What Every School Board Member Needs to Know About Finance

Report
1
Fiduciary Duty
 Legal authority
 Malfeasance
Who is minding the store?
2
Fiduciary Duty
 Legal authority
 Malfeasance
What this means…
VA Code: 22.1-89
Management of funds
“Each School Board shall manage
and control the funds made
available to the School Boards for
public schools and may incur
costs and expenses.”
The School Board determines how the funds are to be spent. The
local governing body determines appropriation levels.
3
Fiduciary Duty
 Legal Authority
 Malfeasance
What this means…
VA Code: 22.1-91
Limitation on
expenditures
“No school board shall expend or
contract to expend, in any fiscal
year, any sum of money in excess
of the funds available for school
purposes for that fiscal year . . . .”
The School Board can not exceed the appropriation levels
determined by the local governing body.
4
So, who IS minding the store?
 Superintendent
 CFO/Director of Finance/Assistant Superintendent
 School Board
5
BUDGET
6
Budget
Superintendent’s role
School Board role
Local governing body role
Who does what…when?
7
ORIGIN OF WORD “Budget”
VIDEO about word “budget” from Hotforwords.com
8
ORIGIN OF WORD “Budget”
The origin of our word budget is the Latin bulga,
a little pouch or knapsack.
The word turned up in English in the fifteenth
century, having travelled via the French as
“leather bag” where housewives kept their
money.
Video source: Hotforwords.com
Superintendent’s Role
 Development of needs-based budget
 Compensation decisions
 Date requirements
What LCPS does….
10
School Board Role
 Sometimes direction to Superintendent on priorities
 Public hearings (formally advertised)
 Public input (community info)
 Submission to local governing body
What LCPS does….
11
Local Governing Body Role
 Fiscal guidance?
 Appropriation – lump sum or state category?
 It’s all about relationships….
What LCPS does….
12
Budget Development: Key Players
 Board of Supervisors
 School Board
 Superintendent
 Senior Staff
 Department of Business and Financial
Services
 School Administrators
 Parents and School Community
 Education Association
13
Standard Budget Reports
 Budget reports
 Trend data
 Comparisons with previous year
 Explanations of changes – cost of
salaries
 Enrollment projections
 Peer comparisons
14
FINANCE
Finance
 School activity funds
 Finance committee
 School operating fund
 Where the money goes
 How to monitor? Financial reporting
16
School Activity Funds
 Basic principles
 Funds used for purpose collected
 Projects shall contribute to educational experience
 Funds derived by student body used for student body
 Students encouraged to participate in management
 Funds managed with sound business practices
Note no oversight responsibility of PTAs/PTOs/Boosters
17
Finance Committee
 Contracts/Procurement
 Virginia Public Procurement Act (VPPA)
 Sanctions significant
 School Board policy
 Competition thresholds
18
Standard Finance Reports
 Monthly financial reports
 Reporting by state category
 Quarterly financial reports
 Expenditure and revenue summary
 Expenditure detail (by Dept, by
Program, by Subobject)
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LCPS Monthly Report- State Category ex.
State Category
Operating Fund
Original Budget
Revised Budget
Actual
$540,362,397
$560,301,189
$443,090,286
$117,210,903
79.08%
$34,590,145
$38,420,337
$34,496,855
$3,923,482
89.79%
$2,308,489
$4,224,570
$3,059,755
$1,164,815
72.43%
Operation & Maintenance
$65,840,169
$64,436,188
$55,227,551
$9,208,636
85.71%
Pupil Transportation
$52,466,940
$53,052,165
$39,733,172
$13,318,993
74.89%
Technology
$25,277,522
$30,838,772
$22,709,099
$8,129,674
73.64%
$0
$7,434,609
$7,434,609
$0
100.00%
$720,845,662
$758,707,831
$605,751,327
$152,956,504
79.84%
$24,034,272
$24,034,272
$18,318,973
$5,715,299
76.22%
$744,879,934
$782,742,103
$624,070,300
$158,671,803
79.73%
Instruction
Admin, Attend & Health
Facilities
Debt Service & Fund Transfers
Fund Subtotal
Balance Expended
Food Service Fund
Food Services
TOTAL
20
LCPS Quarterly Report – Summary ex.
Expenditures
Salaries
Employee Benefits
Contractual Services
Internal Services
Utilities
Communication
Insurance
Materials, Supplies
Training and Mileage
Continuing Education
Leases & Rentals
Ops & Maintenance
Capital Outlay
Transfer Out
Total Expenditures
FY Budget
$443,907,086
$173,175,217
$20,616,004
$11,873,258
$16,236,799
$3,145,404
$1,460,919
$26,103,487
$1,820,412
$548,042
$536,484
$8,500
$1,843,271
$5,168,683
$706,443,566
Revenue
County
State
Federal
Other
Appropriated Fund Bal.
Total Revenue
FY Budget
Revenue Received
$470,818,084
$470,818,084
$196,451,138
$140,960,915
$120,000
$171,602
$5,654,344
$4,607,493
$33,400,000
$33,400,000
$706,443,566
$649,958,094
Projected Change to
Fund Balance @ June 30
Expenditures
Encumbrances Current Balance % Spent
$283,244,196
$0
$160,662,890 64%
$122,025,112
$0
$51,150,105 70%
$13,282,156
$3,440,205
$3,893,643 81%
$7,269,088
$0
$4,604,170 61%
$8,340,677
$14,400
$7,881,722 51%
$1,932,485
$5,476
$1,207,443 62%
$1,230,325
$0
$230,594 84%
$15,871,987
$1,654,404
$8,577,095 67%
$1,016,703
$30,253
$773,456 58%
$350,468
$1,385
$196,189 64%
$371,729
$34,946
$129,809 76%
-$24,748
$0
$33,248 -291%
$342,180
$69,984
$1,431,107 22%
$5,168,683
$0
$0
N/A
$460,421,041
$5,251,053
$240,771,471 66%
Current Balance % Rec.
$0 100%
$55,490,223 72%
-$51,602 143%
$1,046,851 81%
$0 100%
$56,485,472 92%
Projection
$149,830,464
$47,980,520
$3,493,643
$4,604,170
$5,261,722
$1,147,443
$230,594
$8,577,095
$583,456
$196,189
$129,809
$33,248
$1,431,107
$0
$223,499,460
Balance
$10,832,426
$3,169,585
$400,000
$0
$2,620,000
$60,000
$0
$0
$190,000
$0
$0
$0
$0
$0
$17,272,011
Projection
Balance
$0
$62,490,223
-$51,602
$1,046,851
$0
$63,485,472
$0
$2,953,903
$0
$0
$0
$2,953,903
$20,225,915
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VSBA Quarterly Report – Detail ex.
E xp en d itu re L in es
C o lu m n A
C o lu m n B
C o lu m n C
C o lu m n D
C o lu m n E
C o lu m n F
C o lu m n G
O rg .
B u d g et
R evised
E xp en d .
A d d . E st.
E st. E xp en d .
D ifferen ce O rig .
A p p ro ved
A d ju st
B u d g et
Y ear-to -D ate
E xp en ses to
07-08
E n d o f Y ear
B u d g et 07-08
07-08
07-08
______________
___________
______________
C o lu m n H
B ased o n D ate B u d g et an d E st.
o f R ep o rt
E xp .
__________ _____________ ___________ ____________
____________
% D iff
C o lu m n I D o llar
O rig . B u d g et D iff R ev. B u d et
N ew E st.
an d N ew E st.
_________
___________
Instruction
Teacher S alaries
$266,303,358
$6,875,890
$273,179,248
$80,812,228
$188,948,433
$269,760,661
Librarian S alaries
$6,971,110
$42,265
$7,013,375
$2,371,251
$4,554,358
$6,925,609
($45,501)
99.35%
($87,766)
G uidance S alaries
$10,627,977
$19,863
$10,647,840
$3,441,603
$7,072,989
$10,514,592
($113,385)
98.93%
($133,248)
$5,569,744
$79,277
$5,649,021
$1,904,813
$3,673,516
$5,578,329
$8,585
100.15%
($70,692)
$289,988
$0
$289,988
$120,828
$169,160
$289,988
$0
100.00%
D irectors
$1,012,977
$0
$1,012,977
$422,071
$590,906
$1,012,977
$0
100.00%
P rincipal S alaries
$8,793,449
$47,745
$8,841,194
$3,621,924
$5,108,631
$8,730,555
($62,894)
99.28%
($110,639)
$11,865,702
$18,717
$11,884,419
$4,615,903
$7,116,165
$11,732,068
($133,634)
98.87%
($152,351)
$6,827,001
$68,340
$6,895,341
$2,873,355
$3,935,697
$6,809,052
($17,949)
99.74%
($86,289)
Ins. A sst. S alaries
$24,447,863
$229,670
$24,677,533
$5,942,650
$18,413,391
$24,356,041
($91,822)
99.62%
($321,492)
S ecretary S alaries
$14,564,177
$26,170
$14,590,347
$5,339,507
$9,068,255
$14,407,762
($156,415)
98.93%
($182,585)
S ubstitute S alaries
$13,009,486
$10,977,559
$2,740,885
$8,099,300
$10,840,185
($2,169,301)
83.33%
($137,374)
S upplem ental P ay
$4,430,768
$4,570,797
$1,502,291
$3,011,307
$4,513,598
$82,830
101.87%
($57,199)
($40,562)
99.86%
$0
$1,227,003
102.31%
$1,162,313
P sychologists
A sst. S uperintendent
A sst. P rin. S alaries
C oord. S alaries
($2,031,927)
$140,029
F IC A
$28,533,667
($40,562)
$28,493,105
$8,451,041
$20,042,064
$28,493,105
VRS
$53,086,372
$64,690
$53,151,062
$17,725,014
$36,588,361
$54,313,375
Legal S ervices
$3,457,303
101.30%
($3,418,587)
$0
$0
$207,064
$0
$207,064
$44,611
$162,453
$207,064
$0
100.00%
$0
$48,245,662
$87,664
$48,333,326
$17,718,419
$30,614,907
$48,333,326
$87,664
100.18%
$0
Life Insurance
$3,985,553
$27,677
$4,013,230
$1,077,355
$2,935,875
$4,013,230
$27,677
100.69%
$0
O ther Insurances
$1,182,167
$3,786
$1,185,953
$1,144,706
$41,247
$1,185,953
$3,786
100.32%
P urchased S ervices
$6,002,860
$2,979,239
$8,982,099
$4,711,323
$4,083,308
$8,794,631
$2,791,771
146.51%
($187,468)
Tuition
$3,006,096
M edical P rem ium s
P rinting
O ffice S upplies
E ducational S upplies
M edia S upplies
Textbooks
E quipm ent
$2,954,096
$1,573,849
$1,318,591
$2,892,440
($113,656)
96.22%
($61,656)
$57,847
$62,904
$120,751
$62,577
$55,654
$118,231
$60,384
204.39%
($2,520)
$186,504
$98,244
$284,748
$142,360
$136,622
$278,982
$92,478
149.58%
($5,766)
$26,094,153
$3,208,038
$29,302,191
$16,949,076
$11,759,737
$28,708,813
$2,614,660
110.02%
($593,378)
$636,534
$127,784
$764,318
$526,820
$222,020
$748,840
$112,306
117.64%
($15,478)
$4,945,916
$499,645
$5,445,561
$3,682,417
$1,652,870
$5,335,287
$389,371
107.87%
($110,274)
$1,590,858
$256,380
$1,847,238
($437,697)
80.84%
($62,799)
101.37%
($4,635,248)
$2,284,935
______________
S u b -T o tal
$553,168,930
($52,000)
$0
($374,898)
___________
$12,208,250
$1,910,037
______________
$565,377,180
__________ _____________ ___________ ____________
____________
$191,109,735
$369,632,197
$560,741,932
$7,573,002
22
EXPENDITURES
23
LCPS School Operating Fund
Where the money goes
All other costs 12%
Salaries & benefits 88%
24
Fund Balance/Surplus/Savings
 Coming soon to a Local Governing Body meeting
 Important issue facing School Boards across the
Commonwealth
 Why it happens and why it matters
25
Why it happens and why it matters
What is lapse and turnover?
 Fluctuations of budget to actual
 Position lapse and turnover
 CAUTION, CAUTION
 Only flexibility the division has…
26
How To Address It
 Budget a large negative number
 Make assumptions for vacant / new positions
 Other variables
 Predicting human behavior
27
Surpluses Come From Savings
 Surpluses are not a surprise
 All school division’s budgets should have unspent
funds
 School divisions cannot exceed their
appropriations
28
REVENUE
29
LCPS - Where the money comes from
FY 2013
 Carryover
 Local/County Funding
 State Revenue
 Federal Funds
 Other Funds
Total
State
Amount ($ in millions)
$10.0
$528.0
$250.1
$14.1
$6.9
$809.1
30.9%
Local/County
65.3%
30
Local/County Funding
60.0%
50.0%
47.7%
47.2%
43.7%
42.2%
39.7%
40.0%
34.6%
30.9%
30.8%
30.0%
20.0%
10.0%
0.0%
Alexandria
City
Arlington
County
Fairfax
County
Falls Church
City
Loudoun
County
Manassas
City
Manassas
Park City
Prince William
County
Source: FY 2012 WABE Guide
Tax Rate
Value of 1¢
$1.235 per $100 of assessed value
$8.0 million
31
State Funding & the Local Composite Index
•
•
•
Components
True Value of Property
Adjusted Gross Income
Taxable Retail Sales
LCPS LCI - .5666
Source: DOE website
According to the LCI, locally we should be able to pay for about 57 percent of
the costs of education and the Commonwealth should pick up 43 percent.
32
Sales Tax Calculation
Weldon Cooper July 2010
Weldon Cooper LCPS
LCPS Percentage
Sales tax statewide
Education share 1.125%
1,569,153
77,491
4.938%
Basic Aid Calculation
Adjusted ADM (K-12)
66,814
State per pupil amount
$5,594
Total
$373.8 million
$106.9 billion
Less sales tax
($59.3 million)
$1.2 billion
Total Basic Aid
$314.5 million
LCPS percentage
4.938%
Sales tax funding
$59.3 million
State share
State funding
.4334
$136.3 million
OTHER STUFF
34
Other Stuff You Should Know
 Misinformation
 Simplify, simplify, simplify
 Strategies to cut spending
35
Misinformation
VIDEO from Saturday Night Live
Gilda Radner and Chevy Chase
“Violins on Television”
Can be found at Hulu.com
The Things I’ve Learned….
 The media sometimes gets it wrong
 If your version isn’t out there, it doesn’t exist.
 Tell the story better
 Everyone has to help
37
Simplify, Simplify, Simplify
 What kind of information do employees need?
 What can be easily understood?
 The right data will tell your story.
 Peer comparisons
 Pupil/teacher ratios



Cost per pupil
Compensation packages
School-based and non-school based positions
38
Strategies to Cut Spending
 Last in first out

 Reduce staffing greater

than SOQ
 Review current vacancies

 Reduce extended
contracts

 Increase class size

 Healthcare co-pays and
deductibles
Reduce employer share
of healthcare
Defer equipment
replacement plans
Mid-year salary
enhancements
Increase fees
Selective elimination of
programs
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QUESTIONS?
[email protected]
40

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