Tuesday, June 19, 2018

Where do school funds come from? Budget, Funds, Revenue 101

I have recently accepted a nomination to be on the Future Facilities Task Force for Grand Prairie ISD. We are looking at the demographics and needs of the city, then advising on which programs need to be started, changed, or sunsetted for the future. How many students will be coming our way? What do we have money for? What will keep programs in high demand?

First of all, members of the task force have been in something of an education boot camp to learn about demographics, current programs, and the budget as it is.

Here's what I learned about how the budget and finance works in GPISD and similar Texas districts. Lots of acronyms! Here's the 101.

Our visit and education was with Mr. Rob Welch, an assistant superintendent of GPISD, who educated us on school finance and budgeting in Texas and GPISD in particular. It is my goal that this outline will help other task forces organize their beginning education sessions on school finance. I owe him for staying with me afterward to break down all of the various acronyms. 

a.       Funds, or pots of money with very different uses and purposes.
                                                               i.      The general fund (aka maintenance and operation fund M&O, the daily expenses); examples, salaries, utilities, fuel for buses, supplies, pretty much anything we need as a universal “donor” in the district
                                                             ii.      The debt service funds (aka interest and sinking fund I&S, the mortgage payment); pay the principal and interest on bonds that funded building construction and capital acquisitions. This one is very limited in how we can use this
b.       Revenues
                                                               i.      Local fund, general fund of $75.5 million, all funds $106.1 million (property taxes, various tuition, gate receipts [tickets], interest on investments)
                                                             ii.      State general fund, $118.7 million, all funds $211.5 million (FSP [foundation school program], ASF [available school fund], (the two biggest general funds, where the state gets the money to pay for things), ASATR, NIFA, IFA, EDA, [funding components] Weighted funding, revenue per WADA [weighted average daily attendance], etc.)
                                                           iii.      Federal, general fund $5.6 million, all funds $34.1 million (E-rate reimbursements [allows districts to get reduced costs within the community or school district], MAC/SHARS Reimbursements [Medicaid, income related; various special services for special needs], IDEA grants [SPED, such as Title I], Perkins grant)
                                                           iv.      Total revenues, general fund, $170 million, all funds, $351.7 million, plus issuance of bonds or other financing sources (plus issuances of bonds or other funding sources)
c.       State funding and local taxes
                                                               i.      Property values go up, state funding goes down
                                                             ii.      Tax rate goes up, state rewards local tax effort and state funding goes up
                                                           iii.      GPISD maximizes state funding with M&O tax rate of $1.17 passed by voters in 2015
[Question: Definition of General Fund. In public sector accounting, the primary or catchall fund of a government, government agency, or nonprofit entity such as a university. It is like a firm's general ledger account and records all assets and liabilities of the entity that are not assigned to a special purpose fund.]
d.       State funding formula
                                                               i.      Evolving system of calculations intended to equalize for property values and populations served, about 40 years old and tweaked every two years. Annual funding levels are based on WADA, despite the huge demographic shifts in the past 40 years
                                                             ii.      GPISD allotment is appx $5600 per student. 1% gain in attendance is $2mm in additional funding. 290 students are 1% of students, is half of an elem., worth 2800 students or $15mm.
                                                           iii.      School building bonds—require an election. Voters approve the authorizations, board votes on issuance, and the bonds are issued with proceeds deposited into capital projects fund. The board sets the I&S tax rate annually to make the Bond P&I payments [principal and interest scheduled over about 20 years. Key factors:  
1.       limited dates annually for a bond election;
2.       repayment must be supported by projected property values and projected IFA/EDA [instructional facilities allotment funding, which districts apply for and may not get funded];
3.       interest rate cost based on bond ratings provided by rating agencies;
4.       Current bond ratings: Fitch AAA/AA, Moody’s Aaa/Aa3, Standard & Poor’s – AAA/AA- the most significant factor in the bond process. They investigate how the district is managed and evaluate the district’s finances. These are very competitive rates for GPISD
2.       Budget
a.       Budget calendar – the budget planning process begins in November of the prior fiscal year
                                                               i.      Building the budget involves a student forecast in January; campus budget allocations in February through April; Staffing formula and allocations in March through June; and the department zero-based budgeting March through June
                                                             ii.      Setting the tax rate involves property value projections and estimates, May through July; Certified values by July 25thl Public meeting to discuss tax rate and budget in August; Adopting the budget and setting the tax rate, by August 31st; Start of the new fiscal year by September 1. [Responsibilities are laid out for each aspect of the budget calendar, as each element will be assigned to a different area, as appropriate to that area, e.g., school board approval.]
                                                           iii.      Number of Funds – 40, (such as the general fund, debt services, fund, federal fund, child nutrition fund, capital projects fund, etc.…), number of purchase orders annually average, 14,400 per year
                                                           iv.      Basics of expenses [78% of the budget is payroll; utilities, 8%, supplies, 6%, misc., 4%, debt service, 1%, capital acquisitions, 3%]
3.       Human resources
a.       Kinds of staffing—teachers, admin, aides, paras, central admin, auxiliary – custodian, aux – transport, aux – food service, tech, other
b.       3773.1 staff—67% professional staff, 8% aides, 24% auxiliary staff; 75% f, 25% m; .9 doc, 21% m, 77.5 b, .6 no degree;
c.       Salary GPISD avg $54.500 for beginning teachers, $52.5k Arlington, Irving, 52k, Mansfield 54k, state average 46k
d.       Staff benefits – GPISD insurance contribution $350/month. Area districts range from $225-$351. The state requirement for contribution is $225/m.
e.       2017-2018 critical shortage stipends – TEA and GPISD recognize the following as critical shortage areas and provide the following stipends
                                                               i.      SLP $5k
                                                             ii.      Diagnosticians 4k
                                                           iii.      Bilingual 3k
                                                           iv.      VI / O&M 2k
                                                             v.      Certain subject areas such as math, science, ASL 1k

More information available to the public 
a.       GPISD Website contains the proposed and adopted budgets, the SchoolFIRST and annual financial reports, the check registers, and the annual debt reports
                                                               i.      Home>Our district>financial transparency> a ton of resources such as the first section, “financial reports”
                                                             ii.      You can observe every single check written by the school district and what the district is spending money on. It goes all the way back to the 2013 school year, archived, related to how the district is spending money.
b.       SchoolFIRST contains the financial rating systems for the schools based on the prior year data. It makes sure that the school districts are managing finances the way that they should be. They grade the district based on an applicable range for the report. Presently rates A = Superior on the budget integrity rating.
c.       What is happening in the state budget? Certain elements are changing due to…
                                                               i.      Commission on school finance reform
                                                             ii.      Financial transparency – the A-F Financial report card
                                                           iii.      Legislative priorities
                                                           iv.      Changes in school FIRST financial rating system
5.       Local aspects of the budget system
a.       Demographic projections
b.       Property values expect continued growth, in the existing property values. Most new development is on the commercial side.
c.       State revenue adjusts for property value growth
d.     Overall revenue is flat is we maintain our ADA 

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