FISCAL PLANNING AND THE NEW MAINTENANCE OF EFFORT LAW aLa Report 2013-1 Companion Document for Council Presentation OFFICE OF LEGISLATIVE OVERSIGHT October 16, 2012 Natalia Carrizosa Essie McGuire (Council Staft) Sue Richards Aron Trombka Council Presentation available at http://www.montgomerycountymd.gov/o\o OLO 2013-1 Companion Document October 16, 2012 Office of Legislative Report 2013-1 LIST OF TABLES AND EXHIBITS Number Tables Page 1-1 Per Student MOE Requirements and Per Student Actual Contributions, FY02 - FYI3 7 3-1 Comparison of Actual and Budgeted Tax-Supported Revenue, FY03 to FYI2 15 4-1 County Aggregate Operating Budgets, FY03 to FYI3 16 4-2 County Aggregate Operating Budget Appropriations by Agency, FY03 to FYI3 17 4-3 Annual Change in County Aggregate Operating Budgets by Agency: FY03 to FYI3 18 4-4 Annual Change in County Aggregate Operating Budgets by Agency: FY03 to FYI3 19 6-1 Revenue for MCPS' Operating Expense Budget, FY02 to FYI3 28 6-2 Annual Change for MCPS' Current Fund Revenue by Source, FY02 to FYI3 29 6-3 Revenue Shares for MCPS' Operating Expense Budget, FYOI to FYI3 29 8-1 Actual Enrollment, FY03 to FYI2 35 8-2 K-I2 Projected and Actual Enrollment and Variance, FY03 to FYI2 36 Number Exhibits Page 1-1 Changes in Per Student Maintenance of Effort Amounts by Maryland School System, FYIO-FYI2 11 2-1 County Council Approved FYI3-FYI8 Public Services Program and Tax Supported Fiscal Plan Summary 13 5-1 Summary of Agency Compensation Agreements by Bargaining Unit and Component 20 5-2 Detail of Agency Compensation Agreements by Agency, FY03 to FYI3 21 7-1 Summary ofMCPS Operating Budgets, FYII to FY13 30 7-2 Detail ofMCPS Operating Budget Changes, FYII to FYI3 31 7-3 Finances of Individual Public Elementary-Secondary School Systems with Enrollments of 10,000 or More - Excerpt for Maryland School Systems 34 aLa 2013-1 Companion Document October 16, 2012 FISCAL PLANNING AND THE NEW MAINTENANCE OF EFFORT LAW - - - - - Introduction In 2010, the Counci I adopted a balanced Six-Year Fiscal Plan to help the County achieve a structurally balanced budget for future years. Earlier this year, the Maryland General Assembly created conditions that challenge the Council's ability to achieve a structurally balanced budget. Specifically, the General Assembly: o Amended the Maintenance of Effort (MOE) law, establishing a penalty provision that would intercept County income tax revenue equal to the amount by which the County reduced the per-student contribution amount from one year to the next and redirect it from the County to the Board. o Approved a phased-in transfer of normal pension costs for MCPS teachers to the County. In addition, the County Board of Education ("the Board") approved an FY 13 operating budget that includes compensation changes that will put additional pressure on the FY 14 and future year budgets. The Council requested this OLO project to better understand the effects of the new MOE law and the Board's FY13 compensation changes on County fiscal planning. OLO's October 16th presentation to the Council (available at http://W\vw.montgomerycountymd.gov/olo) provides information to help the Council strengthen its exercise of fiscal oversight over the MCPS budget. The topics listed below provide background and context for OLO's Council presentation. I T~PIC TITLE BEGINS ON PAGE SUMMARY OF FINDINGS I MAINTENANCE OF EFFORT REQUIREMENTS AND MCPS FUNDING 7 2 THE COUNTY'S ApPROVED TAX SUPPORTED FISCAL PLAN SUMMARY 12 3 COUNTY TAX SUPPORTED REVENUE, FY03-FYI2 15 4 COUNTY BUDGET TRENDS, FY03-FY 13 16 5 AGENCY COMPENSATION DATA, FY03-FY13(REC) 20 6 MCPS CURRENT FUND REVENUE TRENDS, FYO I-FY 13 28 7 MCPS OPERATING BUDGET SUMMARIES, FYII-FY13 30 8 I I MCPS ENROLLMENT, FY03-FYI2 35 OLO 2013-1 Companion Document 11 ! i October 16, 2012 FISCAL PLANNING AND THE NEW MAINTENANCE OF EFFORT LAW FINDINGS Project Assignment: In 2010, the Council adopted a balanced Six-Year Fiscal Plan to help the County achieve a structurally balanced budget for future years. Earlier this year, the Maryland General Assembly created conditions that challenge the Council's ability to achieve a structurally balanced budget. Specifically, the General Assembly: o Amended the Maintenance of Effort (MOE) law, establishing a penalty provision that would intercept County income tax revenue equal to the amount by which the County reduced the per- student contribution amount from one year to the next and redirect it from the County to the Board. o Approved a phased-in transfer of normal pension costs for MCPS teachers to the County. In addition, the County Board of Education ("the Board") approved an FYI3 operating budget that includes compensation changes that will put additional pressure on the FYI4 and future year budgets. The Council requested this aLa project to better understand the effects of the new MOE law and the Board's FY13 compensation changes on County fiscal planning. This summary presents OLO's findings in two parts: the first part summarizes how the General Assembly's actions will affect budget and fiscal planning decisions in FYI4 and beyond; Part II describes the Board's FY13 compensation decisions and their effect on future year budgets. I: How STATE AND BOARD ACTIONS CHANGE THE COUNCIL'S RESPONSIBILITIES The 2012 Maintenance of Effort (MOE) law requires that the County provide MCPS with an annual minimum mandated per-student funding allocation. This allocation is based on the previous year's funding level and cannot be revised downward. Further, increases in the County's local contribution to MCPS that exceed MOE in any year are irrevocably built into the base; and, in subsequent years, MOE requirements are mandated at this new, higher figure. Projections show MCPS enrollment wi 11 continue to rise at an average rate of 1.1 % each year through FY 18. This guarantees that, regardless of the County's financial situation, the Council's appropriation to MCPS will continue to rise, even if funding never exceeds MOE. The passage ofthe MOE law significantly impacts how the County must address both short and long-term fiscal planning. In the short term, the County's approved Fiscal Plan projects a 5.2% reduction in resources available to the County Government and M-NCPPC in FYI4. Furthermore, as MCPS enrollment in recent years has exceeded projections, funding MCPS at the MOE level could require nearly a 2% annual increase in the County's contribution to MCPS. Given current revenue projections, funding MCPS above MOE could require offsetting reductions in the County Government and M-NCPPC budgets in FY15 and beyond. From a long-term perspective, a decision to fund MCPS above MOE in anyone year establishes a new, permanently increased funding level. As such, when considering each year's operating budget, the Council must assess the availability of resources not only for the upcoming year, but for all future years as well. OLO Report 2013 Companion Document 1 October 16, 2012 Finding 1: Under the amended MOE law, a decision to exceed MOE in one year will permanently increase the County's annual per student contribution to MCPS. The County Government and M-NCPPC bear the entire risk of uncertain future year resources. The amended MOE law creates a new risk exposure for Maryland counties (with stable or growing public school enrollment). Under the previous MOE law, Maryland counties could reassess public school funding levels annually and reduce the per student local contribution, if deemed necessary, to address changing economic conditions or community needs. As the new MOE law does not allow counties to lower the per student contribution, any increase in the local contribution to the school system would constitute a permanent, irreversible increase in a county's largest spending category. 1 In other words, a budget decision to increase the local per student contribution would not only affect the budget in that year, but in all subsequent years as well. In addition to MOE, other variables that the County Council must consider when making long-term budget decisions include: o County Revenues. County tax revenues are a function of economic conditions such as resident income and property values. These conditions are volatile and difficult to predict. o Public School Enrollment. The MOE law establishes a minimum per student local contribution. As enrollment grows, the County must raise its contribution to MCPS. No other agency has a parallel guarantee of increased funding to accommodate increased demand. o "Non-Operating Budget Uses". This term refers to County funding obligations not included in agency operating budgets including debt service payments, capital budget current revenue funding, reserve set-asides, and other post-employment benefits. Proper funding of these obligations is an important element in preserving the County's AAA bond rating. The new MOE law shields MCPS from revenue downturns, changes in school enrollment, and escalating non-operating budget costs. Should these variables reduce resources available for agency use, the local contribution to MCPS cannot fall below the MOE-mandated amount. In contrast, the County Government and M-NCPPC bear the entire risk of declining resources. The Council must assess these risk factors in order to perform its long-term fiscal planning and annual budgeting responsibilities, specifically regarding the allocation of resources among K-12 education, public safety, transportation, economic development, and other County services. Finding 2: Absent increased revenue, raising the local contribution to MCPS above the MOE requirement would necessitate offsetting reductions in other agency budgets in FY14 and potentially in FY15 and beyond. According to the County's approved Fiscal Plan, resources available for agency use 2 are projected to increase at an average annual rate of 2.4% from FY13 through FYI8. While the Fiscal Plan anticipates an upturn in revenues, the projected rate of growth for agency resources is significantly below the 8.7% annual average rate experienced between FY04 and FY08. 1 The new MOE law does include waiver provisions. However, the waiver provisions do not authorize counties to lower the per student contribution without approval of State and/or Local Boards of Education. As the decision on a waiver is beyond the authority of the counties, counties cannot reasonably construct a budget under the assumption of a waiver. 2 Resources available for agency use are the resources that the Council has available to appropriate to MCPS, the County Government, Montgomery College, and M-NCPPC. aLa Report 2013 Companion Document 2 October 16, 2012 At the same time that resources available for agency use are expected to remain tight, pressure exists from at least two cost drivers in the MCPS budget that could trigger offsetting reductions to other agency budgets. o Enrollment. The MOE law requires the County's local contribution to MCPS to keep pace with actual enrollment growth. Under current MCPS enrollment projections, the County's contribution to the school system would increase by an average annual rate of 1.1% from FYI3 through FYI8. Over the past five years, however, actual enrollment exceeded MCPS' projections by an average rate of 0.7% per year. If actual enrollment continues to exceed projections by 0.7% per year, the annual County contribution to MCPS could increase by about 1.8% annually, instead of 1.1 %. o Teacher Pensions. Earlier this year, the Maryland General Assembly approved legislation mandating a phased-in transfer of public school teachers' normal pension costs to the counties. This shift in teacher pension costs will obligate the County to pay an additional $27.2 million in FY13 increasing to $44.4 million by FYI6. Overall, factoring in the effects of both the pension cost shift and actual enrollment exceeding projections, the County's cumulative obligation to fund MCPS could grow by 2.1% per year from FYI3 through FYI8. Thus, the State's new MOE and pension laws could require the County to increase its annual funding to MCPS by an average annual rate of 2.1 % from FY 13 to FYI8, nearly the same growth rate projected for total resources available for agency use. Should the Council approve per student funding above the MOE level, then resources available for agencies other than MCPS would necessarily have to grow at a lower rate than MCPS, resulting in funding decreases for the County Government and M-NCPPC. Alternatively, the Council would need to raise additional revenues to generate sufficient resources to fund an increase in the MOE contribution and to preserve some budget growth for other agencies. II: A REVIEW OF THE BOARD'S FY13 COMPENSATION CHANGES All County agencies, including MCPS, faced severe budget constraints in FYIO through FYI2. The Board of Education met this fiscal challenge by foregoing compensation increases for their staff and by cutting school-based positions. In FY II and FY 12, the Board approved budgets that did not include step increases or cost-of-living adjustments for MCPS employees. In addition, the Board reduced personnel costs by eliminating more than 500 school-based positions. Specifically, o In FYII, the Board eliminated 252 classroom positions, increasing average class size by one student. This yielded savings of$16.2 million in FYII and FYI2; and o In FY 12, the Board cut 266 school-based positions, including academic intervention teachers, assistant school administrators, college preparation teachers, counselors, English composition teachers, ESOL teachers, instrumental music teachers, media assistants, paraeducators, reading recovery teachers, and reserve teachers, and special education staff. This yielded savings of $15.0 million in FY12. 3 October 16} 2012 For FY13, MCPS had sufficient resources at the MOE funding level to increase personnel costs by $47 million. The Board chose to allocate the entire $47 million to employee compensation through multiple forms of salary increases. Notably, the Board did not elect to spend any available resources to restore school-based positions cut in FYll and FYI2. Moreover, the Board approved compensation increases with full costs that will not fit within the FY13 budget and that will increase FY14 costs by an additional $18 million. Summary of Board's Compensation Decisions: The FYI3 operating budget that the Board submitted to the Council included $47 million reserved for unspecified compensation increases. (The Board did not finalize its compensation decisions before the Council completed work on the FY13 budget.) The Board could have taken one of three approaches to allocating the $47 million: o Increase the size of the workforce (e.g., restore some of the school-based positions eliminated because of budget constraints in FYII and FYI2); o Increase employee compensation rates; or o Increase both workforce size and employee compensation. As the table shows, the Board chose to allocate the entire $47 million to compensation increases, foregoing any restorations of school based positions cut in FYII and FYI2. FY13 Compensation Change July 2012 Step (for employees hired before Feb. 2012) FY13 Cost / (SaYings)3 $33.2 million May 2013 Step (for employees who would have been eligible for a FYll step) (FY13 cost) $4.4 million Longevity Increments (for employees who achieved longevity milestones in FYII-13) $5.9 million Two percent salary adjustment for employees not eligible for step or longevity increment $7.0 million Increase in co-pays for non-generic drugs and doctor visits (FY13 savings) Finding 3: ($4.5 million) Approved FY13 MCPS compensation changes have a net annualized cost equivalent of approximately 750 positions. Since budgeting involves tradeoffs, decisions that allocate resources between compensation and workforce size inherently carry an opportunity cost. The cost of allocating finite resources to increase compensation by the Board is a foregone opportunity to increase workforce size. Conversely, the cost of allocating resources to increase workforce size is a foregone opportunity to increase employee compensation. In the FYI3 MCPS budget, the Board elected to allocate its new personnel resources entirely to employee compensation increases. In FY 13, the $47 million cost of this decision is approximately equivalent to the cost of adding 550 full time equivalent positions (FTEs).4 In FYI4, the $18 million net cost of this decision is roughly equivalent to the cost of hiring 200 FTEs. In sum, the total cost of the FY 13 compensation changes is equivalent to the cost of750 additional positions. 3 All cost and savings estimates in this paper are tax supported amounts. Compensation changes will increase costs in MCPS non-tax supported funds by an additional $0.7 million. 4 Based on the average cost per FTE (including salaries and locally paid benefits for all MCPS positions) of$85,400. aLa Report 2013 Companion Document 4 October 16, 2012 Finding 4: The FY13 appropriation to MCPS was sufficient to both increase employee compensation and restore some staffing reductions. As mentioned above, the Board approved FYll and FYl2 operating budgets that included no employee pay increases and eliminated more than 500 school-based positions. In FYI3, the Board had sufficient funds within the $2.03 billion appropriated by the Council to allocate $47 million to increase employee pay, restore cut positions, or a combination of both. The table below displays some illustrative compensation alternatives and their corresponding savings compared to the Board-approved compensation package. Examples of FY13 MCPS Compensation Alternatives Compensation Altcmative 1 I FY13 Savings Compared to Bo:ud's Approved Compensation Package Award $2,000 Lump Sum Payment in Lieu of Salary Increases $3.2 million Award Single Step (no second step in May 2013) 2a in July 2012 $4.4 million 2b in September 2012 $9.9 million 2c in January 2013 $21.0 million 3 $5.9 million Postpone Longevity Adjustments Reduce Salary Increase of Employees Ineligible for SteplLongevity 3a from 2% to 1% $3.5 million 3b from 2% to 0% $7.0 million 3c $6.5 million Raise Health Cost Share by 5% Savings from select combinations of these alternatives would have been sufficient to restore some of the positions cut in the previous two years while still raising compensation. For example, the Board could have awarded a single full-year step without a second step (alternative 2a), saving $4.4 million; and awarded a one percent salary increase for employees not eligible for step or longevity adjustments (alternative 3a), saving $3.5 million. In sum, this package would have reduced costs by $7.9 million compared to the package approved by the Board. A cost reduction of this amount would have been sufficient to restore funding ($7.7 million) for 150 of the school-based positions eliminated in FYI2, including all the positions listed below. Academic Intervention Teachers Assistant School Administrators College Preparation Teachers Counselors English Composition Teachers ESOL Teachers Instrumental Music Teachers Media Assistants Paraeducators / Lunch Room Aides Reading Recovery Teachers Reserve Teachers Special Education Staffing OLO Report 2013 Companion Document 5 October 16, 2012 Finding 5: The compensation changes included in the approved FY13 MCPS budget will increase FY14 costs by a net additional $18 million. This amount is equivalent to about three- quarters of the required FY14 MOE funding increase triggered by growing student enrollment. The State's MOE formula requires the County to increase next year's local contribution to MCPS to accommodate new students based on last year's actual enrollment growth. Under MOE, the County is projected to raise its FY13 contribution to MCPS by $23.5 million in FY14 to account for an enrollment increase of approximately 2,000 K-12 students. Beyond the $47 million in compensation cost increases in FYI3, the Board approved compensation changes that will increase FY 14 costs by a net additional $18 million. This will occur because the compensation package includes two items that will not fully take effect until FY14. Specifically, o The Board approved a second step to be implemented in May 2013 that has an annualized cost of $26.6 million. A relatively small portion of the annualized cost of the second step ($4.4 million) will be incurred in FY13; the bulk of the cost of the second step ($22.2 million) will not be incurred until FY14. o The Board approved an increase in employee co-pays for some non-generic drugs and doctor visits. Implementation of this health plan item follows the calendar year. This measure will take effect in January 2013 and will reduce costs by an estimated $4.6 million during the last six months ofFY13; an additional $4.6 million in savings will be realized in FY 14. All told, the FY 14 cost of the second step minus the FY 14 savings from the co-pay increase equals nearly $18 million. This new obligation will consume about three-quarters of the required $23.5 million FY 14 MOE increase attributable to growing student enrollment. In addition, two other Board decisions will put pressure on the FY14 MCPS operating budget: o Both the Executive and the Council urged County agencies to offer lump sum payments in lieu of salary increases in FY 13. The Board's decision to increase salaries raised base costs thereby creating a recurring obligation in FY14 and beyond. o In FYI2, the Council encouraged all County agencies, including MCPS, to control benefit costs by raising the employee share of health insurance premiums by five percent. The Board declined to adjust the MCPS health insurance cost share formula in both FY12 and FY13. OLO Report 2013 Companion Document 6 October 16, 2012 Topic 1 MAINTENANCE OF EFFORT REQUIREMENTS AND MCPS FuNDING State Education law requires a local jurisdiction to fund its school system at a minimum level known as Maintenance of Effort (MOE). The State formula that determines the threshold funding level based on prior year enrollment and per student local contribution. In any year that the local appropriation exceeds the required funding level, the resulting higher per student amount becomes the minimum for the following year. The local contribution requirement is independent of any other funding, such as State or Federal aid. State law requires that each county maintain its per student funding level from year to year. Amendments to the MOE law in 2012 established a new funding floor, tightened eligibility requirements for the waiver process and strengthened the violation penalties. Local Contributions to MCPS and State MOE Funding Requirements, FY02-FY13 Table 1-1 displays the County's annual per student funding requirements for MCPS under MOE and actual Council per student appropriations from FY02 to FY13. 1 In sum, for the ten-year period from FY03 through FY 13, enrollment increased 10.1 % and the County's local contribution increased 20.4%. . T abill P er Stud ent MOE R e-' Baltimore City Baltimore Calvert Caroline Carroll Cecil Charles Dorchester IFrederick Garrett Harford Howard Kent I'v'Iontsome!l: Prince George's Queen Anne's St. Mary's Somerset Talbot Washington ico Worcester 2,561 339 5,899 2,312 5,620 375 5,611 3,941 5,625 270 4,639 165 8,032 4,059 3,624 11.389 $3,220 7,713 2,561 6,647 6,198 2,312 6,001 4,376 5,611 3,941 5,628 5.397 4,639 3,178 8,034 4,135 3,624 11.389 $3,249 7,713 2,561 6,647 6,198 2,377 6,001 4,376 ~,611 3,941 5,628 5.397 4;640 3,178 8,034 4,136 $3,249 7,713 2,561 6,316 2,377 6,001 4,376 5,611 3,941 5,628 5.537 5,628 4,640 3,192 5,638 6,087 5,701. 761 65 391 1 0 (172) 13 817 172 4,686 3,194 47 29 (421) 4,136 77 (1,007) 11.389 11.389 a 4.9% 12.9% 2.8% 7.0% 0.0% 0.0% -4.4% 0.2% 15.5% 3.1% 0.0% -8.2% 1.0% O. -5.2% 1.9% -27.8% 0.0% Note: Shaded boxes indicate funding below the required per pupil amounts. Source: Maryland State Department of Education; Department of Legislative Services. "Maintenance of Effort Update: Presentation to the House Appropriations Committee and House Committee on Ways and Means," January 20, 2012, p.14, Exhibit originally titled "Seven Counties Have Reduced Their Per Pupil MOE Amounts for Fiscal 2013." ~ g: cr' ...... ...... ........ Topic 2 THE COUNTY'S ApPROVED TAX SUPPORTED FISCAL PLAN SUMMARY Under Section 302 of the County Charter, the County Executive must submit six year programs for public services and fiscal policy with his recommended budget in March and the Council must approve these programs around the time it approves the budget in May. Each six year fiscal plan summary displays current fiscal projections. The approved FY13-FY18 Tax Supported Fiscal Plan l , displayed on the following pages, shows: o revenue assumptions; o allocations to non-operating budget uses, e.g., debt service, reserves, retiree health insurance pre-funding; o resources available for agency uses; and, o agency allocations. Assumptions exist for revenue and non-operating budget uses for FY13 through FY18; assumptions about the allocations for agency uses are projected through FY14. In keeping with a policy that the Council approved in 2010, the current fiscal plan summary is structurally balanced; it limits expenditures and other uses of resources to annually available revenues; and it separately displays reserves at policy levels. 2 I See Council Resolution 17-479, Approval of the County's Tax Supported Fiscal Plan Summary for the FY13-IS Public Services Program, adopted June 26, 2012. 2 See Council Resolution No. 16-1415, Reserve and Selected Fiscal Policies, adopted June 29, 2010. OLO Report 2013-1 Companion Document 12 October 16) 2012 County Council Approved FY13-18 Public Services Program Tax Supported Fiscal Plan Summary (S in Millions) PfOiectea D ..O"""??o", "00 nOD/Buo 1 2 4 5 6 8 9 10 1\ 12 13 14 15 16 11 18 19 20 21 22 23 24 ,.... W 2S Tolal Revenues Property Tax (less POs) Income Tax Tran.fer/Recordation Tax Investment Income Other Taxes Other Revenues Tota' ReVinuu 1,462.2 1,111.2 143.5 1,6 325.3 642.2 3,892..1 1,437.0 1,227.1 123.9 0.2 311.6 839.0 3,9311.8 ?4.8% .70.3% .0.5% 4.9% 4.1% O.O?A. 13.1?A. 1,462.2 1.263.6 136.6 0.5 304.1 663.4 4,050.4 3.0% 2.0% 2.9% 33.6% 1.4'''' O.S% 2,3% 1,505.6 1.296.6 140.5 0.6 308.5 890.2 4,142.2 3.1% 0.6% 5.6% 94.0% 2.2% 0.2% 3.6% 1,553.2 3.5% 4.7% 1.382.0 148.4 7.4% 1.2 134.2% 315.1 17% S92.5 0.2% 4,292.5 3.3% 1,608.2 1,446.4 159.4 3.5% 3.5% 7.4% 2.9 55.8% 320.5? 894.6 4,432..1 1.1% 0.2% 2.9';' 1.664.5 1,491.6 171.2 4.5 324.1 a96.8 4,558.8 3,1% 3.4?A. 5.6% 26.3?'" 0.9% 0.2% 2,6?'" 1,715.4 1,546.2 180.8 5.7 327.0 899.0 4,676.1 41,3 Net Transfens In (Outl Total Revenues and Transfers Available Debt Service PAYGO CIP Current Revenue Change in Montgomety College Reserves Change in MNCPPC Reserves Change in MCP S Reserves Change in MCG Special Fund Reserves Contiibulion to General Fund Undeslgnated Reserves Contribution 10 Revenue Slabllization Reserves Retiree Heallh Insurance Pre? Funding Set Aside tor other uses (supplemental appropriations) Total Olher Uses of Resou(t;es Available to-Aiiocate to Agencies {Total Revonues+Net Trallsfeno?Total Other U...sl 40.1 ?6.3% 38.7 2.90/. 39.8 2.9% 40.9 2.7% 42.0 2.7% 43.1 2.7'1. 44.3 3,933.4 3,978.9 4_0% 4,089.0 2.3% 4,182.0 3.6% 4,333.4 3.2% 4,474.1 2.9% 4,601.9 2.6% 4,720.4 296.2 279.0 31.0 37.7 (4.0) (2.5) 10.5 (0.5) 104.5 45.1 49.6 0.2 550.6 2.5% ?4.8% 43.5% 46.4% 30.6% 0.0% .12.5?.. ?144_5% 3.6% 112.3% ?67.2% .3.4% 303.5 6.8% 20.3% 62.1% 100.0% 109.3% 4.1% -99.9% 106.7% 3.1% 35.5% 30441.4% 28.1% 324.3 35.5 81A 9.6% 56.3% ?26.8% 355.3 5A% 55.5 59.5 4.1% 0.0% 389.8 55.5 56_9 nJa 27.90/0 21.8 142.8 20.1 611,7 100.0% 172.1% 172.1% 4.1% 20.4% 0.0% 12.9'" 0.0% 0.0% 16.2% nJa 35.5% nJa ?10.6% -10.6% 389.8 55.5 66.1 - 0.0% ?2.7% nla 14.1% nln 25.2% 25.2% 3.6% 0.0% 0.0% 2.80/. 25.1 171.9 20.1 734.2 ?1.1% 3,570.3 2.0% 31.0 35.0 (9.0) (1.5) (11.0) 22.8 66,4 20.4 49.6 0.2 494.3 3,439.1 3,4211." 5.0% 29.5 50.2 (4.8) (1.1) (17.0) 20.0 (29.6) 21.2 105.4 0.1 477.5 3,611.5 0.1 (16.3) 0.0 2.0 0.1 0.0 0.1 5.4 22.7 171.9 20.1 690.7 3,642.7 --- 2.9% 3.3% 374.6 55.5 58.0 . 0.1 0.0 0.1 6.8 23.5 171.9 20.1 710.5 3,763.6 ?1.1'10/. nJa 0.4% oJa _9.6',4 ?9.6% 3.6% 0.0% 0.0% 2..0% 20.1 724.9 0.0% 0.0% 1.3% 3.0% 3,877.0 2.8% 0.1 0.0 0.1 6.1 24.4 171.9 0.2 0.1 0.1 5.5 -------3,986.2 26 27 26 Agency Uses ;:t> ::+ 29 30 31 32 33 Montgomery County Public Schools (MCPS) Montgomery College (MC) MNCPPC (wlo Debt Service) MCG Available _to. ~loca Ie 10 Agencies FY 15?18 1,950.9 218.0 34 Agency US9S 3,439.1 3,428.4 5.0'''' 3,611,5 ?1.1% 3,570.3 2.0% 3,642.7 3.3% 3,763.6 3.0% 3,871.0 2.8% 3,986.2 3,933.4 3,978.9 4.0% 4,089.0 2.3% 4,182.0 3.6% 4,333.4 3.2% 4,474.1 2,9% 4,601.9 2.6'" 4,720.4 35 Total Uses 36 IGap)JAvaUable 1.5% ~ S (1) 0.0 0.0 0.0 0.0 -------Notes: 1 FY13 property tax revenue is $26 million below the Charter limit using a $692 income tax offset credit. The Charter limit is assumed FY 14-1 8. 2. May 2010 fuel/energy tax revenue increase is reduced by 10% in FY13-18. 3. Reserve contributions at the policy level and consistent wi1h legal requirements. 4. PAYGO, debt service, and current revenue reflect the approved FY13-18 Capital Improvements Program. 5. Retiree health insurance pre-funding is increased up to full funding by FY15 and then is flat beyond FY15. FY14 is yea 7. of a'year funding schedule. 6. State aid and other intergovernmental revenues are flat in FY14-18. 7. Projected FY14 allocation for MCPS and Montgomery College assumes County funding at main1enance of effort, plus the pension shiff for MCPS. ThiS allocation does not include potential increases to State aid and other possible agency resources, such as higher?than?expected fund balance. 0.0 0.0 0.0 0.0 a .-+- 0 ~ en 0 8" .-+- ...... tr1 0 :>< ~ ::r ,.... Z ,.... CT' 0 .... N ,.... ,.... I -..l I .p. -..l \.Q 37 &1.0 945 158.6 40 41 42 43 ~4 45 46 47 4B 49 50 ITotal ReseNvs 51 IReservo!J as ~ 'I. 01 AdjU$ted Governmental Revenues 6.1%1 52 IVIU1t:f n.C'~'I;I! "'1;;'-::10 53 Montgomery Co 7.0 3.7 0.0 2.6 54 55 56 ~ 57 IMeG .. Agency Reserves as .. % of AdJu$ted Gov! Revenues ?175% 15,2% ?2,7% 139,0 160,8 299.8 1.4% 13.6% 7.9% 141.0 182.6 323,6 3,8% 12.4% 8.7% 146.4 205.3 351.7 4,6% 11.5% B.6% ?144.5% 6.0% ?109,1% ?29,6 21.2 -8,4 106.7% 3.1% 384,0% 2.0 2LB 23.8 172.1% 4,1% 18.1% 5.4 22.1 28.1 25,2% 3.6% 7,8% 6.8 23.5 30.3 .9.6% 3.6% 0.6% 4,3% 40.4% 20.9% 139.0 160,8 299.8 1.4% 13.6% 141.0 182.6 323.6 3.8% 12.4% 8,7% 146.4 205.3 351.7 4.6% 11.5% 8.6% 153.2 228.8 4.0% 10.7% 8.0% 7.5% 11.2 4.8 33,3 (18,4) 7.9% 7.1% .7.6% 0.7% nJa -37.4% 6,4 3.8 16,3 1.6 0.0% 2.6% ?100.0% 1.4% 6,4 3.9 0,0 1.6 0.0% 3,2% nla 3,8% 6.4 4,0 0,0 1.7 0.0% 3,6% n/a 4.6% 6,4 4.1 0.0 1.8 8.0% 6.1 24.4 ?10.6% 2.8% 0,1% 30.5 159.3 253.2\ 412.6 3.4% 9.9% 7.4% 8.1% 8.2'/' 7.8% 7.4% 382.0 382,0 0,0% 3.5% nJe 4.0% 6,4 4.3 0.0 1.8 0.0% 45% "Ia 3.4% 8.9% 8.5% 6.5%1 8.3% 7.8% 7.7% 20.0 20.0 68.9 8Q.3 101.6 100.9 99.7 1.0 1.0 1.8 2.4 3.1 3.0 2,8 2.8 7.4 7.2 7.2 8.1',1, Retiree Healll1lnsurance Pre?Funding 56 , 59 Monlgame,y County Public Schools (MCPS) 60 Montoomeev College (Me) 99.7 2.6 Subtotal Retiree Health Insurance Proo ~,mrllnn 2.6 3.4 6.3 7.7 26.1 61 IMNCPPC 62 MCG 63 I 168.6 139,6 308.1 168.6 139.6 308.1 39 152.0% 47.1% 90,9% 104.5 45.1 149.6 38 26.1 41.4 53.8 59,5 60.6 62.2 62.2 49.6 49.6 105.4 142.8 171.9 171.9 171.9 171.9 3,892.1 3,938.8 4.1% 4,050.4 2.3% 4,142.2 3.6% 4.292.6 3.3% 4,432,1 2.9% 4,668.8 2.6% 45.11 60.3 43.7% 65.5 52,1% 99,6 2,3% 101.9 ?11.8% 89,9 1.1% 90.S ?11.0% 81:1,8 108.9 108.9 -1.7% 107.0 2.9% 110.1 2.9% 113.3 2.1% 116.3 2.7% 119.4 2.7% 122,6 4,046.6 4,108.0 4.4% 4,222.8 3.1% 4,351.9 3.6% 4,507.11 2.9% 4,638.3 2.8% 4,769.0 2.3% 4,879.6 Mjusted Governmental Revenue. 64 65 Total TaJ< S "pported Revenues 66 Capital Pro ects Fund 67 Grants 68 Total Adjus ted Govemmental Revenues 4.616.1 tr:1 6- ...... cr' ...... ...... tv ,..... I Topic 3 COUNTY TAX SUPPORTED REVENUE, FY03 -FY12 County Revenue Trends, FY03 to FY12 Table 3-1 shows annual changes in actual and budgeted tax-supported revenue from FY03 through FY12 (estimated) during that period. Total revenue grew by $1,540 million or 64%. Comparison of Actual and Budgeted Revenue, FY03 to FY12 The comparison of budgeted and actual revenue shows actual revenue exceeded budgeted revenue between FY04 and FY07; whereas since FY08, projections fell below budgeted revenue in all but one year (FY12). Between FY08 and FYI!, revenue shortfalls grew from $50 million in FY08 to $95 million in FY09, peaking at $244 million in FYIO. Most recently, the shortfall was $113 million in FYl1. Table 3-1. Comparison of Actual and Budgeted Tax-Supported Revenue, FY03 tOJ?Y12 (Millions of$) Actual minus Budgeted Annual Change Budgeted Actual Fiscal Year Revenue Revenue Variance Difference % $ $2,404 $(5) (0.2%) 12.5% 2,634 66 2.4% 267 9.9% 2,871 96 3.2% 3,214 247 8.3% 3,041 173 5.4% FY07 3,484 270 8.4% 3,321 162 4.7% FYOS 3,575 91 2.6% 3,625 (SO) (1.4%) FY09 3,681 106 3.0% 3,776 (95) (2.6%) FYl0 3,561 (120) -3.3% 3,805 (244) (6.9%) FYll 3,666 105 2.9% 3,779 (113) (3.1%) 3,892 47 1.2% FY03 $2,399 FY04 2,700 $301 FY05 2,967 FY06 FY121 i 3,939 I 273 i 7.4% II T en year average difference between actual and budgeted revenue ?3.10% Source. Montgomery County Operatlng Budgets I Actual revenue for FY 12 is estimated. aLa Report 2013-1 Companion Document October 16, 2012 Topic 4 COUNTY BUDGET TRENDS, FY03 - FY13 County Aggregate Operating Budgets The tax-supported (or aggregate) operating budget allocates resources based on the County's tax supported capacity. It includes all revenue sources from both County taxes, e.g., property, income and other taxes, and from intergovernmental aid. It excludes other revenue sources, such as enterprise funds, specific grants, and tuition and tuition related charges at the College. Table 4-1 shows County Aggregate Operating Budgets (including debt service) from FY03 to FY13. The data show the County's Aggregate Operating Budget grew $1,544 million, from $2,471 million to $4,015 million between FY03 to FYI3. This reflects an annual average growth rate of5.0%. Table 4-1. County Aggregate Operating Budgets, FY03 to FY13 (Millions of $) Fiscal Year Approved Aggregate Operating Budget (including debt service) FY03 $2,471 FY04 I Annual Increase FY03-FY13 Increase 2,629 +$158 6.4% FY05 2,843 +213 8.1% FY06 3,061 +219 7.7% FY07 3,402 +241 11.1% FY08 3,656 +254 7.5% FY09 3,772 +116 3.2% FYI0' FYll 3,729 (43) (1.1%) 3,603 (126) (3.4%) FY12 3,771 +168 4.7% FY13 4,015 +244 6.5% Source: Councll Operatmg Budget ResolutIOns I This amount does not reflect a double appropriation of $79.5 million of MCPS related debt service to both Montgomery County Government and MCPS. OLO Report October 16,2012 Topic 4 Agency Operating Budget Trends, FY03 to FY13 Table 4-2 displays County Aggregate Operating Budgets (including debt service) by agency from FY03 to FY13 and with agency and debt service shares. The data show: o Every agency budget saw steady growth through FY09. Growth continued through FYIO for both MCPS and the College. o As noted above, the Aggregate Operating Budgets exclude tuition and tuition related charges at the College. Since FYIO, the College's budget has contracted whereas the budgets for MCPS, MCG, and MNCPPC have contracted and recovered. o In FYI3, only MCPS' budget surpasses its previous peak whereas all of the other agencies' budgets are below their previous peaks. o At $304 million, the FY13 Debt Service budget exceeds the College and MNCPPC combined operating budgets (at $133.3 million and $99 million respectively). o Retiree Health Prefunding in FYI3 exceeds MNCPPC's budget. o Among the agencies, MCPS accounts for 52% of the overall budget compared to 33% for Montgomery County Government (MCG), 4% for the College and 3% for MNCPPC. Table 4-2. County Aggregate Operating Budget Appropriations by Agency, FY03 to FY13 (Millions of $) I II Retiree Health Prefunding MCPS College MCG MNCPPC Debt Service Current Revenue FY03 $1,266.6 $91.7 $799.0 $69.4 $196.4 $48.1 $2,471.2 FY04 1,388.9 94.8 837.6 70.2 202.9 34.9 2,629.3 FY05 1,491.7 99.2 929.6 77.5 208.1 36.6 2,842.7 FY06 1,592.2 107.9 1,035.7 84.3 220.4 21.0 3,061.5 FY07 1,724.4 121.6 1,181.3 89.5 224.2 61.4 3,402.4 FY08 1,852.2 135.7 1,260.6 98.4 239.5 70.7 3,656.4 FY09 FY1()2 1,937.0 114.8 1,279.4 106.4 252.7 51.7 3,772.0 2,020.1 147.5 1,251.2 106.6 251.5 32.1 3,808.9 FYll 1,919.8 139.0 1,163.6 92.7 264.0 23.8 3,602.9 FY12 1,950.9 137.5 1,222.9 96.9 296.2 66.0 3,770.5 FY13 2,028.9 133.3 1,265.0 98.9 303.5 79.7 $105.4 4,014.7 Share 52% 4% 33% 3% 1% 0% 100% Fiscal Year .. Total o I 7 Source: CouncIl OperatIng Budget ResolutIOns 2 This amount reflects a double appropriation of $79.5 million ofMCPS related debt service to both Montgomery County Government and MCPS. OLO Report 2013-1 Companion Document 17 October 16, 2012 Topic 4 Agency Operating Budget Trends, FY03 to FY13 Table 4-3 displays aggregate operating budget changes by agency from FY03 to FYI3. The data show: o MCPS and MCG operating budgets increases (at $762 million and $466 million respectively) account for about 80% of the I O-year growth in the Aggregate Operating Budget. o Growth in Non Agency Uses, (e.g., Debt Service at $107 million, Current Revenue +$32 million and Retiree Health Prefunding at $105 million) account for 16% of the total increase. o Increases in the College (+$42 million) and MNCPPC (+$30 million) operating budgets combined account for less than 5% of the total increase. Table 4-3. Annual Change in County Aggregate Operating Budgets by Agency: FY03 to FY13 (Millions of $) i Fiscal Year MCPS College MCG Ii MNCPPC Debt Service Current Revenue Ret. Health Prefunding Total i FY03 FY04 $122.2 $3.2 $38.6 $0.8 $6.5 ($13.2) 0.0 $158.2 FY05 102.8 4.4 92.0 7.2 5.2 1.7 0.0 213.4 FY06 100.5 8.7 106.1 6.8 12.3 (15.6) 0.0 218.8 FY07 132.2 13.7 145.6 5.2 3.8 40.4 0.0 340.9 FY08 127.8 14.1 79.3 8.9 15.3 8.7 0.0 254.0 FY09 84.8 9.1 18.8 8.0 13.2 (18.3) 0.0 115.6 FY10 83.1 2.6 (28.3) 0.2 (1.2) (19.6) 0.0 36.9 FYll (100.2) (8.4) (87.6) (14.0) 12.6 (8.3) 0.0 (206.0) FY12 i 31.1 (1.5) 59.4 4.3 32.2 42.2 0.0 167.6 FY13 78.0 (4.2) 42.1 2.0 7.3 13.7 $105.4 244.2 +$762.2 +$41.7 +$466.0 +$29.5 + $31.7 +$105.4 +$1,543.6 $ Change +$107.2 Source. Council Operating Budget Resolutions aLa Report 2013-1 I October 16, 2012 Topic 4 Table 4-4 shows the growth rates among the agencies' operating budgets. At 2%, the average aggregate operating budget growth rate over the second half of the decade (FY09-FY13) is one-fourth that of the first five years (FY04-FY08). (See bold numbers in the Total column.) Table 4-4. Annual Change in County Aggregate Operating Budgets by Agency: FY03 to FY13 MCPS College MCG MNCPPC Debt Service Current Revenue Total FY04 9.7% 3.5% 4.8% 1.2% 3.3% (27.4%) 6.4% FY05 7.4% 4.6% 11.0% 10.3% 2.6% 5.0% 8.1% FY06 6.7% 8.7% 11.4% 8.8% 5.9% (42.7%) 7.7% FY07 8.3% 12.7% 14.1% 6.2% 1.7% 192.2% 11.1% FY08 7.4% 11.6% 6.7% 9.9% 6.8% 14.1% 7.5% FY09 4.6% 6.7% 1.5%, 8.1% 5.5% (26.2%) 3.2% FYIO 4.3% 1.8% (2.2%1) 0.2% (0.5%) (38.0%) 1.0% FYll (5.0%) (5.7%) (7.0%1) (13.1%) 5.0% (25.8%) (5.4%) FY12 1.6% (1.1%) 5.1% 4.6% 12.2% 177.5% 4.7% FY13 4.0% (3.1%) 3.4% 2.1% 2.5% 20.8% 6.5% FY04-FY08 Ave 7.9% 8.2% 9.6% 7.3% 4.1% 28.2% 8.2% FY09-FY13 Ave 1.9% -0.3% 0.2% 0.4% 4.9% 21.7% 2.0% -6.0 points -8.5 points -9.4 points -6.9 points +0.8 pts -6.5pts -6.2 pts 4.9% 4.0% 4.9% 3.8% 4.5% 25.0% 5.1% Fiscal Year FY03 Difference FY04-FY13 Ave Source: Council Operall11g Budget Resoluttons The difference in average growth rates between the second and first half of the decade varies by agency. From largest to smallest, the reductions were: o -9.4 points for MCG (from 9.6% to 0.2%); o -8.5 points for the College (from 8.2% to -0.3%); o -6.9 points for MNCPPC (from 7.3% to 0.4%); and o -6.0 points for MCPS (from 7.9% to 1.9%). OLO Report 2013-1 Companion Document October 16,2012 Topic 5 AGENCY COMPENSATION TRENDS, FY03 - FY13 The agency budgets that the Council approves each May reflect compensation agreements with represented and non-represented employees negotiated with each agency's board and bargaining units. Most agreements address salary increments (steps) and cost of living adjustments, and some address lump sum payments, top of range adjustments or longevity. The following pages display FY03-FY13 agency compensation data prepared by Mr. Farber, Council Staff Director, for the Government Operations Committee's May 1,2012 worksession. Exhibit 5-1. Summarv ofAgencv Compensation Agreements by Bargaining Unit and Component - - "0 ="0 < ~ & ...... ..... Vl I N WASHINGTON SUBURBAN SANITARY COMMISSION i AFSCME Merit pay adjustment (a) 3.5%(bXd) 3.5%(b)(d) General adjustment (COLA) 3.0o/o(c) 2.0% Lump-sum payment ent Non-Represented Merit pay adjustment 3.5o/o(b)(d) 3.5%(bXd) General adjustment (COLA) 3.0%(c) 2.0% Lump-sum payment T~P~Ef r~f.lg~!,~j~~IEen_t_ _ _-,--__..__---'_ __ 3.5%(bXd) 2.0% 3.5%(b)(d) 3.5% 3.So/o(b)(d) 3.75% 3.0%(b)(d) 3.5% 3.5?/o(b)(d) 2.0% 3.5%(b)(d) 3.5% 3.5%(b)(d) 3.75% 3.0%(b}(d) 1 3.0%(b)(d) 3.5% I 0.0% 3.0%(b)(d) 0.0% i 3.0%(b)(d) I 0.0% 3.0%(b)(d) 2.0%(e) 3.0%(b}(d) 2.0%(e) 0.0% 0.0% 0.0% 0.0% 3.0%(d) 2.0%(e) (a) WSSC has a performance based merit pay system. Adjustments to base pay are based upon annual employee evaluations. In FY09, a new Performance Management System to all employees except those reporting directly to the Commissioners or in a bargaining unit. A rating of 3.0 and above will result in a corresponding percentage pay increase. A rating below 3.0 will result in a Performance Improvement Plan (PIP). Employees rated below a 2.0 numerical rating or employees who do not successfully complete their PIP are subject to release. The merit pay salary adjustments associated with each performance rating category FY94-FY08 were: fY94 tv -...J Superior Commendable Fully satisfactory Needs improvement Unsatisfactory 5.0% 4.5% 4.0% 3.5% 1.0% 0.0% FY97 FY95 4.0% 1.0% 0.0% 4.5% 4.0% 3.5% 1.0% 0.0% FY98 FY99 FYOO FYOI FY02 FY03 FY04 FY~ FY06 FY07 FY08 4.5% 4.0% 3.5% (.0% 0.0% 4.5% 4.0% 3.5% 1.0% 0.0% 4.5% 4.0% 3.5% 1.0% 0.0% 4.5% 4.0% 3.5% 1.0% 0.0% 4.5% 4.0% 3.5% 1.0% 0.0% 4.5% 4.0% 3.5% l.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 4.5% 4.0% 3.5% 0.0% 0.0% 4.5% 4.0% 3.5% 0.0% 0.0% 4.5% 4.0% 3.5% 0.0% 0.0% 4.5% 4.0% 3.5% 0.0% 0.0% 4.5% 4.0% 3.5% 0.0% 0.0% (b) Merit pay adjustment was replaced with skill-based compensation for some bargaining unit employees in FY02. (c) General adjustment (COLA) was effective October 2003 when COLAs and merit increases were no longer limited by State Law. (d) Employees at grade maximum who receive above average evaluations may receive a onetime cash payment. (e) Contract ratified by the union and approved by the Commission includes a 2.0% COLA for represented employees. ~ ?: .... Vl , N Topic 6 MCPS CURRENT FuND REVENUE TRENDS, FYOI-FY13 In 2002, the General Assembly enacted the Bridge to Excellence in Public Schools Act (BTE) to equalize funding for education among counties and increase funding overall. In Montgomery County, revenue for education grew due to the combined effects of: o Rapid State revenue growth under implementation ofBTE; o Rapid appreciation of the County's property tax base; and o A sustained level of locally appropriated county tax dollars for education. Revenue Trends for MCPS Operating Expenses Tables 6-1, 6-2, and 6-3 display revenue sources tor the MCPS' operating expense budgets (the Current Fundi). The tables disaggregate local and state revenue to highlight changes in these revenue sources. The "All Other" column combines Federal, Other, Fund Balance and Specific Grants. o FY 13 revenue from all sources is $922.2 million higher compared to FY02 (before implementation of the Bridge to Excellence). o County and State revenue increases were $458.5 million and $411.8 million respectively. Table 6-1. Revenue for MCPS' Operating Expense Budget FY02 to FY13 (Millions of$) Fiscal Year Local Contribution State Aid All Other Total MCPS Current Fund FY01 (Pre BTE) $ 961.0 $176,5 $42.8 $1,180,3 FY02 1,029,7 204,7 49,2 $1,283,7 FY03 1,064,9 226,7 74,1 $1,365,7 FY04 1,133,0 251.7 67.1 $1,451.8 FY05 1,211.30 270,7 81.5 $1,563,5 FY06 1,272.6 302,7 87,6 $1,662,9 FY07 1,381.6 335.4 83.3 $1,800.2 FY08 91.2 $1,930,7 1,449.1 390A FY09 1,513,6 424,5 98,8 $2,036,9 FY10 1,527,6 440.1 176,8 $2,144,5 FYll 1,415.1 471.1 161.9 $2,048,1 FY12 1,370.1 559.5 100,6 $2,030.3 FY13 1,419.5 94.7 $2,102.5 +$ 51.9 + $ 922.2 Change FY01-FY13 + $ 458.5 Source: MCPS Adopted Operating Budgets +$ 411.8 I According to the Financial Reporting Manual for Maryland Public Schools, the Current Expense fund is the composite of the General Fund and all Special Revenue Funds except the Food Service Fund and Special Revenue funds set up for capital projects. The Current Expense Fund accounts for the basic education programs and includes all financial resources used for the basic operations ofthe school system. aLa Report 2013-1 Companion Document October 16, 2012 Topic 6 Total revenue accounted for in the MCPS Current Fund grew steadily through FYlO, declined in FYII and FYI2, and recovered in FYI3. Since FYOI, total revenue grew 44%, fueled by County and State revenue increases of 32% and 70% respectively. State revenue grew more than twice as fast as County revenue. Table 6-2. Annual Change for MCPS' Revenue by Source, FY02 to FY13 (Millions of$) Total $ $ Change Fiscal Year Change All Other State Local FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FYIO FYll FY12 FYl3 $68.7 S6.4 S103.3 35.2 22.0 24.9 82.1 68.1 25.0 (7.0) 86.1 78.3 19.0 14.4 111.7 61.3 32.0 6.1 99.4 109.0 32.7 (4.3) 137.4 67.5 55.0 7.9 130.4 64.5 34.1 7.6 106.2 14.0 15.6 78.0 107.6 (112.5) 31.0 (14.9) (96.4) (45.0) 88.4 (61.3) (17.9) 49.4 Change $28.2 28.8 (5.9) 72.3 + $458.5 FYOI-FY13 + $4 22.2 I Source: MCPS OperatU1g Budgets Since State revenue outpaced local revenue growth, the county's FY13 revenue share fell compared to FYOI. In FYI3, county revenue accounts for 68% of all revenue, compared to 81% in FY01, a decline of 13 points. Table 6-3. Revenue Shares for MCPS' Operating Expense Budget, FY01 to FY13 (Millions of $) Fiscal Year Local All Other State FYOI FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FYIO FYll FYl2 81% 15% 4% 80% 16% 4% 78% 17% 5% 78% 17% 5% 77% 17% 5% 77% 18% 5% 77% 19% 5% 75% 20% 5% 74% 21% 5% 71% 21% 8% 69% 23% 8% 67% 28% 5% 28% 5% FY13 68% Source: MCPS OperatU1g Budgets oo ~ OLO Report 2013-1 Companion Document October 16, 2012 Topic 7 MCPS OPERATING BUDGET SUMMARIES, FYll - FY13 The MCPS Operating Budget approved by the Board of Education presents a summary of budget changes (Table 7-1) to track items such as enrollment, employee salaries and benefits, inflation and reductions to central services, support operations and school based positions. Exhibit 7-1 presents summary data for the FYII - FYI3 MCPS Operating Budgets. Exhibit 7-2, on the next three pages, provides MCPS budget tables that detail each year's additions and reductions. Exhibit 7-3, on the last page, presents Public Education Finance data from the 2010 U.S. Census that shows expenditure detail for Maryland's school systems. Exhibit 7-1. Summary ofMCPS ()perating Budgets, FYl1 to FY13 FYll FY12 [ Fiscal Year Operating Budget FY13 $2,104.2 $2,086.8 $2,160.0 FYll FY12 FY13 Enrollment Changes Subtotal $14.8 $17.5 $14.6 New School Space Subtotal $1.0 $0.9 $1.8 Employee Salaries Subtotal $0.0 $14.6 $25.3 Employee Benefits and Insurance Subtotal $33.1 $33.0 $37.7 Inflation and Other Subtotal ($6.4) $41.5 $3.0 Reductions Subtotal ($139.2) ($124.9) ($9.2) Less Enterprise Funds ($56.1) ($56.5) ($57.5) Less Grants ($128.2) ($79.3) ($73.7) Spending Affordability Budget $1,919.9 $1,951.0 $2,028.8 Local ($112.4) ($45.0) $49.4 State $48.5 $88.7 $28.8 Federal $1.2 ($66.4) ($5.9) Other $0.3 ($1.8) $0.0 Fund Balance ($33.9) $6.7 N.A. Enterprise ($0.4) $0.4 $0.9 FY10-FYll Change ($96.7) FY II-FY 12 Change ($17.4) FY 12-FY 13 Change $73.2 Item ! Revenue Increase by Source Total Revenue Increase ($96.7) Source. MCPS Operatmg Budget Summary, Table lA. OLO Report 2013-1 Companion Document 30 I ($17.4) I $73.2 October 16, 2012 TABLE 1A FY 2011 OPERATING BUDGET - SUMMARY OF BUDGET CHANGES ($ in millions) ITEM FY 2010 OPERATING BUDGET ENROLLMENT CHANGES Elementary/Secondary Special Education ESOL PreKindergarten Transportation/Food Service/Facilities/Plant Ops/Other Benefits for Staff Subtotal [NEW SCHOOLS/SPACE AMOUNT $2,200.9 7.8 2.1 1.0 004 0.1 304 $14.8 $1.0 EMPLOYEE SALARIES Continuing Salary Costs Benefits for Continuing Salary Costs w ,....... f\:) Subtotal EMPLOYEE BENEFITS AND INSURANCE Employee Benefit Plan (active) Employee Benefit Plan (retired) Retirement Tuition Reimbursement FICAlSelf-insurancefWorkers' Compensation Subtotal INFLATION AND OTHER Utilities Special Education Including Non-public Tuition Transportation Facilities/Plant Operations/Maintenance Food Service Other Subtotal $0.0 21.0 4.9 3.1 0.2 3.9 $33.1 (5.5) (2.1) 2.2 0.2 (0.3) (0.9) ($5.4) ITEM REDUCTIONS Central Office Positions and Resources Class Size by 1 Student Classroom Teachers from Reserve Academic Intervenion, Special Program, Focus, Staff Development, Reading, Reading Initiative, Middle School Reform Teachers . Counselors Speech Pathologists and OT/PTs Psychologists and PPWs Media Assistants Elementary Paraeducators Maintenance Positions Staff Development Training Plan Staff Development Substitutes Teacher Substitutes High School PI~ Middle School Collaborative Planning Students Engaged in Pathways to Achievement (SEPA) Elementary Class I Stipends/Activity Buses Other K-12 Savings Furniture and Equipment Textbooks, Instructional Materials, Media Materials Bus Replacement Bus Fuel (Blodlesel) Local Travel Mileage/Travel Out Cable Television Office Supplies Technology Grant Program Reductions Retiree Health Trust Fund Debt Service Reimbursement Subtotal FY 2011 BUDGET FY 2010? FY 2011 CHANGE Less Enterprise funds . Less Grants SPENDING AFFORDABILITY BUDGET REVENUE INCREASE BY SOURCE local State Federal Other . Fund Balance Enterprise TOTAL REVENUE INCREASE AMOUNT (6.5) (16.2) (0.6) (4,8) (0.7) (0.9) (0.5) (0.2) (1.0) (0.3) (1.0) (1.2) (0.1 ) (0.3) (1.3) (0.1 ) (0.7) (0.9) (0:9) (7.9) (0.2) (004) (0.1 ) (0.1) (0.1 ) (0.3) (0.5) (11.9) (79.5) ($139.2) $2,104.2 ($96.7) (56.1 ) (128.2) $1,919.9 (11204) 48.5 1.2 0.3 (33,9) (004) ($96.7) tn & :;: l=+' -....) I N TABlE1A FV 2012 OPERATING BUDGET? SUMMARY OF BUDGET CHANGES ($ in millions) ITEM FY 2011 OPERATING 8UDGET AMOUNT $2,104.2 ITEM AMOUNT REDUCTIONS School Based: eNROLUMENTCHANGES Elementary/Secondary Special Educatklo PreKinderga~n ESOl :SJbtotal ,?,?,:,~~~?U~~:Ai'~;/~ll~114}~rj.~iL~~~f.!i~~?~Nf:1~~~:W'_N;!~~~']JdHjWl:1t~1~~mt!Wi[~~1fJJ~ 13.0 3.3 0.3 0.9 m~' EMPLOY ~OO~"T$ EMPLOYEE 8ENEFIT$ AND INSURANCE Employee Benefits Plan (active) Employee Benefit, Plef] (retired, Reliiremenl f \..;.J tv t-..) ICAISelf?lll~Uf'ancelWol'kers' 12.9 5.7 11.5 2.9 Transpl.)rtatJon 0.6 2:.8 2.1 1.5 FacilullesJPlant OperatlonsJMalntr;o3nce Tech(lology 0.7 0.5 TexttlOol<:s. Instroctlooa! and Media Malerial:,J Ulitilties SpecOal EducaUoo IncJuding Non-public TUDIiorl ARRAGnmts (13.7) (O.7) School Improvement Planning Funds, Furniture & Equipment. Other A$$l$tant 8dlool AdmlnlstratoJll ReselV9 Teac:llers Academic InterYenlon Teachers Reading Recovel)' Teachers Staff D&velopm4nt Teachers ESOL Teacl1ers h'llittumenlal MuSic Teacher'll career Prep Teachers Counselors English ~sitioo AssJstanl$ Instructional Technology Systems Specialist!! Paraeduea\ors. Elell'llMiddle Lunch Hoor Mes, Parent Comm. Coon;Iinalots High School Teacher Assl$tan4s Instructional Dala Assistants Media Assistants Sc.tlool $eaetaries Athlelics Inflationary Costs lor Textbooks and lostJUclion$lIMedla Materia!s Special Education Staffing Ratios Secondary Le;.lmlng Cenlefs Special Educalion Herr-public Tuition Other. Salary SlepS and Ulogevllie5 Contrlb\Jtlon 10 R~tlree Hearlh Beneiit Trusl Fund (OPEB) Retirement Administration Fee (0.8) (0.2) (1.3) (0,6) (O.5) (3.7) (0.1) {0.1} (O.3) {O.6} (0.5) (O.7} (1.7) (O.1) (1.0) (1.4) {O.6) (O.n (C.S) (0.4) (1.2) (21) (28.0) (47.6) 2.8 0.1 47,6 ,,;1,. ?.4i'""?8l :J:- Central Services: Office of Sc.tIool Pelf<