Author Archives: Stan Jester

Options To Address E-SPLOST Budget Issues

In earlier posts, I discussed E-SPLOST Budget Overruns and Projects on Hold. What’s the plan? Here are the options we are currently looking at.

BACKGROUND

The DeKalb County School District operates in over 130 instructional facilities
• 76 Elementary school facilities
• 19 Middle school facilities
• 21 High school facilities
• 7 Other school facilities
• 3 Instructional program facilities

E-SPLOST BUDGET ISSUES

Industry‐wide construction costs have increased by 15%‐20% in past few years. E‐SPLOST V projects are projected to cost approximately $87 million more than originally estimated. E‐SPLOST V state reimbursement revenues might be as much $31 million over estimated due to existing unused capacity

RECOMMENDATION TO ADDRESS E‐SPLOST BUDGET ISSUES

DeKalb Schools recommends the following two step process to address the budget issues:

1. Balancing Budgets for E‐SPLOST IV and E‐SPLOST V for approval by the Board in June/July 2019
2. General Obligation Bond to fund additional projects (including some of those projects removed in step 1), for approval by the Board

STEP 1: BALANCING E‐SPLOST BUDGETS (JUNE/JULY 2019)

E‐SPLOST V Adjustments
• Remove 10 projects (‐$66.8 M)*
• Reduce scope of 8 projects (+$13.8 M)*
• Increase budget of 14 projects (+$53.0 M)*

Recommended E‐SPLOST IV adjustments:
• Remove K‐12 Arts School from E‐SPLOST IV (‐$11.1 M*)
• Fund project with GO Bond

*Based on current budget.

Remove 10 E‐SPLOST V projects: (‐$66.8 M)
• Peachtree MS Addition (‐$14.1 M)
• Lakeside HS Addition and turf (‐$26.9 M)
• Turf installation at 14 Schools (‐$10.8 M)*
• Parking addition at 10 schools (‐$1.6 M) *
• Sprinkler installation at 18 schools (‐$3.9 M)
• Freedom MS Addition (‐$8.5 M)
• Lead‐In‐Water Set‐Aside (‐$0.9 M)
• Clarkston HS Addition – Reduce addition from 32 classrooms to 15 classrooms and remove artificial turf installation (‐$8.4 M)

Reduce scope and increase budget of 3 E‐SPLOST V projects: (+$22.1 M)
• Cross Keys MS Conversion – Reduce addition size from 21 classrooms to 8 classrooms (+$1.8)
• New Cross Keys HS – Reduce size of new school from 119 classrooms to 98 classrooms (+$17.2 M))
• Cedar Grove HS Auditorium Addition – Remove artificial turf installation (+$3.1 M)

Increase budget with no scope change in 11 E‐SPLOST V projects: (+$22.5 M)
• Fence installation at 36 schools (+$1.2 M)
• Security Vestibules at 20 schools (+$1.6 M)
• Chamblee HS Addition (+$4.9 M)*
• New John Lewis ES (+$0.2 M)
• New Cross Keys North ES (+$0.2 M)
• New Indian Creek ES (+$10.5 M)
• Druid Hills MS (+$0.6 M)
• Tech: ERP/Finance/HR System (+$3.3 M)

Increase budget of 3 other E‐SPLOST V projects: (+$30.6 M)
• Dunwoody HS Addition – Increase size of addition from +26 classrooms to +41 classrooms and remove artificial turf installation (p #215, +$9.5 M)
• Program Contingency (p #602, +$16.1 M)
• Revenue Reserve Fund – Create a revenue reserve fund (+$5 M)

E‐SPLOST IV Recommendation
Remove K‐12 Arts School from E‐SPLOST IV* and place into GO Bond (‐$11.1 M)
OR Keep K‐12 Arts School in E‐SPLOST IV and find $3.9 M of other non‐SPLOST revenues

GENERAL OBLIGATION BONDS

• Option A: $210 million GO Bond
• Option B: $245 million GO Bond
• Option C: $180 million GO Bond

OPTION A ‐ $210 MILLION – GO BOND PROJECTS
• Peachtree MS Addition ($12 M; E‐SPLOST V)
• Lakeside HS Addition ($25 M; E‐SPLOST V)
• K‐12 Arts School ($15 M; E‐SPLOST IV)
• Four new elementary schools ($34 M each): ($136 M total)
• Toney ES (22% FCA; combine with Kelly Lake ES, 39% FCA)
• Stoneview ES (40% FCA; capacity needs)
• Hawthorne ES (37% FCA; combine with Henderson Mill ES, 27% FCA)
• New ES for Dunwoody/Chamblee clusters (capacity needs)
• GO Bond program contingency and escalation ($22 M)

OPTION B ‐ $245 MILLION GO BOND PROJECTS
• Peachtree MS Addition ($12 M; E‐SPLOST V)
• Lakeside HS Addition ($25 M; E‐SPLOST V)
• K‐12 Arts School ($15 M; E‐SPLOST IV)
• Five new elementary schools ($34 M each): ($170 M total)
• Toney ES (22% FCA; combine with Kelly Lake ES, 39% FCA)
• Stoneview ES (40% FCA; capacity needs)
• Hawthorne ES (37% FCA; combine with Henderson Mill ES, 27% FCA)
• New ES for Dunwoody/Chamblee clusters (capacity needs)
• Brockett ES (35% FCA) or Idlewood ES (65% FCA) or E.L. Miller ES (36% FCA)
• GO Bond program contingency and escalation ($23 M)

OPTION C ‐$180 MILLION GO BOND PROJECTS
• Peachtree MS Addition ($12 M; E‐SPLOST V)
• No Lakeside HS Addition ($0 M; E‐SPLOST V)
• K‐12 Arts School ($15 M; E‐SPLOST IV)
• Four new elementary schools ($34 M each): ($136 M total)
• Toney ES (22% FCA; combine with Kelly Lake ES, 39% FCA)
• Stoneview ES (40% FCA; capacity needs)
• Hawthorne ES (37% FCA; combine with Henderson Mill ES, 27% FCA)
• New ES for Dunwoody/Chamblee clusters (capacity needs)
• GO Bond program contingency and escalation ($14 M)

GO BOND OPTIONS
DeKalb Schools Go Bond Options

GO BOND OPTIONS PROPERTY TAX
Go Bond Options Property Taxes

FY2020 – Tentative Budget – No Raise For Teachers

While DeKalb Schools is seeing record revenues, they are depleting the fund balance (reserves) and balancing the budget on the backs of teachers.

FUND BALANCE (Reserves)

We started FY2019 with reserves of $122 million. We are spending $18 million more than we are taking in this year and will end FY2019 with a $104 million in reserves.

Once again, next year we expect to deplete our reserves further. DeKalb Schools expects reserves at the end of FY2020 to drain down another $14 million to $89 million.

The story is, while revenue is up at all time highs, we are spending millions more than we are taking in. The school district has a significant structural deficit. But this spending is not benefiting teachers in the classroom, as they will not be getting the $3,000 raise that the Governor included in the increased QBE funding.

With future legal liabilities looming and the inevitable economic ebb, our proclivity for having structural deficits in the best of times, is disturbing. It puts us on a collision course for calamity.

Let’s do the numbers

.
FY2020 REVENUE
• 5% Tax Digest Growth + $26 million over FY2019
• State QBE Growth + $22 million over FY2019
• Estimated Total Revenue – $1.147 billion

FY2020 BUDGET
• Spending – $1.161 billion (+$59 Million more than FY2019)

My favorite FY2020 budget euphemisms driving increased spending are:
• Resource Equity Allocation Adjustments
• Horizon Schools
RAMP (method of equitably distributing their state and local instructional resources)

CERTIFIED SALARY ADJUSTMENTS

On Feb 13, 2019 the board approved the January 7th salary steps (E scales for teachers), as well as revised Z, G, N, and LT Salary Steps. The annual cost is $40 million. It was implemented in January, so it only cost the school district $20 million in the FY2019 budget.

The school district will need to appropriate another $20 million to pay for a full year of the salary adjustments. The school district is using the Governor’s $3,000 teacher salary increase to pay for the full year salary adjustments the board passed last January.

Classified staff salary adjustments are not finalized yet. Also, teachers will be stepping this year (only appropriating half of that). It is estimated those costs to be another $10 million. The Governor’s $3,000 including benefits is estimated to be a $22 million bump.

SUPPORTING DOCUMENTS
  MAG Salary and Compensation Study – Classified Employees
  January 7th Approved E Scale (and revised Z, G, N, LT) Salary Scales
  FY 2019 Teacher Salary Comparisons

FY2020 NEW SPENDING

• $12 million – Early Learning Center – 11 ‐PREK K TEACHERS, 11 PREK PARAS – New class of 3 year olds
• $2 million – Deferred maintenance
• $3 million – 44 NEW POSITIONS: Facilities Maintenance
• $1 million – 8 new HCM positions
• $1 million – Additional campus security
• $2 million – Broaden the 403(b) match program

TRS FUND – CONTRIBUTION ADJUSTMENTS
The school district has been in contact with the state and they are comfortable that the TRS Fund contributions are set for this year.