The National Association Of Latino Elected And Appointed Officials (NALEO) UNDERSTANDING EDUCATION FINANCING AND THE BUDGET-MAKING PROCESS

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The National Association Of Latino Elected And Appointed Officials (NALEO) 10 th Biennial National Institute For Newly Elected Officials November 20-23, 2014

1 The National Association Of Latino Elected And Appointed Officials (NALEO) 10 th Biennial National Institute For Newly Elected Officials November 20-23, 2014 Washington, DC UNDERSTANDING EDUCATION FINANCING AND THE BUDGET-MAKING PROCESS Presenter Dr. Richard A. Stedry Chief Business Officer Kent School District Kent, WA 1

2 SESSION GOAL & PRESENTATION SESSION GOAL PRESENTATION Provide institute attendees with information to better understand their school district s, community college s or educational agency s budget. 2

3 Budget Fundamentals The school district budget looms as a mystery of intertwined and complicated figures to many school board members, school administrators and community Yet, the school budget is the single most important element in the operation of a school district. For everything that happens in a school district passes through the school budget. The school budget provides the structural shell within which a district s educational programs operate. 3

4 Budget Fundaments Ye old budgeting axiom says: The only difference between large and small school district budgets is the number of digits to the left of the decimal and the length of time it takes to calculate the numbers to the left of the decimal. 4

5 Budget Fundamentals The School Budget - It s Not Hard To Understand But What makes understanding the school budget hard is: A. Educationese/Secret Code/Acronyms B. Financial Language C. Fear of not knowing the answer D. Public Pressure Remember, while they may not fully understand a school district s budget, the public always understands an increase in their taxes! E. Your check book 5

6 Budget Fundamentals The School Budget - It s Not Hard to Understand But Budgeting s DaVinci Code Acronyms Terminology ELL Categorical Programs IEP Robin Hood Theory IB Encroachment MSOC Apportionment PRCA Fund Balance PASA Assessed Valuation SIFE Billy Goat Theory CCSS Unfunded Mandate MOOC McKinney-Vento 6

7 Budget Fundamentals The School Budget - It s Not Hard To Understand But State Budget Form The Good, The Bad, The Ugly It s hard to understand It s not transparent It doesn t tell the district s budget story It s designed by and for bean counters 7

8 Budget Development Theoretically the budget development cycle is 3 years Welcome new ideas but don t let them all move in. A Very Wise Man The superintendent can only spend the same money twice; not three times. R.A. Stedry 8

9 Budget Planning/Development Development process determines the content of the budget When process is disorganized, no one can answer specific questions about what the budget contains When process is disorganized, it gives the impression, right or wrong, that money may be wasted Development of the budget based on the district s Strategic Plan (1) Strategic Plan or the goals of the district (2) Strategic Plan: Tells everyone what s important to the district and what the district is going to do (3) Strategic Plan: Allocate resources to the plan 9

10 Budget Development Kent School District Kent, Washington August 6, 2014 Instrument Bids AGENDA ITEM: BOARD GOAL: Supports KSD Goal: High Student Achievement Maximized Resources (Money, Time, People, and Facilities) BUDGET IMPLICATION: RECOMMENDATION: The recommendation is for the Board of Directors to approve. 10

11 Budget Development Budget development s three important questions: Which programs do we need to continue funding? Which programs do we need to modify funding? Which programs do we need to eliminate funding? Use good data for budget development Start the yearly budget development process when? A) At the minimum, the 1 st day of the new fiscal year B) Two to three years before expenditure year 11

12 Budget Development Leave some unencumbered budget authority Keep a sharp eye on your State Legislature What about budget reduction restorations? As a school board have a restoration plan As a school board consider instead of restoring a budget reduction enact sometime new Budget Development Calendar What is it? Why important 12

13 Budget Planning/Development Common Core State Standards (CCSS) Transition to CCSS can be a little or a lot of work and cost. If the state already had rigorous state standards the school board may only need to budget for alignment of content standards and determining if the rigor of their school s standards measure up to the new CCSS. If the state did not have rigorous state standards, then the school board may have to budget quite a bit to train staff on the CCSS. 13

14 Budget Planning/Development Common Core State Standards (CCSS) CCSS tells teachers what to teach, it doesn t tell them how to teach. Teachers and administrators may need time, resources and personnel to help staff develop a deeper understanding of not only what to teach but how to most effectively teach. School boards may need to budget for district personnel to help with the transition, extra time for teachers to prepare and plan and develop common assessments. 14

15 Budget Planning/Development Common Core State Standards (CCSS) School boards also need to think about their assessment system that will be measuring CCSS. An assessment system could take money as many districts have to give this assessment entirely online and will need to have the technology infrastructure. Textbooks and other instructional materials may need to be purchased that support the CCSS. Yearly staff development and substitute costs. 15

16 The Budget Non-Personnel 18% - 14% Personnel 82% - 86% 16

17 The Budget: Personnel - Salaries Salaries Certificated Personnel Classified Personnel Administrators Board of Education Members Substitutes Supplemental Contracts Stipends Overtime Extra Duties (open house, etc.) Workshops Staff Development Authorized Positions What are they Why have them How many do we need Enrollment Projections & Actual Position Control What is it 3 Kinds of Authorized Positions a) Filled & Budgeted b) Vacant & Budgeted c) Vacant & Not Budgeted 17

18 The Budget: Personnel Payroll Taxes STATUTORY BENEFITS Certificated Classified FICA Social Security 6.20% 6.20% Medicare 1.45% 1.45% Retirement 8.25% 9.71% Unemployment.30%.30% Workers Compensation 1.25% 1.25% Total Statutory Benefits 17.45% 18.91% 18

19 The Budget: Personnel - Benefits Medical Dental Vision Life Insurance Etc. Premium costs for each Medical insurance rates: composite or tiered Composite rate: same monthly premium for all Tiered Rate: Single $ Employee + One $ Employee + Family $ 1, Plan year Self Insured 19

20 The Budget: Personnel - Benefits Manage your district s benefits Why? How? Dependent audit Prescription insurance Pooling Plan for really sick individual(s) Audit your claims OPED: Other Post Employment Benefits SERP: Supplemental Employee Retirement Plan 20

21 The Budget: Personnel Total Compensation Teacher HVAC Repair Salary 59,000 36,000 Supplemental Salary: Head FB Coach Stipend: Refrigerant Certification Statutory Benefits: Certificated 17.45% Statutory Benefits: Classified 18.91% Benefits: Medical, Dental, Vision, Life Insurance 5, ,200 Total Salary 61,000 38,200 10, ,224 7,200 7,200 TOTAL COMPENSATION 78,845 52,624 21

22 The Budget: Non-Personnel - Utilities UTILITIES (2 nd largest expenditure after personnel) Electricity Gas Water/Sewer Water Irrigation Telephone Water Mitigation/Run Off Solar Wind Net-Zero Facility Co-Generation People ENERGY MANAGEMENT PROGRAM 22

23 The Budget: Non-Personnel Contracted Services Legal Services (In/Out of District) Insurance Property & Liability (P&L) Transportation: to/from, special education, act./ath. Food Services Service Contracts Audit Contract Crossing Guards Armored Car Services Personnel Copiers Maintenance Staff Training Workers Comp Insurance Computer Services Purchasing Contracts 23

24 D i s c r e t i o n a r y The Budget: Non Personnel Capital & Supplies CAPITAL EQUIPMENT SUPPLIES School Instructional Supplies District Office Department Supplies Textbooks: new, replacement, consumable materials Maintenance & Operations Travel District Operational Board of Education: travel, memberships 24

25 The Budget: Non Personnel School Allocations 25

26 The Budget: Non Personnel School Allocations 26

27 The Budget: Technology The Three Important Technology Questions (1) Can you afford technology? (2) Can you afford not to have technology? (3) Can you continue to afford technology? Defined Technology Plan Maintaining Expanding Replacing Funding Staffing Training Licensing Up Dated Yearly 27

28 The Budget: Revenue 28

29 The Budget: Revenue - State Basic Education Sales Tax/State tax Revenue Limit EIA Education Improvement Act Lottery Special Education Transportation Foundation Formula Enrollment: FTE, ADA Equalization COLA Cost of Living Adjustment Weighted Student Funding Formula Prototypical School Model Textbooks 29

30 The Budget: Revenue - Federal PL 874 Forrest Land Title I I.D.E.A. Carl Perkins USDA Title II Title III Migrant Programs McKinney-Vento ELL 30

31 The Budget: Revenue - Local Override Election M & O Election Tech Levy Election Pay-to-Participate Impact Fees Facility Use Fees Reimbursements/Refunds Tuition Traffic Fines Jury Duty Property Tax Interest Food Service Sales 31

The Budget: Revenue Categorical Program specific revenue/expenditures Revenue equals expenditures in most cases Federal Programs: Title I I.D.E.A.

32 The Budget: Revenue Categorical Program specific revenue/expenditures Revenue equals expenditures in most cases Federal Programs: Title I I.D.E.A. ELL USDA State Programs (States will have their own programs) Watch Out For: o Encroachment o Supplement not Supplant o Maintenance of Effort o Time and Effort o Excess Carryover 32

33 The Budget USDA Food Services USDA s National School Lunch & Breakfast Programs: School food services is a business subject to P&L and must always show a profit. School food services should not receive funding support from the district s general fund. School food services must balance the nutritional guidelines of the USDA and what today s students want to eat. The above must be accomplished in an ever changing food services environment. In some cases, school food service programs have taken on the operational characteristics of hospital dietetic programs. 33

34 The Budget: Fund Balance Cash received and in the bank and not needed for expenditures on the first day of the new fiscal year This is the money that the bargaining groups want and claim that the district has this huge fund balance that they could spend for salaries and to avoid layoffs. 34

35 The Budget: Fund Balance Fund Balance Classifications Amount Non-spendable Fund Balance 400,000 Restricted Fund Balance 4,020,000 Committed Fund Balance 12,814,314 Assigned Fund Balance 1,650,000 Unassigned Fund Balance 45,187 TOTAL FUND BALANCE 18,929,501 35

36 Budget Transparency Budget Transparency What is it? Presenting budget information so everyone, including Dickie Flat in west Texas, understands the budget Providing budget information so everyone understands the educational and financial direction the district is headed- The CBO/CFO/Board not hiding money in the budget- The Answer YES depending on who you are- 36

37 Budget Transparency How do you get budget transparency? Budget presentations with written explanations of what s in the budget and the budget numbers- Explaining the budget using graphs and charts Achieving the Government Finance Officers Associations (GFOA) Certificate of Achievement for Excellence in Financial Reporting (CAFR Award) Not explaining the budget using budgeting s DaVinci Posting the budget on the district s web page to explain the budget- Code - 37

38 The Budget: Non-Personnel District Operational 38

39 The Budget: Staffing 39

40 Source: Office of the Auditor General FY13 Arizona School District Spending Report Avondale Elementary School District #44, Avondale, AZ 40

41 Financial Transparency Financial Services Department Denver Public Schools We invite you to become familiar with the District s operations and financial performance by clicking upon an area of interest. Board of Education Fiscal Management Policies Charter for Finance and Audit Committees Financing Documents Budget Documents Other Financial Services Documents Comprehensive Annual Financial Reports (CAFR) Payment Review Database Investments Single Audit Quarterly Financial Statements Salary Schedules Bond and Mill Levy Information 41

42 NALEO 10 th Biennial National Institute For Newly Elected Officials November 20 23, 2014 Washington, D.C. 42

Overview of the Budget Process and Procedures

Overview of the Budget Process and Procedures The National Association Of Latino Elected and Appointed Officials Educational Fund NALEO Policy Institute on School Governance: Cultivating Local Leadership to Advance Student Success March 15-16, 2016