Superintendent's Budget Message

Leadership Focus and Strategic Direction

Wake County has been designated as one of the top ten places for families to live in the United States. The Wake County Public School System is a major reason the area received this recognition. Located in the heart of the Research Triangle Park, WCPSS serves children from some of the most educated families in the nation. Parents have very high educational expectations for their children. In addition, business leaders expect a world-class education system to fuel continued economic development. Taxpayers and those elected to represent them want to be sure they are receiving high value for their tax dollars. The mission and strategies of the Wake County Public School System respond to this need for accountability.

The Wake County Public School System is committed to academic excellence. By 2003, 95% of students tested will be at or above grade level as measured by NC EOG testing at grades 3 and 8.

Our mission is to educate each student to be a responsible and productive citizen who can effectively manage future challenges.

We are committed to academic excellence. We will pursue this goal in the spirit of openness, integrity, and accountability through active communication and collaboration with parents and a demanding and caring community. Student performance is the number one priority in all schools in the Wake County Public School System.

In pursuit of this goal, we will:

*including compensation that is market-sensitive and individually responsive.

Human and financial resources are allocated in the budget to achieve the mission and goal of the district. We value student success, excellence, diversity, character (courage, good judgment, integrity, kindness, perseverance, respect, responsibility, and self-discipline), communication and collaboration with all stakeholders, teamwork, and continuous improvement. All must be attended to if we are to succeed in accomplishing our mission.

The board, superintendent, and senior leaders assess system performance on an annual basis in strategic planning retreats, which lead to setting goals and measures. Student/stakeholder needs, our mission, and values are the core of the process and guide all stages of strategic planning. Strategies to accomplish goals are based on the analysis of gaps between current performance and desired future results. Once strategies have been developed, senior leaders determine how to implement strategies. This includes identifying and communicating improvement priorities, organizing work systems, and allocating resources to align the work of central-level and school processes to support goal attainment.

The system goal and strategies cascade through cabinet members to schools and departments that in turn develop objectives, strategies, measures, and action plans. The cabinet, principals, and school staffs review results during the evaluation stage. Improvement needs are then funneled back into the strategic process to begin the cycle again.

Trends/Events/Initiatives

The Wake County Public School System is the second largest school district in North Carolina and one of the largest in the nation. Our customers judge the school systemĚs performance by how well our 101,000 students are learning. The system is one of the fastest growing districts in the nation, with roughly 3,000 additional children entering the system each year, about 4% a year over the last seven years.


The relocation to Wake County of people from other parts of the country and the world brings new educational expectations and standards for district performance. Managing the demand for school facilities and services created by growth while meeting high educational expectations continues to be both a challenge and an opportunity.

For over ten years, the system has compared its performance on selected measures with other school systems as well as to state and national norms. Our principal competitors are a growing number of charter, private, parochial/church schools, and an increasing number of families who choose to home school their children. Charter schools are unique competitors because they decrease the amount of funding available for our schools.

Existing initiatives include a new educational model, the Accelerated Learning Program (ALP). The program includes the development of an individualized learning plan for each student and extended learning time.

The district has a technology plan for finance, human resources, and school instruction. The school systemís technology vision calls for all teachers to be trained in technology; all students to have access to information via technology; and all schools to be networked to one another. Since the districtís vision is that technology is a tool to improve student achievement, teachers have been leading the way in designing and implementing the technology plan. There are approximately 600 ětechnology connectionsî model classrooms in the district at this time. The school system is well on its way to providing direct e-mail services to all faculty, staff, and eventually students. A web page has been implemented and features are being added frequently.

Wake County Public School System is strengthening partnerships and building new alliances. The Wake Education Partnership has taken a significant leadership role in galvanizing community support. Other alliances, such as the Business Education Leadership Council, are also increasing their involvement. The district is working closely with the Department of Human Services and other community groups to better align options and opportunities for students.

The opening of new schools and new programs has impacted the capacity of some magnet programs to attract students. In addition, year-round schools have not attracted a diverse student population under the voluntary application process. The magnet programs will begin another continuous improvement cycle to create new program models to increase student and parent interest.

The most significant and far-reaching effort has been the progress of a single, community-driven goal. By 2003, 95% of students tested will be at or above grade level as measured by NC EOG testing at grades 3 and 8. Our goal has had a dramatic impact on the focus and clarity of our continuous improvement efforts. The district envisions a collaborative journey from being an exemplary school system to a school system that serves as a benchmark for all others in the nation.

Budget Process

The budget represents the 2001-2002 financial plan for the Wake County Public School System. This document culminates a dynamic process involving input from many groups. Wake County Public School System exists in a highly regulatory environment. The system is charged with the responsibility for implementing federal and state education laws and mandates from the legislature, state board of education, and local board of education.

Budget development is a year-round process, which begins in the fall and continues until the official budget is adopted by the Wake County Board of Education in June. Participation at all levels is evident in this ongoing process. Schools and central office departments review their budget needs and submit their requests. The superintendentís management team develops the board of educationís budget request and prioritizes all requests based on the systemís goals, mission, and the delicate balance between instructional and supporting service needs.

The board holds a public hearing as it considers the budget, and finally the board of education submits its budget request to the county commissioners by May 15 of each year.

Total Budget

The total budget approved for 2001-2002 is $706,520,282. This is composed of current expense, capital outlay, and capital improvement dollars. The current expense budget includes items of a recurring nature covering salaries, services, and supplies. The capital outlay budget includes the purchase of property; the purchase, construction, or renovation of buildings; and the purchase or replacement of furniture, equipment, and vehicles. Capital improvement dollars include local funds identified solely for the building program.

Current Expense

$702,828,709

Capital Outlay

3,691,573

Operating Budget

$706,520,282

Capital Improvements(building program)

0

Total Budget

$706,520,282


Current Expense Capital Outlay Total
State $438,181,053 62% $0 0% $438,181,053 62%
County Appropriation 183,280,000 26% 0 0% 183,280,000 26%
Local Capital Improvements 0 0% 0 0% 0 0%
Federal 33,963,978 5% 0 0% 33,963,978 5%
Enterprise Funds 24,267,056 4% 0 0% 24,267,056 3%
Other Local 23,136,622 3% 3,691,573 100% 26,828,195 4%
Totals $702,828,709 100% $3,691,573 100% $706,520,282 100%

Where Do Funds Come From? Total Budget


Where Are Funds Spent?

Note: Other objects include insurance, membership dues, license and title fees, indirect costs, and unbudgeted funds.

State Funding

State allotments are funded on a formula basis. The state funds schools with three basic types of allotments: position allotments, dollar allotments, and categorical allotments. Due to our phenomenal growth rate, we continue to receive additional state funding. The state budget is expected to increase by 4 percent.

Ninety-four percent of state funding is spent on salaries and employee benefits. We anticipate 266.7 new state positions based on growth in student projections:

111.0

Regular Education Teachers

56.0

Clerical Assistants

30.0

Children with Special Needs Teachers

20.0

Children with Special Needs Teacher Assistants

19.9

Vocational Education Teachers

7.5

Guidance Counselors

6.0

Limited English Teachers

4.0

Teacher Assistants

3.4

Social Workers

3.2

Assistant Principals

3.0

At -Risk Student Services Teachers

2.5

Librarians

.2

Psychologist


Budget 2001-2002

$437,678,147

Budget 2000-2001

$421,656,032

Increase

$16,022,115

County Appropriation

Wake County Public School System exists in a highly regulated environment. The system is charged with the responsibility for implementing federal and state education laws and mandates from the legislature, state board of education, and local board of education. However, state and federal funding do not adequately support the delivery of the programs to meet all student needs. It is only through county funding that Wake County Public School System is able to meet mandates as well as provide the quality programs that our community expects.

On July 28, 1997, the county commissioners and board of education signed an agreement as a result of a mediation process regarding the budget. This was the first agreement of its kind in North Carolina and completely changed the previous fiscal relationship between the county commissioners and the board of education. The agreement will remain in effect for at least five fiscal years beginning in 1998-99. The commissioners and school board will review the agreement no later than September 30, 2002.

This agreement guarantees the school system a minimum budget tied to the county's economic growth. A portion of the total property tax rate is designated for the operation of the school system. The dollars will increase each year as long as there is growth in the tax base.

The county staff will provide to the board of education an estimated revenue projection based on anticipated collections for the upcoming year. This will become the beginning budget for the next fiscal year. If actual collections come in higher than the anticipated collections, additional funds will be allocated to the school system.

According to the agreement, the school board may wish to request an increase in the tax rate in order to generate higher levels of funding for the operating budget beginning in 1999-2000. The county commissioners could deny the tax increase if five of its seven members, or two-thirds, oppose it. If the county commissioners increase or decrease the overall property tax, and this does not originate due to a request from the school board, the increase or decrease will not change the original portion of the tax rate allocated to the school system.

1999-2000 Update to Agreement

The school board requested a two-cent increase, in accordance with the mediation agreement, from 35 to 37 cents for the operating budget in 1999-2000. The county commissioners approved this request.

2000-2001 Update to Agreement

The school board unanimously approved a motion to request an increase of two cents in the tax rate dedicated to WCPSS. This would have generated an additional $11.2 million. The school board also requested a shift of $5.5 million in funding from the building program to the operating budget for maintenance and operations.

The Wake County Commissioners denied the request for an increase of two cents in the tax rate dedicated to WCPSS. They approved a shift of $3.5 million from land acquisition in the July 1 budget and another $2.0 million shift from building program projects in July 2000 for maintenance and operations in the operating budget.

During 2000-2001, the Wake County Board of Education requested a transfer of $13.0 million remaining in the unallocated capital budget to the operating budget. The Board of Commissioners approved funding of the request in the following manner:

2000-2001 Reevaluation

For 1999-2000 the general property tax rate in Wake County was $0.73 per $100 of assessed valuation. Of this total tax rate, $0.37 per $100 went to support school operating expenditures. As required by state statute, Wake County completed a reevaluation of all property values effective January 1, 2000. It had been eight years since the last reappraisal of property values in the county. As a result of the reevaluation, the total tax base was projected to increase by 39% over the estimated actual 1999-2000 tax base.

In light of the increased real property values due to reevaluation, Wake County developed a revenue neutral tax rate for 2000-2001. The effect of applying a revenue neutral tax rate effectively lowered the tax rate on all property to offset or "neutralize" the effect of higher real property values. As a result, the recommended budget for 2000-2001 includes a revenue neutral property tax rate of $0.564 per $100 valuation. Of this total revenue neutral property tax rate, $0.286 supports school operating expenditures.

2001-2002

The Wake County Board of Commissioners approved $183,280,000 for the budget for Wake County Public School System for 2001-02. In addition, $9,720,000 was appropriated to an education reserve. Upon the agreement of the Wake County Board of Education to jointly establish, with the Wake County Board of Commissioners, a citizens review committee to examine the current expense budget of the Wake County Public Schools (WCPSS), and upon the actual establishment of same, the amounts appropriated to this reserve were transferred to the Wake County Public Schools current expense appropriation on July 9, 2001. No adjustment was made to the tax rate for 2001-02.

The development of the 2001-02 budget was very challenging during a time when:

The superintendent and associate superintendents held weekly budget work sessions in February and March. The board of education held work sessions and a public hearing in March and April. The budget request is arranged in three levels:

  1. Base
  2. Expansion
  3. Deferred Needs

The base budget is the amount necessary to maintain our same level of services and programs. The expansion section includes priorities for expanded or new programs or services that we requested for 2001-2002. Deferred needs are priorities beyond our budget request to the county. These are items that are deferred to future years.

July 1, 2001

28.6 cents

 

Maintenance and Operations

1.0 cent

 

County Approp. - Current Tax Rate

29.6 cents

$183,280,000

Note: Wake County released an additional $9.7 million on July 9, 2001, from their fund balance. These funds are not included in the totals in this document since they were not able to be included in our budget resolution for July 1.

Base budgets were adjusted to reflect costs related to growth, inflation, and projected legislative changes. Significant adjustments to the base budget include:

The expansion budget needs reflect requests consistent with the community's goal. These items were funded upon the release of Education Reserve funds by Wake County, on July 9, 2001:

Base and expansion budget requests are funded through new county tax dollars due to growth and additional fund balance appropriation by the county and school system. Expansion budget items are not included in the Official Budget as of July 1, 2001.

2000-2001

2001-2002

Inc. (Dec.)

County Appropriation

 

 

 

 

Current Expense

$179,038,352

$183,280,000

$4,241,648

2%

Capital Outlay

$2,102,162

$0

($2,102,162)

(100%)

Totals

$181,140,514

$183,280,000

$2,139,486

2%

 

 

 

 

Student Membership

 

 

 

 

WCPSS

97,583

100,525

2,942

3%

Charter Schools

2,082

2,710

628

30%

Totals

99,665

103,235

3,570

4%

 

 

 

 

Allocations per student

$1,817

$1,775

($42)

(2%)

Local Current Expense Fund

The local current expense budget includes all local revenues of the school system. The largest of these is the county appropriation. Others include fines and forfeitures, interest earned, indirect costs, vending contract, fund balance appropriation, and categorical programs. The "Budget by Funding Source" section of this document shows budget line items by source of funds whether state, federal, enterprise, other local, or county appropriation.

The local current expense budget for 2001-2002 is $207,412,118, a decrease of $212,213.

Ongoing, rapid growth and efforts to reach Goal 2003 continue to be the most significant fiscal challenges for our school system. Student membership projections from North Carolina Department of Public Instruction total 100,525 students (excluding 2,710 students projected to be enrolled in charter schools). Our net increase in students for 2001-2002 would be 2,942 students or 3 percent.

The Wake County Public School System manages resources in an efficient and effective manner. When compared to other urban North Carolina districts, WCPSS operates at the lowest per pupil expenditure of the group. We are proud of our efficiency, and we continually seek ways to make the best use of every dollar spent. We utilize a purchasing card throughout the system to decrease the time between order and delivery by teachers and other staff, as well as to reduce purchase orders and accounts payable transactions. We utilize a systemwide email system to reduce paper transactions and improve timeliness of communication.

We budget positions to be funded by lapsed salaries. We currently budget 17 custodians, 10 special education teachers, 17 regular education teachers, 16 clerical positions, 40 teacher assistants, and 3 central office administrators to be paid through vacancies or lapsed salaries. In addition, we will budget 7 assistant principals, 2 librarians, 3 counselors, and 21 school-based clerical positions to be paid through vacancies in 2001-2002. This is very aggressive and can vary based on turnover. We constantly monitor these areas throughout the year to make sure we will be within budgeted dollars.

We continually monitor state funding. We shift local costs onto state dollars whenever possible to make the most of state funding and save local dollars. As begun last year, we have shifted 78 local teachers to state funding to be paid by conversion of teacher assistant dollars.

We have moved all of our tuition programs to enterprise funds and charge indirect costs on these programs to help support the local budget. Last year we moved the print shop to an enterprise fund also.

Schools process conversions during the year within state ABC transfer policies. This allows schools to move dollars between program codes as defined in legislation in order to meet the needs of that particular school. Funds checking rules have been expanded on the local budget to allow central office departments to gain the use of lapsed salary dollars. These processes allow schools and departments to make the best use of all dollars budgeted.

We allocated fund balance as part of our beginning budget to support one-time and capital costs. At the same time, we maintain a reserve at a level we feel is necessary to support the district in cases of emergency, unusual circumstances, or negative budget variances.

We constantly seek additional sources of revenue. The grants office supports schools and assists with identification of new sources of funding. We entered a vending agreement in 2001 that will bring revenues over the next five years in excess of $6 million. We have entered into cellular tower agreements. We adjust fees annually as needed for tuition and parking fees.

REVENUES BY SOURCE

INCREASE/DECREASE

2000-2001

2001-2002

Dollars

Percent

County Appropriation

179,038,352

183,280,000

4,241,648

2%

Local Sources-Unrestricted

7,757,026

7,300,486

(456,540)

(6%)

Local Sources-Restricted

5,338,032

4,748,771

(589,261)

(11%)

Operating Transfers In

5,838,985

3,485,602

(2,353,383)

(40%)

Fund Balance Appropriated

7,595,800

6,881,704

(714,096)

(9%)

Local Sources - Tuition/Fees

849,891

720,059

(129,832)

(15%)

State (Grants)

775,737

502,906

(272,831)

(35%)

Federal (Impact Area Grants, ROTC)

430,508

492,590

62,082

14%

Total

207,624,331

207,412,118

(212,213)

0%

Federal Funding

The federal funding budget for 2001-2002 is $25,771,753, a decrease of $7,656,613 million or 23% from 2000-2001. We are estimating a reduction in funding of federal programs and will reduce staffing and other expenses covered by these funds. The largest area of reduction is the Magnet Grant. We received $3.4 million in Magnet Assistance funding in 2000-2001 in carryover and current year dollars. This grant ends in 2000-2001. One million dollars of costs for employees previously on this grant have been shifted to the local base budget.

We have applied for a new Magnet Grant for Gateways. The focus will be different than the previous grant. Funds have been built into the expansion budget to begin these programs if the new grant is not funded. If funded, $693,332 can be budgeted for other purposes.

Budget 2001-2002

$25,771,753

Budget 2000-2001

$33,428,366

Decrease

$(7,656,613)

Multiple Enterprise

The multiple enterprise fund includes the Child Nutrition program and other self-supporting programs such as Before- and After-School Care, Tuition Summer School, Summer Camp, Extended High School, and Preschool Programs. Tuition or fees solely support these programs. We charge indirect cost at the unrestricted maximum rate of 13.00% on all these programs.

The multiple enterprise fund budget for 2001-2002 reflects a decrease of $1,132,874 or 3 percent from 2000-2001. The budget includes $26,610,688 for the Child Nutrition program and $5,356,003 in tuition and fee-supported programs. The Print Shop became an enterprise fund in 2000-2001.

The Child Nutrition budget includes salary increases of 2% and inflationary increases for food and supplies. Any reduction of federal funds for this program will require us to implement one or more of the following: reduce costs where possible, increase meal prices, reduce meal offerings, implement more satellite meal programs, and eliminate breakfast programs.

Budget 2001-2002

$31,966,691

Budget 2000-2001

$33,099,565

Decrease

$(1,132,874)

Capital Outlay

The proposed capital outlay budget for 2001-2002 totals $3,691,573. The budget includes $250,000 interest earned and $3,441,573 fund balance appropriation.

Plan 2000, the current long-range school building program, is the fifth in a series of building phases that began in 1985. Despite building 44 new schools and expanding dozens of existing school facilities since 1986, the system needs more space to accommodate the influx of more than 3,000 new students each year and funding to address its aging facilities.

The PLAN 2000 (2001-04) school building program, provides 14 new schools to accommodate more than 10,400 new students expected in our schools by 2004. Additionally, 32 schools will receive major renovations and expansions. Another 64 schools will get much needed maintenance and repair. PLAN 2000 will cost $550 million. A $500 million bond referendum to finance this plan was supported by a special citizens commission and approved by voters on November 7, 2000. The remaining $50 million will be provided by Wake County government from general "pay as you go" revenues. No tax increase will be required to pay for this building program.

Capital Improvements are shown differently than in previous years. In 2000-2001, the county passed a resolution for $370.6 million for Plan 2000. This resolution authorized funds for projects for multiple years. These funds are in the 2000-2001 budget. We anticipate spending this year approximately $5.0 million of the total appropriation of $370.6 million in 2000-2001. That would leave a roll-over balance for 2001-2002 of $365.6 million. We expect to spend $132.0 million in 2001-2002. The remainder at that time will roll forward to 2002-2003. The carryover for 2001-2002 will not be recognized until after June 30, 2001.

Budget 2001-2002

$3,691,573

Budget 2000-2001

$566,063,849

Decrease

$(562,372,276)

Competitive Factors

Wake County Public School System demonstrates exemplary practices in areas of financial management, growth management, and grant awards. More importantly, student achievement results in the areas of reading and math, as measured by state End-of-Course (EOC) and End-of-Grade (EOG) tests as well as SAT results, are exemplary. Student performance has continued to improve while dropout rates have declined.

The school system has faced many challenges over the past ten years. During this time, we have successfully managed a building program, which is one of the largest in the nation. We have received an "unqualified" audit opinion each of the last thirteen years.

For the past eleven years, we have received the Certificate of Excellence in Financial Reporting from both the American School Business Officials (ASBO) and the Government Finance Officers Association (GFOA). We have also received the Distinguished Budget Presentation Award from the Government Finance Officers Association for the past seven years. This award is the highest form of recognition in governmental budgeting. We have received the Meritorious Budget Award from the Association of School Business Officials (ASBO) for the last two years. In 1998 our school system was the only one in North Carolina to receive the Advancement Award of the N.C. Quality Leadership Foundation - a process similar to the Malcolm Baldrige award criteria. We have aggressively managed our budget and wisely invested available resources. These accomplishments are the result of a dedicated and competent staff, a supportive board, and a caring and supportive community. The end result of all this has been continued improvement of programs and outcomes for our students.

Conclusion

In 1998 our community adopted a goal that is likely the boldest in the nation. Since that time, Goal 2003 continues to serve as the driving force behind the efforts of the Wake County Public School System. We know that in order to reach the goal, the needs of every student in every school in our district must be addressed. The goal cannot be met by focusing only on students performing below grade level. We know that the needs of every one of our students must be constantly reexamined as efforts are redoubled to leave no child behind as we work diligently to meet the goal established by our community.

Is Goal 2003 attainable? Given adequate resources and support from parents and our community, it is. Are we on track to reach Goal 2003? With the current resources available to our schools, we will not reach the goal by 2003. We have stretched and reallocated both human and financial resources near the limit in our efforts to improve student achievement for all.

Our per pupil expenditure is the lowest of any large urban district in our state, while our student achievement is the highest. We are extremely proud of our efficiencies and strive to use each tax dollar to the benefit of students. We are a strong, high-performing school district. Reaching Goal 2003 will make the Wake County Public School System a lighthouse for every school district in our country. More importantly, reaching the goal will demonstrate that we truly wish to leave no child behind. It is clear at this time, that if we are to meet our goal, additional funding must be provided.

Every child deserves a quality teacher. Every child deserves a safe, well-maintained and well-equipped classroom. High academic achievement is expected for all students through programs and services designed to meet their needs and prepare them for the future they desire and deserve. Parents deserve continued opportunities for choice through the nationally recognized magnet program in our system.

The passage of the bond referendum last November provides much needed building capacity for Wake County students. The capital program outlined in Plan 2000 also addresses deferred maintenance needs found throughout the existing buildings in the Wake County Public School System. Plan 2000 did not address the impact of growth and Goal 2003 on the operating budget for our changing and rapidly growing school district.

Goal 2003 is a statement of the desire of our community and school family to meet the needs of every child; however, reaching Goal 2003 is not without cost.

Bill McNeal, Superintendent