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School Budgeting and Accounting Summer Workshops

School Budgeting and Accounting Summer Workshops. Denise Ulberg and Brenda Thomas Office of Public Instruction, School Finance Division July 2011. Today’s Agenda. SB 329 Agenda. Multidistrict Agreements Cooperative Purchasing Contracts Transfers Between Funds

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School Budgeting and Accounting Summer Workshops

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  1. School Budgeting and Accounting Summer Workshops Denise Ulberg and Brenda Thomas Office of Public Instruction, School Finance Division July 2011

  2. Today’s Agenda

  3. SB 329 Agenda • Multidistrict Agreements • Cooperative Purchasing Contracts • Transfers Between Funds • One-Time General Fund Transfer • FY2012 General Fund Budget • Basic and per-ANB Entitlements • General Fund over-BASE levy • Limit on GF fund balance reappropriated (FBR) • Block grants frozen at 2011 rates • Oil and natural gas production taxes

  4. SB 329 Agenda - continued • Budget Amendments • Ending Fund Balance Limits • Flexibility Fund (29) • All Budgeted Funds • Pathway to Excellence Program • Timelines

  5. Multidistrict Agreements (20-3-363, MCA) • Any two or more school districts • Multidistrict agreement creates a multidistrict cooperative • Perform any services, activities and undertakings of the participating districts • Provides for joint funding and operation and maintenance of all participating districts • Subject to terms and conditions mutually agreed upon by the districts

  6. Multidistrict Agreements (20-3-363, MCA) • Trustees of all participating districts must approve the agreement annually by April 1 • If signed by April 1: • Effective retroactive back to July 1 of the current fiscal year, OR • Effective for the ensuing fiscal year • If signed after April 1, can only be effective for ensuing fiscal year

  7. Multidistrict Cooperatives “Multidistrict Cooperative” - created by a multidistrict agreement (two or more school districts) or by an interlocal agreement between a school district and other public entity under Title 20, chapter 9, part 7 Prime Agency (a.k.a. fiscal host or coordinating agency) Could be a school district or other public entity If the prime agency is a school district: Maintains Interlocal Agreement Fund (82) Financial reporting responsibilities: Trustees Financial Summary (TFS) Annual financial report and audit Cooperating Agency (participating district) Sends a warrant (funding) to Prime Agency

  8. Multi-District CooperativesFunding Sources • If the prime agency and cooperating agencies are school districts, they may: • Transfer from General Fund - limited to DSA • Transfer from other budgeted funds (except Retirement and Debt Service) • Transfers count against adopted budget • Transfers must be made by April 1 each year • No transfers from non-budgeted funds

  9. Multi-District Cooperatives • Note: if money is transferred from funds supported by a non-voted levy, you cannot backfill in the next year to restore the amount transferred. • This is true regardless of the source of the money transferred, i.e., whether it is tax or non-tax money • Budgeted Funds Supported by a Non-Voted Levy 10 Transportation 17 Adult Education 11 Bus Depreciation Reserve 19 Non-operating 13 Tuition

  10. Multi-District CooperativesAccounting Codes for Transfers Prime Agency (coordinating agency/fiscal host) Transfers between its own funds Debit: XXX-XXX-6100-910 Operating Transfers Out Credit: XXX-101 Cash Debit: X82-101 Cash Credit: X82-5300 Operating Transfers In from Other Funds Transfers in from other districts Debit: X82-101 Cash Credit: X82-5700 Resources Transferred from Other School Districts

  11. Multi-District CooperativesAccounting Codes for Transfers Cooperating Agency (participating district) Transfers out to prime agency Debit: XXX-XXX-6200-920 Resources Transferred to Other School Districts Credit: XXX-101 Cash

  12. Multidistrict Agreements - Appropriation • Purpose: to contribute to interlocal cooperative funds provided for in 20-3-363(1), MCA • Paid to: Districts participating in multidistrict cooperatives (deposit into Fund 15) • $2 million will be distributed based on a district’s BASE budget compared to the total of the BASE budgets of all participating districts • Prime applicant sends to OPI by Dec. 31, 2012: • Name of each participating district • Copy of finalized agreement • OPI must pay by February 1, 2013

  13. Cooperative Purchasing Contracts • 20-9-204(4), MCA • Two or more districts may enter into a cooperative purchasing contract for procurement of supplies or services • Can purchase supplies and services through a cooperative purchasing group • Group must have a publicly available master list of items available with pricing • Group must provide opportunity at least twice yearly for any vendor to compete for inclusion on the list • Advertisement for bids is not required

  14. Transfers Between Funds • 20-9-208, MCA • No transfers to and from the General Fund unless specifically allowed by law • Budgeted fund to Budgeted fund allowed • Nonbudgeted fund to Nonbudgeted fund allowed

  15. Transfers Between Funds • Allowed General Fund Transfers: • 20-9-512, MCA: to and from Compensated Absences Fund (21) • 20-9-803, MCA: to and from Litigation Reserve Fund (27) • 20-9-703, MCA: to Interlocal Agreement Fund (82) • 20-9-104 (9), MCA: By June 30, 2011, one-time transfer to any budgeted fund (SB329)

  16. Transfers Between Funds • 20-9-201, MCA Types of Funds • Budgeted: any fund for which a budget must be adopted in order to expend money from the fund • *Nonbudgeted: any fund for which a budget is not required to expend money on deposit in the fund * 20-9-210, MCA states, “The expenditure limitation, at any time during the school fiscal year, for a nonbudgeted fund is the amount of cash balance of the nonbudgeted fund.”

  17. BUDGETED FUNDS NONBUDGETED FUNDS

  18. Transfers Between Funds • Budgeted Fund to Budgeted Fund • Tax money (voted and non-voted) transferred: • must be used for the purpose related for which the tax was levied and the trustees hold a public hearing to accept public comment, OR • Can hold election to obtain voter approval of the transfer; funds can be spent for purpose approved on the ballot • Non-tax money transferred may be used for any purpose allowed by law • Counts against expenditure budget • Public hearing, resolution, notification required NEW

  19. Transfers Between Funds NEW • Note: if money is transferred from funds supported by a non-voted levy, district cannot backfill in the next year to restore the amount transferred • Budgeted Funds Supported by a Non-Voted Levy • 10 Transportation • 11 Bus Depreciation Reserve • 13 Tuition • 17 Adult Education • 19 Non-operating Note: Transfers from 14 Retirement and 50 Debt Service are not allowed.

  20. Transfers Between Funds Nonbudgeted Fund to Nonbudgeted Fund • Trustees determine the transfer is necessary to “improve the efficiency of spending within the district” • Transfer of funds restricted by state or federal law are not allowed, unless in compliance with those laws • Public hearing, resolution, notice required

  21. Closing Inactive Funds • 20-9-201, MCA • Inactive fund may be closed to any fund deemed appropriate by trustees • SB329 removes restriction on closing inactive tuition fund to miscellaneous programs fund • Inactive fund must not have a deficit cash or fund balance • 20-10-147, MCA • SB329 removes restriction on transferring $$ from Bus Depreciation Reserve fund (11) • No longer have to sell all the buses and obtain voter approval to transfer NEW

  22. One-Time Transfer from General Fund • Trustees must have approved the transfer at a properly noticed hearing prior to June 30, 2011 • General Fund money in excess of 15% of FY2011 GF adopted budget (doesn’t include amendments) • FY2011 GF ending fund balance reported on TFS must be at least 15% of 2011 GF budget! • May transfer to any budgetedfund(s) • Notify OPI and county treasurer • Identify as SB329 One-time Transfer • Amount transferred • Identify to which fund(s) $$ were transferred

  23. One-Time Transfer from General Fund Use these accounting codes At June 30, 2011 • From General Fund: Debit: X01-999-9999-971-940 Residual Equity Transfer – Out Credit: X01-606Due to Other Funds • To Budgeted Fund: Debit: XXX-170Due from Other Funds Credit: XXX-9710-940Residual Equity Transfer– In Use this PRC!

  24. One-Time Transfer from General Fund Use these accounting codes When Cash is Moved (July or August) • From General Fund: Debit: X01-606 Due to Other Funds Credit: X01-101Cash • To Budgeted Fund: Debit: XXX-101 Cash Credit: XXX-170 Due from Other Funds

  25. FY2012 General Fund BudgetSub-Agenda • Basic and per-ANB Entitlements • General Fund over-BASE levy • Limit on GF fund balance reappropriated (FBR) • Block grants frozen at 2011 rates • Oil and natural gas production taxes

  26. General Fund Budget Rates

  27. FY2012 General Fund Budget • Districts may permissively adopt an over-BASE levy that is equal to the higher of: • the highest over-BASE amount imposed(actually levied) in any of the previous 5 years (FY2007 – FY2011), OR • The highest over-BASE amount authorizedby voters, up to the highest budget allowed, in any of the previous 5 years (FY2007 – FY2011)

  28. General Fund Budget Elements Let’s review! Basic Entitlement + Per-ANB Entitlement + 200% Special Education Allowable Cost Payments + Quality Educator Payment + At-Risk Student Payment (funding restored ) + Indian Education for All Payment + American Indian Achievement Gap Payment MAXIMUM BUDGET (100%)

  29. General Fund Budget MAXIMUM BUDGET 100% over-BASE BASE BUDGET ~80% • Highest Budget Allowed • Districts may adopt a budget that is the higher of: • Current Year Maximum, -OR- • Prior Year adopted budget plus any increases in the Quality Educator, At-Risk, Indian Education for All and Student Achievement Gap payments

  30. General Fund Budget Highest Budget Without a Vote Without a vote: Prior Yr Over-BASE Tax Levy Amt + Prior Yr Excess Reserves Used to Fund Over-BASE + Estimated Tuition Revenue Effective with FY2012 Budgets, highest amount imposedor authorizedin any of the previous 5 years Over-BASE portion BASE

  31. Highest Budget With a Vote Vote Required for Increase in Over-BASE Tax Levy Without a vote: Prior Yr Over-BASE Tax Levy Amt + Prior Yr Excess Reserves Used to Fund Over-BASE + Estimated Tuition Revenue District may adopt up to the ensuing year’s Maximum or the prior year budget (w/ adjustments) , whichever is higher. Requires voter approval to increase the over-BASE levy. Over-BASE portion BASE

  32. (Note: In any year, the Amount Authorized /Imposed + Current Year BASE budget cannot exceed the Highest Budget Allowed by law.) Question: In FY2008, why would the district actually levy only $2,020,000?

  33. Possible Answers • The district had other revenue sources available to fund the over-BASE budget, such as tuition or excess reserves. • The amount authorized + the CY BASE budget exceed the highest budget allowed: Example: CY BASE Budget $ 13,010,000 Amount authorized $ 2,060,000 Total $ 15,070,000 CY Highest Budget $ 15,030,000 Excess $ 40,000

  34. FY2012 General Fund Budget • General Fund Balance Reappropriated (FBR) • Any unreserved fund balance in excess of 15% of a school district’s maximum general fund budget must be remitted to the state • FY2012 – 100% deposited to state general fund • FY2013 - deposited to: • 70% Guarantee account • 5% State school oil and natural gas impact account • 25% County school oil and natural gas impact fund Note: this provision terminates June 30, 2016

  35. General Fund Balance Reappropriated (FBR) Let’s review! End-of-year General Fund Balance (TFS 48) Less: Operating Reserves Less: Excess Reserves (held) Less: Excess Reserves (held for at least 1 year and used to fund BASE and/or over-BASE levy) = Fund Balance Available for Reappropriation

  36. General Fund Balance Reappropriated (FBR) Step 1: Calculate Fund Balance Available for Reappropriation Step 2: Subtract 15% of FY12 Maximum Budget (line 8c on page 2 of GF Budget Data Sheet) Step 3: Remit excess to the State Example: XYZ Elementary If FB Available for Reappropriation is $80,000 Less FY12 Max Budget X 15% $71,163 ($474,417.67 X 15%) Amount to remit to the state $ 8,837

  37. FY2012 General Fund Budget • School district block grants (20-9-630, MCA) are frozen at FY2011 amounts: • General Fund • Transportation Fund • Combined Block Grant In FY2013, SB372 Business Equipment Tax Reimbursements will be added to these payments • Countywide transportation block grants (20-9-632, MCA) will continue to increase by .76% annually More about SB372 later!

  38. Oil and Natural Gas Production Taxes Distribution of taxes to taxing units (15-36-332, MCA) • Dept. of Revenue (DOR) allocates per 15-31-331, MCA • DOR distributes to Counties • County remits to school districts

  39. Oil and Natural Gas Production Taxes • Limit on total oil and natural gas tax revenue • School district may receive 130% of its Maximum General Fund budget • DOR distributes $$ until the limit is reached • Excess of the limitation is deposited to: • In FY2012, to the state general fund • Beginning in FY2013: • 70% to state guarantee account • 5% to state school oil and natural gas impact account • 25% to county school oil and natural gas impact fund Note: this provision terminates June 30, 2016

  40. Oil and Natural Gas Production Taxes • Example FY2012 Maximum Budget $1,100,000 Maximum FY2012 O&G revenue (130%) $1,430,000 • OPI will provide the information to Department of Revenue • DOR will distribute up to the maximum allowed

  41. Oil and Natural Gas Production Taxes • School district must budget a minimum amount of oil and natural gas production tax revenue in the General Fund equal to the lesser of: • 25% (FY2012) of the total oil and gas revenue received in all funds in the prior year, OR • The general fund levy requirement (BASE and over-BASE) • Required minimum receipts to be budgeted: FY2012 25% FY2014 45% FY2013 35% FY2015 and after 55% Note: this provision terminates June 30, 2016

  42. Oil and Natural Gas Production Taxes Example: Amounts report in revenue source code 3460 on the FY2011 Trustees Financial Summary (TFS): General (01) $ 600,000 Transportation (10) $ 175,000 Building Reserve (61) $ 50,000 Total $ 825,000 X 25% $ 206,250 Estimate the lower of this amount --OR-- the FY2012 general fund levy requirement (BASE and over-BASE).

  43. Oil and Natural Gas Production Taxes • Oil and natural gas revenue must be deposited in the General Fund until the budgeted amount is reached. • All remaining oil and natural gas revenue may be deposited in any budgeted fund.

  44. Impacts From Oil and Natural Gas Production • State School Oil and Natural Gas Impact Account • Purpose: to provide money to schools not receiving oil and natural gas tax revenue but are impacted by contiguous counties that are benefitting from oil and natural gas tax revenue • Funding sources (FY2013 – FY2016): • Excess fund balance available for reappropriation • Excess oil and natural gas production tax revenue • Amount in fund is limited to $7.5 million; excess is deposited in the state general fund • School applies to OPI for funds • Awards based on need, impacts and other criteria

  45. Impacts From Oil and Natural Gas Production • County School Oil and Natural Gas Impact Fund • County distributes 80% of the fund when: • A school district receives 30% or less of the district’s 4-year average oil and gas revenue, OR • The average price of oil is $50 or less for the fiscal year, OR • Production of oil in the county drops 50% or more below the county’s 5-year average production • County may retain 20% to: • Pay outstanding capital project bonds • Other expenses incurred prior to reduction in price, • Offset property taxes • Promote diversification and economic development in the county • Attract new industry • Provide cash incentives for expanding employment base in the impacted area

  46. Budget Amendments • Any budget amendment(s) adopted due to an “unforeseen need of the district that cannot be postponed until the next school year without dire consequences affecting the educational functions of the district” (20-9-161(b)) • Adopted in combination with other budget amendments within the same fiscal year • Exceeds 10% of the district’s adopted general fund budget • Must be reported with an explanation of why the budget amendment is necessary to: • Board of Public Education • Education and Local Government Interim Committee

  47. Ending Fund Balance Limits • Flexibility Fund (29) • Beginning July 1, 2013 (FY2014), the balance of a school district’s flexibility fund may not exceed 150% of its maximum general fund budget • Example: FY2014 Maximum GF Budget $ 1,500,000 Flexibility Fund balance as of June 30, 2014 cannot exceed $ 2,250,000

  48. Ending Fund Balance Limits • Beginning July 1, 2016 (FY2017), EFB limited to 300% of the maximum general fund budget • All budgeted funds, except building reserve, debt service and bus depreciation • General (01) Transportation (10) • Tuition (13) Retirement (14) • Adult Education (17) Technology (28) • Flexibility (29) • Doesn’t apply to districts in a non-operating status or in the first year of re-opening

  49. Pathway to Excellence Program • Purpose: To promote education excellence in Montana’s public schools through data-driven decision-making • Intent: That Montana K-12 public education maintain a focus on continuous improvement and increased academic achievement for public school students

  50. Pathway to Excellence Program • OPI must develop a publicly available data system that displays an educational data profile for each school district. At a minimum, include: • Contact information and link to district website • State criterion-referenced testing results • Program and course offerings • Student enrollment and demographics by grade level • Graduation rates

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