SCHOOL FINANCE ESSENTIALS 1 WASDA NEW ADMINISTRATORS WORKSHOP Bruce Anderson and Karen Kucharz School Finance Team – DPI November 12, 2013

What you have already done in the school year Revenue Limits Getting Started on Your Budget Explaining the Tax Levy – Three tough questions Referenda Equalization Aid/General Aid Community Service Fund WUFAR 2

Regarding Public School finance – a quick glance in the rearview mirror and the documents that will continue to assist us in preparing for the School Year... 3

School Census/CSF (PI-1505 Census) Aid Certification (PI-1505-AC) Transfer Service (PI-5000) Special Education – Annual (PI-1505 SE-Ann) Annual Report (PI-1505) September 3 rd Friday Count (PI-1563 Sept.) Summer Pupil Count (PI-1804) Youth Challenge Academy – Sept. (PI-1563 YCA) Audited Fund Balances (PI-1506-FB) Pupil Transportation Summer (PI-1547SS) Revenue Limit Worksheet Tax Levy (PI-401) 4

Revenue Limit Worksheet (“School District Revenue Limits” webpage ) The “ Revenue Limit Worksheet - Blank executable” “Longitudinal Data” (SFS website) “SFS Longitudinal Data Tools” webpage ( ) provides access to the following spreadsheets. Comparative Costs Comparative Revenue Equalization Aid Levies Membership Property Valuations Revenue Limits 5

Review of Revenue Limit Basics “Getting It Right – 2013” presentation includes 36 slides that cover this topic in detail is available on the “ Revenue Limit Worksheets for Budget Planning” webpage 6 REVENUE LIMITS

Revenue Limits Revenue Limits control the following resources: General Fund (Fund 10):  Property Tax Levy  General Aid & High Poverty Aid (general aid includes Equalization, Special Adjustment and Chapter 220 Aid)  Computer Aid (from the Dept. of Revenue) Non-Referendum Debt Service (Fund 38) Capital Projects (Fund 41) Revenues Subject to the Revenue Limit Represent 75-90% of a district’s total resources 85-95% of General Fund revenues 7

Revenue Limits Does NOT include other revenues: Categorical Aids  Special Education, Transportation, High Cost Transportation Aid (new), Library Aid, etc. Federal or State Grants School Fees & Gate Receipts Donations Other Local Levies  Referendum Debt Service (Fund 39)  Community Service Fund (Fund 80)  Levy Chargeback (Fund 10) 8

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What is New for 14-15?  Per Pupil Adjustment Amount (Line 4A)  : +$75/member  Low Revenue Ceiling remains at $9,100 for  The Per Pupil Adjustment Aid in was $75/member and in it will increase to $150/member.  Remember this is no longer part of the Revenue Limit Worksheet calculations. 10

Revenue Limits – Exemptions Exemptions to the revenue limit allow districts to levy additional amounts above the amount generated by membership changes and the per pupil adjustment: Recurring Exemptions (Line 8) “Permanently” in your base – they build the subsequent year’s base. Ex: Prior-Year Carryover, Transfer of Service, Transfer of Territory, Federal Impact Aid Loss, Recurring Referendum (even if multi-year) Non-Recurring Exemptions (Line 10 & 7b) Authority is available for a limited time Ex: Non-Recurring Referendum (even if multi-year), Declining Enrollment, Energy Efficiency Exemption and Line 7b. Base Hold Harmless & Prior Year Uncounted Open Enrollment Pupils (new in ). 11

Recurring Exemptions – Permanently in Your Base Base Non-Recurring Exemptions – One Year Only Recurring This Year Next Year Base Non-Recurring Base This Year Next Year 12

Line 11 represents the total amount of resource your district will get from property tax, state general aids, and exempt computer aid. This will equal about 75-90% of total revenues for most districts and 85-95% of general fund revenues. For budgeting purposes, it’s very important to compare this Line 11 with the previous year’s Line 11. Major decreases in Line 11 from year to year can have serious implications for your budget. 13

Revenue Limits – Watch Change Across Time Total Revenue Limit with Exemptions Year 2Year 3 Total Revenue Limit with Exemptions Decreasing resources (shown on Line 11) indicates the need for the district to evaluate current programs for efficiency, identifying cost- saving measures. 14 Year 1

15 Enter pupil count Know and 2014 estimate

Resources on the DPI Website Pre-populated & Blank Executable Revenue Limit Worksheets (Pre-populated worksheet updated 11/11/13 with Levy data) “Sources of New-Year Revenue Limit Authority” Explaining the change from Line 1 to Line 7. “Multi-Year Revenue Limit Survey” View what’s happening to your district over time. View Webcast on the Revenue Limit Computation Choose “Webcast Presentations” under “General Information” (School Financial Services Team) 16

Yes, It IS Time to Start Thinking About Next Year! We will discuss the budgeting process in relation to revenue limits today and in more detail at the next workshop. 17 BUDGET PROCESS

 Winter:  Define Budget Parameters  Enrollment Projections  Use to Define Staffing Needs  Used in Revenue Limits (85% - 95% of Budget)  Revenue Budget Projections  Revenue Limit Worksheet (Property Tax, General Aid, Computer Aid)  Sources Outside the Revenue Limits  Expenditure Budget Projections  Personnel Cost Projections (60% - 85% of Budget)  Non-Personnel Cost Projections 18

Budget Building Revenue Limit Calculation 19

Budget Building Revenue Limit Calculation 20 Budget Planning Papers

 Spring:  Refine Staffing Projections  Retirements/Resignations – Replacements  Lay-Off Notices (if necessary)  New Staffing Needs  Refine Personnel Cost Projections  Refine Non-Personnel Cost Projections  Building/Department Allocations  Contracts (Transportation)  Inflationary Trends (Supplies)  Other (Utilities) 21

 Summer:  Refine Staffing Projections  Hiring Process  Refine Personnel Cost Projections  Refine Non-Personnel Cost Projections  Contracts (Transportation)  Inflationary Trends (Supplies)  Other (Utilities)  Compile a Preliminary Budget 22

 Fall:  Actual Enrollments  Impact on Revenue Limits  Impact on Staffing Needs  Annual Meeting  Aid Certification  Levy Certification  “Original Budget” Adoption  File Budget Report (PI-1504) with DPI 23

You Know You’ll Be Getting Questions Soon … 24 EXPLAINING PROPERTY TAXES Three Tough Questions

How can one homeowner’s tax bill go up by 25% and the neighbor’s across the road from him go up by only 15%? Reasons (so far) That Answer Question #1 1.Individual property owner’s assessed value increases as a percent of the municipality. 2.Municipal levy increases and/or individual property owner’s assessed value increases as a percent of the municipality. 3.Municipality goes through a re-assessment which likely changes the ratio of the total value. 25

26 School Years used in this slide are not a factor in this information being discussed.

How can the tax bills show an increase in the school district tax levy of 5.8% when the % year over year increase on the PI-401 was only 2.98%? Reasons That Answer Question #2 (and can compound the answer to #1) 1.Tax base composition shifting both within and between municipalities. (see previous slide) 1.The percentage the tax credits (School Levy, Lottery and Gaming, First Dollar) granted the property owner were of the total (levy) in their respective year, which can change from year to year. 27

 Only the year when a TIF expires and all the property comes back on the tax rolls might this be part of the explanation.  Even then, the result would be to lower taxes as the end of the TIF adds more property value to share the levy. 28

Tracking the details that cause these results, given the many underlying municipalities in a school district, is virtually impossible. But, now you know some of the items that might be contributing to the cause. 29 Conclusion

If you are thinking of a spring referendum election, now is the time to start planning! 30 REFERENDA

 Board adopts resolution calling for election on proposed borrowing - s (6a), Wis. Stats.  Resolution must provide for sufficient time.  Within 10 days, school district clerk must publish notice of such adoption - s (6a)(a)2, Wis Stats.  Referendum to be held not earlier than 45 days after the adoption of the resolution - s (6a)(a)2a, Wis. Stats. We are advising that the new 70 days requirement for filing the referendum question with the official responsible for preparing ballots  The district must publish a notice under s (2), Wis. Stats., on the fourth Tuesday before the referendum and also on the day before the referendum - s (3), Wis. Stats.  The district must notify the department of the scheduled day of the referendum and submit a copy of the resolution to the department within 10 days after adopting a resolution that authorizes the school board to incur debt per s (1)(a), Wis. Stats.  Source: Referenda Procedures and Reporting Requirements ( 31

 Essentially the same procedures and requirements as bond referendums.  Board adopts resolution calling for election on proposed borrowing - s (3), Wis. Stats.  State the amount; and  If it is for a recurring or nonrecurring purpose; and  If both, amount for each must be stated.  Within 10 days of adopting resolution, the school board shall notify the department (DPI) of the scheduled date of the referendum and submit a copy of the resolution to the department.  In lieu of a special referendum, the school board may specify that the referendum be held on the next regularly scheduled primary or election day, if such election is to be held not earlier than 70 days after the adoption of the resolution. 32

 Procedures and Reporting Requirements:  dpi.wi.gov/sfs/ref1 dpi.wi.gov/sfs/ref1  Reporting Results (SAFR Reporting Portal):  www2.dpi.state.wi.us/sfssafr/intro www2.dpi.state.wi.us/sfssafr/intro  (Searchable) History of Referenda Results  www2.dpi.state.wi.us/sfsref/ref_Home www2.dpi.state.wi.us/sfsref/ref_Home 33

An extensive explanation of this topic is available on SFS “Equalization Aid - Section F of Basic Facts” webpage. “Equalization Aid Presentation” (WASBO Fall Conference, October 3, 2013) EQUALIZATION AID 34

Why do you need to know how to calculate aid when DPI calculates it for you? Because you will be asked by your board members, constituents, and the media. So you can figure out why your aid has changed AND explain why. Because you may want to do estimates and run “what if” scenarios … 35

State “shares” in district cost. Aid is based on a district’s ability to pay, as measured by its property wealth per member. 36 Basic premise: The more property wealth per member a district has, the lower the percent (proportion) of shared costs that will be aided by the state through the equalization aid formula.

District Factors - shared cost - equalized property value - membership State Factors - cost ceilings - guaranteed valuations per member - total amount of funding available for distribution 37 What determines where a district is in the formula?

Positive Primary Aid Positive Secondary Aid Positive Tertiary Aid District Value per Member 10%90% 75%25% 50% Negative Tertiary Aid Negative Secondary Aid No Aid Equalization Aid

39 What happens when a district’s value/member exceeds the guaranteed value per member? NEGATIVE AID  181 districts are negatively aided at the tertiary level because their property value/member is greater than the tertiary guarantee. Equalization Aid Review

40 It is important to know where your district is in the formula to understand how the formula impacts your district, vis-à-vis changes in shared costs.  Negative Tertiary districts that increase shared cost see a decrease in state aid  Positive Tertiary districts that increase shared cost see an increase in state aid NEGATIVE AID Equalization Aid Review

Knowing where your district is in the formula will help you better explain how changes in local finances might affect your state aid. 41 What if we under- spend our budget? How does that affect our aid? If we go to referendum, how will our aid change? Equalization Aid Review

Resources on the DPI Website October 15, General Aid Worksheets “Ten Year Longitudinal Analysis of General and Equalization Aid Formula Components ” View what’s happening to your district over time “October 15, Equalization Aid Computation – Percentage Method – Algebraic Format” Computed Aid at each cost level View Webcast on the General Aids Computation Choose “Webcast Presentations” under “General Information” (School Financial Services Team) 42

43 COMMUNITY SERVICE FUND (FUND 80 ) 2013 Wisconsin Act 20 (the State Budget) includes changes in state law with respect to a school board’s levy authority under ss (19), Community programs and services (i.e., the Fund 80 Levy) Act 46 amends the 2013 Wisconsin Act 20 limitations on community programs and service.

 The “characteristics of community service activities” has become the “criteria” school boards must use to describe Fund 80 levy expenditures.  Imposes a limit on the amount a board may levy into Fund 80 for the and school years;  Specifies a procedure for exceeding this new limit;  Requires school boards to include information on planned Fund 80 expenditures in the budget summary at an annual meeting;  Requires districts to publish this information on the district website and report the information to (DPI); and  Requires DPI to publish the information on the DPI website and submit a report to the Legislature by December 1, 2014 detailing the information reported to DPI by school boards. wisconsin-act-20 44

Under prior laws the School Finance Team provided general guidance regarding community service fund activities based on our interpretation of the statutes. Under current law, the general guidance has become the Department’s criteria. Act 20 (2013) requires a school board to describe how it’s Fund 80 levy expenditures meet the Department’s criteria. We advise districts to seek legal counsel should they question either the information or the interpretation. Disputes over community service fund activities are handled locally. This can also lead to a legal matter base on the manner in which the topic is addressed. 45

The School Board establishes the fund per state statute (19). It must meet budget requirements per statute If an operational levy is needed, it must be adopted at the annual meeting per statutes (8) and (3). – the levy is outside the revenue limit. Key Point to Remember: Community service activities and programs outside the district’s regular and extracurricular programs for students. WI State Statute (19) 46

1. Is it open to everyone in the community? (age appropriate) 2. Are all costs directly related to the Community Service Program? 47 Two Key Questions: 1. Is the program outside the usual instructional timeframe? 2. Is it fee supported? Two Important Considerations:

Recreational After-school swimming Softball & basketball leagues Adult Education Community Library After School Day Care 48

Wisconsin Uniform Financial Accounting Requirements Wisconsin Uniform Financial Accounting Requirements What is WUFAR? Why do we have WUFAR? 49

 Reporting/Accounting System.  Required structure for reporting budget and annual reports to the Department of Public Instruction.  Used by local districts on a daily operational basis. 50

 Consistency among school districts  For DPI reporting  For factors used to calculate state aid  For federal reporting  For data requests “Following WUFAR will make your life easier.” 51

52 xx - x - xxx - xxx - xxxxxx - xxx 10General Fund60Agency Fund 20Special Project Funds70Trust Funds 30Debt Service Funds80Community Service Fund 40Capital Projects Funds 90 Package & Cooperative Program Fund 50Food Service Fund FUND Funds are used to segregated activities.

53 xx - x - xxx - xxx - xxxxxx - xxx R = Revenue E = Expenditure TYPE Type tells the kind of transaction.

54 xx - x - xxx - xxx - xxxxxx - xxx LOCATION Generally indicates building or site where activity takes place. DPI does not collect.

55 xx - x - xxx - xxx -xxxxxx - xxx OBJECT (E) or SOURCE (R) OBJECTSOURCE Paying the Gas BillEqualization Aid PayrollStudent Fees Textbook PurchaseFederal Aid SuppliesOpen Enrollment Revenue ComputerTransportation … many more…

56 xx - x – xxx – xxx – xxxxxx - xxx FUNCTION 1xxxxx Instructional2xxxxx Support Services UndifferentiatedPsychologists ScienceLibrary MathematicsBuilding Administration VocationalBuildings & Grounds PhysicalTransportation … many more…

57 xx - x - xxx - xxx - xxxxxx - xxx PROGRAM/PROJECT Some project numbers are prescribed by DPI (grants). Local districts can use program numbers to identify specific programs they want to track.

58 10 E General Fund Expenditure High School Supplies Mathematics No Program Designation

District general ledger will include more detail of WUFAR accounts than the DPI budget and annual report. Many accounts will “rollup” into subtotals for DPI reporting. 59

 All things WUFAR are located on the DPI School Finance Team’s site at including  Current version (pdf)  Narrative descriptions of the dimensions.  Allowable account Classifications  Which account dimensions can be combined with which other ones  Fund 27 account coding  (Links to) Webcast and PowerPoint on WUFAR available at:

Thanks to WASDA for the opportunity to speak to you today! VISIT OUR WEBSITE: … or CALL US (all 608 Area Code): Robert Soldner, Director ………………………… Erin Fath, Assistant Dir ………………………… Brad Adams, Consultant ……………………… Bruce Anderson, Consultant …………………… Dan Bush, Consultant ………………………… Karen Kucharz, Consultant ……………………… Gene Fornecker, Auditor ……………………… Brian Kahl, Auditor ……………………………… Michele Tessner, Auditor ……………………… Victoria Chung, Accountant………………………