The third work session for the 2023-2024 Annual Budget was Thursday, March 16, 2023.  We reviewed revenue and expenditure updates.  Below are links to the BoardDocs agenda with materials and the Work Session video:

• Agenda Item 14.03 2023-2024 Budget Work Session #3     
• Work Session Video

Revenue Update

 

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After the last work session, the General Assembly approved a "Skinny Budget," which means they did not reach an agreement on most policy-related issues.  The only issues incorporated were (1) technical updates to include current statistics for certain values in the calculator tool and (2) Hold Harmless funding for school divisions in the fiscal year 2023 with a formula correction in the fiscal year 2024.  The Skinny Budget produced $1.7 million less state revenue for RCPS than the House budget.  Staff recommends moving forward with the House Budget with expectations the Governor will bring forth changes.

The County's Revenue Sharing Formula is presented, which resulted in new revenue of approximately $8 million for the RCPS. However, this number is subject to reduction since the Board of Supervisors is contemplating additional tax relief for citizens.

Department Requests

 

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The separate file 2024-03-16 Budget Department List provides a condensed list of the incremental new revenues and incremental new department requests as compared what was presented on March 2, 2023.  The budget as presented is balanced.

Final Meeting: March 23, 2023, Budget Adoption

 

 

The second work session for the 2023-2024 Annual Budget was Thursday, March 2, 2023.  We reviewed a revenue update, compensation & benefits, and department requests.  Below are links to the BoardDocs agenda with materials and the Work Session video:

• Agenda Item 2.12 2023-2024 Budget Work Session #2     
• Work Session Video

Revenue Update

 

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As reviewed during the first work session, forecasting next year's Average Daily Membership (ADM) is the basis for estimating state revenue.  We use grade-level progression as a data point and refined our calculations since the first Work Session.  In addition, we identified a small population of students who have moved into the Students with Intensive Support Needs program, which will reduce our overall ADM while being reimbursed at a higher per-pupil rate.  The result is a change in the adopted ADM for March 31, 2024, to 13,375.

This new ADM was run through the Governor's budget, along with the House and Senate budgets, to provide a similar basis for revenue estimates.  The House and Senate calculator tools provided by the Virginia Department of Education (VDOE) were corrected for the previous grocery tax error.  After using the new ADM forecast, the House budget was the lowest and will be the basis for revenue estimates until we receive further guidance from VDOE.  This results in $8.0 million in additional revenue for the General Fund, which is where the majority of our operating expenses occur.

We shared the proposed 2023-2024 student fee schedule, which we are required to adopt annually.  Changes include building back in the fee for summer repeat courses, beginning in the summer of 2024, changes in adult education classes, PSAT fees, and the breakdown between PE uniform shirts/shorts.  Fees are reduced or waived for economically disadvantaged students and students whose families are undergoing economic hardships.  Families should contact their principal.

Compensation

 

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The previous agenda item during the Work Session was the presentation of the results of the compensation study. (See Agenda Item 2.11)

The proposed teacher scale is on page 52 and is built on the following basis:

• The proposed starting salary is $45,000, which is 4.23% more than the current salary of $43,174.
• The proposed step difference is 1.6%, which is more than the current differential of 1.5%.
• The total number of steps proposed is 35, which is more than the current 30.  This increases the top of the scale to $77,197 from $66,556.

We also reviewed other options as well and the following is the summary of each option:

• A teacher scale beginning at $45,000 with 35 steps will cost the General Fund $6.5 million and will result in an overall average raise of 8.74%.
• A teacher scale beginning at $45,000 with 30 steps will cost the General Fund $6.2 million and will result in an overall average raise of 8.55%.
• A teacher scale beginning at $46,000 with 35 steps will cost the General Fund $8.2 million and will result in an overall average raise of 11.08%.
• A teacher scale beginning at $46,000 with 30 steps will cost the General Fund $8.0 million and will result in an overall average raise of 10.89%.

The non-teacher scale is on pages 35-39 and is built on the classification of each position by pay grade and step.  The latter of which does not necessarily equate to years of service, but rather provides for consistent movement once the employee is placed on the scale.

• The non-teacher scale will cost the General Fund $3.8 million and will result in an overall average raise of 7.20%.

Because the compensation study provided a recommended change in the structure of both scales, unlike normal years, we cannot mathematically provide the same raise for all employees.  Averages are over the population, rather than each individual.

The compensation study also provided new scales for the athletic stipends (see pages 60-61) and the academic stipends (see page 63), which will cost the General Fund $210,895 and $60,450 respectively.

Health Insurance, Dental Insurance, and Vision Insurance

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We provided a review of the background of each of these insurances, a comparison against a benchmark study, and the rate tables.  In all cases, our plan designs were determined to be better than our average peer group.  The most important thing to note is the recommendation to leave all plan designs and rates the same for 2023-2024 as they exist today.

The only recommended change is to the Wellness Plan itself, and that was to allow employees

• to complete the 3-steps to wellness at the clinic as has been required or 
• to complete an annual physical with their primary care physician.

The second option adds flexibility for those who always have an annual examination with their primary care physician.

Department Requests

 

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The separate file 2024-03-02 Budget Department List provides a condensed list of the incremental new revenues and incremental new department requests.  As presented, there is an out-of-balance of $2.8 million.  We have additional work to revise the County revenue, estimate summer school costs, estimate PTO leave costs, and sharpen our pencils on other estimates.  So stay tuned to see how we pull the pieces together for a sound and balanced budget.

 Next Meeting: March 16, 2023 Additional Work Session

(Updated)

 

Final Meeting: March 23, 2023 Budget Adoption

(Updated)

 

 

The first work session for the 2023-2024 Annual Budget was Thursday, January 5, 2023.  We reviewed the budget process, the Governor's Budget, and replacement plans.  Below are links to the BoardDocs agenda with materials and the Work Session video:

• Agenda Item 5.02 2023-2024 Budget Work Session #1     
• Work Session Video

Budget Process

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The budget cycle is a five-step process that results in a financial outline of the School Division's education program.

1. Planning - Starting in October, we develop and adopt a calendar that details when we will proceed through the various steps of preparing the budget.
2. Preparation - Between November and March we perform many analyses to estimate money coming in and make plans for how to use it.  We hold meetings and publish this blog to keep all stakeholders informed as we proceed through the process.
3. Adoption - In March, the School Board will adopt the budget and, subsequently, the County Board of Supervisors will adopt an ordinance making the budget law.
4. Implementation - In July, the budget is loaded into the accounting system and the departments will spend the funds.
5. Evaluation - At the end of the year, we will summarize our spending in an Annual Comprehensive Financial Report (ACFR).  Independent auditors will perform an audit of the ACFR and issue an opinion on the financial statements.

Over the next several months we will prepare the budget, which is similar to putting together a puzzle.  We will estimate money coming in from the State, County, and other means.  We will also be looking at our spending priorities, including compensation needs, current department and school needs, and long-term funding needs.  The hard part is balancing the additional money coming in with the additional money going out to meet all the priority needs of the School Division.

Governor's Budget

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Most revenue of the School Division comes from the State.  A large amount of State revenue is based on March 31 Average Daily Membership (ADM).  So, before we can estimate state revenue, we have to forecast March 31, 2024, ADM.  We forecast ADM using grade level progression analysis, which was 13,287.  Our December 16, 2022 enrollment was 13,418.  We suspect some of the drops from low enrollment during the pandemic are skewing our grade progression and are looking at possibly using 13,400 as our budget estimate.

Some of the initiatives in driving revenues up (▲) or down (▼) are as follows:

▲ Funding for a 5% raise effective July 1, 2023.  To qualify for a prorated portion of the compensation funds, school divisions must provide a minimum of 2.5% raise each year.  As usual, the state funding will not cover all that we need.  Not only is the funding reduced by the local composite index (an amount the state says the County must fund) but it is also subjected to the support cap and SOQ position limits.
▲ Supplemental Payments in Lieu of Food and Hygiene Tax
▲ Sales Tax Increase
▲ One-time 1% Retention Bonus for SOQ-funded instructional and support positions

▼ School Construction Grant Program Entitlement not funded
▼ Reduction in Early Reading Intervention Program
▼ VPI slots went from 200 to 179

With this budget estimate, the Governor's Budget shows an additional $8 million of new operating funds.  However, this is just the beginning and usually, the Governor's budget is reduced once the General Assembly starts reviewing it.  We will report back after the crossover when we look at the House and Senate estimates.

Replacement Plans

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The replacement schedules lay out future spending forecasts to methodically plan for future funding.  This allows the School Division to set aside funds at a steady rate to fund periodic significant dollar needs, rather than face large fluctuations in an individual year.  By slowly building up the transfer to fund future needs, the School Division limits the annual impact on the classroom or employee raises.

• Textbook Adoption Plan - A 7-year plan addressing the need to replace textbooks and other electronic resources for the classroom following VDOE guidelines. This will ensure classroom materials remain current and relevant.
• Fleet Replacement Plan - A 15-year plan addressing the need to replace school buses and other vehicles on a useful life schedule. This will ensure the fleet does not age to a point where the cost to maintain any vehicle exceeds the cost to replace the vehicle.
• Technology Replacement Plan - A 6-year plan addressing the need to continually replace technology infrastructure and equipment.  This will help avoid disruptive service outages and keep the School Division up to date with technological changes and help deter or respond to cybercrime issues.
• Nutrition Equipment Replacement Plan -  Newly compiled for this year, this is a 15-year plan addressing the need to continually replace kitchen equipment.  This will help avoid service outages and keep our kitchens up to date with food preparation needs.
• Capital Maintenance Plan (CMP) - A 10-year plan for preventative maintenance projects to maintain the condition and longevity of school-owned buildings.  This will extend the life of school facilities.
• Capital Improvement Plan (CIP) - A planning tool used to identify funding and allocate resources for large capital needs.  Projects on the CIP are typically greater than $500,000 in value and may be funded by cash or by the sale of bonds.

 Next Meeting: March 2, 2023 Work Session

(Updated)

 

Background: The General Assembly set aside a portion of the American Rescue Plan Act Grant Funds to provide a bonus for SOQ positions.  Per clarification from VDOE, these funds can be distributed as a smaller amount per person to give all employees a bonus without using other funding sources.  Staff reviewed the allocation basis during the July 11, 2022, School Board Work Session (see page 11 of the presentation and discussion in the 7/11/22 Budget Blog).

Bonus amount: All employees will receive a net payment of $421.41 in the December 15, 2022 paycheck.

Reminder on taxes: When Roanoke County Public Schools issues supplemental pay (including bonuses), this is outside the regular contract and is required by the Federal and State IRS to be taxed as follows:

Federal Tax	22.00%	IRS Publication 15 §7
State Tax	5.75%	Virginia Department of Taxation Income Tax Withholding Guide for Employers Page 10
FICA	7.65%	IRS Publication 15 §7
	35.40%

The term bonus or gross bonus will mean the amount of expenditure the school division will incur.  To calculate the after-tax payout, multiply the bonus by 35.4% and subtract this from the bonus itself.  In this case:

Bonus	$  652.34
Less taxes (652.34 x 35.4%)	($ 230.93)
After-tax amount received	$  421.41

During the September 1, 2022 Work Session, we provided an update on the progress of the Compensation Study.  

Below are links to the BoardDocs report and the meeting recording:

     Agenda Item 2.01 2022-2023 Budget Work Session
     Work Session Video

Compensation Study Update

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A Compensation Study will be incorporated into the 2023-2024 budget to improve the School Division's attractiveness and marketability to retain and recruit good employees.  The School Division issued a Request for Proposal on August 18, 2022, and it closed on August 13, 2022.  Vendor interviews and negotiations will occur in September.  The scope of the study includes pay scales (teacher and non-teacher) and other pay schedules (academic supplements/stipends, supplemental pay, and athletic stipends).  The final report will include a market study, a review of internal equity, and a review of best practices to enhance benefits.  The study will kick off in November, with analysis in December/January for a final report in February, which falls in line with the budget calendar.