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2 Llano ISD – Budget Process The Budget Calendar lists important dates in the process The District uses centralized revenue and salary budget processes with input from various sources –Major sources of revenue are calculated based on property value estimates, tax rates, student population estimates and school funding formulas –Salary and wage scale changes have been guided by the District’s Site Based Decision Making Committee’s (SBDM) recommendations Staffing requests originate at the campus and department level and must be approved by the Board of Trustees Non-salary budgets originate at the campus and department level

3 Llano ISD – Budget Process Revenue and expense budgets are developed at the same time – we can’t budget one without considering the other: –Revenue budgeting is a very iterative process, especially in years that include regular and/or special legislative sessions. We estimate early in the process based on what we know or think will happen with property values and funding formulas, then refine the numbers as we get better information. The early estimates help us to identify when requests exceed projected resources. –Expenditure budgeting involves negotiations on various levels and recalculations as we hire staff to replace those who have left the district and as we identify areas where we can cut expenditures or where we need to spend more to meet the district’s goals.

4 Llano ISD – Budget Process Revenue Budget –3 M&O Funds: State Technology Allotment Cafeteria Fund General Fund –I&S Fund pays for bonded indebtedness –Federal and state grants and entitlements which are not part of the M&O budget: Approximately $1 million for all federal and state non-M&O funds Title I funding for programs for “at risk” students IDEA-B funds for special education programs Other smaller grants

5 Llano ISD – Budget Process The State Technology Allotment is paid to the District in January. –The state pays $25 to $30 per student in average daily attendance the prior year (~$50,000). –The district uses the funds for instructional technology purposes Approximately 29% is allocated to the two elementary campuses’ computer labs The remaining funds are spent at the direction of the District’s Technology Director.

6 Llano ISD – Budget Process Cafeteria Fund Revenue –Cafeteria Fund revenues have covered Cafeteria Fund expenses for the past several years (“self-funding”). –Local cafeteria revenues are roughly equal to federal cafeteria funds. USDA also donates commodities, and we record the donation as a revenue and an expense. –The federal government reimburses Llano ISD $2.40 per free lunch, $2.00 per reduced price lunch, $0.23 per paid lunch, $1.31 per free breakfast, $1.01 per reduced price breakfast, and $0.24 per paid breakfast. –Household income determines eligibility for free and reduced price meals (130% or 185% of poverty level).

7 Llano ISD – Budget Process Cafeteria Fund Revenue (cont’d) –Llano ISD charges $2.00 for lunches at the elementary campuses ($0.40 for reduced price lunches), $2.50 for lunches at the secondary campuses ($0.40 for reduced price lunches), and $1.50 for breakfasts at all campuses ($0.30 for reduced price breakfasts). –The Cafeteria Fund earns interest income, which is allocated at year-end based on the fund’s month-end cash balances. –Cafeteria Funds cannot be used for construction.

8 Llano ISD – Budget Process General Fund Revenues - Composition –88% M&O tax collections (current, delinquent, penalty & interest) 54% of M&O tax collections (current and delinquent) are returned to the state via Robin Hood in 2006-07 –10% state revenues, including TRS On-Behalf 22% of state revenue comes from TRS On-Behalf, which is a revenue and expense entry relating to employee pension funds, and does not represent funds available for use by the district. –1% interest income –1% other local revenues, including western land payments and athletic event income

9 Llano ISD – School Finance Because they are so interrelated, we cannot discuss tax revenue without also discussing recapture - or “Robin Hood” - expenditures as well as state funding. The state funding formulas are driven by the concept of “wealth equalization”. The idea is that all students in the state should have equitable access to public education, and the vehicle that has been adopted by the state to assure this equity is commonly known as “Robin Hood”. –Section 41.002 of the Texas Education Code states: “A school district may not have a wealth per student that exceeds $319,500” –Llano ISD’s wealth per student exceeds $725,000 per student, and the taxes collected on the part that exceeds $319,500 are “recaptured” by the state.

10 Llano ISD – School Finance Some definitions: –WADA: number of students in Weighted Average Daily Attendance Weights are applied to students that cost more to educate. This includes special education, career and technology, bilingual and gifted and talented students. On average, WADA is about 1.3 times ADA Notice that this formula considers average daily attendance, not enrollment We calculate this figure at the end of each six-week period –Property value: the Comptroller’s Property Tax Division’s “T2” measure of property value for the prior tax year Excludes the 10% optional homestead exemption granted to Llano ISD homesteads, so the district pays Robin Hood on the 10% of the homesteads that are not taxed. –Examples of the wealth per student calculation are found on the following table

11 Llano ISD – School Finance DISTRICT2006-07 WADA (ESTIMATED) 2005 PROPERTY VALUE WEALTH PER STUDENT Llano 2,346 1,701,842,321725,423 Austin97,98540,673,736,142415,102 Brownsville68,427 3,854,819,206 56,335 Mason 1,089 177,915,780163,375 Lake Travis 6,463 3,850,559,710595,785

12 Llano ISD – School Finance In this table, Llano, Austin and Lake Travis are considered “Property Wealthy” and are subject to recapture. Brownsville and Mason receive funds from the state or from partner districts as a result of the Robin Hood system.

13 Llano ISD – School Finance House Bill 1 introduced some changes to the school funding formulas: –Robin Hood is based on district property wealth of $319,500 per student instead of $305,000 –The maximum M&O tax rate is 88.67% of the 2005 tax rate, plus 4 optional cents (66.67% next year) –The state continues to pay $500 per eligible employee for health insurance, but it is now a General Fund salary item. –The state funded an additional $2000 increase in the teacher pay scale. –The state funded a new high school allotment to improve graduation and college readiness rates. The funding is $275 per high school ADA. –The state provided assistance in reducing the local tax rate to ensure that, on average, school districts earn the same revenue per WADA in 2006-07 that they earned in 2005-06. –According to some sources, House Bill 1 is underfunded by more than $20 million over the next five years.

14 Llano ISD – School Finance 2002-032003-042004-052005-062006-07 Taxes (C+D) 18,920,712 20,209,575 22,652,293 23,705,178 23,464,000 State formula 822,219 837,144 962,481 848,377 1,655,168 Robin Hood (6,545,275) (8,656,045) (10,421,078) (12,469,355) (12,618,000) Net Revenue 13,197,656 12,390,674 13,193,696 12,084,200 12,501,168 WADA 2,369 2,355 2,383 2,312 2,346 Revenue per WADA 5,571 5,261 5,537 5,227 5,329

15 Llano ISD – School Finance Dr. Joe Thedford and Omar Garcia at the Region XIII Education Service Center provide assistance to districts in the areas of school finance, budget and other business office topics. Omar’s Summary of Finances template is used by districts across the state to determine the largest parts of our budgets. Selected pages from a recent template are included in your handout materials.

16 Llano ISD – School Finance Tax Rates –The State Comptroller’s Office issues a Truth in Taxation guide for all taxing entities across the state. This office also provides training and telephone assistance to all taxing entities, to assist us in following the state laws that govern taxation. –The Llano County Tax Assessor/Collector and the Llano Central Appraisal District also provide a great deal of assistance to taxing entities in Llano County.

17 Llano ISD – School Finance Tax Rates (cont’d) –In March, the district runs a few different “current law” scenarios involving tax rates, property value increases, and student populations –In May, the Chief Appraiser provides an estimate of property values –At the end of July, the Chief Appraiser certifies the appraisal roll, and the district uses the certified roll in the final tax rate calculations. –A copy of the tax rate calculation spreadsheet is included in your handout materials.

18 Llano ISD – Budget Process Expenditure budgets –In March (or earlier if possible), the initial estimate of payroll expense is calculated by applying the current pay scales to the current staff, and moving everyone one step on the scale. Additional staffing requests, if known at this time, may be added to the calculation. Non-scale employees may or may not get a pay increase applied during this process. –In January, all departments and campuses begin working on non-salary budget requests. Central Office and Business Office work on district-wide expenses such as insurance and utilities. –The Budget Calendar explains the timeframe for the remaining tasks.


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