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School Finance in ReviewFundamentals of School FinanceUSBA 95th Annual Conference
J A N UA R Y 5 , 2 0 1 8
Zane K. WoolstenhulmeBusiness AdministratorOgden School Districtzanew@ogdensd.org
Discussion TopicsSCHOOL BOARDS AND BUDGETS
SCHOOL FINANCE FUNDAMENTALS
MINIMUM SCHOOL PROGRAM
Q & A
CALENDARS
CALENDAR YEAR (CY)
TAX YEAR (TY)
FISCAL YEAR (FY)
SCHOOL YEAR (SY)
SCHOOL BOARDS AND BUDGETS
Who’s Responsible?What’s my Responsibility?
SCHOOL BOARDS AND BUDGETS --- Continued
Title 53 A --- Utah Code Annotated --- State System of Public Education
• Chapter 3 --- Local School Boards
53A-3-402(2) --- Local school boards shall spend minimum school program funds for programs and activities for which the State Board of Education has established minimum standards or rules under Section 53A-1-402.
53 A-3-402(3) --- A board may purchase, sell, and make improvements on school sites, buildings, and equipment and construct, erect, and furnish school buildings.
SCHOOL BOARDS AND BUDGETS --- Continued
Title 53 A --- Utah Code Annotated --- State System of Public Education
• Chapter 19 --- School district and charter school budgets
53A-19-101(2) --- Before June 1 of each year, the budget officer shall prepare a tentative budget, with supporting documentation, to be submitted to the budget officer's governing board.
53A-19-102(2)(a) --- For a school district, before June 22 of each year, a local school board shall adopt a budget and make appropriations for the next fiscal year.
SCHOOL BOARDS AND BUDGETS --- Continued
Who is the “Budget Officer”?a) District Superintendentb) District Budget Directorc) Business Administratord) Local Board President
SCHOOL FINANCE FUNDAMENTALS
WHERE DOES IT COME FROM?
WHERE DOES IT GO?
MOVING TARGET
PRELIMINARY ESTIMATES
MID-YEAR UPDATES
FINAL UPDATES
ENROLLMENTS◦ YEAR-END AVERAGE DAILY MEMBERSHIP
◦ OCTOBER 1ST
SCHOOL FINANCE FUNDAMENTALS --- Continued
BUCKETS OF FUN(DS)
GENERAL FUND
STUDENT SERVICES FUND
TAX INCREMENT FUND
DEBT SERVICE FUND
CAPITAL PROJECTS FUND
FOOD SERVICES FUND
SCHOOL FINANCE FUNDAMENTALS --- Continued
OTHER FUNDS
BUILDING RESERVE FUND
ENTERPRISE FUND
INTERNAL SERVICE FUND
TRUST AND AGENCY FUND
SCHOOL FINANCE FUNDAMENTALS --- Continued
WHERE DOES IT GO?
Instruction,
65.24%
Support
Services, 7.95%
Transportation 3.32%
Physical Plant,
10.57%
Administration,
11.13%
Other, 2.00%
2016 Public Education General Fund --- Expenditures $4,240,969,029 USOE FINGER TIP FACTS 2016-17
SCHOOL FINANCE FUNDAMENTALS --- Continued
WHERE DOES IT GO? --- Another View
Salaries &
Benefits, 84.78%
Purchased
Services, 5.60%
Property & Misc.,
3.14%
Supplies, 6.47%
2016 Public Education General Fund --- Expenditures
SCHOOL FINANCE FUNDAMENTALS --- Continued
WHERE DOES IT COME FROM?
Federal, 6.82%
Local, 27.02%
State, 66.16%
2016 Public Education General Fund --- Total Revenue $4,297,269,764USOE Fingertip Facts 2016-17
24.23% Property Taxes
2.79% Tuition, Fees & Investments
SCHOOL FINANCE FUNDAMENTALS --- Continued
FEDERAL REVENUETITLE PROGRAMS◦ Poverty◦ Mobility & Homeless◦ English Language Learners◦ Quality Teaching / Professional Development◦21st Century Schools
IDEA – SPECIAL EDUCATION PROGRAMS◦ Medicare & Medicaid Reimbursement Programs
FEDERAL IMPACT AID
DIRECT GRANTS
SCHOOL FINANCE FUNDAMENTALS --- Continued
LOCAL REVENUEPROPERTY TAXES (General Fund)◦ Basic Levy (Set by State) .001568 --- Same for all School Districts)
◦ Board Local Levy (Legal Max .001800 or .002500)
◦ Voted Local Levy (Voter Authorized, Max .002000)
PROPERTY TAXES (Other Funds)◦ GO Bond Payments Levy Sufficient to Pay Voter Authorized Debt Payments
◦ Capital Local Levy (Legal Max .003000)
◦ Discharge of Judgement As Permitted to Pay Property Tax Refunds
Charter School Levy Offset by decrease in Board Local Levy
SCHOOL FINANCE FUNDAMENTALS --- Continued
LOCAL REVENUEGovernor Gary R. Herbert:
Budget Recommendations – Fiscal Year 2019
◦ “ State law allows school districts to impose discretionary property tax levies to provide services above the levels possible with state funding.”
◦ “Over $800 million in local discretionary property tax authority remains available under existing statutory property tax rate caps … includes over $355 million in levies for school operations and over $446 million of taxing authority under the capital levy that can be used for items such as buildings and technology infrastructure.”
SCHOOL FINANCE FUNDAMENTALS --- Continued
“Never blame congress for not doing something. When they do nothing, that don't hurt anybody. When they do something is when they become dangerous.”--Will Rogers--
Property Tax Matters Tax Rate Formula:
Assessed Valuation X Tax Rate = Tax Revenue
Assessed Valuation?◦ The Sum of Taxable Value of All Properties within the Jurisdiction
◦ Based on Fair Market Value of Properties◦ Primary Residential (Real) Property Taxed @ 55% of Market Value
◦ Other Locally Assessed Real Property (Second Homes) Taxed @ 100% of Market Value
◦ Centrally Assessed Property (Utilities, Mines, Airlines, Railroads, Oil & Gas) Taxed @ 100% of Market Value
SCHOOL FINANCE FUNDAMENTALS --- Continued
Certified Tax Rate ◦ That rate which will yield the same property tax revenue that it
budgeted in the previous year (and includes an allowance for revenue generated from real new growth in its tax base).
◦ Includes the rate required to pay the debt service associated with Voter Authorized General Obligation Bonds.
SCHOOL FINANCE FUNDAMENTALS --- Continued
Tax Values
Tax Rates
BASIC LEVY HISTORYFISCAL YEAR BASIC LEVY
1994-95 .004220
1995-96 .002640
2005-06 .001720
2008-09 .001250
2012-13 .001650
2014-15 .001419
2015-16 .001736
2017-18 .001568
BASIC LEVY 1987-Present
0.000000
0.000500
0.001000
0.001500
0.002000
0.002500
0.003000
0.003500
0.004000
0.004500
0.005000
SCHOOL FINANCE FUNDAMENTALS --- Continued
STATE REVENUE
• STATE INCOME TAX (Primary Source)
• SCHOOL LAND TRUST (INTEREST & DIVIDENDS)
• OTHER
State Education Fund
$ 3.75 Billion
SCHOOL FINANCE FUNDAMENTALS --- Continued
STATE FUNDING
HOW DOES THE MONEY FLOW ?
Funding Distribution?
SCHOOL FINANCE FUNDAMENTALS --- Continued
MINIMUM SCHOOL PROGRAM -- (MSP)
Primary funding source for school districts and charter schools in Utah. The Fiscal Year (FY) 2018 total budget is $4,093,382,300, including State & Local Revenue
Used to support over 1,000 traditional, alternative, special education and charter schools for about 652,000 Utah students.
Distributed according to formulas provided by State Law and State Board Rules.
Weighted Pupil Unit
•PRIMARY DISTRIBUTION UNIT WITHIN MSP
•180 DAYS OF MEMBERSHIP ONE WPU (Membership Driven not Attendance Driven)
Minimum School Program --- Continued
FY18 WPU VALUE
$ 3,311
Minimum School Program --- Continued
1 % Increase in the WPU costs about $30 Million
WPU WEIGHTINGSCHOOL DISTRICT STUDENTS
Kindergarten Students --- 55%
Grades One thru 12 ---- 100%
CHARTER SCHOOL STUDENTS
Kindergarten Students --- 55%
Grades One thru Six ---- 90%
Grades Seven & Eight ----- 99%
Grades Nine thru 12 ---- 120%
Minimum School Program --- Continued
FISCALYEAR
WPU VALUE
CPI Adjusted
1987-88 $1,204 $2,510
1994-95 $1,608 $2,676
2000-01 $2,006 $2,874
2006-07 $2,417 $2,957
2010-11 $2,577 $2,915
2013-14 $2,899 $3,070
2017-18 $3,311 $3,311
CPI Adjusted WPU Value
$-
$1,000
$2,000
$3,000
$4,000
WPU Value
$0
$1,000
$2,000
$3,000
$4,000
Change: $ 2,107 $ 801
Minimum School Program--- Continued
Minimum School Programs
A. Basic School ProgramsRegularRestricted
B. Related to Basic School Programs
C. Board and Voted Local Levy Programs
D. School Building Programs (Funded Separately from MSP)
Minimum School Program --- Continued
MSP ---- The Equalizer
DISTRICT ALPINE SALT LAKE PARK CITY TINTIC IRON
BASIC SCHOOL PROGRAMS $ 287,970,439 $ 97,886,283 $ 19,342,882 $ 2,669,468 $ 39,557,666
Locally Generated $ 34,748,243 $ 37,496,448 $ 23,387,938 $ 107,375 $ 6,691,705
MSP STATE FUNDED $ 253,222,196 $ 60,389,835 N/A $ 2,562,093 $ 32,865,961
Percent State Funded 88% 62% Zero 96% 83%
Average All Districts – 83%Source: USOE -- FY17 Final Summaries
Minimum School Program --- Continued
(FY 17 Basic Rate .001675)
The Infamous “LINE”
Minimum School Program --- Continued
Minimum School ProgramsA. Basic School Programs (WPU Driven)
B. Related to Basic School Programs
C. Board and Voted Local Levy Programs
D. School Building Programs (Funded Separately from MSP)
T H E “L I N E”
Minimum School Program --- Continued
The “LINE”
Basic School Programs(WPU DRIVEN FUNDING)
Related to Basic School Programs (Non-WPU Formula Driven Funding)
ABOVE
BELOW
Minimum School Program --- Continued
Basic School Programs –Regular (Above the Line)
1. Kindergarten (27,099 WPUs, $89.7 Million)
2. Grades 1-12 (587,693 WPUs, $1.946 Billion)
3. Necessarily Existent Small Schools (9,514 WPUs, $31.5 Million)
4. Professional Staff Cost (55,808 WPUs, $185 Million)
5. Administrative Costs (1,565 WPUs, $5.2 Million)
Per MSP FY18 Revised Appropriations --- Governors FY19 Budget
Minimum School Program --- Continued
"This country has come to feel the same when Congress is in session as when a baby gets hold of a hammer.“--Will Rogers--
Basic School Programs – Restricted (Above the Line)
Special Education Programs (109,076 WPUs, $361.2 Million)
Career & Technology Education – Add On (28,480 WPU’s, $94,297,300)
Class Size Reduction (40,909 WPUs, $135.5 Million) Note: Based on the average teacher’s salary --- 1,800 teachers state-wide.
Minimum School Program --- Continued
Related to Basic Programs (Below the Line)
1. To and From School Pupil Transportation ($83.7 Million)
2. Pupil Transportation (Unsafe Routes Grants) ($500K)
3. Guarantee Transportation Levy ($500K)
4. Flexible Allocation Distribution ($7.8 Million)
Minimum School Program --- Continued
Related to Basic Programs (Continued)
Special Populations – (Major Programs)
Enhancement for At-Risk Students ($28 Million)Youth in Custody ($22.7 Million)Adult Education ($11 Million)Enhancement for Accelerated Students ($5 Million)Concurrent Enrollment ($10.7 Million)Misc. Other Programs ($550K)
Minimum School Program --- Continued
Related to Basic Programs (Continued)
◦ Other Programs 1. School LAND Trust Program ($50.4 Million) 2. Charter School Local Replacement ($170.5 Million)3. Charter School Administrative Costs ($7.8 Million)4. K-3 Reading Improvement Program ($15 Million)5. Educator Salary Adjustment ($173.6 Million)6. Teacher Salary Supplement Restrict Account ($6.8 Million)7. Library Books & Electronic Resources ($850 K)8. Matching Fund for School Nurses ($1 Million)9. Critical Languages & Dual Immersion ($3.5 Million)10. Year-Round Math & Science (USTAR Centers) ($6.2 Million)11. Early Intervention ($ 7.5 Million)12. Beverly Taylor Sorenson Arts Learning Program ($9.8 Million)13. Digital Teaching & Learning Program ($9.8 Million)14. Teacher Supplies ($5 Million)15. Misc. Other Programs ($455.7K)
Minimum School Program --- Continued
Related to Basic Programs (Continued)
One-Time Funding Items
None for Fiscal Year 2018
Minimum School Program --- Continued
VOTED AND BOARD LOCAL LEVY PROGRAMS
1. Voted Local Levy Program $453.2 Million *** (Up to .001600 Tax Rate)
2. Board Local Levy Program $136.8 Million *** (Up to .000400 Tax Rate)
3. Board Local Levy – Reading Improvement Program $15 Million
*** Guarantee Rate (per 0.0001 Tax Rate per WPU) $38.54
Voted & Board Levy GuaranteeDISTRICT CACHE Jordan SOUTH
SUMMITPROVO SOUTH
SANPETE
Voted and Board LevyProgram
$ 17,505,826 $ 52,163,783 $ 1,884,757 $ 15,888,042 $ 3,721,801
LOCAL TAX RATE (EFFORT) .002704 .002244 .002925 .002693 .003365
Local Tax Rate Generated $ 8,607,020 $ 37,929,195 $ 1,884,757 $ 8,241,732 $ 1,168,460
MSP STATE FUNDED $ 8,898,806 $ 14,234,588 N/A $ 7,646,309 $ 2,553,341
Percent State Funded 51% 27% N/A 48% 69%
Return On Tax Effort 1.03 .38 N/A .93 2.19
26 Districts ParticipatingSource: USBE -- FY17 Final Update
School Building Programs
Capital Outlay Programs(Reference: Utah Code 53A-21-101,201,301)
1.Foundation ($27.6 Million)Based on local property tax effort and tax yield per student based on a foundation guaranteed funding level. (15 Districts)
2. Enrollment Growth ($5.6 Million)Provides funding to school districts experiencing net enrollment increases. (16 Districts)
“If we got one-tenth of what was promised to us in these acceptance speeches there wouldn’t be any inducement to go to heaven“--Will Rogers--
Pulling Together, Great Things Can Happen !!!
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