BUDGET BASICS Denise Williams, Executive Director MT Association of School Business Officials (MASBO) 406-461-3659 or [email protected] March 21 - Great Falls March 26 - Billings April 24 Fairmont Hot Springs BUDGET BASICS Terminology and Key Concepts General Fund Overview Other Budgeted Funds (chart) Non-budgeted funds (chart) Budget Timeline and Q&A Terminology and Concepts Why do we use separate funds?
to account separately for resources affected by different types of spending restrictions because financial reporting standards require it Fund accounting Each fund has a self-balancing set of accounts (debits = credits) to keep the cash flow, revenues, expenditures and equity segregated from the other funds. It is desirable to have as few funds as legal and sound administrative requirements make possible. Terminology and Concepts 20-9-201, MCA Fund Definitions BUDGETED FUNDS NON-BUDGETED FUNDS Trustees must adopt a budget to spend money Local property tax levies are a common revenue source
No budget is needed to spend money Expenditures are limited to cash available in the fund (20-9-210, MCA) No tax revenues Voted Levy hold an election to obtain voter approval Permissive (non-voted) Levy voter approval not required UDDGETED FUNDS FUND # FUND NAME 01 02 11 13 14 17 19 28 29
50 61 General Transportation Bus Depreciation Tuition Retirement Adult Education Non-Operating Technology Flexibility Debt Service Building Reserve Permissive or Voted Levy? Permissive and voted Permissive Permissive Permissive Permissive (countywide levy) Permissive Permissive
Voted Voted, but tied to state funding Voted and permissive (SIDs) Voted and permissive UDDGETED FUNDS FUND # FUND NAME 12 15 18 20 21 24 25 26 27 45 60 70-72
73-79 82 81-85 Food Service Miscellaneous Programs Traffic Education Lease Rental Agreement Compensated Absences Metal Mines Tax Reserve State Mining Impact Impact Aid Litigation Reserve Permanent Endowment Building Enterprise Internal Service Interlocal Cooperative Other Trust Funds Terminology and Concepts Budget Authority vs. Cash BUDGET AUTHORITY
CASH Budget amounts are estimates of what you intend to receive in revenue and what you intend to spend to operate the school for the year. The actual amount of money you have on hand to spend! 20-9-133, MCA: Trustees must formally approve (adopt) an expenditure budget in order to spend money during the fiscal year (July 1 June 30). Total expenditures made (or liabilities incurred) during the year must be within the approved budget. Consider this:
Not everyone pays their tax bill on time. (revenue doesnt come in when you expect it to) Stuff happens! (unanticipated events = unanticipated expenditures Terminology and Concepts Budget Authority vs. Cash - Example BUDGET AUTHORITY Budgeted Revenues State payments $750,000 Facilities use 15,000 Property Taxes 185,000 Total $950,000 Budgeted Expenditures Salaries/Benefits
$800,000 Textbooks/supplies 40,000 CASH Actual Revenues Received State payments $750,000 Facilities use 17,000 Property Taxes 173,000 Total $940,000 Actual Expenditures Salaries/Benefits $755,000 Textbooks/supplies 55,000 Facilities maintenance80,000 Insurance 20,000 Field trips/athletics 15,000 Total $925,000 Change in cash balance $ 15,000 Terminology and Concepts
Fund Balance Budget vs. Actual Beginning Fund Balance + Revenues - Expenditures Ending Fund Balance BUDGETED ACTUAL $ 95,000 $ 95,000 950,000 940,000 950,000 925,000 $ 95,000 $ 110,000 Terminology and Concepts Fund Balance Fund Balance (cash + receivables payables) Beginning Fund Balance (July 1) + Current Year Receipts - Current Year Expenditures Ending Fund Balance (June 30)
Terminology and Concepts Fund Balance - Example Fund Balance (cash + receivables payables) Beginning Fund Balance (July 1) $ 95,000 + Current Year Receipts $940,000 - Current Year Expenditures $925,000 Ending Fund Balance (June 30) $110,000 Terminology and Concepts Fund Balance, Reserves and Reappropriation Fund Balance (cash + receivables payables) Beginning Fund Balance + Current Year Receipts - Current Year Expenditures Ending Fund Balance Reserves (keep for cash flow
purposes) Reappropriate (reduces revenue requirement in next years budget) Return to state (General Fund only) Terminology and Concepts Fund Balance, Reserves and Reappropriation Reserves - year-end cash balances kept for cash flow Fund General (01) Operating Reserve Limit Greater of $10,000 or 10% of ensuing year budget (20-9-104, MCA) Transportation (10)
20% of ensuing year budget (20-10-144, MCA) Retirement (14) 20% of ensuing year budget (20-9-501, MCA) Adult Ed (17) 35% of ensuing year budget (20-7-713, MCA) Debt Service (50) Approximate amount of payments due between July 1 and November 30 of second ensuing year (20-9-438, MCA) Terminology and Concepts Fund Balance, Reserves and Reappropriation - Example Fund Balance (cash + receivables payables) Beginning Fund Balance $
95,000 + Current Year Receipts 940,000 - Current Year Expenditures 925,000 Ending Fund Balance $ 110,000 Assume next years adopted budget is $ 975,000 Reserves @ 10% = $97,500 Terminology and Concepts Fund Balance, Reserves and Reappropriation - Example Fund Balance (cash + receivables payables) Beginning Fund Balance $ 95,000 + Current Year Receipts 940,000 - Current Year Expenditures 925,000 Ending Fund Balance $ 110,000 $97,500
Reserves (keep for cash flow purposes) Reappropriate (reduces revenue requirement in next years budget) Return to state (General Fund only) Terminology and Concepts Fund Balance, Reserves and Reappropriation Fund Balance Reappropriated Ending Fund Balance - Reserves = Fund Balance Reappropriated Used in place of new revenue to fund the ensuing years expenditure budget Reappropriation is mandatory after reserves are
maximized General Fund reappropriation is limited to 15% of the maximum budget (excess is remitted to the state) Terminology and Concepts Fund Balance, Reserves and Reappropriation - Example Fund Balance Reappropriated Ending Fund Balance $ 110,000 - Reserves 97,500 = Fund Balance Reappropriated $ 12,500 Terminology and Concepts Fund Balance, Reserves and Reappropriation - Example Fund Balance (cash + receivables payables) Beginning Fund Balance $ 95,000 + Current Year Receipts 940,000
- Current Year Expenditures 925,000 Ending Fund Balance $ 110,000 $97,500 $12,500 Reserves (keep for cash flow purposes) Reappropriate (reduces revenue requirement in next years budget) Return to state (General Fund only) GENERAL FUND OVERVIEW General Fund Expenditure Budget Limits
Funding Sources General Fund - Budget Elements Basic Entitlement Per-ANB Entitlement Special Education Allowable Cost Payment Quality Educator Payment At-Risk Student Payment Indian Education for All Payment American Indian Achievement Gap Pmt Data for Achievement Payment Basic Entitlement Rates Entitlements FY2017 FY2018 * (HB191) FY2019 * (HB191)
Elementary Basic $ 50,895 $ 51,149 $ 52,105 For every 25 Elem ANB over 250 Middle School Basic $ $ $ 2,606
$ 101,790 $ 102,299 $ 104,212 For every 45 MS ANB over 450 $ $ $ High School Basic $ 305,370 $ 306,897 $ 312,636 For every 80 HS ANB over 800
$ 15,269 $ 15,345 $ 15,632 2,545 5,090 2,558 5,115 5,211 *HB191 increased FY2017 by inflation of .5% for FY2018 and 1.85% in FY2019. General Fund - ANB AVERAGE NUMBER BELONGING (ANB) FALL
ENROLLMENT (1ST Monday in October) Part-time Students = , , or SPRING ENROLLMENT (1st Monday in February) Part-time Students = , , or Total of 2 counts divided by 2 X180 + PIR Days* 180 = ANB Example: Oct count = 150
Feb count = 166 (150 + 166) 2 = 158 X 187 180 = 165 ANB *PIR Days are pupil instruction related days for teacher in-service training and recordkeeping General Fund - ANB Use the ANB that generates the greatest maximum general fund budget: Current Year ANB (CY ANB) ANB for the budget unit for the ensuing school year (FY2019 ANB is based on FY2018 enrollment counts) 3-Year Average ANB Add current year ANB to the current ANB for the previous two school fiscal years and divide by 3 (FY2019 ANB is the average of
FY2018, FY2017 and FY2016) (see section 1. Certified ANB on budget data sheet) Per-ANB Entitlement Rates Entitlements Elementary per-ANB High School per-ANB FY2017 $ 5,444 $ 6,970 FY2018 * (HB191) $5,471 $ 7,005 FY2019* (HB191) $ 5,573 $ 7,136 *HB191 increased per-ANB entitlements by .5% in FY2018 and 1.85% in FY2019
Each student after the first ANB is decreased by a reduction factor (decrement) per ANB: Elementary ANB decrement is $.20 per ANB High school & 7th - 8th accred ANB decrement is $.50 per ANB Per-ANB Entitlement Calculations Elementary: $.20 decrement for first 1,000 ANB [$5,573 X Elem ANB] - [.20 X (Elem ANB/2) X (Elem ANB 1)] For each ANB over 1000: ($5,373.20 X ANB) + $5,473,100 7th & 8th accredited: $.50 decrement for first 800 ANB [$7,136 X 7th & 8th ANB] - [.50 X (7&8 ANB/2) X (7&8 ANB 1)] For each ANB over 800: ($6,736.50 X 7&8 ANB) + $5,549,000 High School: $.50 decrement for first 800 ANB [$7,136 HS ANB] - [.50 X (HS ANB/2) X (HS ANB 1)] For each ANB over 800: ($6,736.50 X ANB) + $5,549,000 Special Education Allowable Costs FY2017 FY2018* HB 2 $ 42.892 $ 43.292 Appropriation
million million * Net of reductions under SB261 FY2019* $ 43.292 million Special Education Allocation 20-9-321(4)(a), MCA: 52.5% through instructional block grants (ISB) 17.5% through related services block grants (RSBG) 25% to reimbursement of local districts (disproportionate costs) 5% to special education cooperatives and joint Funding Components
Quality Educator (QEC) OPI pays to school districts and special education cooperatives Paid for each full-time equivalent (FTE) licensed educator and for other licensed professionals employed by the district or cooperative At-Risk Student (ARC) Annual appropriation is distributed school districts based on Title I allocations Funding Components (continued) Indian Education for All (IEA) Paid per ANB ($100 minimum) For providing curriculum for the recognition of American Indian cultural heritage American Indian Student Achievement Gap (SAG) Paid per each American Indian student enrolled as reported on the October enrollment count For closing the educational achievement gap that exists between American Indian students and non-Indian students
Data for Achievement (D4A) Paid per ANB For access fees or other costs for statewide data system, including data entry and staff training Funding Components FY2017 Quality Educator At-Risk Student (1) Indian Education for All (per ANB) Am Indian Student Achievement Gap Data for Achievement (2) (per ANB) FY2018* FY2019* (HB191) (HB191)
$3,169 $3,185 $3,245 $5,363,730 $5,390,549 $5,463,895 $21.25 $21.36 $21.76 ($100 min.) ($100 min.) ($100 min.) $209 $210 $214 $20.36 $20.46 $20.84 *HB191 increased these payments .5% in FY2018 and 1.85% in FY2019. (1) reduced by SB261 level 2 trigger; (2) suspended by SB261 level 4 trigger General Fund Budget Limits BASE Budget
Maximum Budget* Basic Entitlement 80% 100% Per-ANB Entitlement 80% 100% Special Ed Allowable Cost Payment 140% 175 200% Quality Educator Payment
100% 100% At-Risk Student Payment 100% 100% Indian Education for All Payment 100% 100% Amer. Indian Achievement Gap Pymnt 100% 100% Data For Achievement Payment
100% 100% General Fund Budget Limits Minimum Budget Requirement ~80 % BASE Budget Trustees must adopt a budget that is at least equal to the BASE Budget. Item 9b on your budget data sheet from OPI General Fund Budget Limits
100 % Over-BASE Budget (funded w/ local property taxes) BASE Budget Maximum Budget Item 9c on budget data sheet from OPI General Fund Budget Limits Over-BASE Budget (funded w/ local property taxes) BASE
Budget A district may adopt an expenditure budget that exceeds the BASE budget. The Over-BASE budget is funded primarily through local property taxes at a level approved (authorized) by the voters through a levy election. General Fund Budget Limits Highest Budget Allowed Over-BASE Budget (funded w/ local property taxes) BASE Budget Highest Budget Allowed
Districts may adopt a budget that is the higher of: Current Year Maximum (9c), OR Prior Year adopted budget (10d) plus any increases in the Basic and per-ANB entitlements and any increases in the Quality Educator, At-Risk, Indian Education for All, Student Achievement Gap and Data for Achievement payments Item 9e on budget data sheet from General Fund Budget Limits Voted levy (9f) Permissive Over-BASE Budget (10e) BASE Budget (9b on data
sheet) Highest Budget Allowed (9e) Highest Budget allowed without having to ask voters to approve an additional local levy (9d) Without seeking additional voter approval, trustees may adopt a General Fund budget that equals their current year BASE budget (9b) plus highest over-BASE levy approved by voters or levied in past five years (10e). Item 9d on budget data sheet from OPI Highest Budget without a Vote To the Spreadsheet! FY2019 General Fund Budget Worksheet
or from the OPI Home Page (www.opi.mt.gov) Leadership Finance & Grants - School Finance Budgets Budget Spreadsheets and Guidance SAVE THIS FILE TO YOUR DESKTOP! FY2019 General Fund Budget Worksheet Expenditure Budget Limits 1. Enable Editing 2. Enable Content On the Inputs tab: Elem 3. Enter LE 4. Enter 2019 Taxable value 5. Compare to Item 9d on data sheet 6. Compare to Item 9e on data sheet 7. Enter Proposed Adopted Budget C3 Q16
Q31 Q32 Q33 High School C4 S16 S31 S32 S33 K-12 C5 U16 U31 U32 U33 GENERAL FUND REVENUES Funding the BASE budget Funding the over-BASE budget
Funding the BASE Budget Adopted Budget Over-BASE Levy BASE Budget BASE Levy DSA/SPED/ 5 Funding Components Local Revenues Revenues from State Funding the BASE Budget State funding Direct State Aid 44.7% of the Basic Entitlement 44.7% of the per-ANB Entitlement
Special Education Allowable Costs (140%) Funding Components (100%) Quality Educator At-Risk Student Indian Education for All American Indian Achievement Gap Data for Achievement Payment schedule: 10% in AugOct and DecApr; 20% in June Funding the BASE Budget Adopted Budget Over-BASE Levy BASE
Budget Guaranteed BASE Tax Levy Base Aid (GTB) DSA/SPED/ 5 Funding Components Direct State Aid (DSA) (44.7% Basic & per-ANB) 100% QEC 100% ARC 100% IEA 100% SAG 100% D4A 140% Funding the BASE Budget Adopted
Budget Over-BASE Levy BASE Budget SB 261 cuts for FY18 and FY19: Guaranteed At-Risk payment reduced Data for Achievement BASE Tax payment suspended Levy Base Aid (GTB) DSA/SPED/ 5 Funding Components Direct State Aid (DSA) (44.7% Basic & per-ANB) 100% QEC 100% ARC
100% IEA 100% SAG 100% D4A 140% Funding the BASE Budget Adopted Budget Over-BASE Levy BASE Budget BASE Levy DSA/SPED/ 5 Funding Components 35.3% Basic Entitlement + 35.3% Per-ANB Entitlement + 40% SPED Payment
Funded with local permissive (non-voted) levy, other nonlevy revenue and state GTB aid, if a district is eligible Funding the BASE Budget Adopted Budget Over-BASE Levy BASE Budget BASE Levy Revenue that reduces BASE levy requirement DSA/SPED/ 5 Funding Components
FB Reappropriated Oil and gas revenue School Block Grant* Local revenue required to be anticipated Other non-levy revenue *Eliminated in HB647 K-12 Funding (2017 session) Payment* Funding the BASE Budget State Guaranteed Tax Base Aid (GTB) State subsidy for BASE mills Eligibility is based on the ratio between the districts taxable value and the districts GTB Budget Area as compared to the statewide taxable value X 193%*
and the GTB Budget Areas of all districts statewide. Districts with a ratio lower than the statewide ratio qualify for GTB aid. OPI pays General Fund GTB to districts in November and May Funding the BASE Budget Adopted Budget Over-BASE Levy BASE Budget Guaranteed If a district is eligible, BASE Tax GTB subsidizes the Levy Base Aid BASE levy (GTB) requirement DSA/SPED/
5 Funding Components Funding the BASE Budget Adopted Budget Over-BASE Levy BASE Budget BASE Levy GTB Revenue that reduces BASE levy requirement DSA/SPED/ 5 Funding Components
FB Reappropriated Oil and gas revenue School Block Grant Local revenue required to be anticipated Other non-levy revenue *Eliminated in HB647 K-12 Funding (2017 session) Payment Increases in GTB to offset the loss of block grant and NRD payments (HB647) State Guaranteed Tax Base Aid (GTB)
State subsidy for BASE mills Eligibility is based on the ratio between the districts taxable value and the districts GTB Budget Area as compared to the statewide taxable value X 193%* and the GTB Budget Areas of all districts statewide. Districts with a ratio lower than the statewide ratio qualify for GTB aid *GTB statewide guarantee ratio FY2018 193% (no change) FY2019 216% FY2020 224% FY2021 232% Districts that already qualify for GTB will receive more More districts will qualify Funding the BASE Budget Adopted Budget FY2018 Over-BASE Levy
BASE Budget Increases GTB budget area BASE Levy GTB (permissive) DSA/SPED/ 5 Funding Components
FB Reappropriated Oil and gas revenue School Block Grant Local revenue required to be anticipated Other non-levy revenue *Eliminated in HB647 K-12 Funding (2017 session) Payment Funding the over-BASE Budget Adopted Budget BASE Budget Funded with voter Over-BASE Levy approved levies and non-levy revenue
Guaranteed BASE Tax Levy Base Aid (GTB) DSA/SPED/ 5 Funding Components Local Revenues Revenues from State Back to the OPI Spreadsheet! FY2019 General Fund Budget Worksheet Funding Sources On the Inputs tab: Elem 1. Enter Fund Balance Reappropriated C17
On the Non-Levy Revenue tab: Elem 2. Enter non-levy revenues col. E On the Gen Fund Budget tab: Elem 3. Guaranteed Tax Base Aid (GTB) 4. BASE levy 5. Over-BASE levy E219 E220 E241 High School
C17 K-12 High School col. F K-12 High School F219 F220 F241 C17 Col. G K-12 G219 G220 G241
SCHOOL BUDGET TIMELINE School Finance and Budgeting Essential element in school operations Complex in nature Driven by laws, regulations, policies Requires special knowledge, skills and abilities Affects everyone SCHOOL BUDGET TIMELINE Joint Leadership Define, understand and agree on the various roles Effective Roles - Board of Trustees - Superintendent - Business Manager - Community Board of Trustees Montana Code Annotated 20-3-324 Powers and duties (government of the school) 20-9-213 Duties (financial administration)
Effective Roles Knowledge Policies Communication Employ effective leaders Superintendent Montana Code Annotated 20-4-402 (district supt.) 20-3-205 (county supt.) Effective Roles Knowledge Communication Implement and administer policies Supervision and evaluation Clerk/Business Manager Montana Code Annotated 20-3-325 (clerk of the district) Title 20, chapter 9 (finance) and chapter 20 (school elections) Portions of Title 2 (state employees), Title 13 (elections) and
Title 15 (taxation) Effective Roles Knowledge Implement and administer Financial reports Communication Community Montana Code Annotated Effective Roles Knowledge Communication Elect effective trustees Financial support Other Key Roles County Superintendent County Treasurer State Agencies Office of Public Instruction (OPI) Department of Revenue county level
state level QUESTIONS? Contact information: Denise Williams Montana Association of School Business Officials (MASBO) 900 North Montana Avenue, Suite A5 Helena, MT 59601 (406) 461-3659 [email protected]
