WSSDA Webinar May 14, 2014 Barbara Posthumus, Director of Business Services Lake Washington School District

 Budgeting for Capital Levies  Budgeting for Bonds  Debt Service Limitations  Front-Funding  Monitoring and Reporting 2

 For levies passed in 2014, collection begins in 2015  Typically collect 53% in Spring and 47% in Fall  For newly passed levies, your budget will only include the spring collection.  The 2 nd year, will include 100% of annual levy 3

Example: $5.0 Million levy over 4 years = $20Million $5.0 x 53% = $2,650,000 = revenue $5.0 x 53% = $2,650,000 plus $5.0 x 47% = $2,350,000 Total = $5,000,000 = revenue 4

 Technology Levies have special rules  Beginning in 2008, OSPI required that expenditures on staff training and software related to technology systems must be spent in the General Fund  Capital Technology Levy revenue then must be transferred from the Capital Projects Fund to the General Fund to cover the costs  You will see this in the presented budget as a transfer out of capital and a revenue in GF 5

 100% of Revenue and Expenditures are in Capital Projects Fund 6

 Great news – you passed a bond!!  Determination of when to sell bonds  Must be able to spend 85% of proceeds within 3 years  Business Office will work with underwriter and advisor to sell bonds  Board will need to pass resolution  Superintendent/Business Office will conduct call with rating agencies to rate the bonds 7

 Bonds impact two funds:  Revenue from bond sale and construction expenses go in Capital Projects Fund  Principal and Interest Payments on Bonds are paid out of debt service fund.  The presented budget will reflect estimated amounts if prior to actual sale  Will need to levy an amount sufficient to pay principal and interest 8

 The total indebtedness of a district can not exceed 5% of the value of taxable property within a school district. This includes all non voted debt and all voted debt (bonds).  Voter approved bond capacity may exceed 5% of the district’s assessed valuation but the principal amount of the bond sale is limited to the available debt capacity.  Small school districts may have to structure bond issues and repayments differently than large districts due to the debt limitations.

 Griffin School District AV=$1,300,000,000  5% debt limitation = $65 million  Current outstanding voted debt $13 million  Current outstanding non voted debt $300K  Cost of a new high school $100 million ◦ To construct a high school – would likely need to qualify for state matching funds and would need to ensure funding availability before moving forward. Maximum bond issuance would be about $52 million. ◦ In this scenario, a district could issue ½ and then issue the other ½ in the subsequent year. This would increase the cost of issuance but would likely result in more available capacity (if AV increases and additional existing debt is paid down).

 LGOs, lines of credit, capital leases, LOCAL program obligations, conditional sales contracts, and qualified zone academy bonds are all examples of non-voted debt subject to different rules for use of funds.  All non voted debt above is limited to (3/8 th of 1 percent) of the value of taxable property within the school district

 Utilizing the State Treasurer’s LOCAL program, one local district was able to purchase school buses over a 13 year term. They are making payments utilizing state funds from the depreciation schedule.  This funding allowed them to fund buses without utilizing a transportation levy or cutting educational programs.

 Can you spend dollars from voted levies or bonds prior to collection?  Maybe…….  Need to have other reserves  Need to clearly track new expenditures separately  Need a clear cash flow plan

 Why you may not want to ◦ If use other reserves to front-fund, then those reserves will not be available for emergencies ◦ May show negative fund balance line item on your budget – requires additional explanations  Depends on your level of reserves and need to use those reserves immediately for other things

 For best transparency, sources of funds should be clearly identified.  Bonds vs. levies  Multiple Levies crossing over years 16

 Monthly board financial reports provided by district  If conducting multi-year construction project, outstanding encumbrances in Capital Projects Fund may exceed budget  District staff have reporting requirements to OSPI if receiving State Assistance on construction projects 17

 Organization and Financing of Washington Public Schools tion% pdf  Funding Resources for School Facilities 18

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