1. School Finance Workshop September 10, 2014

2. State Aid Process Calculated two times each year. – First calculation becomes the state aid certification. Statute requires certification by March 1 (Good one!!! ) – Second calculation is the recalculation of state aid. Difference between certification and recalculation becomes the prior year correction. Made available in late fall each year.

3. 14/15 State Aid Recalculation Comparison groups remain the same for the year-end recalculation Formula Students based on 2013/14 Average Daily Membership

4. Updated Information 2012/13 Annual Financial Report 2013 Certificate of Taxes Levied

5. Local Effort Rate Floats in Recalculation Redistribute $932.9 Million

6. Recalculate Formula Needs Formula Resources Equalization Aid = Prior Year Correction on 2015/16 Certification

7. Lump Sum Payment of Positive Prior Year Correction Rule 8 – Regulations for School Financing and Budgeting On or before July 15 Notify districts with a positive prior year correction Districts must respond by August 15

8. Lump Sum Payment of Positive Prior Year Correction On or before September 15 we will notify you of the amount approved for the lump sum payment. Reduced Amount of Monthly State Aid Payments

9. Maximizing State Aid Check and verify information submitted. – State Aid uses information from CDC, NSSRS and GMS. Educate your State Senator on what your district needs to be successful.

10. Maximizing State Aid Special Receipts and DETA allowance. – Make sure receipts for Special Education are coded to correct accounts. – Verify DETA related expenses are coded to the 382 object code. Includes: – Telecommunication services – Access to data transmission networks – Transmission of data on such networks paid by the school distict.

11. Maximizing State Aid Poverty and LEP allowances – Are you receiving the amount NDE calculates or what you submit? – Make sure you spend 117.65% of the allowance you receive. Use caution when applying for the LEP allowance and you have a very small number of LEP students.

12. Maximizing State Aid Transportation allowance – Make sure regular pupil transportation expenses are coded to 2750. – Report regular route miles on pupil transportation report including special education miles. Summer School – Expenses must be coded to 6000 accts to be eligible to receive the summer school allowance.

13. Maximizing State Aid Other Needs that you should be aware of: – Teacher Education Allowance, Instructional Time Allowance, Elementary Site Allowance, Student Growth Adjustment, New School Adjustment

14. Maximizing State Aid Other Actual Receipts – Verify receipts coded to these accts are accurate. Net Option Funding – Review net option report and verify students optioning in and out are correct. Minimum Levy Adjustment – Districts with general fund levy’s below $.95 have a minimum levy adjustment added to their resources.

15. Maximizing State Aid Allowances – District Specific (not averaged) – Reduces Basic Funding Adjustments – Added on to Needs – Increases Needs – No Reduction to Basic Funding

16. Legislative Information New Governor Minimum of 17 new Senators Education Committee LB 1103 Vision – At least 3 public hearings. $1 million of re-organization funds available for districts that re-organize prior to the 15/16 school year.

17. Legislative Information State Aid Projections – 2014/15 $932.8 Certified – 2015/16$994(6.6% Increase) Projected – 2016/17$1.038 (4.5% Increase) Projected – State Receipts are currently keeping pace with projections.

18. Superintendent Pay Transparency Act Budget Schedule D Collects Superintendent Contract Compensation detailed information as required by §79-2401 thru §79-2405 Instructions to complete Schedule D included on Schedule D. Use Schedule D as the Meeting Notice when contract/amendments are discussed and approved by local board Publish in newspaper or post on school website

19. Superintendent Pay Transparency Act Budget Schedule D Timeline required by statute: At least 3 days before meeting, publish/post: – Meeting notice (Schedule D) detailing current costs and estimated future costs – Proposed contract or amendments to contract (pdf) Within 2 days after board approval, publish/post: – Entire approved contract (pdf) – Budget Schedule D

20. Superintendent Pay Transparency Act Timeline required by statute: On or before August 1: – Submit entire approved contract (pdf) on Portal September 20: – Schedule D submitted with district budget October 1: – Withholding state & local funds started for schools not submitting superintendent contract through NDE Portal (CDC)

21. Budget Spreadsheet Do not key information into the Budget Summary Pages (Pages 2 - 4) Complete the Basic Data Input Page and worksheet pages − Populates Notice of Budget Hearing and Budget Summary

22. Budgeting Reminders Statutory Maximum Levy: $1.05 Minimum Levy Adjustment: 95¢ (For State Aid Purposes) Correct State Aid Amount

23. Budgeting Reminders Motor Vehicle Taxes – Should not be less than previous year County Treasurer’s Balance – Make estimate of average from previous years Beginning and Ending Balances – Huge impact on levy

24. Budgeting Reminders Higher levy - reduce 2014/15 beginning balance: – Increase 2013/14 disbursements and/or lower receipts Lower levy - increase 2014/15 beginning balance: – lower 2013/14 disbursements and/or increase receipts

25. Beginning & Ending Balances Auditor of Public Accounts review of budgets includes a check that those balances match 2014/15 Budget Total Beginning Balance 2012/13 Actual Page (Page 4) 2013/14 Budget Total Ending Balance 2011/12 Actual Page (Page 4)

26. 2013/14 Early Childhood Education Grants 2013/14 was final year of Early Childhood Education Grant 2014/15 is first year that early childhood membership is included in formula students Grant amount grown by Basic Allowable Growth Rate (2.5%)

27. REORGANIZATION SUPPORT GRANTS Newly Merged/Reorganized districts Exclusion equal to $125,000 per school in reorganization Reorganization Support Grant approved by State Reorganization Committee LB 967 §79-1028.1 Template available on FOS website & in Budget Text

28. Schedule A Expenditure Exclusions Repairs to Infrastructure Damaged by a Natural Disaster Judgments not Covered by Liability Insurance (Does Not Include Orders from the CIR) Distance Education Courses Voluntary Termination Agreements Retirement Contribution Increase

29. Distance Education Amounts received from other educational entities Providing courses through ESU Coordinating Council

30. Three separate timeframes to qualify as an expenditure exclusion: Prior to July 1, 2009. On or after the last day of the 2010/11 school year and prior to the first day of the 2013/14 school year. On or after the first day of the 2013/14 school year and the district will see net savings over 5 year period Voluntary Termination Agreements Exclusion

31. Information required in the request: Dollar amount of the request Number of payments/Dates of payments Round to the nearest dollar. Code to Function Code 2905 Voluntary Terminations Formerly 285 object code Template available on FOS website & in Budget Text Voluntary Termination Agreements Exclusion

32. Difference between 9.88% of estimated salaries and 7.35% of estimated salaries. Round to the nearest dollar. Template available on FOS website & in Budget Text Retirement Contribution Increase Exclusion

33. State Board Approval Process Submit request as a letter, email, or fax to: Janice Eret School Finance & Organization Services 301 Centennial Mall South PO Box 94987 Lincoln, NE 68509 Email: janice.eret@nebraska.gov Fax: 402-471-2486

34. State Board Approval Process The request should provide the name of the exclusion. Dollar amount of the exclusion. – Round to nearest dollar The request should provide details of the additional expenditures relating to the exclusion.

35. State Board Approval Process School Finance & Organization Services will email the school district of the State Board’s approval, modification, or denial of the amount(s) requested for exclusion from the expenditure lid. Email will come from NDE_SFOS.

36. Use the amount approved by the State Board. Include exclusions in budget before State Board Approval State Board Approval Process

37. 2014/15 Deadlines State Board Approval Process

38. General Fund Levy Exclusions Allows a school to levy over the $1.05 levy limit Budget Schedule B

39. Levy Limitation $1.05 Levy Limit includes: General Fund Levy Special Building Fund Levy Qualified Capital Purpose Undertaking Fund Levy Bond Fund

40. Budget Schedule B Levy Exclusions Voluntary Termination Agreements with Certificated Employees Judgments not covered by Liability Insurance Special Building Fund Projects commenced prior to April 1, 1996

41. Lease-Purchase Contracts approved prior to July 1, 1998 Bonded Indebtedness for Bond Principal and Interest – Bond Fund – Qualified Capital Purpose Undertaking Fund - if issued by local board of education – General Fund Budget Schedule B Levy Exclusions

42. Bonded Indebtedness for Insurance Premiums – Repayment of principal, premium, or interest on bonds issued for insurance premium costs associated with membership in a risk management pool – Levy Exclusion if effective prior to April 2, 2008. Levy Exclusions

43. Budget Schedule B Bond Principal and Interest Bond Fund & QCPU Fund Amount on Principal and Interest lines pulled from worksheet Increase to zero out bottom line Exempt from Levy Limit

44. Budget Schedule C Verifies the tax request – less the levy exclusions – does not exceed $1.05 Do not use to calculate property tax levy to be assessed by a district

45. Expenditure ExclusionsLevy Exclusions Special Education Special Grant Fund List Repairs to Infrastructure Damage Judgments not paid by Liability Ins. Distance Education Courses Voluntary Terminations w/certificated staff Three separate timeframes to qualify All Voluntary Termination Agreements w/certificated staff Retirement Contribution Increase Data Transmission Networks New Elementary Attendance Site 2013/14 Early Childhood Education Grant Reorganization Support Grant Special Building Projects (prior to 4/1/96) Lease Purchase Contracts (prior to 7/1/98) Bonded Indebtedness

46. Clerical, Math, or Accounting Errors No hearing required if the total budget is not affected by more than 1% or the property tax does not increase Board action can correct error within 30 days after budget adoption or after notification from Auditor’s Office

47. Special Hearing to Set Final Tax Request Publish 5 Calendar Days Prior to Hearing Hold Hearing by Friday, October 10, 2014 – Statutory date is October 13, but deadline moved up to October 10 due to Columbus Day being Monday, October 13. If errors are found in notice, not required to re-publish

48. Property Tax Request Resolution Must be submitted to County Clerk by Friday, October 10, 2014 Specifies tax dollars requested for each taxing fund General Fund Special Building Fund Qualified Capital Purpose Undertaking Fund Bond Fund

49. Property Tax Request Break down tax requests for: – Multiple bond funds – K-8 or 9-12 Bond Fund – K-8 or 9-12 Qualified Capital Purpose Undertaking Fund

50. Property Tax Request Make sure all of the clerks in the counties where you have valuation, have set your levy correctly. – Contact the county clerk immediately if you see a problem

51. Notice of Summary of Changes Budget adopted is changed from what was originally published Publish within 20 days after the budget was adopted Hearing must be held if over 20 days since budget was adopted

52. Amending the Budget Amend budget when actual expenditures will exceed budgeted amount – for any fund Amend before exceeding budget Can amend anytime during year

53. – Five day hearing notice – Publish budget as originally adopted – Add line for fund(s) being amended beneath budget matrix – Include reason for amending Refinancing bonds which will save district $xxxx Unanticipated expenses – Include statement “This amendment does not increase taxes for the current year” Budget Amendments

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55. Filing Requirements for Amended Budget Amend LC-2 if General Fund, Depreciation Fund, or the Employee Benefit Fund Necessary Cash Reserves are amended Submit to: – Auditor of Public Accounts – County Clerk – NDE

56. August 20 – Assessed Valuation Certified by County September 20 – Filing Date for Budget and LC-2 October 10** – Tax Request Resolution filed with County December 31 – File Report of 2012/13 Joint Public Agency & Interlocal Agreements 2014/15 Budget Timeline

57. General Information – LC-2 Online System Online system has been completed using information from the 2014/15 Budget Factors Certification and information on file at NDE Only line numbers applicable to a school district display on the LC-2. Information that is displayed in the LC-2 is pre- populated by NDE and cannot be changed. Upload feature of LC-2 Online System is functional this year

58. General Information - LC-2 Error Messages Exceeds Access to Prior Year’s Unused Budget Authority – Line A-355 Budget Authority Exceeded – Line B-150 Allowable Reserves Exceeded – Line C-340

59. Unused Budget Authority School district must enter an amount on Line A-355 – Access to Prior Year’s Unused Budget Authority. Access to Prior Year’s Unused Budget Authority for 2013/14. – Lesser of 2 percent of the 2013/14 Adjusted Expenditures (Line B-140) or 2013/14 Total Unused Budget Authority (Line B-175).

60. Special Election for Additional Budget Authority A board of education or the legal voters of the school district may request a special election to exceed the budget authority for the general fund budget of expenditures by a specific dollar amount.

61. Special Election for Additional Budget Authority Voters are asked to increase the Certified Budget Authority by a specific dollar amount Special Education expenditures, Special Grant Funds, and other expenditure exclusions are not included in the specific dollar amount Election for additional Budget Authority is for one school fiscal year.

62. Special Election for Additional Budget Authority Include the entire amount of additional budget authority approved in the special election into the General Fund Budget – This will maximize the total disbursements and transfers for the 2014/15 school fiscal year. – This will ensure the additional budget authority will carry forward into future school fiscal years. Must submit sample ballot & certification of results if held election to exceed expenditure limitation

63. Applicable Allowable Reserve Percentage 2012/13 Average Daily Membership (ADM)Percentage 0 - 47145% 471.01 – 3,04435% 3,044.01 – 10,00025% 10,000.01 and Over 10,000.0120%

64. General Fund Budget of Expenditures6,500,000 Allowable Reserve Percentage.45 Total Allowable Reserves2,925,000

65. General Fund Necessary Cash Reserve1,000,000 Depreciation Fund Total Requirements500,000 Employee Benefit Fund Necessary Cash Reserve 100,00 Total1,600,000 Total Allowable Reserves2,925,000

66. Budgeting Cash Reserves Budget for 3-4 months of expenses as cushion to help with cash flow Extra property taxes Not the amount of $$ in the bank

67. Budgeting Cash Reserves “Balancer” to help balance the budget 1. Determine property taxes the levy will generate Levy x Valuation ÷ 100 = Property Taxes 2.Subtract Total Budget of Disbursements (Line 33) 3.Difference becomes the Cash Reserve

68. Where to File Budget & LC-2 Materials Auditor of Public Accounts County Clerk of the Headquarter County Nebraska Department of Education Can be postmarked by September 20

69. End of Year Budget Reminders If spending authority remains in General Fund, consider a transfer to other funds Depreciation Fund Lunch Fund Activity Fund Employee Benefit Fund Unspent General Fund spending authority will increase year end cash balance

70. End of Year Budget Reminders Review remaining spending authority Amend before overspending Refinancing Bonds Unanticipated costs in lunch program Special Building Projects

71. Annual Financial Report 2014 Users’ Manual – Available on FOS website – Summary Page shows changes from 2013 Users Manual 2013/14 AFR Spreadsheet – Available in July on FOS website – Due date November 1 2013/14 District Audit – Due date November 5

72. Annual Financial Report See “Summary of Changes Page” in the 2014 Users’ Manual to see complete list of code changes: New Deleted Revised Few ARRA Receipt and Disbursement Codes remain on AFR

73. Changes to 2013/14 Annual Financial Report New Disbursement Function Codes 2900 Early Retirement or Termination 2905 Voluntary Terminations Removed 284 and 285 from individual function codes Function 6000 Summer School New Object Codes 300 Purchased Services 500 Capital Outlay

74. Changes to 2013/14 Annual Financial Report School Lunch Fund Report Indirect Costs for School Lunch Program as new object code 695 – Calculate on following object codes: 100s Salary 200s Employee Benefits 300s Purchased Services 400s Supplies/materials (excluding food) 600s Other Expenses

75. School Lunch Fund Report Non-Restricted Indirect Cost Rate used to calculate Indirect Cost Rate for School Lunch Program Federal requirement to report rates actually used by districts Online AFR System does edit check to confirm rate has not been exceeded Changes to 2013/14 Annual Financial Report

76. AFR Online System AFR submitted through AFR Online System in NDE Portal – Upload AFR spreadsheet – Correct error/warning messages and re- upload – Complete narratives describing ARRA Disbursements LEP Disbursements Poverty Disbursements

77. Response to Letter to Management Due January 31, 2015 Auditor’s Letter to Management School district response Issues noted in audit and/or Issues in the Letter to Management Request auditor to add audit schedule to report the non-compliant issues and school district response. – This would complete requirement with no further action by district.

78. Audit Information Single audit threshold is increasing from $500,000 to $750,000 for school year 2015-16. Computers may be classified as supplies under the new OMB Guidance. School District must have individual capable of overseeing financial statements or audit firm can’t complete audit and prepare f/s for the district. Districts that use the cash basis will no longer qualify as low risk for audits.

79. Funds Review General Fund Depreciation Fund Special Building Fund Qualified Capital Purpose Undertaking Fund Bond Fund Employee Benefit Fund Activity Fund Contingency Fund School Lunch Fund Cooperative Fund Student Fee Fund

80. Key Issues Only Four Taxing Funds – General Fund – Special Building Fund – Qualified Purpose Undertaking Fund – Bond Fund

81. Other Key Issues Loans / Borrowing – Only between taxing Funds Close Out a Fund – Proceeds go to the General Fund Cannot make transfers to the Special Building Fund or Qualified Capital Undertaking Fund Questions on Use of Funds – Call Us

82. NDE School Finance Team Bryce Wilson bryce.wilson@nebraska.gov 402-471-4320 bryce.wilson@nebraska.gov Jen Utemark jen.uttemark@nebraska.gov 402-471-3323 jen.uttemark@nebraska.gov Janice Eret janice.eret@nebraska.gov 402-471-2248 janice.eret@nebraska.gov Bill Biven bill.biven@nebraska.gov 402-471-0526bill.biven@nebraska.gov