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Board of School Directors – Upper Moreland School District, Dr. Robert Milrod - Superintendent
Michael J. Braun – Business Manager

First Draft of the 2007/2008 Budget

December 28, 2006

Attached please find a copy of the first draft of our budget for the 2007/2008 school year.  The gap of revenue to expense is currently $992,539.  The revenue reflects a 3.4% millage increase and the administration is recommending that the board apply for the exceptions available to us.  The budget was developed with the following assumptions:

Revenue:

• Real Estate taxes reflect a 3.4% increase
• The EIT tax shift is at .5% based on the Tax Study Commission recommendation
• It is assumed that we will collect approximately 60% the first year based on state data from 2005.  The approved eligibility for Homestead will change the estimated tax credit.  Our assumption is 90% eligibility this year
• The EIT was held at $2,500,000 based on Berkheimer’s estimate
• Transfer taxes moved to $600,000 based on past history the last two years
• Delinquencies were reduced due to Portnoff Law Associates effective collections (may revise after seeing delinquencies for 2006)
• Earnings from investments increased to $700,000, this may be lower if economists projections hold
• IDEA funds are the same as last year.  There is no new information
• Tuition from patrons is down $10,000 based on the 2005/2006 actuals
• Basic instruction subsidy is up 2% based on prior years
• Special Education is up 2% based on prior years
• Transportation is up $20,000 based on prior years
• Social Security and retirement reflect on salary levels
• Federal sources remain the same until we receive information
• Debt Service transfers have dropped $700,000 based on a one time draw down

Expenses– Increased 3.83% over last year

• All salaries estimated at a 4% increase
• Medical is estimated at 8% for the BC/BS and 15% for Aetna
• Workmen’s Compensation is estimated at 75% and unemployment at 25% based on salaries
• Life insurance rates estimated to stay the same as last year.  ESPA contract may increase costs slightly
• Income protection up 5%
• Dental insurance up 5%
• The total estimate for benefits is up 9.16%
• Retirement rose from 6.43% to 7.13% or .70% over last year, for a 10.9% overall increase
• Social Security is 7.65% of salary increases at a rate of 7.65%
• The 300 codes Professional & Technical Services - rose 22.60% due to Special Education increases, estimated cost of collecting the new .5% EIT, copier costs (principals had to reduce existing budgets to reflect their actual copier costs)
• The 400 codes Purchase Services - increased by $17,476 for facilities contracted services including HVAC equipment, pest control, etc.
• The 500 codes Other Purchased Services - Tuition for students placed in outside programs

• Regular Education
• Special Education
• Technology in Education
• Contractual Transportation
• IU Services

• The 600 codes Supplies – Transportation costs for fuel, repair parts, tires, etc and the Facilities Departments custodial supplies and maintenance parts for a total increase of 2.59%
• The 700 codes Equipment – there was virtually no change an increase of only .10%
• The 800 codes Other Objects – was reduced by 3.80%

My estimates are based on what we currently know and the assumptions I put forth.  I assume the same staff levels.  I expect Dr. Milrod to propose additional staff changes as we move into June.  I request that the Board of School Directors approve our filing for exemptions in order to keep the integrity of our education program.

Issues that need to be addressed

• Debt Service for High School renovation project.
• Debt Service dropped for one year from $3,572,133 to $3,047,425 or $524,708.  The budget shows a $524,500 fund transfer to Capital Reserve.  This will maintain debt service millage level.  Debt Service in 2008/2009 will return at the level of $3,628,937.  This one time savings reflects our prior refinancing efforts.  I supplemented the Capital Reserve this year at $400,000, reflecting the fund balance surplus from last year.  The $524,500 will cover costs associated with the Middle School roof project.
• I have no information on teacher retirements for next year
• Gasoline levels and fuel costs are still a mystery
• Liability insurance numbers are not in at this time
• Aetna does not have figures yet
• Still need IU figures for next years Special Education
• Special Education is working on Project Access
• We will reduce budget with exceptions to avoid referendum if the Board of Directors approves
• The State budget is not done
• I do not have the Homestead figures from the county yet
• I do not have average assessments from the county yet for homestead act
• ESPA negotiations are still ongoing and are not reflected in my final figures

MJB/caw

cc:             J. Lehman
                  T. Hinterberger
                  P. O’Donnell