1. Equalization Aid & Revenue Limits “Using Your Knowledge” WASBO “WINTER AT A GLANCE WORKSHOP” New Business Office Staff Year of Success Program Karen Kucharz Robbe DPI School Finance Consultant December 2, 2014

2. Handouts Sample % Method Equalization Aid District-Specific 2014-15 % Method Equalization Aid District-Specific October 15 Aid Certification District-Specific Aid Formula Position Grid Sample School Aid Value as % of State Average District-Specific School Aid Value as % of State Average Sample Longitudinal Equalization Aid District-Specific Longitudinal Equalization Aid District-Specific Longitudinal Revenue Limits 2

3. Aid is inversely related to district property value per member. Aid is inversely related to district property value per member. One pot of money is split over 424 school districts based on district values, membership, and shared costs. Changes in individual district data affect every other district’s aid. One pot of money is split over 424 school districts based on district values, membership, and shared costs. Changes in individual district data affect every other district’s aid. Depending on district value-per-member, some districts’ aid is increased by increasing expenses, while others’ aid is decreased by increasing expenses. Depending on district value-per-member, some districts’ aid is increased by increasing expenses, while others’ aid is decreased by increasing expenses. Know where your district is in the formula and be aware of what is happening to your district over time so you can figure out why your aid has changed AND explain why. Know where your district is in the formula and be aware of what is happening to your district over time so you can figure out why your aid has changed AND explain why. 3 Basic Equalization Aid Concepts

4. District Factors - shared cost - membership - equalized property value State Factors - cost ceilings - guaranteed valuations per member - amount of funding the State puts into the formula What affects the amount of a district’s Equalization Aid? Equalization Aid Review 4

5. Positive Primary Aid Positive Secondary Aid Positive Tertiary Aid District Value per Member 10%90% 75%25% 50% Negative Tertiary Aid Negative Secondary Aid No Aid Understanding/Explaining Equalization Aid 5

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9. How can I find out where my district is in the aid formula? Longitudinal Data -> Equalization Aid –> Equalization Aid Formula Position Longitudinal Data -> Equalization Aid –> October 15, 2014 Equalization Aid Computation - Percentage Method Equalization Aid http://sfs.dpi.wi.gov/sfs_buddev_eq 9

10. 10 What happens when a district’s value/member exceeds the guaranteed value per member? NEGATIVE AID 181 districts are negatively aided at the tertiary level because their property value/member is greater than the tertiary guarantee. Equalization Aid POP QUIZ !

11. From Gross Aid Eligibility to Actual Aid Payment (I5) 11 Reductions/adjustments to general aid eligibility - (Lines H1 & I1 on Aid Certification): 1. Independent (“2r”) Charter Schools: cost is spread over all districts via an equal % reduction to gross general aid (equalization/special adjust/inter/intra aids). October 15 th 2014 Certification: -1.533% 2. Prior Year (“October to June”) adjustment: the difference in general aid amounts calculated between the October 15 th aid certification and the final aid run of the prior year (+ or – value). 3. Parental Choice Program: reduction in aid to partially offset the cost of the program – but affects Milwaukee only.

12. Positive Primary Aid Positive Secondary Aid Positive Tertiary Aid Negative Tertiary Aid Negative Secondary Aid No Aid Understanding/Explaining Equalization Aid 12

13. Value Per Member Over Time 13

14. Special Adjustment Aid – can’t lose more than 85 % of prior year aid. 14

16. Where Can I Find Value Per Member Over Time For My District? Longitudinal Data –> Property Valuation –> School Aid Property Valuation http://sfs.dpi.wi.gov/sfs_buddev_valuation 16

17. Longitudinal Data -> Equalization Aid -> Multi-Year Longitudinal Analysis…… http://sfs.dpi.wi.gov/sfs_buddev_eq Where Can I Find the Multi-Year History For My District? 17

18. How can I predict future aid amounts? Well……… Equalization Aid Worksheets -> DPI Executable -> Percentage Method….. Percentage Method….. http://www.dpi.wi.gov/sfs/index.html Uses membership, shared cost, values for simulations. 18

19. The change in the State’s appropriation for General Aid does NOT equal the change in any specific district’s general aid payment. 19 Equalization Aid Odds & Ends Two-thirds NEVER meant that each district would get 66.7% of their local cost reimbursed by state aid! It was a STATE computation that added together several statewide revenue sources, (all local levies, all state and categorical aid and levy credit) and multiplied that number by 66.7%. The result of this equation was the amount put into the general aid formula. Two-thirds is no longer law.

20. Equalization Aid Recap 1.One pot of money is split over 424 school districts based on district membership, shared costs and values; changes in individual district data affect every other district’s aid. 2.Aid Membership = average of September + January FTE, plus 100% of Summer FTE. This is different from Revenue Limit Membership. 3.Depending on district value per member, some districts increase their aid by increasing expenses, while others decrease their aid by increasing expenses (negative vs. positive tertiary aid). 4.Special Adjustment Aid ensures that districts receive at least 85% of the [gross] general aid awarded the prior year. 5.Reductions for the Independent Charter schools & prior year aid adjustments impact the actual aid payment. 6.Be aware of what is happening to your district over time … 20

21. Revenue Limits 21

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24. Revenue Limits & Budget-Building Watch Change Across Time – Line 11 Total Revenue Limit with Exemptions Year 1Year 2Year 3 Total Revenue Limit with Exemptions Line 11 represents the total amount of resource your district will get from property tax, state general aids, and exempt computer aid. This will equal about 85-95% of general fund revenues. For budgeting purposes, it’s very important to compare Line 11 with the previous year’s Line 11. Major decreases in Line 11 from year to year can have serious implications for your budget. 24

25. Longitudinal Data -> Revenue Limits -> Multi-Year Revenue Limit Survey http://sfs.dpi.wi.gov/sfs_buddev_rl 25 Where Can I Find the Multi-Year History For My District?

26. 26 2015-16 Revenue Limit Base Enter pupil counts - known and 2015 estimate.

27. Budget Building Revenue Limit Calculation 27 Budget Planning Papers

28. Typical Errors in Setting Levy 28 First, type in the amounts you intend to levy for Funds 38 and 41 (lines 14B & 14C, respectively). Then, enter into line 14A the difference between line 13 and the sum of lines 14B & C. By doing this, you have levied to your maximum. Note that districts may choose to levy less than the maximum. Remember: Line 14 cannot exceed Line 13 ! If it does, you must reduce something in Line 14 (or, remain in a penalty situation). Overlevying by Computer Aid Amount

29. Typical Errors in Setting Levy Strategy for Line 14 29

30. Energy Efficiency Exemption Line 10C Use to funds energy efficiency projects. (need performance contract, projected energy savings, etc) Watch requirements. This exemption is normally receipted and expended from Fund 10. Put original revenue from debt issue in Fund 49 ONLY if you are taking out debt to fund the project. Debt repayment will likely be in fund 38 (non-referendum debt fund). Each requires annual resolution by the board for the amount that will be levied to either retire the debt or to use for energy projects expended that fiscal year. http://sfs.dpi.wi.gov/sfs_enrgyrevlim 30

31. Energy Efficiency Exemption Line 10C 31

32. Remember to go back into the portal after the BOE meeting and enter the vote results. In the referenda portal, RS – 2014 means 2014-15 ……differs from other database tables…… Energy Efficiency Exemption Line 10C

33. Know the Difference ! Recurring Exemptions – Permanently in Your Base Base Non-Recurring Exemptions – One Year Only Recurring This Year Next Year Base Non-Recurring Base This Year Next Year Line 8 Line 10 33

34. If every district receives a $75 per-pupil increase, and my district has 1,000 FTE, why didn’t my revenue limit increase by $75,000? http://sfs.dpi.wi.gov/sfs_buddev_rl Sources of New-Year Revenue Limit Authority 34

35. VISIT OUR WEBSITE: sfs.dpi.wi.gov dpi.wi.govdpi.wi.gov … or CALL US (all 608 Area Code): Robert Soldner, Director ………………………….……………..266-6968 Vacant, Assistant Director Bruce Anderson, Consultant ……………………….…………..267-9707 Carey Bradley, Consultant …………….……………………….267-3752 Dan Bush, Special Ed./Consultant ……………………….….267-9212 Victoria Chung, Accountant…………………….…………….….266-9205 Gene Fornecker, Auditor …………………………….…………..267-7882 Brian Kahl, Auditor ………………………….…………..…….……266-3862 Karen Kucharz Robbe, Consultant …….……………………..266-3464 Vacant, Auditor 35 Questions?