001Hello everybody. My name is Matt Clark. I serve as the director of business and finance for the Sun Prairie Area School District. Here tonight to pre present on the budget forecasting and planning for the 2627 fiscal year and beyond. So why do budget forecasting and and how do we do it here at Sun Prairie? Um so first why um why we do this is to be able to proactively plan um rather than um react to any future budget shortfalls that we that we have or see in the future. Um we do this in accordance with board's operational expectations in OE5. Um, and we do this as well to ensure resources are available to be able to meet community and schoolboard expectations in SRS, OEES, and OS. And we do this through um the BARED budget
002forecast model. So, this is a model that we've used for many years. gives us a five-year forecast of where we're at. Looking at past spending um and then utilizing that information to project future spending as well as future state revenues um and the future enrollments which we'll get into with the applied population lab um results that are in a different agenda item tonight. So, a quick note on projections. um all long range projections have a weakness and not being able to accurately predict every single factor that could impact our district budget. So um especially with this being the the second year of a state banium budget, one of the the good things about that is that we do have a lot of known variables um that the state budget had put into place last year.
003However, when you look at the five-year forecast forecast model that's going to be spanning over two different binding budgets and different governor, a lot could change. So, um this is as close as we think the forecast and as accurate as we think the forecast can be at this point with everything that we know. But please know that um a lot can change especially in the world of public school finance. So the budget assumptions um I'll start with enrollment um in the past we've aligned our enrollment assumptions with the applied population lab through the University of Wisconsin Madison and we've utilized the baseline model to project where our enrollment is going to be for future years not only the next five years but even the next 10 years. So, um, we received an updated report, um,
004and APL is projecting the district's enrollment to decline by a total of 235 students in the next 5 years. Um, for this next year, 2627 that we're starting to budget for, APL is projecting a decline of 45 students. Um however what we saw last year was that the actual um decline of students was more than APL had um initially projected. So we wanted to make sure that we were um as conservative as we felt um we could be. And so with that, in this budget that you'll be um seeing tonight, we are budgeting a decrease of 75 students opposed to 45. Since third Friday in September of this year, the district has experienced a net increase of 28 students. Um though enrollment continues to fluctuate. So that that did in um that is something that
005we make sure that we're keeping in mind as we're we're budgeting for enrollment as well. This budget also assumes a modest annual [clears throat] decrease in the net of open enrollment in versus open enrollment out moving forward. So if you remember students who open enroll into our district we receive revenue for. Students who open enroll out of our district we incur an expense. So there in lies a net gain or loss in open enrollment. And historically some prairie has been a net gain district. Um but that gap has been closing. So, we've made sure to um include that in this budget over the next five years. We've also seen an increase in voucher participation not only in our district but statewide. So, we've reflected that in these assumptions as well. So, other key assumptions, um
006I'm just going to go at a high level over these. I would encourage um board members or whoever is watching to go look into our situation report. Um, I've gone into more detail on each of these assumptions as well as a couple others. So, um, as I mentioned, this is the second year of a state budget year, which means we know we're getting $325 of a revenue limit increase per pupil um, next year. After that, we'll see. Um, but we currently have that um, in our model for the next five years. This budget also has an assumption of 39% special ed reimbursement going forward. If you remember back to our state budget um from this last year, we were told we'd be receiving 42%. In this [clears throat] current fiscal year and 45% in 2627
007because it is a some certain um funding mechanism that's trending more at 37 and a half this year opposed to 42. So, we're conservatively budgeting for 39% opposed to 45%. Um, that can change um and we can always adjust moving forward, but we feel comfortable with that assumption. At this point, we have a a current assumption um and we worked with Bear to get a lot of the factors um with state aid, what they're currently seeing statewide, what they're anticipating for our district. Um we're currently projecting a small increase in state aid. However, after that, we are projecting decreases. Um, just one quick note on state aid. A lot of what goes into that formula is enrollment. So, as districts decline in enrollment, naturally, what will usually happen is state aid will also decline with
008that. We have uh currently in this assumption uh in our salary assumption 3.13% increase for next year and 3% after that. um as CPIU is finalized, we can always adjust that, but um that is what we currently have in our budget. CPI as well as the professional development um adjustments as well. We have an increase of 10% built in for health insurance for next year. Um and then after that between 6 and 8%. Health insurance has been is becoming more and more prevalent in our budget and will be something that we'll have to continue to monitor moving forward. We also have a strategic transfer of funds built into this budget over the next two years from fund 10, our general fund to fund 46, which is our long-term capital maintenance. I like to call it
009our rainy day fund um for capital maintenance purchases. Um, we also have all planned expenditures related to the November 24 operating referendum and that phase in plan um through 2829. That is all built into what you're about to see. I bring up this slide just to remind the board that the model that you're going to see for our five-year forecast is us rolling over our current class size assumptions and therefore our current staffing. Um really the model that you're about to see is us rolling over again everything and everyone that we currently have with those increases to health insurance to salaries um in the next five years. Um so really everything that we do 80% of our budget roughly is staffing and we staff based off of these class size assumptions. So, I'm just bringing
010this this to light in our uh budget conversations as this is something that we look to as a guiding light in terms of staffing. So, as I talked about, we um have built in the referendum, the planned referendum expenses in 2627 um which will include the dual credit double enrollment with Madison College STEM Academy. We're estimating those costs to be $200,000 in 2627 and then a million dollars in staff compensation which again will align with adjustments resulting from hourly support and admin support wage studies during the next two fiscal years. And here's the summary of of those referendum funds that are built into our budget for next year. So then we get to the five-year forecast model. Um there's a lot going on in this um spreadsheet, but this gives you a a snapshot of
011a lot of the assumptions that um I just went over. Um it gives you our historical look in that gray column, our current year budget in the light blue column, and then the next five years after that, where we're looking. So, as you can see, um we have um a balanced budget for the next three years. Um which is great news and that's really a result of of our referendum, right? Um we have the declining membership or enrollment built in there, our per people 325 increase. We do have equalized property value growth at 4%. In the past, you've seen that maybe at five or six at this point in the budgeting cycle. What we're seeing statewide is that equalized valuation growth is starting to taper off from the last 5 to 10 years of of
012really hyper growth um for equalized valuation. So being conservative um there we we put 4%. And then as you can see with the tax levy mill rate we see increases in both of those um over the next two years really three years. Um, one thing to note with the mill rate is that the mill rate is tied directly with the equalized valuation growth. So if that 4% ends up being 6%, you can expect our mill rate to decrease. Um, it is also good to note that our mill rate is going to be able to in this current projection remain under the $11.30 which was communicated in the referendum to our community. So, as I alluded to, why no deficit in the next handful of years is really um tied to the passing of the referendum.
013Um we're projecting to avoid a significant deficit through 2829. Um again, while forecast numbers are predictions based on assumptions, um we will have more clarity um each and every month on these assumptions and we'll make sure that we're updating the board and the community um as some of these values become known. So with that, I want to thank you for listening. Um please reach out if you have any questions at all. I'd be happy to talk with you. Thank you for your support. [music]