BUDGET AND FINANCE WHAT EVERY NEW SCHOOL BOARD
BUDGET AND FINANCE: WHAT EVERY NEW SCHOOL BOARD MEMBER NEEDS TO KNOW LEIGH BURDEN, ASSISTANT SUPERINTENDENT BUSINESS & FINANCE 1
Fiduciary Duty � Legal authority � Malfeasance Who is minding the store? 2
Fiduciary Duty � Legal authority � Malfeasance What this means… VA Code: 22. 1 -89 Management of funds “Each School Board shall manage and control the funds made available to the School Boards for public schools and may incur costs and expenses. ” The School Board determines how the funds are to be spent. The local governing body determines appropriation levels. 3
Fiduciary Duty � Legal Authority � Malfeasance VA Code: 22. 1 -91 Limitation on expenditures “No school board shall expend or contract to expend, in any fiscal year, any sum of What this means… money in excess of the funds available for school purposes for that fiscal year The School Board can not exceed the appropriation. . ” body. levels determined by the local governing 4
So, who IS minding the store? � Superintendent � CFO/Director of Finance/Assistant Superintendent � School Board 5
BUDGET 6
Budget Superintendent’s role School Board role Local governing body role Who does what…when? 7
ORIGIN OF WORD “Budget” VIDEO about word “budget” from Hotforwords. com 8
ORIGIN OF WORD “Budget” The origin of our word budget is the Latin bulga, a little pouch or knapsack. The word turned up in English in the fifteenth century, having travelled via the French as “leather bag” where housewives kept their money. Video source: Hotforwords. com
Superintendent’s Role Development of needs-based budget Compensation decisions Date requirements What LCPS does…. 10
School Board Role � Sometimes direction to Superintendent on priorities � Public hearings (formally advertised) � Public input (community info) � Submission to local governing body What LCPS does…. 11
Local Governing Body Role � Fiscal guidance? � Appropriation – lump sum or state category? � It’s all about relationships…. What LCPS does…. 12
Budget Development: Key Players � Board of Supervisors � School Board � Superintendent � Senior Staff � Department of Business and Financial Services � School Administrators � Parents and School Community � Education Association 13
Standard Budget Reports � Budget reports �Trend data �Comparisons with previous year �Explanations of changes – cost of salaries �Enrollment projections �Peer comparisons 14
FINANCE
Finance � School activity funds � Finance committee � School operating fund �Where the money goes �How to monitor? Financial reporting 16
School Activity Funds � Basic principles �Funds used for purpose collected �Projects shall contribute to educational experience �Funds derived by student body used for student body �Students encouraged to participate in management �Funds managed with sound business practices 17
Finance Committee � Contracts/Procurement �Virginia Public Procurement Act (VPPA) �Sanctions significant �School Board policy �Competition thresholds 18
Standard Finance Reports � Monthly financial reports �Reporting by state category � Quarterly financial reports �Expenditure and revenue summary �Expenditure detail (by Dept, by Program, by Subobject) 19
LCPS Monthly Report- State Categor ex. State Category Original Budget Expended Operating Fund Instruction Revised Budget Actual Balance $540, 362, 397 $560, 301, 189 $34, 590, 145 $38, 420, 337 $34, 496, 855 $3, 923, 482 89. 79% $2, 308, 489 $4, 224, 570 $3, 059, 755 $1, 164, 815 72. 43% Operation & Maintenance$65, 840, 169 $64, 436, 188 $55, 227, 551 $9, 208, 636 85. 71% Pupil Transportation $52, 466, 940 $53, 052, 165 $39, 733, 172 $13, 318, 993 74. 89% Technology $25, 277, 522 $30, 838, 772 $22, 709, 099 $8, 129, 674 73. 64% $0 $7, 434, 609 $720, 845, 662 $758, 707, 831 $24, 034, 272 $744, 879, 934 $782, 742, 103 Admin, Attend & Health Facilities Debt Service & Fund Transfers Fund Subtotal $443, 090, 286 $117, 210, 903 79. 08% $0 100. 00% $605, 751, 327 $152, 956, 504 79. 84% Food Service Fund Food Services TOTAL $18, 318, 973 $5, 715, 299 76. 22% $624, 070, 300 $158, 671, 803 79. 73% 20
LCPS Quarterly Report – Summary ex. Encumbranc Current es Balance % Spent $0 $160, 662, 890 64% $0 $51, 150, 105 70% $3, 440, 205 $3, 893, 643 81% $0 $4, 604, 170 61% $14, 400 $7, 881, 722 51% $5, 476 $1, 207, 443 62% $0 $230, 594 84% $1, 654, 404 $8, 577, 095 67% $30, 253 $773, 456 58% Expenditures Salaries Employee Benefits Contractual Services Internal Services Utilities Communication Insurance Materials, Supplies Training and Mileage Continuing Education Leases & Rentals Ops & Maintenance Capital Outlay Transfer Out Total Expenditures FY Budget Expenditures $443, 907, 086 $283, 244, 196 $173, 175, 217 $122, 025, 112 $20, 616, 004 $13, 282, 156 $11, 873, 258 $7, 269, 088 $16, 236, 799 $8, 340, 677 $3, 145, 404 $1, 932, 485 $1, 460, 919 $1, 230, 325 $26, 103, 487 $15, 871, 987 $1, 820, 412 $1, 016, 703 Revenue County State Federal Other Appropriated Fund Bal. Total Revenue Projected Change to Fund Balance @ June 30 FY Budget $470, 818, 084 $196, 451, 138 $120, 000 $5, 654, 344 $350, 468 $371, 729 -$24, 748 $342, 180 $5, 168, 683 $460, 421, 041 Revenue Received $470, 818, 084 $140, 960, 915 $171, 602 $4, 607, 493 $33, 400, 000 $706, 443, 566 $33, 400, 000 $649, 958, 094 $548, 042 $536, 484 $8, 500 $1, 843, 271 $5, 168, 683 $706, 443, 566 $1, 385 $196, 189 $34, 946 $129, 809 $0 $33, 248 $69, 984 $1, 431, 107 $0 $0 $5, 251, 053 $240, 771, 471 Current Balance $0 $55, 490, 223 -$51, 602 $1, 046, 851 Projection $149, 830, 464 $47, 980, 520 $3, 493, 643 $4, 604, 170 $5, 261, 722 $1, 147, 443 $230, 594 $8, 577, 095 $583, 456 Balance $10, 832, 426 $3, 169, 585 $400, 000 $0 $2, 620, 000 $60, 000 $0 $0 $190, 000 64% 76% -291% 22% N/A 66% $196, 189 $129, 809 $33, 248 $1, 431, 107 $0 $223, 499, 460 $0 $0 $17, 272, 011 % Rec. 100% 72% 143% 81% Projection $0 100% $56, 485, 472 92% Balance $0 $62, 490, 223 -$51, 602 $1, 046, 851 $0 $2, 953, 903 $0 $0 $0 $63, 485, 472 $0 $2, 953, 903 21 $20, 225, 915
VSBA Quarterly Report – Detail ex. 22
EXPENDITURES 23
LCPS School Operating Fund Where the money goes All other costs 12% Salaries & benefits 88% 24
Fund Balance/Surplus/Savings � Coming soon to a Local Governing Body meeting � Important issue facing School Boards across the Commonwealth � Why it happens and why it matters 25
Why it happens and why it matters What is lapse and turnover? � Fluctuations of budget to actual � Position lapse and turnover � CAUTION, CAUTION � Only flexibility the division has… 26
How To Address It � Budget a large negative number � Make assumptions for vacant / new positions � Other variables � Predicting human behavior 27
Surpluses Come From Savings � Surpluses are not a surprise � All school division’s budgets should have unspent funds � School divisions cannot exceed their appropriations 28
REVENUE 29
LCPS - Where the money comes from FY 2013 Amount ($ in millions) � Carryover $10. 0 � Local/County Funding $528. 0 � State Revenue $250. 1 � Federal Funds $14. 1 � Other Funds $6. 9 Total $809. 1 State 30. 9% Local/County 65. 3% 30
Local/County Funding 60. 0% 47. 7% 50. 0% 47. 2% 42. 2% 43. 7% 39. 7% 40. 0% 34. 6% 30. 9% 30. 8% 30. 0% 20. 0% 10. 0% Alexandria City Arlington Fairfax County Falls Church County City Loudoun Manassas City Manassas Prince William County Park City County Source: FY 2012 WABE Guide Tax Rate value Value of 1¢ $1. 235 per $100 of a 31 $8
State Funding & the Local Composite Index • • • Source: DOE website Components True Value of Property Adjusted Gross Income Taxable Retail Sales LCPS LCI -. 5666 According to the LCI, locally we should be able to pay for about 57 percent of the costs of education and the Commonwealth 32
Sales Tax Calculation Weldon Cooper July 2010 Basic Aid Calculation Weldon Cooper LCPS Percentage Adjusted ADM (K-12) 1, 569, 153 State per pupil amount 77, 491 Total 4. 938% Sales tax statewide Less sales tax $106. 9 billion Education share 1. 125% billion LCPS percentage Sales tax funding Total Basic Aid $1. 2 State share State funding 4. 938% $59. 3 million
OTHER STUFF 34
Other Stuff You Should Know � Misinformation � Simplify, simplify � Strategies to cut spending 35
Misinformation VIDEO from Saturday Night Live Gilda Radner and Chevy Chase “Violins on Television” Can be found at Hulu. com
The Things I’ve Learned…. � The media sometimes gets it wrong � If your version isn’t out there, it doesn’t exist � Tell the story better � Everyone has to help 37
Simplify, Simplify What kind of information do employees need? What can be easily understood? The right data will tell your story. Peer comparisons Pupil/teacher ratios Cost per pupil Compensation packages School-based and non-school based positions 38
Strategies to Cut Spending � Last in first out � Reduce staffing greater than SOQ � Review current vacancies � Reduce extended contracts � Increase class size � Healthcare co-pays and deductibles Reduce employer share of healthcare Defer equipment replacement plans Mid-year salary enhancements Increase fees Selective elimination of programs 39
QUESTIONS? Leigh. Burden@LCPS. org 40
- Slides: 40