Ohio School Funding Overview for Fiscal Years 2016 and 2017 PFR Webinar Mike Sobul and Ernie Strawser August 4, 2015 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 1
Please note: This webinar will be recorded for future client use. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 2
PFR Forecasting Software New This Year State Funding Projections with Tangible Personal Reimbursement Calculations. Trend Tracker and Report Writer Real Estate Reconciliation Tool Updated State Funding Wealth and Capacity Report Year-long Webinar Series Training Tutorials For Information: www.pfrcfo.com PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 3
State Funding Changes 2016 & 2017 The Big 10 1. Per Pupil Dollar Amounts 2. Prior Year Enrollment 3. Income Index 4. Agricultural Supplement 5. Capacity Aid is Added 6. Transportation Supplement 7. Graduation and 3 rd Grade Achievement Bonus 8. Guarantee calculation 9. Cap calculation 10. TPP Phase Out PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 4
Per Pupil Dollar Amounts Starting in 2016 the per pupil funding amounts change for Core Aid, Special Education, and K-3 Literacy. The district s state share percentage is applied to the full per pupil amounts to determine district funding. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 5
Prior Year Enrollment for Wealth and Capacity Calculations The calculation of your district s current wealth indicators is now based upon the prior year final enrollment. The change stabilizes your district s current year state share percentage calculations without ongoing changes due to current enrollment fluctuation. However, the number of students funded will be based upon the current year s student count. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 6
District Taxpayer Income (Index) In the example above you can see the rather dramatic impact in state share calculation for District-1 (a district with taxpayer income above 1.5). The state s funding formula contains a component that reduces the district s per pupil valuation index if the district s taxpayer income index is lower. If this is the case, then the district s wealth index will be lowered from the valuation index and state share could increase. In 2016, the state has limited this benefit to district s that have an income index less than 1.5 (income is less than 150% of the statewide calculation). The 2016 income factor also includes a change that uses not only the median income index as it had in 2015 but also income per pupil in each district relative to a statewide average. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 7
Agricultural Assistance Funding The example above compares a district s 2015 level of funding versus 2016 shows a dramatic increase in revenue. The increase in 2016 is because Ag Assistance percentage factor is being applied to the district s total Core Aid to generate $614,633 (see below). This funding was changed to place added emphasis on districts with agricultural real estate values at 10% or more of their total real property valuation. This was accomplished in 2016 by eliminating funding to districts with less than 10% agricultural value and applying the new agricultural percentage to the core aid per pupil funding amount of $5,900 per pupil instead of the much lower wealth based assistance amount. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 8
Capacity Aid In the example above, on line 4.1, the district yields $110,800 per mill, only about 50% of the state-wide median yield per mill of $221,595. At a yield of one-half the district generates a Capacity Ratio of 1.00 (line 4.3) The capacity aid per pupil is set at $211.65 in 2016 and in this case the district will receive 100% of this amount per pupil. There is an additional factor for all districts qualifying for this funding, the result of the formula will be multiplied by 2.75. For the district above the formula yields $598,293. For the district below the yield per mill is about 30% of the statewide yield. This causes a much higher capacity ratio of 2.46. The district will receive 2.46 x the $211.65 per pupil. The maximum capacity ratio is 2.5 x the Capacity Aid Per Pupil. Capacity aid was added to help smaller school districts where their valuation yields lower amounts of revenue per mill of taxation. If one mill of tax yields less than $221,595 in total for 2016 then the district will qualify for capacity aid. Any capacity aid that a district receives is excluded from the calculation of the funding cap, allowing districts to receive total funding that grows in excess of the 7.5 percent growth cap. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 9
Transportation Supplement In the example above the district qualifies for funding in 2016 because their number of riders per square mile is only 25 (line 4.2). The district has 10 fewer riders per square mile than the 35 rider threshold (35-25=10). This factor of 10 is divided by 100 thus generating 10%. The district then receives 10% of its regular transportation amount ($799,645) for a result of $79,964 which is then multiplied by a statewide funding reduction factor (used on all districts) of 55%. The net supplemental amount is $43,980. This aid is intended to help districts with larger areas to transport but are more sparsely populated. In 2016 if the district has 35 (threshold for funding) or fewer bus riders per square mile then they qualify for funding. More districts will qualify in 2017 because districts with 50 or fewer bus riders per square mile will qualify for funding. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 10
Graduation and Third Grade Reading Proficiency Bonuses The state has added two funding pieces that provide supplemental aid based on: percentages of students graduating percentage of student being rated proficient or better on the third grade reading assessment. For the graduation bonus, the calculation multiplies the per pupil funding amount x 7.5% x the number of graduating seniors x the graduation percentage x the districts state share percentage. The third grade proficiency bonus uses the same basic structure, but instead of graduation rate and number of students graduating uses the percentage passing the third grade reading proficiency test and the number of students passing. Both calculations use data from the state report card. This funding is also outside of the cap and could cause a district to receive higher than the 7.5% growth PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 11
Guarantee Calculation In the calculation above, the base for the guarantee is lowered in 2017 by the $5,000 in career tech weighted funding the district received in 2016. Any calculated career tech funding received in 2017 would be in addition to the guarantee amount which keeps the district from losing money. The district could receive additional money in 2017 if career tech funding increases. The base for the guarantee calculation for both FY 2016 and 2017 is the amount of total SFPR aid received in FY 2015. Beginning in FY 2017, there is one adjustment to this calculation. Career technical aid will be calculated outside of the guarantee. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 12
Funding Cap Calculation In both years of the biennium, total base funding is allowed to grow by 7.5 percent (C) from the prior year. Additionally, any funding from capacity aid (F), the graduation bonus (G), or the third grade reading bonus (H) would be paid in addition to amounts up to the 7.5 percent growth amount. In the example above the district s YOY percentage increase in 2016 would rise to 14.09% (K) Beginning in FY 2017, any career tech aid growth is also exempt from the cap calculation. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 13
PFR CFO Resources Simulation Compare Tool PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 14
Simulations Compare Tool PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 15
Wealth & Capacity State Funding Concept Tool Your district s customized and updated wealth and capacity profile will be provided at the seminar. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 16
PFR Financial Forecasting Seminars PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 17
The Public Finance Resources Team Matt Bunting, Consultant, has over 25 years of experience in the public finance sector. This includes 15 plus years as a school district treasurer, and 11 years with the Auditor of State where he led financial, legal compliance, and Federal single audits of government entities. Matt has served as interim school treasurer several times, as well as worked with Ernie and Stacy to test their forecasting software and instruct at their yearly seminars. He holds an Associates Degree in Accounting from Hocking College, and is a Certified Government Financial Manager. Ryan Ghizzoni, Consultant, began his career with the Auditor of State s Office and has served as a school district treasurer for the past 10 years. During his career, he has been the recipient of six Association of School Business Officials International Meritorious Budget Awards and was the recipient of the Ohio Association of School Business Officials 2011 Outstanding Treasurer of the Year Award. Ryan holds a Bachelors of Business Administration from the Youngstown State University, and is a Certified Administrator of School Finance and Operations. Debra Hoelzle, Chief Operations Officer, provides direct services to clients, and oversees the day-to-day operations of PFR. She brings with her operational experience from both the public and private sectors, including a school district and multiple corporations in the financial services industry. Debra holds her Masters of Business Administration from Ohio University, and her Bachelors of Science in Business Administration from The Ohio State University. Stacy Overly, Consultant, provides direct financial services to clients. He has over 20 years of experience serving as school district treasurer, including 15 plus years of developing financial forecasting tools, and providing instruction and training opportunities attended and used by over two hundred of Ohio s public school treasurers. Stacy works with clients to analyze trends and review local economic data to help determine a long-term operating strategy for the organization. He holds his Masters of Business Administration and his Bachelors of Business Administration in Finance from Ohio University. Mike Sobul, Consultant, brings 30 years of experience in public finance and tax analysis. Currently a school district treasurer, Mike spent nearly 25 years with the Ohio Department of Taxation where he led revenue forecasting efforts and provided analysis, training, and fiscal services to schools and local governments. Mike holds a Masters Degree in Public Policy from the University of Michigan and a Bachelors Degree in Economics and Political Science from Wittenberg University. Ernie Strawser, Consultant, provides direct services to our public finance clients. He has over 30 years of public finance experience as a CFO, consultant, and developer and instructor of financial forecasting techniques and tools which have been used by over two hundred Ohio school district CFOs. Ernie works with clients to facilitate their understanding of local financial results, trends, and strategies. He holds both a Masters of Science in Administration from Central Michigan University and a Bachelor of Science in Finance from Ohio University. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 18
Services Five Year Forecast Software More than a compliance document Cash flow monitoring Modeling scenarios Graphics and dashboards Planning tool Consulting Maximize your effectiveness Financial consulting and cash flow monitoring Forecast review and analysis, what if planning Presentations to key stakeholders Special Projects Data Interpretation Data driven decision making Multi-year data sets to identify trends Benchmark analysis reports to see how you compare Graphics that are easy to read, understand and explain Data driven decision making PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 19
PFR Contact Information Ernie Strawser Consultant Public Finance Resources, Inc. PO Box 1822 Columbus, OH 43216 ernie@pfrcfo.com Phone: 614-732-5948 Debra Hoelzle Chief Operating Officer Public Finance Resources, Inc. PO Box 1822 Columbus, OH 43216 debra@pfrcfo.com Phone: 614-732-5948 www.pfrcfo.com PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 20