JEFFERSON PARISH PUBLIC SCHOOL SYSTEM. 501 Manhattan Blvd. Harvey, Louisiana DRAFT

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1 501 Manhattan Blvd. Harvey, Louisiana DRAFT Fiscal Year Proposed Fund Budgets September 8, 2016 Prepared By: SARAH B. CARUSO Chief Financial Officer Submitted by: ISAAC G. JOSEPH Superintendent of Schools

2 PROPOSED BUDGETS FY TABLE OF CONTENTS List of Officials and School Board Members... 1 Organization Chart... 2 Structure of School Board... 3 Understanding the School Board Budget... 3 Superintendent s Mission and Goals Budget Message BUDGET SUMMARIES All Governmental Funds Summary of All Governmental Fund Budgets Summary of Major Governmental Fund Budgets Summary of Non-Major Governmental Fund Budgets General Fund Summary of General Fund Estimated Revenues and Expenditures Detail of General Fund Expenditures by location by object code Detail of General Fund Central Office Salaries and Benefits by unit: Superintendent and Chief of Staff School Board Members Academics Achievement and accountability Finance Human Resources Operations and planning Student Support Special Revenue Funds Description of Special Revenue Funds Elementary and Secondary Education Act of 1965 (Title I) Elementary and Secondary Education Act of 1965 (Title III) Elementary and Secondary Education Act of 1965 (Title VII) Individuals with Disabilities Education Act of Part B Vocational Education Education for Economic Security Act (Title II) Drug Free Schools and Communities Medicaid Temporary Assistance for Needy Families Adult Education Other Federal Programs State and Local Programs Community Education Other ESEA Programs

3 PROPOSED BUDGETS FY TABLE OF CONTENTS (CONTINUED) Special Revenue Funds (Continued) FEMA Public Assistance Program Debt Service Funds Description of Debt Service Funds Fund 20- Ad Valorem Tax Series 2013 Sinking Fund 21- Ad Valorem Tax Series 2008 Sinking Fund ½ Cent Sales Tax Bond Sinking Fund ½ Cent Sales Tax Bond Reserve Fund ½ Cent Sales Tax Bond Series 2011 Sinking Fund 26- LCDA Fund 27- QSCB Series 2009 Sinking Fund ½ Cent Sales Tax Bond Series 2011 Reserve Fund 29- QSCB Series 2010 Sinking Fund 30- Ad Valorem Tax Series 2010 Sinking Fund 32- Ad Valorem Tax Series 2014 Sinking Fund 33- Ad Valorem Tax Series 2015 Sinking Fund 36- ½ cent Sales Tax Construction Series 2016 Sinking Capital Project Funds Description of Capital Project Funds Fund 9- High School Renovations Fund 40- Capital Improvement Fund 41- Sales Tax Bond Construction Fund 44- Sales Tax Construction Fund Fund 50- Ad Valorem Tax Construction Fund 52- Limited Tax Bonds Series Fund 54- Limited Tax Bond Series Fund 55- Patrick Taylor Construction Fund Fund 56- ½ cent Sales Tax Construction Series 2016 Construction Fund Fund Limited Tax Bond Construction Fund Fund 409- Ike Insurance Claims Construction Fund Enterprise Fund Description of Enterprise Funds Fund 4- School Lunch Fund

4 PROPOSED BUDGETS FY TABLE OF CONTENTS (CONTINUED) Statistical Section Table 1: Net Position by Component- Last Ten Fiscal Years Table 2: Changes in Net Position- Last Ten Fiscal Years Table 3: Fund Balances, Governmental Funds- Last Ten Fiscal Years Table 4: Changes in Fund Balances, Governmental Funds- Last Ten Fiscal Years Table 5: Assessed Taxable Value by Type of Property- Last Ten Fiscal Years Table 6: Direct and Overlapping Property Tax Rates- Last Ten Fiscal Years Table 7: Principal Property Taxpayers Table 8: Property Tax Levies and Collections- Last Ten Fiscal Years Table 9: Assessed Value and Estimated Actual Value of Taxable Property- Last Ten Fiscal Years Table 10: Taxable Sales by Category- Last Ten Fiscal Years Table 11: Sales Tax Revenue Payers by Industry- Current Year and Nine Years Prior Table 12: Ratios of Outstanding Debt by Type- Last Ten Fiscal Years Table 13: Ratios of Net General Bonded Debt Outstanding- Last Ten Fiscal Years Table 14: Legal Debt Margin Information- Last Ten Fiscal Years Table 15: Computation of Direct and Overlapping Debt- June 30, Table 16: Ratios of General Bonded Debt Outstanding and Legal Debt Margin- Last Ten Fiscal Years Table 17: Demographic Statistics- Last Ten Fiscal Years Table 18: Principal Employers- Current Year and Nine Years Prior Table 19: Number of Employees by Function- Last Ten Years Table 20: School Building Information- Last Ten Fiscal Years Contents & Glossary Financial Definitions

5 OFFICIALS Isaac G. Joseph SUPERINTENDENT SCHOOL BOARD MEMBERS Mark Morgan, District I Ricky Johnson, District II Ray St. Pierre, District III Melinda Bourgeois, District IV Cedric Floyd, District V Larry Dale, District VI Melinda Doucet, District VII Marion Bonura, District VIII Sandy Denapolis-Bosarge, District IX 1

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7 STRUCTURE OF THE SCHOOL BOARD The Jefferson Parish School Board is an independent legislative body created under Louisiana Revised Statute 17:51. The School Board has the power to sue and be sued, and to make rules and regulations for its own government consistent with the laws of the State of Louisiana and the regulations of the State Board of Elementary and Secondary Education, to levy taxes and collect revenues through state approved means. The School Board consists of nine (9) members elected from districts. Each Board Member serves a term of four (4) years, and terms are concurrent. The chief duties of the Jefferson Parish School Board are to: o Appoint the Superintendent of Schools, o Establish school attendance boundaries, o Establish public schools as it deems necessary to provide adequate facilities, o Formulate educational and other policy, o Establish short-and-long range planning processes, o Adopt a balanced annual budget, o Exercise oversight authority for all financial matters. COMPOSITION OF THE SCHOOL DISTRICT The school system is currently composed of 84 schools (77 district schools and 7 charter schools) and three central administrative office facilities. Student enrollment in February 2016 was 48,584 with projected enrollments of 49,211 for the school year. UNDERSTANDING THE SCHOOL SYSTEM BUDGET THE PROCESS The process of formulating the Jefferson Parish Public School System General Operations Budget (as well as all other budgets) begins with the Superintendent and his staff. After the Superintendent/staff develop the general outline of the budget, i.e., determine available revenues and a broad framework of expenditures, the Superintendent calls the Budget Planning Committee (BPC) into session. This committee, comprised of a cross section of Jefferson Parish Public School administrators, is appointed annually by the Superintendent. Prior to the committee being called into session, the Superintendent and his staff develop the general framework of the budget by qualifying, quantifying and prioritizing the goals and aspirations of the system. With these educational priorities established, the Superintendent presents to the BPC his recommendations along with a directive that each program and expenditure be scrutinized from the standpoint of its impact on, and contribution toward, student outcomes. This process, starting from the Superintendent and his staff through the involvement of the BPC, involves an analysis and understanding of the following: 3

8 The general state of the economy - State and Jefferson Parish Potential State imposed reductions Economic indicators o Price of oil o Unemployment rate o Sales tax receipts o Tourist growth o New business starts Expected state financing - Minimum Foundation Program Proposed/expected legislation affecting school systems unemployment compensation changes, worker compensation changes, etc. Projected enrollment Opening of new schools and classroom availability Student boundaries/changes Educational programs - additions/deletions/changes Maintenance requirements Other/new sources of revenue This process is accomplished with the needs of the public (especially those of the students served) in mind. The Budget Calendar depicts the Jefferson Parish Public School System annual budget/planning process. It is clearly evident that the main objective is to allow for the widest possible input so that the public served is afforded ample opportunities to voice their concerns as well as impact the formulation of the final document. This process provides the public (as well as school administrators, teachers and other employees) with sufficient financial information upon which they can make informed judgments leading to more community involvement and support. It should be noted here that the BPC is a year around working committee. The Superintendent calls the BPC into session whenever he needs system wide advice and/or review of new or continuing programs. The BPC treats the budget as one of the outgrowths of its analytical and oversight responsibilities for improving student outcomes. The members includes: Isaac G. Joseph, Superintendent Germaine Gilson, Chief of Staff Sarah B. Caruso, Chief Financial Officer Debra Cooper, Chief Academic Officer Carolyn VanNorman, Chief Achievement and Accountability Lale Geer, Chief Operating & Planning Officer Denise Carpenter, Chief Student Support Officer Donna Joseph, Chief Human Resources Officer Stephanie Butler, Executive Director of Budget and Accounting Angela Grabert, Principal Dawn Kalb, Principal Pat Helmsetter, Principal Semaj Allen, Principal Tamara Warner, Principal 4

9 The budget process is divided into four parts: BUDGET PREPARATION- The preparation includes the consideration of the following: a. The state and local educational mandated programs b. The Jefferson Parish School Board s goals, plans, and policies c. The Superintendent s goals and priorities d. Fixed costs such as collection fees, etc. e. Enrollment projections f. Revenue projections g. Teacher pupil staffing ratios h. Per-pupil expenditures for non-salary items i. Central and regional office staffing j. Capital expenditures priorities BUDGET PRESENTATION- A comprehensive budget presentation is given to the Jefferson Parish School Board, employees, and citizens of Jefferson Parish. The goal of the presentation is to foster credibility and trust and sets forth the educational programs and their associated costs and benefits. BUDGET ADOPTION- The budget adoption provides the financial wherewithal and legal basis upon which the administration carries out the educational plan and sets legal limits on expenditures. BUDGET EXECUTION- The execution of the budget provides for a system of managerial accounting provided through the establishment of financial records and accounts; provides real-time information upon which the Superintendent and Board base their decisions. BUDGET CALENDAR The following timetable is recommended for the Budget September Submit the Jefferson Parish School Board s adopted current year General Fund Budget to the Superintendent of Education at the State Department of Education prior to the 30 th of the month. On-going collection of financial data with which to measure program performance and to which the revision of the general fund will be based upon. July Submit the preliminary next year s General Fund Budget to the Board. The Board sets the formal public hearing dates and places notices in the official journal. Hold the official public hearings on the next year s General Fund Budget. Submit the Superintendent s recommended next year s General Fund Budget to the Board for consideration and approval. Upon Board approval, publish the official budget document. 5

10 BUDGET PHILOSPHY The Jefferson Parish School Board develops its budget based on broad objectives, i.e., pupil-teacher ratios. This method emphasizes impact on schools and central office activities by objects of expenditures and does not tie expenditures to specific programs. However, use of this approach does not ignore nor preclude the use of program budgeting, a method that places each cost with a specific program. The Jefferson Parish Public School System is moving toward a greater use of program budgeting to facilitate cost/benefit analysis. The Jefferson Parish Public School System emphasizes decentralized budgeting in order to enhance the ability of principals to serve as effective and efficient instructional leaders. The Jefferson Parish School Board, in fiscal year (FY) 1986/87, gave to principals, with input from subject coordinators, teachers, students and parents, the authority to direct the allotted financial resources to best meet the needs of their unique student groups. To accomplish this end, the Jefferson Parish School Board adopted a set of guidelines, consistent with applicable state law, which provides principals the wherewithal. This system allows for each school to determine its needs, establish budgets and spend their financial resources according to their own timetable. The vehicle for these actions is the student activity fund financial and accounting system. All monies due to a school are deposited directly into each school's activity account. The principal, using Jefferson Parish School Board adopted guidelines, operates his/her school according to his/her individually tailored educational plan. A major advantage of this system is that it gives principals direct control over resources vital to achieving educational success, and in doing so makes it easier to assess accountability for goal achievement. The Jefferson Parish School Board adopted a policy (June 9, 1993) that prohibits the utilization of any non-recurring revenue to fund expenditures that are known or expected to be recurring. This policy defines "fund balance" to be nonrecurring. In December 2013, the School Board adopted a revised ordinance in regards to the General Fund fund balance requirements. The revised ordinance states, In order to assure fiscal responsibility, the Jefferson Parish School Board shall maintain a committed fund balance of not less than $32,500,000 for catastrophic emergencies and an additional $10,550,000 as a committed fund balance for stabilization. The Board shall not utilize the committed General Fund balance for additional recurring or non-recurring emergencies. In the event of an emergency situation, the Board may, upon the request of the Superintendent, utilize the committed fund balance by approving such expenditures by a super majority vote. 6

11 BUDGET POLICY In accordance with provisions of Louisiana Revised Statutes 17:88 and Revised Statutes 39:1301 et seq., a comprehensive budget for the ensuing fiscal year for the general and each special fund must be prepared, adopted and implemented. Responsibilities of the Board shall include: Conducting at least one public hearing on the General Fund Budget proposed by the Superintendent. Adopting a balanced budget with approved expenditures not exceeding the total of estimated funds available. (balanced budget) Based on information provided by the Superintendent during the year, adopting an amended budget(s) reflecting significant changes in revenues and expenditures estimates. Adapting, as necessary, supplementary emergency budgets to cover unforeseen expenditures. Reviewing long/short-range plans and approving system-wide objectives. Ensuring that there is a system of procedures and internal controls to properly account for revenues and expenditures. Determining the amount of local funds to be raised in any school year. By state law, referring the issue of a tax levy or bond levy above the statutory limit directly to the people. Providing for the establishment of necessary procedures to assure proper accounting of receipts, disbursements, and balances. Providing for an annual audit of funds of the system as required by law, including those of student organizations, child nutrition, and other funds under the supervision of the Board. Seeking to promote, by state and federal legislation, adequate financial support of the public schools. Requiring and considering reports of business transactions of the system and of the financial condition of the system. Responsibilities of the Superintendent shall include: Preparation of a comprehensive budget for the general fund with expenditures not exceeding estimated revenues. Making available such budget(s) for public inspection prior to adoption by the Board. Informing the Board when any one of the following conditions occur: Projected revenues fail to meet the budgeted revenues by five percent or more. Projected expenditures are expected to exceed budgeted expenditures by five percent or more. 7

12 Beginning fund balance for any given fund fails to meet the estimated balance by five percent or more when the fund balance is being used to fund current operations. Making budget revisions, moving budgeted items within the general fund, but not increasing the total amount approved in the budget. Determination of personnel salaries and benefits. Providing all possible economies that do not endanger educational programs. Supervising the general business procedures of the system to secure the proper accounting of funds, supplies and equipment. Seeking to secure materials and supplies best suited to the educational needs of the system. Approving all contracts to be entered into by the system or any person on behalf of the system and acting as authorized agent of the system and the Board in contracts between other governmental agencies. Recommending an adequate program of insurance in all phases of system operation with regard to those prescribed by law. Making proper reports to the School Board, keeping the School Board fully advised as to the financial status of the system and all implications of the financial aspects of school administration. Formulating a student grade organization and housing plan. Formulating the student educational plan. BUDGETARY STRUCTURE The Annual Operating Budget for JPPSS includes various funds that are budgeted and accounted for separately. As per Board Policy, the Superintendent, as secretary-treasurer of the Jefferson Parish School Board, shall be authorized and in his/her sole discretion to make such changes with the various budget classifications as he/she may deem necessary provided that any reallocation of funds affecting in excess of five percent (5%) of the projected revenue collections must be approved in advance by action of the School Board at a meeting duly noticed and convened. If receipts from any unexpected or contingent sources are realized, the School Board shall, before any such funds are allocated, committed, expended, or disbursed, adopt an amended budget. Categorized into Governmental and Proprietary, the funds are as follows: Governmental Funds: The General Fund is the general operating fund of the School System. It accounts for all financial resources except those required to be accounted for in other funds. As required, the General Fund is presented as a major fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted or committed to expenditures for specified purposes other than debt service or 8

13 capital projects and exclusively of resources held in trusts for individuals, private organizations, or other governments. With this budget package, all Special Revenue Funds qualify as non-major funds. Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. Typically, all of the debt service funds qualify as non-major funds. Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. With this budget package, all Capital Project Funds qualify as non-major funds. Proprietary Funds are used to account for the School Board s business type activities. Enterprise Funds may be used to report any activity for which a fee is charged to external users for goods and services. Generally Accepted Accounting Principles require the use of an enterprise fund for any activity whose principal external revenue sources (1) are used for debt backed solely by fees and charges; or (2) are legally required to recover the cost of providing services of a particular activity (including capital costs such as depreciation or debt service); or (3) have been legally earmarked by policy decision to recover the cost of providing services of a particular activity (including capital costs such as depreciation or debt service). Financial Policies Auditing, Accounting and Financial Reporting The School System accounting and financial reporting systems will be maintained in conformity with Generally Accepted Accounting Principles and the standards of the Governmental Accounting Standards Board (GASB). A fixed asset system will be maintained to identify all School System assets, their location, historical cost, useful life, depreciation method, depreciation to date, and the department responsible for asset control. The School System will contract with an independent accounting firm which will issue an audit opinion on the official Comprehensive Annual Financial Report. The School Board will maintain a good credit rating in the financial community. Basis of Accounting All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Governmental funds are maintained on the modified accrual basis of accounting. Governmental fund revenues resulting from exchange transactions are recognized in the fiscal year in which the exchange takes place and meets the government s availability criteria (susceptible to 9

14 accrual). Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. Ad valorem taxes, sales and use taxes, Minimum Foundation Program (MFP) funding, and most governmental miscellaneous revenues, including investment earnings, are recorded as earned since they are measurable and available. The School System s definition of available means expected to be received within sixty days of the end of the fiscal year. Non-exchange transactions, in which the School System receives value without directly giving value in return, includes sales tax, property tax, grants, and donations. Property taxes are considered measurable in the calendar year of the tax levy if collected soon enough to meet the availability criteria. Sales taxes and gross receipts business taxes are considered measurable when the underlying transaction occurs and meets the availability criteria. Anticipated refunds of such taxes are recorded as fund liabilities and reductions of revenue when they are measurable and valid. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources can be used. Expenditures are recognized in the accounting period in which the related fund liability is incurred, if measurable, except for the following: (1) principal and interest on long-term debt are recorded when due, and (2) claims and judgments, group health claims, arbitrage payable, net pension obligation, and compensated absences are recorded as expenditures in the governmental fund type when paid with expendable available financial resources. Allocations of cost such as depreciation and amortization are not recognized in the governmental funds. In accordance with Statement No. 20 of the Governmental Accounting Standards Board (GASB), Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting it is the policy of the Parish s proprietary funds to apply only Financial Accounting Standard Board Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the Committee on Accounting Procedures issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. The proprietary fund is accounted for on a flow of economic resources measurement focus. Proprietary funds are maintained on the accrual basis of accounting wherein revenues are recognized in the accounting period in which they are earned and become measurable, and expenses are recognized in the period incurred, if measurable. Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. Budgetary Accounting Formal budgetary accounting is employed as a management control device during the year for the General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, and Proprietary Funds. 10

15 The level of budgetary control is at the fund/department level and expenditures may not exceed budgeted appropriations. Appropriations that are not expended or encumbered lapse at year-end. Budgets for the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Project Funds are adopted on a modified accrual basis of accounting. Proprietary funds are adopted on a basis consistent with Generally Accepted Accounting Principles (GAAP). The budgetary basis of accounting is the same as the financial reporting basis of accounting. Debt Issuance and Cash Management The School System will use interfund loans if cash is available rather than outside debt instruments to meet short term cash flow needs. A single consolidated bank account has been established at a local bank into which monies are deposited to and from which disbursements are made. Under state law, the Parish may deposit funds in demand deposits, interest bearing demand deposits, money market accounts, or time deposits with state banks organized under Louisiana law and national banks having principal offices in Louisiana. Under state law, these deposits must be secured by federal deposit insurance or the pledge of securities owned by the bank. The market value of the pledged securities plus the federal deposit insurance must at all times equal the amount on deposit with the bank. Certain pledged securities are held by the Parish s agent in the Parish s name. State laws permit the Parish to invest in United States bonds, treasury notes or certificates, or other obligations of the U. S. Government and agencies of the U. S. Government that are federally insured, and certificates of deposit of state banks and national banks having their principal office in the state of Louisiana, or in mutual or trust fund institutions which are registered and which have underlying investments limited to securities of the U. S. Government or its agencies. In addition, local governments in Louisiana are authorized to invest in the Louisiana Asset Management Pool (LAMP), a cooperative endeavor formed by an initiative of the State Treasurer and organized under the laws of the State of Louisiana, which operates as an investment pool. Cash and cash equivalents are stated at cost, which approximates market. The School System does not currently have any investments. The School System uses a pooled cash account to make disbursements for a majority of funds of the School System. Funds with a negative Claim on Cash report the advance as an interfund payable and the General fund, which has been determined to be the receivable fund by management, reports an off-setting interfund receivable. The School System will confine long term borrowing to capital improvements that cannot be funded from current revenues. Proceeds of long term debt will not be used from current ongoing operations. The term on the bonds shall not exceed the expected useful life of the project. The Parish will adhere to all legal and statutory limitations relative to debt issuance. The School System has the authority to incur debt and issue bonds in accordance with a number of provisions found in the Louisiana Constitution and Louisiana Revised Statutes. The School System will obtain approval from the State Bond Commission prior to the issuance of any type of long term debt, as 11

16 required by state law. The School System will issue general obligation bonds only when authorized by a majority of all qualified voters voting on a proposition to issue general obligation bonds. The issuance of additional sales tax revenue bonds supported by existing sales and use taxes does not require further voter approval. The School System s Finance Department with the assistance of outside bond counsel, will review outstanding debt periodically to determine feasibility of refunding all or a portion of particular issues. Debt Level and Capacity The School System will adhere to all legal or statutory limitations on debt level and capacity. Prior to the issuance of debt, an evaluation of debt capacity will be conducted based on current financial capacity, projected future capacity, statutory and constitutional limitations, and bond covenants. Majority of the debt issued by the School System is serviced through the collection of Ad Valorem Taxes and Sales and Use Taxes. As of June 30, 2016 and 2015, the School System has outstanding bonded debt of these bonds totaled $206,492,000 and $191,107,000, respectively. In accordance with Louisiana Revised Statute 39:562, the School System is legally restricted from incurring long-term bonded debt secured by ad valorem taxes in excess of ten percent of the assessed value for taxable property in the parish for any one purpose. The statutory debt limit for the Parish as reported at June 30, 2015 was $219,329,278. Investment Policy The assets of the Jefferson Parish School System shall be invested, as provided in La. Rev. Stat. Ann. 33:2955, as amended, including, but not limited to, the following: 1. Direct United States Treasury obligations, the principal and interest of which are fully guaranteed by the United States government. 2. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by federal agencies and provided such obligations are backed by the full faith and credit of the U.S., including U.S. Export Import Bank, Farmers Home Administration, Federal Financing Bank, Federal Housing Administration Debentures, General Services Administration, Government National Mortgage Association (guaranteed mortgage-backed bonds and guaranteed pass-through obligations), U.S. Maritime Administration (guaranteed Title XI financing), and U.S. Department of Housing and Urban Development. 3. Bonds, debentures, notes, or other evidence of indebtedness issued or guaranteed by U.S. government instrumentalities, which are federally sponsored, including Federal Home Loan Bank System, Federal Home Loan Mortgage Corporation, Federal National Mortgage Association, Student Loan Marketing Association, and Resolution Funding Corporation. 12

17 4. Time certificates of deposit of state banks organized under the laws of Louisiana, or national banks having their principal offices in the state of Louisiana, savings accounts or shares of savings and loan associations and savings banks, or share accounts and share certificate accounts of federally or state-chartered credit unions issuing time certificates of deposit not less than fifty basis points below the prevailing market interest rate on direct obligations of the United States Treasury with a similar length of maturity. Funds invested in accordance with this paragraph shall not exceed at any one time the amount insured by the Federal Deposit Insurance Corporation in any one bank, or in any one savings and loan association, or by the National Credit Union Administration in any one credit union, unless the uninsured portion is collateralized by the pledge of securities in the manner provided in La. Rev. Stat. Ann. 39: Mutual or trust fund institutions which are registered with the Securities and Exchange Commission under the Securities Act of 1933 and the Investment Act of 1940, and which have underlying investments consisting solely of and limited to securities of the U.S. government or its agencies. Investment of funds in mutual or trust fund institutions shall be limited to 25% of the monies considered available for investment as provided by R.S. 33:2955(A) (2). The Attorney General has determined that only mutual funds created as a Massachusetts business trust are acceptable investments (Op. Atty. Gen (A). 6. Bonds, debentures, notes or other evidence of indebtedness issued by the state of Louisiana or any other state of the United States, or any of the political subdivisions of any state, with limited exceptions noted in La. Rev. Stat. Ann. 33: Bonds, debentures, notes or other evidences of indebtedness issued by domestic United States corporations provided that: (i) The indebtedness shall have a long-term rating of Aa3 or higher by Moody s Investors Service, a long-term rating of AA- or higher by Standard & Poor s, or a long-term rating of AA- or higher by Fitch Ratings, Inc. (ii) The indebtedness shall have a final maturity, mandatory tender, or a continuing optional tender of no more than five years. (iii) Prior to purchases of any such indebtedness and at all times during which such indebtedness is owned, the purchasing Louisiana political subdivision retains the services of an investment advisor registered with the United States Securities and Exchange Commission. The School System has no investment policy that would further limit its investment choices beyond the restrictions imposed by the State. The School System recognizes all purchases of investments with an original maturity of three months or less as cash equivalents. The School System does not have any resources subject to credit risk disclosure in accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures, since all deposits are at financial institutions. Revenues The School System reviews each revenue stream annually in regards to factors relevant to past, present, and projected future collections. The School Board s primary sources of revenue are the Sales and Ad Valorem taxes collected each year, Minimum Foundation Program (MFP), as well as, federal sources. The School System will on occasion receive one time revenues for which the School System will limit the use of these one-time revenues, as they cannot be relied on in future budget periods, to non-recurring expenditures in order to minimize disruptive effects on service due to 13

18 non-recurrence of these sources. One time revenues may include, but are not limited to, legal settlements, bond refunding savings, the sale of government buildings, non-recurring grants, etc. Acceptable uses of non-recurring funds include infrastructure improvements, capital acquisitions, startup costs, early debt retirement, and other expenditures of a non-recurring nature. User fees and charges The School System mainly collects user charges in the School Lunch Fund, which is a Business Type fund. These charges are mainly related to those students who pay full price or a reduced price for breakfast, lunch or snack. Expenditure Policies The Parish will maintain a level of expenditures that will provide for the well-being and safety of the students and employees of the School System. All expenditures made shall be for a public purpose, and no expenditures will be made which are prohibited by administrative directives, local ordinances, or federal and state statutes. The School System will comply with the procedures included in the Purchasing Policies. Fund Balance In December 2013, the School Board adopted a revised ordinance in regards to the General Fund fund balance requirements. The revised ordinance states, In order to assure fiscal responsibility, the Jefferson Parish School Board shall maintain a committed fund balance of not less than $32,500,000 for catastrophic emergencies and an additional $10,550,000 as a committed fund balance for stabilization. The Board shall not utilize the committed General Fund balance for additional recurring or non-recurring emergencies. In the event of an emergency situation, the Board may, upon the request of the Superintendent, utilize the committed fund balance by approving such expenditures by a super majority vote. Reporting Entity The Jefferson Parish Public School System (the School System ) is an independent special district created for the purpose of providing elementary and secondary education to the citizens of Jefferson Parish, Louisiana. The School System is governed by an elected board comprised of nine members. The basic criterion for determining whether a governmental department, agency, institution, commission, public authority, or other governmental organization should be included in a primary governmental unit s reporting entity for basic financial statements is financial accountability. Financial accountability includes appointment of a voting majority of the organization s governing body and the ability of the primary government to impose its will on the organization or if there is a financial benefit/burden relationship between the primary government and the other organization. In addition, an organization that is fiscally dependent on the primary government or has a potential to provide specific financial benefits to the primary government should be included in the reporting entity. 14

19 As required by Generally Accepted Accounting Principles, the financial statements of the reporting entity present the primary government (the School System) and its component units. The component units discussed below are included in the School System s reporting entity because of the significance of their operational or financial relationships with the School System. Based on the previous criteria, the School System has determined that the following component units should be included in the reporting entity of the School System as discretely presented component units. 1. Discovery Health Sciences Foundation was created to provide a learning environment where students achieve academically, develop intellectual curiosity, and practice environmental responsibility while exploring health and science topics and careers. The fiscal year end is June 30 th. 2. Young Audiences Charter School was created to provide a rigorous learning environment where students achieve academically, develop intellectual curiosity, and practice environmental responsibility while integrating arts education and quality after-school programs. The fiscal year end is June 30 th. 3. Jefferson Chamber Foundation Academy serves Jefferson Parish residents, ages 15-20, who were formerly unsuccessful in making adequate progress towards a high school diploma in a traditional classroom. This Charter School serves students in ninth through twelfth grade. The fiscal year end is June 30 th. 4. Jefferson Parish Campus of the International School of Louisiana is a Type I Charter School whose identity is a multi-language immersion school. The fiscal year end is June 30 th. 5. Jefferson Education Foundation is a foundation established strictly for the benefit of the School System. The most recent campaign was for the assistance of the construction of the Patrick Taylor facilities. The fiscal year end is June 30 th. 6. Celerity Woodmere Charter School creates and operates high quality schools that serve underserved communities. Celerity will develop and implement programs for at-risk children and their families, including after-school, evening, and summer programs. Celerity is currently serving PreK- Fifth grade.. The fiscal year end is June 30 th. 7. Jefferson RISE was approved as a Sixth to Twelfth Grade school which opened in fiscal year 2016 with 120 students in Sixth grade and will expand a grade in each of the subsequent six years. It is authorized to have a total of 730 students by its seventh year of operations. The fiscal year end is June 30 th. 8. Laureate Academy was Board approved as a Kindergarten to Eighth grade school, which opened at the beginning of the fiscal 2016 school year serving 120 students in Kindergarten and First Grade. It will expand over the seven subsequent years at a grade per year. It is authorized to have a total of 540 students by its eighth year of operations. The fiscal year end is June 30 th. Component units are defined as legally separate organizations for which the elected officials of the primary government are financially accountable. The criteria used in determining whether financial accountability exists include the appointment of a voting majority of an organization s governing board, the ability of the primary government to impose its will on that organization or whether there is a potential for the organization to provide specific financial benefits or burdens to the 15

20 primary government. Fiscal dependency may also play a part in determining financial accountability. In addition, a component unit can be another organization for which the nature and significance of its relationship with a primary government is such that exclusion would cause the reporting entity s financial statements to be misleading or incomplete. The School System is required to prepare financial statements that consider all units within the reporting entity. The School System budget establishes appropriations for operations of the primary government, which in some cases include interaction with the component units; however the School System does not exercise budgetary control over the component units except on funds appropriated by the School Board. Legal Requirements Legal requirements applicable to budget amendments are set forth with the Louisiana Local Government Budget Act (Louisiana Revised Statutes 17:02, 17:82, 17:88(A) and. 39:1301 et. seq.). Revenue Assumptions The School Board s primary sources of revenue are the Sales and Ad Valorem taxes collected each year, Minimum Foundation Program (MFP), as well as, federal sources. The School System employs historical trends to forecast Ad Valorem tax revenue and utilizes outside estimates provided by the Sales Tax collection office to budget revenues for sales taxes. For the MFP funding, the School System utilizes projected per pupil amounts released by the Louisiana Department of Education. Federal sources are most commonly grants. This type of revenue is simply determined by the type of grant award to be received. Total sources of governmental fund revenue, excluding transfers and internal charges, reflect an overall decrease for 2017 of 6% as compared to the 2016 projected amounts. The decrease is due to the one time Oil Rig Deepwater Horizon Settlement (BP oil spill settlement) amount of $32,717,883 and a one time MFP stipend of $1,971,259. The following is a general overview of revenues, along with detailed discussions for the more significant items. The School System anticipates Ad Valorem revenue to be slightly higher between 2016 and 2017 due to a rollforward of ad valorem tax millages. The School System, to be conservative, has used the sales and use tax amounts more reflective of FY 2015 less $1.2 million to account for a settlement that was paid out in FY Taxes The taxes revenue category includes ad valorem and sales and use tax. With internal charges between funds excluded, taxes account for approximately 47% of total sources in the fiscal year 2017 budget, including the Lunch Fund. Taxes, along with their associated interest and penalties, are projected to generate $269.7 million of the total $568.6 million generated externally in the fiscal year 2017 budget. 16

21 Ad Valorem Tax Property tax is due and becomes an enforceable lien on property on the first day of the month following the filing of the tax rolls by the assessor with the Louisiana Tax Commission (usually December 1). The tax is delinquent thirty days after the due date. The property tax assessment for fiscal 2017 will be formally levied in November 2016 based on property values determined by the Jefferson Parish Assessor s Office. All land and residential improvements are assessed at 10% of its fair market value and other property at 15% of its market value. The tax is billed and collected by the Jefferson Parish Sheriff s Office which receives a certain millage for its services. Most of the property taxes are received by the School System in the months of January and February of each year; however, delinquent property taxes are received throughout the year and are recognized as revenue primarily when they are received, except at year-end when they are accrued for a period not exceeding 60 days. All property tax assessments with the exception of the constitutionally authorized assessment are authorized by the voters of Jefferson Parish for ten (10) year time periods. Listed below are the current and proposed millages maintained by the School System for the 2014 and 2015 calendar years. No. of Mills Constitutionally authorized 2.91 Teachers salaries and benefits increases (renewed in April 2012) 9.00 Maintain school buildings (renewed October 2013) 7.00 Support technology expansion (authorized May 2007) 1.00 Support capital projects (authorized May 2007) 2.00 Repair and maintain buildings (authorized May 2007) 1.00 The following chart shows the ten-year trend of Ad Valorem Tax Collections: $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- 17

22 Sales Tax A 4.75% local sales and use tax was levied and collected within Jefferson Parish by the Jefferson Parish Sheriff s Office of which 2% was received by the School System and dedicated for the following purposes: 1/2% (approved May 3, 1966) for teachers salaries and operating expenses 1/2% (approved October 5, 1954 and January 12, 1971) for debt service purposes, for making capital improvements and/or for operating expenses (This represents 50% of a 1% tax levied by the Parish and dedicated to the School System.) 1/4% (approved June 28, 1980) for making capital improvements, with authority to issue additional bonds for such purpose, and paying the related maintenance and operating expenses 1/4% (approved June 28, 1980) for increasing salaries and fringe benefits of school teachers and other employees 1/2% for increasing salaries and benefits of school teachers and other employees, establishing guidance programs, payment of debt service, and instruction and maintenance expense. This tax expires on December 31, Sales and Use tax is budgeted based on normal collection rates, not on extraordinary scenarios such as Hurricane Katrina. The following chart shows the ten-year trend of Sales and Use Tax Collections: $190,000,000 $185,000,000 $180,000,000 $175,000,000 $170,000,000 $165,000,000 $160,000,000 $155,000,000 $150,000,000 $145,000,000 Minimum Foundation Program (MFP) MFP is a formula that determines the cost to educate students at public schools and is supported with both state and local portions. The Louisiana Board of Elementary and Secondary Education (BESE) is required by the Louisiana Constitution to adopt a formula to determine the total cost of a minimum foundation program of education in public schools and to equitably allocate funding to school systems. This formula is approved annually by the Louisiana legislature. These payments are based on student enrollment counts on October 1 and February 1. 18

23 Intergovernmental Intergovernmental revenues include monies received from other governmental agencies such as federal and state offices. In some cases these funds are dedicated to provide for the operation of a specific program such as special education, career and technical programs, low income, etc. For fiscal year 2017, these funds represent approximately 9% of the School System Governmental Funds total revenue. As these funds are determined by outside sources, i.e. the particulars of which are found in the grant documents/agreements, intergovernmental revenues can fluctuate from year to year depending on Grant awards. Operating Revenue- School Lunch Fund The School Lunch Fund obtains operating revenue through the following avenues: food sales, donated commodities, Federal School Lunch Program and State MFP monies. The School Systems Free and Reduced Rate is traditionally between 70% and 80% which signifies that approximately 70-80% of the students within our district qualify for free or reduced meals. While the other 20-30% pay full price for the meals provided at the Schools. In addition, the USDA donates commodities to the School System. These commodities are either readymade or are diverted to a food processor before being delivered to the School System. The School System recognizes the donation of these commodities (at fair market value) as operating revenue. Lastly, per Louisiana RS 17D:192, the School Lunch Fund shall receive 12 ½% of the MFP formula. Fund Balance Fund balance is defined as total assets and deferred outflows less liabilities and deferred inflows of a governmental fund. The 2017 General Fund includes a fund balance of $151.7 million. As previously mentioned, the School Board adopted a revised ordinance in regards to the General Fund fund balance requirements. The revised ordinance states, In order to assure fiscal responsibility, the Jefferson Parish School Board shall maintain a committed fund balance of not less than $32,500,000 for catastrophic emergencies and an additional $10,550,000 as a committed fund balance for stabilization. The Board shall not utilize the committed General Fund balance for additional recurring or non-recurring emergencies. In the event of an emergency situation, the Board may, upon the request of the Superintendent, utilize the committed fund balance by approving such expenditures by a super majority vote. On July 9, 2015, the School Board unanimously approved the acceptance of the Oil Rig Deepwater Horizon Settlement (United Stated District Court. Eastern District of Louisiana, Section J, MDL no. 2179, applies to ) in the amount of approximately $32,717,883. On July 15, 2015, the School Board unanimously approved for the District to set aside approximately $4,500,000 of the settlement monies to create a fiduciary trust fund for Other Post-Employment Benefits. In November 2015, the Board voted to keep the remaining unpsent amount of approximately $15 million intact and invest the proceeds. The investment income would be used to offset the cost of 19