School Finance Boot Camp 2009 by xfz11675


									              School Finance
                Boot Camp

       Craig Hansel, Chief Financial Officer, Ankeny Schools
Galen Howsare, Vice President, Hawkeye Community College

• Introductions
• Housekeeping – breaks/restrooms, etc.
• Table talk
  What do you expect?
   What are the burning questions you need to
    have answered before you leave?
• Ground rules
  No “dumb” questions
  Please interrupt!

Packet Contents


• Basic school finance overview
• Property tax basics
• Topics in school finance:
   Counts (who, where, when)
   Allowable growth
   On-time funding
   Budget guarantee
   Special education
   Instructional support levy
   Spending authority
Agenda… continued

• Topics in school finance continued:
  Financial Health Ratios
  Facility and other related levies
• Categorical Funds
• Finding and Saving money
• Fiduciary Responsibility
• Check for Understanding
• Summary and reflection
• Evaluation
School Finance Basics

School Finance - Background

• Dillon’s rule:
   School districts only have those
    powers expressly authorized by the
    Code of Iowa
• Home rule:
   Cities and counties can do anything
    not expressly prohibited

School Finance - Background

• The “Bright” Line in School Finance
  Educational program expenditures
   are funded and equalized by the
   state foundation formula.
  Facility expenditures are not under
   the finance formula and may not be
   used for educational program
   expenditures (and vice versa).

School Finance - Background

• The school foundation formula
  relies on two sources of revenue

  State General Fund appropriations

  Locally raised property taxes

   School Aid - Basics
• Purpose of the foundation formula:
  Code of Iowa, 257.31:
     • “…equalize educational
       opportunity, to provide good
       education for all children of
       Iowa, to provide property tax
       relief, decrease the
       percentage of school costs
       paid from property taxes, and
       to provide reasonable control
       of school costs.”
  School Aid - Basics
• Foundation formula - ceiling vs. floor
   The foundation formula results in a
    maximum expenditure per pupil and
    therefore a maximum amount a district
    can raise and spend (note: not every
    district has the same ceiling)
   Other states’ school aid formulas have
    created a minimum spending per pupil
   This has led to lawsuits nationwide
   Iowa’s Constitution does not guarantee
    educational equity

Operation of Foundation Formula

• Three components
  Uniform Levy - Property tax levy of $5.40 per
    thousand of taxable valuation
  State Foundation Percentage - Amount the
    state pays in excess of $5.40 - varies by district (87.5%
    of cost per pupil)
  Additional Levy - Property tax levy which funds
    the difference between the Combined District Cost and
    the sum of the Uniform Levy and the State Foundation

Operation of Foundation Formula

Operation of Foundation Formula

• Two factors affecting district Regular Program
   1. Enrollment - increases or decreases
    in enrollment affect district budgets
   2. Combined district cost changes
     (Allowable Growth)
   Changes in growth in valuations - uniform
     levy rate ($5.40) or foundation percentage have no
     effect on Regular Program

School Aid - Basics

• Basic Calculations - District Costs
  Regular Program District Cost -
    budget enrollment times district cost per pupil.
    608.4 students x $5,546 = $3,374,186
  Combined District Cost - sum of
    Regular Program plus special education, ELL,
    media services.
  What happens if less is spent?
    Carries forward as unspent budget authority.
    Can be used in future (one-time).

Spending Authority

• Schools must keep two sets of books:
  Normal “Fund Balance” set of books
   (think audit).
  Spending Authority set of books
• What controls school district spending –
  cash or spending authority?
• Both are important, but spending
  authority is vital.

Which scenario is best for Iowa
school districts:
1. Legislature sets 4 percent allowable growth 18
   months in advance and due to low state
   revenues, an across-the-board cut reduces
   state aid, or
2. Legislature sets 2 percent allowable growth 18
   months in advance and promises to increase it
   mid-year should state revenues exceed
   expectations, or
3. Legislature waits to set allowable growth until
   revenues are known - 6 months before the
   start of the fiscal year.

• Any questions before we
  transition into Iowa’s
  property tax system???

Understanding Property Taxes

• Handout – Chapter of New School
  Finance Manual “Property Taxes”
• Taxing authorities
• Taxing districts
• Basic equation
   Rate x Value = Taxes due
• Tax rates
   Expressed in dollars per thousand

Which is lower tax rate?

• $7.57 per $100 of taxable value
• $12.50 per $1,000 of taxable value

Understanding Property Taxes
• Property Valuation:
         Assessed value
            • Classes of property
               –   Residential
               –   Agricultural
               –   Commercial/Industrial
               –   Gas and Electric
               –   Railroad

            • Market value
            • Productivity value
            • Equalization
         Taxable value
            • Rollbacks
            • Credits

                   Residential Property Rollback History











                           Budget Year

Understanding Property Taxes

   Computing school taxes paid on an individual
   property can be reduced to the following steps:
1. Taking the assessed value, multiply by the rollback
    percentage which results in the taxable value
2. Taking the taxable value, divide by 1,000 and multiply by
   the school tax rate to get the school taxes due without
   homestead credit
3. Taking the homestead credit, divide by 1,000 and
   multiply by the school tax rate to get dollars of
   homestead credit
4. Taking the taxes due without homestead credit,
   subtracting the dollars of homestead credit to the get the
   net school taxes due.
Sample Calculation
Home with assessed value = $100,000
Actual Rollback (2010-11) = 46.9094%
District Tax Rate = $14.55 per $1,000
Homestead Credit on first $4,850 of taxable value

1.    100,000 x .469094 = 46,909 (taxable value)
2.    40,909/1000 *14.55 = 595.23 (school taxes due
     without homestead credit)
3.      4,850/1000*14.55 = 70.57 (dollars of homestead
     credit if fully funded)
4.     595.23-70.57 = $524.66 net school taxes due    24
Exercise 1

• Figuring your property taxes

 Understanding Property Taxes
• Property valuation characteristic of school districts
  (why we care):
   “Property Rich”
   “Property Poor”
• How is it calculated?
   Total Property Valuation / Enrollment
• Interaction:
   High value = lower property tax rate
   Low value = higher property tax rate

Understanding Property Taxes
• Tax Increment Financing
   Municipalities define an economic
    development need – could be business,
    residential, or city property
   TIF “freezes” a property tax base for length
    of the TIF (all recent TIFs sunset)
   Taxes applied to all growth (increment) in
    the area pay for economic development
    improvements or provide revenue stream
    to municipalities

  Understanding Property Taxes
• Tax Increment Financing School Impact
   Costs the state $36 million last year to pay for
    loss of taxes generated by $5.40 levy (“looks”
    like increased school funding)
   Shifts taxes to other property tax payers in the
    district since TIF taxes on the increment go to
    the city (management, cash reserve,
    instructional support and additional levies)
   Loss of revenue to districts with “capped”
    levies (PERL levy or levies capped by either
    board promise or politics)
   Debt levy is exempt and PPEL levy may be
Property Taxes: what can you do?

• Follow legislation and tell your district’s story.
• Lobby against eroding the property tax base.
• Lobby for school district participation and
  accountability in the TIF process.
• Explain school district limits on authority (the
  state made you do it).
• Point out the difference between property tax
  relief and real school spending increases within
  the funding formula.

• Questions about taxes before
  we go into the detailed topics in
  Iowa school finance???

Detailed Topics in School Finance


• Why important?
  Pupil-driven formula
     • Each enrollment category has associated
     • Determines total spending authority

• Terminology
  Regular program
  Weighted enrollment

• Headcount – October 1
  Basic v. budget enrollment
  Always use prior year enrollment for
   setting budget
• Special education weightings
• Supplementary weightings
  English Language Learners ELL
  Senior Year Plus                       35
  School Finance - Weightings
• Why Weight?
  Some populations have higher costs
   than others. Two choices: pay more
   per student or count students at value
   greater than 1
  Special education has three weightings:
   .72, 1.21, 2.74 depending on severity
  These are in addition to the 1.0 weight

Special Education

• Revenue determined by weightings
• Iowa’s system is unique
  If you spend less than the
   weightings generate have to send
   back (>10%)
  What happens if spend more?
     • Creates a “deficit”
     • Does not cause long term spending from regular
     • Deficits may be recouped from property taxes

Special Education

• Are weightings sufficient?
  No, special ed deficits growing statewide
  Number of kids increasing
• How solve
  Adjusting weightings = more state $’s
  Adjust annually = less “sticker shock”


• Weighted enrollment:
  + Budget enrollment
  + Supplementary weighting – ELL
  + Supplementary weighting – At-risk
  + Supplementary weighting – PK, etc
  + Special ed weighting
     • + 0.72 weight
     • + 1.21 weight
     • + 2.74 weight


• Doing the math
• Facts:
   October 1, 2009 headcount: 672.6
   Special Education
     • 6 Level I
     • 9 Level II
     • 4 Level III
   Supplementary weighting – 12.82

• What is my weighted enrollment?


                                    Count Weighting Enrollment
                                      a      b        c=b*a

Budget Enrollment                   672.6      1.00      672.6

Special Education
 * Level 1                              6      0.72       4.32
 * Level II                             9      1.21      10.89
* Level III                             4      2.74      10.96
Total Special Education Weighting                        26.17

Supplementary Weighting             12.82      1.00      12.82

Total Weighted Enrollment                               711.59

Enrollment: Key Point

• In preceding example, even though serving
  about 672 children, the funding formula
  generated almost 712 “children” for the funding
• Why important? Remember the credit card
• Our “limit” is being multiplied by 712 and not
  672. That’s 40 additional students.
• Weighting of students provides additional
  dollars to cover their unique needs.

Allowable Growth

• What is it?
   Amount district cost per pupil may
   Percent increase => $ increase
   Generates spending authority
   Tells us how much our credit card limit
    can go up by
   Only Foundation Formula (General Fund)
• What isn’t it?
   Doesn’t differentiate funding sources
   Doesn’t guarantee budget increase       43
Allowable Growth

• FY 2009 state cost per pupil
• Allowable growth rate for FY 2010
• FY 2010 state cost per pupil?

Allowable Growth
   • Basic Calculations - Allowable Growth
 Last year’s minimum District Cost Per Pupil
  (e.g., $5,546)
 Allowable Growth Rate = 4.0%
 This year’s district cost per pupil growth =
  $5,546 x .04 = $221.84 (rounds to $222)
 $ 5,546 + $222 = $5,768
 If District Cost Per Pupil is higher than
  minimum, only get the fixed dollar - not
  4.0%. For example, $5,602+ $222 = $5,824
 Not $ 5,602 x 4% = $5,826

         Allowable Growth
• Basic Calculations (cont.)

   Differing District Costs Per Pupil
      • Slightly over 50% of districts
        have a cost per pupil above the
        minimum, although the deviation
        is less than 4.5%.
      • Percentage differences will be
        reduced over time.

        Allowable Growth
• When is 4% allowable growth not 4%?
   Common perception is all districts receive 4%
    increase in budgets.
   FY 2004: 2% allowable growth resulted in
    $32.4 M new money (1.4%) of which $27.5 M
    was due to the budget guarantee.
   FY 2005: 2% allowable growth resulted in
    $39.2 M of new money (1.7%), of which $31.1
    M was due to the budget guarantee.
   FY 2006: 4% allowable growth resulted in
    $71.7 M of new money (3.0%), of which $18.8
    M was due to the budget guarantee.
   FY 2007: 4% allowable growth resulted in
    $88.3 M of new money (3.7%), of which $18.8
    M was due to the budget guarantee.

Exercise 2

• Allowable Growth

 On-time Funding
• Basic Calculations - On Time Funding
    Principle - Districts with increasing enrollment
     have a way of capturing growth. Due to a year
     delay in enrollment count in the formula -
     districts with increasing enrollment have
    Calculation:

                               FY 2009 Budget FY 2009 Actual
        Enrollment                         450           500
        Cost Per Pupil         $        5,546 $       5,546
        Regular Program Budget $    2,495,700 $ 2,773,000

        Shortfall                               $       (277,300)
        On-time Funding Authority               $        277,300
        Net Change in Budget                    $            -
On-time Funding

• Exercise 3

   Allowable Growth
• Basic Calculations - Budget Guarantee
    Principle: Districts receive what they received in the prior
     year for the Regular Program Budget regardless of
     enrollment changes.
    Base Calculation:

                                          2003-04     2004-05
               Enrollment                        450         410
               Cost Per Pupil           $     4,648 $     4,741
               Regular Program Budget   $ 2,091,600 $ 1,943,810

               Difference                            $ (147,790)
               Buget Guarantee                       $ 147,790
               Net Change in Budget                  $      -

  Budget Guarantee Phase-out
• Legislature phasing out the “100%” Budget
  Guarantee beginning in FY 2005 and
  completely phased out by FY 2014.
• Created two alternate calculations:
  “Scale Down” calculation
  101% calculation
  Not a choice, automatically get greatest of the
   two calculations.

  Districts Receive:

• If a district is eligible for some form of
  Budget Guarantee in FY 2005 or thereafter:
  Greater of scale down v. 101% option

Big Picture

• Scale down calculation was created to
  bring those with a lot of budget
  guarantee down slowly (soft
• The 101% calculation gives an additional
  year when enrollment declines.
• Relationship between allowable growth
  and budget guarantee: Enrollment % lost
  greater than allowable growth rate = less
Policy Implications

• Districts must plan and forecast into the
• Will result in decreases in budgets from
  one year to next – especially coupled
  with low allowable growth
• How do you plan?

Exercise 4

• Figure New Money

Instructional Support Levy (ISL)
• Local levy to increase regular program
  district cost per pupil
• Two questions:
  How much do you want to increase (max
  How are you going to fund (property tax,
   income surtax)?

Instructional Support Levy (ISL)
• How do we get it approved?
   Board action for up to five years
      • Subject to reverse referendum – 30% of voters in
        last board election or 100 signatures – whichever is
   Voter-approved for up to ten years
      • Simple majority vote
   Series of board actions and resolutions
   Must be approved and in budget by April
    15 – work backwards to get timelines –
    late January or early February is latest can
   Be attentive to special election date
Instructional Support Levy (ISL)

• Uses
  Any General Fund purpose except can’t
     •   Dropout prevention
     •   Talented and Gifted
     •   Physical plant and equipment levy (PPEL) uses
     •   Management levy uses
  Specifically prohibits under any
   circumstances, use to offset:
     • Special education deficits
  May be more restrictive in use, but not
  Check with auditor in advance
Instructional Support Levy (ISL)

• Funding
  Property tax – not rate limited – limited
   on amount of expenditure
  Income surtax – surtax on state income
   tax – maximum combined surtax rate of
  State aid – frozen $14 million annually,
   thus prorated. Current shortfall is $46
  Split statewide: 51% property tax, 41%
   income surtax, 8% state aid

Instructional Support Levy (ISL)

• Who has it?
  339 of 362 districts have it in place
  Generates $180 million
  80% of districts generate full 10%
  Increased use of income surtax
     • 284 out of 339 have the surtax
     • Average surtax is 6% to 7%
     • Lightens load of property tax

New Special Elections Law
            Special School Election
       Odd Years              Even Years
     February 1st Tues            February 1st Tues
         (2/3/2009)                  (2/2/2010)
       April 1st Tues               April 1st Tues
         (4/7/2009)                  (4/6/2010)
       June last Tues
    September 2nd Tues            September 2nd Tues
         (9/8/2009)                   (9/14/2009)
(with school board election)   (no school board election)
                                  December 1st Tues

• Any questions before we
  move on to spending

Big Picture: Spending Authority

• Schools have to keep two sets of books:
   Normal fund accounting set of
    books (think Audit or Certified
    Annual Report)
   Spending authority set of books
    (think credit card balance)

 Spending Authority
• Two key concepts
  Spending authority
     • Is the maximum a district could spend in a year if it

  Unspent balance (unspent budget
     • Is the difference between a district’s total spending
       authority for a year and what they actually spent

Spending Authority

• Concept:
  State gives each child a credit card
   with $5,768 for FY 2010
  The funding formula decides the mix
   of property tax and state aid to pay
   the bill
  If spend less, carries forward and
   added to next year’s credit card

 Spending Authority
• Spending authority is the sum of:
   Combined District Cost
    (property tax and state aid)
   Miscellaneous income – anything not above
   Unspent balance from previous years
• Why important?
   Districts cannot exceed spending authority
   Not a measure of cash
   Why allow districts to carry forward unused
    spending authority?

Building Blocks of Spending

                                 Unspent Balance
                                 Federal Grants - Misc
                                 Fees, Rentals, Tuition -
 60                              Misc
                                 Teacher Sal. Supp.-
 40                              CDC
                                 Special Education-
 20                              CDC
                                 Regular Program-
      Total Spending Authority   CDC
Total Spending Authority = Total
   Certified Budget Capacity

                   Another Way of Looking at Spending
                            Authority & Cash
                  Comparing Spending Authority and Cash Concepts
       Term                          Explanation                               Analogy            Type
Spending Authority Total amount a school district can legally spend      Income + credit cards Recurring
                   during a year.
Unspent Balance    Remaining amount of spending authority at end of      Credit cards          One time
                   year (Spending Authority minus Actual

        Term                             Explanation                           Analogy            Type
Cash On Hand         Total cash on hand.                                 Savings account       One time
State Aid            Amount received by a district from state General    Paycheck              Recurring
Property Taxes       Amount received by a district from local property   Paycheck              Recurring
Miscellaneous        Any income which is not property tax or state aid   Birthday money from   One time/
Income               (must be actually received).                        Grandma               recurring
                  Unspent Balance vs. Cash

               Unspent Balance and Cash on Hand Matrix
                                       Cash on Hand
                        Negative            Zero               Positive
           Negative         Bad           Less Bad     Water, water everywhere…
Unspent     Zero        Less Bad          Tolerable         More Tolerable
Balance    Positive Better than reverse Even Better              Best

    $150,000                                $150,000

    $100,000                                $100,000
Financial Health Indicators
• What are they?
   Research based financial ratios
   Assesses different aspects of a District’s General
    Fund operations
   Shows if trends are going up or down relative to
    what has happened
   Good measurement tools for bondholders
   When used together they are a reliable predictor
    of financial health for the year ahead

Financial Health Indicators

• What they are not.
    Are not useful without a context or benchmark
    Use of single indicators for operational
     conclusions is not advised
    Assesses only General Fund operations
    They do not quantify management’s future
     response to identified financial issues

Solvency Ratio

• Packet – refer to “Health Report”
  handout on Solvency Ratio page 11

Solvency Ratio – Table & Graph

Solvency Ratio - Purpose

Solvency Ratio - Application

• Questions:
  Your district receives notice that state aid
   will be cut by 10% - reductions are
   impossible. What happens to your
   solvency ratio for the current fiscal year?
  What does it mean for the upcoming
   fiscal year?

Facility Related Levies

• Physical Plant and Equipment Levy
• Debt levy
• State Penny for School Infrastructure

Physical Plant and Equipment
• Two levies
   Board approved PPEL – maximum of $0.33
    property tax approved annually by board (cannot
    borrow against)
   Voter approved PPEL – maximum of $1.34
    property tax/income surtax approved by voters
    (50% simple majority)
     • Maximum 10 years
     • Can borrow against property tax portion of
     • Must have at least $1 of property tax

Physical Plant and Equipment
• Allowable uses:
    Purchase grounds, construct sidewalks,
     roadways, athletic fields, lighting, and
     demolition work
    Construction of schoolhouses or buildings
    Purchase, lease or lease-purchase of
     buildings or single unit of equipment or
     technology > $500
    Repair/remodel/reconstruct facilities
    Transportation equipment
    See Iowa Code Section 298.2&3 for full
Debt Levy

• Voter approved levy for construction and
  renovation of school buildings, sites and
  other school facilities
• Two ballot measures:
  One-time election if want to go from
   $2.70 to $4.05
  Ballot language approving bond
  Both require 60% super majority for

State Penny for School Infrastructure

• Replaced the School Infrastructure Local
  Option Tax with State Penny effective
  July 1, 2008
• Sunset 12/31/2029
• Need a Revenue Purpose Statement
  vote prior to expiration of existing SILO
  ballot OR if district wants to borrow
  against time period between expiration
  and 12/31/2029
• District election rather than county
   50% plus one simple majority to pass      82
State Penny for School Infrastructure

• Current Revenue Purpose Statement or
  ballot is valid until expired or replaced
• Law requires lowering certain levies if a
  RPS is not approved:
   Voted and Board PPEL
   Schoolhouse Levy

• Once levies are reduced, revenue can
  be used for any lawful purpose
State Penny for Infrastructure

• Allowable uses
  Original ballot language is binding
     until replaced by a Revenue Purpose
     Statement vote
  Any permissible debt levy use
  Payment of bonds – either new or old
     property tax bonds
  Can borrow against proceeds

State Penny for School Infrastructure

• Full per pupil equity by 2014 after expiration of
  all grandfathered counties
• Distributed monthly – reconciliation payment in
• So, how does this help my General Fund?
    Cannot spend on direct General Fund purposes
     – except those authorized by Code (buses,
     technology, etc.)
    Can use to reduce General Fund expenditures –
     for example – replace HVAC system with
     geothermal – savings in natural gas and
     electricity accrue to General Fund but costs are
     paid through State Penny.

State Penny for School
Infrastructure Other Issues
• Certificate of Need required for using
  supplemental funds for districts below
  250 enrollment or 100 in high school.
• State Penny revenue must be on hand to
  lower debt – can’t anticipate next year’s

Other Levies Available to
• Management levy
  Levy amount determined annually
   by the board for following purposes:
     • Unemployment benefits
     • Liability insurance/judgments/settlements
     • Early retirement benefits

  Dollars levied go to Management
   Fund not General Fund

Other Levies Available to
• Cash reserve levy
   Levy amount determined annually
    by the board for cash flow purposes
   Used to fund spending authority
    but does not create spending
   Limitation – total cash reserves
    can’t exceed 25% of expenditures
    for the prior fiscal year (changes to
    20% for FY2013)
School Aid Formula –
Understanding the System   Remember…

School Aid Formula –
Understanding the System
• Observations
  The foundation formula provides student
   equity on the instruction side of the
  The foundation formula provides some
   taxpayer equity
  The additional levy causes the most
   taxpayer inequity for the foundation

School Aid Formula –
Understanding the System
• Is this all the taxpayer inequity?
• Instruction side - ISL
• Facilities
    PPEL & Debt service
    PERL
    Even though rate limited, because property
     taxes are not equalized, rates may be higher
     than otherwise would be the case
• Other
   Cash reserve levy
   TIF

School Aid Formula –
Understanding the System

• Student inequity
  Regular program - Differing costs per
   pupil (about 4%)
     • Debt service, PPEL and PERL generate
       approximately six times the amount in the property
       richest district as property poorest

School Aid Formula –
Understanding the System

• Helping make sense of all this
• IASB Finance Website Tools
• DE Finance Website Tools

Categorical Funds

• Appropriations from the State
• Strings – must spend a certain way and
  account for the spending – and report
• Outside of bargaining
• Don’t tend to increase with inflation

Categorical Funds Examples

• Teacher Compensation Supplement
    Basic allocation
    Professional development
    Professional development Core Curriculum
• Gifted and Talented
• All Title Programs
• Grants
• Part B ARRA Monies

           10% ATB Cut
• Set the expectation and keep it
• Minimize any negative effect on student learning
• Minimize any negative effect on student academic
• Be sustainable long-term
• Be based on realistic savings estimates / projections
• Be careful about using one-time sources of money
  for ongoing expenditures
• Maximize the use of non-general funds resources
  for qualified expenditures
• Maintain flexibility with all program modifications to
  adjust to student needs

 Where to look for $$$$$
 Title I (Reading and Math) – carve out
  portion of regular staff development for Title
  1 teachers
 Special Education & TAG
 Early Childhood Intervention            $
  Class Size - State & federal (K-3) Title V
 Grants

Where to look for $$$$$
      Vocational Education
      Instructional Support Levy
       (board or vote)
      PERL max 13.5 cents / $1,000
      At-Risk prevention allowable
       growth (requires approved plan
       and SBRC request)

 Alter your schedules
 Monitor class sizes
 Supplemental weighting for Dual credit
 Early Outs (explain to parents– it cannot
  be perceived as “time off” for teachers)
 Late starts? Is this easier on

      Free up General Fund
 Use of State Penny & PPEL – buses,
  equipment, lease-purchases above $500
 Use of management fund – property,
  casualty & loss insurance or early
 Review Master Contract
 Make energy efficiency improvements
  w/energy bank loans
 Participate in pooled purchasing

Four Questions

• Why do we have enough money to pave
  the parking lot but can’t pay teachers?
• Why can’t we just levy whatever we
  need to support the school?
• Why don’t schools become more
• Why don’t property taxes ever

Three Steps to Fiduciary

• Crafting Policy to Guide Fiscal Planning
• Crafting Policy to Safeguard Fiscal
• Monitoring Fiscal Management

Source: Carver Guide 3
Fiscal Planning-Budget

• Certified Budget (April) – legal requirement that
  sets maximum spending limits and property tax
• Line-item Budget (August-October) –
  management uses to allocate dollars to
  individual accounts in line with board
  expectations/success criteria
• Board Budget-Typically higher level reporting
  by function, location or object summaries

   Source: Carver Guide 3

Board Member Responsibility

 Board members are NOT budget managers and
 should not operate at the level of detail as the
 management staff.
   You should not be selecting pens and toner
   Exercise appropriate control so that the right
    things occur and the wrong things don’t

  Source: Carver Guide 3

Financial Goal Considerations

• What should be the relationship of revenues
  and expenditures?
• How are revenues and expenditures projected?
  (conservative-what does that mean?)
• What are the right and wrong things for
• Where are contingency dollars (unallocated) in

Financial Goal Considerations

• What are the targets for financial solvency ratio,
  unspent balance, fund balance, and other
  measures of financial health?
• How much cash should be available?
• Inter-fund loans?
• Use of reserves?

Financial Goal Considerations

• Projections (recommended 3-5 years)
    Use informed instinct or (Best/Worse Case)
    Keep track of assumptions that match projection
      •   Enrollment
      •   Revenue and expenditures
      •   Spending Authority
      •   Fund Balance

• Others?????

Ummm, let’s see! CIETC…no audit
committee, no code of ethics, poor
Internal controls, poor tone of control set
by executives, reasonableness???, no
fiduciary monitoring by board…WOW!

 Ramona, … move over!!!

  Don’t let your name or district
  be added to this list. Start NOW
  to begin implementing the best
  practices from the Sarbanes-
  Oxley Act of 2002 and other
  professional organizations.
 School Aid - Web Resources
• Dept. of Education:
• Legislature - bills, amendments, etc.:
• Legislative Fiscal Bureau:
• Dept. of Revenue and Finance:


        Let’s do the evaluation
                    right now!!!

Please fill out open-ended evaluation
on table
• Thanks for coming – have a great rest of
  the convention!!!


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