Team IASB Shawn Snyder School Finance Director direct (515)

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1 School Finance Terminology The Short Version (Yes, there is such a thing!) IASB Annual Convention November 16, 2017 Team IASB Shawn Snyder School Finance Director ssnyder@ia-sb.org direct (515) Patti Schroeder School Finance Director pschroeder@ia-sb.org direct (515)

2 Agenda Handout of key school finance terminology (not all inclusive) Big Picture View A District View (where possible) Other data, etc. See also IASB Toolkit, Finance, School Finance Basics School Finance Glossary of Terms 1. Dillon s Rule and Home Rule Lite Dillon s Rule versus Home Rule School Districts Cities/Counties Dillon's Rule Doctrine of enumerated powers to construe school board authority. Meaning: Schools can only do what is expressly authorized in law or rule. New HF 573 New law that allows district to exercise any board and implied power not inconsistent with the law (Consider this Home Rule Lite) Meaning: There may be some oppurtunity to innovate if law doesn't prohibit it. Home Rule Constitutional provision that provides cities/counties a broad interpretation of authority. Meaning: Cities and Counties can manage their own affairs as they deem appropriate long as the law doesn't expressly prohibit it. 2

3 HF 573 Home Rule - Lite Considerations: Is it may or shall Code language? Can existing school law be broadly interpreted? o Not full Home Rule, just lite o Expect pushback o Seek school attorney advice upfront 2. Spending Authority Building Blocks to Determine District s Maximum Spending Authority SPENDING AUTHORITY VS. CASH Spending Authority Component Revenue Source Regular Program District Cost D State Aid & Property Tax Supplementary Weighting D State Aid & Property Tax Special Ed District Cost State Aid & Property Tax D Teacher Salary Supplement State Aid D Prof Dev Supplement D State Aid Early Intervention State Aid D Teacher Leadership Compensation D State Aid AEA Support State Aid & Property Tax D SBRC Modified Amounts No Cash Source D Preschool Foundation Aid State Aid D Instructional Support Authority D Income Surtax & Property Tax Ed Improvement Authority D Income Surtax & Property Tax D All Revenues, except State Other Miscellaneous Income Aid/Property Tax Unspent Authority Budget - Previous Year No additional cash No Spending Authority Cash Reserve Levy D D 3

4 Spending Authority Going Negative? A District s View 65.5% Unspent Authorized Budget Ratio 17.7% 4.6% 6.1% -12.3% -1.3% -5.1% -6.6% FY16 Max FY16 Median FY16 Min Your District Your District Your District Your District Your District FY 12 FY 13 FY 14 FY 15 FY 16 Financial Focus Data Tool: (II) Seven General Fund Key Financial Indicators Spending Authority #1 Financial Indicator! A District s View 65.5% Unspent Authorized Budget Ratio 17.7% 12.5% 13.1% 12.6% 12.3% 13.8% -12.3% FY16 Max FY16 Median FY16 Min Your District Your District Your District Your District Your District FY 12 FY 13 FY 14 FY 15 FY 16 Financial Focus Data Tool: (II) Seven General Fund Key Financial Indicators Spending Authority The Future -A District s View Remaining Spending Authority: Unspend Authorized Budget (UAB) Amounts and Percentages $1,500, % $1,000,000 $814,343 $814,551 $870,601 $938,230 $954,838 $811, % 10.0% $570,397 $500, % $ $173,100 FY 2014 FY 2015 FY 2016 Est. FY 2017 Est. FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY % 5.0% $(500,000) $(427,375) 10.0% $(1,000,000) $(1,500,000) 15.0% 20.0% $(1,150,420) 25.0% Unspend Authorized Budget (UAB Amount) Projected UAB Amount UAB % Right Axis) Projected UAB % (Right Axis) Ask us about this tool: ssnyder@ia-sb.org or pschroeder@ia-sb.org 4

5 Spending Authority is More Important Than Cash SOLVENCY RATIO (Cash) STATUS Negative Zero Positive Unspent Authorized Negative Very High Concern Very High Concern Very High Concern Budget Ratio Zero High Concern Concern Concern Positive Concern Acceptable Best 3. Enrollment Enrollments Drive the School District Budgets Down over 20,000 students from all time high, but trending up lately But, amounts vary by district. Budget Enrollments: FY 1991 to FY , , , , , , , , , , , Budget Enrollment 5

6 Last 10 Years: Overall enrollment is up, but most districts are down Enrollment Drives the Budget! Enrollment? New Money? Spending? Increase Yes New staff Collective Bargaining Decrease No Negative new money Budget reductions Collective Bargaining Open Enrollment 6

7 4. School Aid Funding Legislative Action on SSA 16.00% State Percent of Growth Rate: Formula Driven Rate vs. Legislative Action (FY 1973 through FY 2018) 14.00% 12.00% 13.59% 10.00% 8.00% 6.00% 4.00% 4.00% 2.00% 0.00% 2.54% 0.00% 1.11% State Percent of Growth: Formula Driven State Percent of Growth: Legislative Action Supplemental State Aid (SSA) - Calculation Calculation-State Cost Per Pupil (SCPP) FY 2017 State Cost Per Pupil (SCPP) $6,591 FY 2018 State Rate of Growth X 1.11% FY 2018 State Cost Per Pupil (SCPP) = $6,664 Allowable growth in District Cost Per Pupil (DCPP) $ 73 Example: FY 2017 DCPP Dollar Value Rate of Growth FY 2018 DCPP District A $6,591 $73 $6,664 District B $6,623 $73 $6,696 7

8 SSA Calculator A District s View Estimated Estimated Estimated Estimated Fiscal Year FY 2016 FY 2017 FY 2018 FY19** FY20** FY21** FY22** Estimated FY23** Budget Enrollment Supplemental State Aid (Allowable Growth) 1.25% 2.25% 1.11% 2.00% 2.00% 2.00% 2.00% 2.00% Dollar Change Cost Per Student State Cost Per Student 6,446 6,591 6,664 6,797 6,933 7,072 7,213 7,357 Area FY 2016 FY 2017 FY 2018 Estimated Estimated Estimated FY19** FY20** FY21** Estimated FY22** Estimated FY23** District Cost Per Student 6,613 6,758 6,831 6,964 7,100 7,239 7,380 7,524 Regular Program Cost/W-O Budget Guarantee 3,174,240 3,289,794 3,480,395 3,420,717 3,054,420 3,365,411 3,597,012 3,570,138 Budget Guarantee 76, , , ,844 Regular Program Cost/With Budget Guarantee 3,250,338 3,289,794 3,480,395 3,515,199 3,454,924 3,365,411 3,597,012 3,632,982 Prior Year Regular Program Cost/With Budget Guarantee 3,400,261 3,250,338 3,289,794 3,480,395 3,515,199 3,454,924 3,365,411 3,597,012 "New Money" -149,923 39, ,601 34,804-60,275-89, ,601 35,970 Percent New Money -4.41% 1.21% 5.79% 1.00% -1.71% -2.59% 6.88% 1.00% 5. Categorical Funding 8

Governmental Proprietary Fiduciary General Special Revenue Capital Projects Debt Service Enterprise Internal Service Trust Agency Management Student Activity PERL Special Rev.

9 Governmental Proprietary Fiduciary General Special Revenue Capital Projects Debt Service Enterprise Internal Service Trust Agency Management Student Activity PERL Special Rev. Trust PPEL Local Option Sales/Statewide Sales and Services Tax Child Care Scholarship Trust Pension Trust Investment Trust Categorical Funding (within the General Fund) Also treat as Silos only Accounts, not Funds Teacher Salary Supplement Dropout Prevention Professional Development Beginning Teacher Mentoring Iowa Early Intervention Beginning Administrator Mentoring Statewide Voluntary Four Year Old Preschool Nonpublic Textbook Services SPED Special Education At-Risk Home school Gifted and Talented ELL English Language Learners Teacher Leadership Compensation Categorical Professional Development Dropout Prevention Preschool Program HF 564 Categorical Flexibility Adds Uses/Eliminates Restrictions Textbooks/curriculum materials that include PD Administering assessments that include PD Eliminates percent that was to be used for Iowa Core Guidance counselors Programs aimed at high absenteeism, truancy, tardiness Removes 5% limitation for district/building/grade specific programs Supplies Translation services Playground equipment and repair Student food and beverages Rental fees GF/Student Activity Fund Allows transfer for protective and safety equipment for extracurricular interscholastic athletics 9

10 HF 565 Flexibility Account Balances from: SVPP PD Home School Expired/repealed programs Program requirements met? Flexibility Account Balances to: SVPP Start Up PD Home School DOP / At Risk Any GF purpose Board Resolution to spend? Deference will be given to decisions made by a school board 6. Modified Supplemental Amount School Budget Review Committee (SBRC) Approves/Disapproves Modified Supplemental Amount (MSA) Class action approval for all requesting districts Increasing enrollment (on-time funding) Open enrollment out situations Additional English Language Learner (ELL) costs beyond 5 years Special education expenditure deficits Note: Biennially, SBRC reviews SPED weighting plan, may approve change; no change since 2004 Unique and unusual circumstances for an individual district (Code ) o Required approval (by law) o Other approvals - Committee decision 10

11 SPED Deficits Are Increasing Over Time Modified Supplemental Amount for Special Education Deficits: Total Amount (in Millions) and Percentage of Districts FY 2010 through FY 2016 $120.0 $100.0 $80.0 $60.0 $ % 52.9% 61.0% $ % $ % $ % $ % $ % 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% $20.0 $37.1 $ % 10.0% $0.0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY % Modified Supplemental Amount for Special Education Deficit (left axis) Percentage of Districts (right axis) Source: Iowa Departmentof Education, SBRC Modified Supplemental Amount files SPED Deficits - A District s View Annual Calculated Surplus- Deficit Previous Year Carryover Cumulative Calculated Surplus- Deficit , , , , , , , ,968 Financial Focus Data Tool: (XV) Special Education Balance Calculator 7. Taxes 11

12 School Property Taxes Types All Funds FY 2018 School District Levies (Millions of Dollars) $1,000.0 $900.0 $800.0 $700.0 $600.0 $500.0 $400.0 Schl. Aid Formula Levies $862.1 $612.7 Total School Levy = $2,353.0 M Non-General Fund Levies $300.0 $200.0 $100.0 $- $224.7 $180.1 $138.1 $137.0 $139.8 $55.4 $0.8 $ School District Discretionary Levies FY 2018 Number of Code Districts with Levied Amount Section School Disrict Discretionary Levies Approval Levy (in Mill.) (in Mill.) Cash Reserve Board Approved 231 $ N.A. Amount Income Surtax Board Approved for up to 5 Years Instructional Support 330 $ $ 91.2 Voter Approved for up to 10 Years (majority approval) Voter Approved (in place until Board rescinds or reverse referendum) Educational Improvement levy 3 $ 0.8 $ 0.1 However, no new districts can implement this Regular Physical Plant and Equipment Levy (PPEL) Board Approved $ N.A Voter Approved PPEL Voter Approved (Up to 10 Years requires majority approval) 263 $ $ Public Education and Recreation Levy (PERL) Voter Approved (in place until Board rescinds or reverse referendum) $ N.A Management Board Approved $ N.A Debt Services Voter Approved (requires 60.0% approval) $ N.A. # of Districts = 333 Totals $ $ Iowa Association of School Boards Sources: Iowa Department of Management, School Aid file, IASB analysis and calculations Overall Taxes - A District s View Total Tax Rate FY18 Max FY18 FY18 Min FY12 FY13 FY14 FY15 FY16 FY17 FY18 Median Fiscal Year Data Your District Financial Focus Data Tool: (IX) Tax Rates 12

School District Percent of Local Taxes Continues to Decline Statewide Percentage of Total Property Taxes by Governmental Taxing Authority: FY 1977 to FY 2018

0% FY 1977 FY 1978 FY 1979 FY 1980 FY 1981 FY 1982 FY 1983 FY 1984 FY 1985 FY 1986 FY 1987 FY 1988 FY 1989 FY 1990 FY 1991 FY 1992 FY 1993 FY 1994 FY 1995 FY

13 School District Percent of Local Taxes Continues to Decline Statewide Percentage of Total Property Taxes by Governmental Taxing Authority: FY 1977 to FY % 55.2% 50.0% 40.0% K 12 Schools Counties Cities Community College Co Hospitals Other 41.5% 30.0% 20.0% 20.2% 19.8% 29.0% 22.1% 10.0% 0.0% FY 1977 FY 1978 FY 1979 FY 1980 FY 1981 FY 1982 FY 1983 FY 1984 FY 1985 FY 1986 FY 1987 FY 1988 FY 1989 FY 1990 FY 1991 FY 1992 FY 1993 FY 1994 FY 1995 FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY

Real Life Example - Property Wealth of a District Real District A Real District B Enrollment= 1,219.8 Enrollment= 1,215.8 Tax. Valuation Per Pupil= $ 611,043 Tax.

14 Real Life Example - Property Wealth of a District Real District A Real District B Enrollment= 1,219.8 Enrollment= 1,215.8 Tax. Valuation Per Pupil= $ 611,043 Tax. Valuation Per Pupil= $ 218,645 Total Tax Rate= $ Total Tax Rate= % 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Uniform 11.3% Levy % Uniform 11.3% Levy ## State Aid 1.2% % 1.2% State Aid ## PTRP DCPP = $6,664 DCPP = $6, PTRP 83 ## 80.0% Additional Levy 750 Additional Levy 750 ## 38.0% 70.0% Additional 6664 Levy 60.0% Additional 6664Levy PTRP PTRP 50.0% 69.8% State Aid State Aid 40.0% Uniform Levy Uniform Levy 30.0% 49.5% 20.0% 10.0% 17.7% 0.0% Property Rich District Property Poor District Property Valuations Classifications - A District s View Utilities W/O G & E, 0.9% Railroads, 4.3% Other, 0.0% % Taxable Valuation by Class Gas & Electric Utility, 5.9% Residential Multi-Residental, 1.3% Ag Land Industrial, 2.9% Residential, 30.2% Ag Buildings Commercial Commercial, 12.2% Industrial Multi-Residental Railroads Ag Buildings, 2.2% Utilities W/O G & E Other Gas & Electric Utility Ag Land, 40.2% Financial Focus Data Tool: (XVIII) Taxable Valuation By Class 14

15 Property Wealth - A District s View Taxable Valuation Per Student 1,400,000 1,300,025 1,200,000 1,000, ,000 Your District State Max 600, ,462 State Median State Average 400, , ,208 State Minimum 200, ,466 - Taxable Valuation Per Student Financial Focus Data Tool: (XVIII) Taxable Valuation By Class 8. Wrap-Up: Other Helpful Information Learn More. Do More. IASB Annual Convention: Preconvention School Finance 101, 201, 301: Wed, Nov. 15 Convention: Thursday, Nov. 16 Board Presidents Workshop: Friday, Nov. 17 ISFLC: December 13-14, 2017 Prairie Meadows Conference Center 15

16 Vision & Voice for Public Education 16

School Finance 101 The Basics of Iowa School Finance. IASB Convention November Iowa Association of School Boards 1

School Finance 101 The Basics of Iowa School Finance IASB Convention November 2017 Iowa Association of School Boards 1 Presenters Shawn Snyder School Finance Director email ssnyder@ia-sb.org direct (515)