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Basics of School Finance

Basics of School Finance. WSSDA Webinar March 27, 2014 Barbara Posthumus, Director of Business Services Lake Washington School District bposthumus@lwsd.org. Agenda. School Funding History Sources of Revenue Funding Model Budgeting. Washington State Constitution.

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Basics of School Finance

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  1. Basics of School Finance WSSDA Webinar March 27, 2014 Barbara Posthumus, Director of Business Services Lake Washington School District bposthumus@lwsd.org

  2. Agenda • School Funding History • Sources of Revenue • Funding Model • Budgeting

  3. Washington State Constitution • Article IX “It is the paramount duty of the state to make ample provisions for the education of all children residing within its borders,...”

  4. School Funding History

  5. Doran Court Decisions • Doran I - 1977 • the level of funding provided by the state.... was not fully sufficient.. • legislature had not defined basic ed or provided fully sufficient funding without reliance on special excess levies • led to Basic Ed Act of 1977 which established revised funding formula, substantially increased state funding, and limited amount and purpose of special levies.

  6. Doran Court Decisions • Doran II - 1983 • duty to fully fund includes not only basic ed act also: special education; transitional bilingual; remediation; transportation for some pupils. • Doran III - 1988 • required establishment of some form of “safety net” in special education

  7. ESHB 2261 • ESHB 2261 passed in 2009 • Defines new programs of Basic Education, while mandating that no new requirements shall be implemented without associated funding. • Adopts prototype schools funding model. • Establishes that programs shall be fully funded by the 2018-19 school year. • Establishes a new funding formula for Pupil Transportation, to begin during or before 2013. • Created the Quality Education Council (QEC) to develop and implement workgroups on funding formulas, data governance, levy, compensation • Creates a roadmap for work groups to define the details of the funding formulas.

  8. SHB2776 Prototypical School Funding Model • SHB2776 passed in 2010 • Implements the new funding structure for education as proposed by the QEC and the Funding formula technical workgroup • New funding structure to begin Sept 2011 • New structure only - no new dollars • Creates timeline for funding phase-in and 2018 deadline for full funding • Funding shall be for allocation purposes only

  9. SHB 2776 Goals (continued) • More funding must begin in 2012-13 • Full Day Kindergarten fully funded statewide by 2017-18 • K-3 Class Size Reduction fully funded by 2017-18 • Materials, Supplies and Operating Costs fully funded by 2015-16 • Transportation fully funded by 2014-15

  10. McCleary v. State of Washington • McCleary 2010 • The Washington State Supreme Court issued a ruling that the state is not complying with its constitutional duty to “make ample provision for the basic education of all children in Washington.” • Court recognized the Legislature had enacted “a promising reform package” in its 2009 education reform bill and indicated that legislation, if funded, “will remedy deficiencies in the K-12 funding system.” • Court deferred to the Legislature to determine how to meet its constitutional duty, but retained jurisdiction over the case to “facilitate progress in the state’s plan to fully implement the reforms by 2018.”

  11. Sources of Revenue

  12. State PerspectiveWhere Does the money come from? Source: Organization and Financing of Washington Public Schools May 2013

  13. State PerspectiveWhere Does the money go to? Source: Organization and Financing of Washington Public Schools May 2013

  14. District PerspectiveWhere Does the money come from? Source: Organization and Financing of Washington Public Schools May 2013

  15. State Revenueor “Apportionment” • Largest Revenue source for school districts • Basic Education • Categorical • Special Education • Highly Capable • Learning Assistance Program • Bilingual Instruction • Transportation

  16. Basic Ed Apportionment • Enrollment is the largest driver of revenue • Key to positive or negative impacts to budget • Prototypical Model • Enrollment Staffing Funding • Staff Mix (levels of education and experience of your teachers) drive funding

  17. Prototypical School Funding Model Fixed theoretical school size used for modeling purposes Funding formula assumptions are based upon prototypical school Class size assumptions are different based upon grade and subject Planning time for teachers is factored in for determination of class size

  18. Prototypical Model • Certificated Instructional Staffing (CIS) • Legislative class size allocations plus planning time equals teachers

  19. Prototypical Model • Other cert staff based on prototypical school model.

  20. Prototypical Model • Classified Staff (CIS)

  21. Prototypical Model • Certified Administration Staff (CAS)

  22. How Model Drives Funding • Certified staffing FTE and Staff Mix (levels of education and experience of your teachers) drive funding. Cert FTE multiplied by state salary allocation equals funding • Classified and Administration FTE multiplied by average state salary allocation equals funding • Some districts are grandfathered at higher amounts • Salaries drive mandatory benefits and medical benefits

  23. Materials, Supplies and Operating Costs (MSOC)

  24. Basic Apportionment • Substitutes • Career and Technical Education (Vocational Education) • Small Schools Districts – special allocations

  25. State Categorical Funding • Special Education • Funded based on a % of basic ed • Birth to Pre-Kindergarten=115% • Kindergarten to age 21 =93.09% • Learning Assistance Program (LAP), Transitional Bilingual (ELL) and Highly Capable • Provides funding for additional hours of instruction • Formula drives cert teachers • Transportation

  26. Levy Funds • Local Levy • Must be voted on by community at least every four years • Amount that can be collected is capped by state formula • Increased from 24% to 28% in 2011 • Set to sunset after 2017 • Some districts are grandfathered at higher percentage • Levy Equalization

  27. Federal Funding • Special Education IDEA • Vocational Education • Title I (Remediation) • Title II (Professional Development) • Title III (Limited English Proficiency) • Free and Reduced Lunch Funding • Head Start • Other Grants

  28. Local Nontax/Other • Investment earnings • Fee programs – all day kindergarten, sports participation, food services, summer school • Grants and donations • Rentals and leases – facilities use • Revenue from other school districts • Fines and fees from students (workbooks, supply fees)

  29. Budgeting

  30. Year in the Life of School District Budgeting • Enrollment • Mid-Year Projections (Fund Balance) • Legislative Impact • Budget Preparation • Multi-year Budget Projection • Monitoring and Reporting

  31. Budget Factors • Staffing drives 85% of budget • State defines format of budget • Program – Activity - Object

  32. District PerspectiveWhere Does the money go? Source: Organization and Financing of Washington Public Schools May 2013

  33. District PerspectiveWhere Does the money go? Source: OSPI Financial Summary 2011-12

  34. Sample Timeline

  35. Sample Timeline

  36. Board input/Questions • Feedback • What kind of public process will you have? • Goals for next year • Goals for long-term • Questions • How are contingencies built into budget? • Does your district regularly do budget extensions?

  37. Multi-year Budget Projection • How do decisions today effect long-term budget outlook?

  38. Monitoring and ReportingWAC 392-123-115 “A monthly budget status report for each fund shall be prepared by the administration of each school district; and a copy of the most current budget status reports shall be provided to each member of the board of directors of the district at the board's regular monthly meeting. The report shall contain the most current approved budget amounts by summary level accounts and the fund balance at the beginning and end of the period being analyzed….Also, as a part of the budget status report, the administration shall provide each member of the board of directors with a brief written explanation of any significant deviations in revenue and/or expenditure projections that may affect the financial status of the district… “

  39. Next steps • Meet with Business Manager • Ask about funding issues • Ask about budget preparation process • Ask about long-range financial picture • Ask about monthly board financial reports

  40. Additional Resources • Organization and Financing of Washington Public Schools http://www.k12.wa.us/safs/PUB/ORG/13/Final%20Edition%202013.pdf • A Citizen’s Guide to WA State K-12 Finance http://www.leg.wa.gov/Senate/Committees/WM/Documents/2014%20K12%20Citizens%20Guide.pdf • “A Brief History of Education Funding in WA State” This is a one-page pictorial timeline of funding http://www.k12.wa.us/Communications/PressReleases2014/EducationFundingChart.pdf • Quality Education Council (QEC) reports http://www.k12.wa.us/QEC/default.aspx

  41. Final Questions

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