2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Slicing and Dicing Your Principal Apportionment FIN-20 APRIL 3-6, 2013, LONG BEACH, CA These materials

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO

Slicing and Dicing Your Principal Apportionment

FIN-20

APRIL 3-6, 2013, LONG BEACH, CA

These materials have been prepared by the CASBO Finance Professional Council – Southern Section. They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO.


Slicing and Dicing Your Principal ApportionmentMarlene DunnDirector, Business Advisory Services

Los Angeles County Office of Education

Ambur BorthDirector, Fiscal Services

Palos Verdes Peninsula Unified School District



Slicing and Dicing Your Principal Apportionment• Components of Principal Apportionment• Apportionment Calculations• Payment Schedule• Deferral Schedule• Cash Flow Management Options• Impact of LCFF

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO4

Principal Apportionment• Delivers funding for several different

programs including:– Revenue Limit– Special Education– GATE– ROC/P– Adult Education– Supplemental Instructional Programs


Principal Apportionment• Since 2008-09, amounts for all but

revenue limit and special education have not changed.

• Revenue Limit experiences greatest variances due to changing factors:

Taxes ADA COLA

PERS UI Deficit


Principal Apportionment• Recalculated four times annually:• Advance Apportionment (July through January)

– Estimate based on prior year P-2 and adjusted for current year COLA, deficits, and other factors contained in enacted Budget

• First Principal (February through May)– Based on P-1 data including estimated taxes, ADA, and other data

• Second Principal (June)– Based on P-2 data including estimated taxes, ADA (final data for

most programs), and other• Annual (Adjustment paid February through June)

– Based on final year-end data included actual taxes, ADA (P-2 for most programs, Annual for specific), and other data


5-5-9 Schedule - The monthly payment schedule used in a

“normal” year with no deferrals (if apportionments are equal, then Feb through June would be 9%)

Month Payment Amount

July 5% of the Advance Apportionment

August 5% of the Advance Apportionment

September 9% of the Advance Apportionment

October 9% of the Advance Apportionment

November 9% of the Advance Apportionment

December 9% of the Advance Apportionment

January 9% of the Advance Apportionment

February 1/5 of the difference between the amount received YTD and the P‑1 Apportionment

March 1/5 of the difference

April 1/5 of the difference

May 1/5 of the difference

June Difference between the amount received YTD and the P‑2 Apportionment


Principal Apportionment• CDE releases:

– “Apportionment Summary” that details the amount for each program for each district

– “Payment Schedule Summary” that details the amount the monthly payment for the total PA for each district

• The 2012-13 P-1 Apportionment documents are posted on the CDE’s Web site at:http://www.cde.ca.gov/fg/aa/pa/iassf12p1.asp


Deferrals2012-13 Deferrals

(Updated by CDE February 2013)

TimeframeExemption Available?

AmountPrincipal Apportionment

Payment Impact

July 2012 to Sept. 2012 Yes $700 million 75%

July 2012 to Jan. 2013 Dec. 2012 Yes $500 million 25%

Aug. 2012 to Jan. 2013 Dec. 2012 Yes $600 million 60%

Oct. 2012 to Jan. 2013 Dec. 2012 Yes $800 million 46%

Feb. 2013 to July 2013 No $531.7 million 31%

March 2013 to April 2013 Yes $900 million 27%

March 2013 to Aug. 2013 No $1.3 billion 60%

April 2013 to July 2013 No $594.7 million 35%

April 2013 to Aug. 2013 No $763.8 million 45%

May 2013 to July 2013 No $1.98 billion 100%

June 2013 to July 2013 Yes $474 million 100%

Deferred across fiscal years $5.64 billion


2012-13 Adjusted Payment Schedule (Assumes Equal Apportionments)

2012-13 2013-14

Advance P-1 P-2 Advance

Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept

5-5-9 Schedule 5.00% 5.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 5.00% 5.00% 9.00%

Actual Percentages Paid 0.00% 2.02% 9.00% 4.86% 9.00% 9.00% 9.00% 6.19% 0.00% 1.82% 0.00% 0.00% 0.00% 2.02% 9.00%

Deferred from July Advance 3.73% 1.27% 3.73%

Deferred from August Advance 2.98%

Deferred from October Advance 4.14%

Deferred from February P-1 7.88%

2.81%

Deferred from March P-1 5.12% 3.56% 5.44%

Deferred from April P-1 1.65% 5.68% 3.14% 4.04%

Deferred from May P-1 3.15% 3.94%

9.00%

Deferred from June P-2 9.00% 9.00%

Total Received from Current

Year 0.00% 2.02% 12.73% 4.86% 9.00% 17.39% 9.00% 6.19% 3.56% 1.82% 0.00% 0.00% 0.00% 2.02% 12.73

Grand Total Received from CY 66.57%

Total Received from Prior Year 21.68 14.74% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 23.95 9.48% 0.00%

Grand Total Received from PY 33.46%

Grand Total Received 21.68 16.76% 12.73% 4.86% 9.00% 17.39% 9.00% 6.19% 3.56% 1.82% 0.00% 0.00% 23.95 11.50 12.73

Grand Total Deferral for CY

33.43%


Revenue Limit Cash Flow1. For 2012-13, understand what payments

have been made YTD (CDE’s Payment Schedule Summary)

2. Calculate what you expect final Revenue Limit will be using:

– Projected P-2 ADA– Estimated Taxes, other data (i.e., PERS, UI,

etc.)– Estimated other data (i.e., PERS, UI, etc.)


Revenue Limit Cash Flow3. Create table that calculated monthly

payments based on % of each apportionment

4. Fill in Advance Apportionment and Projected Apportionment amounts

5. Confirm that YTD totals match CDE’s data6. Adjust to match as CDE releases

apportionment and as projected data is revised

OR


Revenue Limit Cash Flow• Use Revenue Limit Cash Flow developed by

LACOE, Division of BAS• Reflects:

– Current Adjusted Monthly Payment Schedule– CDE’s Advance Apportionment data– Projected Revenue Limit Allows for changes to

projection by user– Adjust as appropriate – trigger reductions, major

PY adjustments (RDA recovery or other audit findings)


Revenue Limit Cash Flow

• Sample District Revenue Limit Cash Flow.xls


Principal Apportionment Accruals• Accruals:

– Annual Apportionment• Difference between PY P-2 and Annual applied as an adjustment to

CY P-1 in February– CY Deferral

• Amount deferred from 2012-13 to 2013-14– PY Unsatisfied Accruals

• Portion of PY Accruals deferred to following year• Ex: Annual Apportionment is adjustment to P-1, which is paid Feb

through May. Any deferral of Feb through May payments to 2013-14 results in deferral of accrued amounts resulting in unsatisfied accruals.


Taxes• Assume taxes to be same as prior year

– Same amounts– Same monthly distribution

• County A-C Estimates drive revenue limit calculation– Actual taxes not considered in revenue limit until

Annual Apportionment


Taxes• Any change to tax estimate has

corresponding change to revenue limit– If taxes go up, state aid portion of revenue limit

goes down and vice-versa• Most RDA revenue is treated as tax revenue

– Exception is facilities portion of pass-through payments


EPA Cash Flow • EPA is now third component of Revenue Limit

(State Aid, Property Tax are other two)• Based on DOF estimates• Offset State Aid for each EPA dollar ()• For 2012-13, lump-sum payment in June 2013• Thereafter, to be paid quarterly (September,

December, March & June)

18


Prop 30 EPA• The vehicle to collect and disburse

revenues generated by temporary taxes from Prop 30

• State Aid is reduced for each dollar districts received from EPA

• Treat as a third revenue limit source: – Total Revenue Limit less Property Taxes and

EPA equals State Aid

19


Prop 30 EPA• For 2012-13, distributed by June 30, 2013• State Aid payments already reduced by

estimated EPA (about 21.2% of revenue limit - refer to EC 14140 Reduction)

• P-2 State Aid payment to be based on updated estimate to be released by DOF

• For 2013-14, distributed on quarterly basis

20


Considerations• Should prepare 24-month cash flow

projection to allow time to address issues• TRANs require 90-120 days to prepare

– Mid-year issuance in March (covering deficiencies in Spring and Summer) S/B identified and process initiated by December

– July 1 issuance by March/April– Cash flow projection should cover pledge dates

and subsequent months


Considerations (cont.)• Principal Apportionment and Taxes are not posted until

the end of the month– Typically rec’d around the 27th-29th

– With processing time, may not be reflected for several days but will be posted with date of receipt

• Consider Payroll Cycles and Amounts– Month-end cash balances must be sufficient to cover payrolls

issued prior to receipt of revenue– Ex: month-end balance of $1 M, but $2 M payroll issued on 5th

means insufficient cash of $1 M

• Don’t wait for projected negative month-end balances – may be too late


Cash Flow Deficiency Management Tools• TRANs• Inter-fund Borrowing• Borrowing from County Office• Borrowing from County Treasurer• All have restrictions and requirements• Responsibility of District to manage cash


Questions?

Documents

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Slicing and Dicing Your Principal Apportionment FIN-20 APRIL 3-6, 2013, LONG BEACH, CA These materials