2015-16 Budget FAQ
- Q: What are the key drivers of the budget?
- Q: How has the budget been impacted by the rising costs of mandates?
- Q: How has enrollment growth impacted the budget?
- Q: How does the District’s proposed tax increase compare to what other districts in the area are proposing?
- Q: How much funding for instructional expenditures does the District receive from the state compared to other districts?
- Q: What is a fund balance and why is it important for the District to maintain? Why can’t we use the fund balance to offset budget increases?
- Q: What are referendum exceptions and why does the District apply for them?
- Q: What would the potential implications be if the District developed a budget that stayed within the 1.9% increase per the state index?
- Q: How is cost per pupil calculated in Pennsylvania and what is the figure for LMSD?
- Q: What percentage of the budget goes towards salaries? What is the breakdown for teachers, administrators and support personnel?
- Q: Has the 2009 high school redistricting decision impacted the budget?
- Q: How does having two high schools impact opportunities and costs?
- Q: How was the 3.81% proposed tax increase determined?
- Q: What has the District done to cut costs and reduce spending?
- Q: What is the impact of the Governor’s proposed new budget on LMSD’s budget?
- Q: What are some of the unique programs and services offered in LMSD that enhance the student experience?
- Q: What are the District’s transportation costs? Does LMSD operate transportation services differently from other districts?
- Q: How does debt service impact the budget?
Q: What are the key drivers of the budget?
A: Fixed costs, including salaries, benefits and debt service continue to be key drivers of the budget, accounting for nearly 88% of expenditures. Specifically, salaries and benefits account for 76% of the budget; debt service accounts for 12% and all other operational costs are 12%. Salaries and benefits are determined through a collective bargaining agreement between the District and its employees. Debt service refers to the District’s outstanding obligations on bonds used to finance school construction projects.
Q: How has the budget been impacted by the rising costs of mandates?
A: Mandates have had a dramatic impact on the LMSD budget. Shortfalls in state funding of PSERS (state pension program), for example, have forced local school districts to make up the difference using local tax revenues. Districts are required to contribute at rates well beyond the established inflationary index (21% this year). PSERS is a mandatory defined pension plan established by the state legislature. Each year, the PSERS Board of Trustees certifies the required school district contribution rate. Pension reform would require legislative action.
Additionally, the cost of providing appropriate special education services continues to increase while state support remains virtually unchanged. Since 2000, the District’s special education budget has increased from less than $15M to nearly $40M. At the same time, state contributions for special education have remained flat at less than $3M/year.
Q: How has enrollment growth impacted the budget?
A: An increasing number of students (nearly 20% growth in the past ten years) has resulted in the need for additional staff, classrooms, buses and other services to maintain existing programs. For example, during the 2004-05 school year, there were 634 teachers in the district. Today, there are 742 teachers. Staffing is the single biggest driver of the budget; more students results in the need for more staffing and thus, greater costs.
Enrollment has been growing at even greater levels in recent years. Over the past three years alone, LMSD enrollment has grown nearly 9%, far outpacing surrounding districts.
|School District||% Enrollment Increase/Decrease 2012-2015|
|Lower Merion SD||8.87%|
|Haverford Township SD||3.54%|
|Radnor Township SD||1.39%|
|Upper Merion SD||1.25%|
|Upper Dublin SD||-1.24%|
|Unionville-Chadds Ford SD||-1.54%|
|West Chester Area SD||-1.82%|
Q: How does the District’s proposed tax increase compare to what other districts in the area are proposing?
A: The proposed tax increases in 2015-16 Preliminary budgets are as follows:
Tredyffrin Easttown - 3.68%
Unionville-Chadds Ford - 4.08%
West Chester - 3.20%
Haverford - 3.57%
Marple Newtown - 3.67%
Radnor - 1.90%
Wallingford-Swarthmore - 2.56%
Abington - 4.03%
Lower Merion - 3.81%
Upper Dublin - 3.09%
Upper Merion - 3.27%
Q: How much funding for instructional expenditures does the District receive from the state compared to other districts?
A: Statewide, school districts receive more than 32% of funding for instructional expenditures from state sources. In 2012-13, state sources accounted for just 2.31% of the LMSD actual instructional expense. This percentage has continued to decrease over time, forcing a greater burden on local taxpayers.
Q: What is a fund balance and why is it important for the District to maintain? Why can’t we use the fund balance to offset budget increases?
A: Fund balance is a measure of net financial assets, which is similar but not identical to equity or accumulated savings. The fund balance is equal to financial assets less financial liabilities.
A common misconception is that a fund balance is a cash account, and therefore corresponds to the district's bank balance. As discussed above, fund balance represents the fund's total assets minus its liabilities (what a fund owns minus what it owes). Cash is an asset, but it usually is not a fund's only asset. The fund may also have liabilities, such as an accounts payable amount due a supplier that could result in a decrease in fund cash when they are paid.
A district with an appropriate fund balance can:
- avoid excessive short term borrowing thereby avoiding associated interest cost.
- accumulate sufficient assets to make designated purchases or cover unforeseen expenditure needs.
- demonstrate financial stability and therefore preserve or enhance its bond rating, thereby lowering debt issuance costs.
The most commonly asked question regarding fund balance is how large should it be? Perhaps the best answer would be: "an amount sufficient that short term borrowing for cash flow could be avoided and would also allow the district to set aside sufficient assets to realize its longer range goals." * However, this may not always be practical.
* Governmental Accounting Standards Board (gasb.org)
Q: What are referendum exceptions and why does the District apply for them?
A: Under Act 1 the Pennsylvania Department of Education (PDE) publishes an inflationary tax index that represents the maximum real estate property tax levy increase for each school district (without PDE exception or voter approval). This year the index is 1.9%. Districts that seek to raise taxes above the index may do so by submitting referendum exceptions to PDE or receive approval from the local voters by referendum. The four referendum exceptions are school construction-grandfathered debt, school construction-electoral debt, special education expenditures and retirement contributions. This year, LMSD applied for the special education and retirement contribution exceptions. Excluding the exceptions, the District’s proposed tax increase would be within the state index.
Q: What would the potential implications be if the District developed a budget that stayed within the 1.9% increase per the state index?
A: The District would first need to cover any increases related to mandates. As referenced above, these mandates account for a significant portion of the 1.9% increase. The District would then need to cut over $3.6 million in programs and personnel and potentially increase class sizes.
Q: How is cost per pupil calculated in Pennsylvania and what is the figure for LMSD?
A: The Labor, Education and Community Services (LECS) Comptroller's Office, Division of School Finance certifies and issues Elementary and Secondary Tuition Rates annually in May. The rates are based on a formula that factors instructional costs for elementary and secondary programs, total student population and support services, among others. Items excluded include expenditures related to non-public services and certain overhead costs. For 2012-13, which is the most recent data available, LMSD’s elementary tuition rate was $18,189.66 and the secondary tuition rate was $19,621.80.
Q: What percentage of the budget goes towards salaries? What is the breakdown for teachers, administrators and support personnel?
A: Approximately 32% goes to teacher salaries, 11% goes to support personnel and 4% goes to administrator salaries.
Q: Has the 2009 high school redistricting decision impacted the budget?
A: The 2009 redistricting decision has had minimal direct impact on the budget.
Q: How does having two high schools impact opportunities and costs?
A: LMSD is fortunate to have two high schools of ideal size for supporting extensive curricular and co-curricular opportunities while providing for favorable class sizes, access to opportunities and individualized attention for students. Many other districts of comparable size have one high school for the entire high school age population. There are certain advantages in student outcomes to providing more opportunities, particularly in developing and nurturing lifelong skills and interests. Having two high schools does result in greater costs as the District must run two sets of equivalent programs and offerings and operate two separate facilities.
Q: How was the 3.81% proposed tax increase determined?
A: The increase was determined to ensure that the District is able to maintain existing programs and cover new costs related to enrollment growth, personnel (salaries and benefits) and mandates, including rising retirement and special education costs.
Q: What has the District done to cut costs and reduce spending?
A: The administration and Board are focused on keeping costs down and have utilized targeted departmental budget reductions, the use of some existing fund reserves, streamlined and/or delayed purchasing practices, group/shared purchasing and strategies to reallocate and maximize existing resources. Starting in 2010-11, employees began contributing for the first time to the costs of healthcare benefits. Average tax increases over the past five years are the lowest in more than 30 years.
Q: What is the impact of the Governor’s proposed new budget on LMSD’s budget?
A: The Governor’s budget of additional state funding will have a minimal impact on the LMSD budget, accounting for a change of less than two-tenths of a percent (approximately $345K) on the proposed tax increase.
Q: What are some of the unique programs and services offered in LMSD that enhance the student experience?
A: LMSD is proud to offer a wide variety of excellent curricular and co-curricular opportunities that enhance the student experience and prepare young people in this community for success. Unique programs include the International Baccalaureate diploma program, world languages at the elementary level, cultural proficiency programs, one-to-one computing, post-secondary partnerships and dual enrollment, enhanced summer enrichment and support programs and middle school interdisciplinary programs, among many others. Co-curricular highlights include after-school programs at all levels, extensive clubs and athletics, community service programs, travel experiences, evening speaker series and summer entrepreneurship programs. LMSD is also fortunate to provide a high level of service to students, families and the community. These include enhanced academic support services at all buildings (literacy and math specialist), enhanced holistic support services at all buildings (counselors, psychologists, etc.), extensive health service programs (influenza vaccinations, wellness council, etc.), community access to facilities and hosting of community activities. All support services are in-house, including custodial, transportation and operations enabling a higher degree of personal attention and care.
Q: What are the District’s transportation costs? Does LMSD operate transportation services differently from other districts?
A: The transportation budget is approximately $12 million. Highlights of our transportation services include:
- Serving 126 public, private and parochial schools daily using 117 vehicles
- 639 daily bus routes and 5019 stops per day
- Two late bus runs available
- 2070 extracurricular, 890 field and 1180 sports trips per year
- Environmental award-winning CNG (compressed natural gas) fleet
Q: How does debt service impact the budget?
A: Debt service expenditures account for 11.47% of our budget.