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BASIC SCHOOL FINANCE

BASIC SCHOOL FINANCE. Jeff B. Mills, Executive Director, OSSBA Steven Crawford, Executive Director, CCOSA. OKLAHOMA SCHOOL FINANCE. REVENUE “SHOW ME THE MONEY” BUDGET “WHERE DID IT GO?” Site Budgets Activity Accounts Budgets District Budgets Review ACCOUNTING “OCAS” .

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BASIC SCHOOL FINANCE

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  1. BASIC SCHOOL FINANCE Jeff B. Mills, Executive Director, OSSBA Steven Crawford, Executive Director, CCOSA

  2. OKLAHOMA SCHOOL FINANCE • REVENUE “SHOW ME THE MONEY” • BUDGET “WHERE DID IT GO?” • Site Budgets • Activity Accounts Budgets • District Budgets Review • ACCOUNTING “OCAS”

  3. “Show Me the Money” Eleven Funds • General Fund (operations) • Building Fund (repairs) • Sinking Fund (debt) • Child Nutrition (lunch) • Co-op Programs • Activity Funds (fund raisers) • Gifts & Endowments (scholarships) • Bond Funds (construction) • Trust

  4. REVENUE/GENERAL FUND “A Thousand Sources – Mostly Taxes” Operations • Local • Intermediate • State • Dedicated • Appropriated • Federal • “Non-revenue” • Cash Accounts (Fund Balance)

  5. I. LOCAL • AD VALOREM TAX LEVY • PRIOR YEAR AD VALOREM • IN LIEU of TAXES • TUITION and FEES • INTEREST EARNINGS • RENTAL • REIMBURSEMENTS • OTHER LOCAL SOURCES

  6. 1. AD VALOREM LEVY • A.K.A. PROPERTY TAX • A. PROPERTY • REAL • PERSONAL • COMMERCIAL • PUBLIC SERVICE • Locally Assessed (11%) • Centrally Assessed (22.8%)

  7. AD VALOREM CALCULATION • MARKET VALUE $100,000 • Assessed Valuation • Assessment Ratio (11%) $11,000 • Less Homestead Exemption $ 1,000 = $10,000 • X Tax Levy (70 mills) $ 700 • + Personal Property (11%) $ 77

  8. Ad Valorem Continued • Assessed Valuation – Homestead X Mill Levy =Tax • General Fund $11,000 - $1,000 = $10,000 X 35 mills = $350 County 4 mill $10,000 X 4 mills = $40 • Building Fund $10,000 X 5 mills = $50 • Sinking Fund $10,000 X 22 mills =$220 • Total School Tax $660

  9. II. INTERMEDIATE • County 4 Mill Levy • Assessed Valuation – Homestead X 4 mills = Tax • $11,000 - $1,000 = $10,000 X .004 = $40 (Local 35 mills + Intermediate 4 mills = General Fund 39 mills) • County Apportionment a.k.a. Mortgage Tax • Resale of Property • Miscellaneous

  10. III. STATE REVENUE • Dedicated Revenue • Gross Production (oil & gas tax) • Motor Vehicle (car tag % excise tax) • Rural Electric Cooperative • School Land Earnings • Vehicle Tax Stamp • Farm Implement Tax

  11. State-Continued • Appropriated Revenue • State Aid – Noncategorical • Foundation Formula • Transportation Formula • Salary Incentive Formula • Mentor Teachers • Flexible Benefit Allowance (4 groups)

  12. State-Appropriated d. Grants – Categorical • Alternative Education • Community Education • Arts-in-Oklahoma e. Categorical • Professional Development • Great Expectations • Reading Sufficiency

  13. State-Appropriated e. Textbooks f. Adult Ed. Matching g. Driver Education h. Advance Placement Incentives i. OPAT

  14. State-Appropriated j. Additional Homestead Reimbursement k. Child Nutrition • State Reimbursement • State Matching l. Vocational Programs • LEA salary and program support • Career Centers – 21 areas m. Miscellaneous

  15. IV. FEDERAL REVENUE • Title Programs • T-I Remediation • T-II High Quality Teachers • T-III Limited English • T-IV 21st Century • T-V Innovative programs • T-VI Rural schools • T-VII Indian education • T-VIII Impact Aid

  16. Federal-Continued • IDEA special education • Migrant • Johnson-O’Malley • Medicaid • School Renovation • Child Nutrition • Lunches • Breakfast • Milk • Summer Feeding • Carl Perkins/Tech Prep/School-to-work

  17. NONREVENUE RECIEPTS • Cash (change) • Petty Cash • Activity Fund Reimbursement • Co-op Reimbursement • Miscellaneous Revenue Transfers

  18. V. CASH ACCOUNTS • CASH FORWARD (Fund Balance) • Prior-Year Lapsed Appropriations

  19. STATE AID FORMULA • “POWER EQUALIZATION FORMULA” • Foundation Aid: • Foundation Weighted ADM ( ) X Foundation Aid Factor ($ 1,642) = $ ______ • Less Chargeables: • Ad Valorem (15 mills) $________ • County 4 mill (75%) $________ • School Land Earnings $________ • Gross Production $________ • Motor Vehicle $________ • REA Tax $________ Total Chargeables: $________

  20. WEIGHTED ADM • Average Daily Membership • Raw ADM (avg. # students on roll/day) • Grade Weights PK(1/2) 0.7 4th-6th 1.0 PK (f) 1.3 7th-12th 1.2 K 1.5 Ungraded 1.2 1st 1.351 2nd 1.351 3rd 1.051

  21. 4 th Grader 1.0 Econ. Dis. 1.25 Gifted 1.84 Bilingual 1.50 Visually Imp. 5.64 Summer Sp. Ed. 6.84

  22. Weighted KidThe 4th Grade, Econ. Dis., Bilingual, Gifted, Visually Imp. Summer Special Ed. Kid NormalKid

  23. Weights • Special Education Weights • HH 2.9 h. LD 0.4 • DEAF 2.9 i. DB 3.8 • S.I. 0.05 j. MH 2.4 • VH 3.8 k. AUTISM 2.4 • ED 2.5 l. TBI 2.4 • OI 1.2 m. MR 1.3 • OHI 1.2 n. DEV. DELAY 0 (Federal)

  24. Weights • SUMMER PROGRAM /Sp.Ed. 1.2 • GIFTED 0.34 • BILINGUAL 0.25 • ECONOMICAL DISADVANTAGE 0.25 (Free and Reduced Lunch Count) • TEACHER INDEX • SMALL SCHOOL FACTOR

  25. II. TRANSPORTATION • Regular A.D.H. ( ) X Per Capita (Previous year ADH/square miles of District then look for ration on transportation chart in the technical assistance document ($48.00) X Transportation Factor (1.39) = $

  26. III. SALARY INCENTIVE • INCENTIVE AID GUARANTEE FACTOR (72.72) X INCENTIVE WEIGHTED ADM ( ) = $________ • Adjusted District Valuation ($___________) / 1000 = $______ • #1 - #2 = $__________ • #3 X Incentive mills (20.0) = $________

  27. Salary Inc. Continued • BASIC FORMULA (I + II + III) $______ • SUPPLEMENT $______ • BASIC STATE AID $______ • LESS PENALTY • TOTAL NET STATE AID $______

  28. FORMULA FACTORS • HIGHEST of PRIOR TWO YEARS ADM • Current Year / 1st Nine Weeks ADM (Growing District) • Prior Year ADM (stable or declining ADM) • Second Prior Year ADM (declining ADM) • CURRENT YEAR CHARGEABLES • FOUNDATION AID FACTOR $1,587.00 • INCENTIVE AID FACTOR $72.72 X 20= $1454.40 TOTAL FACTOR $3,041.40

  29. REGULAR STUDENT 4TH grader= $3041.40, 1st grader(1.351)=$4108.93 HS=$3649.68 • INITIAL ALLOCATION (JULY) Uses higher of the prior two years ADM and last year’s chargeables. • MID-YEAR ALLOCATION (DEC.) Uses 1st nine weeks ADM or higher of the prior two years ADM and CURRENT YEAR’S CHARGEABLES. • FINAL ALLOCATION (anytime) State Aid changes if “factors” change

  30. DAILY RATE • $ 2,976.80 / 175 = $17.10 • $ 4,021.65 / 175 = $22.98 • $ 3,572.16 / 175 = $20.41

  31. TIMELINE FOR FINANCE • Dec. Preliminary Estimate of Need • Jan. Re-employ Superintendent • Feb. Mill Levy Vote • 1st Monday in June, Re-employ Teachers • June 30 Close Fiscal Year • July 1 Open new Fiscal Year • Aug Estimate of Needs

  32. Sept. Adopt Final Budget (with 45 days of Estimate of Needs) • Start Planning for next year

  33. BUILDING FUND • 5 MILLS X DISTRICT ASSESSED VALUATION = $_____ • USED FOR: 1. Property Insurance • Capital Expenditures • Repair of Buildings • Utilities • Maintenance and Custodial Salaries • Purchase equipment

  34. SINKING FUND • USED TO PAY DEBT INCURRED BY THE DISTRICT AT SALE OF GENARAL OBLIGATION BONDS • MILL LEVY IS CALCULATED TO PAY THE PRINCIPLE AND INTEREST OF THE BONDS • DEBT MAY EXTEND FROM TWO YEARS TO TWENTY-FIVE YEARS • TRANSPORTATION BONDS AND COMPUTER EQUIPMENT BONDS ARE LIMITED TO 5 YEARS

  35. Maximum Debt is limited to 10% of the district’s total valuation. ex: __ valuation is $189,000,000. The maximum debt is $18,900,000.

  36. ACTIVITY ACCOUNTS • PRIMARILY FOR STUDENT ORGANIZATIONS • REVENUE IS USUALLY FROM FUND RAISERS • PROFITS MUST BE SPENT FOR BENEFIT OF STUDENTS • Highest level of fraud and misuse of public funds occurs in these accounts • Numerous administrators lose their jobs over these accounts each year.

  37. DOCUMENTS of FINANCE • Preliminary Estimate of Needs • Compiled by district auditor in December • Approved by the Board of Education and the County Excise Board • Allows the district to vote millage levy of 10 mills Local Support Levy, 5 mills Emergency Levy for the General Fund and 5 mills Building Fund. (These levies can be made permanent eliminating the annual vote.) • Allows the district to spend 75% of Estimate

  38. Estimate of Needs • Prepared by the auditor in August and approved by the Board of Education and the County Excise Board • Allows the District to spend the estimated amount of revenue in each Fund • It also determines the actual fund balance from the previous year and sets the Sinking Fund mill levy for the coming year. • It is the “OFFICAL BUDGET” for the district

  39. OCAS REPORT • Prepared by the district staff and submitted to the State Department of Education in July (On Line) • It provides a detail of all expenditures for the year under the OCAS code system • The FR 3 is submitted electronically and serves as the basis for penalties imposed on the State Aid Formula

  40. The Audit • Prepared by the independent auditor within six months of the close of a fiscal year. • Approved by the Board of Education and submitted to the State Department of Ed. • It contains a complete record of all financial transactions in all district funds. It also audits compliance with all Federal regulations and program requirement.

  41. AUDIT • AN INDEPENDENT AUDIT MUST BE COMPLETED AND SUBMITTED TO THE SDE BY MARCH 31 (MAY 30 if the district has less than $500,000 in Federal Funds)

  42. OPERATIONAL BUDGET • Prepared by district staff • Detail of anticipated revenue and expenditures in each fund • Usually shows expenditures and revenues equal to or less than the amounts approved in the Estimate of Needs.

  43. TREASURERS REPORT • Prepared by the district treasurer monthly • Approved by the Board of Education • Contains the financial transaction by fund each month

  44. REVENUE SHORTFALLS • State Aid Reductions • Chargeable Increases reduce Formula $ • Tax collections can cause State Aid to be cut on an across the board % or reduction in the formula factors • Declining enrollment will reduce weighted ADM (Use higher of the prior two years) • Loss of grade or program weights can reduce weighted ADM

  45. Shortfalls • Local Revenue decline • Drop in ad valorem will increase revenue in State Aid formula – eventually. • Tax protest, such as SBC can reduce ad valorum across the state and reduce amount coming through the formula. • Property owners not paying tax can cause a local shortfall. • Interest rate declines can reduce revenue.

  46. Federal Budget changes can cause loss of revenue as the Federal fiscal year begins October 1. Teachers contracts must be renewed by the first Monday in June. • Special Ed. enrollment can vary widely, affecting IDEA funding. • Federal grants may have a short life, such as 21st Century grants which normally end after three years.

  47. REVENUE ENHANCEMENT • Check the State Department reports carefully. • Count students and their weights accurately. In some districts the weights are 35 to 50% of the State Aid! • Monitor early retirement incentives-may cause a loss of teacher index weights.

  48. DOCUMENTS 5. FINAL BUDGET SEPTEMBER • Must be approved by the Board of Education within 45 days of the approval of the Estimate of Needs by the County Excise Board

  49. SUMMARY • Eleven Funds • Most revenue is some form of tax. • Biggest fund is the General Fund and is used for operations. • 23% comes from Ad Valorem and local • 65 % comes from the State • 12% comes from the Federal Government • Building Fund comes from 5 mill levy on property. • Sinking Fund come from mill levy on property and it varies from less than a mill to a high of 38 mills in Bethany Schools. • Activity Accounts come from fund raisers.

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