Your browser does not support JavaScript!
May 27, 2013 - Committee of the Whole Board (Budget) Meeting
Committee of the Whole Board (Budget) Meeting
Limestone District School Board
May 27, 2013

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 Monday, May 27, 2013, at 6:00 p.m.                         
Present Trustees:
G. Beavis
H. Brown
H. Chadwick
E. Crawford
A. Goodfellow
D. Jackson
B. Milligan, Student Trustee
P. Murray
S. Ruttan
Present Staff:
M. Baumann, Manager of Financial Services
K. Burra, Supervisor of Safe and Caring Schools and Assistant to the Director
D. Fowler, Manager of Facility Services
B. Fraser-Stiff, Superintendent of Education
T. Giles, Supervising Principal
R. Holmes, Supervising Principal
B. Hunter, Director of Education
D. Kirkpatrick, Recording Secretary
S. Lehman, Supervising Principal
N. Marsh, Superintendent of Education
A. McDonnell, Supervising Principal
R. Richard, Superintendent of Business
K. Smith, Communications Officer
W. Toms, Manager of ITS and Planning Officer
        The meeting was chaired by Trustee Goodfellow.  She called the meeting to order, advising that regrets were received from Vice-Chair French and Student Trustee Yun.

APPROVAL OF AGENDA

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

DECLARATION OF CONFLICT OF INTEREST

        No Trustee declared a conflict of interest.

REVIEW OF PRELIMINARY 2013-2014 REVENUE BUDGET

        Superintendent Richard stated that this year’s budget process is the same as the process used in past years.  He said that we will 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 indicated that Manager Baumann had about one month since she was hired last year to complete the Board’s financial statements, advising that she did an outstanding job.  He said that he was very impressed with Manager Baumann’s understanding of the budget process in such a short period of time.

        Manager Baumann stated that this revenue budget is not yet presented on a full PSAB basis (i.e. it excludes school generated funds estimated at $6.5 million and Charitable Trust funds estimated at $180,000).  She indicated that it also does not include capital, as these components will be incorporated at a later date.

        Manager Baumann reported that this presentation has been prepared consistent with previous years’ presentations for ease of comparison and understandability.  She advised that the preliminary 2013-2014 budget is presented alongside the 2012-2013 original and revised estimates budges for comparison purposes.  She indicated that commentary will be provided throughout the presentation to articulate significant areas of variance and reasons for change.

        Manager Baumann noted the following enrolment forecast:



2013-2014 Budget
Revised Estimates
2012-2013
Original 2012-2013 Budget
Enrolment
Average Daily Enrolment
    Elementary
    Full-Day JK/SK EPO funded
    Secondary
    Secondary – High Credit
    Adult, Cont Ed, Summer School

11,914
             900
 6,698
    89
   645

11,956
              571
           7,223
                  0
     647

11,950
               562
            7,150
                   0                           581

        Manager Baumann indicated that the above-noted enrolment forecast includes 11 First Nations secondary pupils and 10 elementary and 103 secondary International Visa pupils.  She advised that full-day learning pupils are funded 0.5 FTE in the regular GSNs (in elementary enrolment above) and 0.5 FTE through EPO grants (in full-day JK/SK above).  She indicated that with regard to adult enrolment, there are 440 ADE pupils (406 in 2012-2013 budget; Continuing Education, there are 30 ADE pupils (34 in 2012-2013 budget); and Summer School, there are 175 ADE pupils (141 in 2012-2013 budget).

Manager Baumann indicated that elementary enrolment is projected at 11,914 ADE, noting that this represents a decrease of 36 ADE pupils in comparison to the original 2012-2013 budget.  She said that, however, when incorporating FDK, elementary enrolment increases, versus prior year – 2013-2014: 12,814 ADE (11,914 + 900 FDK) versus 2012-2013: 12,512 ADE (11,950 + 562 FDK), noting that the resulting increase is 302 ADE when incorporating FDK.  She reported that year 4 includes 17 more schools.  Enrolment of 900 FTE is actually 1,799 pupils attending full day (0.5 funded through GSN and other 0.5 funded through EPO).

        Manager Baumann advised that secondary enrolment is projected at 6,698, which represents a decrease of 363 ADE pupils, in comparison to the original 2012-2013 budget, and a movement of 89 ADE pupils in the new high credit day school ADE category.  She indicated that the portion of a pupil’s enrolment over the 34-credit threshold is now included in the new high credit day school ADE category which is funded at the Continuing Education rate.  

Manager Bauman reported that Adult, Continuing Education and Summer School enrolment is projected at 645 ADE, which represents an increase of 64 ADE in comparison to the original 2012-2013 budget.  She 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 Baumann reviewed the Operating GSN Allocations information.  She reported that the Operating GSN allocations show a 1.89% decrease ($210.4 million vs. $214.4 million).

        Manager Baumann referred to the Pupil Foundation Grant, noting there is a decrease of $4.04 million or 4.07%.  She said that this grant is intended to cover classroom related costs, including teachers/supply teachers, library and guidance, consultants and professional supports, educational assistants, textbooks, supplies, and computers.  She said that the Ministry of Education set funding consistent with the current labour framework, meaning 0% salary increase, reduction of the teacher salary benchmark by 1.5% to recognize the three unpaid PA days and a reduction of the benefit benchmark by .167% as part of the phase-out of retirement gratuities.  Manager Baumann said that the Board has made the same assumptions through the compensation expenditure budget for consistency.  Should the labour framework differ from the current proposal, grants and expenditures will be adjusted accordingly.  Overall funding is reduced by declining enrolment and the movement of 89 high credit ADE to Continuing Education.

        Manager Baumann stated that there is a decrease of $893,000 or 5.57% in the School Foundation Grant.  She advised that this grant is intended to cover costs of in-school administration and leadership – Principals, Vice-Principals and Secretaries.  She said that the same assumptions apply regarding the 0% salary increase, unpaid days (three for Principals and Vice-Principals and one day for Secretaries) and benefit reductions.  She said that funding for Principals is based on school rather than enrolment.  However, Vice-Principals and Secretaries are funded on a graduated scale that incorporates enrolment.  She said that two elementary schools are closing (Hinchinbrooke PS and Sharbot Lake PS, including two portables for Grades 7 and 8 at Sharbot Lake HS); one secondary school is closing (Sharbot Lake High School); and one new K-12 school is opening (Granite Ridge Education Centre).

        Manager Baumann stated that there is a decrease of $722,000 or 2.28% in the Special Education Grant.  She said that the decrease in overall funding versus the original 2012-2013 budget is due to declining enrolment and a reduction in the Special Equipment Amount (SEA) per pupil amount which is transitioning from a school board specific per pupil amount to a single provincial per pupil amount by 2014-2015.  She indicated that the SEA allocation decreased by $244,000, the SEPPA allocation decreased by $290,000 and the High Needs allocation decreased by $188,000.  She said that factoring in the FDK EPO funding, the special education budget will increase in overall funding versus the original 2012-2013 budget by $366,000.

        Manager Bauman stated that there is a decrease of $39,000 or 1.19% in the Language Grant.  The allocation represents FSL of $2.6 million and ESL of $615,000; both are enrolment adjusted.  Manager Baumann indicated that the same assumptions apply from the labour framework.  ESL has also been decreased to reflect updated 2006 census data; 2013-2014 is the fourth and final year of the phase-in of the 2006 census data.

        Manager Baumann referred to the Outlying Schools and Remote and Rural Grant.  She stated that there is a decrease in the Outlying Schools and Remote and Rural Grant of $174,000 or 7.12%.  She said that both grants are enrolment adjusted, and top-up funding is not being provided to new schools for their first five years of operation.

        Manager Baumann indicated that in the Rural and Small Community Grant there is a decrease of $4,000 or 2.72% and the grant is enrolment adjusted.  She referred to the Learning Opportunities Grant, noting that there is an increase of $146,000 or 3.8%.  She commented that base funding of $2.4 million is demographically driven and has been increased by $182,000 versus 2013-2014, to reflect updated 2006 census data.  2013-2014 is the fourth and final year of the phase-in of the 2006 census data.  She said that other components of this grant include: literacy/numeracy, student success, school effectiveness, OFIP and High Skills Major, which are all enrolment adjusted.

        Manager Baumann reviewed information regarding the Adult and Continue Education Grant, as follow:

  • Increase of $556,000 or 27.87%;
  • New high credit ADE accounting for $294,000;
  • Enrolment adjusted.  Increased enrolment in adult education, summer school and international languages.
        Manager Baumann reviewed information regarding the Teacher Compensation Grant, as follows:

  • Increase of $1.2 million or 9.57%;
  • 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 from the labour framework;
  •                 Recognizing grid movement based on the 97th day provision which was not recognized in the original budget for 2012-2013;
  • 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 Baumann reviewed the following New Teacher Induction Program Grant:

  • Increase of $1,000 or .63%;
  • 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 Baumann reviewed information related to the Transportation Grant, as follows:

  • Increase of $103,000 or .72%;
  • The amount is enrolment adjusted.  However, boards receive support for 50% of any funding decrease driven by declining enrolment;
  •                 2% cost increase to recognize higher operating 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 Baumann reviewed information relating to Administration and Governance, as follows:

  •         Decrease of $101,000 or 1.84%;
  •         This grant allocation is enrolment adjusted;
  •         The Ministry expects to roll out a new funding model for administration that will better reflect key cost drivers and cost structures of school boards.
        Manager Baumann reviewed information related to the School Operations Grant, as follows:

  •         Decrease of $134,000 or .65%;
  •         There continues to be a 2% funding increase to assist boards in managing commodity prices for natural gas, electricity (7.9%), insurance and other costs;
  •         Remaining costs are 0% funding increase, as well as enrolment adjusted.
        Manager Baumann reviewed information related to the Community Use of Schools Grant, as follows:

  •         Decrease of $1,000 or .33%;
  •         Grant is fairly consistent year over year.
        Manager Baumann reviewed information related to the Declining Enrolment Grant, as follows:

  •         Increase of $69,000 or 4.77%;
  •         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;
  •         $1.2 million is provided for the forecast enrolment decline in 2013-2014.  The balance of funding is the phase-in amount over two previous years – year two phase-in is 50% and year three is only 5%;
  •         In 2014-2015, the Board will lose $905,000 of the 2013-2014 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. Baumann reviewed information regarding the First Nations Grant, as follows:

Increase of $5,000 or .78%;
Grant is enrolment adjusted.

Manager Baumann reviewed information regarding the Safe Schools Grant, as follows:

  • Decrease of $10,000 or 2.64%;
  • Grant is enrolment adjusted.
        Ms. Baumann reviewed the Board’s revenue sources, other than the Funding Model.  She indicated that $15.6 million of the other revenue sources represents a $4.7 million increase from $10.8 million at original budget last year.

        Ms. Baumann reviewed the following information related to other revenue:
        
•     Increase of $556,000 or 27.87%;
•     New high credit ADE accounting for $294,000;
•     Enrolment adjusted.  Increased enrolment in adult education, summer school and international languages.
        
                Manager Baumann reviewed information regarding the Teacher Compensation Grant, as follows:
        
•     Increase of $1.2 million or 9.57%;
•     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 from the labour framework;
•     Recognizing grid movement based on the 97th day provision which was not recognized in the original budget for 2012-2013;
•     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 Baumann reviewed the following New Teacher Induction Program Grant:
        
•     Increase of $1,000 or .63%;
•     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 Baumann reviewed information related to the Transportation Grant, as follows:
        
•     Increase of $103,000 or .72%;
•     The amount is enrolment adjusted.  However, boards receive support for 50% of any funding decrease driven by declining enrolment;
•     2% cost increase to recognize higher operating 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 Baumann reviewed information relating to Administration and Governance, as follows:
        
•     Decrease of $101,000 or 1.84%;
•     This grant allocation is enrolment adjusted;
•     The Ministry expects to roll out a new funding model for administration that will better reflect key cost drivers and cost structures of school boards.
        
                Manager Baumann reviewed information related to the School Operations Grant, as follows:
        
•     Decrease of $134,000 or .65%;
•     There continues to be a 2% funding increase to assist boards in managing commodity prices for natural gas, electricity (7.9%), insurance and other costs;
•     Remaining costs are 0% funding increase, as well as enrolment adjusted.
        
                Manager Baumann reviewed information related to the Community Use of Schools Grant, as follows:
        
•     Decrease of $1,000 or .33%;
•     Grant is fairly consistent year over year.
        
                Manager Baumann reviewed information related to the Declining Enrolment Grant, as follows:
        
•     Increase of $69,000 or 4.77%;
•     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;
•     $1.2 million is provided for the forecast enrolment decline in 2013-2014.  The balance of funding is the phase-in amount over two previous years – year two phase-in is 50% and year three is only 5%;
•     In 2014-2015, the Board will lose $905,000 of the 2013-2014 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. Baumann reviewed information regarding the First Nations Grant, as follows:
        
•     Increase of $5,000 or .78%;
•     Grant is enrolment adjusted.

Manager Baumann reviewed information regarding the Safe Schools Grant, as follows:

•     Decrease of $10,000 or 2.64%;
•     Grant is enrolment adjusted.
•     
                Ms. Baumann reviewed the Board’s revenue sources, other than the Funding Model.  She indicated that $15.6 million of the other revenue sources represents a $4.7 million increase from $10.8 million at original budget last year.
        
                Ms. Baumann 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
  •         Ontario Youth Apprenticeship Program – no change
  •         Adult ESL – slight decrease to reflect enrolment decrease
  •         Ministry of Education – Full Day Kindergarten – enrolment based – year 4 with 17 more schools – full enrolment 1,799 vs. 1,124 prior year (50% GSN, 50% EPO)
  •         Ministry of Education Other – based on EPO announcements so far; more to come in year
Tuition Fees

  •         International students – decreased enrolment at elementary (10 vs. 17) and secondary (103 vs. 115)
  •         First Nations –paid by Federal government – enrolment increase by 1 to 11
  •         Community Education and Outreach – no significant change
Other

  •         School rentals:
  •         Term leases – primarily to day care agencies and community use
  •         Cafeteria and beverage – reduced sales and commission rates due to P/PM 150
  •         Interest – increased as Board has added Sydenham HS addition and FDK new classrooms to the loan agreement
  •         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.  Increase to special camps provided.
  •         Continuing Education contracts – decrease due to change in PSW program
Manager Baumann reviewed the following information:



2013-2014 Budget
Revised Estimates
2012-2013
Original 2012-2013 Budget
Allocations from Funding Model
Operating Grants
$210,401,000
$216,160,000
$214,448,000
Debt Charges
  Permanently Financed
  Capital Debt Support Interest

$       457,000
$    2,122,000

$      457,000
$   2,187,000

$      457,000
$   2,187,000
Total GSN funding allocations
$212,980,000
$218,804,000
$217,092,000
School Renewal Capital
School Condition Improvement
$    3,915,000
$    1,886,000
$    3,993,000
$    1,847,000
$    3,964,000
$    1,847,000
Total Capital allocations
$    5,801,000
$    5,840,000
$   5,811,000
Capital Debt Support – Principal
$    1,386,000
$    1,321,000
$   1,321,000

Manager Baumann reviewed the Operating GSN Allocations information, as follows:

  • Operating grants include the financing of debt interest charges of $2.6 million;
  • Debt charges permanently financed of $457,000 represents the 55 School board Trust debt (pre amalgamation liabilities not permanently financed until 2003);
  • Capital debt support interest of $2.1 million included:  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 all pertaining to expenditures incurred under the Good Places To Learn Program;
  • New OFA loan documentation will be sent to the Board on June 6, 2013 for Southview PS and École Sir John A. Macdonald PS.  Once received the schedule will be updated to reflect the principal and interest portion applicable to 2013-2014.  The new OFA long-term financing will be for $28.5 million;
  • In addition, capital funding is provided for school renewal annually.  Updates to the factors affecting the school renewal grant allocation calculation result in decreased funding of approximately $78,000.  The school condition improvement fund has also continued in 2013-2014 (year 3 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 and expenditures.
        Manager Baumann provided an overview of the Preliminary 2013-2014 Revenue Budget, as listed below.  
                                        

2013-2014 Budget
Revised Estimates
2012-2013
Original 2012-2013 Budget
Total GSN funding allocations
Ministry of Education
Municipal Tax Revenue

$152,903,000
   60,077,000

$158,986,000
   59,818,000

$157,274,000
   59,818,000
$212,980,000
$218,804,000
$217,092,000
Other revenues
$  15,618,000
$   13,416,000
$    10,858,000
Capital revenues taken into income
$                  0
$                  0
$                  0
Deferred revenues taken into income
$                  0
$                  0
$                  0
Unfinanced operating expenditures
        TBD
$    1,829,000
$    1,806,000
Total
$228,598,000
$234,049,000
$229,756,000

        Manager Baumann stated that the above-noted information excludes an estimated $6.5 million of school and school council revenues and $180,000 of Limestone DSB Charitable Trust fund revenues that will be consolidated in the budget submission to the Ministry of Education.  As such, this preliminary revenue budget is not considered to be prepared on a PSAB (Public Sector Accounting Board) basis, i.e. it does not comply in all respects with the Ministry of Education requirements for presentation for the 2013-2014 Estimates.

        Manager Baumann provided an overview of the revenue summary, as follows:

  • The preliminary operating revenue budget is $228.5 million, which includes grants, municipal taxes and other income.
  • 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.
  • Similar to last year, declining enrolment continues to cause reductions in grant funding.  However, increases in Full Day Kindergarten (FDK) enrolment are helping to offset the decline in funding.  The ‘other revenue’ category is where the EPO component of the FDK funding resides.
Manager Baumann advised that in general, the Ministry of Education requires school boards to submit a balance budget whereby in-year expenditures are less than in-year revenue.  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 (operating grants plus permanently finance debt charges) to ensure that boards are not facing undue financial risk.

Manager Baumann stated that the Board is permitted to adjust the fully PSAB financial position to a modified version for balanced budget compliance calculation purposes.  She said that historically, boards have been able to exclude vacation accruals and employee future benefits/post-retirement benefits from overall expenditures.  She indicated that vacation accrual is no longer excluded from expenditures for compliance.  Limestone DSB absorbed the accumulated vacation accrual in its entirety in 2011-2012; however, in going forward, the annual budget must now absorb any in-year changes to the vacation accrual.

        Manager Baumann said that the Ministry if now taking the same approach with the WSIB benefit liability, i.e. 50% of the in-year change in the in-year change in the unfunded liability will now be included in compliance.  Boards will also now be required to manage the retirement gratuities and sick leave employee future benefits, as well as the retirement health, dental and life insurance plans on a PSAB actuarial valuation basis (to be amortized over Estimated Average Remaining Service Life – EARSL), rather than on a cash basis (expensed as paid).

        Trustee Goodfellow thanked Ms. Baumann for providing the above-noted information, and for providing her speaking notes.

Committee to Rise and Report

        MOVED BY Trustee Chadwick, seconded by Trustee Murray, 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, June 3, 2013, at 6:00 p.m.

Adjournment

        MOVED BY Trustee Beavis, seconded by Trustee Jackson, that the meeting adjourn at 6:30~p.m.–Carried