School Finance Update Leanne Emm, Associate Commissioner Emm_l@cde.state.co.us – 303-866-6202 Jennifer Okes, Director Okes_j@cde.state.co.us – 303-866-2996 Public School Finance and Operations Division July 2015

Agenda Total Program Funding 2015 Legislative Session & Funding Levels Accreditation & Transparency BEST Program Other Items

Total Program Funding Formula Total Program Funding equals: =(funded pupil count x formula per pupil funding) + at-risk funding + online & ASCENT funding After Total Program is calculated, the Negative Factor is Applied

Base Per Pupil Funding 2014-15 Base Funding - $6,121.00 2015-16 Increase of $166.72 Inflation of 2.8% 2015-16 Base Funding - $6,292.39 Increase of $171.39

Formula Per Pupil Funding - Factors Base per pupil funding is adjusted by factors Cost of Living Personnel & Non-personnel costs Size of district Determine At-Risk Funding, On-line and ASCENT Funding Once Total Program is determined, the negative factor is applied 2015-16 – 12.13% Once the base funding has been set, the base has factors applied. These factors determine the per pupil funding amount by district and each district is different. Cost of living – factor that attempts to reflect the differences between districts for the cost of housing, goods and services. Aspen has a higher cost of living factor than a small rural district. Personnel costs factor – based on enrollment and incorporates cost of living for personnel. Size factor – driven by enrollment and attempts to reflect purchasing power within districts. Small districts have greater size factor adjustments. At-risk funding – based on the numbers of students qualifying for free lunches On-Line funding – based on the number of students enrolled in an online program within the district. There are various rules that make a student eligible to be counted. Once these factors are applied to the base, a total per pupil funding amount is determined for district. This amount is then multiplied by the districts funded pupil count to arrive at total program funding.

2015 Legislative Session & Discussion of Funding Levels

2015 Legislative Session SB15-267 –School Finance Act Provided funding to fund growth and inflation plus $25 million buy down of negative factor Provides a starting point for 2016-17 that states negative factor amount will not increase from 2015-16 Minimum state aid funding permanently removed $5 million additional at-risk per pupil funding – estimated at approximately $16 per pupil Legislative declaration (intention): If the actual local share higher than estimates, then the state share of total program will not decrease. Through the supplemental appropriation process.

Pupil Count Estimates Long bill and School Finance Act based on pupil count estimates After the October counts are finalized in December, Legislative Council staff prepare estimates for the next year They send out the estimates and seek input from districts (around Nov/Dec) They use discretion on incorporating input Similar to fiscal notes CDE will help ensure that district’s receive the estimates

July State Share Payments Traditionally, the Department has allowed districts to revise their pupil counts from the final budget appropriation and receive funding based on these revisions – this causes the entire formula to rerun which causes differences from the original appropriation. This year significant pupil count changes caused a larger difference which caused July payments to vary at a greater rate than the original appropriation August payments will be recalculated and based upon the original appropriation estimates and will incorporate the funds received in July

Assumptions FY2015-16 Final Budget Estimated Change Total Pupil Growth* 10,844 855,391 At-Risk Growth 448 309,985 Inflation Estimate 2.8% NA Base Per Pupil Funding $171.39 $6,292.39 Sources Colorado Department of Education *Legislative Council provides estimates

Assumptions FY2015-16 Final Budget 2014-15 Actual 2015-16 Final Budget Change Total Program prior to Negative Factor (Growth & Inflation) $6,813,620,535 $7,094,740,921 $281,120,386 Negative Factor (880,176,146) (855,176,146) 25,000,000 Revised Total Program $5,933,444,389 $6,239,564,775 $306,120,386   Negative Factor Percentage -12.97% -12.13% .84% Average Per Pupil Funding $7,025.60 $7,294.41 $268.81 Sources Colorado Department of Education

Compare FY2014-15 Final to FY2015-16 Appropriation   2014-15 Actual 2015-16 Final Appropriation Change State Share $3,950,612,482 $4,113,321,147 $162,708,665 Local Property Tax 1,837,512,870 1,976,565,020 139,052,150 Specific Ownership Tax 145,319,037 149,678,608 4,359,571 Total $5,933,444,389 $6,239,564,775 $306,120,386

The School Finance Act is funded with a combination of State General Fund; local funds including property tax and specific ownership tax and other state funds which include the State Education Fund and the Public School Fund.

Property Tax & Assessed Values Odd Years – reassessment year for counties 2015 is reassessment year In August, assessors send preliminary AVs to districts In December, assessors send final AVs to districts and CDE AVs are plugged into the school finance formula and the local share is determined based upon mill levies Once the local share is determined (property tax plus specific ownership tax), the state “backfills” the rest of total program Legislative Council bases estimates for the following year on the December actuals – built into School Finance Act

Property Tax & Assessed Values Mill levies Equals one-tenth of one percent (.001) Assessed values based on percentage of actual value Residential – 7.96% of actual Most other (commercial) – 29% In 2007-08, total program mill levies were frozen at 27 mills or less Four districts that have not passed TABOR elections are a bit different AV X mill levy = property taxes $10,000,000 AV X .027 mills = $270,000 property tax

Mill Levies Total Program - mill levy set to generate local share Capped at 27 mills. Cannot go up from prior year. Bond Redemption – mill levy set to generate funds to pay off debt (voter approved) This levy can potentially float up and down depending on the AVs Voter approved overrides – mill levy approved by voters to provide funding for district Might be a certain dollar amount or a certain mill Abatements – mill levy to recapture property tax refunds or cancellations based on revaluations Will change from year to year

Specific Ownership Taxes (SOT) SOT are paid on motor vehicles – collected by counties Counties distribute SOT to all taxing entities in the county Distributed based on the proportion of property taxes collected by each taxing entity Property Taxes + Specific Ownership Taxes = Local Share Total Program – Local Share = State Share

Illustration of Two Districts

SB15-267 – Legislative Intent Legislative declaration (intention): If the actual local share higher than estimates, then the state share of total program will not decrease. Statewide – look at assessed values and the local share Will AVs increase over the estimates? This may increase the local share. Consider SOT also. What will happen with pupil counts? If it is higher than estimated, then the whole pie needs to grow. Will increases in local share cover any changes in pupil counts? Intent: the state provides the same level of funding - $4.1B Legislative decision that will happen through the supplemental appropriation process.

State of Colorado Average Per Pupil Funding Similar to Total Program, the gaps in the bars represents the effect of the negative factor. For 2015-16, the effect is $1,000 in the statewide average per pupil funding.

2016 Legislative Session November, 2015 Governor Submits Budget Request for 2016-17 THIS IS ONLY A PROPOSAL! Late November/December 2015 Joint Budget Committee Hearings with Department The JBC hears about the 2016-17 Budget Request from the Department and seeks any information January 2016 Governor Submits Supplemental Budget Request for 2015-16 Adjusts the Current Year Budget for actual Pupil Counts, AVs, etc. Governor Submits Budget Amendments for next budget year Revised estimates for next year’s students, AVs, etc based on actual Spring 2016 JBC Develops State Budget – Figure Setting & Long Bill – pass by GA SB15-267 sets starting point – no change in negative factor School Finance Bill Introduced and passed Adjusts the Long Bill numbers

Accreditation, Transparency

Data Pipeline: Financial December The Financial December collection opens August 15th for the FY14-15 data collection Optional Financial December Data Checklist Checklist is designed to help districts catch common data submission mistakes/issues before their audit is approved and submitted to the Department All Financial December material can be found on the Public School Finance web page under “Financial Reporting” http://www.cde.state.co.us/cdefinance/sfadministrate

Data Pipeline: Financial New Reporting Requirement 2014-15 reporting requirement per HB14-1292– additional local property tax revenue – mill levy overrides How much is distributed to schools of the district Department will compile the report Districts and charter schools review report prior to publication District or charter school may request an addendum Overall distribution by district to charter schools Capital construction and facilities Funding for technology Other funding

Data Pipeline: Financial New Reporting Requirement Report required information through Fund 90 – informational items Total Amount Authorized – Voter Approved Overrides The total amount that was authorized through elections Total Amount Collected – Voter Approved Overrides The total amount that was actually collected by the district for overrides (this might be different than the authorized amount) Amount Distributed to Charter Schools – Voter Approved Overrides Does your district pass along override funding directly to charter schools? Amount Distributed to Non-Charter Schools – Voter Approved Overrides Does your district pass along override funding directly to district schools? Amount Retained by District – Voter Approved Overrides Any amounts that are not directly passed along to the schools within the district.

Financial Transparency: HB 14-1292 and HB15-1321 Beginning July 1, 2015 Local Education Providers (LEP: School Districts, BOCES, Charter Schools and the Charter School Institute) must begin following the revised financial transparency requirements set forth in HB14-1292 and HB15-1321

July 1, 2015 LEP homepages – two options or Begin using the Financial Transparency Icon on your website homepage as a link to the July 1, 2015 LEP Financial Transparency Webpage or Ensure the words “Financial Transparency” are clearly visible on your website homepage – as a link to the required July 1, 2015 LEP Financial Transparency Webpage On your website homepage, the Financial Transparency icon, or the words “Financial Transparency” must link to your Financial Transparency Webpage – which follows the Standard Webpage Template

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Website Homepage Example with Icon

Website Homepage Example with Icon

Website Homepage Example with words “Financial Transparency”

Website Homepage Example with words “Financial Transparency”

Financial Transparency Web Resources The Financial Transparency Icon, the required website templates and other Financial Transparency information is on the CDE website: http://www.cde.state.co.us/cdefinance/sfFinancialTransparency Financial Transparency Basic Considerations Guide http://www.cde.state.co.us/cdefinance/financialtransparencyguide

Transparency Vendor RFPs were received by 5 vendors RFPs will be reviewed and vendor selected by mid-August 3 district representatives on review team CDE will contract with the vendor and begin design and building of “big” transparency website Vendor will obtain financial information from district websites beginning with the FY2015-16 data Districts will ensure this is posted on their websites “Big” contracted transparency website live July 1, 2017 Will be able to compare 2015-16 school level data

HB14-1292 – FPP Recommendation on Revenue Financial Policies and Procedures Advisory Committee (FPP) makes recommendation to the State Board regarding the reporting of revenues Recommendation will be presented in September No change to chart of accounts – school level revenue can already be reported through existing structures Not recommending that “district wide revenues” are allocated down to school level.

School Finance Contacts Pipeline, Accreditation, Transparency Mary Lynn Christel: 303-866-6818– christel_m@cde.state.co.us Yolanda Lucero: 303-866-6847-lucero_y@cde.state.co.us Paul Reynolds: 303-866-6137– reynolds_p@cde.state.co.us Kirk Weber: 303-866-6610- weber_k@cde.state.co.us Adam Williams: 303-866-6843- williams_a@cde.state.co.us

BEST Program

BEST Program The Division anticipates approximately $50 million available for grants in the coming year Grants are available for any school capital improvement project with a focus on health, safety, security, overcrowding, technology and all other types Contact Division staff to get started on next year’s BEST application http://www.cde.state.co.us/cdefinance/capconstbest

BEST Program – 2015-16 Updating the Statewide Facility Assessment The Division of Capital Construction is currently developing an in-house assessment program to update the statewide facility assessment performed in 2010. CDE assessors will make site visits to schools to assess facility conditions and suitability; In the case the school already has an assessment program CDE will work with the district to obtain the relevant data points; CDE assessors will update the assessment data on an ongoing basis; The Capital Construction Assistance Board and the Division will use this data to solicit applications, review grant requests and provide technical support to schools. Assessments are scheduled to begin in the spring of 2016

Audit Overview Purpose School Finance Funding Pupil Count At-Risk Transportation Funding Cycle One to four years depending on size and other risk factors Scheduling January to June and July to December Approach Compliance vs. training and support Risk Based Audits are designed to ensure accuracy of school finance and transportation funding Audits are performed on a one to four year cycle depending on district size and other risk factors 1 yr – 14 districts 2 yr – 18 districts 3 yr – 41 districts 4 yr – 106 districts 30 audits in fall and 30 audit in spring 41

Audit Process Engagement Letter Audit Liaisons Expectations Data privacy Scheduling Audit documentation Field Work and Report Draft Management Representation Letter Feedback and Report Finalization Appeal Audits are designed to ensure accuracy of school finance and transportation funding Audits are performed on a one to four year cycle depending on district size and other risk factors 42

Student Types There are various student types that require additional documentation to support the standard enrollment, attendance, and schedule requirements. Updated and expanded guidance has been developed for the following student types: Concurrent Enrollment Students ASCENT Students Expelled Students Home-School Students Home-Bound Students Independent Study Students Online Students Work Study Students 43

Resources Individual Training and Support Regional Training Classes October Count 101: La Junta (Aug 25), Alamosa (Aug 26), Ft Morgan (Sept 1), Glenwood Springs (Sept 3), Aurora (Sept 10) Webinars At-Risk (Aug 18), CE (Aug 27), October Count (Sept 17) Website (http://www.cde.state.co.us/cdefinance/auditunit.htm) Pupil Count - including the Student October Count Resource Guide: At-Risk Count - including the At-Risk Resource Guide: Transportation – including Transportation PowerPoint: One-on-One Training: FAST members are available for individual assistance and support. Field Training: We will be developing additional training resources for the field to clarify transportation funding issues in the upcoming months.

School Transportation School Transportation Advisory Reviews (STAR): On-site visits every 2 years Scheduling notification in July Rotating Cycle: Vehicle Inspection/Garage Operations Administration/Training Operations Purpose Resources: Individual Training and Support Regional Training Classes Website (http://www.cde.state.co.us/transportation) Audits are designed to ensure accuracy of school finance and transportation funding Audits are performed on a one to four year cycle depending on district size and other risk factors 1 yr – 14 districts 2 yr – 18 districts 3 yr – 41 districts 4 yr – 106 districts 30 audits in fall and 30 audit in spring 45

Nutrition

Professional Standards for Food Service Employees Hiring standards/minimum education requirements for new food service directors Must obtain food safety certification within first 30 days of hire Annual training requirements for all food service employees Professional Standards: Became effective on July 1, 2015; USDA established minimum professional standards requirements for school nutrition professionals who manage and operate the National School Lunch and School Breakfast Programs. The standards are another key provision of the Healthy, Hunger-Free Kids Act of 2010 and aim to institute minimum education standards for new state and local school nutrition directors, as well as annual training standards for all school nutrition professionals. Annual continuing education/training for all school nutrition professionals; minimum of eight hours of food safety within past five years or within 30 days of starting date Each training offered by the OSN will meet learning objectives that are required for annual training standards. Check out the OSN website for more information and resources. From the OSN home page: http://www.cde.state.co.us/nutrition , click on the “training” tab in the upper left hand corner. Check out our resources! 47

Upcoming Training Administrative Review Training for 2015 – 2016 review cycle 10 regional locations; August – September 2015 Financial Management webinars – Fall 2015 2015 Directors’ Conference, Oct. 14 – 16, 2015 In conjunction with the Advisory Council for School Nutrition (ACSN) Online School Nutrition Trainings and Resources on the Web! http://www.cde.state.co.us/nutrition Administrative Review Trainings: Before the OSN starts conducting reviews of district compliance with the school meals programs, school food authorities scheduled for a review in the 2015-2016 review cycle will have an opportunity to attend one of 10 regionally-based trainings to help prepare and learn what to expect during the review. These trainings will start in August and end in September. 2015 Directors’ Conference: The OSN will host the annual Directors’ Conference, Oct. 14 – 16, 2015 in Copper Mountain, CO. The conference will be held in conjunction with the Advisory Council for School Nutrition (ACSN) meeting. The conference provides the most up-to-date information on the operation, implementation and compliance of child nutrition programs, provided by OSN, USDA and partner organizations. Motivational speakers are also included in this event and cover the leadership, human resources, training and management areas of the school food service. Over 215 directors and school food professionals, representing most districts in Colorado, attended the 2014 Directors’ Conference in Pueblo. The office has also expanded its online trainings and resources. We highly encourage anyone involved in the school meals programs to take a look at what we have to offer on our training webpage: http://www.cde.state.co.us/nutrition/nutritrainings