INDEPENDENT SCHOOL DISTRICT #883 INTRODUCTION TO SCHOOL FINANCE

Requirements to Maintain Fiscal Integrity MAINTAIN fund balance according to Board Policy 701.2R (8% -10%) Continue to balance revenue to expenses Maintain systems that ensure financial stability

Funds General Fund (01) Food Service (02) Community Service (04) Bldg. Construction (06) Debt Service (07) OPEB Trust (45 & 47)

Definition of Funds The General Fund (01) is used to account for all revenues and expenditures of the school district not accounted for elsewhere. K-12 educational activities; instructional and student support programs; superintendent; district administration; normal operations and maintenance; transportation; and operating capital expenditures (including health & safety). The Food Service Fund (02) is used to record financial activities of a school district's food service program. Food service includes activities for the purpose of preparation and service of milk, meals, and snacks in connection with school activities

Definition of Funds (cont.) The Community Service Fund (04) is used to record all financial activities of the Community Service program. The Community Service Fund is comprised of four components; Community Service, Community Education, School Readiness and Early Childhood Family Education. The Debt Service Fund (07) is used to record revenues and expenditures for a school district's outstanding bonded indebtedness.

Definition of Funds (cont.) The Building Fund (06) is used to record revenues and expenditures for voter approved capital projects. If any fund balance remains after the projects are completed, the funds are to be transferred to the debt service fund. The OPEB Funds (45 and 47) are used to record OPEB expenditures annually (45) and levy and bond payments for OPEB repayment (47).

Definition of Terms Basic General Education Formula Dollar amount per pupil unit of revenue set by state legislature Adjusted Pupil Units (APU) Students membership times weighting factors EC, K-6 (1.0) 7-12 (1.2) Weighting Factor Set by state legislature

Definition of Terms (cont.) Unreserved Fund Balance Revenues minus expenditures Necessary for sound financial management of District Necessary for cash flow, credit ratings, unexpected changes in enrollment, revenues, and expenditures Reserved Fund Balance State restrictions and mandates to reserve and spend funds toward a specific purpose

Revenue Categories Local Taxes State Aid Federal Aid Operating Referendum Bonds for Building Projects State Aid General Education Categorical Aid Federal Aid Other (i.e. interest, fees, rentals) Categorical Aid includes: Local Optional, Operating Capital, Equity Revenue, Transition Revenue, Referendum Revenue

Expenditure Categories District and School Administration School board, superintendent, principals, director of building & grounds, Director of Technology, Business Manager, Activity Director District Support Services General and other office support, human resources, community relations, elections, census, legal, business support services, and information systems services Regular Instruction All activities dealing directly with the teaching of students K-12, English Language Learner, Co-Curricular, Athletics, and Area Learning Center District & School Administration Prog. 000-099 District Support Services Prog. 100-199 Regular Instruction – 200-299

Expenditure Categories (cont.) Vocational Instruction Agriculture, Career & Tech and ACTE (disabled SpEd) Special Education Instruction Speech, Mild, Moderate and Severe Disabilities, Physically Impaired, Hearing Impaired, Visually Impaired, Specific Learning Disability, Emotional/Behavior Disorder, Autistic Spectrum Disorders, Early Childhood, and Federal Programs Instructional Support Services Activities for assisting the instructional staff with the process of providing K-12 learning experiences. Curriculum, Staff Development, Technology Integration, Education Media Vocational Instruction Prog. 300-399 Special Educatoin Instruction Prog 400-499 Insturctional Support Services Prog 600-699

Expenditure Categories (cont.) Pupil Support Services All services provided to students not classified as direct instruction. Counseling, Health Service, Psychological Service, Social Work, and Transportation Site, Buildings and Equipment Acquisition, operation, maintenance, repair, and remodeling of all physical plant, facilities, and grounds Fiscal and Other Property and Liability Insurance Pupil Support Servies Prog 700-799 Site-Building, Equipment Prog 800-899 (B&G & LTFM) Fiscal & Other Prog 900-999 (Property, liability Ins)

UFARS (Uniform Financial accounting & reporting standards) Dimension Overview 17 digit (01-005-010-000-000-401) 01 Fund (General Fund) 005 Organization (District-Wide) 010 Program (School Board) 000 Course (local use) 000 Finance (state, federal, child nutrition, etc.) 401 Object (supply, detail)/Source (revenue)

2018-19 Budget Overview revenues

General fund revenue budget

2018-19 budget overview expenditures

How are general fund dollars spent? Expenses incurred in the operation of the district are paid from the General Fund. The following schedule relates how the dollars allocated to the General Fund are spent:

General fund expenditure budget

Budget and factors Budget is a moving target Enrollment Labor Agreements Funding Formulas (set by state) Facility Needs Fund Balance Targets Inflation

State special education Five Components in the formula Initial Aid – (prior year data) Three formula options – Least of the three calculation Excess Cost Aid – (prior year data)Two formula options – Greater of the two calculations Transportation – (prior year data) 100% of transportation expenditures but subject to minimum and maximum in the formula Tuition Adjustment – formula calculation done by MDE Occurs when a district other than the resident district provides education to a special education student The district serving the student is responsible for providing the special education services

State special education (cont.) Hold Harmless/Growth Limit (based on FY 2016 Special Ed. Data) Calculation that assures districts will not receive less aid than if the state special education aid formula had not changed in previous years. Growth limit calculation was designed to ensure that districts will get some increase in the state special education aid over the old formula calculations. Per MDE, this is not necessarily true. Resulting in districts having to pay excess cost of providing education to special education students. Special Education extra cost Fiscal year 2017-2018 - $1.1 million

Additional information Funding Education in Minnesota 2018-19 (81 page document) https://www.house.leg.state.mn.us/Fiscal/Download/2091 Minnesota School Finance – A guide for Legislators (136 page doc.) http://www.house.leg.state.mn.us/hrd/pubs/mnschfin.pdf Minnesota Association of School Business Officials School Finance Video https://www.mnasbo.org/page/sfvideo Special Education Funding Video https://www.mnasbo.org/page/spedvideo