Outline SC Budget and Revenues Convergence 2017 Transportation and Pension Reform Economic and Budget Outlook Future Funding Possibilities Capital Improvement Funds Current and Future ID: 695592
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Slide1
Fall 2017 Conference
Myrtle Beach SCSlide2
Outline
SC Budget and Revenues
“Convergence 2017” - Transportation and Pension
ReformEconomic and Budget Outlook Future Funding PossibilitiesCapital Improvement Funds (Current and Future)
2Slide3
South Carolina’s Budget and Revenues
Appropriations & Revenues
3Slide4
FY
2017-18
Appropriation Sources
General Fund (Gross) $8,533,988,000Less Tax Relief Trust Fund ($583,649,169)Less Homestead Exemption Shortfall ($25,735,247)
General Fund (Net Available) $7,924,603,584
Federal Funds
$8,623,469,730
Other Funds
$10,855,586,746 Total $27,429,395,307***SC Total Personal Income in 2016 is $192.6 Billion. So, the State Budget represents about 14% of economic activity in SC.
4Slide5
FY 2017-18
Net General Fund Revenue Available
Sales Tax $3,041,207,000Individual Income Tax $4,295,400,000Corporation Income Tax $ 329,486,000Other Sources $ 868,270,000 TOTAL (Gross) $8,534,363,000
Less Tax Relief Trust Fund
($583,649,169)
Less Homestead Exemption Shortfall
($25,735,247) Total (Net Available) $7,924,603,584
5Slide6
FY 2017-18 General Fund, EIA and Capital Reserve Appropriations
6
“New Money”
Recurring $417 Million One-time $ 95 Million CRF $ 139 Million Total: $651 Million Statewide Appropriations: Pension Stabilization $118 Million
Employee Pay/Health/Dental/Pension $ 58 Million
Hurricane Matthew and Pinnacle Mountain $ 69 Million
Reserve Funds $ 22 Million
Local Govt. Fund
$ 10 Million
Subtotal: $
277MillionState Agency Appropriations: K12 Education $ 80 Million Health & Environment $ 149 Million Higher Education $ 26 Million Econ. Develop, Tourism & Natural Resources $ 83 Million All Other $ 36 Million Subtotal: $ 374 MillionSlide7
Why “Convergence?”
Retirement Funding Reform &
Transportation Funding Reform7Both bills were the culmination of years of work in the legislative arena.Slide8
H3516
,
Transportation Funding
8Slide9
Road Funding…and Tax Cuts
9Slide10
H3726
,
Pension Reform and Funding
10Slide11
11
Act 13 of 2017
SCRS & PORS FUNDING IMPACT
Expected new cash flow into SCRS and PORS from
employers
as a result of contribution increases required by Act 13 is $73.6 million for FY 2017-18, and an additional $36.8 million for each of the next 5 years.
EMPLOYER
IMPACT
July 1
Employer Rate Increase
General Fund
Local Government
Federal /Other Funds
Total All Funding Sources
Cumulative Total
2017
2.00%
$73.6
$67.4
$95.4
$236.4
$236.2
2018
1.00%
$36.8
$33.7
$47.7
$118.2
$354.6
2019
1.00%
$36.8
$33.7
$47.7
$118.2$472.820201.00%$36.8$33.7$47.7$118.2$591.020211.00%$36.8$33.7$47.7$118.2$709.220221.00%$36.8$33.7$47.7$118.2$827.4Total Additional Funds to System over 6 years$3,191.4
($ in millions)Slide12
12
PENSION FUNDING
IN THE
FY 2017-18 GENERAL APPROPRIATIONS ACT
The General Assembly allocated $154.8 million funding to cover a portion (if not all) of the 2% employer contribution rate increases in FY 2017-18 for every employer that participates in SCRS or PORS as follows:
The full 2% for:
General-funded
state and school district employees
EIA-funded employees (teachers & other school employees funded through the EIA)
1% for:
Federal-funded employees (including state agencies & colleges)
Other-funded
state and school district employees (also includes colleges)
Local entities (counties, municipalities, associations, hospitals, special purpose districts)Slide13
Economic
and
Budget Outlook
Let’s take a look at the state’s income growth and employment growth..
13Slide14Slide15
15Slide16Slide17
17Slide18
Show Me the Money
An Unofficial Guesstimate of FY18-19 Available Revenues
Recurring
General Fund (Unofficial): $320 Million*DOT “Transfer Back”: $50 MillionRoad Bill Tax Cuts (Year 1): ($36 Million)Net “New Money”: $334 MillionNon-RecuringFY17 Surplus: $0CRF:
$145 Million
Net “Non-Recurring”: $145 Million
*SFC staff estimate.
Official
Prelim. BEA estimate due mid-November 2017.
18Slide19
Lookout! More Budget Outlook…things to Watch
Impact of Federal Tax Reform on South Carolina Taxpayers…and the General Fund?
Phase-in of additional tax cuts from Roads Bill over multiple years.
Pension – Implementation of Phase 1 – increasing employer costs.Pension – Phase 2? A new plan for new workers?Abbeville Equity Lawsuit (and School Bus Funding)?College Scholarships and Funding Impact of SDE grade scale change.It’s a Disaster - - - Natural Disaster Recovery requirements?“Shaken, Not Stirred” - - - is 2018 finally the “Year of Bond”? (Bond Bill, that is)19Slide20Slide21Slide22Slide23Slide24
Original
Base
Student
CostAt District
Level: 6,000 students
in a
District
One superintendent
One fiscal officer
One director of planning for every 3,000 students
One assistant superintendent
One program consultant for every 750 pupils
Five secretaries
24Slide25
Original
Base
Student
CostAt
School Level
(Minimum size of
375
students):
One teacher for every 26 pupils
One principal
One assistant principal (if have more than 500 pupils)
One secretary
One attendance clerk
One librarian
One library aide (if have more than 500 pupils)
One guidance counselor (if have more than 500 pupils)
25Slide26
Original
Base
Student
CostOther
Items:
$7
per pupil for instructional supplies,
materials &
library
books
$10 per
staff
member
for in-service
education
Maintenance and Operational
Costs
Office
Support
Costs
26Slide27
Fiscal
Year
1981-82Total
Appropriations
to
Sc
hool
Districts
(Act
178
of
1981)
Distribution
to
Subdivisions: Aid
to
School Districts-
Education
Finance
Act
$
503,143,508
State
Employer
Contributions:
State Retirement
- Public School
Employees$ 50,121,169Group Life Insurance - Public School $ 2,148,050Social Security - Public School Employees$ 48,585,472Health Insurance - Public School Employees$ 22,627,040Total State Employer Contributions$123,481,73127Slide28
Fast forward to 2017…Slide29
29
EIA
1983-84
2017-18
%
Teacher Salaries & Fringes
$69,467,502
32%
School Building Aid
$66,738,136
31%
Remediation Services to Students
$60,500,000
28%
Improve Student Learning (Advanced Placement Exams, Modernize Vocational equipment, 5K, etc.)
$19,189,449
9%
Other
$1,370,773
1%
Total:
$217,265,860
%
Teacher Salaries & Fringes
$224,345,370
28%
SC Public Charter School District
$100,556,551
13%
Remediation Services to Students
$79,551,723
10%
4K Public Schools
$49,838,283
6%
EAA
$41,855,943
5%
Transportation
$41,198,813
5%
Office of First Steps
$29,336,227
4%
Instructional Materials
$20,922,839
3%
Other
$209,896,251
26%
Total:
$797,502,000
Slide30Slide31
House Education Reform Committee
Do away with the forty year old formula.
Goal is to have a new formula by 2020.
Main goal is to roll up as many lines as we can this year. We have had Superintendent Spearman present, CFO’s from several districts, Revenue and Fiscal Affairs, and Melanie Barton with the EOC. Ultimately we want the districts to be given the money and let them spend it as they see fit, but hold them accountable. Slide32Slide33
Capital Improvement FundsSlide34
Abbeville Equity School Districts Capital Improvements Plan
Proviso
1A.82
in the Fiscal Year 2017-18 Appropriations ActFunding ($55.8 Million) is provided to eligible school districts by the Department of Education for school facility upgradesEligible districts are Plaintiff districts and those with greater than 80% povertyEligible Projects Include:Health and Safety UpgradesTechnology Upgrades inside school facilitiesUpgrades associated with career and technology education programsDeferred Maintenance needs described in the district’s capital improvement planSlide35
Abbeville Equity School Districts Capital Improvements Plan
Funding comes from:
EIA Capital Improvements fund (N/R) $ 4.8 Million
Revolving Student Loan Fund Transfer $16.0 MillionEIA Prior Year Cash Balance $35.0 MillionTOTAL $55.8 MillionSlide36
Abbeville Equity School Districts Capital Improvements Plan
Eligible Districts are:
ORANGEBURG 04
LAURENS 56
GREENWOOD 51
BARNWELL 45
DARLINGTON
SALUDA
CHESTER
LAURENS 55
CHESTERFIELD
SUMTER 01
UNION
RICHLAND 01
ANDERSON 03
CHEROKEE
LEXINGTON 03
DILLON 03
ABBEVILLE
FLORENCE 02
BAMBERG 01
FLORENCE 05
FLORENCE 01
BERKELEY
CLARENDON 03
LEXINGTON 02
ALLENDALE
CLARENDON 01
HAMPTON 02
LEE
BAMBERG 02
WILLIAMSBURG
FLORENCE 04
ORANGEBURG 03
JASPER MARION 10BARNWELL 19FAIRFIELD DILLON 04FLORENCE 03
MARLBORO
ORANGEBURG 05
CLARENDON 02
MCCORMICK
CALHOUN
COLLETON
LEXINGTON 04
DORCHESTER 04
BARNWELL 29
HAMPTON 01Slide37
SC Education School Facilities Act-
H.3343
Requires the State Department of Education to conduct a statewide facility assessment
Requires school districts to maintain Facilities and Maintenance plans and to submit these plans annually to SDE.SDE, through its Facilities Office, shall review the plans and annually submit to the State Board of Education for approval. The priority list of $200 million of facilities need ranked based on several priority factors which include: 1. Current condition of facilities 2. Population trends
3. Millage and fee levels
4. District financial health
5. Ability to pay bonded indebtedness
6. Ability to incur debt without the need of a
referendum
After the State Board approves the priority list, the list is submitted to the General Assembly and the governor’s office.Slide38
The General Assembly may adopt a proviso or joint resolution annually to authorize an amount of debt to be issued during the next fiscal year
.
The State Board would then submit an amount equal to the General Assembly’s authorized amount to
JBRC and SFAA for the issuance of G.O. (General Obligation) debt through the treasurer’s office.SDE would be responsible for verifying applications and district facility information and ensuring financial and program compliance.Financial assistance to districts could be in the form of grants, loans, or a fund of non-recurring appropriations for maintenance and smaller facility needs of the districts.The State Board together with the assistance from
SDE
would promulgate regulations as to the specifics of the program.Slide39
Abbeville Capital Improvement Fund (ACIF)
SCDE Process
Proviso 1A.82 requires SCDE to:
Establish an application processEstablish policies and proceduresPrioritize projects with greatest needRecommend listing of projects to the State Board of Education (SBE)Submit an annual report to the Governor and General Assembly based on prior year ACIF activitiesProviso 1A.82 requires the SBE to make an affirmative vote to award fundsSlide40
SCDE Considerations - ACIF
Timely distribution of funds
District summer renovation activities
Electronic application submissions only; multiple submission dates; minimize paper processesFeedback and guidance from eligible districtsFocus Group of finance officialsPriority for life safety, handicap accessibility, energy efficiency, technology upgrades inside school facilities, and deferred maintenanceTop three district-defined priorities
Compliance and Reporting
Adherence to 2017 District Facilities Assessments
Terms and Conditions – no new construction, plan review approvals, accounting and audit requirements
Reporting – expenditures and activities
Slide41
ACIF Requests for Funding
Available for Projects $55,828,859
Requested by Districts $133,780,920
SBE Approvals by Nov. 14 $45,230,262Yet to Allocate $10,598,597Slide42
ACIF Funded Projects
The majority of projects relate to health and safety upgrades and deferred maintenance
Within priority areas:Slide43
Next Steps
Leverage
State Energy Office
funds where feasibleSeek technical assistance from Office of School Facilities (OSF) when neededObtain Plan Review, Building and Fire Marshal Approvals if neededSubmit Quarterly Expenditure Reports to FinanceTrack Activities for inclusion in Annual Report to General AssemblyConclusion of Facility Assessments for some districtsQuestions:Delisa Clark, Director OSF, dclark@ed.sc.gov
Michael Thom, Director Finance,
mthom@ed.sc.gov