accepted.
There are a few things important to note.
- The State used to reimburse the District for a portion of the expense. That stopped for the 2011/12 school year.
- Transportation costs are included in the per student price. The District then has provide transportation for those students even though the Charter school is receiving the transportation funds.
- The current rate being paid is approx. $9,000 per student for regular ed students and $24,000 for special needs students. That means that if a Charter school students needs 1/2 hour of speech therapy per week, the Charter school is getting $24,000 for that student instead of $9,000 per student.
Public Charter School Expense
The District is trying to determine if the decrease in the projected Charter School expense for 2012/13 is due to the implementation of Full-day Kindergarten. A quick calculation at the Finance meeting showed that if that is the case, then Full-day Kindergarten is at about break-even. This ties to the recommendations made last year for Full-day Kindergarten & the additional expense.
For some perspective, here is a list of charter school payments for February:
Commonwealth Connections Academy $ 8,641.30
Graystone Academy 5,816.14
21st Century Cyber Charter School 10,370.75
Agora Cyber Charter School 12,321.67
Pennsylvania Cyber Charter School 7,935.00
PA Leadership Charter School 14,283.00
Other Expenses
Some of the Other Expenses include CCIU, Outside Services, Supplies, Bond Interest, etc.
Outside Services includes the outsourced custodial service (which is basically a transfer from Salaries & Benefits). It also includes traffic control services from Signal 88.
The District continues to work with Althouse Transportation to cut costs. One cost savings measure in the past couple of year was adjusting the bus routes.
Special education expenses to the CCIU can be an issue. We have several students that cost over $100,000 per year. State funding for special education has been flat-funded for 6 years (meaning no increase in funding from the State, while the cost has increased).
Bond interest has increased over the past 10 years with the building of the Intermediate School and the High School renovation. The State is supposed to reimburse the District 10 cents on every dollar. We have not been receiving it, because the State doesn't have the money to reimburse us. We should eventually get it.
In most industries, capital purchases and principal payments would not appear on an expense list. They would be balance sheet transactions. I'm guessing that since School Districts have to account for all payments to determine tax rates, they need to include the payments in expenses.
Next: Expense per Average Daily Membership
Posts
With salaries, we have to keep in mind that the school cut 56 positions in order to keep those numbers looking the way they do.
ReplyDeleteThere were 29 teacher cuts that “saved” the district $2.4 Million per year (in 2010-11 & 2011-12 dollars), while greatest growth in teacher salaries have occurred in the last 4 years.
Also, 17 custodian positions ($328,000) went from being under salaries to outsourced services... which was $0 in 03-04, and is $626,000 in the proposed budget.
Any "savings" reported (as a budget line item) was not in true cost control, but at the expense of the children and with accounting tricks.
Gee.. thanks for highlighting points I already made in my post.
ReplyDeleteWhen teachers leave and they are NOT replaced, that is a savings. Even though the custodial positions moved from one line item to another, it produced a savings. I don't see how you can say that not replacing a position is NOT cost control. It's simple math. A position in the budget = expense. A position out of the budget = savings.
That $ 626,000 isn't JUST for the custodians. Let's not make people think that it is. The additional amount is for traffic control. That is something the district started paying for when the renovation of the high school started. Prior to that, high school staff did traffic control at the end of the day. I would think that would be a liability.
Ellen,
ReplyDeleteWhere did you get the idea that all 29 teacher positions were those who voluntarily left or were retiring? Regardless, those were 29 positions that were cut.
It is not a cost control because they are paying more, and getting less.
Simple math: Which cost more... 9 apples for $10 or 6 apples for $9?
This comment has been removed by the author.
ReplyDeleteWhere did I get the idea? By paying attention to what has gone on over the past decade or more.
ReplyDeleteHow else would the positions go away? At the time these cuts took place, by LAW, districts were not permitted to lay off teachers for economic reasons.
The only way teachers could be let go was 1)if there was a decline in enrollment over a certain percentage - which we didn't meet 2) if an entire program was cut or 3) a teacher did something like lie on their app, have a relationship with a student or some other instance that was a offense to be fired. But they could NOT be be laid off for economic reasons.
I don't know what your definition of cost control is but if there were 29 positions that were being paid and now they are gone, that is cost control. At least it was in my 15 years of doing the budget for a large company in this county.
If those 29 positions were still in the budget the expense would be even higher than it is now. How is that NOT cost control?
I don't how you can say they are getting less. The teachers are working more days. They are doing more with less. They are being creative. We have teachers who have built computers out of spare parts ON THEIR OWN TIME because the District couldn't afford to provide them. We have teachers who take items that are basically scrap and use those items to adapt furniture in their classrooms to what they need rather than ask for the district to provide what they need. Our teachers provide a whole lot more to our students than just state test scores.