December 2012

Adopted Budget 2012-13 December 2012 2012-13 ADOPTED BUDGET December 11, 2012 Educational Services Center, Building 1 15701 East 1st Avenue Aurora, Colorado 80011 November 27, 2012 To the Members of the APS Board of Education And the Citizens of the Aurora Public Schools District: We are pleased to present the re-adopted budget for fiscal year 2012-13 to the board of education and the citizens of Aurora Public Schools. Despite continuing state funding reductions, the Aurora Public Schools budget remains in balance. Most importantly, the 2012-13 spending plan aligns fiscal resources with programs designed to raise the achievement of all students. OVERVIEW Balancing the APS budget, while providing quality educational services, is the top priority for the district. Through this process, current and future fiscal year revenues and expenditures are projected by school, program and fund. We then produce a statement of spending priorities aligned with the instructional needs of our students. This budget reflects almost $4 million in anticipated higher costs for insurance, retirement, health care and utilities. State per pupil funding increased by 0.5%, from $6,715 to $6,748, in 2011-12. Revenue from Ad Valorem taxes will increase by $15 million, due to the successful mill levy override election held in November 2012. Specific Ownership Taxes and other General Fund revenues overall are not expected to increase significantly. Fund balance carry forward in the General Fund increased by $4.7 million, due to 1) a lower than expected spending rate in the 2011-12 fiscal year, 2) a higher than average revenue collection rate and 3) actual accrued compensation was approximately $0.8 million less than budgeted. During the planning cycle for the FY2012-13 budget year, APS anticipated that, in the coming years, the district could expect relatively flat state funding for K-12 education as well as small increases in local tax collections and higher costs of operations due to inflation and mandatory payment increases to the state retirement fund. Given this outlook, APS engaged in a collaborative effort with employees, parents and community members to identify alternatives to lower the rate of cost growth in the years to come. Toward this end, $4.6 million of the $4.8 million of budget reconciliation measures are identified as recurring reductions and will partially reduce our need to further cut expenditures in FY2013-14 and beyond. Due to the generosity of the voters in Aurora who approved the $15 million override, the district will have the resources to restore some of the programs and activities that were eliminated in the prior three years. The budget for FY2012-13 presents a General Fund revenue and expenditure plan that will begin the fiscal year with a sound plan to balance revenues and expenditures while providing for required reserves. Across all funds, this budget includes FY2012-13 appropriations of $539.5 million in the following funds: General Athletics Bond Redemption Building Charter Schools Colorado Preschool Education Foundation Grants Nutrition Services Internal Services Fund Agency Risk-Related Activity Special Programs Pickens School Health Services FY2012-13 BUDGET HIGHLIGHTS To accommodate the anticipated freeze in General Fund revenues and higher costs, APS began FY2012-13 with these identified General Fund expenditure reductions totaling $4.8 million: • Recalibrate charter school at-risk funding $300,000 • Drawdown remaining federal Education Jobs ARRA funds $250,000 • William Smith budget realignment $250,000 • Reduce board-designated fund balance reserve $1,845,147 • Allocate Series 2010B&D bond subsidy revenues to the General Fund (recurring revenue increase) $1,242,683 • Reduce General Fund allocation to Support Services for Capital Projects activities $1,000,000 2012 Mill Override Funds The 2012 mill override funds will alleviate some of the budget reductions experienced over the last four years. The mill override revenues of $15 million will be used to: • Recover a portion of reduced state funding for reading, writing, math, science, early childhood education and more public school $9,650,000 choices. • Recover a position of reduced state funding for instructional classroom technology, equipment and curriculum materials $1,750,000 which aid in preparing students for college and careers. • Recruit and retain high quality teachers and staff to provide for smaller class sizes, increases in graduation rates and lower $3,600,000 dropout rates. 2008 Mill Override Funds Due to prior years’ declines in assessed value, revenues from the 2008 mill override continue to be depressed by weak economic conditions. When originally passed, the 2 2 2008 override provided APS with $14.7 million per year to enhance instructional programs. APS uses these funds to: • Raise teacher and staff pay in 2008-09. • Expand full-day kindergarten. • Expand instructional technology. • Expand the truancy program. • Fund a portion of the district’s Fifth Block of summer instruction. • Expand pilot/pathway/magnet schools and programs. • Expand the Positive Behavior Support program. • Expand the International Baccalaureate program to all levels. • Increase per-pupil funding to the district’s six charter schools. In 2012, preliminary reports from the assessors for Adams and Arapahoe Counties report an increase of 0.3%, or $4.9 million, in assessed property value within the APS boundary. This small increase in assessed value is welcomed, but it does not restore funding to the 2008-09 level. As a result, we anticipate that 2008 mill override revenues for FY2012-13 will be $13.6 million, or $1.1 million lower than in 2008. 1990 Mill Override Funds The 1990 mill override continues to provide $7.6 million for the General Fund’s operations. The mill levy amount fluctuates as assessed value changes, providing a constant revenue to the district. The 2012-13 mill levy will be 4.366, a decrease of 0.3%, or 0.12 mills, compared to the previous year. Bond Funds Thanks to the generous support of voters who approved our $215 million bond in November 2008, every school in the district will receive renovations, improvements or technology upgrades financed by the bond proceeds. All projects are listed in the project book at http://bond.aurorak12.org/. As of December 2010, APS had sold all $215 million in bonds approved by voters in the November 2008 election. A portion of these bonds were sold under the federal Build America Bonds program, and we expect these to return approximately $1.243 million per year to APS as General Fund revenues from the Internal Revenue Service. APS is using these funds to offset lower state and local revenues. Whereas assessed valuations have declined by $125.5 million since the 2008 bond election, the mill rate required to service outstanding bonded debt will likely increase to 19 mills during the December 2013 mill certification. This will raise the tax liability on the typical $200,000 home by about $6 per month. Historically, increased property valuations have resulted in a constant or even decreasing mill levies. However, due to persistent decreases in valuations, the mill levy will likely increase in the near term. GROWTH From October 2007 through October 2010, student counts in our district increased by over 4,000 students, or 12.9 percent. In October 2011, APS realized growth of 2.8 3 3 percent, exceeding initial projections of 2.2 percent. The original budget for 2012-13 was based on a decrease in student enrollment of (1.1%). After receiving the preliminary October 2012 student count, the state per pupil revenue budget was adjusted to reflect an increase of 1.4%, or 448 funded students. PROJECTIONS As with any plan, the FY2012-13 budget is based upon key assumptions. These range from changes in enrollment and per-pupil revenue amounts to assessed valuations and staffing ratios. Assumptions upon which this budget is based are: • FY2012-13 Per-pupil revenue: $6,748 • FY2012-13 Additional mill levy override revenues: $15 million • FY2012-13 Increase in projected enrollment: 448 students, an increase of 1.4% • Assessed value of property within APS boundaries: $1.750 billion • FY2011-12 General Fund revenue collection rate: 101% • FY2012-13 General Fund revenue collection rate: 100% • FY2011-12 General Fund spending rate: 96% • School teacher equivalent staffing ratios: No change from FY2011-12, 25.2 for Elementary Schools, 20.65 for Middle Schools and 21.6 for High Schools Given economic uncertainties confronting the nation and Colorado, the APS team will continue to work closely with employee groups and members of the community to create options that maintain the financial health of APS while contining our progress in raising student achievement. I am confident that in partnership with our employees and community we will meet this challenge and the needs of our students. SUMMARY Today, APS is prepared to enter its fourth year of reduced state revenues and tight budgets. This budget includes measures to address rising mandatory costs for employee retirement and to maintain class sizes in the face of rising enrollment. Notwithstanding this difficult financial situation, the district continues to make progress in providing its community with educational choices that are raising student achievement. With our VISTA 2015 Strategic Plan, we will build upon progress already achieved to ensure that we can graduate every student with the choice to attend college without remediation. Sincerely, John L. Barry Superintendent of Schools 4 4

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