Rob Smith – Assistant Superintendent, Business Services

1. Utah School Finance – 202 Rob Smith – Assistant Superintendent, Business Services

2. Utah School Finance – 202Topics to review & discuss • Who should pay for Education? • Local effort - Property Tax • Bonding & Capital Financing Options • Transparency – but not too transparent  • Financial Strength & Repurposing Funds • Engagement & outreach

3. Utah School Finance – 202WHO SHOULD PAY FOR PUBLIC EDUCATION?

4. K-12 Education Funding Basics – State Perspective • Primary Revenue Sources • Income Tax • Property Tax – Basic Rate • Trust Lands – Interest & Dividends • Minimum School Program – Statutory • Regular students K-12 • Restricted programs – SPED, CTE, Class size K-8 • Equity funds – NESS, Charter LR, Leeway’s • Other funds – Transportation, At-Risk, Trust Land, Adult Ed, etc. Weighted Pupil Unit (WPU) = $3,311 Education Fund • District & School Budgets – • 85-89% of expenses on PEOPLE • Allocate based on: • FTE’s per student; • Dollar per student; or • Hybrid (FTE & dollar) • Other expenses – often pooled @ District • Utility costs • Maintenance Higher Ed K-12 Ed

5. Utah School Finance – 202Education Fund distribution 1996-2016

6. Utah School Finance – 202local effort – property tax • Market or Assessed Value – Value of an individual property, set by the County Assessor; value often lags behind the actual market value; lien date is January 1stand taxes are due on November 30theach year • Taxable Value – market or assessed value x multiplier • Primary Home multiplier is 55% - (45 percent exemption) • Secondary Home multiplier is 100% of market value • Commercial property multiplier is 100% of market value • Primary residence example – $250,000 market value • @55% = $137,500 taxable value • If the school district levies a total tax rate of .007250, taxes due on this property would be $996.88.

7. Utah School Finance – 202Property Tax – Certified Rate Calculation • Calculation • Amount budgeted from prior year • Divided by the Aggregate taxable value of all property in district less redevelopment adjustments • Add Adjustments for last 3 years prior year collections • Multiply by 5 year average collection percentage • Subtract growth • Equals Certified Rate • The Certified Rate is the tax levy a District can impose without Truth in Taxation. • Does not apply to Debt Service or Basic Levy

8. Utah School Finance – 202Property Tax – Levies and limits • Basic State Levy - .001568 FY18 • Local effort - part of the Weighted Pupil Unit (WPU) • Board Local Levy -limit of .002500 (31 districts), with a limit of .001800for 10 districts, HB301 in 2012 collapsed levies • Voted Local Levy - legal limit of .002000 • Capital Local Levy - legal limit .003000 • Debt Service Levy -sufficient – legal debt margin • Discharge of Judgment Levy – sufficient – unappealable judgment or order

11. Utah School Finance – 202Property Tax – Levies and Limits • District info – • Tax Rates • MSP by District • School Spending Report

12. Utah School Finance – 202Bonding and Capital Financing • Legal Debt margin – Calculation • Market & Tax reform – How will the reduction in the Corporate Tax rate impact the market? • Alternatives to GO Bonds – Pro’s and Con’s • Local Building authority • Capital leasing • Pay as you go

13. Utah School Finance – 202Bonding and Capital Financing • Legal Debt margin – 4% of District Fair Market Value • For calculation purposes, the fair market value of all taxable property in the District is used. • FMV = $2,000,000,000 x 4% FMV limit = $80,000,000 debt limit

14. Utah School Finance – 202Bonding and Capital Financing

15. Utah School Finance – 202Bonding and Capital Financing

16. Utah School Finance – 202Bonding and Capital Financing

17. Utah School Finance – 202Bonding and Capital Financing

18. Utah School Finance – 202Bonding and Capital Financing • Alternatives to GO Bonds – Pro’s and Con’s • Local Building Authority • Capital leasing • Pay as you go

19. Utah School Finance – 202Financial Assessments • Business Training for Principals – Leadership / Business Team • District Accounting, Budgeting or Finance Handbook • Local policies, procedures and processes • Contingency or Recession Testing – Business Team • Model Revenue / Expense deviation to examine pinch points • Examine Fund Balance vs. Peers • Internal Program / Process Reviews – Leadership / Budget team • Repurpose existing allocation of funds • Zero Based Budgeting - Modified

20. Utah School Finance – 202Financial Assessments

21. Utah School Finance – 202Financial Assessments

22. Utah School Finance – 202Transparency and communication • Internal – District reports and information • Alpine – www.alpineschools.org • USOE - http://www.schools.utah.gov/main/ • Legislative leaflet – key legislative issues and local priorities • School stakeholder reports • External • Utah Taxpayer Association – School Spending report • Legislative Fiscal Analyst – Office of Legislative Research • Transparency – Division of Finance • Utah Foundation

23. Utah School Finance – 202Legislative Engagement • Governor’s FY19 Proposed K-12 budget • $208 million in new funding • $36 million enrollment growth for 7.700 new students • $171 million increase in flexible, local education ongoing funding • 4% or $121 million WPU Increase • Professional development • Teacher salary increases • Technology development • Counseling • 1.6% or $50 million ongoing & $10.2 million one-time • $34 million for children at risk of academic failure • $14.8 million for equalization ongoing & $10.2 million one-time

24. Utah School Finance – 202Legislative Engagement • USBA / USSA / UASBO Legislative Priorities • Fully fund growth- ($38+ million) • 5.5% WPU increase ($165 million)- that includes 2.5% necessary to maintain current levels of service with additional funds to attract, develop and retain quality educators; and support local improvement initiatives and programs. • $5 million per year as part of a 5-year plan to attain 85% state support of to and from school transportation costs as provided in statute • $500,000 per year as part of a 5-year plan to increase Necessarily Existent Small Schools (NESS) funding to provide greater equity in educational opportunities • Expand Education Funding revenues • Set Basic Levy floor at current rate - .001568 to fund additional MSP guarantee programs up to .002000 combined Board or Voted levy increments without devaluing the WPU • Set the local Board, Voted and Capital levy floors at current levels for 5 years to capture inflationary costs with no loss in State Guarantee funds

25. Utah School Finance – 202Legislative Engagement • Things to watch for during 2018 Session: • Federal Tax reform impact on Utah • Utah Tax reform – Omnibus bill or individual components • Equalization efforts • Education Savings Plan / Scholarship / Vouchers? • Our Schools Now

26. Utah School Finance – 202Legislative Engagement Ideas for Engagement • JLC meetings – Friday’s at noon in the Senate Building SW room • Legislator meetings • Joint meetings with Mayor and City Councils • Present at a City Council meeting with time for Q & A • Monthly communications highlighting positive things in your District • Personal, handwritten communications expressing appreciation

27. Utah School Finance – 202Summary • Questions?