Why Budgets Should Be Evaluated

Size: px

Start display at page:

Download "Why Budgets Should Be Evaluated"

Derek Nichols
5 years ago
Views:

1 Why Budgets Should Be Evaluated 1. Accurate information is essential in making difficult mid-year budget decisions. 2. An accurate current budget is the basis for next year s budget 1

Revenues Local Property Taxes ü Assessed Value ü Tax Rate Finalized after July 1 ü Historical Collection Rate Example December 31, 2014 Assessed Valuation

Current Tax Revenues 2014-15: $940,000 Delinquent Tax Revenue 2014-15: $40,000 Theoretical Tax Collection: Tax Rate x Assessed Va

2 Revenues Local Property Taxes ü Assessed Value ü Tax Rate Finalized after July 1 ü Historical Collection Rate Example December 31, 2014 Assessed Valuation $25,000, Total Tax Rate $4.00 per $100 A.V. Current Tax Revenues : $940,000 Delinquent Tax Revenue : $40,000 Theoretical Tax Collection: Tax Rate x Assessed Value $4.00 per $100 A.V. x $25,000,000 = $1,000,000 Percent Collected as Current taxes: Actual Current Collection / Theoretical x 100 (940,000/1,000,000 x 100 =94%) Percent Collected as Delinquent taxes: Actual Delinquent Collection / Theoretical x 100 (40,000 / 1,000,000 x 100 =4%) 2

3 Example Recommend: ü Repeat with data for & ü Average Percentages from , , & ü Use Average for Budget ü Check to see if protested taxes skewed results in any of these years. If so, eliminate that year from average calculation. Example Budgeted Property Taxes Current Taxes : A.V. x Tax Rate x Adjusted Historical Current Collection Rate Delinquent Taxes : A.V. x Tax Rate x Adjusted Historical Delinquent Collection Rate Recommend: Monthly receipt analysis (starting in December) compared to last year ( ). Check with County Clerk/Assessor on protested taxes this year. 3

4 Proposition C 1. FY15 distributed $831 M ($921 per WADA) 2. FY16 budget is $848.7 M (2.2% increase over FY15 distributed) If budget is met, $940 per WADA. 3. Projected range: $925 - $940 per WADA Caution: Watch DESE Finance Memos and monthly state revenue reports for updates this year. Through October, state sales tax collections are up 1.6% compared to October Proposition C Weighted ADA How do we find? 4

5 5

6 Suggest that you bookmark this page. DESE Website 6

7 DESE Website 7

8 Prop C Proposition C $930 x 268 = $249,240 Check with current budget. 8

9 Other Local and County Revenues Review Historical Data Last 2-3 ASBRs Intangible Taxes M & M Replacement - In Lieu of Taxes Check 2015 Commercial Real Estate Assessed Valuation Fines and Forfeitures (Probably received in Oct.) State Assessed Railroad and Utility (See State Tax Commission Report included in your packet.) State Revenues Formula - DESE Transmittal Sheets 9

10 DESE Website SAT will be adjusted as year progresses 10

11 Being paid on 2nd Preceding Year Reminder: Formula WADA is highest of 1 st preceding, 2 nd preceding or estimated current year with 2015 Summer School ADA + = 11

12 DESE will update if A.V. in is less than DESE will update if fines are greater than fines. If fines decrease in counties that established a Municipal Court, DESE will adjust. 12

13 Small District is hold-harmless to dollar amount. (Districts with ADA greater than 350 are holdharmless to per WADA amount) 13

14 (Not WADA) May end the year around $385 per ADA 1. Amount may change before the end of fiscal year depending on how the supplemental bill, if there is one, is worded. 2. Gross amount greater than amount must be placed in Incidental and/or Teachers Fund. 3. District can use CTF amount in any fund(s). 4. This district received $98,623 CTF monies in If this year s CTF amount remains the same through June 2016, $102,791 - $98,623 = $4,168 would have to be placed in the Incidental and/or Teachers Fund as a minimum. CTF 14

15 DESE Website Small Schools: ADA 350 or fewer Amount per ADA that all small schools receive. Amount per tax-rate weighted ADA small schools with Incidental and Teachers fund tax rate greater than or equal to $3.43 have. Amounts may change during the fiscal year. Reminder: If reassessment lowers the incidental and teacher fund tax rate below $3.43, district still qualifies for payment. 15

16 Other State Revenues Compare Budget to DESE Information Transportation Vocational Early Childhood (PAT) Early Childhood Special Education Other State Budget Update 1. The FY16 state budget assumes that FY16 general revenues will exceed FY15 general revenues by 2.1%. 2. Through Oct compared through Oct. 2014: Individual Income Taxes: +6.2% Sales Taxes: +1.6% Corporate Taxes: - 9.4% Other: +2.9% Income Tax Refunds: +18.2% Total Net General Revenue +3.05% 16

17 State Budget Update Caution: 2015 revenues were up only 1.6% over September 2014 revenues. October 2015 revenues were up only.98% over October 2014 revenues State Budget Update 3. Individual income taxes determine 67% of general revenue. 4. Sales taxes determine 25% of general revenue. 5. The Governor s office, House and Senate Budget leaders will complete a revised FY16 consensus revenue forecast in late December and early January along with a consensus revenue forecast for FY Pay attention as the year progresses to the growth in state revenues this year. Additional withholdings possible? 7. Gov. Nixon recently restricted $50 M in spending due to loss of money in the tobacco lawsuit. K-12 education was not significantly affected. 17

18 Federal Revenues IDEA Title Programs Grants Other Revenues Bond Sales Miscellaneous 18

19 Questions Expenditure Evaluation EXPENDITURES REPEAT YEAR AFTER YEAR!!!! Especially Salary Benefits Makes up approximately 80% of Operating Budget 19

20 Salary & Benefits State Wide = 78.55% of Operating Expenditures Per State ASBR 1 st Payroll is different for every district Paid out over same periods every year Evaluate Expenditures/Mo Have your bookkeeper run expenses by month Use Object Codes 61xx Salaries 62xx Benefits 63xx Purchased Services 64xx Supplies 65xx Equipment Get at least 2 years of history Watch for unusual events Career Ladder 20

Salary Example Projection = YTD divided by Historical % YTD 61xx - Salaries Current Year 1st Prior 2nd Prior JUL $ 449,286 1.8% $ 407,918 1.8% $ 396,975 1.8% 1.8% 1.78% AUG $ 500,196 2.0% $ 470,873 2.

21 Salary Example Projection = YTD divided by Historical % YTD 61xx - Salaries Current Year 1st Prior 2nd Prior JUL $ 449, % $ 407, % $ 396, % 1.8% 1.78% AUG $ 500, % $ 470, % $ 429, % 2.0% 3.77% SEP $ 2,019, % $ 1,880, % $ 1,798, % 8.1% 11.89% OCT $ 2,026, % $ 1,915, % $ 1,833, % 8.3% 20.18% NOV $ - 0.0% $ 1,946, % $ 1,838, % 8.4% 28.54% DEC $ - 0.0% $ 1,929, % $ 1,835, % 8.3% 36.85% JAN $ - 0.0% $ 1,899, % $ 1,828, % 8.2% 45.09% FEB $ - 0.0% $ 1,917, % $ 1,847, % 8.3% 53.41% MAR $ - 0.0% $ 1,898, % $ 1,841, % 8.3% 61.67% APR $ - 0.0% $ 1,882, % $ 1,848, % 8.2% 69.92% MAY $ - 0.0% $ 1,927, % $ 1,857, % 8.4% 78.28% JUN $ - 0.0% $ 5,009,883 22% $ 4,820,936 22% 21.7% 100.0% BGT $ 24,703,042 $ 23,084,989 $ 22,177,331 PROJ $ 24,759,748 Nov-May 99.97% % +/(-) $ 56,706 June 261.7% 261.8% Salary Example-2 Oct X Ave Nov-May Prior 2 years = Nov-May Estimate Current Year 61xx - Salaries 1st Prior 2nd Prior JUL $ 449, % $ 407, % $ 396, % 1.8% 1.78% AUG $ 500, % $ 470, % $ 429, % 2.0% 3.77% SEP $ 2,019, % $ 1,880, % $ 1,798, % 8.1% 11.89% OCT $ 2,026, % $ 1,915, % $ 1,833, % 8.3% 20.18% NOV $ 2,031, % $ 1,946, % $ 1,838, % 8.4% 28.54% DEC $ 2,031, % $ 1,929, % $ 1,835, % 8.3% 36.85% JAN $ 2,031, % $ 1,899, % $ 1,828, % 8.2% 45.09% FEB $ 2,031, % $ 1,917, % $ 1,847, % 8.3% 53.41% MAR $ 2,031, % $ 1,898, % $ 1,841, % 8.3% 61.67% APR $ 2,031, % $ 1,882, % $ 1,848, % 8.2% 69.92% MAY $ 2,031, % $ 1,927, % $ 1,857, % 8.4% 78.28% JUN $ 5,315, % $ 5,009,883 22% $ 4,820,936 22% 21.7% 100.0% BGT $ 24,703,042 $ 23,084,989 $ 22,177,331 PROJ $ 24,530,775 Nov-May 99.97% % +/(-) $ (172,267) June 261.7% 261.8% 21

Salary Example-2 Current Year 61xx - Salaries 1st Prior 2nd Prior JUL $ 449,286 1.8% $ 407,918 1.8% $ 396,975 1.8% 1.8% 1.78% AUG $ 500,196 2.0% $ 470,873 2.0% $ 429,600 1.9% 2.0% 3.

22 Salary Example-2 Current Year 61xx - Salaries 1st Prior 2nd Prior JUL $ 449, % $ 407, % $ 396, % 1.8% 1.78% AUG $ 500, % $ 470, % $ 429, % 2.0% 3.77% SEP $ 2,019, % $ 1,880, % $ 1,798, % 8.1% 11.89% OCT $ 2,026, % $ 1,915, % $ 1,833, % 8.3% 20.18% NOV $ 2,031, % $ 1,946, % $ 1,838, % 8.4% 28.54% DEC $ 2,031, % $ 1,929, % $ 1,835, % 8.3% 36.85% JAN $ 2,031, % $ 1,899, % $ 1,828, % 8.2% 45.09% FEB $ 2,031, % $ 1,917, % $ 1,847, % 8.3% 53.41% MAR $ 2,031, % $ 1,898, % $ 1,841, % 8.3% 61.67% APR $ 2,031, % $ 1,882, % $ 1,848, % 8.2% 69.92% MAY $ 2,031, % $ 1,927, % $ 1,857, % 8.4% 78.28% JUN $ 5,315, % $ 5,009,883 22% $ 4,820,936 22% 21.7% 100.0% BGT $ 24,703,042 $ 23,084,989 $ 22,177,331 PROJ $ 24,530,775 Nov-May 99.97% % +/(-) $ (172,267) June 261.7% 261.8% Benefit Example 62xx - Benefits Current Year 1st Prior 2nd Prior JUL $ 110, % $ 97, % $ 90, % 1.5% 1.53% AUG $ 122, % $ 111, % $ 99, % 1.7% 3.25% SEP $ 560, % $ 510, % $ 465, % 8.0% 11.22% OCT $ 560, % $ 513, % $ 470, % 8.0% 19.25% NOV $ - 0.0% $ 520, % $ 480, % 8.2% 27.43% DEC $ - 0.0% $ 631, % $ 573, % 9.8% 37.27% JAN $ - 0.0% $ 515, % $ 472, % 8.1% 45.34% FEB $ - 0.0% $ 521, % $ 488, % 8.3% 53.59% MAR $ - 0.0% $ 514, % $ 474, % 8.1% 61.67% APR $ - 0.0% $ 512, % $ 476, % 8.1% 69.74% MAY $ - 0.0% $ 521, % $ 481, % 8.2% 77.93% JUN $ - 0.0% $ 1,396,865 22% $ 1,304,915 22% 22.1% 100.0% BGT $ 7,104,940 $ 6,365,956 $ 5,877,629 PROJ $ 7,031,236 Nov-May % % +/(-) $ (73,704) June 262.9% 266.5% 22

Purchased Services Example 63xx - Purchased Services Current Year 1st Prior 2nd Prior JUL $ 139,599 2.6% $ 147,498 2.7% $ 186,215 4.2% 3.5% 3.5% AUG $ 186,665 3.5% $ 104,824 1.9% $ 133,250 3.0% 2.

23 Purchased Services Example 63xx - Purchased Services Current Year 1st Prior 2nd Prior JUL $ 139, % $ 147, % $ 186, % 3.5% 3.5% AUG $ 186, % $ 104, % $ 133, % 2.5% 6.0% SEP $ 432, % $ 239, % $ 205, % 4.6% 10.5% OCT $ 566, % $ 685, % $ 445, % 11.4% 22.0% NOV $ 551, % $ 436, % $ 372, % 8.3% 30.2% DEC $ - 0.0% $ 660, % $ 412, % 10.8% 41.0% JAN $ - 0.0% $ 468, % $ 541, % 10.5% 51.6% FEB $ - 0.0% $ 280, % $ 293, % 5.9% 57.5% MAR $ - 0.0% $ 960, % $ 451, % 14.0% 71.5% APR $ - 0.0% $ 258, % $ 387, % 6.8% 78.3% MAY $ - 0.0% $ 547, % $ 448, % 10.2% 88.5% JUN $ - 0.0% $ 616,068 11% $ 507,773 12% 11.5% 100.0% BGT $ 5,403,085 $ 5,406,705 $ 4,384,139 PROJ $ 6,208,252 +/(-) $ 805,167 Recommendation for 63xx 64xx Pick Key Items and Look at History 6481 Electricity 6482 Natural Gas 6486 Bus Fuel 6341 Contracted Transportation Mostly Salary 6471 Food 6472 Non-Food 23

Electricity Example Electric - 6481 3rd PY 2nd PY % Chg 1st PY % Chg CY % Chg July $ 81,981 $ 81,558-0.5% $ 99,591 22.1% $ 115,892 16.4% August $ 77,342 $ 82,479 6.6% $ 106,284 28.9% $ 127,084 19.

8% December $ 46,651 $ 49,537 6.2% $ 54,116 9.2% -100.0% January $ 46,618 $ 49,275 5.7% $ 56,201 14.1% -100.0% February $ 51,765 $ 56,064 8.3% $ 58,616 4.6% -100.0% March $ 50,621 $ 54,176 7.

24 Electricity Example Electric rd PY 2nd PY % Chg 1st PY % Chg CY % Chg July $ 81,981 $ 81, % $ 99, % $ 115, % August $ 77,342 $ 82, % $ 106, % $ 127, % September $ 96,977 $ 95, % $ 108, % $ 149, % October $ 113,136 $ 103, % $ 118, % $ 147, % November $ 58,001 $ 52, % $ 58, % $ 74, % December $ 46,651 $ 49, % $ 54, % % January $ 46,618 $ 49, % $ 56, % % February $ 51,765 $ 56, % $ 58, % % March $ 50,621 $ 54, % $ 55, % % April $ 47,056 $ 48, % $ 54, % % May $ 46,154 $ 52, % $ 50, % % June $ 48,277 $ 61, % $ 56, % % Total $ 764,579 $ 787, % $ 878, % $ 614, % TTL YTD $ 427,437 $ 415, % $ 491, % $ 614, % % of TTL-YTD 55.9% 52.7% 56.0% Average % 54.9% Projection Projection $ 1,120,001 BUDGET Budget $ 1,079, % +/(-) $ 40,515 Drill Down in Salary/ Benefits The overall 61xx or 62xx code gives you a good idea of where you are. A better understanding will occur if you drill down 61xx minus Non-Contract Expenses Subs, Sick Leave Pay, Summer School Pay, Overtime Health Insurance PSRS PEERS Medicare & OASDI Subs 24

PSRS Example PSRS - 6211 3rd PY 2nd PY % Chg 1st PY % Chg CY % Chg July $ 73,430 $ 76,565 4.3% $ 78,504 2.5% $ 87,423 11.4% August $ 91,371 $ 95,654 4.7% $ 97,077 1.5% $ 100,481 3.

0% December $ 397,622 $ 425,275 7.0% $ 455,173 7.0% -100.0% January $ 402,583 $ 424,320 5.4% $ 454,312 7.1% -100.0% February $ 398,310 $ 422,930 6.2% $ 452,578 7.0% -100.0% March $ 397,323 $ 422,754 6.

25 PSRS Example PSRS rd PY 2nd PY % Chg 1st PY % Chg CY % Chg July $ 73,430 $ 76, % $ 78, % $ 87, % August $ 91,371 $ 95, % $ 97, % $ 100, % September $ 395,505 $ 427, % $ 466, % $ 473, % October $ 395,366 $ 424, % $ 454, % $ 470, % November $ 405,581 $ 425, % $ 453, % $ 471, % December $ 397,622 $ 425, % $ 455, % % January $ 402,583 $ 424, % $ 454, % % February $ 398,310 $ 422, % $ 452, % % March $ 397,323 $ 422, % $ 452, % % April $ 396,844 $ 421, % $ 452, % % May $ 467,195 $ 423, % $ 452, % % June $ 1,006,207 $ 1,141, % $ 1,221, % % Total $ 4,827,337 $ 5,132, % $ 5,490, % $ 1,603, % TTL YTD $ 1,361,252 $ 1,450, % $ 1,550, % $ 1,603, % % of TTL-YTD 28.2% 28.3% 28.2% Average % 28.2% Projection Projection $ 5,678,966 BUDGET Budget $ 5,718, % +/(-) $ (39,637) Other Purchased Services and Supplies Manually Glance over YTD vs Budget Look for Items that are Over or Close to Budget Generally Staff Stays Under Budgets and Provides Cushion 25

Building Improvements Usually 1 Time Expenditures Debt Service Bond

26 Capital Projects Compare Projections to Budget Equipment & Furniture Vehicle & Bus Purchases Grants for Capital Purchases New Construction Building Improvements Usually 1 Time Expenditures Debt Service Bond Principal and Interest Payments Review Current Amortization Schedule Contact your Bond Advisor 26

27 Download Spreadsheets FILL IN HIGHLIGHTED YELLOW CELLS ONLY Non-Highlighted Cells have Formulas Questions 27

28 Fund Transfers General (Incidental) to Capital Projects 7% x WADA x $6,107?? Or Minimum of $162,326 Maximum if Board resolution is adopted Otherwise Match current year Capital Projects Expenditures Fund Transfers General (Incidental) to Debt Service Fund or Capital Projects Fund 5% x WADA x $6,107?? Or Transfer Amount of (Use if needed to supplement Debt Service Fund) 28

29 Revenue Placement Deposit at least the following percentages of revenues in Teachers Fund: 75% Formula (excluding CTF) 75% of ½ Proposition C 100% Fines and Escheats Gross Classroom Trust Fund Receipts in excess of amount must be placed in some combination of the incidental and teachers fund. Salary Compliance DESE has notified school districts that they will be required to meet salary compliance in The legislative waiver has expired. Requirement: Teacher Fund expenditures must be equal to or greater than the sum of: 1. 75% Formula Receipts (excluding gaming revenues Classroom Trust Fund) 2. 75% of one-half of Proposition C receipts 3. Local and county tax receipts used for teacher fund expenditures in on a per weighted ADA basis. 29

30 Salary Compliance Fund Placement is the most important factor in maintaining compliance. Statutory Requirements 75% of Basic Formula (5311) placed in Teachers Fund 75% of ½ Prop C (5113) placed in Teachers Fund Out of compliance if you don t comply Make sure you place at least these amounts in Teachers Fund. Salary Compliance If you place more than the statutory requirement in Teachers Fund it will give you more cushion for meeting the local tax receipt requirement in future years. Place up to 100% of Basic Formula and Prop C in Teachers Fund AS LONG AS IT DOES NOT BUILD A FUND BALANCE IN TEACHERS FUND. 30

31 Salary Compliance Use DESE spreadsheet available under formula calculation. A worksheet is included in your packet. Fund Placement Example-Actual Fund 1 Fund 2 Fund 1 Fund 2 Fund 1 Fund Basic Formula $960,925 $0 $266,982 $800,946 $274,991 $824, Prop C $222,190 $0 $135,536 $81,321 $139,602 $83,761 Other Rev No Choice No Choice No Choice Fund 2 Expenses $1,636,131 $1,538,647 $1,418,401 Teacher Fund Xfr. $1,423,196 $502,054 $492,891 $ In Compliance $527,313 $258,778 $257,178 31

Fund Placement Example- Minimum Placement 2010-2011 2011-2012 2012-2013 Fund 1 Fund 2 Fund 1 Fund 2 Fund 1 Fund 2 5311-Basic Formula $240,231 $720,694 $266,982 $800,946 $274,991 $824,974 5113-Prop C

32 Fund Placement Example- Minimum Placement Fund 1 Fund 2 Fund 1 Fund 2 Fund 1 Fund Basic Formula $240,231 $720,694 $266,982 $800,946 $274,991 $824, Prop C $138,869 $83,321 $135,536 $81,321 $139,602 $83,761 Other Rev No Choice No Choice No Choice Fund 2 Expenses $1,636,131 $1,538,647 $1,418,401 Teacher Fund Xfr. $619,181 $502,054 $492,891 $ In Compliance $527,313 $338,242 $352,377 Difference From Actual $0 $79,464 $95,199 Fund Placement Example- Maximum Placement Fund 1 Fund 2 Fund 1 Fund 2 Fund 1 Fund Basic Formula $0 $960,925 $0 $1,067,928 $0 $1,099, Prop C $0 $222,190 $0 $216,857 $0 $223,363 Other Rev No Choice No Choice No Choice Fund 2 Expenses $1,636,131 $1,538,647 $1,418,401 Teacher Fund Xfr. $240,081 $99,536 $78,297 $ In Compliance $527,313 $338,242 $432,456 Difference From Actual $0 $79,464 $175,278 32

33 Questions Recommended Budget Updates Have quarterly Budget Amendment process with Board of Education approval. Line item and Fund Summary (Show Board effect of budget amendments on bottom line.) 33

34 34

35 Questions 35

36 Financial Summary Future Workshops Developing Your Budget March 16 or 17 - Jefferson City 36

37 Comments on Budget New SAT and new threshold calculations done by DESE and reported to school districts in September for and : new threshold calculations will apply only to districts that use estimated current year WADA in a. Lower thresholds for free and reduced lunch, IEP and LEP will raise statewide WADA, especially in and b. Next year ( ), provisionally accredited districts can count free and reduced lunch early childhood students in formula WADA calculation. Comments on Budget c. DESE estimates growth in WADA statewide of 10,000 in formula calculation next year. d. Additional money needed to keep SAT at this year s level could be approximately $61 million. 37

38 Additional Assistance MASA School Finance Service School Finance Consultants available to work one-on-one Call Roger Kurtz to arrange appointment Questions 38

Budgeting for

Budgeting for 2015-2016 Presented By Chris Straub & Jason Hoffman Budgeting Axioms Budgeting Is A Year-Round Process 1 Budgeting Axioms Budgets change as better information is obtained Budgeting Axioms