AUSTIN INDEPENDENT SCHOOL DISTRICT FY 2011-12 BUDGET UPDATE

Meria Carstarphen, Superintendent Nicole Conley-Abram, CFO Christy Rome, Dir. Intergovernmental & Policy
June 20, 2011

Senate and House Compromise-HB 1, SB 1 & SB 2,

Reduces Permanent School Fund by $4b below what is needed to fund current law formulas, contrast to January cut of nearly $10b

$1.8b decrease when compared to 2010/11 $1.6b increase in General Fund. However last legislative session, $3.2b in onetime Federal assistance was used to fund FSP with no funding in 2011/12 reduction of AISD reduction of $37,248,999 in FY2012 from current law, addl reduction of $20m in FY2013 to $57,991,657

For AISD:

Reliant on a number of one-time funding sources that will not be available in the next biennium: payment delay ($2.3b), property value growth ($800m), tax speedups ($700m), unclaimed property ($300m), ASF ($200m) $1.3b in grant/textbook cuts Special Program Allotments still remain for special education, career & technology, bilingual and compensatory, which means regular education must take the cuts
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Senate & House Version of HB 1 and SB 1

FY2012
Senate Version $4 billion cut Reduces the "regular program allotment" to 92.39 percent of its current level No changes to target revenue Average reduction of 5.6% compared to current law Eliminates NIFA-$125k for AISD Reduces regular program allotment to 92.39% for most districts, 95.195% for formula districts Maximum tax rate districts (1.17) get EWL of $339,500 and GL of $33.95 for pennies above Austin yield
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FY2013
Raises the "regular program allotment" back to 98 percent of its current level Reduces each districts target revenue amount to 92.35 percent of its current level Repeals current law limitation on revenue gains Average reduction of 5.4% compared to current law Eliminates NIFA-$125k for AISD Raises the "regular program allotment" back to 98 percent of its current level, 95.195% for formula districts Changes EWL and GL for pennies above Austin yield back to current law levels

House Version $4 billion cut

State Funding Cuts Likely in the Next Biennium

Elimination of ASATR-While SB1 does not identify Additional State Aid for Tax Reduction (ASATR) cuts beyond FY2013, it calls for its full elimination by FY2018 which means an annualized loss of $145m for AISD when fully implemented. House version of SB1 calls for future appropriation of Target Revenue along with elimination in 2018. Structural Deficit-The State used one-time measures to fill $4b of the budget gap which means that we will face more cuts in the next biennium if new recurring revenue isnt realized. Proration changed to percentage reduction in State/Local funds and a permanent reduction to entitlement. Edujobs funding will provide one-time offset to cuts in first year of biennium but goes away in the subsequent year and outyears.
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Other State Reductions with AISD Impact

Grant Technology Allotment Pre-k Grant Student Success Initiative Optional Extended Year DATE/Other State Reduction $271.0 m $223.3 m $269.7 m $14.1m AISD Impact $2.4m $4.6m $1.4m $370k

$345.1m ($40m remains for $10.9m FY2012/13, of which $16m earmarked) $50 .0m TOTAL $150k-$300k $19.8m-$20.0m

New Instructional Facilities Allotment

Projected Impact on AISD and Changes Since Revised Budget Presentation in April
General Fund Revenue Budget 2011-2012 Revised Budget
11-Apr-11
Re ve nue s : Local Sources State Sources (Current Law) Anticipated State Reduction Federal Sources Subtotal Other Sources Total Less: Chapter 41 Recapture Payments Total Revenue Less Chapter 41 Payments $ $ $ 631,912,493 182,621,802 (79,118,408) 15,287,000 750,702,887 51,000 750,753,887 (106,832,982) 643,920,905 $ $ $

2011-2012 SB 1 Budget
13-Jun-11
632,725,188 209,085,219 (37,248,999) 15,287,000 819,848,408 51,000 819,899,408 (133,515,121) 686,384,287

Incre ase (De cre ase ) Re vise d vs. SB 1

2012-2013 Projected Budget SB 1

13-Jun-11

812,695 26,463,417 27,276,112 -

$635,228,006 173,386,564 (50,750,361) $16,705,408 774,569,617 51,000

$ $

69,145,521 (26,682,139) 42,463,382

$ $

774,620,617 (102,727,476) 671,893,141

General Fund Expenditure Budget 2011-2012 Revised Budget

11-Apr-11
Total Expe nditure s : FY2011 Base Budget FY 2012 HB 1 Base Budget Projected Baseline Increases (Same Services) Strategic Investment Increases Strategic Compensation/Magnet Restoration State/Federal Grant Reductions Recapture Increase (Reduction) Baseline Budget Reductions Subtotal Other Uses Total Less: Chapter 41 Recapture Payments Total Expenditures Less Chapter 41 Payments Total Expenditure Adjustments Surplus /(De ficit) Edujobs Offs e t Es timate d Ye ar-End Condition $ $ $ $ $ $ $ $ $ $ $ $ $ $ 844,230,727 15,764,610 3,871,304 (20,982,394) (45,966,130) 796,918,117 95,000 797,013,117 (106,832,982) 690,085,135 (46,259,230) (46,259,230) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

2011-2012 SB 1 Budget
13-Jun-11
844,230,727 15,764,610 3,871,304 1,264,082 5,447,627 5,699,745 (42,230,202) 834,047,893 95,000 834,142,893 (133,515,121) 700,532,772 (14,243,485) 13,798,672 (444,813)

Incre ase (De cre ase ) Re vise d vs. SB 1

2012-2013 Projected Budget

13-Jun-11

$ $ $ $ $ $ $ $ $ $

5,447,627 26,682,139 3,735,928 37,129,776 37,129,776 (26,682,139) 10,447,637

$ $ $ $ $ $ $ $ $ $ $

834,047,893 11,312,000 1,350,000 (30,787,645) 815,922,248 95,000 816,017,248 (102,727,476) 713,194,772

$ $ $ $

32,015,745 32,015,745

$ $ $ $

(41,396,631) (41,396,631)

Projected FY2012 Revenue Adjustments

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Increase of .14% in preliminary appraisal values provided by Travis Central Appraisal District on April 25th which increases collections by $813k Final certified not available until July 30th Assumed State reduction of $10.6m offset by increase in recapture of $26.7m One-time transfer of $13.8m to Edujobs Fund for Pre-k, addl planning period and secondary Librarians Bottom Line: Potential drawdown on fund balance for remaining shortfall of $445k in FY2012 if spending reductions are not realized
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Projected FY2012 Expenditure Adjustments

Budgeted expenditures for FY2012 assume the full realization of projected savings from the 1,153 RIF actions ($60.3m combined between local and expiring grant funds) Strategic Compensation restoration to meet Federal grant match requirements $1.1m Water rate increase-$130k Health insurance premium increase based on more months of actual data under self insurance-$816k Adjustment to savings estimate from part-time social security program and salary lapse estimates-$2.8m Offsets to State/Federal grant reductions-$5.4m
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Managing the FY2013 Deficit

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State reductions of $58m and loss of one-time Edujobs funding results in projected shortfall of $41.4m Projected increase in Medicaid collections of $1.5m Projected expenditure increases for enrollment, health, utilities and new school openings The District will continue efforts to modify health plan and monitor proposed Austin Energy rate increases to reduce projected increases The District is seeking $2.4m from State to restore DATE funding. If State funding is not provided, this will become a financial pressure for the local budget in the outyears In order to stabilize staffing in the District for the next two years, the District will continue to implement cost reduction measures to increase reserve levels in FY2011 and FY2012 in anticipation of the need to access reserves in FY2013
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Bills of NoteThe Living (Finance Related)

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HB 1 ($608m) & HB 4 ($184m): Instructional Materials SB 8 which provides school districts flexibility to furlough, implement salary reductions, notice requirements etc. HB 33 Vouchers program that provides taxpayer savings grant of 60% of total M&O revenue SB 1543 which allows school districts to invest in corporate bonds Check Registers Teacher Retirement System-State contribution levels, right to work Property Taxes-No major changes on property appraisal caps, homesteads or Chapter 313. Some governance changes. TRE-No major changes. Some calendar considerations for early adoption timelines.
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Bill of Note-Still Dead (So Far)

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Significant expansion of charter schools Private school participation in UIL Middle school reform Overhaul of teacher appraisal Special education voucher arrangements Pre-kindergarten accountability

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Other Bills of Note-The Living

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Vouchers Sanctuary Cities-inclusion of school district Virtual school reform-course approval, adults, diploma granting Check registers-on-line posting of financial documents and transactions (already compliant) Dual Credit-tuition credit, participation, phys ed. Elections-Military and overseas, runoff dates, redistricting, bond elections
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Historic Exemptions

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School District Local Exemptions

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School Distric Local Options Beyond State Mandated

State Mandates: Homestead: $15,000, Over 65: 10,000 and Disability: 10,000
Jurisdiction Austin Community College Austin ISD Coupland ISD Dripping Springs ISD Del Valle ISD Eanes ISD Elgin ISD Hays Consolidated ISD Johnson City ISD Lago Vista ISD Lake Travis ISD Leander ISD Marble Falls ISD Manor ISD Pflugerville ISD Round Rock ISD 2010 Rate per $100 Valuation Disability Exemption Over 65 Homestead Exemption % Homestead Exemption Limit Historic

0.0951 1.2270 1.0401 1.4900 1.5300 1.2025 1.5400 1.4613 1.1936 1.1800 1.3159 1.4548 1.2900 1.5150 1.4600 1.3800

115,000 15,000

115,000 25,000

1% 0% 0%

5,000 5,000 5,000 -

20,000 15,000 3,000

20,000 3,000 25,000 9,100 -

0% 0% 0% 0% 0% 0% 20% 20% 0% 0% 0% 0% 0%

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Historic Exemption Per Jurisdictions

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HOMESTEAD PROPERTIES: Land Structure

AISD*** CITY OF AUSTIN TRAVIS COUNTY TCHD ACC DIST*** PFLUGERVILLE ISD

25%* 50%** 50% 50% 50% 25%

50%* 100%** 100% 100% 100% 25%

*Owner-occupied residences designated after December 31, 2005 are eligible for a property tax exemption by AISD equaling 50% of the value of the structure and 25% of the value of the land, with a maximum AISD exemption of the greater of $2,000 or 50% of the AISD tax levy. The maximum exemption instituted by the AISD does NOT affect the exemptions offered by Travis County, Travis County Healthcare District, and ACC District. **Owner-occupied residences designated after December 1, 2004 and any grandfathered landmarks which change ownership after December 1, 2004 are eligible for a property tax exemption by the City of Austin equaling 100% of the value of the structure and 50% of the value of the land, with a maximum City exemption of the greater of $2,000 or 50% of the City tax levy. The maximum exemption instituted by the City of Austin does NOT affect the exemptions offered by Travis County, Travis County Healthcare District, and ACC District. *** ACC & AISD District has repealed the historic exemption for the 2010 tax year.

NON-HOMESTEAD PROPERTIES: Land Structure

AISD CITY OF AUSTIN TRAVIS COUNTY TCHD ACC DIST* PFLUGERVILLE ISD

13% 25% 25% 25% 25% 25%

25% 50% 50% 50% 50% 25%

* ACC & AISD District has repealed the historic exemption for the 2010 tax year.

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Exemption Values: 2010 Certified Values

a/o 09-30-10
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Value 2010 Assessed Value after Homestead Cap Total Exemptions: State Exemptions Local Exemptions: Disability *Economic Development Freeport Historical Over 65 Over 65 Spouse Pollution Control M&O Net Taxable I&S Net Taxable *Econ devel applies only to M&O 70,547,728,684 8,189,252,174 7,384,707,041 804,545,133 23,344,809 949,551 93,323 148,092,582 560,607,787 43,759,489 27,697,592 62,358,476,510 62,359,426,061

(Estimated) M&O Revenue Loss

(Estimated) I&S Revenue Loss

Total Revenue Loss

88,362,030.96 79,680,988.97 8,681,041.99 251,890.49 10,245.66 1,006.96 1,597,918.96 6,048,958.02 472,164.89 298,857.02

12,120,093.22 10,929,366.42 1,190,726.80 34,550.32 1,405.34 138.12 219,177.02 829,699.52 64,764.04 40,992.44

100,482,124.17 90,610,355.39 9,871,768.78 286,440.81 11,650.99 1,145.07 1,817,095.98 6,878,657.55 536,928.93 339,849.45

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Historic Exemptions Findings

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The rate of historic exemption for each taxpayer varies depending on other exemption entitlements Many of the bills for historic exemptions are calculated by hand The District has modeled City language which doesnt necessarily apply to AISDs calculations: a maximum AISD exemption of the greater of $2,000 or 50% of the AISD tax levy Average tax relief for residential is well over $3,200 The potential increase in recapture liability under SB1 severely limits the ability for AISD to obtain relief in the M&O budget. However, the District could retain full value for I&S
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Estimated Historic Properties Revenue

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Residential

Commercial

TOTAL

Estimated Exemption using 2011 Preliminary Values M&O Revenue (1.079) I&S Revenue (.1480) TOTAL

97,798,652 1,055,247 144,742 1,199,989

67,089,848 723,899 99,293 823,192

164,888,500 1,779,147 244,035 2,023,182

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Options to Consider for Historic Exemptions

Commercial

Reinstate Commercial/Non-Homestead unchanged Institute cap on Residential similar to City Range of $3,000 to $6,000 Greater affect on higher-valued properties Proportional reduction Reduce component exemptions for land (25%) or structure (50%) which is what has been done historically Apply exemption to Total Assessed Value, i.e. recommendation from Historic Society of 70% of Assessed Value with cap Combination The administration will continue to work with the Travis Central Appraisal District to refine options
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Residential