Welcome! Before-We-Begin Tasks: 1.) Locate the School Financial Services homepage: and bookmark it! 2.) On the Green ScanBar, go to: Worksheets/DPI-Executable/09-10 Percentage Method Equalization Aid Worksheet and save this file to your desktop. File should already be named simaid10.xls 3.) On the Green ScanBar, go to: Worksheets/DPI-Executable/ Revenue Limit Worksheet and save this file top your desktop. File should already be named revlim10_act28.xls. 4.) On the Green Scanbar, go to “Presentations,” find the presentation for today and save this file to your desktop. 5.) Get a cup of coffee and a donut.

Getting It Done Right: FROM THE BUDGET TO THE LEVY …AND BEYOND… October 21 & 22, 2009 Brad Adams Karen Kucharz Robbe

Today’s Goal For you to be able to: –understand and accurately prepare your district’s revenue limit –determine your final Fall, 2009 levy –finalize your budget –and learn a few other things about school finance

Agenda Introduction/Preparation Membership Revenue Limit to Line 11 Work break Revenue Limit from Line Work break Lunch Should I Underlevy?, Equalization Aid, Other Odds and Ends

Handouts District-Specific Final Revenue Limit Worksheet District-Specific Revenue Limit Worksheet District-Specific October 15 Certification of General Aid Weyerhaeuser Revenue Limit Longitudinal District-Specific Revenue Limit Longitudinal Florence Equalization Aid Longitudinal District-Specific Equalization Aid Longitudinal PowerPoint Slide Presentation

The “Big Picture” Revenue Limit Calculation Budget Planning Papers 3 rd Friday Count, Oct 1 Tax Values, October 15 Aid Certify Levies via PI-401 & PC-401 (in portal) Budget Adjustments to BOE Send tax bills. PI-1508 Budget Report PI-1504 Annual Meeting?

Membership (Kid count drives the Revenue Limit, so it’s THAT important.)

Let’s Talk a Bit About Membership… Membership is used in both the Revenue Limit and Equalization Aid computations. 3 Questions for Guidance Who can you count for membership? Who is a resident? Who is incurring the cost for the education?

Membership Who can you count for membership? Generally, residents for which you are financially responsible - i.e. you are incurring the cost for the student’s education. - Start with who is in your seats on the count date. - Subtract non-residents being educated in your seats. - Add in your residents who are elsewhere (and for which you are financially responsible). -Watch for the “before and after” rule. Count the student if he/she was present for instruction during the school year, at least one day before the count date and at least one day after, and didn’t change residency during the period of absence.) (Count the student if he/she was present for instruction during the school year, at least one day before the count date and at least one day after, and didn’t change residency during the period of absence.)

Membership Who is a Resident? Not defined by statute. Residency is determined by the local district. 1.) Is the child living in the district with his/her parents? 2.) What about other situations? – there is case law - i.e. - Thayer Ruling A minor may have, for school purposes, a residence other than that of his parents. In this specific case, the school district was incidental to the child’s reason for living in the district. Use common sense…WHY are they there?

Who is incurring the cost for the education?  Pupil is in your seats, taught by your teachers.  Full-time resident pupils in attendance elsewhere, but your district is paying for their education. Open Enrollment (your residents going elsewhere) Tuition Agreements CESA Programs Tuition Waivers (Be careful with this one. These situations involve kids moving out/in of a district mid-year. Sometimes, you still can count a kid in the year that they have moved out of your district….and, sometimes you can’t count a new kid that has recently moved into your district. Please call us if you have a student in this situation.) Membership

Revenue Limit Membership SAFR Membership Report

Pupil Count (NOT used for much! Need to convert to FTE!) SAFR/Non-Financial Data Home/Membership Report/Final Summary Don’t use this!

Pupil FTE Conversion (used in the Revenue Limit!) SAFR/FTE Reports/FY FTE Conversion for Revenue Limit Calculation

Pupil FTE Conversion with Youth Challenge Students (used in the Revenue Limit!) SAFR/FTE Reports/FY FTE Conversion for Revenue Limit Calculation

Calculating Your FTE Before the Report is Open Excel File: “Converting Count to FTE” This is also the web address for everything “Membership.”

Revenue Limits

We’ll walk through a SAMPLE revenue limit calculation worksheet line-by-line, giving you some time to work on your district’s numbers…. ….please ask questions as we go.

Revenue Limit Controls The Revenue Limit controls the following revenues: – General Aid (Equalization Aid, for most districts) – High Poverty Aid districts) – Computer Aid – General Fund (Fund 10), Non-Referendum Debt (Fund 38) & Capital Projects (Fund 41) Levies The Revenue Limit does not control the following revenues: – School Fees – Categorical Aids (Library Aid, Transportation Aid, etc.) – State and Federal Grants – Gate Receipts – Donations – Referendum Debt (Fund 39) & Community Service Fund (Fund 80) Levies

A 4-Step Process  Step 1: Build the Base Revenue Per Member. (Worksheet lines 1-3)  Step 2: Calculate a New Revenue Per Member. (prior to exemptions) (Worksheet lines 4-7)  Step 3: Determine Allowable Exemptions. (Worksheet lines 8-11) Revenue Limit

 Step 4: Determine Levy and Computer Aid Amounts. Controlled Amounts Levies for Funds 10, 38, 41 DOR Computer Aid (Worksheet lines 12-14) Non-Controlled Amounts Levies for Funds 39 & 80 and Prior-Year Chargeback. (Worksheet lines 15-20) Revenue Limit

+ October 15 Aid (Line 12A) Prior-Year Data ( ) + Computer Aid Received (Src 691) + 10R 211 Levy (Line 18) + 38R 211 Levy (Line 14B) + 41R 211 Levy (Line 14C) - Revenue Limit Penalty - Levy for Non-Recurring Referendum Base Step 1: Build the Base Revenue Line 1 Prior-Year Data ( ) is Used to Build the New-Year ( ) Base - Levy for Declining Enrollment + High Poverty Aid Received (Line 12B)

Step 1: Build the Base Revenue Line 1

Step 1: Build the Base Revenue Line 2

+ October 15 Aid Prior-Year Data ( ) + 10R 211 Levy + 38R 211 Levy + 41R 211 Levy - Revenue Limit Penalty - Levy for Non-Recurring Referendum Line 1 + Computer Aid - Levy for Declining Enrollment Exemption Step 1: Build the Base Revenue Line 3 ÷ Base Membership 3-Year Average = Base Revenue Per Member 3 Previous Years (Fall 06, 07, 08) Summer 06 (40%) + Fall 06 Summer 07 (40%) + Fall 07 Summer 08 (40%) + Fall 07 ( ) / 3 = 275 $ 9, Line 3 $2,633,051 + High Poverty Aid

Step 1: Summary Lines 1-3 Base Revenue Per Member

Step 2: Calculate a New Revenue per Member Line 4A Each year, under current law, districts are allowed to add in a per-pupil inflationary increase at this point in the computation. Usually computed by using the March to March CPI-U, the Legislature actually set in law the dollar increase for both the and years is $ This number is used by all districts. $ for

Step 2: Calculate a New Revenue per Member Lines 4B & C Also under current law, districts having low revenue (less than a State-determined per-pupil amount) AFTER Lines 3 and 4A are summed are allowed to increase their per-pupil revenue limit amount to reach this specified amount. For the school year, the amount is $9,000. Line 4B, Low Revenue Increase, will automatically pre-fill if your district has low revenue. You don’t need to enter anything in the spreadsheet to get this extra amount, if you qualify. If your district participates in a CCDEB, please call the Finance Team for further instructions for Line 4C. (none for 09-10)

Step 2: Calculate a New Revenue per Member Line 5 Line 5 is the sum of Lines 3 and 4 (auto-calculates).

Step 2: Calculate a New Revenue per Member Line 6 Remember to use the most up-to-date numbers you have for the Summer, 2009 and Fall, 2009 counts.

Step 2: Calculate a New Revenue per Member Line 7 Line 7 is Line 5 multiplied by Line 6. “But Line 7 cannot be less than Line 1.“ $9, X 269 = 2,629,402

Step 2: Summary Lines 4-7

Exemptions to the Revenue Limit allow districts to levy additional amounts up and above the amount generated by the computation up to this point. Line 8 tracks Recurring Exemptions. Line 10 tracks Non-Recurring Exemptions. It’s important to understand the distinction between the two. Step 3: Determine Allowable Exemptions Lines 8-11

Recurring Exemptions (Lines 8A-E) are base-building – that is, if the district taxes for any of this additional authority, the levy amount is automatically included in the succeeding year’s base. Any unused Recurring authority is eligible for 100% carryover into the next year. Step 3: Determine Allowable Exemptions Lines 8-11

Non-Recurring Exemptions (Lines 10A-C) are not base-building – that is, if a district taxes for any of these exemptions, the amount is not included in the succeeding year’s base. In addition, any unused Non-Recurring authority is not eligible for carryover in the next year – districts have one, and only one opportunity to use Non-Recurring exemptions. Step 3: Determine Allowable Exemptions Lines 8-11

Line 11 is the final “Revenue Limit With All Exemptions” for your district. This is the total revenue your district can receive from the combination of property tax from Funds 10, 38, and 41, State General Aid (Equalization, Special Adjustment, and Integration Aids), High Poverty Aid and State Computer Aid.

Aid Certification Line 12 Line 13 must now be divided between the Fund 10 levy, the Fund 38 levy, the Fund 41 levy, and Computer Aid. General Aid (October 15 Cert.) State Aid to High Poverty Districts (not all districts)

Controlled Amounts - Lines General State Aid (Including High Poverty Aid) Fund 10, General Fund Levy Fund 38, Non-Referendum Debt Levy Fund 41, Capital Projects Levy Computer Aid Non-Controlled Amounts - Lines Fund 39, Referendum Debt Levy Fund 80, Community Service Fund Fund 10, Src 212, Property Tax Chargebacks Step 4: Determine Levy and Computer Aid Amounts

Controlled Amounts Line 14 Fund 38 Levy Fund 41 Levy Computer Aid Fund 10 Levy October 15 Aid Certification and High Poverty Aid reduce what you can levy. Line 12 Computer Aid is based on the total levy, but, at this point in the computation, we don’t have total levy yet. Calls for a strategy on how to get the limited portion right……. Line 13 Allowable Limited Revenue Line 11 – Total Resources from Property Tax and Levy

Strategy Line 14 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).

Non-Controlled Amounts Line 15 Enter anticipated levy amounts into Lines 15 A,B,& C.

Computer Aid Line 17 Since , business computers have been exempt from property taxes. Instead of receiving property taxes for this property, districts receive an aid payment (Computer Aid) from the Department of Revenue to make up the loss in value. (Source 691) DOR certifies to districts the equalized value of exempt computers, and districts calculate computer aid based on that value.

Property Tax Exemption for Business Computers Definition of computers: – alarm/security systems; automotive diagnostic equipment; ATM’s; cash register/checkout systems; grocery store scanners; hotel reservations systems; lottery ticket terminals; computer controlled optical, medical, printing systems; etc. – “Computer Aid” must be considered in the context of revenue limit calculation because it replaces a portion of a district’s allowable tax levy.

Computer Aid Line 17 Once you have entered all of the levy amounts on Lines 14 & 15, the spreadsheet automatically calculates Computer Aid on Line 17. You must enter property values in Line 17 for the calculation to work properly. Computer Aid is based on property values and total levy. Normally, the Department of Revenue certifies the 2009 Property Values on October 1, 2009, so use an estimate until the certification arrives.

Fund 10 Levy Line 18 Once all your numbers are entered into the spreadsheet, Line 18 will be the amount of your Fund 10 Levy.

Total All Fund Levy Line 19 Line 19 is the sum of all levies from all funds (line 14B & C, line 15, and line 18). Computer aid should not be included here. Line 19 is the levy to be apportioned to municipalities and must equal the total amounts on the PI-401.

Total Debt Service Line 20 Line 20 is a total sum of your debt- related levies. It has been included here as a convenience.

…you’ve finished your revenue limit calculation, which incorporates: Third Friday Count October 1 Tax Values October 15 General Aid Certification You Are Ready to Set the Levy When…

Levy Certification Fund 10 = $1,249,195 Fund 38 = $50,000 Fund 80 = $75,000 $1,374,195 Total Fall, 2009 Levy

Levy Certification Prior to November 1, 2009, your school board needs to vote on the district property tax levy for After the levies have been set, district staff will use an internet-based program to certify the district’s levy to municipalities and to report the data to both DPI and the Department of Revenue.

Levy Certification SAFR/Financial Data Home/Tax Levies/

Levy Certification

Congratulations! You’re done! Quick and painless! The information you have provided will be submitted to the Wisconsin Department of Revenue (DOR) by the Department of Public Instruction on your behalf. Your district no longer needs to send a paper report to DOR. Gather the appropriate signatures on the tax bills and certification page, mail your tax bills, and take the afternoon off!

The “Big Picture” Revenue Limit Calculation Budget Planning Papers 3 rd Friday Count, Oct 1 Tax Values, October 15 Aid Certify Levies via PI-401 & PC-401 (in portal) Budget Adjustments to BOE Send tax bills. PI-1508 Budget Report PI-1504

Tie It All Together What’s tied together? The levies on the following should all be the same: –Revenue Limit Worksheet –DPI PI-401, Fall 2009 –PI-1508 (Tax Bills) – DPI Budget Report

Levy Certification

Tie It All Together Once you submit the levy reports to DOR and DPI, and the budget report to DPI, the process is completed ….. …..until next year……

Important Dates On or before Nov. 1 - Last Day For Board To Approve Tax Levy On or before Nov. 6 - Last Day to Certify Levy to Municipalities Dec. 4 - Special Ed Budget Due to DPI (PI-1505 SE) Dec. 4 - PI 1504 Budget Report due

Using Revenue Limit Data in Budgeting ( there is a direct link)

Budgeting with Revenue Limit Data Districts typically develop an estimate of their new-year revenue limit by the end of January in any given budget year. (Need to estimate many pieces of data: upcoming 3 rd Friday FTE, upcoming October 15 aid certification, upcoming fall property values, exemptions…) This preliminary revenue picture, together with salary and other local expenditure and revenue budget estimates, serves as a guide for the district as it moves through budget development. The process culminates in the fall of each year after districts receive the 3 rd Friday in September FTE Count and the DPI October 15 th General Aid Certification, allowing them to set the levy, send tax bills, and report levy amounts to DPI.

Revenue Limit Calculation Budget Planning Papers The Revenue Limit computation contains data elements that may change during the budgeting cycle. Remember to update your Revenue Limit Calculation and budget planning documents as new information is received throughout the year. Budgeting with Revenue Limit Data

Enter Information into Your Budget Planning Papers Trying to Get at the Bottom Line Large Difference? Use Fund Balance? Budgeting with Revenue Limit Data

Base Line 4-7 Adding the state per-pupil increase with new 3-year avg Line 8 Adding recurring exemptions Importance of Line 11 in the Revenue Limit Line 10 Adding non- recurring exemptions Line 11

Line 11 represents the total amount of resource your district will get from Property Tax, State Aid, and Computer Aid. (about 70-90% of total revenues for most districts). For budgeting purposes, it’s very important to compare this 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. Comparing Line 11s from Year to Year

Decrease probably means budget cuts. The earlier in your budget process you discover this, the better…………. Line 11 Amounts

Comparing Line 11s from Year to Year See Longitudinal Revenue Limit History Excel file under Longitudinal Data (or Budget Planning and Development) on our website.

Revenue Limit Calculation Budget Planning Papers Using Revenue Limit Data

Recurring and Non-Recurring Exemptions, Underlevying, Carryover, Revenue Limit Projection Tool

Revenue Limit Exemptions Recurring Exemptions Prior-Year Carryover Transfer of Service Transfer of Territory Federal Impact Aid Loss Recurring Referenda to Exceed (if year 1 of authority) Non-Recurring Exemptions Non-Recurring Referenda to Exceed Declining Enrollment Line 7 Hold Harmless Energy Exemption

Base $10,000,000 Inflationary Increase Transfer of Service Recurring Referendum Prior Year Aid plus Levies (no backouts) #1 - Recurring Exemptions, Levied to Max Aid + Levy Base This district used all of its authority and has no carryover authority in 09-10, Line 8A.

Base $10,000,000$9,800,000 Inflationary Increase Transfer of Service Recurring Referendum Prior Year Aid plus Levies (no backouts) #2 - Recurring Exemptions, Underlevy Aid + Levy Base This district will have $200,000 of carryover authority in in Line 8A. Underlevied by $200,

Base Inflationary Increase Decl Enroll - $150,000 Prior Year Aid plus Levies Minus $150,000 (base backout) #3 - Non-Recurring Exemptions, Levied to Max Aid + Levy Base This district will have no carryover authority in in Line 8A

Base Inflationary Increase Low Revenue Increase Line 7 - $46,000 Prior Year Aid plus Levies Minus $36,000 (base backout of amount used) #4 - Line 7 Hold Harmless (non-recurring), Recurring, Underlevy Aid + Levy Base This district will have no carryover authority in in Line 8A. Underlevied by $10,000 Transfer of Service

Base Inflationary Increase Transfer of Service Line 7 - $46,000 Prior Year Aid plus Levies (no backout) #5 - Line 7 Hold Harmless (non-recurring), Other Recurring, Underlevy Aid + Levy Base This district will have $10,000 in carryover authority in in Line 8A. Underlevied by $56,

Base Inflationary Increase Line 7 - $40,722 Rec Ref - $252,707 Prior Year Aid + Levies #6 - Line 7 Hold Harmless (non-recurring), Recurring, Non-Recurring & Underlevy Aid + Levy Base This district will have $43,955 of carryover authority in in Line 8A. Decl Enroll - $168,030 Underlevied by $252,707 $43,

Multi-Year Revenue Limit Projection Tool SFS Homepage/Longitudinal Data (will be moving back to Budget Development & Planning)/Revenue Limits Higher-Level = Using your own district data projections, simulate the multi-year effect on your district’s Revenue Limit.

Equalization Aid

Property value varies greatly across the state. As a result, resources that districts can raise from just their property tax also vary. The Equalization Aid formula mitigates this by distributing aid (“assistance”) to poorer districts to make up for what it can’t get from the property tax. In theory, the higher the value of a district, the less aid it will receive.

Equalization Aid What about two-thirds funding? Two-thirds NEVER meant that each district would get 66.7% of their costs back in state aid! It WAS a state computation that added together several statewide revenue sources, (all local levies, state and categorical aid and levy credit) and “backed into” an amount that the state would pay to districts - equaling 66.7% in total. Two-thirds is no longer law.

Equalization Aid Knowing how “rich” your district is in the formula will help you in the future as you estimate aid amounts. (But, you don’t need to estimate aid at this point in the year because you have just received the ACTUAL October 15 Certification for !)

Equalization Aid What determines where a district is in the formula? District Factors - shared cost per member - equalized value per member State Factors - cost ceilings - guaranteed valuations per member

Equalization Aid District Factors –Membership - Sept. ‘08 + Jan.’09 divided by 2, plus 2008 summer school. –Equalized Value - use the School Aid values sent to your district in May, 09. –Shared Cost – from auditor-submitted AC reports. (all on our website)

09-10 Equalization Aid State Factors (K-12 districts) –Primary Guarantee - $1,930,000 (Set by Law) –Secondary Guarantee - $1,255,824 (Determined by Calculation) –Tertiary Guarantee - $582,588 (Average Property Value Per Member)

09-10 Equalization Aid State Factors (all districts) –Primary Cost Ceiling - $1,000 (Set by Law) –Secondary Cost Ceiling - $9,205 (90% of the State Average Expenditure Per Member)

09-10 Equalization Aid Reminder: Equalization Aid is computed using prior year ( ) data including membership, shared cost and property value. We now have the data we need to see how the formula treats your district.

09-10 Equalization Aid Basic Aid Calculation (it’s just fractions!) A district’s Equalized Value Per Member divided by the State guarantee at that level produces the percent of the expenditure that is funded locally at that tier. State Aid pays the rest…

09-10 Equalization Aid Switch to Simplified Percentage Method Worksheets to calculate aid. SFS Homepage/Worksheets/Executable/ Percentage Method

Aid Scenarios Get your district’s individual cost, membership, and value from the District-Specific October 15 Aid Certification Worksheet handout. Type your district values into the spreadsheet. Add just more kids to your membership count. What happens to your aid? Add just more cost to your shared cost number. What happens to your aid? Add just more value to your property value. What happens to your aid? Important to know these effects…

On October 15, DPI certified an amount to districts. It is the amount of aid the districts will receive in This amount must be used in the Revenue Limit Calculation Equalization Aid

Equalization Aid Across Time See “Longitudinal Data” on the SFS Homepage. How can we estimate for 10-11? What districts do individually and collectively (cost, value, and kids) in the fiscal year will determine how everything shakes out.

Other Odds & Ends

Budgeting for Long Term Debt The Fall, 2009 levy should be enough to cover your debt payments due in the Spring of 2010 and Fall of (calendar year) The Budget Report should reflect the amount of your debt payments you will pay in the Fall of 2009 and Spring of (fiscal year)

The Annual Meeting Must Be Held in “Common” School Dist. Meeting of District Electors, Not Board Has Only Certain Powers Vote Tax For Operations, Debt, Capital Expansion, Purchase Sites –Please note: Board minutes should include individual levies for each fund, not just total levy. Authorize Purchase/Sale - Text Books, Real Estate School Lunch, Consolidation, Legal

Board Responsibilities Adopt the Budget Approve An Appropriate Tax Levy

Or call: David Carlson, Director, Jerry Landmark, Assistant Dir., Brad Adams, Consultant, Lori Ames, Consultant, Karen Kucharz, Consultant, Gene Fornecker, Auditor, Kathryn Guralski, Auditor, Natalie Rew, Auditor, Questions? Visit our web site: