Date:

May 21, 2015

To:

Tom Forcella, Superintendent

From:

Todd LoFrese, Assistant Superintendent for Support Services

Re:

Budget Update

On April 28, 2015, the Boards 2015-16 budget request was presented to the Board of Orange
County Commissioners. The Board requested an additional $3,539,191 (or $302 per pupil) in
revenue to fund state mandates, maintain current services, and support priorities in our strategic
plan.
This week both the North Carolina House of Representatives state budget proposal and the
County Managers recommended budget were presented. A review of both recommendations
was conducted and items of significance and the associated local impact are briefly discussed
below.
The proposed state budget includes a salary increase for all public school employees. Newer
teachers (0 to 4 years of experience) would receive about a 6% increase and all other employees
would receive a 2% increase. If enacted, it will require an additional $1.2 million in local dollars
to implement this state mandate. This amount is precisely what our local request included. The
proposed state budget also establishes required employer matching contributions for state
retirement and we anticipate increases in health insurance rates. As proposed, approximately
$210,000 of additional local dollars will be required.
The state budget does restore funding for driver education, and if adopted, would not require
additional local dollars to support driver training next year. After nearly 7 years of minimal
funding, additional textbook and digital resource funding is part of the state budget (about 50%
of 2008 levels). The state budget also maintains teacher assistant funding at 2014-15 levels, but
this would result in a small reduction to our district due to enrollment increases across the state.
Transportation funding is also reduced, mostly attributed to lower diesel fuel costs.
This week, the County Managers recommended budget was presented to the County
Commissioners. The County Managers recommended budget included an additional $630,722
($81 per pupil) for our school district. This however, is approximately $2.9 million less than our
request.

If both budgets are adopted as presented, the district will be required to make reductions to
current positions, services, and programs. Since we must meet state mandates, the cost of
providing a well-deserved raise and meeting state retirement/medical benefit matches would
require us to reduce our current local budget by nearly $800,000 dollars. Unless we made further
reductions, we would not have funding to support any of our strategic plan priorities or
expansion recommendations, most of which are essential to help us meet our goals.
Finally it is important to recall that over the past 7 years, the district has made millions of dollars
in reductions to our local operational plan and has received state reductions of nearly $10
million. We have run out of places to make reductions that do not impact the classroom or
positions. An $800,000 reduction equates to 12 teaching position or 25 teacher assistants.
In June we will present the Board with a budget update on work session as both the county and
state will be further along in the budget process. While we can hope that the final budgets
improve, we need to be prepared to make some tough decisions in the coming weeks. We will
share additional information and considerations for the board to consider as we reconcile the
differences between our request, the local budget, and the state budget.