1	School Finance & Budgeting “101” Davenport Community Schools
2	Background Presentation to board over several months Requested to repeat for administrators
3	Background to school finance Dillion’s rule: School district only have those powers expressly authorized by the Code of Iowa Vs. Home rule: Cities and counties can do anything not expressly prohibited Code of Iowa: Composite of all laws passed by the Iowa General Assembly
4	State oversight of District finances: Dept of Management Reviews all budget Has legal authority to make adjustments Certifies property tax levies Determines amount of state aid Dept of Education Oversees every aspect of school districts School Budget Review Committee Authorized to oversee budget and financial needs of Iowa’s school districts
5	Overview of District Funds General Fund – property tax, state aid Management Fund – property tax PPEL (Physical Plant & Equipment Levy)– property tax Activity – student fees Capital projects – special Debt service – special Food & Nutrition – meals prices + state/fed funding Child Care – fees LOSS (Local Option Sales & Services Tax) – sales tax
6	Iowa School Finance Principles-General Fund State foundation formula is “key” Enrollment is a primary factor in determining a schools’ spending authority State foundation formula is pupil driven State foundation formula calculates spending authority and how it is funded
7	Iowa State Foundation Formula School districts are funded through a mechanism called the Iowa State Foundation Formula Also known as: “State Foundation Formula” “School Finance Formula” “School Aid Formula”
8	1. Iowa State Foundation Formula It is used to calculate a school district’s General Fund budget which primarily supports the educational programs of the district Calculation is detailed in the Aid & Levy worksheet (State Aid & Tax Levy) The School Foundation Formula relies on two sources of revenue: State General Fund appropriations (State Aid) Locally raised property taxes (Tax Levy)
9	General Fund Moneys received by a school district from taxes and other sources must be accounted for in the general fund. This is the only fund that receives state moneys in the form of state foundation aid.
10	General Fund-What is it? Supports day to day operations of district. Includes ALL of the following: Special Education Allowable Growth Grants Title I
11	Iowa State Foundation Formula The foundation formula determines how each district’s budget is calculated as well as the maximum amount of its budget. The foundation formula sets a ceiling for each district’s spending authority and tells the district how to fund its spending authority.
12	Spending Authority vs. Budget Spending Authority Is the amount a district can spend Budget The document prepared by each school district which includes the calculation of the district’s total spending authority Our legal level of oversight is Spending Authority!
13	2. Enrollment is a primary factor in determining a schools’ spending authority Enrollment types: Actual – “headcount” taken on 3^rd Friday in September of resident students Basic – same as “Actual” Budget – same as “Actual” Certified – resident students enrolled on 3^rd Friday in Sept. used in Iowa Finance Formula Weighted = Actual + Additional weightings
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15	“Resident” Pupils School districts only receive spending authority for pupils that are enrolled and resident Pupils who are not residents pay tuition Pupils who open enroll out, the resident district receives spending authority but pays the receiving district tuition A district’s certified enrollment report is audited by the school district’s auditor during the annual fiscal audit
16	Weighted Enrollment Weighted =Actual + additional pupil weighting Weightings: Special Education Supplementary: Sharing agreements Offering particular courses School district reorganization Programs for non-English speaking students
17	Special Education Weighting Weighting is determined on December 1^st each year The Special Ed headcount taken on December 1, 2004 is used to calculate fiscal year 2005-06 spending authority (2 year delay) Only resident pupils may be counted
18	Special Education Weighting
19	3. State foundation formula is pupil driven The amount of funds a school district may generate and spend is determined by the number of pupils, or enrollment in the district multiplied by a dollar value, or cost assigned to those pupils by the state.
20	Regular Program State Cost Per Pupil Also referred to as: Cost per pupil State cost per pupil Regular program cost per pupil State foundation cost per pupil *No cost to it – it’s how much we can spend!
21	Regular Program State Cost Per Pupil The amount of state aid per pupil is determined by the regular program foundation percentage = 87.5% This amount is determined by the legislature
22	Regular Program State Cost Per Pupil In 2005-06 the State Cost per Pupil is $4931 87.5% = $4315 Note: Enrollment in current school year is used in the next year’s foundation formula
23	State Percent of Growth = Percentage of Allowable Growth increase in the state cost per pupil Allowable Growth refers to the dollar growth in the state cost per pupil The legislature has 30 days after receiving the governor’s budget recommendation to set the state percent of growth for the following budget year
24	State Percent of Growth Allowable growth dollar amount is added to base year state cost per pupil 2005-06 percent of growth = 4% 2004-05 Cost per pupil = $4741 4% allowable growth = $4741 * .04 = $190 2005-06 Cost per pupil = $4741 + $190 = $4931 Only the state cost per pupil is used to determine the amount of state allowable growth each district receives
25	State Percent of Growth History 2000-01: 4% 2001-02: 4% 2002-03: 1% 2003-04: 2% 2004-05: 2% 2005-06: 4 % Note: In 2002-03, $23.49 was not funded of increase
26	“Allowable Growth” “Allowable Growth” “Allowable Growth” State Allowable Growth Increase in funding Modified Allowable Growth Granted by SBRC Allowable Growth Program Refers to Dropout Prevention Program
27	When is 4% not 4%?
28	Adjustments to Allowable Growth Budget Guarantee Districts receive what they received in the prior year for the Regular Program Budget regardless of enrollment changes Davenport was in guarantee in 2002-03
29	Budget Guarantee
30	Adjustments to Allowable Growth On Time Funding Districts with increased enrollment have a way to capture growth 101% Option District’s are eligible to receive 101% of prior year’s regular program district cost Davenport received the 101% option for 2004-05
31	Modified Allowable Growth Schools districts may be provided allowable growth beyond the state allowable growth – by the School Budget Review Committee (SBRC) Is stated as a dollar figure Several types: Permanent Additional Negative Special Education Balances
32	SBRC A committee established by Iowa Code chapter 257 and appointed by the Iowa Governor with the Director of the Dept of Education as the Chair, the Director of the Dept of Management as the Secretary and three lay members. This committee reviews school budgets and hears requests from school districts for modified allowable budget growth.
33	Modified Allowable Growth Permanent – not granted since 1990 Additional – unique and unusual needs Additional costs associated with extending English Language Learner’s program Open enrollment students not counted in enrollment count Negative Special Education Balances
34	Question? What’s the point of a state cost per pupil if district’s only receive 87.5% of that amount? Why not just set the per pupil cost at the reduced amount?
35	Answer: 4. School districts use its per pupil cost to determine its total spending authority
36	4. School districts use its per pupil cost to determine its total spending authority State Foundation Formula Generates spending authority Provides funding of spending authority
37	Determination of Spending Authority: The calculations are: Total Spending Authority equals: 1.Combined District Cost plus 2.Miscellaneous Income plus 3.Unspent Balance Combined District Cost equals a)Uniform Levy plus b)State Foundation Aid plus c)Additional Levy
38	a) Uniform Levy A property tax levied equally against the taxable property in all of the school districts in the state of Iowa Stated in terms of a dollar amount per $1000 of assessed valuation The uniform levy is $5.40 per $1000 of assessed valuation Assessed valuation is value given to property by the county or city assessor
39	Uniform Levy In Davenport: Assessed valuation = $3,232,147,108 Uniform Levy = ($3,232,147,108/$1000) X $5.40 = $17,453,594
40	b) State Foundation Aid Is used to assist in equalizing funding as well as reducing property tax The state money funding the difference between the uniform levy per pupil in each school district and the foundation percentage, 87.5% of the state cost per pupil
41	State Foundation Aid (State Cost Per Pupil x 87.5% x District Weighted Enrollment) – Uniform Levy ($4315 x $19,284.90) - $17,453,594 = $65,760,749
42	c) Additional Property Tax Levy To fully fund the district cost per pupil, the school district must levy additional property tax
43	Additional Property Tax Levy Cost per pupil = $4931 Uniform Levy + State Foundation Aid = $4315 per pupil Additional Levy = $616 per pupil In Davenport: $616 x 19,284.90 = $11,879,498
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45	Assessed Valuation
46	1) Combined District Cost The Combined District Cost is funded by: Uniform Levy ($5.40 per $1000 of assessed valuation) State Foundation Aid (Equalizes funding to 87.5% of per pupil cost) Additional Levy (brings funding to 100% of per pupil cost)
47	2) Miscellaneous Income Any general fund revenue that is not part of the combined district cost If general fund revenue received by a school district is not from the uniform levy, state foundation aid or the additional levy
48	Miscellaneous Income Can be from many sources: Property tax State funds (restricted and unrestricted) Local funds (restricted and unrestricted) Federal funds (restricted and unrestricted)
49	Miscellaneous Income Can be used for any general fund purpose unless the funds received were to be used for a specific purpose (restricted, categorical) Unless the source of funds is guaranteed to be continuing from year to year, miscellaneous income should only be used for one-time expenditures
50	Example of Local Misc Inc.- Non-categorical
51	Local - Categorical
52	State Misc. Inc. – Non-Categorical Military Credit
53	State Misc. Inc. - Categorical
54	Federal Misc. Inc. – Non-Categorical Currently there is none
55	Federal Misc. Inc. – Categorical
56	Misc. Income for 2004-05 $20,080,737 or 15.15% of revenues Local-$4,902,323 Total Categorical: $962,124 Non-categorical: $3,940,199 State - $5,076,092 Total Categorical: $5,042,947 Non-categorical: $33,145 Federal - $10,094,818 Categorical: $10,094,818 Non-categorical: $0 Other: $7504 – categorical $3,973,344 Non-categorical or 19.79% of total miscellaneous income
57	Miscellaneous income Miscellaneous Income is the 2^nd component to determining total Spending Authority It can be unrestricted or restricted
58	3) Unspent Balance Sometimes referred to as “carryover” balance Unspent balance means that current or prior spending authority was unfunded or unspent
59	Determining Unspent Balance
60	For example: You’d like a credit card with a $10,000 limit, because that’s what you can afford monthly payments for. MasterCard gives you a card with a $5,000 limit. Even though you believe you have the cash flow to make larger payments, you can’t automatically go over your credit limit.
61	History in Davenport
62	Money??? Cash Currency, coin, checks, etc. Unspent Balance Amount of spending authority not spent (not cash) Fund Balance Excess of assets over liabilities (not cash)
63	Fund Balance vs. Unspent Balance
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65	Cash & Unspent Balance-”How did we do that?” When both are negative: Overspent budget When cash is positive and unspent balance is negative: Levied funds through cash reserve that did not carry spending authority and overspent budget When cash is negative and unspent balance is positive: You haven’t levied cash reserve (no extra cash) but have spending authority. You fund a new project, but no cash to do it. i.e. You get spending authority for excessive ESL costs, special ed deficit, open enrollment but don’t levy cash reserve for those areas. When both are positive: Under spent budget
66	Putting it all together
67	Summary Annually a school district: Calculates total spending authority Itemizes its revenues and expenditures States its funding method The result of this process is the Certified Budget – which must be filed with the county auditor no later than April 15 each year
68	Summary Spending Authority Is the amount a district can spend Budget The document prepared by each school district which includes the calculation of the district’s total spending authority