1. SCHOOL FINANCE EA756

2. Finance The budget is one of the most important legal documents of a school district. It is not a static document, but rather a working document that changes (through board approved budget amendments) throughout the year as actual financial data changes.

3. Finance Budget by definition is: a plan of financial operation embodying an estimate of proposed expenditures for a given period or purpose and the proposed means of financing them.

4. Key Considerations in School Finance How much money do you have in total How much money do you have in each fund How can you make the existing dollars accomplish district goals and meet budgetary requirements

5. Budget When working to develop your budget remember you should allocate dollars to the areas identified as “priorities”. School districts should spend money on what they say is important.

6. Budget Section 67.010, RSMO, requires that the annual budget shall present a complete financial plan for the ensuing budget year, and that the budget shall include “five” specific pieces of information. These are:

7. Budget Message A budget message describing the important features of the budget and major changes from the preceding year. This is a very general portion of the budget and should explain how the budget was developed, who was involved, and why the proposed solutions to acknowledged needs were selected. The goals and objectives of the district should be stated and related to the budget.

8. Projected Revenues Estimated revenues to be received from all sources for the budget year, with a comparative statement of actual or estimated revenues for the prior two years, itemized by year, fund, and source.

9. Proposed Expenditures Expenditures for each department, office, commission, and other classification for the budget year, together with a comparative statement of actual or estimated expenditures for the prior two years, itemized by year, fund, function, and object.

10. Schedule of Debt Payment A schedule detailing the amount required for the payment of interest, amortization, and redemption charges on the debt of the political subdivision.

11. Budget Summary A general budget summary which includes the “General Budget Summary” and budget transfer summary detail together summarize the budgetary requirements of the district, thus allowing the district to meet the full statutory requirement of budget detail.

12. Budget Summary Includes Assessed Valuation Unadjusted and adjusted tax levies by fund Estimated beginning fund balances Estimated revenues by fund Estimated expenditures by fund Estimated transfers Estimated ending fund balances Estimated restricted fund balances

13. Statutory Financial Funds General (Incidental) Fund: Used to account for all financial resources except those required to be accounted for in another fund Special Revenue (Teachers) Fund: Used to account for revenue sources legally restricted to expenditures for the purpose of teachers’ salaries and health insurance benefits, and tuition payments to other school districts.

14. Statutory Funds Continued Debt Service Fund: Used to account for principal, interest, and fees on bonded indebtedness of the district. Capital Project Fund: Used to account for all facility acquisition, construction, lease purchase principal and interest payments, and other capital outlay expenditures as specified in Section 165.011, RSMo.

15. Student Count Terms Average Daily Attendance (ADA): Regular term ADA is the total number of hours attended (including remedial hours) in a term by resident pupils between the ages of 5 and 21 divided by the actual number of hours school was in session (actual calendar).

16. Student Count Continued Summer School ADA: The total number of hours attended in an approved summer school divided by 1,044 hours (minimum school term). Summer School ADA is a part of the following school year’s total ADA.

17. Eligible Pupil (EP) Sum of the ADA for the regular school term plus summer school ADA. Under old formula, schools were allowed to double summer school ADA for the purpose of state formula dollars. During this time, the number of summer school programs grew dramatically. Unfortunately, the new formula does not allow for double summer school ADA.

18. Enrollment vs. Membership Enrollment: Head count taken the last Wednesday of September of all resident and nonresident students K-12 enrolled in the attendance center. Each student is counted as one. Membership: Count of resident students taken the last Wednesday in September and January who are enrolled on count day and in attendance at least 1 of the 10 previous school days.

19. Free and Reduced Lunch Count Head count taken the last Wednesday in January of children who reside in the district, whose eligibility for free or reduced lunch is documented, and who do not attend a private or parochial school.

20. Tax Rate Terminology Operating Levy: Levy for all funds of the district except the Debt Service Fund. School Purposes Levy: Adjusted levy for Incidental and Teachers Funds only. Voluntary Rollback: Amount of tax rate ceiling that the district does not intend to levy.

21. Tax Rate Terms Continued Proposition C Rollback: Calculated amount required to be subtracted from the school purposes unadjusted tax levy. Unadjusted Tax Rate: Amount of tax levy in the operating funds after the voluntary rollback (from ceiling) but before the Proposition C rollback.

22. Tax Rate Terms Continued Adjusted Tax Rate: Amount of tax levy in the operating funds after completing the Proposition C rollback.

23. Accounting Code Terms Fund: Describes the type of fund and the fiscal year. The first two digits represents the type of fund and the third digit indicates the year. – 10X General – 20XSpecial Revenue Fund – 30XDebt Service Fund – 40XCapital Projects Fund

24. Accounting Code Terms Continued Function: Describes the action, purpose, or program for which activities are performed. Object Code: All revenue codes will be classified as “5’s”, and all expenditure objects will be classified as “6’s”. The revenue object code (second digit) identifies the source of the revenue, such as local, county, etc. The expenditure object code (second digit) identifies the service or commodity obtained, such as salaries, supplies or travel.

25. Assignment for second class You need to get a budget for FY 2010, an ASBR for last year, and a final general ledger from your current school district. You need to go to the state auditors website and print a copy of the tax levy calculation for school districts. You need to go to the DESE website and review the new foundation formula.