Long Range Planning Model
Finance and Audit Committee
September 22, 2016
Long Range Planning Model
 Review Updated 8 Year Budget Model Plan
 Revenue Assumptions
 Expenditure Assumptions
 Discuss net result of assumption refinements
 Comments and discussion on assumptions and model
Modeling Objectives and Highlights
 Purpose of 8-Year Model: Determine revenue shortfall resulting from expiration of Measure C
(2010) and “business as usual” operations
 Year 1 (2016-17) Projections vs. Adopted Budget (16-17): Revenues same, expenditures
approx. $1.7M higher
 Key change: Negotiated compensation increases (both 15/16 and 16/17)
 Years 2-8: New projections based on long-term historical averages and trends
 Secured property tax growth: Reflects current 8-year cycle-average growth rate
 Key salary assumptions
 (1) Constant class sizes (i.e., 2 new teachers per year)
 (2) Salary increases: placeholder based on historical average increases
 Any government mandated increases in revenues or expenditures are reflected, as appropriate
(e.g., PERS/STRS growth, COLA, per student growth)
 All other revenues and expenditures are subject to inflation (i.e., CPI)
 Year 5 (2020-21) shortfall: $4.9M, vs. $6.0M shortfall presented at May 10, 2016 Board Meeting
following vote on Measures A and C
 The $4.9M shortfall includes $900K in reductions (i.e., $5.8M vs. $6.0M apples-to-apples)
Revenue Assumptions for 8-Year MYP
100%
$44.6M*
Property Tax ($25.8M, 58% of total)

Secured Property Tax
 6.1% annual growth based on current 8-year
historical CAGR (2007/08 to 2015/16), reduced by
0.76% each year starting in 2020/21 (down to 3%
growth in 2023/24)
 Resulting projected growth for 2015/16 to 2023/24 is
5.1% per annum

Unsecured Property Tax
 3.3% per annum, based on the average 8-year
CAGR over the period 1992/93 to 2015/16

See next two slides for further detail
80%
60%
40%
20%
Unsecured Prop Tax
Secured
Property
Tax
0%
2015/16
*Total Revenue does not include Interfund Transfers
Secured Property Tax: Historical YOY Growth
8-9 Year Real Estate Cycles
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
-2%


Analysis of historical property tax revenue from 1992/93 through 2015/16
Projections based on 8-year compound annual growth rates (CAGRs), to normalize for cyclicality
Secured Property Tax: Rolling 8-Year CAGRs
12%
10%
8%
6%
6.1%
4%
2%
0%



Easier to see long-term cycle-average trends with rolling 8-year CAGRs
Growth rates have been declining since the 8-year period ending 2004-05
To reflect this decline, projections use the most recent 8-year CAGR for years 2-4 (6.1%), with
gradual decreases in the growth rate beginning in year 5 (down to 3% growth in year 8)
Unsecured Property Tax: Historical YOY Growth
20%
15%
10%
5%
0%
-5%
-10%
-15%


No clear / consistent cyclicality
Projections use the average 8-year CAGR for the entire historical data set (3.3%)
Revenue Assumptions for 8-Year MYP
100%
$44.6M
80%
60%
Other LCFF
40%
20%
0%
2015/16
Other LCFF ($2.6M, 6% of total)
 SELPA
 Increased by COLA as projected by School
Services of California
 Minimum State Aid
 Held constant by law
 Education Protection Account
 Increased at flat rate of $200 per student
based on enrollment growth
 The EPA is on the November 2016 ballot for
renewal. Current funding goes away in
2018/19
 Deferred Maintenance
 Grows at 10 year CPI average of 2.5%
 Note this is a revenue transfer out into Fund 14
Revenue Assumptions for 8-Year MYP
100%
80%
$44.6M
Other Local
Parcel Taxes
Other State
60%
40%
Other State ($4.2M, 9% of total)
 Mandated Block Grants and Lottery
 Per student amount increased for student
enrollment growth through 2020/21
 State STRS on Behalf (Pass-Through)
 Adjusted to match staffing
 State Mandated Block Grant Debt Repayment
 No monies budgeted beyond 2016/17
 Based on State fiscal health and owned debt
on Mandated Block Grants
Other Local ($11.5M, 26% of total)
20%
0%
2015/16
 Parcel Tax
 Measure C not renewed
 Other Parcel Tax revenues grow with CPI
 MPAEF
 Grows with enrollment
8-Year Revenue Projections
$60
Millions of Dollars
$50
$40
$30
8Y CAGR
$55.8M
1.0%
$44.6M
-0.9%
-4.6%
Other Local
-0.4%
3.1%
1.2%
2.9%
Parcel Taxes
Federal Other State
Other LCFF
Unsecured Prop Tax
$20
$10
2.9%
5.1%
Secured
Property Tax
$0
2015/16

2023/24
Although robust growth in secured property taxes is projected to continue, the other 46%
of MPCSD’s revenues are declining on average
Expenditure Assumptions for 8-Year MYP
100%
$43.4M
Salaries ($28.9M, 67% of total)*

80%

60%

40%
Salaries
20%
0%
2015/16
Addition of 2 teachers annually 
maintains current class sizes
 No other staffing additions
Placeholder for salary increases for all units,
based on 10 year historic average
Additional assumptions
 Ongoing retirements and resignations,
similar to recent experience
 Ongoing compensation increases for
advancing tenure and education (i.e.,
“Step and Column”)
*Salaries for 2015/16 do not include recent one-time
compensation increase which will be paid in fiscal year 2016/17.
Expenditure Assumptions for 8-Year MYP
100%
80%
$43.4M
Employee Benefits ($8.5M, 20% of total)
Other
Expenditures


Employee
Benefits

60%
40%
Health and benefits growth of 7% annually
STRS and PERS grow to 19.1% for both by 2020/21
(from 10.7% and 11.9% in 2015/16)
Not included: Additional SRTS and PERS growth
beyond 2020/21. STRS can increase another 1%
annually up to 20.25%. PERS Board can increase
or decrease rates as needed.
Other Expenditures ($5.9M, 14% of total)
 2016/17 budget includes $900K in reductions
 Grow 2016/17 budget by CPI (2.5% per annum)
 Includes: Books and Supplies, Other Operating
Expenses, and Capital Outlay
20%
0%
2015/16
8-Year Expenditure Projections
$70
8Y CAGR
$62.8M
Millions of Dollars
$60
$50
$40
$30
$20
$10
4.7%
0.2%
9.0%
$43.4M
Other Expenditures
Employee Benefits
4.1%
Salaries
$0
2015/16
2023/24
Model Comparison to Prior
January Model
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
Total Revenue
$42.3M
$43.2M
$43.0M
$44.4M
$46.0M
$47.6M
Total Expense
42.6M
44.6M
47.1M
49.1M
51.2M
53.6M
($0.3M)
($1.5M)
($4.0M)
(4.7M)
($5.2M)
($5.9M)
Reserve, Economic
Uncertainty
$7.0M
$6.9M
$4.2M
($0.1M)
($5.3M)
($11.3M)
September Model
2015/16
2016/17
2017/18
2018/19
2019/20
2020/21
2021/22
Total Revenue
$45.3M
$45.0M
$46.9M
$49.0M
$51.1M
$52.8M
Total Expense
47.1M
48.5M
51.0M
53.6M
56.0M
58.2M
($1.7M)
($3.4M)
($4.1M)
($4.5M)
($4.9M)
($5.3M)
$8.1M
$5.9M
$2.0M
($2.4M)
($7.3M)
($12.7M)
Surplus/(Deficit)
Surplus/(Deficit)
Reserve, Economic
Uncertainty
2021/22
Risks and Opportunities
 Renewal of Proposition 30: $600,000 risk
 STRS/PERS growing beyond 2020/21(up to 1.2% risk)
 Additional One time State funding opportunity
 Foundation Donations
 Reevaluation of the $900,000 in reductions in 2016/17
 Special Education
What does this mean?
 Operating Deficit is $5.3M by 2021/22
 District Economic Uncertainty Reserves fall below 10% in 2018/19
 District can not sustain current operations financially beyond
2018/19
Next Steps