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WASBO NEW SCHOOL ADMINISTRATORS AND BUSINESS SUPPORT STAFF WORKSHOPS Revenue Limits

WASBO NEW SCHOOL ADMINISTRATORS AND BUSINESS SUPPORT STAFF WORKSHOPS Revenue Limits August 17, 2007. Karen Kucharz, Consultant DPI School Finance Team. Handouts. School Finance Homepage School Finance Staff Assignments Sample District 2006-07 Final Revenue Limit Calculation

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WASBO NEW SCHOOL ADMINISTRATORS AND BUSINESS SUPPORT STAFF WORKSHOPS Revenue Limits

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  1. WASBO NEW SCHOOL ADMINISTRATORS AND BUSINESS SUPPORT STAFF WORKSHOPS Revenue Limits August 17, 2007 • Karen Kucharz, Consultant • DPI School Finance Team

  2. Handouts • School Finance Homepage • School Finance Staff Assignments • Sample District 2006-07 Final Revenue Limit Calculation • Sample District 2007-08 Current Law Revenue Limit • District-Specific 2007-08 Current Law Revenue Limit • Fund 10 – Sample Budget • Sample Budget Timeline Model • Budgeting for Longterm Debt • Power Point Slides

  3. How Important is the Revenue Limit? IMPLEMENT THE BUDGET DATA COMPARES/ANNUAL MEETING REFERENDA FUND BALANCE GET A FIRST LOOK AT THE BUDGET SITUATION PLANNING A BUDGET STATE AID AND CATEGORICAL AID 2007-08 REVENUE LIMIT X COUNTING KIDS WUFAR ACCOUNTING

  4. Counting Kids… ….is very important!

  5. Headcount vs. Membership Fulltime Equivalent(FTE)You need to know which is used for what School Financial Services reports. Counting Kids

  6. Counting Kids Most of the School Financial Services reports use “membership” not headcount. What is Membership? Generally, it’s resident headcount adjusted for full-time equivalency (FTE). 2 halftime (.50) kindergarteners equal 1 FTE.

  7. Keys to Determining Membership • Key question # 1 – Is the pupil a resident of the district? • Key question # 2 – Who is paying for the pupil’s education? • Key question # 3 – Is the pupil a member of the school district on the count date? - basic count rule

  8. Who is a Resident? Not defined by statute – residency is determined by the local district. 1.) Is the child living in the district with his/her parents? 2.) What about other situations? – there is case law i.e. - Thayer Ruling(A minor may have, for school purposes, a residence other than that of his parents). The school district was incidental to the child’s reason for living in the district. Use common sense…WHY are they there?

  9. Who is Paying for the Education? • Pupil is in your seats, taught by your teachers. • Full-time resident pupils in attendance elsewhere, but your district is paying for their education. • Open Enrollment • Tuition Agreements • CESA Programs • Tuition Waivers (Be careful with this one. These situations involve kids moving out/in of a district mid-year. Sometimes, you still can count a kid in the year that they have moved out of your district….and, sometimes you can’t count a new kid that is in your seats if a recent move has occurred. Please call us if you have a student in this situation.)

  10. Basic Membership Count Rule Count for membership those resident students in attendance for instruction on the count date. Or, if they were absent on the count date……. Count if the “Before and After” rule is true:Count the student if he/she was present for instruction at least one day before the count date and at least one day after, and didn’t change residency during the period of absence.

  11. What Membership Counts Are Used in the Revenue Limit? • Summer School FTE Report • 3rd Friday in September Pupil Count

  12. Summer School FTE • Summer School count is the first count of the school year. • 40% of the Summer School FTE is used in the Revenue Limit Membership. • Complete PI-1804 (Summer School Membership Report) and submit by the September Pupil Count Report due date.

  13. 3rd Friday in September Pupil CountPI-1563 • A very critical FTE report – it’s used in both the Equalization Aid Membership and Revenue Limit Membership computations (if an error is found, the report must be amended). • Remember: Where the student is educated is not necessarily important. Who is paying for the education is. • The report is usually due 4th Friday in September.

  14. Pupil Count Resources • http://www.dpi.wi.gov/sfs/membrpt2.html • General Count Instructions for the PI-1563 Workbook • PI-1563 Pupil Count Workbook Form for Draft Use

  15. Revenue Limits

  16. REVENUE LIMIT • The Revenue Limit controls the following revenues: • General Aid (Equalization Aid, for most districts) • Computer Aid • General Fund (Fund 10), Non-Referendum Debt (Fund 38) & Capital Projects (Fund 41) Levies • The Revenue Limit does not control the following revenues: • School Fees • Categorical Aids (Library Aid, Transportation Aid, etc.) • State and Federal Grants • Gate Receipts • Donations • Referendum Debt (Fund 39) & Community Service Fund (Fund 80) Levies

  17. REVENUE LIMIT • Districts typically develop an estimate of their new-year revenue limit by the end of January in any given budget year. • This preliminary revenue picture, together with salary and other local expenditure and revenue budget estimates, serves as a guide for the district as it moves through budget development. • The process culminates in the fall of each year after districts receive the 3rd Friday in September FTE Count and the DPI October 15th General Aid Certification, allowing them to set the levy, send tax bills, and report levy amounts to DPI.

  18. A 4-Step Process REVENUE LIMIT • Step 1: Build the Base Revenue Per Member. (Worksheet lines 1-3) • Step 2: Calculate a New Revenue Per Member. (prior to exemptions) (Worksheet lines 4-7) • Step 3: Determine Allowable Exemptions. (Worksheet lines 8-11)

  19. REVENUE LIMIT • Step 4: Determine Levy and Computer Aid Amounts. Controlled Amounts Levies for Funds 10, 38, 41DOR Computer Aid(Worksheet lines 12-14) Non-Controlled Amounts Levies for Funds 39 & 80 and Prior-Year Chargeback. (Worksheet lines 15-20)

  20. Step 1:Build the Base Revenue Line 1 Prior-Year Data (2006-07) 2007-08 Base + October 15 Aid (Line 12) + Computer Aid Received + 10R 211 Levy (Line 18) + 38R 211 Levy (Line 14B) + 41R 211 Levy (Line 14C) - Revenue Limit Penalty - Levy for Non-Recurring Referendum - Levy for Declining Enrollment Prior-Year Data (2006-07) is Used to Build the New-Year (2007-08) Base

  21. Step 1: Build the Base Revenue Line 1

  22. Step 1:Build the Base Revenue Line 2 200420052006 Summer FTE 12 12 7 40% 5 5 3 Sept FTE 446435419 Total FTE 451 440 422 (451 + 440 + 422) / 3 = 438

  23. Step 1: Build the Base Revenue Line 2

  24. Step 1:Build the Base Revenue Line 3 2007-08 Line 1 = Base Revenue Per Member ÷ Base Membership 3-Year Average $ 8,892.96 3 Previous Years (Fall 04, 05, 06) Prior-Year Data (2006-07) Line 3 + October 15 Aid Summer 04 (40%) + Fall 04 + Computer Aid Summer 05 (40%) + Fall 05 + 10R 211 Levy Summer 06 (40%) + Fall 06 + 38R 211 Levy + 41R 211 Levy - Revenue Limit Penalty - Levy for Non-Recurring Referendum (451+440+422) / 3 = 438 - Levy for Declining Enrollment Exemption $3,895,116

  25. Step 1: Summary Lines 1-3 Base Revenue Per Member

  26. Step 2:Calculate a New Revenue per Member Line 4A Each year, under current law, districts are allowed to add in a per-pupil increase (inflationary) at this point in the computation. Computed by using the March to March CPI-U, the dollar increase for the 2007-08 year is $264.12. This number is used by all districts. The State is currently in biennial budget deliberations, so the Legislature can still change this number for the 2007-08 year. $264.12 for 2007-08

  27. Step 2:Calculate a New Revenue per Member Lines 4B & C Also under current law, districts having low revenue (less than a State-determined per-pupil amount) AFTER Lines 3 and 4A are summed are allowed to increase their per-pupil revenue limit amount to reach this specified amount. For the 2007-08 school year, the Governor has proposed $8,700 for this amount. Line 4B, Low Revenue Increase, will automatically pre-fill if your district has low revenue. You don’t need to enter anything in the spreadsheet to get this extra amount, if you qualify. If your district participates in a CCDEB, please call the Finance Team for further instructions for Line 4C.

  28. Step 2: Calculate a New Revenue per MemberLine 5 Line 5 is the sum of Lines 3 and 4 (auto-calculates). (Remember, the Governor has proposed $8,700 for Line 4B. What we see here is current law.)

  29. Step 2: Calculate a New Revenue per MemberLine 6 200520062007 Summer FTE 12 7 7 40% 5 3 3 Sept FTE 435419419 Total FTE 440 422 422 (440 + 422 + 422) / 3 = 428

  30. Step 2: Calculate a New Revenue per MemberLine 6 The Fall, 2007 FTE numbers must be estimated until the 3rd Friday in September occurs, and actual data is available.

  31. Step 2: Calculate a New Revenue per MemberLine 7 Line 7 is Line 5 multiplied by Line 6.

  32. Step 2: Summary Lines 4-7 Calculate a New Revenue per Member

  33. Step 3: Determine Allowable ExemptionsLines 8-11 Exemptions 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 tracks Recurring Exemptions. Line 10 tracks Non-Recurring Exemptions. It’s important to understand the distinction between the two.

  34. Step 3: Determine Allowable ExemptionsLines 8-11 Recurring Exemptions (Lines 8A-E) are base-building – that is, if the district taxes for any of this additional authority, the levy amount is automatically included in the succeeding year’s base. Any unused Recurring authority is eligible for 100% carryover into the next year.

  35. Step 3: Determine Allowable ExemptionsLines 8-11 Non-Recurring Exemptions (Lines 10A-C) are not base-building – that is, if a district taxes for any of these exemptions, the amount is not included in the succeeding year’s 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.

  36. Step 3: Determine Allowable ExemptionsLines 8-11 Line 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 from Funds 10, 38, and 41, State General Aid (Equalization, Special Adjustment, and Integration Aids) and State Computer Aid.

  37. “Fly-Over” Review

  38. SummaryHow We Arrived at Line 11 Line 10 Adding non-recurring exemptions Line 11 2007-08 Base Line 8 Adding recurring exemptions Line 4-7 Adding the state per-pupil increase with new 3-year avg

  39. Comparing Line 11sfrom Year to Year Line 11 represents the total amount of resource your district will get from Property Tax, State Aid, and Computer Aid. (about 70-90% of total revenues for most districts). 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.

  40. Comparing Line 11sfrom Year to Year 2006-07 Line 11 Amounts 2007-08 Decrease probably means budget cuts. The earlier in your budget process you discover this, the better………….

  41. Comparing Line 11sfrom Year to Year See 7-Year Revenue Limit History under Budget Development and Planning on website.

  42. Step 4:Determine Levy and Computer Aid Amounts • Controlled Amounts - Lines 12-14 Fund 10, General Fund Levy Fund 38, Non-Referendum Debt Levy Fund 41, Capital Projects Levy Computer Aid • Non-Controlled Amounts - Lines 15-20 Fund 39, Referendum Debt Levy Fund 80, Community Service Fund Fund 10, Src 212, Property Tax Chargebacks

  43. Controlled AmountsLine 14 Line 11 – Total Resources from Property Tax and Levy October 15 Aid Certification reduces what you can levy. Line 12 Fund 10 Levy Fund 38 Levy Line 13 Allowable Limited Revenue Fund 41 Levy Computer Aid Computer Aid is based on the total levy, but, at this point in the computation, we don’t have total levy yet. Calls for a strategy on how to get the limited portion right…….

  44. StrategyLine 14 • First, type in the amounts you intend to levy for Funds 38 and 41 (lines 14B & 14C, respectively). • 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. • Remember: Line 14 cannot exceed Line 13 ! If it does, you must reduce something in Line 14 (or, remain in a penalty situation).

  45. Budgeting for Long-Term Debt BUDGET LEVY

  46. Budgeting for Long Term Debt The Fall, 2007 levy should be enough to cover your debt payments due in the Spring of 2008 and Fall of 2008. (calendar year) The 2007-08 Budget Report should reflect the amount of your debt payments you will pay in the Fall of 2007 and Spring of 2008. (fiscal year)

  47. Non-Controlled AmountsLine 15 Enter anticipated levy amounts into Lines 15 A,B,& C.

  48. Computer AidLine 17 Once you have entered all of the levy amounts on Lines 14 & 15, the spreadsheet automatically calculates Computer Aid on Line 17. You must enter property values in Line 17 for the calculation to work properly. Computer Aid is based on property values and total levy. The Department of Revenue certifies the 2007 Property Values on October 1, 2007, so use an estimate until the certification arrives.

  49. Fund 10 LevyLine 18 Once all your numbers are entered into the spreadsheet, Line 18 will be the amount of your Fund 10 Levy.

  50. 2nd “Fly-Over”

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