Board work session – Saturday, January 21, 2017 Tuba City Unified School District Review of School District Revenue & Expenditure Budget Board work session – Saturday, January 21, 2017

Outline School Finance Terminology, Funding Formulas Factors Impacting Tuba City Budget Review of Prior Year Expenditures, Future Needs Estimated Budget Projections – FY18

School Budget History In the early 1980’s, AZ Legislature refined its school finance system to provide equal dollars per pupil for school operations. This concept commonly referred to as the “equalization formula” allowed public school districts across the state to experience similar education dollars regardless of property values.

1980’s Reform Reduced disparities in tax rates Equalize per-pupil funding Decrease reliance on property taxes Limited property tax growth Continue local prerogative of voter-approved budget overrides with limits Distinguish between primary and secondary (voter-approved) taxes

Further Reform 1994 Students FIRST Fair and Immediate Resources for Students Today prior statutory formula for funding school facilities and equipment violated the Arizona Constitution Law enacted in 1998 Created minimal adequacy standards Tightly controls the capital funding School Facilities Board (SFB)

School Budget Terminology Chart of Accounts Uniform, comprehensive, data collection, reporting Uniform System of Financial Records (USFR) Minimum level of internal controls that school districts must follow Generally Accepted Accounting Principles (GAAP) Governmental Accounting Standards Board (GASB) Comprehensive Financial Report (CAFR) Annual Financial Report (AFR)

School Budget Terminology General Budget Limit The General Budget Limit results from a number of formulas heavily dependent upon the number of students or Average Daily Membership (ADM), the district has during years’ first 100 days. Support Level Weight The effect of Weighted Student Count, which allows a student to be worth more (for funding purposes), more than 1.0. This is how students with special needs generate additional funding based on their needs. Weighted Student Count The Weighted Student Count takes into consideration the associated cost of educating certain classifications of student without utilizing dollars to do it. Weighted Student Counts is specified by ARS 15-943. Group A and Group B

School Budget Terminology Local Taxes Property tax on property within the district provides a portion of M&O, Capital Outlay, All of Overrides, GO Bonds State Equalization State general fund revenues used to support education M&O, Capital Outlay, but not overrides & bonds County Equalization A countywide tax rate applied to offset the State Equalization State and Federal Grants State and Federal resources used to support supplemental programs Federal Impact Aid Federal funds paid directly to district in impacted areas (federal land) in lieu of property taxes.

School Budget Terminology Budget Controlled Funds Allocation based on formula (i.e., student count, need-based) Cash Controlled Funds Cash carried over from the prior year plus current year revenue

Funding Formula Maintenance & Operations (M&O) Base Support Level Weighted Student Count Group A Group B Base Level Amount Teacher Experience Index (TEI)

Funding Formula Maintenance & Operations (M&O) Transportation Revenue Control Limit Route Miles Approved daily route miles x 180 days Eligible Students State Support Level Less than .5 miles .5 to 1.0 mile More than 1.0 mile

Funding Formula Maintenance & Operations (M&O) Base Support Level (BSL) + Transportation Revenue Control Limit (TRCL) = Revenue Control Limit (RCL) x Override Authorizations (*if applicable) + Carry Forward, Tuition, Prop 123, DAA transfer = General Budget Limit (GBL)

Funding Formula District Additional Assistance (DAA) Unweighted ADM X CORL per Student = CORL Allocation Funding can be transferred into M&O budget

Funding Formula Impact Aid Programs include: Basic Support Payments Children with Disabilities Payments Construction Grants Funding based on District application in prior year (January 31). Application is based on federally connected students. Most recently, payments have equaled about 80-85% of allocation within the current year. Remaining is paid in later years.

Funding Formula Entitlement Grants District receives federal grants based on demographics ESEA Programs Title I – Education for Disadvantaged Title II – Teacher and Principal Professional Development Title III – Limited English Proficiency Title VII – Native American JOM – Johnson O’Malley

Funding Formula Proposition 301 (Prop 301) Statute requires distribution of funds 40% - Principal Site Fund 40% - Performance Pay 20% - Base Pay Group A weighted ADM x Per Pupil Limits on what Prop 301, Fund 013, can be used for class size reduction, teacher compensation, AIMS intervention, teacher development, dropout prevention

Funding Formula Instructional Improvement Fund (IIF) Statute allows for xx Up to 50% - Teacher Base Pay or Class Size Reduction Remaining purposes include dropout prevention and instructional improvement programs Group A weighted ADM x Per Pupil Funding is not known until received, therefore we cannot spend until the funds are received (January/July)

Funding Formula Proposition 123 Proposition that resolved the longstanding lawsuit regarding per pupil funding. Reset the per pupil funding in FY16 to $3,645 Provides for inflation increase each year (set by JLBC – CPI or 2% whichever is less) Allocates $50M across the state based % of statewide enrollment (increases to $75M in 2021-2025)

Factors Impacting Tuba City Budget Review FY16 AFR Review FY17 Budget Worksheets Review FY18 Budget Projections

FY16 AFR Annual Financial Report Completed in October of each year (no later than October 15) Report of actual expenditures Board approved Submitted to ADE Accessible publically on ADE website and District website

FY17 Adopted Budget Adopted in July Based on projected enrollment Will be revised by May 15, 2017 Board approved Submitted to ADE Accessible publically on ADE website and District website

FY18 Budget Proposal

Discussion, Future Topics