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Denver Community School DistrictDenver, IowaKathy Enslin – Superintendent of Schools – 15 years Supt. experienceCraig Lohmann, Board President – 7 years board experienceKerri Wilson, Board Vice President – 6 years board experienceCarter J. Stevens Board member – 13 years board experienceDale Schneider, Board member – 6 years board experienceKen Kuennen, Board member – 7 years board experience FinancialPlanning in a Small District: What is Sacred? What can be Sacrificed? What needs to Be Considered? IASB State Convention November 2010
Basic Information on School Finance Goals and Principles • Basic History of School Finance • Financial Indicators to watch • Identifying Areas of Expenditures • Basic Information on Denver Budget • Cash Reserves • Staff reduction • One time monies (ARRA stimulus) • Building with Revenue Bonds OBJECTIVE OF THIS SESSION
School Finance Goals and Principles
Equity in Expenditure Property Tax Relief Equalize Taxation Uniform State Aid Allocation Formula Predictable Simple Pupil Driven Goals and Principles
Goals and Principles Provide for Local Discretion Establish Maximum Spending Control One Funding Formula (AEA + K-12) Provide Adequate Funding Promote High Achievement Modify the Impact of Community and Family Background on Achievement
In 1950 4,652 school districts Reorganization Plan adopted in 1950’s Currently 361 school districts Brief History of School Finance in Iowa
Brief History of School Finance in Iowa Until the mid 1960’s –school district funding was all property tax In 1971, school foundation program adopted (enrollment based) –substantial increase in State aid to school districts
In 1992, allowable growth adopted • In 1996, increased Regular Program Foundation Level from 83.0% to 87.5% beginning in FY 1997 (increased the portion of State aid paid from the State General Fund and provided property tax relief) Brief History of School Finance in Iowa (continued)
In 2001, eliminated the 100.0% budget guarantee and replaced it with phase-out or alternate budget adjustment to begin in FY 2004. Made the on-time funding provision permanent Brief History of School Finance in Iowa (continued)
2008 - State Sales/Use Tax for school infrastructure - excess funds after school infrastructure allocations will be used for property tax relief through school aid formula • 2010-11 - State Categorical –Additional categorical program funding rolled into the school aid formula beginning in Brief History of School Finance in Iowa (continued)
2009 Legislative Session: Across-the-Board Reduction of 1.5% for FY 2009 • 2010 10% Across-the-Board Reduction October 2009 • American Recovery and Reinvestment Act (ARRA) Education Fiscal Stabilization:$40.0 million in FY 2009 • Established 2.0% allowable growth rate for FY 2011 Brief History of School Finance in Iowa (continued)
Financial Indicators to Watch Unspent Balance Spending Authority Cash Balance State Funding Formula Enrollment Patterns
AKA……….Unspent Budget Authority • Creates Confusion/Not well understood • 2-separate books… • Fund Balance (Annual Audit) • Spending Authority (Unspent Balance) Unspent Balance
Understanding Spending Authority Each child has a “credit card limit” on spending. Each year “Credit Card Limit” is paid through a combination of State Foundation Aid and local property taxes (cash). Unspent Balance (Unspent Budget Authority) simply is the unused credit card limit for all of the children who have ever attended school in the district.
Cash rarely equals Authority The goal is to have cash and authority equal.
? Why is Spending Authority So Important?
This is not the same as Cash Balance. This is not the fund balance. It is illegal for districts to overspend their Allowable Spending Authority.
Understanding Spending Authority is more important than ever!
Foundation Formula Levy FY2010: 87.5% of State Cost ($5,768) =$5,047 per pupil Foundation Formula
Property poor districts would be able to generate very little spending with very high tax rates. This would eliminate per pupil student funding equity in the finance formula - the main stated goal of the formula.
Spending Authority is especially important when the state is unable to fulfill its obligations. What is the Value of Spending Authority?
When the state has to reduce its expenditures mid-year through an Across the Board (ATB) cut, cash to school districts is reduced, but not Spending Authority. In Across the Board Cuts…
Virtually all of a district's spending is obligated, so in the case of an ATB cut, the reduction impacts a district's bank balance, but does not impact their Spending Authority. Cash is impactedBut Credit Remains
Identifying Areas of Expenditures Energy Facility Physical Plant and Equipment Transportation Staffing Curriculum and Supplies
What is Sacred? What can be Sacrificed? What needs to be Considered?
Reduction Areas to be Considered Staff (Sacred? Sacrificed? Considered?) Class size (Sacred? Sacrificed? Considered?) Energy (Sacred? Sacrificed? Considered?) Transportation Technology Curriculum Extra-Curricular Administration Sharing Opportunities
Energy – What are the room temperatures? Are lights being turned off? Is there a better building arrangement/ structure? Do windows, boilers, roofing, insulation need replacing? Transportation- Can we consolidate routes? Can we share team buses? Can we schedule activities more efficiently? Field Trips? Professional Development Travel? Staffing - What are our pupil : teacher ratios? How big are we willing to go with class sizes? Can we reduce in any area? Will negotiations committee work with us? Can we alter benefits? (insurance, TSA, extended contracts? What are our Administrative Costs? Professional Development Costs? Curriculum – Can we postpone the curriculum cycle? Do we have classes with low numbers?
SOLVENCY RATIO SACRED? SACRIFICED? CONSIDERED?
Enrollment Patterns Are you gaining in enrollment? Are you losing in enrollment? Is your enrollment stable? What are your Enrollment patterns?
Certified Enrollment provides two key pieces of information. • Enrollment served (not headcount) • Teacher FTE’s • Divide enrollment served by FTE’s and you end up with a de-facto class size measure. Certified Enrollment
STAFFING NUMBERS SACRED? SACRIFICED? CONSIDERED?
Key Measures Total number of staff Average Pay Students per Staff Payroll per Student
STAFFING DECISIONS are critical to school districts because once the year is started, there is very little ability to reduce expenditures. Schools are required to provide contracts to certified staff by April 30 of the year prior to the budget year they are planning. Districts may not reduce or eliminate these contracted staff mid-year.
Variables in Data Enrollment served Full-time Staff Part-time Staff Total Number of Staff Full-time pay Part-time pay Total Licensed Staff Students per Licensed Staff Percent of Staff Part-time Total Licensed Payroll Payroll per Student
Conclusions for Staffing Trends You may be surprised that your most expensive staff may be at your elementary level Massive differences in Class size expectations between districts
Are We Missing Something? Are all programs equal? elementary, middle and high school
How Did Denver Schools Meet the Shortfall?RAISED TAXES $1.00 /$1,000.00 Levied Cash Reserve Budget Guarantee due to loss in enrollment Levied for special education deficit Levied for on-time funding (open enrollment/new to district) Levied for At-Risk Allowable Growth Cut expenditures (energy, transportation, curriculum, staff) Froze administrative salaries Building addition with Revenue Bonds to reduce future costs l
