Regional Breakout

1. Regional Breakout MASBO Annual Institute May 2015

2. Monitoring Your School Budget Presenter Stephen Hemman

3. School Committee Responsibilities • Hire the Superintendent • Budget • Policy

4. Monitoring Your School Budget • School Committees are responsible for input into the preparation of the regional school district budget and its subsequent certification and monitoring. • This presentation will highlight types of budget reports to provide to school committees and how often; as well as recognizing when district finances are stable verses red flags for trouble.

5. Process to Monitoring Regional School District Financial Status • DESE Chart of Accounts • Function Codes • Object Codes • Regional School District • Income • Budget • Assessment • Financial Reports • Grants • Revolving Accounts • Special Funds

6. Chart of AccountsDESE Classifications Object codes 01 Professional Salaries 02 Clerical Salaries 03 Other Salaries 04 Contract Services 05 Supplies and Materials 06 Other Expenditures 09 Transfers (optional) Program codes 01 Regular Education 02 Special Education 03 Chapter 74 Occupational Day 04 Other Programs 05 Undistributed Expenditures • 1000 District Leadership & Administration • 2000 Instructional Services • 3000 Other School Services • 4000 Operation and Maintenance Of Plant • 5000 Fixed Charges • 6000 Community Services • 7000 Acquisition, Improvement and Replacement of Fixed Assets • 8000 Debt Retirement and Service • 9000 Programs with Other School Districts Revenues • General fund receipts • State aid receipts • State and Federal Grant receipts • Revolving and Special Fund Receipts See DESE Chart of Accounts (DESE Classifications) ref: Notebook for definitions

7. Financial Report • Summary Report • Income Report • Function Budget Summary Report • Function Budget Detail Report • Balance Sheet • Detail Budget Report

8. Revolving Accounts and Funds • Revolving Accounts Need a law to create a revolving account • Funds

9. Revolving Accounts and Special Funds

10. Montachusett Regional Vocational Technical School District • 18 Communities 2 Cities 16 Towns • 22 School Committee Members • 1,435 Students • FY15 Budget $25,640,833

11. Montachusett Regional Vocational Technical School DistrictFinancial ReportsAs of September 30, 2014 Included: • Balance Sheet • Statement of Income and Expenses • General Fund Income Summary • Summary By Function Code (Subtotal) • Summary By Function Code (Function Detail) • General Ledger Expense Report • Grants • Revolving Funds

19. Regional School District Transportation Reimbursement FundPresentation to MA Association of School Business Officials Christine M. Lynch, DESE

20. Transportation Reimbursement Fund • Chapter 233 approved on August 5, 2014. • Allows regional school committees to establish a Regional Transportation Reimbursement (RTR)Fund and deposit regional transportation reimbursements into the fund. • Once deposited, any remaining funds at the end of the year are allowed to carry forward for one FY. Currently regional school districts must estimate future reimbursements as they compile their budgets for the next fiscal year. This activity can occur in the fall or early winter before the Governor’s proposed budget is released. Allowing regional school districts to carry forward current reimbursements allows them to more accurately plan for the following year’s budget.

21. Establishment of Fund • School Committee votes once to establish the RTR Fund. • The district then is allowed to deposit state transportation reimbursements into the RTR Fund, with approval of school committee.

22. Use of RTR Fund • May only be used for transportation expenses. • Must use to decrease the town’s transportation assessments. Towns should assume that whatever is deposited in previous year will be used to offset assessments for the current year. • Should inform the member towns of amounts available within the RTR Fund.

23. Restrictions • Deposited funds can be used only in the current fiscal year or the subsequent fiscal year. • If prior year reimbursements remain in the RTR Fund at the close of the subsequent fiscal year, those funds must then revert to the district’s Excess & Deficiency (E&D) balances.

24. General Fund Exceptions • Expenditures are made directly from the RTR Fund; a transfer into the general fund is not allowed. • Balances within the restricted amount are not part of the district’s general fund and do not impact the district’s E&D calculation.

25. Budget Development and Amendments • The RTR Fund can be used by the school committee without requiring approval of the member towns during the budget process. • HOWEVER, in the event that use of these funds increases the budget, the regional school committee must amend its budget by following the process outlined in 603 CMR 41.05 (5). Regional School District Budgets.

26. Reporting • Report as a normal budgeted expense. (funds approved as part of the budget or through an amendment to the budget.) • Expenditures from the RTR Fund, are reported on the EOY Report as an additional appropriation of the school committee. • Report revenue on EOY Report as assessment revenue.

27. Incurring Debt and Capital Issues Presenters Christine M. Lynch Camie Lamica

28. Methods of Incurring Capital Debt • M.G.L Chapter 71, § 16(d) “. . . no debt may be incurred until the expiration of sixty days from the date on which said debt was so authorized; and prior to the expiration of said period any member town of the regional school district may hold a town meeting for the purpose of expressing disapproval of the amount of debt authorized by the district committee, and if at such meeting a majority of the voters present and voting thereon express disapproval of the amount authorized by the district committee, the said debt shall not be incurred.” • Written notice must be provided to the member towns.  • If any member town holds a town meeting within 60 days of the school committee’s authorization to disapprove the amount of debt, the debt will not be incurred.

29. Methods of Incurring Capital Debt - continued 2. M.G.L Chapter 71, § 16(d) In the case of a vocational RSD, if the agreement so provides, such debt may also be incurred: • If 2/3 of the member towns do not vote disapproval within a sixty day period provided that said towns which have not voted disapproval agree within ninety days of the date on which said debt was authorized to pay the total bond indebtedness authorized by the district committee without contribution by the member towns which voted disapproval of the amount of said debt. • Member towns which voted disapproval of the amount of said debt shall have the right to retain their membership except that they shall not be allowed any added enrollment that might result solely from the expansion of facilities that occurs on account of said new indebtedness. • Debt incurred under § 16(d) shall be payable within 30 years, but no such debt shall be issued for a period longer than the maximum useful life of the project being financed as determined in accordance with guidelines established by the division of local services of the department of revenue.

30. Methods of Incurring Capital Debt - continued • M.G.L Chapter 71, § 16(n) “To incur debt for the purposes and terms specified in clause (d); provided that the vote of the district committee authorizing such debt is approved by a majority of the registered voters in member towns voting on the question at an election…” • The election must be called and held pursuant to the provisions of § 16(n). • Vote of district committee authorizing debt must be approved by majority of registered voters throughout the district ballot. • Expenses of the election are paid by the RSD.

31. School Committee Choice on Options M.G.L Chapter 71, § 14 D • Use the method outlined in the RSD Agreement for incurring debt; - § 16(d) or § 16(n) • If the RSD Agreement does not include a method for incurring debt: • The provisions of § 16(d) apply or • The regional school committee may, by a 2/3 vote choose § 16(n).

32. Purpose for Borrowing – C.71, §16(d) • Acquiring land and constructing, reconstructing, adding to, and equipping a school building; • Remodeling and making extraordinary repairs to a school building; • Constructing sewerage systems and sewerage treatment and disposal facilities, or for the purchase of use of such systems with municipalities; • Purchasing departmental equipment; • Constructing, reconstructing or making improvements to outdoor playground, athletic or recreational facilities or roadways and parking lots; • Any other public work or improvement of a permanent nature, and • For planning, architectural or engineering costs relating to any of above purposes.

33. Capital Definition in RSD Agreement Chapter 71, § 14B: RSD Regulations - Contents of Agreement: • The Regional Agreement must include the method of apportioning the expenses of the regional school district. • Operating and Capital Costs are typically defined in the regional agreement before addressing the apportionment methods. • Recommend that language defining capital costs in agreements retain flexibility for school committee to include certain categories as net school spending eligible.

34. Net School Spending Categories 603 CMR10.06: Annual School Spending Requirements • Extraordinary maintenance • 150,000 or less, at the discretion of the school committee. • Student instructional services, materials and equipment. • All Instructional equipment. • Expendable items with a useful life of less than a year or a per unit acquisition cost of less than $5000.

35. Definitions 603 CMR 10.02: School Finance Regulations – • Equipment means machines, tools, furniture, vehicles, and other non-expendable items with a useful life of more than one year and a per unit acquisition cost not less than $5000. • Extraordinary maintenance means the periodic servicing, repair or reconditioning of school buildings, grounds, or equipment to extend the useful life of an existing asset, provided that the total cost per project per school of an extraordinary maintenance project shall not exceed $150,000. EOY Report Instructions • Expenditures for instructional equipment, including vocational equipment and science lab equipment irrespective of unit costs.

36. Examples of Capital Definition in RSD Agreements • Capital costs will include capital outlay appearing in the 7000 DESE function codes. Capital costs also include principal and interest debt service. Instructional capital expenditures which qualify under net school spending are not included under capital costs and instead are included as an operating cost. • Capital costs shall consist of the costs of acquiring land and constructing, reconstructing, adding to, and equipping a school building or buildings; remodeling and making extraordinary repairs to a school building or buildings; constructing sewerage systems and sewerage treatment and disposal facilities; purchasing or using such sewerage systems with municipalities; leasing, with an option to purchase, equipment for educational purposes; any other projects or acquisitions of a capital nature which the District is or may be authorized to finance by borrowing; and debt service on bonds or notes of the District issued to finance capital costs. The categorization of costs into either of these sub-categories is to be determined by the Regional District School Committee.

37. Assessment Methods Presenter Mark Abrahams

38. Assessments • Statutory Method • Outlined by statute • Agreement Method • District proposes method to be approved by DESE.

39. Assessments Statutory Assessment Method. The calculation of members' assessments pursuant to the provisions of M.G.L. c.70, § 6. Each such assessment shall be the sum of the following amounts: • the member's required local contribution to the regional school district as determined by the Commissioner; • the member's share of that portion of the regional school district's net school spending, as defined by M.G.L. c.70, § 2, that exceeds the total required local contribution for all members, this share to be allocated pursuant to the assessment provisions of the regional agreement; and • the member's share of costs for transportation, capital project debt service, other capital costs, and all other expenditures not included in the regional school district's net school spending, this share to be allocated pursuant to the assessment provisions of the regional agreement.

40. Assessments Alternative Assessment Method. The calculation of members' assessments pursuant to the local option provided in the fourth paragraph of M.G.L. c.71, § 16B. Each such assessment shall be the sum of the following amounts: • the member's share of the regional school district's net school spending, as defined by M.G.L. c.70, § 2; and • the member's share of costs for transportation, capital project debt service, other capital costs, and all other expenditures not included in the regional school district's net school spending; both such shares to be allocated pursuant to the assessment provisions of the regional agreement.

41. Assessments Statutory • Notification to the DESE is not required. • An annual affirmative vote of the appropriating authorities of 2/3 of the members is required. • “Preferred” methodology • About 2/3 of MA districts Alternative • All members of the regional school district must unanimously approve this method. • A vote must be taken each year to utilize this method. • Notification to the DESE isrequired. • About 1/3 of MA districts

42. Governance—School Committee Presenter Stephen Hemman

43. Constitutional Law • One Person One Vote • School Committee membership must conform to One Person One Vote • Representation on the Committee is based on the populations of the towns

44. Meeting One Person One Vote Requirement • Options • CHAPTER 71 - PUBLIC SCHOOLS • Section 14E: Regional school district committee membership

45. Section 14E • A regional school district may, by amendment to its regional school district agreement, provide for one of the following options concerning the members of its regional district school committee:

46. Options • (1) electing committee members by voters in member communities with each community’s representation apportioned according to population; • (2) electing members in district-wide elections to be held at the biennial state elections;

47. Options • (3) electing members with residency requirements in district-wide elections to be held at the biennial state elections; • (4) weighing the votes of committee members according to the population they represent;

48. Options • (5) appointing committee members by locally elected officials such as school board members. • Each regional school district shall designate an individual to serve as district clerk.

49. Elections at Biennial State Elections • If a regional school district decides to elect members in district-wide elections to be held at the biennial state elections or if any vacancy is to be so filled, the district clerk shall notify the state secretary by April fifteenth of the year of the biennial state election of that fact and also of his name and mailing address.

50. Special Legislation • A Regional School District can file special legislation to have the school committee members elected for a different number of years and at the local elections rather than biennial state election .