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May 22, 2012 - Committee of the Whole Board (Budget) Meeting
Committee of the Whole Board (Budget) Meeting
Limestone District School Board
May 22, 2012

        A Committee of the Whole Board (Budget) Meeting of the Limestone District School Board was held in the Barry C. O’Connor Board Room at the Limestone Education Centre, 220~Portsmouth Avenue, Kingston, on Tuesday, May 22, 2012, at 6:00 p.m.                                        
Present Trustees:
L. French, Vice-Chair
        H. Brown
        H. Chadwick
        E. Crawford
        A. Goodfellow
        D. Jackson
        P. Murray
        S. Ruttan
Present Staff:
E. Braidford, Manager of Financial Services
J. Douglas, Communications Officer
B. Fraser-Stiff, Superintendent of Education
B. Hunter, Director of Education
D. Kirkpatrick, Recording Secretary
S. Lehman, Supervising Principal
N. Marsh, Superintendent of Education
R. Richard, Superintendent of Business
W. Toms, Manager of ITS and Planning Officer    

        The meeting was chaired by Vice-Chair French.  She reported that regrets were received from Trustee Beavis.

DECLARATION OF CONFLICT OF INTEREST

        Trustee Goodfellow declared a conflict of interest as her son is an employee of the Limestone District School Board, and she withdrew from the meeting.

APPROVAL OF AGENDA

        MOVED BY Trustee Jackson, seconded by Trustee Crawford, that the agenda, as distributed, be approved.–Carried

REVIEW OF PRELIMINARY 2012-2013 REVENUE BUDGET

        Superintendent Richard stated that this year’s budget process is the same as the ones used in past years.  He said that we start with the presentation of the revenue budget.  He said that there is no discussion with respect to the expenditure side of the budget at this time, because we have not finalized the expenditure information.

        Superintendent Richard reported that there was a delay this year, as when the budget came out the software was not updated to include the new schools.  He indicated that the software was now updated to include the new schools, noting that staff in Financial Services worked hard to catch up.  He said that at the next meeting, we would start with the expenditure side of the budget, and where we go from there.

        Manager Braidford provided an overview of the Preliminary 2012-2013 Revenue Budget, as listed below.  
                                        

2012-2013 Budget
Revised Estimates
2011-2012
Original 2011-2012 Budget
Total GSN funding allocations
Ministry of Education
Municipal Tax Revenue

$157,275,000
  59,818,000

$164,625,000
  58,910,000

$162,809,000
   58,910,000
$217,093,000
$223,535,000
$221,719,000
Other revenues
$ 10,858,000
$   7,910,000
$    7,146,000
Capital revenues taken into income
        TBD
$              0
$               0
Deferred revenues taken into income
        TBD
$              0
$               0
Unfinanced operating expenditures
        TBD
$   2,167,000
$    1,195,000
Total
$227,951,000
$233,612,000
$230,060,000

        Manager Braidford advised that the revenue budget is not yet presented on a full PSAB (Public Sector Accounting Board) basis, i.e. it excludes school generated funds estimated at $6.2 million and Charitable Trust activity estimated at $195,000, which will be consolidated in the budget submission to the Ministry of Education.  She further advised that it does not include capital, noting that the above-noted components will be incorporated at a later date.  

        Manager Braidford indicated that tonight’s presentation has been prepared consistent with previous years’ presentation for ease of comparison and understandability.  She said that the preliminary 2012-2013 budget is presented alongside the 2011-2012 original and revised estimates budgets for comparison purposes.  She said that commentary will be provided throughout the presentation to articulate significant areas of variance and reasons for change.

        Manager Braidford indicated that the preliminary operating revenue budget for 2012-2013 is $227,951,000, which includes grants, municipal taxes and other income.  A further breakdown of the components and changes within each category will be given during the presentation.

        Manager Braidford indicated that this does not yet include a line for “unfinanced operating expenditures” which would represent the use of accumulated surplus (formerly reserves) to balance the overall budget.  She said that the reason being, the expenditures budget is still in process, and therefore, as the expenditure budget is finalized and presented, we will be able to determine to what extent we may have to dip into accumulated surplus in order to balance the budget.

        Manager Braidford said that similar to last year, declining enrolment continues to cause reduction in grant funding.  However, increases in Full Day Kindergarten (FDK) enrolment are helping to offset the decline in funding.  She said that the “other revenue” category is where the EPO component of the FDK funding resides.

        Manager Braidford said that in general, the Ministry of Education requires school boards to submit a balanced budget whereby in year expenditures are less than revenues.  She said that, however, boards are permitted to use prior years’ accumulated surpluses to obtain a balanced budget.  The use of prior years’ accumulated surplus is limited to a maximum of 1% of total in year operating revenue to ensure that boards are not facing undue financial risk.

        Manager Braidford indicated that it is expected that the Board will have available at August 31, 2012, approximately $3.9 million in WSIB surplus, as well as $1.5 million of unappropriated accumulated surplus.  She reported that as Trustees will recall, the Board approved the use of $1 million of the $2.5 million August 31, 2011 year end unappropriated accumulated surplus at the November 2011 Board meeting.  She indicated that the Board is permitted to adjust the fully PSAB financial position to a modified version for the balanced budget compliance calculation purposes.  Historically, boards have been able to exclude vacation accruals and employee future benefits/post-retirement benefits from overall expenditures.

        Ms. Braidford reviewed the following changes to compliance calculation for 2012-2013:

  •         Vacation accrual is no longer excluded from expenditures for compliance.  Limestone DSB absorbed the accumulated vacation accrual in its entirety in 2011-2012.  Going forward, the annual budget must now absorb any in year changes to the vacation accrual;
  •         The Ministry is now taking the same approach to the benefit liability (including health, dental and WSIB).  Boards’ operating budgets will be required to phase in 25% of the growth in the liability over the next four years, starting in 2012-2013;
  •         Board will also now be required to manage the retirement gratuities and sick leave employee future benefits on a PSAB actuarial valuation basis (to be amortized over Estimated Average Remaining Services Life (EARSL)), rather than on a cash basis (expensed as paid);
  •         We are working through the financial impact of these changes and expect to update the Board when the PSAB expenditure budget is presented;
  •         Ministry is proposing changes to the PDT, which are intended to reduce these liabilities to assist boards in managing these expenditures within compliance;
  •         Proposed changes include the reduction of the number of paid sick days to six days.  To bridge employees to long term disability, short term sick leave will be offered at 2/3rds regular salary.  This will align the school board sector with the Ontario Public Sector;
  •         If these proposed changes to the PDS materialize, funding for benefits will consequently reduce by approximately 2% over 12 years (EARSL).
        Manager Braidford reviewed the following information:



2012-2013 Budget
Revised Estimates
2011-2012
Original 2011-2012 Budget
Allocations from Funding Model
Operating Grants
$214,449,000
$221,086,000
$219,270,000
Debt Charges
  Permanently Financed
  Capital Debt Support Interest

$       457,000
$    2,187,000

$      457,000
$   1,992,000

$      457,000
$   1,992,000
Total GSN funding allocations
$217,093,000
$223,535,000
$221,719,000
School Renewal Capital
School Condition Improvement
$    3,964,000
$    1,847,000
$    3,625,000
$    1,910,000
$    3,616,000
$    1,910,000
Total Capital allocations
$    5,811,000
$    5,535,000
$   5,526,000
Capital Debt Support – Principal
$    1,321,000
$    1,099,000
$   1,121,000

        Manager Braidford reviewed the following information regarding the allocations from GSNs:

  •         Operating grants include the financing of debt interest charges of $2.644 million;
  •         Debt charges permanently financed of $457,000 represent the 55 School Board Trust debt (pre-amalgamation liabilities not permanently financed until 2003);
  •         Capital debt support interest of $2.187 million includes: the 20 year financing with RBC for the Frontenac SS and Bayridge SS additions, and six OFA long term financings (all 25 years; first in late 2006 and latest in March 2012 to cover the 2010-2011 expenditures).  These all pertain to expenditures incurred under GPTL project;
  •         In addition, capital funding is provided for school renewal annually.  Updates to the factors affecting the school renewal grant allocation calculation result in increased funding of approximately $339,000 (in comparison to 2011-2012 revised estimates).  The school condition improvement fund has also continued in 2012-2013 (year 2 of 3);
  •         Funding is also provided for the principal repayments on debt, including the RBC and OFA loans previously mentioned;
  •         The principal repayments do not appear as part of the operating budget as these are reflected on the balance sheet as reductions to liabilities, rather than on the statement of operations as expenditures.
        Manager Braidford noted the following enrolment forecast:




2012-2013 Budget
Revised Estimates
2011-2012
Original 2011-2012 Budget
Enrolment
Average Daily Enrolment
    Elementary
    Full-Day JK/SKI EPO funded
    Secondary
    Adult, Cont Ed, Summer School

11,950
                   562
 7,150
   581

12,014
                   267
                7,460
   637

12,060
                   262
                7,473
                   648

        Manager Braidford indicated that elementary enrolment is projected at 11,950 ADE, noting that this represents a decrease of 110 pupils in comparison to the original 2011-2012 budget.  She said that, however, when incorporating FDK, elementary enrolment increases, versus prior year – 2012-2013: 12,512 (11,950 + 562 FDK) versus 2011-2012: 12,322 (12,060 + 262 FDK), resulting increase is 190 ADE, when incorporating FDK.  She reported that year 3 includes eight more schools.  Enrolment of 562FTE is actually 1,124 pupils attending full day (0.5 funded through GSN and other 0.5 funded through EPO).

        Manager Braidford advised that secondary enrolment is projected at 7,150, which represents a decrease of 323 pupils, in comparison to the original 2011-2012 budget.  She further advised that enrolment projections are informed by a third party consultant, Baragar.  Historically, projections have been accurate within a 1% margin.  She said that enrolment projections significantly impact overall GSN funding.        

        Manager Braidford reviewed the appended Operating GSN Allocations information.  She reported that the Operating GSN allocations show a 2.2% decrease ($214.5 million vs. $219 million).

        Manager Braidford reviewed the following information regarding the Pupil Foundation Grant:

  •         Decrease of $1.85 million or 1.83%
  •         Intended to cover classroom related costs, including: teachers/supply teachers, library and guidance, consultants and professional supports, educational assistants, textbooks, supplies, computers and professional learning for teachers;
  •         Ministry of Education has set funding consistent with proposed PDT parameters, meaning 0% salary increase and frozen grid progression;
  •         Board has made the same assumptions through the compensation expenditure budget for consistency;
  •         Should the PDT outcome differ from the current proposal, grants and expenditures will be adjusted accordingly;
  •         Ministry of Education has honoured the PDT agreements impacting the fifth year, including increased funding for elementary specialist teachers, grade 4-8 class size reduction, increased funding for secondary programming and support for a 0.9% increase in the OMERS contribution rate;
  •         However, reductions have occurred for classroom consultants’ funding.  Additionally, previous constraints on computers and staff development are now permanent;
  •         Overall funding is reduced by declining enrolment.  However, the lost funding pertaining to teachers can be offset by reductions in the staffing model.  The declining enrolment grant is intended to further assist in supporting lost revenue during the transition period.
        Ms. Braidford reviewed information related to the School Foundation Grant, as follows:

  •         Decrease of $314,000 or 1.92%;
  •         Intended to cover costs of in-school administration and leadership – Principal, Vice-Principal and Secretary;
  •         Same assumptions regarding 0% salary increase and frozen grid;
  •         Funding for Principal is based on school, rather than enrolment.  However, Vice-Principal and Secretary are funded on a graduated scale that incorporates enrolment;
  •         Four elementary schools closing – J.E. Horton, Lundy’s Lane, Westdale Park and H.H. Langord Public Schools;
  •         Two new elementary schools opening – Southview Public School and Sir John A. Macdonald Public School;
  •         Ministry of Education has reviewed and updated definition of a school site.  Sites on the same municipal lot, unless separated by a municipal road, are now considered combined.
        Manager Braidford reviewed information related to the Special Education Grant, as follows:

  •         Decrease of $516,000 or 1.6%;
  •         Decrease in overall funding verus the original 2011-2012 budget due to declining enrolment;
  •         Note that the large increase from 2011-2012 original budget to 2011-2012 revised estimates is due to a significant carryover of the prior year’s unspent SEA allocation.  Allocation was not fully spent by end of year, as announcement was made late in year.
        Manager Braidford reviewed information related to the Language Grant, as follows:

  •         Decrease of $14,000 or 0.42%
  •         Allocation represents French-as-a-Second Language (FSL) of $2.6 million and English-as-a-Second Language (ESL) of $665,000.  Both are enrolment adjusted;
  •         ESL has also been updated to reflect updated census data.
        Manager Braidford reviewed information related to the Outlying Schools and Remote and Rural Grants, as follows:

  •         Decrease of $52,000 or 4.18%;
  •         Both grants are enrolment adjusted.;
  •         Additionally, the “distant” schools learning resources allocation now phased out, but year over year impact is minimal ($11,000).
        Manager Braidford reviewed information related to the Learning Opportunities Grant, as follows:

  •         Increase of $347,000 or 9.92%;
  •         Base funding of $2.4 million is demographically driven and has been increased by $200,000 versus 2011-2012 budget to reflect updated census data;
  •         Other components include: Literacy/Numeracy, Student Success, School Effectiveness, OFIP and High Skills Major – all are enrolment adjusted;
  •         New allocation of approximately $190,000 for Student Success and Literacy and Numeracy teachers.
        Manager Braidford reviewed the following information related to the Adult and Continuing Education Grant:

  •         Decrease of $215,000 or 9.73%;
  •         Enrolment adjusted.  Decreased enrolment in adult education is partially offset by increases in continuing education and summer school.  Expenditures will be reduced via the staffing process to offset lost funding.
        Manager Braidford reviewed information regarding the Teacher Compensation Grant, as follows:

  •         Decrease of $583,000 or 4.46%;
  •         Intended to offset teacher compensation costs that are above and beyond the pupil foundation benchmark.  Amount is determined by considering the Board’s actual staffing complement as scattered across the collective agreement salary grids;
  •         Same assumptions here as the proposed PDT – 0% increase and frozen grid;
  •         Anticipated retirements are built into the projected staff complement resulting in a change in the relative mix of staff, as new hires enter grid at lower rates.
        Manager Braidford reviewed the following New Teacher Induction Program Grant:

  •         Decrease of $8,000 or 4.79%;
  •         Allocation is based on each board’s new teacher complement from the year before.  Funds are available to support the growth and professional development of new teachers.
        Manager Braidford reviewed information related to the Transportation Grant, as follows:

  •         Decrease of $178,000 or 1.23%;
  •         Transportation funding is projected at $14.3 million.  The amount is enrolment adjusted.  However, boards receive support for 50% of any funding decrease driven by declining enrolment;
  •         Boards that do not have a “high” efficiency rating face a 1% reduction in funding.  This does not apply to our Board, as we have achieved the “high” rating through the use of the consortia to optimize efficiencies;
  •         The Ministry has a 0% increase for operators this year (previously 2% increase).  In the past, the Limestone DSB was not eligible for the 2% increase as our revenue exceeded our costs;
  •         The fuel costs escalator/de-escalator allocation is set using a benchmark pump price of $1.058 per litre, including HST ($0.936 without HST), which is consistent with last year.  This benchmark will be revisited throughout the year and resulting grant adjustments (increases or decreases) are made twice per year.
        Manager Braidford reviewed information relating to the Administration and Governance/Restraint Savings Grant, as follows:

  •         Decrease of $145,000 or 2.58%;
  •         This is the third year of a 1.5% decrease.  Additionally, this grant allocation is enrolment adjusted;
  •         The Ministry expects to roll out a new funding model for administration in 2013-2014, which will better reflect key cost drivers.
        Manager Braidford reviewed information related to the School Operations Grant, as follows:

  •         Decrease of $831,000 or 3.9%;
  •         There continues to be a 2% funding increase to assist boards in managing commodity prices for gas, electricity (7.9%), insurance and other costs;
  •         Remaining costs are 0% funding increase, as well as enrolment adjusted;
  •         Further, in 2012-2013, the Ministry updated benchmarks for factors affecting the school operations grant allocation.  The result is decreased funding in school operations (largest impact is to secondary panel), some of which has been redistributed through the school renewal grant (which increased by approximately $339,000);
  •         Across the province, boards were faced with significant decreases in funding as a result of the updated factors.  Recognizing that boards could not reduce costs immediately, the Ministry is phasing in this change.  However, it is expected in 2013-2014, that further funding decreases will be fully phased in;
  •         Note that in 2013-2014, the Ministry will be examining the incentives that are currently built into the GSN that encourage school boards to create and/or maintain small and under-utilized schools with a particular focus on schools in urban areas, with the goal of implementation changes in the 2013-2014 year.  Therefore, there is increased pressure on boards to address declining enrolment in relation to overall physical footprint.  Currently, the 2012-2013 urban top-up funding is $1.138 million for elementary and $1.068 million for secondary.
        Manager Braidford reviewed information related to the Community Use of Schools Grant, as follows:

  •         Decrease of $11,000 or 3.54%;
  •         Grant is fairly consistent year over year.
        Manager Braidford reviewed information regarding the Rural and Small Community Grant, as follows:

  •         Decrease of $3,000 or 2%;
  •         Grant is enrolment adjusted.
        Manager Braidford reviewed information related to the Program Enhancement Grant, as follows:

  •         Decrease of $598,000 or 100%;
  •         This grant has been eliminated from the GSN.  However, the Ministry’s intent is to replace it with an EPO.  No announcement to date regarding the level of EPO funding;
  •         This grant supports the costs of outdoor education and other program enhancement including music and art.
        Manager Braidford reviewed information related to the First Nations Grant, as follows:

  •         Increase of $14,000 or 2.24%;
  •         Grant is enrolment adjusted.  Enrolment is expected to increase marginally.
        Manager Braidford reviewed information related to the Safe Schools Grant, as follows:

  •         Decrease of $8,000 or 2.07%;
  •         Grant is enrolment adjusted.
        Manager Braidford reviewed information related to the Declining Enrolment Grant, as follows:

  •         Increase of $189,000 or 15.01%;
  •         Many of the GSN grants are driven by enrolment.  As enrolment declines, so does funding.  Some costs are easy to adjust in reaction to this; i.e. teaching costs can be adjusted through the overall staffing process.  However, other costs take time to adjust and restructure.  The declining enrolment grant helps to offset lost grant revenue during this transition period;
  •         $968,000 is provided for the forecast enrolment decline in 2012-2013.  Balance in funding is the phase-in amount over two previous years.  Year two phase-in is 50% and year three is only 5%;
  •         In 2013-2014, the Board will lose $921,000 of the 2012-2013 total allocation.  This may be offset by a new allocation, if enrolment continues to decline;
  •         If/when enrolment stops declining, this transitional funding will quickly disappear.
        Ms. Braidford reviewed the Board’s revenue sources, other than the Funding Model, as appended.  She indicated that $10.9 million of the other revenue sources represents a $3.7 million increase from $7.2 million last year.

        Ms. Braidford reviewed the following information related to other revenue:

Other Provincial Grants                                                 

  •         Literacy & Basic Skills – Ministry of Training, Colleges and Universities grant relatively flat year over year
  •         Employment Resource Centre – program eliminated – loss of $146,000, however, this program was essentially operating at a cost recovery (no lost profit)
  •         Ontario Youth Apprenticeship Program – no anticipated change
  •         Adult ESL – slight increase to reflect enrolment
  •         Ministry of Education – Full Day Kindergarten – enrolment based – year 3 with eight more schools – full enrolment 1,124 vs. 520 prior year (50% GSN, 50% EPO)
  •         Ministry of Education Other – more EPO announcements so far; more to come in year – waiting to hear about Program Enhancement Grant (previously GSN $598,000)
Tuition Fees

  •         International students – increase in fee as calculated by Ministry – slight decreased enrolment at elementary (23 vs. 25) and increase at secondary (136 vs. 115)
  •         First Nations – decrease in fee as calculated by Ministry – paid by Federal government – consistent enrolment (steady at 11)
  •         Community Education and Outreach – no significant change
Other

  •         School rentals:
  •                 Term leases – primarily to day care agencies
  •                 Community use – similar usage
  •         Cafeteria and beverage – reduced sales and commission rates due to P/PM 150
  •         Interest – reduced as Board will finance new schools until OFA debt issued
  •         Administrative cost recoveries – payroll for FCCC and accounting for Tri-Board Student Transportation Services Inc.
  •         Instructional cost recoveries – athletic programs and camps – similar
  •         International students – portion of fee above fee calculated by Ministry
  •         Continuing Education contracts – slight increase
        Trustee Jackson stated that as mentioned previously, there are some changes in enrolment in some families of schools.  He asked if we have clusters of declining enrolment that we could look at in families of schools and about what that would look like across the system.  Manager Toms indicated that he would provide this information to Trustees in the near future.

        In response to a question from Trustee Murray, the Director stated that students in Junior Kindergarten and Senior Kindergarten, who are not in full day programs, are counted as one-half.  She said that Full Day Kindergarten students are counted as full time, but the second half is not included in the regular GSNs.

        Superintendent Richard stated that we receive funding for Full Day Kindergarten through an EPO Grant, as opposed to through the regular GSNs.  He said that this is a cost saving measure for the Ministry at this time.

        Trustee Jackson referred to FDK and asked if Sir John A. Macdonald Public School was over subscribed.  Superintendent Richard stated that we have monitored registration for FDK closely, and we do not think we will be over subscribed.  However, we do not know who will register the first day of school.  He indicated that if a student does not live in the catchment area, the Principal has to indicate that there is space at the school to accommodate that child before he/she can attend the school.  Director Hunter stated that children from out of boundary would have to go on a waiting list.  She said that the number of a classes projected is where we sit at the moment, and that we are gathering information regularly.

        Superintendent Fraser-Stiff stated that we are tracking registrations for FDK on a weekly basis, and right now we are well within the projections.  She said that no one school has projections over of what we anticipate.

        Trustee Brown stated that on page 4 of the handout, Ms. Braidford mentioned about the Ministry reviewing and updating the definition of a school site, and she asked for clarification.

        Superintendent Richard stated that Napanee District Secondary School and The Prince Charles School site is being considered.  He said that the reason the Board could be impacted is under the School Foundation Grant, if a board has a building next to another building on a contiguous piece of land, it is considered to be on one site.  He said that under the School Foundation Grant a board receives funding for a building in order to keep a Principal, Vice-Principal and a Secretary.  However, if two schools are considered to be on the same site, then there is funding for one Principal only, except where a secondary school’s enrolment is above 500 and an elementary school’s enrolment is above 300.  He said that our Board is not impacted because we meet the threshold for combined sites, i.e. for Napanee District Secondary School and The Prince Charles School, as well as for Ernestown Secondary School and Odessa Public School.
        
        Chair French thanked Ms. Braidford for providing the above-noted information, and for providing her speaking notes.

RECESS TO PRIVATE SESSION

        MOVED BY Trustee Jackson, seconded by Trustee Murray, that the Board recess at 6:45~p.m. for five minutes to reconvene in Private Session at 6:50~p.m.–Carried
        
COMMITTEE OF THE WHOLE BOARD

        MOVED BY Trustee Crawford, seconded by Trustee Jackson, that the Board resolve itself into a Committee of the Whole Board in Private Session at 6:50 p.m.– Carried

PRIVATE SESSION - ATTENDANCE


L. French, Vice-Chair
H. Brown
H. Chadwick
E. Crawford
D. Jackson
P. Murray
S. Ruttan

Budget Update

        The Director and Superintendent Richard provided information that could potentially affect the budget long term.

Committee to Rise and Report

        MOVED BY Trustee Jackson, seconded by Trustee Brown, that the Committee of the Whole Board rise and report to the Board.–Carried

Next Meeting Date

        The next meeting of the Committee of the Whole Board to discuss the budget is scheduled for Monday, May 28, 2012, at 6:00 p.m.

Adjournment

        MOVED BY Trustee Jackson, seconded by Trustee Chadwick, that the meeting adjourn at 7:25~p.m.–Carried