Business Manager and CFO Roundtable Discussion April 25, 2018 Hank Johnson Consultant

1909 Woodall Rodgers Fwy, Ste 575 https://www.empirelease.com/ 1909 Woodall Rodgers Fwy, Ste 575 Dallas, TX  75201 t. 214-978-3831 t. 918-712-9300 t. 1-800-242-6241 Email: sales@empirelease.com

Empire Financial Capital Equipment Financing Empire Financial, LLC has been leasing equipment for companies and municipalities for over 25 years with most of our business as repeat customers.   Empire has a relationship with US Bancorp allowing them to offer our competitive municipal rates to school districts in Texas for bus financing.   They have numerous options including 100% financing on 3-7 year terms or a lease option with a buy back agreement. We are the nation’s largest multiline insurance company focusing on educators and their families. With nearly $10 billion in assets, we offer a full line of personal insurance and retirement planning products. We’ve been in the 403(b) tax-deferred annuity (TDA) market since 1961, the year Congress first made them available to public school employees. We provide school districts and their employees with solutions designed to maximize savings, enhance benefits and support the mission of public education.

Agenda Introductions Upcoming Events Updates on recent TEA Correspondence Current News and Updates/Reminders Proposed Change to FIRST Rating Texas Commission on Public School Finance Discussion for Future Meetings Questions and Comments

Upcoming Events Public Funds Investment Training - May 15, 2018 The Business Center at ESC Region 11 is hosting a Public Funds Investment Training. This session is presented by guest speaker Patrick Shinkle, Associate Director for the Center for Public Management at the University of North Texas. Shinkle has more than 17 years of experience in public funds management in Texas, including 12 years as Administrator of LOGIC and five years as part of the TexPool management team. Shinkle has spoken on investment management, disaster recovery planning, computer security awareness, and technology-related issues. CPAs will receive CPE credit.

Recent TEA Correspondence: Accreditation Ratings 2017-2018 accreditation status results are available Posted publicly to the TEA website on the Accreditation Status homepage at http://tea.texas.gov/accredstatus/ Includes 2017 FIRST rating 2017 Accountability rating 2017-2018 Accreditation status Reason for status if not accredited or pending

Recent TEA Correspondence: Travel and Mileage Reimbursement The Comptroller published the travel and mileage reimbursement rates Effective January 1, 2018, as listed below: Automobile mileage reimbursement rate is 54.5 cents per mile. Meals and lodging reimbursement rates are listed by city on the federal per diem rate map. Lodging reimbursement rate is $93 a night for in-state travel and out-of- state to areas not listed on the federal per diem rate map. Meal reimbursement rate for overnight travel is $51 per day for travel to areas not listed on the federal per diem rate map. Meal reimbursement rate for non-overnight travel is $36. The mileage, lodging, and meal reimbursement rates published by the comptroller apply to all grants funded by the Texas Education Agency for individuals on travel status.

Recent TEA Correspondence: Instructional Materials for the 2018−2019 School Year 2017-2018 instructional materials ordering closed April 2 EMAT reopens May 1 for the 2018−2019 school year Districts required to certify annually: Students have access to instructional materials To cover all of the Texas Essential Knowledge and Skills (TEKS) Failure to certify: Unable to order 2018−2019 instructional materials through EMAT

Recent TEA Correspondence: Maintenance of Effort TEA performed/performing 2016–2017 IDEA-B LEA MOE Compliance Reviews LEA’s were required to reply within 5 business days to preliminary review TEA to release final IDEA-B LEA MOE determinations in May Refunds are based on final

Charter School Facilities Funding Beginning in FY2019, certain charter schools will be eligible to receive a facilities allotment calculated using the state average debt service tax rate for school districts (estimated at 21 cents) or a rate which will deliver $60 million in additional funding statewide. Funding is currently estimated at approximately $200 per student in average daily attendance (ADA), but is subject to change.

Update: Summary of Finances Updated April 2018 - Final Tax Collections State Funding Recapture 2017-2018 Summary of Finances Updated mid April

Update: SOF Template New Template February 14, 2018 Updates 2017 Certified Values Minor Chapter 41 corrections Increases per capita to $447.18

Update: Review 2017-2018 Estimates Projections: Compare actual tax collections to estimates Compare attendance through 5th six weeks with estimates Recalculate state funding Recalculate recapture

Update: 2018-2019 Budget Projections: 2018-2019 Students Enrollment Attendance Weighted Average Daily Attendance

Update: 2018-2019 Budget Projections: 2018-2019 Revenue Property values Tax revenue calculations State funding Recapture

Current News Statewide walkouts for better teacher pay Safe schools – facility changes Teacher retirement

FIRST Rating Proposed Changes What’s New 2020-2021 Ratings (Based on FY 2020 data) Proposed indicators for 2020–2021 ratings are NOT the same as the 2016–2017 ratings Point scales and ratings are different There are 21 proposed indicators An introduction of a new type of indicator, designated as a “Ceiling Indicator”, is included with the proposed indicators.

SCHOOL FIRST RATINGS 2020–2021 RATING YEAR (BASED ON FY 2020 DATA) A = Superior Achievement 90-100 Points B = Above Standard Achievement 80-89 Points C = Meets Standard Achievement 60-79 Points F = Substandard Achievement 0-59 Points

SCHOOL FIRST RATINGS 2020–2021 RATING YEAR (BASED ON FY 2020 DATA) Must pass critical indicators to receive a passing rating (Superior, Above Standard, or Meets Standard rating) F = Substandard Achievement Fail a critical indicator or points less than Meets Standard rating Substandard data quality because the AFR and/or the Data Feed was not submitted on time and/or not complete for FIRST analysis.

Ceiling Indicators - New A “Ceiling Indicator” Adds additional criteria to designated indicators; and if the additional ceiling criteria is not met by the school district Subject to a predetermined maximum number of points, and highest applicable School FIRST rating that may be earned is assigned to the school district.

Ceiling Indicators - New Activation of Ceiling Indicator Maximum Points Rating Indicator 4 – Timely Payments and Warrant Hold(s) Issued 95 A = Superior Achievement (Original points earned on School FIRST minus 5 points) Indicator 5 – Unrestricted Net Position Balance Passes indicator 5 solely on 7% or more increase in students in membership over 5 year period 79 C = Meets Standard Achievement

Ceiling Indicators - New Activation of Ceiling Indicator Maximum Points Rating Indicator 6 – 3 Year Change in Assigned and Unassigned Fund Balances 3-year change in assigned and unassigned fund balances > 25% or assigned and unassigned fund balance < 75 days of operational expenditures 89 B = Above Standard Achievement Indicator 16 – Comparison of PEIMS to AFR data PEIMS to AFR data exceeds 3% threshold

Ceiling Indicators - New Activation of Ceiling Indicator Maximum Points Rating Indicator 17 – Material Weaknesses in Internal Controls Over Financial Reporting and Compliance AFR discloses one or more material weaknesses in internal controls over financial reporting and compliance 79 C = Meets Standard Achievement Indicator 20 – Property Values and Funding Lag Discussion with Board of Trustees Property values and funding lag discussion did not occur 89 B = Above Standard Achievement

CEILING INDICATORS, CONTINUED If the school district's overall points earned is less than the maximum points allowed by the applicable ceiling indicator the district will receive a rating based on the lesser of the points earned. If the school district receives an F = Substandard Achievement rating based on the school district failing a critical indicator or the school district's total number of points is equal to or less than 69 points, the F = Substandard Achievement rating supersedes any rating that the school district may earn for a ceiling indicator.

DETERMINATION OF POINTS – 2020-2021 SCHOOL FIRST RATING YEAR Indicator Points Ceiling Indicator Maximum Points Highest Rating 1-4 Pass/Fail (Critical) Indicator 4 5 Point Deduction A = Superior Achievement, 95 points 5 Indicator 5 79 C = Meets Standard Achievment 6 Pass/Fail 89 B = Above Standard Achievment 7 10   8 9 11 12 13 14 15 16 17 18 19 20 21 Total 100

Texas Commission on Public School Finance Property tax levy out pacing taxpayers ability to pay Improving outcomes Class size – 21 Teacher Quality Improved Pay Increasing pay for some Other than just years of experience

Texas Commission on Public School Finance - Types of Funding Formulas Student-Based Formulas estimate a total amount needed for each average pupil and then adjust that amount for students in different need categories. Inherently responsive to changes in student demographics Flexible at the district and school levels Responsive to changes in pedagogical methods Calculation is clear and transparent

Texas Commission on Public School Finance - Types of Funding Formulas Resource-Based Formulas are driven by estimated cost of particular inputs (salaries, benefits, materials, etc.). Reflect a particular, frozen-in-time vision of education May include more limited-use funds Can be responsive or nonresponsive to changes in student demographics, depending on design

Texas Commission on Public School Finance - Types of Funding Formulas Program-Based Formulas are composed of discrete funding allocations whose use is restricted to particular programs. Least flexible way of funding schools Least responsive to changes in pedagogical methods

Texas Commission on Public School Finance -

Discussion for Future Meetings Future Topics Dates for Future Meetings

Questions and Comments