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Financial Limitations

Management Limitation 2.6 – Financial Planning/BudgetingFinancial planning for any fiscal year or the remaining part of any fiscal

year may not deviate materially from the Board’s Student Expectations Policy or risk financial jeopardy.

Accordingly, the Superintendent shall not present a budget that:– Falls below a 15% solvency ratio for the General Fund.– Falls below a 15% unspent spending ratio for the General Fund. – Creates a situation or condition described as unacceptable in the

“Financial Conditions and Activities.”– Omits credible projections of revenues and expenses and disclosure of

planning assumptions.– Plans the expenditure of more funds than are projected to be received

in any fiscal year.

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Revenue All Funds (FY20 Budget)

• State Aid• Statewide Sales Tax• Including Property Tax• Levies• Federal Funds• Program Fees• Intermediary Sources

Sources of Revenue

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80%

5%

6%4% 5%

ALL FUNDS REVENUE, BY FUND

Operating (i.e., General Fund)

Special Revenue

Capital Projects

Debt Service

Enterprise

Putting it All Together: Sources of Revenue & Fund Accounts

Fund

ing

Sour

ce State Aid Property Tax

Levy Sales Tax Federal Funds

Program Fees

Fund

A

ccou

nt

Operating Fund: General Fund

Capital Projects: Statewide Penny

Special Rev: Management

Special Rev: PPEL (Voted)PPEL (Brd.)

Special Rev: PERL

Enter: Food & Nutrition

Enter: Child Care

Debt Service:Debt Service

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General Fund Sources of Revenue(FY20 Budget)

60.2%

32.3%

7.4% 0.2%

GENERAL FUND REVENUE SOURCES (FY 20 BUDGET)

State Local Federal Intermediary

• State Aid• Property Taxes• Levies• Intermediary• Federal Funds

Sources of Revenue

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All Funds Expenditures(FY20 Budget)

77%

5%

9%

4%5%

EXPENDITURES BY FUND TYPE

Operating (i.e., General Fund) Special Revenue

Capital Projects Debt Service

Enterprise

48%

19%

8%

3%

5%

3%

6%

4% 4%

EXPENDITURES BY FUNCTION

Instruction Student SupportPlant Operations Central AdministrationNon-Instruction AEA SupportFacilities Acquisition & Construction Debt ServiceTransfers Out

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Putting it All Together: Revenue, Fund Accounts, & Restricted Uses

Fund

ing

Sour

ce State Aid Property Tax

Levy Sales Tax Federal Funds

Program Fees

Fund

A

ccou

nt Operating Fund: General Fund

Capital Projects: Statewide Penny

Special Rev: Management

Special Rev: PPEL (Voted)PPEL (Brd.)

Special Rev: PERL

Enter: Food & Nutrition

Enter: Child Care

Debt Service:Debt Service

Use

s of

Fu

nds

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General Fund Expenditures (FY20 Budget)

60.6%

22.8%

8.4%

4.1%3.7% 0.3%

GENERAL FUND EXPENDITURES BY FUNCTION

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General Fund – Expenditures(FY 20 Budget)

82%

18%

GENERAL FUND EXPENSES

Compensation Everything Else

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Key Financial Measures & ObjectivesFY 2019 (actual) | FY 2020 (budget) | FY 2021 (forecast)

Key Measure Objective Status Status

Certified Enrollment(line 7)

Stable or growing• 32,788 (10/2018)• 32,606 (10/2019)• 32,356 (est.)

Unspent AuthorizedBudget

Maintain or build• $10.4 M (FY 2019 est.)• $16.2 M (FY 2020 est.)• $36.1 M (FY 2021 est.)

Unspent Spending Authority

15%, not to exceed 25% • 2.3% (FY 2019 est.)• 3.6% (FY 2020 est.)• 7.9% (FY 2021 est.)

Solvency Ratio (General Fund)

15%, not to exceed 25%• 15.1% (FY 2019)• 20.4% (FY 2020 est.)• 22.0% (FY 2021 est.)

Salaries & Benefits (General Fund)

75% by 2023• 82.4% (FY 2019)• 81.6% (FY 2020 est.)• 81.2% (FY 2021 est.)

New Money % vs.Total Package % vs.Difference

Less than or equal to Supplemental State Aid and/or at state average

FY SSA DMEA Diff.

19 1.00% 3.28% (2.28%)

20 2.06% 1.88% 0.10% 10

General Fund: Basic Principles

Budget is student driven Funding amount per student, set by legislature.

Schools are budget limited, not tax rate limited.

Tax rate is driven by formula more than district actions and doesn’t impact Spending Authority.

District can only spend funds on allowable purposes.

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General Fund: Spending Authority

• It is illegal for a school district to exceed its total Spending Authority.

State controls maximum amount each district can spend.

• Amount of cash or fund balance not considered.

Limit on spending is the amount of Spending Authority a district has.

• Cost Per Pupil: Fixed dollar amount set by the State that will be funded (through both State and local sources) for every student.

Spending Authority is directly tied to student enrollment.

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Statewide Spending Authority (2018)

0% -10%8%

11% - 20%32%

21% - 30%26%

31%- 40%18%

41% - 50%8%

51% +8%

UAB AS PERCENT OF EXPENDITURES

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Total Spending Authority in a Year

Calculating Spending Authority - SimplifiedCurrent year Spending Authority

+ Previous year’s surplus Spending Authority= Total Spending Authority

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Where Does Spending Authority Come From?

Important Notes:• Student count is a year behind

• Always use prior year count – this October’s number = the number used for next year’s budget

• Cost per child is set by the Iowa Legislature by setting State Supplementary Assistance Rate

• Spending Authority is then funded by a combination of State Aid and Property Taxes

Basic FormulaNumber of Students

x Cost per Pupil

= Total current year Spending Authority

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Growth in Spending Authority

Three Basic Ways

Increase in Supplemental State Aid

Increase in Student Enrollment

Increase in Miscellaneous Income

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1)Increase in Supplemental State Aid

2)Increase in Student Enrollment

3)Increase in Miscellaneous Income

0%

5%

10%

15%

73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19

GROWTH IN STATE AID

POTENTIAL DECREASE IN FEDERAL FUNDING

Growth in Spending Authority

30000

32500

35000

09-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21(est.)

21-22(est.)

22-23(est.)

ENROLLMENT

Actual Enrollment DE Projection DMPS Assumption

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Compensation (Salary & Benefits) v. Supplemental State Aid

0%

1%

2%

3%

4%

5%

6%

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

DMEA Settlement Supplemental State Aid

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Three Scenarios Presented for FY 20

0%2%4%6%8%10%12%14%16%18%20%22%24%26%28%30%32%34%36%38%40%

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

In M

illio

ns

Cut (in Millions) Spending Authority Solvency

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How will we get to $24M for FY 21?• Charge:

–Reduction of $24M while achieve the targets of the four Board Goals for the district (3 academic goals and 1 goal targeting SEL).

• Method:–Reprioritizing programs we currently have and the benefits that it brings to the district as a whole

• Identify and evaluate revenue generating option• Identify and evaluate systemic budget saving strategies • Funneling resources to directly support the achievement of our Board and

District goals• Minimize classroom deductions (automated virtual solutions)

• Budget Team Representatives:–HR: Benefits–Schools: Leadership Development, Curriculum, C3, SPED, ELL–Operations: Technology, Food Service–Finance: Business & Finance

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Solvency Ratio

Why is the Solvency Ratio so important?

Revenue Comes in Waves• Expenditures ≈

$46M per Month

Tax Ratings• Number one factor rating agencies look for

“Solvency Ratio” is a moment-in-time (June 30) measure of the financial health of the district’s General Fund

Fund Equity Position

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Downsides to Dramatic Changes In Solvency

Increases

• Public perception that the district is “flush”

• Run into Cash Reserve Levy Limits

Decreases

• Impact on bond ratings

• Inability to cover expenses due to revenue/expenditure timing

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Basic Types of Levies for Iowa Schools

• General Fund

• Management

• PPEL

• PERL

• Debt Service

• (Statewide Penny Sales Tax)

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Property Tax Rate Components

Authority FY 2019 FY 2020 FY 2021 (estimated) Max

GENERALRegularInstructional SupportDropout PreventionCash Reserve Levy

CodeVote OR BoardBoardBoard

9.251711.663781.50161 3.48865

9.057811.633281.194193.82658

8.891651.632801.516623.35405

NA10% of cost5% of cost20%

MANAGEMENT Board 1.60000 1.80000 1.40000 NA

PPEL RegularVoted

BoardVote

0.330000.63000

0.330000.63000

0.330001.34000

0.3301.340

PERL Vote 0.13500 0.13500 0.13500 0.135

DEBT SERVICE Vote 0.00000 0.00000 0.00000 4.050

TOTAL 18.60074 18.60686 18.60012

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Things to Remember

Restrictions

• District cannotuse funds on anything it chooses

• General Fund is the least restrictive fund

Revenue

• Most revenue is from sources outside the District’s control

Expenditures

• Compensationis the largest expense in the General Fund

• Compensationis the largest expenditure category of “All Funds”

Key Financial Measures

• Spending Authority has been driving the budget

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