Senate Bill 175 Denise Ulberg, Executive Director MASBO 2013 MCEL Conference Billings Hotel October 17, 2013
AGENDA General Fund Budget Limits Funding Sources Distribution of Oil and Natural Gas Production Taxes Excess Interest and Income from State Lands Ending Fund Balance Limitations Oil and Gas Revenue Bonds
General Fund - ANB AVERAGE NUMBER BELONGING (ANB) FALL ENROLLMENT (1 ST Monday in October) Part-time Students = ¼, ½, or ¾ WINTER ENROLLMENT (1 ST Monday in December) Part-time Students = ¼, ½, or ¾ SPRING ENROLLMENT (1 st Monday in February) Part-time Students = ¼, ½, or ¾ X Total of 3 counts divided by 3 180 + PIR Days* 180 = ANB *PIR Days are pupil instruction related days for teacher inservice training and recordkeeping
General Fund - ANB SB175 other provisions affecting ANB Pupil enrolled in a program providing fewer than the required aggregate hours of instruction Pupil must demonstrate proficiency in the course ANB will be converted to an hourly equivalent to the hours the course would be ordinarily be provided School designated as nonaccredited by BPE Failure to meet BPE s assurance and performance standards Regularly enrolled, full-time pupils not eligible for ANB calculations
General Fund - ANB SB175 other provisions affecting ANB (continued) Unusual enrollment increase threshold Lesser of 4% of the original ANB or 40 students Direct State Aid is available for the # of students in excess of the new threshold
General Fund - ANB Use the ANB that generates the greatest maximum general fund budget: Current Year ANB (CY ANB) ANB for the budget unit for the ensuing school year (FY2014 ANB is based on FY2013 enrollment counts) 3-Year Average ANB Add current year ANB to the current ANB for the previous two school fiscal years and divide by 3 (FY2014 ANB is the average of FY2013, FY2012 and FY2011)
General Fund - Budget Elements Basic Entitlement Per-ANB Entitlement* Special Education Allowable Cost Payment* Quality Educator Payment At-Risk Student Payment Indian Education for All Payment* American Indian Achievement Gap Payment Data for Achievement Payment* *ANB used to calculate these payments
Basic & per-anb Entitlement Rates Entitlements FY2013 FY2014 FY2015 FY2016 Elementary Basic Middle School Basic High School Basic *Elementary per-anb *High School per-anb $ 23,593 $ 40,000 $ 40,000 $ 50,000 $ 66,816 $ 80,000 $ 80,000 $100,000 $262,224 $290,000 $290,000 $300,000 $ 5,075 *$ 5,120 *$ 5,226 $5,226 $ 6,497 *$ 6,555 *$ 6,691 $ 6,691 *per-anb entitlements were increased by.89% in FY2014 and 2.08% in FY2015
Basic & per-anb Entitlement Rates SB175 Additional Basic Entitlement Increases the basic entitlement Provides an increment for additional ANB Budget Unit FY2014 FY2015 FY2016 Elementary > 250 ANB Middle School > 450 ANB High School > 800 ANB For every 25 ANB over 250 For every 45 ANB over 450 For every 80 ANB over 800 $ 2,000 $ 2,000 $ 2,500 $ 4,000 $ 4,000 $ 5,000 $ 12,000 $ 12,000 $ 15,000
Basic & per-anb Entitlement Rates Example: Elementary Budget Unit 1 (E1) 366 ANB Basic Entitlement 250 ANB $ 40,000 Additional entitlement 366 250 = 116 116/25 = 4.64 ~ 4.0 4.0 X $2,000 $ 8,000 Total Basic Entitlement $ 48,000
Basic & per-anb Entitlement Rates Per the OPI K-12 Legislative Summary, the following received one or more Basic Entitlement increments in FY2014: 59 Elementary Budget Units 7 Middle School Budget Units 7 High School Budget Units
Special Education Allowable Costs HB 2 Appropriation $ 41.6 million FY2013 FY2014 FY2015 $ 42.018 million $ 42.892 million % increase 1% 2% Special Education Allocation 20-9-321(4)(a), MCA: 52.5% through instructional block grants (ISB) 17.5% through related services block grants (RSBG) 25% to reimbursement of local districts (disproportionate costs) 5% to special education cooperatives and joint boards for admin and travel
Funding Components Quality Educator (QEC) OPI pays to school districts and special education cooperatives Paid for each full-time equivalent (FTE) licensed educator and for other licensed professionals employed by the district or cooperative At-Risk Student (ARC) Annual appropriation is distributed school districts based on Title I allocations HB2 increased appropriations by.89% in FY2014 and 2.08% in FY2015
Funding Components (continued) Indian Education for All (IEA) Paid per ANB ($100 minimum) For providing curriculum for the recognition of American Indian cultural heritage American Indian Student Achievement Gap (SAG) Paid per each American Indian student enrolled as reported on the October enrollment count For closing the educational achievement gap that exists between American Indian students and non-indian students Data for Achievement (D4A) Paid per ANB For access fees or other costs for statewide data system, including data entry and staff training
Funding Components FY2013 FY2014 FY2015 FY2016 Quality Educator $3,042 $3,042 $3,042 * At-Risk Student $5,000,000 $5,044,500 $5,149,426 * Indian Education for All Am Indian Student Achievement Gap Data for Achievement $20.40 ($100 min.) $20.40 ($100 min.) $20.40 ($100 min.) $200 $200 $200 * N/A $10 $15 *$20 *In the 2017 biennium budgeting process, these components will be increased by the annual inflationary adjustment as provided in 20-9-326, MCA *
General Fund Budget Limits Basic Entitlement + Per-ANB Entitlement + 200% Special Education Allowable Cost Payment + Quality Educator Payment + At-Risk Student Payment + Indian Education for All Payment + American Indian Achievement Gap Payment + Data for Achievement Payment MAXIMUM BUDGET (100%)
General Fund Budget Limits 80% Basic Entitlement + 80% Per-ANB Entitlement + 140% Special Education Allowable Cost Pmts + 100% Quality Educator Payment + 100% At-Risk Student Payment + 100% Indian Education for All Payment + 100% American Indian Achievement Gap Pmt + 100% Data for Achievement Payment BASE BUDGET (~80%)
General Fund Budget Limits 100% ~80% over-base MAXIMUM BUDGET BASE BUDGET Trustees must adopt a budget that is at least equal to the BASE Budget.
General Fund Budget Limits 100% ~80% over-base MAXIMUM BUDGET BASE BUDGET Highest Budget Allowed Districts may adopt a budget that is the higher of: Current Year Maximum, -OR- Prior Year adopted budget plus any increases DSA (Basic and per-anb entitlements) and any increases in the Quality Educator, At-Risk, Indian Education for All, Student Achievement Gap and Data for Achievement payments
General Fund Budget Limits EXAMPLE FY2013 FY2014 Adj. Highest Current Yr Maximum 9,553,176 9,553,176 Prior Yr Adopted 9,712,682 9,712,682 Basic Ent. (44.7%) 40,412 84,036 + 43,624 Per-ANB Ent. (44.7%) 3,620,164 3,556,589 - Quality Educator 346,904 339,478 - At-Risk Student 61,751 60,790 - Indian Ed for All 31,049 30,233 - Student Achvmt Gap 11,400 15,600 + 4,200 Data for Achvmt N/A 14,820 + 14,820 Prior Yr Adopted + Adj. 9,775,326 9,775,326
General Fund Budget Limits Districts may permissively adopt an over- BASE levy that is equal to the higher of: the highest over-base amount imposed (actually levied) in any of the previous 5 years, OR The highest over-base amount authorized by voters, up to the highest budget allowed, in any of the previous 5 years
General Fund Budget Limits 100% ~80% over-base MAXIMUM BUDGET BASE BUDGET
Over-BASE portion General Fund Budget Limits Highest Budget Without a Vote BASE Without a vote: Prior Yr Over-BASE Tax Levy Amt + Prior Yr Excess Reserves Used to Fund Over-BASE + Estimated Tuition Revenue + Oil & Gas Revenue Highest amount imposed or authorized in any of the previous 5 years (Example: For FY2014, use FY2009 - FY2013)
Over-BASE portion Highest Budget With a Vote* Vote Required for Increase in Over-BASE Tax Levy BASE Without a vote: Prior Yr Over-BASE Tax Levy Amt + Prior Yr Excess Reserves Used to Fund Over-BASE + Estimated Tuition Revenue + Oil & Gas Revenue * Cannot exceed the Highest Budget Allowed (Current Year Maximum vs. Prior Yr + Adjustments)
QUESTIONS?
Funding the BASE Budget Adopted Budget Over-BASE Levy BASE Budget BASE Levy Guaranteed Tax Base Aid (GTB) GTB Budget Area DSA/SPED/ 5 Funding Components Local Revenues Revenues from State
Funding the BASE Budget Adopted Budget Over-BASE Levy BASE Budget BASE Levy Guaranteed Tax Base Aid (GTB) DSA/SPED/ 5 Funding Components Direct State Aid (DSA) (44.7% Basic & per-anb) 100% QEC 100% ARC 100% IEA 100% SAG 100% D4A 140% SPED
Funding the BASE Budget State funding for: Direct State Aid 44.7% of the Basic Entitlement 44.7% of the per-anb Entitlement Special Education Allowable Costs (up to 140%) Funding Components (100%) Quality Educator At-Risk Student Indian Education for All American Indian Achievement Gap Data for Achievement Payment schedule: 10% in Aug Oct and Dec Apr; 20% in June
Funding the BASE Budget Adopted Budget BASE Budget Over-BASE Levy BASE Levy Guaranteed Tax Base Aid (GTB) DSA/SPED/ 5 Funding Components GTB Budget Area: 35.3% Basic Entitlement + 35.3% Per-ANB Entitlement + 40% SPED Payment Funded with local permissive (non-voted) levy, other nonlevy revenue and state GTB aid, if a district is eligible
Funding the BASE Budget GTB Budget Area 35.3% Basic Entitlement 35.3% per-anb Entitlement 40% Special Education Allowable Cost Payment Funded with BASE Budget Levy, less: Fund Balance Reappropriated Oil and Natural Gas Production Taxes State School Block Grant Local revenue required to be anticipated K-12 Funding Payment
Funding the BASE Budget Oil and Natural Gas Production Taxes Must anticipate as revenue the lesser of: at least 25% of oil and gas revenue received in the prior year, OR the net levy requirement One-half must be used to reduce the BASE levy Remaining may be used to fund the over- BASE levy
Funding the BASE Budget Oil and Natural Gas Production Taxes (continued) Exceptions: Maximum GF Budget < $1 million Adopted GF budget + oil and gas revenue = 105% or less of the Maximum GF budget Maximum GF Budget > $1 million AND have an approved anticipated unusual enrollment increase Outstanding oil and gas revenue bonds
Funding the BASE Budget Natural Resource Development K-12 Funding Payment A variable % of the Basic and per-anb entitlements above the Direct State Aid (DSA) Distributed to each school district based on the ratio of that district s DSA to statewide DSA Considered non-levy revenue that is used to reduce the BASE levy If a district is eligible for GTB, offsets a portion of the amount of GTB received
Funding the BASE Budget Natural Resource Development K-12 Funding Payment (continued) $3 million appropriated for FY2015 budgets In subsequent years, minimum payment is the amount needed to prevent a statewide increase in BASE budget levies associated with inflationary increases in the Basic and per-anb entitlements, plus any excess interest and income revenue appropriated by the legislature pursuant to 20-9-622(3)(a), MCA
Funding the BASE Budget Natural Resource Development K-12 Funding Payment (continued) Total payment to schools may not exceed the greater of 50% of FY2012 oil and gas revenue deposited to the state general fund, or 50% of oil and gas revenue deposited to the state general fund in the fiscal year that is 2 years prior to the fiscal year in which the payment is made, plus any excess interest and income revenue appropriated by the legislature in 20-9-622(3)(a)
Adopted Budget Funding the BASE Budget FY2015 Over-BASE Levy BASE Budget BASE Levy GTB Revenue that reduces BASE levy requirement DSA/SPED/ 5 Funding Components FB Reappropriated Oil and gas revenue School Block Grant Local revenue required to be anticipated Other non-levy revenue K-12 Funding Payment
FY2016 FY2015 Over-BASE Levy BASE Levy GTB Revenue that reduces BASE levy requirement DSA/SPED/ 5 Funding Components Adopted Budget BASE Budget At minimum, prevents an increase in the BASE levy from year to year Over-BASE Levy BASE Levy GTB K-12 Funding Payment Revenue that reduces BASE levy requirement Increased DSA, etc. DSA/SPED/ 5 Funding Components
Funding the BASE Budget Adopted Budget BASE Budget Over-BASE Levy BASE Levy GTB Revenue that reduces BASE levy requirement DSA/SPED/ 5 Funding Components Guaranteed Tax Base Aid (GTB) Subsidizes the BASE Levy Requirement
State Guaranteed Tax Base Aid (GTB) State subsidy for BASE mills Eligibility is based on the ratio between the district s taxable value and the district s GTB Budget Area as compared to the statewide ratio of the same calculation Districts with a ratio lower than the statewide ratio qualify for GTB aid Statewide Taxable Valuation X 193% Total of all District GTB Budget Area = State GTB Ratio District Taxable Valuation District GTB Budget Area = District GTB Subsidy per Mill OPI pays General Fund GTB to districts in November and May
Brain Break!
Funding the over-base Budget Adopted Budget BASE Budget Over-BASE Levy BASE Levy Guaranteed Tax Base Aid (GTB) Funded with voter approved levies and non-levy revenue DSA/SPED/ 5 Funding Components Local Revenues Revenues from State
Funding the over-base Budget Generally, non-levy revenue must be used first to reduce the BASE Budget Levy Exceptions: Estimated Tuition revenue Excess Reserves held for more than one year Oil and natural gas production tax revenue after the amount required to fund the BASE Budget Levy is met When BASE Budget Levy = zero, available non-levy revenue may be used to fund the over-base Budget
Funding the over-base Budget Over-BASE Levy Voter approved initially; permissive in subsequent years Flexible Non-Voted Levy Authority 20-9-308 (2)(b), MCA May swap out permissive levy authority from other budgeted funds and apply to GF over-base levy authority Must return permissive levy authority from GF if an increase in property taxes is needed in the other budgeted funds in future years
Funding the over-base Budget Which budgeted funds are we talking about? Transportation (10) Bus Depreciation (11) Tuition (13) Adult Education (17)
Questions?
Distribution of Oil and Natural Gas Production Taxes 20-9-310, MCA (1) and (8) Maximum amount that may be retained 130% of the Maximum General Fund budget Exceptions: If Maximum GF Budget < $1.5 million, 150% may be retained (applies to FY2014 FY2016) Unusual enrollment increase approved by OPI Add $45,000 X each additional ANB DOR distributes quarterly until the amount for each district reaches its limitation
Distribution of Oil and Natural Gas Production Taxes DOR deposits excess oil and gas revenue to the State School Oil and Natural Gas Distribution account OPI distributes excess by the end of the month following the quarterly distribution in this order: 1. To another school district within the unified school system or to any district having a joint board with the originating district, up to the maximum allowed.
Distribution of Oil and Natural Gas Production Taxes 2. Proportionately to all districts immediately contiguous to the originating district, up to the maximum allowed. 3. Proportionately to all schools located in whole or in part in the same county as the originating district, up to the maximum allowed. 4. Proportionately to all schools located in whole or in part in the same county contiguous to a county where a horizontally completed well has been drilled with the last 3 years, up to the maximum allowed. SUNSETS JUNE 30, 2016
Distribution of Oil and Natural Gas Production Taxes Any remaining revenue after the distribution in #1 #4 is distributed to: 70% to the state guarantee account 5% to state school oil and natural gas impact account 25% to county school oil and natural gas impact account
Excess Interest and Income 20-9-342, MCA Interest and income from state trust lands must be deposited in state guarantee account Used for state equalization aid, and Annual amount in excess of $56 million is distributed for Natural Resource Development K-12 Funding Payment (50%) Building safety (50%)
Excess Interest and Income - continued 20-9-342(3), MCA Excess interest and income must equal at least $1 million to be distributed from guarantee account If less than $1 million, the amount is carried forward to next year
Excess Interest and Income - continued 20-9-622(3), MCA Allocation of excess interest and income 50% reserved for the K-12 Funding Payment in the next biennium 50% to schools on a per-quality-educator basis to be deposited in the Misc. Programs Fund (15) Address repairs referenced in the facility assessment report (facility condition inventory) If repairs are completed, any other purpose authorized by 20-9-543, MCA Flexibility Fund
Ending Fund Balance Limitations 20-9-323, MCA Ending fund balance limits Beginning July 1, 2020 Fund balances as of June 30, 2020 (FY2020) Combined balance for all budgeted funds may not exceed 300% of Max GF Budget Exceptions: Building Reserve, Debt Service and Bus Depreciation Reserve Flexibility Fund balance may not exceed 150% of Max GF Budget
Oil and Gas Revenue Bonds Maximum amount of bonds cannot exceed 3 times the average of the annual oil and gas revenue received in the prior 2 fiscal years Average annual payment may not exceed 35% of total oil and gas revenue received in the prior year Bonds secured by a deficiency tax levy are counted toward debt capacity limitations Not eligible for debt service GTB
Questions?
Sources Montana Code Annotated, 2013 http://leg.mt.gov/bills/mca_toc/index.htm Administrative Rules of Montana, Title 10 Education http://www.mtrules.org/gateway/departm ent.asp?deptno=10 SB175 http://leg.mt.gov/bills/2013/sesslaws/ch04 00.pdf
Sources - continued K-12 Education, 2013 Legislative Session, Summary of Legislation Related to K-12 Education (Office of Public Instruction) http://opi.mt.gov/pdf/superintendent/2013l egsummary.pdf Understanding Montana School Finance and School District Budgets (Office of Public Instruction, January 2013) http://opi.mt.gov/pdf/schoolfinance/budget/ UnderstSchlFin.pdf
Denise Ulberg MASBO dulberg@masbo.com (406) 442-5599