2017-2018 Approved Operating, Categorical & Special Funds Budget

115 Pages·2017·2.29 MB·English

CHESAPEAKE PUBLIC SCHOOLS

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2017-2018
APPROVED OPERATING,
CATEGORICAL &
SPECIAL FUNDS BUDGET
May 22, 2017
Chesapeake Public Schools
School Administration Building
312 Cedar Road
Chesapeake, Virginia 23322

May 22, 2017

Dear Citizens of Chesapeake

The Chesapeake School Board approved the 2017/18 Operating, Categorical, and Special
Funds Budgets at the Monday, May 22, 2017 meeting. The total of all budgets is
$488,688,890, an increase of $20,647,387 or 4.41%. Fall expected enrollment is projected to
be 39,400, an increase of 247 students over the actual 2016/17 fall enrollment of 39,153. The
table below provides a summary comparison of all available resources along with increases,
decreases, and percentage changes from the FY 2016/17 fiscal year.

Approved Approved Increase/ % Increase/
Sources FY 17/18 FY 16/17 Decrease Decrease
Operating Budget 440,716,372 421,976,560 18,739,812 4.44%
Federal Grants 18,361,003 17,145,315 1,215,688 7.09%
State Grants 5,108,711 4,388,227 720,484 16.42%
Other Grants 13,000 13,000 0 0
Anticipated Grants 6,000,000 6,000,000 0 0
Cell Tower Fund 510,000 100,000 410,000 410.00%
School Nutrition Services 13,087,144 13,480,517 -393,373 -2.92%
Fund
Self-Insurance Fund 2,500,000 2,500,000 0 0
Textbook Fund 2,392,660 2,437,884 -45,224 -1.86%
Total Available Funds 488,688,890 468,041,503 20,647,387 4.41%

The total approved FY 2017/18 operating budget is $440,716,372, an increase of
$18,739,812 or 4.44% over the FY 2016/17 operating budget. State funding ($234.0M)
accounts for the largest overall increase. City funding ($199.7M) is up from FY 2016/17 by
$11.1M.

Categorical grants continue to support instruction. The major projected increases in federal
funding are for grants Title I – Part A Basic School Improvement, Special Education Title VI-B,
and Title III Limited English Proficient Program. Increases in state grant budgets are mostly
found in the State Technology Initiative, Chesapeake Juvenile Services Educational Program,
School Security Grant, and the Virginia Preschool Initiative.

Cell Tower funding utilizes $300,000 of accumulated fund balance to be used primarily for
capital purchases related to technology and energy improvements. There is a decrease
in School Nutrition Services Federal Meal Reimbursement revenues due to lower projected
percentage participation for Free and Reduced lunches. The decrease is offset somewhat by
an increase in meal prices of five cents ($.05) for breakfast and ten cents ($.10) in all lunch
prices to comply with mandated federal lunch meal price regulations.
Chesapeake Public School Board
Approved Operating, Categorical and Special Funds Budgets 2017-2018
May 22, 2017

The Self Insurance Fund pays for employee and retiree benefits costs (hospitalization, dental,
and worker’s compensation). There is no change in projected use of fund balance.
The Textbook Fund will provide Foreign Language textbooks for grades 6-8 as well as new
AP Science course textbooks. New curricula purchases are planned for the International
Baccalaureate Program, STEM Academy, Science & Medicine Academy, and the
Chesapeake Center for Science & Technology. The operating budget contains funding for
textbook consumable materials.

The table below shows FY 2017/18 and FY 2016/17 Operating Budget revenue, increases
and decreases between the two budget years and percent change.

Approved Approved Increase/ % Increase/
Operating Budget Revenue FY 17/18 FY 16/17 Decrease Decrease
State General Fund 190,088,841 182,521,994 7,566,847 4.15%
State Sales Tax 43,949,087 44,107,631 (158,544) -.36%
Federal 4,075,000 3,825,000 250,000 6.54%
City General Fund 195,522,000 188,635,000 6,887,000 3.65%
City FY16 Actual/Budget 2,883,000 0 2,883,000 0
School Reversion FY 2015/16 1,311,509 0 1,311,509 0
Other Local 2,886,935 2,886,935 0 0
Total Operating Budget* 440,716,372 421,976,560 18,739,812 4.44%

State revenue (not including sales tax) in the Approved Operating Budget is still less than the
same number in 2008-2009, the year just prior to the economic downturn. For FY 2017/18
this amount (not including sales tax) is $5,289,494 less than in 2008/09. While an increase is
noted over 2016/17, the state budget has yet to recover to the 2008/09 level.

State revenue projections are based on the General Assembly’s budget approved February
25, 2017. The major changes in state revenue are the funding of a 2% compensation
supplement effective February 15, 2018 for SOQ funded instructional and support positions
and an increase in the Supplemental Lottery per pupil allocation with no restrictions on
expenditures. A school division can spend the per pupil lottery allocation “in a manner that
best supports its needs”. Another change that bears mentioning is the reduction of over $1M
in Special Education Regional Tuition funding in the 2016-2018 biennium. Changes to the
allocation method of these funds in future years may bring additional reductions.

Federal revenue increased due to an increase in projected Medicaid reimbursements.

City revenue projections increased a total of $6,887,000. The remaining local increase is
from two sources of one-time funding, the school system’s share of FY 2015/16 city actual
revenue received over that budgeted ($2,883,000) and the FY 2015/16 school’s reversion
($1,311,509).
Chesapeake Public School Board
Approved Operating, Categorical and Special Funds Budgets 2017-2018
May 22, 2017

We continue our commitment of providing an excellent education to the students of our city
and are guided by our seven strategic goals. The 2017/18 budgets align a comprehensive
and responsible spending plan with those strategic goals:

• Optimize school safety
• Ensure rigorous educational standards
• Evaluate effectiveness and efficiency
• Optimize the management of human resources and ensure effective staff development
• Optimize the use of technology
• Enhance parental and community involvement
• Provide optimal school facilities

Maintaining a high quality school system takes commitment by all stake holders. Our city is
responsive to our needs but can’t make up the gap caused from the loss of state support
position funding. Funding for support positions needs to be restored because support and
instructional positions have been reduced due to these cuts. This additional revenue may also
be used to help reduce class size, bring teacher salaries to a level that encourage people to
enter and stay in the teaching profession, replace equipment, provide more teaching
materials, and provide reasonable tuition assistance and professional development needed to
renew licenses.

For the reasons above and more, this budget includes a 2.5% salary increase for full-time
employees. It provides a step increase and recognizes our employees’ dedication to their
profession and their students.

Sincerely,

THE SCHOOL BOARD OF THE CITY OF CHESAPEAKE

Mr. C. Jeff Bunn, Chairman
Mrs. Victoria L. Proffitt, Vice Chairman
Mr. Samuel L. Boone, Jr.
Mrs. Christie New Craig
Mrs. Colleen C. Leary
Mr. Thomas L. Mercer, Sr.
Mr. Harry A. Murphy
Mr. Louis J. Tayon, Jr.
Mr. Michael J. Woods
Budget Development Highlights

Budget Dates Highlights & Changes
February 13, 2017  Unidentified funding need $4,883,777
Presentation of  2.5% Salary Increase
Superintendent’s 2017-  Additional Teachers (16) for student growth
2018 Proposed  Health Insurance costs increase
Budgets (based on  Move positions and health costs from Title VI-B
Governor’s Proposed  VRS and Health Care Credit rate increases
2017-2018  One time funding for bus & white fleet replacement, surveillance cameras,
amendments to the technology equipment, stage curtains, & musical instruments
biennial budget)
March 13, 2017 Unidentified funding need $564,982
Work Session, Public Revenue Revisions +$4,588,666
Hearing & Action for  State +$426,666 - Adjustments due to final General Assembly Budget
School Board Proposed • Increase in Sales Tax
2017-2018 Operating, • Adjustments to Compensation Supplement [2% raise effective 2/15/18]
Categorical, and • Increase in Lottery per pupil funding
Special Funds Budgets  Federal +$250,000 - Increase Medicaid Funding
 City +3,912,000
 +$1.029M increase in revenue sharing formula
 +2,883,000 from FY 15/16 city actual received over budget
Expenditure Revisions +$269,871
 Add 10 Bus Driver Positions
 Add 46 positions from Title I for first phase of division-wide full-day
kindergarten
 Re-allocation of expenditures due to elimination of Lottery non-recurring
restrictions
 Lease Purchase 36 bus replacements
 Lease Purchase white fleet vehicles
Board approved 2017-2018 Proposed Budgets
April 24, 2017  Board approved request to city council to add FY15/16 reversion of
Request for Action on $1,311,509 to schools appropriation for FY 17/18.
FY 15/16 Reversion  Expenditure use of the balance left over after balancing the budget to be
decided on May 11th

Source: Budget Department, Chesapeake Public Schools
Budget Development Highlights continued

Budget Dates Highlights & Changes
May 11, 2017 • 2017-18 Employee Benefits-Health Insurance Proposals
Presentation on Health Premiums from Option 2
o
Insurance Options and Add HMO Open Access Plan
o
use of FY 2015-2016 New Hires July 1, 2017 only offered HMO plans
o
Reversion Wellness Credit $300/year Actives & Retirees
o
• 2018-19 Employee Benefits-Health Insurance Proposals
Add a High Deductible Health Plan
o
Close PPO to new enrollments
o
Spousal Surcharge $500/year ($25/Pay Period) if eligible with their
o
employers
• 2015-16 Reversion $1,311,509
$564,982 Balance budget
o
$240,000 Transportation Maintenance
o
$240,000 Operations Maintenance
o
$212,527 Classroom Replacement Furniture
o
$ 54,000 Wellness Credit for Double Tier eligible employees
o
May 22, 2017 • Approval of 2017-18 Operating, Categorical Grants, and Special Funds
Final Approval 2017- Budgets
2018 Operating, Includes expansion of Full-day Kindergarten
o
Categorical Grants, and Includes use of 2015-16 Reversion presented on May 11, 2017
o
Special Funds Budgets Includes Employee Benefits-Health Insurance Proposals presented on
o
May 11, 2017
• Approval of FY 2017-18 Pay & Classification Plan
Approximate 2.5% increase Teacher types (step increase)
o
Approximate 2.5% increase ) Support & Administrative Scales (step
o
increase)
• Approval of Student Fee Schedule & Building Use Fees
• Action requesting City Council to re-appropriate FY 16/17 reversion back to
the school division (Specific uses provided after September 2017)

Source: Budget Department, Chesapeake Public Schools
DOLLARS & SENSE 2017-2018

For FY 17/18 Chesapeake Public Schools will manage approximately $488.7M in operating funds.

FY 17/18 Sources of Revenue Approved FY 17/18
Operating Budget $440,716,372
Grants (Federal, State, Other) 29,482,714

School Nutrition 13,087,144
Cell Tower 510,000

Textbook Fund 2,392,660
Self-Insurance Fund 2,500,000

Total $488,688,890
The sources for the $488.7M of FY 17/18 operating funds are predominantly from the state and the city of
Chesapeake.
School Cell Self-
Source Operating Grants Nutrition Tower Textbook Insurance Total
State 190,088,841 5,108,711 308,635 195,506,187
Sales Tax 43,949,087 - 43,949,087
Federal 4,075,000 18,361,003 8,485,491 30,921,494
Other Local 2,886,935 6,013,000 4,091,998 100,000 25,000 13,110,933
City – General Fund 195,522,000 195,522,000
City FY 15/16: 2,883,000 2,883,000
One-time
School Reversion: 1,311,509 1,311,509
One-time
Fund Balance - - 201,020 410,000 2,367,660 2,500,000 5,478,680
Total 440,716,372 29,482,714 13,087,144 510,000 2,392,660 2,500,000 488,688,890

The city of Chesapeake provides funds to the school system under a revenue sharing agreement.
In 2003 the City Council established the revenue sharing agreement to allocate local revenues between
the city and the schools. This agreement is generally referred to as the Revenue Sharing Formula (RSF).
The RSF allocates the increases in certain local revenues (not all local revenues because some are
dedicated to certain uses such as public utilities, E-911, etc.) and shares them equally (50/50) between
the city and the schools.
The revenue sharing agreement also encompasses funding for the city’s and the school’s lock box which
is intended to fund capital projects and the debt service on capital projects after 2003.
For FY 17/18, the city allocated to the school lock box a total of $23.4M from general tax revenues and
$2.4M from the hotel tax and $1.0M from the South Norfolk TIF for debt service payments on Oscar
Smith Middle School. The city also paid approximately $4.9M for payments on debt service issued prior
to the revenue sharing agreement.
Dollar and Sense 2017-2018
2

RSF calculation for FY 17/18 Amount
Estimated total shared revenues for the upcoming fiscal year 476,130,706
Subtract the amount required to maintain the fund balance policy -2,424,525
Subtract the lock box contributions (general fund shared revenues only) -21,424,200
Subtract the prior year’s net shared revenues -438,483,349
Net increase in shared revenues 13,798,632
50% allocation to the school division 6,899,316
FY 16/17 City support for school operating budget (per formula) 187,623,000
Projected FY 17/18 City support for school operating budget* 194,522,316
*City FY 17/18 General Fund support of $195,522,000 includes $1M from Greenbrier TIF surplus fund balance
The City will provide approximately $231.4M of local tax dollars to the school system for FY 17/18. This is
$139.2M above the amount required by law.
• OPERATING BUDGET: $199.7M
• $92.2M in REQUIRED payments under SOQ /LCI
• $102.3M from FY 17/18 estimated local tax revenues above the required amount
• $1.0M from a declared surplus in the Greenbrier TIF Fund Balance
• $2.9M from the FY 15/16 City RSF Actual Over Budget
• $1.3M from the School’s FY 15/16 Reversion
• LOCK BOX: $26.8M
a. $23.4M from general tax revenues
b. $2.4M from hotel taxes
c. $1.0M from the South Norfolk TIF revenues
• Pre-2003 Debt Service Payments: $4.9M
In addition to the annual operating funds above, CPS also manages construction projects in the Building Fund.
Funding for these projects is provided by the School’s Lock Box and consists of cash, 10-year debt for systems
replacements (roofs and HVAC) and 20-year debt for modernizations, additions, and replacements of
buildings.
FY 2018 Future Years
Building Fund Project Prior Year’s Appropriation FY 2019-22 Through 2026 Total Amount
Full Day Kindergarten 2,530,235 3,000,000 6,136,765 11,667,000
School Modernizations 4,725,000 40,275,000 45,000,000
Non-routine Renewal and Replacement 27,851,093 10,500,000 44,000,000 33,000,000 115,351,093
Oscar Smith High School Addition 915,900 6,068,500 6,984,400
Bus replacements 3,000,000 1,000,000 4,000,000 4,000,000 12,000,000
Technology replacements 3,000,000 1,000,000 4,000,000 4,000,000 12,000,000
Great Bridge Primary Modernization 24,775,000 24,775,000
TOTAL 62,072,228 26,293,500 98,414,765 41,000,000 182,822,493
Dollar and Sense 2017-2018
3

The school division and the city are separate legal and political bodies.
The Virginia Constitution details the duties and responsibilities of the school board, the state, and the
city. Exclusive responsibility for the supervision of the school division rests with the local school board.
The Code of Virginia declares each school board to be a “body corporate” enabling the school division’s
various rights and responsibilities, such as holding title to property (real estate and other tangible
property), entering into contracts, etc.
As separate legal entities, the school division and the city also have separate federal ID’s, have authority
over the hiring and dismissal of their own employees, have the authority to determine certain levels of
benefits (annual and sick leave, health and dental, etc.) for their own employees, and issue their own tax
documents (W-2’s, VA-6’s, 1099’s, 1095’s, etc.).
As separate political entities, each is governed by separately elected officials. The Chesapeake School
Board is an elected nine member board. Each member must be a resident of the city of Chesapeake.
Board members may be elected for a particular district of the city or as an at-large candidate.
Elections for school board occur every other year in May. The next school board election will take place
in May 2018. Each election cycle is for a four-year term on the board. The Chesapeake board consists of
nine members, therefore four seats are up during one election cycle, and the remaining five seats are up
in the next election cycle.
Even though the school division is a separate legal entity in Virginia, the division is fiscally dependent upon
the city and the state.
The majority of school divisions in the United States are fiscally INDEPENDENT, however, divisions in
Virginia are fiscally dependent – on both the city AND the state.
Fiscal dependence means that the school board does not have the authority to raise and collect taxes
(income, real estate, property, sales tax, etc.) or issue debt. In Virginia, authority to levy taxes rests
exclusively with the state and the city/county government. In fact, the city treasurer is required by law
to manage and invest all school division funds – including school activity funds held and managed by the
principal at the schools.
The state and federal funds designated for school use are appropriated in the city budget and cannot be
withheld from the school division.
One of the main duties exclusively left to the School Board by the Constitution and the State Code is the
responsibility to propose operating and capital budgets for the division. While the Board can propose a
budget, the Board does not have the authority under the Code of Virginia to set tax rates, collect taxes,
or issue debt, leaving the level of LOCAL funding (above the legally required minimum set by the state
for operating purposes) in the proposed operating and capital budgets at the discretion of the local
government.
Dollar and Sense 2017-2018
4

Appropriations provide the authority for spending.
No school division has any spending authority at all unless it is granted through an appropriation by the
governing body – the City Council. An appropriation by the city to the schools defines the maximum
amount of money that a school division is authorized to spend in any given period.
The appropriation does not provide the authority for a division to spend more than will actually be
received. Spending is capped by either the amount of funds expected to be received (if revenues will
not meet budget), or by the appropriation limit (if revenues exceed budget).
What this basically means is that if a school division is appropriated $100 for revenues and $100 for
expenditures, and is expecting to receive revenues of $95, they may not spend more than $95.
On the other hand, if the school division expects to receive more money than the appropriation, they
ALSO can’t spend more than the appropriation. In other words, if the revenue is actually $105, the
division only has the authority to spend up to $100. The additional revenue of $5 is required by law to
be returned to the governing body – the city. This additional revenue becomes part of what is referred
to as a “reversion” and by law must be returned to the city. The city is not required to return the
reversion to the division for future use, however, traditionally, these funds have been returned to the
schools by a re-appropriation.
Most reversions are from expenditure appropriations that are not spent. Every division has some level
of “reversion” each year because it is very difficult to spend down to $0.
The Chesapeake City Charter provides for a “lump sum” appropriation to the school board.
According to the state code, there are basically two primary ways a city can appropriate funds to a
school division. The method that provides the most control a city can have over school funds is called a
“categorical” appropriation, and the method that provides the most autonomy to the school division is
called “lump sum” appropriation.
Under the “categorical” method, the city could appropriate that same $100 by the major classifications
as defined by the state code. That same $100 could be appropriated under the “categorical” method in
any amount that the city council determined to the following nine categories:
1. instruction
2. administration, attendance and health
3. pupil transportation
4. operations and maintenance
5. school food services and other non-instructional operations
6. facilities
7. debt service
8. technology
9. contingency reserves