WASBO NEW SCHOOL ADMIN WORKSHOP

Revenue LimitsWASBO Fall Conference 2014Year Of Success Track

October 2, 2014

Bruce Anderson School Finance Consultant, DPIBob Avery Director of Business Services, BDUSD

Welcome! First things first, today we will walk through the revenue limit worksheet. You will NOT be completing the worksheet today with all your October data as we dont have it all set yet. October property values will be coming from the DOR in the next few days and the October certified aid amounts will be released next Friday.

There will be a WASDA/DPI workshop called Getting It Right on the 16th in Madison and again on the 18th in Stevens Point where participants will go through the revenue limit worksheet with up-to-date data. You will be able to walk away from either of those workshops with all the information you need to certify your levy except of course, the Boards decision whether to under-levy or not. See the WASDA website to register.REVENUE LIMITS..will determine approximately 85-95% of your general funds revenue budget!

2Go to dpi.wi.gov/sfs/revlimworksheet to load your districts worksheet andwork along with us as we go throughthe presentation and worksheet.

Most of the dollars needed to fund general operations is governed by the revenue limit formula. Wrong calculations here will result in penalties to your district. And have cost people their jobs.

If you have your laptops, you can go to http://sfs.dpi.wi.gov/files/sfs/revlim14_prepop_July%201%20Aid%20Est2.xls to follow along looking at your districts data throughout the presentation.Revenue Limits ReviewThe Revenue Limit controls the following revenues:General Fund (Fund 10)Property Tax LevyGeneral Aid: Equalization Aid (for most districts)Chapter 220 (Integration) Programs, and Special Adjustment Aids.Computer AidNon-Referendum Debt (Fund 38) LevyCapital Projects (Fund 41) Levy3

First, lets review. These revenue sources are controlled by state law. School districts cannot receive more revenues than allowed by the revenue limit formula or will by subject to aid penalties.Revenue Limits ReviewThe Revenue Limit does not control the following revenues:School FeesCategorical Aids (Library, Transportation, Sparsity, SAGE, High Poverty Aid, High Cost Transportation, etc.)State and Federal GrantsGate ReceiptsDonationsTax Levies for Referendum Approved Debt (Fund 39) and Community Service (Fund 80) Funds4

These, however, are some of the revenue sources that are not restricted. The downside is that, for most districts, this total less than 20% of income.Follow along with your 14-15 worksheet as we walk through the sample district worksheet.Four Step Process:Step 1: Build the Base Revenue Per Member. (Worksheet lines 1-3)

Step 2: Calculate New Revenue Per Member(Worksheet lines 4-7)

Step 3: Determine Allowable Exemptions.(Worksheet lines 8-11)Revenue Limits5

Calculating a districts revenue limit is a four-step process, each with sub-steps. It sounds intimidating, but really, its pretty straight forward math.Step 4: Determine Levy & Computer Aid Amounts.

Controlled AmountsLevies for Funds 10, 38, 41DOR Computer Aid(Worksheet lines 14, 17 & 18)

Non-Controlled AmountsLevies for Funds 39 & 80Prior-Year Chargeback (Fund 10, Src 212)(Worksheet line 15c)Revenue Limits6

Step 4 is the most challenging step in the process actually identifying the allowable school property taxes to be levied.A point to remember$150.00 per Member in 2014-15

$150.00 per Member each year thereafterSubject to Legislative action may be eliminated in the next biennium

No longer included on the Revenue Limit worksheet as it will NOT be affected if the district chooses to under-levy. Per Pupil Categorical Aid7

Step 4 is the most challenging step in the process actually identifying the allowable school property taxes to be levied.

8Rev Limit Worksheet

The RL worksheet is put together on two sides .

The RIGHT side is where the calculations for the revenue limit are done. It is a building block process, where elements are added as you move down the worksheet.

The LEFT side contains primarily the previous years data but is also used to calculate specific lines on the right side.8

9Rev Limit Worksheet

Here is how the LEFT side feeds data to the Right side.

Line 1 Base Revenues Line 2 Base membership Line 6 Current Membership Line 10B Declining Enrollment Exemptions Line 17 Aid for Exempt Computers 910

Rev Limit WorksheetGreen cells are formula cells and will auto calculate the amount for that cell based on the values entered in other cells.Yellow cells pull data on file with DPI and loaded on the Data tab of the worksheet. Line 12A State General Aid reflects the July 1 aid estimate.This WILL be updated on Oct. 15. Pink cells require district entry.Note: some of the pink cells will become yellow cells as additional data become available, such as property values and 2014 enrollment data.

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2013-14

2014-15

11* NOTE: Next Year levy for non-recurring exemptions = Line 10 under-levy amount.**Step 1: Build Base RevenueLine 1

Here you see the areas that are pulled forward. When using the Pre-Populated worksheet available on the DPI website, this data is pulled forward for you.

If you are using a Blank Executable worksheet, you will need to enter these cells.11Step 1: Build Base RevenueLine 1ITEM13-14 RL Line+October 15 Certified General AidLine 12A+High Poverty AidLine 12B+State Aid for Exempt ComputersLine 17+Fund 10 Tax LevyLine 18+Fund 38 Tax LevyLine 14B+Fund 41 Tax LevyLine 14C-Revenue Limit PenaltyFrom DPI-Levy for Non-Recurring Exemptions Non-Recurring ReferendaLine 10A Declining EnrollmentLine 10B Energy EfficiencyLine 10C Refunded/Rescinded TaxesLine 10D Prior Year Open EnrollmentLine 10E Hold HarmlessLine 7BPrior-Year Data (2013-14)2014-15 Base12

This is easier to read: These 11 items are pulled from the 10-11 worksheet and used to calculate the base revenue for your district.12

Step 1: Build Base RevenueLine 113

The worksheet calculates, in both the Pre-Pop and Blank Executable versions, the Line 1 base revenue.

This number , the previous year base revenue is then copied to the RIGHT side of the worksheet.13

Step 1: Build Base RevenueLine 2Previous three year average membership = September (Third Friday) counts+40% of Summer School FTEFor 2014-15, use years 2011, 2012, and 201314

Line two is the base (previous three year) average enrollments. This is calculated on the LEFT side of the worksheet. For the 11-12 calculation, we look at the 2008, 2009 and 2010.

Summer school FTEs are factored in at 40% and added to the FTE conversion from the September count for the years total. The three years are then averaged to provide the Base Average Membership.

Like Line 1, this is carried over to the RIGHT side of the worksheet.142013-14 Line 1Base Membership Previous 3-Year AverageLine 2(Fall 2011, 2012 , 2013)=Base RevenuePer MemberLine 3$15,557,2501,699$9,156.71Step 1: Build Base RevenueLine 315

Line 3, the Base Revenue Per Member is simply dividing Line 1 by Line 2.Step 2: New Revenue/MemberLine 4Line 4A: Each year, under current law, each districts per pupil revenue limit may change.Historically was an inflationary increase.Recently has been fixed dollar amounts.For 2014-15, line 4A = $75.00.Future years = $0. May change with legislative action in the next biennium.16

Line 4 where we make the adjustments from the previous years, or base, revenue per member to the current year before we add in allowable revenue limit exemptions.

On Line 4A, the annual adjustment is made. For 11-12, that adjustment is negative 5.5%. For 12-13, it will be plus $50.16Line 4B:Under current law, if after adding line 4A to line 3, a district has a per pupil base revenue per member of under $9,100 (called a low revenue ceiling) the per pupil revenue limit is adjusted up to the ceiling. Line 4B will automatically pre-fill if your district meets this criteria. Step 2: New Revenue/MemberLine 417

ScenarioLine 3Line 4A3 + 4ALine 4BLine 5Low Revenue$8,956.71$75.00$9,031.71$68.29$9,100.00Above Ceiling$9,156.71$75.00$9,231.71$0.00$9,231.71If, after the adjustment in line 4A, the districts new revenue limit per member is less than a fixed amount - $9100 for 13-14 then it is adjusted upwards to equal that amount. This calculation is done automatically on the worksheet.17Line 4C:If your district participates in a CCDEB, please call the DPI School Finance Team for further instructions for Line 4C.

Line 4 = Line 4A + Line 4B + Line 4C

NOTE: Line 4C may be negative.Step 2: New Revenue/MemberLine 418

For school districts that are in a CCDEB, and are below the low revenue ceiling, there is an adjustment amount provided by the Department.

Line 4, then equals 4A + 4B + 4C.18Step 2: New Revenue/MemberLine 5Line 5 is the sum of Lines 3 and 4 (auto-calculates).

Note: if Line 4C is a >0, the resulting Line 5 will be less than $9,100.00.

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$9447.97 + $75 = $9522.97.

Line 5 = Line 3 + Line 4.19Step 2: New Revenue/MemberLine 6Current three year average membership = September (Third Friday) counts+40% of Summer School FTEFor 2014-15, use years 2012, 2013, and 201420

Line 6 is where the current, or most recent, three year average membership. It includes data from this year.

On the LEFT side of the worksheet, is where the calculation occurs and is carried over to the RIGHT side.

For 13-14, the three years are 2011, 2012, and 2013. The average is calculated the same way as it was in Line 2 (Previous years 3-year average).20Step 2: New Revenue/MemberLine 7Line 7 Revenue Limit = Line 7A + Line 7B

Line 7A = Line 5 x Line 6

If Line 7A is less than Line 1 (below) the difference will automatically calculate in Line 7B. This is a non-recurring exemption. Line 7B = Line 1 Line 7A, but not < 0.

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On Line 7, the PER MEMBER revenue limit is converted to a TOTAL revenue limit. Line 5 is multiplied by Line 6.21

Step 2: New Revenue/MemberLines 3-7Calculate a New Revenue Limit22

Line 7 then is the revenue limit with no exemptions.22Step 3: ExemptionsLines 8-11Exemptions to the Revenue Limit allow districts to levy additional amounts up and above the amount generated by the computation up to this point.

Line 8 identifies Recurring Exemptions.

Line 10 identifies Non-Recurring Exemptions.(Line 7B is also non-recurring and is treated the same way as Line 10.)

Its important to understand the distinction between the two.

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In step 3, we begin adding allowable exemptions to the revenue limit things that allow districts to exceed the Line 7 amount. There are two types recurring and non-recurring.23Recurring Exemptions Permanently in Your BaseBase

Non-Recurring Exemptions One Year Only RecurringThis YearNext YearBase

Base

Non-RecurringBase

This YearNext YearRecurring v Non-RecurringKnow the Difference!24

Simply put, recurring exemptions are added to the base revenue used in subsequent years calculations.

Non-recurring are only added for the current year. Not, you can repeat non-recurring over time. For example, the declining enrollment exemption. Or a multi-year non-recurring referendum.24

Step 3: ExemptionsLine 8Recurring Exemptions (Lines 8A-E) are base-building that is, if the district taxes for any of this additional authority, the levy amount is included in the subsequent years base.

Any unused recurring authority is eligible for 100% carryover into the next year.

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Line 8 is where the recurring exemptions are listed. There are five (A-E) which are then added together for a total.

The Prior Year carry-over on Line 8A is the amount of previous year unused revenue authority that is not non-recurring. If the district under-levied by $100,000 and had no non-recurring exemptions, the full $100,000 would be shown here. If the district had $50,000 in non-recurring exemptions, then only $50,000 of the under-levy would be eligible to carry over to the current year.

If your district passed a recurring (re: perpetual) referendum and 11-12 is the first year it is being added, enter the amount on Line 10E. After the first year, it is built into the base and should not be entered again. The only exception to this is if the recurring referendum is an escalating one. ($100K year 1, $200K year 2, $300K years 3 on).25Line 9 = Line 7 + Line 8Step 3: ExemptionsLine 926

The Line 8 total is then added to Line 7 resulting in Line 9.26Step 3: ExemptionsLine 10Non-Recurring Exemptions (Lines 10A-E) are not base-building that is, if a district taxes for any of these exemptions, the amount is not included in the succeeding years base.In addition, any unused non-recurring authority is not eligible for carryover in the next year. Districts have one, and only one, opportunity to use non-recurring exemptions.27

Line 10 lists the available non-recurring exemptions on lines A-D. Line 10B is auto-calculated by the worksheet.

Line 10A is where you enter the amount on a non-recurring referenda. For multiple-year non-recurring referendum, you would enter the amount each year the referendum is in effect.

Line 10E is new Non-Recurring Exemption per the 2013 Wisconsin Act 20. Previously it was treated as a Recurring Exemption, going forward it will be treated as Non-Recurring.

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Step 3: ExemptionsLine 10Line 10B, Declining Enrollment Exemption, will auto-fill based on the 2014 membership numbers entered on the left side of the worksheet.Line 10E, is a change per 2013 Wisconsin Act 20, Prior Year Open Enrollment (uncounted pupils) has been moved from Recurring to Non-Recurring Exemption.28

Line 10 lists the available non-recurring exemptions on lines A-D. Line 10B is auto-calculated by the worksheet.

Line 10A is where you enter the amount on a non-recurring referenda. For multiple-year non-recurring referendum, you would enter the amount each year the referendum is in effect.

Line 10E is new Non-Recurring Exemption per the 2013 Wisconsin Act 20. Previously it was treated as a Recurring Exemption, going forward it will be treated as Non-Recurring.

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The decline in the three-year average of 1 FTE is multiplied by the new per pupil limit on Line 5 to determine the exemption amount.29Step 3: ExemptionsLine 10B Declining Enrollment

Left side of worksheetRight sideFor the purposes of illustrating the exemption, 29

Line 11 = Line 9 + Line 10Step 3: ExemptionsLine 1130

Line 11 is where the non-recurring exemptions are added to the previous total on Line 9.30Line 11 is the final Revenue Limit With All Exemptions for your district.

This is the total revenue your district can receive from the combination of Property Tax for Funds 10, 38, and 41 + State General Aid +Equalization, Special Adjustment, and Integration AidsHigh Poverty Aid +State Computer AidStep 3: ExemptionsLine 1131

31Fly-Over ReviewLines 1 1132

So we have complete 3 steps and calculated the districts revenue limit authority on lines 1-11.32Line 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 70-90% of total revenues for most districts and 85-95% of general fund revenues.

For budgeting purposes, its very important to compare this years Line 11 with the previous years Line 11. Major decreases in Line 11 from year to year can have serious implications for your budget.

Remember that results for 2011-12 will skew analysis trending due to the 5.5% reduction in Line 4A.

Comparing Line 11sfrom Year to Year33

33Comparing Line 11sfrom Year to YearTotal Revenue Limit with ExemptionsYear 1Year 2Year 3Total Revenue Limit with Exemptions

Total Revenue Limit with Exemptions

Decreasing resources indicates the need for the district to evaluate current programs for efficiency, identifying cost-saving measures.The earlier in the budget you know this, the better.34

34Controlled Amounts Lines 12-14, 17, 18State General (12A)Poverty Aid (12B)Fund 10, General Fund Levy (18)Fund 38, Non-Referendum Debt Service Levy (14B)Fund 41, Capital Projects Levy (14C)Computer Aid (17)Non-Controlled Amounts Lines 15 & 20Fund 39, Referendum Debt Levy (15A)Fund 80, Community Service Levy (15B)*Fund 10, Src 212, Property Tax Chargebacks (15C)

* Note: Fund 80 has new restrictions for 2014-15.Step 4: Determine Levy and Computer Aid Amounts35

So, at this point, we have identified the districts revenue limit. Now we need to determine how that revenue limit is compiled out of the various tax levies and state aid programs. These are the revenue sources we will look at in Step 4.35

State Aids: Line 12 = Line 12A + Line 12BState General Aid (Line 12A)Currently shows the July 1 Aid Estimate AmountWill change with October 15 Certified Aid AmountAid to High Poverty Districts (Line 12B)Allowable Limited Revenue (Line 13) Line 11-Line12Step 4: Levies & AidsLine 12 and Line 1336

In the last hour, Erin walked you though how state general aid is calculated. On the pre-populated worksheets we enter on line 12A this value for you.

As of right now, the amounts shown are the JULY 1 aid estimates. Those estimates are based on last years PI-1504 budget reports as of late June.

This will change next Friday when the Department releases the October 15 Certified Aid amounts. The 10/15 amounts are based on actual costs as reported on the PI-1506AC. Once the aid calculation is done, we will produce an updated RL worksheet with the new data.

BE SURE TO REDO YOUR REVENUE LIMIT CALCULATION AFTER THE OCTOBER 15 AID CERT IS PUBLISHED, whether you use the pre-populated worksheet or the blank executable. If you use the blank worksheet, be sure you enter the 10/15 values not the 7/1 estimated amounts.

High Poverty Aid on Line 12B is also pre-populated. While this is a categorical aid, it is a levy-offset aid and therefore is within the revenue limit. It is intended to lower the tax levy for those districts that qualify.

Line 12 is the sum of 12A + 12B.36Step 4: Levies & AidsLines 14 & 1537State General Aids (line 12)

*Computer Aid is based on the total levy, but, at this point in the computation, we dont have total levy yet. Calls for a strategy on how to get the limited portion rightRevenue Limit (Line 11)Allowable Limited Levy, including Computer Aid(Line 13)Controlled Levies:F-10 LevyF-38 LevyF-41 LevyComputer Aid*Controlled LeviesFund 10 LevyFund 38 LevyFund 41 Levy

Non-Controlled Levies (39+80 +10 chargebacks)Total Tax Levy + Comp Aid (Line 16)

Computer AidTotal Tax Levy- Line 1937Step 4: Levies & AidsLine 14STRATEGY:First, enter the amounts you intend to levy for Funds 38 (line 14B) and 41 (line 14C).Then, enter into line 14A the difference between line 13 and the sum of lines 14B & C.

By doing this, you have levied to your maximum. Note that districts may choose to levy less than the maximum, in which case, a lower amount would be entered in Line 14A.

14A Revenue Limits > Section on Multi-Year Revenue Limit DataSFS HomepageSFS Team is in the process of updating 50

50Visit the DPI SFS web site: dpi.wi.gov/sfs

Or call (all area code 608)Bruce Anderson, Consultant608-267-9707Carey Bradley, Consultant608-267-3752Dan Bush, Consultant608-267-9212Karen Kucharz, Consultant608-266-3464Gene Fornecker, Auditor608-267-7882Michele Gundrum, Auditor608-267-9218Brian Kahl, Auditor608-266-3862Bob Soldner, Director608-266-6968Questions?51

51REVENUE LIMIT CARRYOVER DISCUSSION.(optional)52

1.) If our a district added 9 FTE to their 2013 Fall count, how would Lines 6 & 7 change?2.) How does a district enter an underlevy on the worksheet?The revenue limit uses a 3-year average, so the 9 extra kids would compute to an increase of 3 FTE on Line 6. The dollar increase to Line 7 would be 3 x the 14-15 Maximum Revenue/Memb on Line 5.The district revenue limit status is computed by subtracting Line 14 from Line 13. If the district wishes to underlevy, enter a number in Line 14 that is less than Line 13 by the amount of underlevy.Revenue LimitsUsing What You Know53

3.) Your district has only recurring exemptions and wants to underlevy. How much of your underlevy will be carried over into the next year?4.) Your district has only non-recurring exemptions and wants to underlevy. How much of your underlevy will be carried over into the next year?100%Only the amount of underlevy that exceeds the amount of your non-recurring exemptions will be carried over.Revenue LimitsUsing What You Know54

5.) Your district has BOTH recurring and non-recurring exemptions and wants to underlevy. How much of your underlevy will be carried over into the next year?This can be very tricky and depends on the amounts of each exemption, plus the amount of the underlevy. The Revenue Limit Worksheet includes an audit check to the right of the calculations that show the allowable carry-over under existing law. Call the SFS Team at DPI to discuss further to understand your circumstances.Revenue LimitsUsing What You Know55

6.) Is there any relationship between Line 11 and Line 12 i.e. does it have to be 2/3rds (66%)? There is and never has been an intentional relationship between these 2 lines. What a district gets for aid on Line 12 is dependent on the state appropriation for General Aid and how the district fares in the aid formula. This does NOT have anything to do with 2/3rds (66%.)Revenue LimitsUsing What You Know56

Revenue LimitsRecurring Exemptions

Prior-Year CarryoverTransfer of ServiceTransfer of TerritoryFederal Impact Aid LossRecurring Referenda to Exceed (if year 1 of authority)

Non-Recurring Exemptions

Non-Recurring Referenda to ExceedDeclining EnrollmentLine 7 Hold HarmlessEnergy ExemptionOther

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57Base$10,000,000$10,000,000Inflationary IncreaseTransfer of ServiceRecurring ReferendumPrior Year Aid plusLevies

(no backouts)#1 - Recurring Exemptions, Levied to Max2013-142014-15Aid+Levy

Base

This district used all of its authority and has no carryover authority into 14-15, Line 8A.58

58Base

$10,000,000$9,800,000Inflationary IncreaseTransfer of ServiceRecurring ReferendumPrior Year Aid plusLevies

(no backouts)#2 - Recurring Exemptions, Underlevy2013-14Aid+Levy

Base

This district will have $200,000 of carryover authority in 2014-15 in Line 8A.Underlevied by $200,0002014-1559

59Base

Inflationary IncreaseDecl Enroll - $150,000Prior Year Aid plusLeviesMinus $150,000(base backout)#3 - Non-Recurring Exemptions, Levied to Max2013-14Aid+Levy

Base

This district will have no carryover authority in 2014-15 in Line 8A.2014-1560

60Base

Inflationary IncreaseLow Revenue IncreaseLine 7 - $46,000Prior Year Aid plusLeviesMinus $36,000(base backout of amount used)#4 - Line 7 Hold Harmless Non-Recurring, Recurring, Under-levy2013-14Aid+Levy

Base

This district will have no carryover authority in 2014-15 in Line 8A.Underlevied by $10,000Transfer of Service2014-1561

61Base

Inflationary IncreaseTransfer of ServiceLine 7 - $46,000Prior Year Aid plusLevies

(no backout)#5 - Line 7 Hold HarmlessNon-Recurring, Recurring, Under-levy2013-14Aid+Levy

Base

This district will have $10,000 in carryover authority in 2014-15 in Line 8A.Underlevied by $56,0002014-1562

62Base

Inflationary IncreaseLine 7 - $40,722Rec Ref - $252,707Prior Year Aid +Levies2013-14Aid+Levy

Base

Plus, this district will have $43,955 of carryover authority in 2014-15 in Line 8A.Decl Enroll - $168,030Underlevied by $252,707$43,9552014-1563#5 - Line 7 Hold HarmlessNon-Recurring, Recurring, Under-levy

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