Hello and welcome to March!  We are quickly moving towards the final stretch of the budgeting timeline.  Our last budget work session on February 28, 2019 covered Compensation, Benefits, and a Revenue Update.

The General Assembly approved a budget and included a compensation supplement for SOQ funded instructional and support positions over the two-year biennium equal to 3% effect effective July 1, 2019 and an additional 2% effective September 1, 2019.  Since Roanoke County Public Schools provided an average raise of 2.37% for fiscal year 2019, we would need to provide an average raise of 2.63% for fiscal year 2020 in order to fully receive the State supplement of $2.5 million.  The proposed raise would be approximately 3.13% (this is in the form of 1-step + 1.5% scale adjustment) and would cost around $3.2 million.

Roanoke County Public Schools had a compensation study performed for the 2017 school year and implemented adjustments to bring employees to market levels.  The recommendation was to revisit this every few years to ensure continued internal equity, external marketability, and integrity of the scales.  Market adjustments would then be pursued during the fiscal year 2021 budget process.

Switching to the benefits side, we reviewed the impact of providing a steady 1-step raise along with a 2.5% health insurance premium increase annually as opposed to every other year.  We looked at the impact to an 11-year teacher with a bachelor’s degree in 2019, who pays for employee-only insurance, works until full retirement at 55, and lives until 85.  Over the next 19 years, the cumulative savings to the teacher with the annual raise and insurance premium increase would be approximately $75,411.  Then upon retirement, based on the average of the last three years of salary, the estimated average annual VRS benefit for life would be $4,221 and if the teacher received this increase over the remaining 30 years, the total VRS benefit savings would be approximately $126,626.  Over the course of the teacher’s life the impact would be approximately $202,037 more money for the teacher.

Over the winter of 2019 the health insurance plan was put out to bid, which is done every five years.   Anthem won the contract and will continue to service our health insurance plan.  We participate in the same health insurance plan as the County of Roanoke, Roanoke Valley Resource Authority, Regional Center for Animal Care and Protection and Western Virginia Jail Authority. We were hoping to be able to offer a second health insurance plan choice this year, but are not able to do so at this time.  The rates on higher deductible Health Reimbursement Account (HRA) plans were more costly than expected and would have led to higher premiums to employees than would be desired.  The same held true for the Health Savings Account (HSA) plans, in addition, IRS rules also creates barriers that will have to be overcome in order to provide an HSA.   We will go through a renewal agreement each of the five years of the contract with Anthem and we will continue to explore alternative plans at future renewals.

The proposed budget at this time includes a slight increase in the base premiums of the health insurance as follows: 

• 2.4% premium increase
• 10% base premium increase for non-wellness rates
• The HRA contribution will continue to be $500 for employee only and $1,000 for the other levels 
• There will continue to be a $2,500 benefit to retirees participating in the Employee Extended Work Plan and for part-time employees who choose the health insurance  plan
• The employee percentage of the total premium does not change from prior year

The Health Insurance proposed rates for budget year 2020 is as follows:

Roanoke County Public Schools participates in the Roanoke Valley Consortium (Consortium) to purchase dental insurance.  We participate in the same dental insurance plan with the City of Roanoke, County of Roanoke, and Roanoke Regional Airport Commission.  The Consortium signed a contract with Delta Dental of Virginia January 2018 that will go through December 31, 2019 with up to four additional one-year renewals. 

The Dental Insurance proposed rates for budget year 2020 is as follows:

The revenue update included the summary of the final approved State budget, which will provide us with an additional $2.7 million next year, much of which is designated for the compensation supplement.  Other revenue increases include an additional $1.6 million from the County of Roanoke.  In total it appears as though Roanoke County Public Schools will have approximately $4.3 million in new revenue for the 2020 budget year.

During the regular School Board Work Session on March 5, 2019 the Superintendent summarized some budget options to allow School Board members to begin considering their priorities.  We will delve into this more at the next scheduled Budget work Session on March 12, 2019.

Hello and happy Tuesday!  Our last budget work session on February 14, 2019 covered the Instructional Resources Fund, Grant Fund, Nutrition Fund, and updates on Student Enrollment Projections, Crossover Budgets, and the County Revenue.

The Instructional Resources Fund accounts for money received and used to provide students textbooks.   It is mainly funded by State revenue with a small transfer from the Operating Fund.  New this year, staff recommends moving full-time salaries from this fund to the Operating Fund, which will reduce the transfer from the Operating Fund. 

The Grant Fund is used to account for federal, state, and private grants.  The Grant Fund is budgeted whereby a grant’s expenditures equally offsets expected revenue.  Several of the grants have matching requirements, which are spent in the Operating Fund.  Historically, only multi-year grants were included in the Grant Fund, however, staff recommends moving single-year grants here as well.  Under the new guidelines the following grants will move from the Operating Fund to the Grant Fund:  Project Graduation, various Career and Technical Education state grants, and Carl Perkins.

The Nutrition Fund is self-contained and receives enough state and federal reimbursements, along with food sales, to cover its own expenditures.  The proposed budget includes a 1-step increase along with an annual fee for a new contract to inventory and maintain the cafeteria equipment.

The January 23 blog explained the importance of budgeting Average Daily Membership (ADM) as accurate as possible.  Staff uses various methods to arrive at the best estimate and recommended using the grade progression method this year.  The grade progression projected ADM based on December enrollment was 13,610, however, based on January enrollment, this dropped to 13,602.  No change is recommended, however, the February enrollment numbers will be analyzed to determine if the downward trend continues.

February 6, 2019 was crossover day, when the House of Representatives and the Senate presented their amendments to the Governors’ Budget.  Here is what they all put forth about the compensation supplement for SOQ instructional and support personnel.

• The Governor’s Budget recommended an increase of 5% during the 2018-2020 biennium, either in the first year alone, the second year alone, or by adding both years together and there is no partial funding.
• The House amendments allows up to 3% of average raises in 2018-2019 and up to 2% of average raises in 2019-2020 to quality for the supplement.
• The Senate amendments support the Governor’s recommendation as written, however, allows for partial funding from 3% to 5%.

What would this look like for Roanoke County Public Schools?

Overall, based on fully funding the compensation supplement and using an ADM of 13,610 the Senate Budget provides an estimated $2.6 million increase from the 2018-2019 school year to the 2019-2020 school year.  The County of Roanoke provides the second largest source of funds to the school system.  Based on their current projections, they expect to provide an estimated $1.6 million increase from the 2018-2019 school year to the 2019-2020 school year.

The next work session will be February 28^th and includes compensation and benefits.

Well, hopefully Punxsutawney Phil is right about the early spring!  I hope you enjoyed the warm weather last week.  Our last work session on January 24, 2019 covered the replacement plans, including the Capital Improvement Program, Capital Maintenance Plan, Bus Replacement Plan, and Technology Replacement Plan. 

In fiscal year 2020, the Capital Improvement Program includes funds for an upgraded Human Resources and Payroll Software along with the Capital Maintenance Plan.  The current Human Resources and Payroll Software is being decommissioned by the vendor and requires migration to an upgraded platform.  The upgrade will provide necessary functionality to integrate with the financial system, substitute system, and other systems.  It will also allow additional functionality for employees to access and use Employee Self-Service and principals/supervisors to access and use Manager Self-Service.

The Capital Maintenance Plan allows Roanoke County Public Schools to set aside a constant funding stream to provide regular maintenance and repairs to maximize the life of school facilities. Ongoing preventive maintenance of all school facilities will help ensure the safety and value of these assets while avoiding potentially large costs resulting from lack of proper maintenance.

The Bus Replacement Plan was established to accumulate funds for bus replacements.  The school system operates 152 school buses with a life expectancy of 12-15 years at an average purchase price of $98,000 each.  The replacement plan is created in order for the school system to use cash to purchase between 7 and 13 buses annually over a 15-year time period.  The reserve is funded through an annual operating transfer determined during the budget process annually.

The Technology Replacement Plan was established to replace technology needs throughout the school division as equipment ages.  These funds allow the purchase of updated equipment for the one-to-one laptop program for students in grade 6 through 12, staff computers, security cameras, security access systems, IP telephony, networking equipment, Promethean boards, servers and wireless access, among other needs. The reserve is funded through an annual operating transfer determined during the budget process annually.

The General Assembly crossover occurred February 6 and we are reviewing the effects of the House and Senate amendments and will provide an update at the next work session.  The next work session will be February 14^th and includes all other funds (Instructional Resource, Grants, and Nutrition) as well as an update on Revenue and Budget Requests.

Hello!  Albeit a little late, I want to welcome you all back to school.  I hope you were able to enjoy the holiday time with your family and friends.  My name is Susan Peterson and I am the Director of Finance.  It was a privilege for me to work with Penny Hodge for past seven and a half years.  She was an excellent mentor and built a fiscally prudent, stable, and transparent foundation for funding the education of students in Roanoke County Public Schools.  Continuing one of her traditions, I will do my best to provide timely, factual, and transparent blog updates of budget work sessions.

Our first budget work session was January 10^th, during which we reviewed the budget process, student enrollment projections, the Governor's budget, and preliminary budget requests.

Projecting student enrollment is important because most of the state revenue is based on our March 31 ADM.  If we estimate ADM too low we end up receiving extra money that could have been used in a purposeful and meaningful manner.  However, if we estimate ADM too high, we cannot pay for the expenditures we planned and may need to freeze spending before the end of the year.  The 2018-2019 budgeted ADM was 13,700 and as of December the year-to-date ADM was 13,712.  Roanoke County Public Schools continues to experience larger graduating classes and smaller incoming kindergarten classes.  This reduction is partially offset by 6^th and 9^th grade students coming into the district.  Staff recommended and the School Board approved adopting an ADM of 13,610 for 2019-2020 budget planning.

This is the second year of the biennium and the Governor has recommended increases of a minimum average of 5% for SOQ instructional and support personnel during the 2018-2020 biennium, either in the first year or in the second year or through a combination of the two years.

• The State funds 63.8% of (1) teaching SOQ positions and (2) support SOQ positions up to a capped limit. This means have to we use local funds for 36.2% of these positions (more for the capped support SOQ positions) and 100% of positions outside of SOQ. 
• Roanoke County Public Schools provided an average raise of 2.37% in 2018-2019 for the 1-step increase for all employees, 1% shift in the teacher scale, and 1% for teachers at the top of the scale. As such, we would need to provide an average raise of 2.63% (2.37% + 2.63% = 5.00%) in order to access the compensation supplement, if it is passed by the General Assembly.

Budget Requests received from departments and schools will be analyzed by the management team and added to the list after they are fully investigated.  Some preliminary requests include:

• Investment in Sustainability – these increases are related to budgets that are required to maintain the current program level and/or preserve the taxpayer investment in school property. Preliminary requests include vendor contact increases and the ROTC program.
• Investment in Employees – these increases are directly related to the compensation and benefits of school employees. Preliminary requests include compensation, health insurance, new positons, bus driver substitute pay rate increase, and an hourly pay rate increase.
• Investment in Program Enhancements – these increases reflect requests to expand existing programs or add new programs. Preliminary requests include library funding, RCPS Online, and leveled readers for middle schools.

The next work session will be January 24^th and includes all replacement funds and schedules, incorporating the Capital Improvement Plan, Capital Maintenance Plan, Bus Replacement Plan, and the Technology Replacement Plan.

Happy Holidays!  It is once again time to begin work on the School Budget for next year (2019-2020). For many years, the budget blog has served as a way for me to share information throughout the budget process with all of you.  Today, I will be writing my last blog update before I retire on December 31st.  I hope that you have found the blog to be informative, factual, timely, and a reliable source to learn about the school budget which impacts our entire work force and all the programs we offer to our students.

I would like to introduce you to Susan Peterson, our Director of Finance, who will be taking over the blog posts and will undoubtedly continue to provide meaningful and transparent budget information for our entire school community.  As always, we value your feedback and encourage you to contact the Finance Office when you have questions or would like for us to consider addressing a specific budget topic in a future blog update.

The School Board will approve a budget calendar for the 2019-2020 budget cycle at their meeting on December 13th.  The calendar includes dates for important budget meetings, hearings, and work sessions with the School Board, Principals, Employee Advisory Committee, and the public.  You are invited and encouraged to attend any of these meetings to learn more about the budget process.  Important dates in January include the following:

• January 9th – General Assembly convenes in Richmond to begin work on the state budget (this is the source of about 50% of our revenue)
• January 10th – School Board Meeting with board reorganization for 2019 and work session on the Governor’s Proposed Budget for 2019-2020 (our first look at state funds for the next budget)
• January 24th – School Board Meeting, public hearing on the budget (anyone can speak),  and work session on the Bus, Capital, and Technology Replacement Plans

Quick Reminder:  For those of you who participate in the school district health insurance plan, the school district opened the on-site Marathon Health & Wellness Center in October 2016 to address rising group health claims which impact the premiums for both employees and the school division.  As a reminder (you should be seeing several reminders in emails from Marathon), in order to qualify for a lower health premium in 2019-2020, you must complete the Wellness 1-2-3 Plan which requires completion of the 3 Step program by May 2019 including a wellness visit to the Marathon Health & Wellness Center.  Appointments in the Spring fill very quickly, so don’t wait, go now!  You do not have to wait 365 days from your last wellness visit.  Marathon is open over the Holiday break so take advantage of a break from your normal daily schedule and contact them at 540-795-2279 to schedule your wellness appointment soon.

It has been my great pleasure and honor to share budget and finance related information with you over the years.  My best to each of you for a blessed holiday season and a wonderful New Year ahead.

Penny Hodge
Assistant Superintendent for Finance and Operations