Parent AcademyTopic: Public Schools Funding

1

2

-Our Mission-The mission of the Palmdale School

District is to provide each child with a rigorous and relevant academic

education, a safe learning environment and the knowledge, skills and attitudes necessary for

success in the 21st Century.

Outcomes

3

• Basics of California School Finance• Financial Reporting Periods• Building The District Budget• Our Focus On Students• How We Get Our Money• Purchasing/Warehouse• How We Spend Our Money• Historical Financial Data• Behind the Scenes

4

Basics of California School FinanceCalifornia School Districts use a system called “fund accounting.” All

Revenues and Expenditures are placed in one of several funds. The one that is used to record most of the district’s day-to-day operations is the General Fund (Fund 01), which all districts are required to have.

Most of the district’s financial transactions flow through the General Fund. The largest part of the money is for general purposes and is categorized as unrestricted.

Some of the revenues that go into the General Fund, however, are restricted to specific uses, usually in compliance with state or federal regulations.

5

Basics of California School Finance• Our budget covers the essential costs of educating more than

20,000 students. The total Palmdale School District Budget is actually a combination of several funds.

• The General Fund is the largest part, at over $140 million, and is the primary operational budget for the district.

• When the other funds are added to the District Budget, such as Nutritional Services or Head Start, the entire budget is over $214 million for 2012-13. Our Budget includes the Antelope Valley Special Education Local Plan Area (SELPA) office and the Guidance Charter School.

6

Basics of California School FinanceOther Funds are used to separate revenues from the General Fund and are most often used for

purposes other than providing K-12 instruction. The other fund categories can consist of:• Special Revenue Funds

Cafeteria Child Development Deferred Maintenance Special Reserve for Postemployment Benefits

• Capital Project Funds Building Fund Capital Facilities Special Reserve for Capital Outlay Projects

• Debt Service Funds Tax Override Debt Service Bond Interest and Redemption

Each Fund is self-balancing and has its own financial statement with a beginning balance, list of revenues and expenditures, and ending balance. The balances for all funds are shown on the district’s financial report.

Financial Reporting PeriodsThe Budget process occurs all year long through

constant review and analysis of financial data. Interim Reports help ensure solvency during the

course of the year. Inevitably the estimates used to create the original budget will change somewhat as the year progresses.

There are too many unknowns at the time of budget adoption and the Interim Reports allow for adjustments to the original budget. Even the most skillfully prepared budget is just a snapshot in time. Districts are required to certify their financial condition twice during the school year.

There are three financial certification that a district issue:

• Positive – The district will meet its financial obligations

• Qualified – The district may not be able to meet its obligations

• Negative – The district will not be able to meet its obligations

7

Building The District Budget

8

Our Focus on Students

• The budget process begins with a careful projection of the number of students who will enroll in the district.

• The student count is not just a matter of how many children enroll each year.

• For most funding purposes, districts receive income based on the number of students who actually attend class, referred to as Average Daily Attendance (ADA).

9

• Projecting the number of students comes first

• The primary focus of budget development is related to General Fund revenues which represent the bulk of the operating money for K-12 instruction

• Revenue is largely determined by the state funding through formulas and mandatory programs in which districts must participate

• The number of students who attend school is critical to district revenue because most of this funding is provided on a per-pupil basis, adjusted for actual attendance.

Students are Critical to Revenue

Our Focus on Students

Some Factors that affect Enrollment involve:

-Birth Rates-Residential Construction-Private Schools-Charter Schools-The EconomySome Factors that affect

Average Daily Attendance (ADA):

-Illness-Travel-Family Situations/Relocation-The Economy

10

Enrollment is based on the California Basic Education Data System (CBEDS) reporting at the end of the first school month (October)

Enrollment represents the number of students actually enrolled in the district

Average Daily Attendance (ADA) is the measurement of attendance, or seat time. Actual attendance without regard to excused or unexcused absences

ADA is measured at three points in the year:• P1 – Daily Attendance counts first 4 months

(Sept-Dec)• P2 - Daily Attendance counts first 8 months

(Sept-Apr)• Annual – Daily Attendance counts for fiscal yearADA projections are based on CBEDS enrollment,

converted to P1, P2 and Annual ADA based on historical trend data

Enrollment vs. Average Daily Attendance (ADA)

11

Our Focus on Students

Enrollment History/Projections

12

Our Focus on StudentsEnrollment versus Average Daily Attendance (ADA)California schools receive revenue based on Average Daily Attendance (ADA),

not on total enrollmentWhen students are absent for any reason, schools lose money. Schools must prepare for student enrollment with teachers, rooms, desks, chairs and support staff, but only receive funds for days students attend.

ADA Formula

# of Days Student Attends School

= ADADivided by

# of School Days in the regular school year(181)

ADA Formula

# of Days Student Attends School

= ADADivided by

# of School Days in the regular school year(181)

For one school day = $34 = $0

A district’s ADA is calculated by dividing the total number of days of student attendance by the total number of days in the regular school year. A student attending every day would equal one unit of ADA. In simple terms, a district multiplies its revenue limit by its projected ADA to determine its total general purpose funding (1 ADA x $34 = $6,154).

13

Combined General Fund 01 Historical Financial Data

• Trend reports confirm and improve the validity of budget assumptions• The Budget development process leans heavily on assumptions about a district’s

students, revenues, and expenditures. Examining trend reports can help improve the validity of these assumptions.

• By looking over district budgets for several years, it is possible to identify patterns and past errors in predictions.

• The majority of district funds are received through the Revenue Limit (taxes and state aid). The amount is determined through complicated calculations based on the district Average Daily Attendance (ADA).

• Staffing and purchasing determinations for the district are based on enrollment numbers and actual revenues is based on ADA.

TRENDS DATA 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12CBEDS 22,598 22,609 22,684 22,321 21,712 20,995 20,515 20,377 20,020

Year-to-Date Change 168 11 75 (363) (609) (717) (480) (138) (357)P-2 ADA 21,403 21,458 21,467 21,225 20,550 20,044 19,571 19,440 19,121

CBEDS vs. ADA % 94.71% 94.91% 94.63% 95.09% 94.65% 95.47% 95.40% 95.40% 95.51%

14

How We Get Our MoneyWhen it comes to money, Palmdale School District shares a

school finance system with every other California Public School.

The money comes from: – Income and sales taxes– Local property taxes– Miscellaneous local income, fees, interest, donations– California State Lottery

Some of our revenue is restricted and can only be spent in certain ways. Most of our money is used to pay staff.

15

How We Get Our MoneySources of

FundsDistribution

of Funds

Federal Revenue 10%

State Revenue 60%

Local Property Tax Revenue

23%

Other Local Revenue 6%

Lottery* 2%

*Note: When the lottery passed, many in California were under the impression it provided a majority of school funding. Lottery revenue is the smallest portion. For Palmdale School District, lottery funding is about 2% of the total revenue received.

Sources of Funds

Distribution of Funds

Federal Revenue 10%

State Revenue 60%

Local Property Tax Revenue

23%

Other Local Revenue 6%

Lottery* 2%

*Note: When the lottery passed, many in California were under the impression it provided a majority of school funding. Lottery revenue is the smallest portion. For Palmdale School District, lottery funding is about 2% of the total revenue received.

33% RestrictedCategorical

67% UnrestrictedGeneral Purpose

California School Funding in More Detail

How We Get Our Money

16

• Revenue Limit Districts are dependent on the average daily attendance (ADA) of students.

• Each new student brings more funding to a district.

• Declining enrollment districts lose funding.

• Changes in local property tax is offset by state aid funds

Tota

l Rev

enue

Lim

it $9

5,08

6,52

5 State Aid Portion $95,046,100

Property Taxes Local Sources

$4,559,706

17

How We Get Our Money

How We Get Our Money

18

Revenue Limit Apportionment

District Revenue Limit per ADA (Prior Year) 6,280

COLA per ADA - 3.24% 203

Equalization 0

Total Base Revenue Limit per ADA 6,483

Revenue Limit ADA ( prior year ADA used) 19,121

Total Base Revenue Limit 123,956,241

Additional Revenue Limit Adjustments (Meals for the Needy/Beginning Teachers) 540,540

Revenue Limit Subject to the Deficit 124,496,782

Deficit Factor 22.272% = .77728 (27,727,923)

Revenue Limit after Deficit (Our Total RL Amount) 96,768,858

How We Get Our Money

• Revenue Limit Districts are dependent on the average daily attendance (ADA) of students.

• Each new student brings more funding to a district.

• Declining enrollment districts lose funding.

• Changes in local property tax is offset by state aid funds.

19

How We Spend Our MoneyThe Key to our school

district is the people who work here. Palmdale School District values its employees.

Typically between 73% and 75% of every General Fund dollar is used for salary and benefits.

Since we cannot control our revenue, sacrifices are often required in reducing staff and programs.

20

21

How We Spend Our MoneyFor particular programs or

groups of studentsTeachers, classroom supplies,

support staff, maintenance, utilities, insurance

3%

Expenditure Report

These are programs designed to provide extra funding for specific efforts, including those that target

different categories of students, such as students with disabilities

The state requires that districts maintain a 3% in the

unrestricted fund

Combined General Fund 01Historical Financial Data

22

23

General Fund 01Revenue Unrestricted Restricted Combined

Revenue Limit (taxes & state aid)(SpEd & CDS) 95,623,321 4,022,380 99,645,701

Federal Revenue (Categoricals) 250,000 15,212,849 15,462,849

State Revenue ( State Tier III/Categoricals & Lottery) 11,180,347 15,666,568 26,846,915

Local Revenue (Fees, Interest, Leases, Rentals, Donations) 1,720,836 2,000 1,722,836

Total Revenue $108,774,504 $34,903,797 $143,678,301

Expenditures Unrestricted Restricted Combined

Salaries & Benefits (Certificated & Classified) 92,021,852 40,138,833 132,160,685

Books/Supplies ( Textbooks, Office Supplies, Technology, etc.) 2,563,534 2,973,536 5,537,070

Services/Operations (Utilities, Outside Contracts, etc.) 9,819,843 7,103,022 16,922,865

Capital Outlay (Capital Projects) 989,253 407,356 1,396,609

Other ( In-Direct, Charters) 687,392 1,010,598 1,697,990

Total Expenditures 106,081,874 51,633,345 157,715,219

Transfers/Contributions (Contributions from Unrestricted to Restricted) ($17,069,159) $17,069,159 $0

Beginning Fund Balance (Brought forward from Prior Year) Estimated 19,280,537 3,148,937 22,429,474

Ending Fund Balance (The difference between Revenues vs. Expenditures) 4,904,007 3,488,548 8,392,555

Components of Ending Fund Balance (Items that use a portion of the EFB)

Revolving Cash, Stores, 3% Reserve, Restricted 4,904,007 3,488,552 8,392,559

Undistributed 0 (4) (4)

24

Behind the ScenesDollars cannot be used for any other

purpose

Other District Funds Child Development

Child Development

National school lunch program

Facilities Construction, Renovations

Developer Fees and Redevelopment Funds. For

Capital Facilities only

GO Bond FundsGO Bond Funds

Child NutritionChild Nutrition

CapitalFacilitiesCapitalFacilities

Child Development, preschool, and extended school programs

25

Purchasing/Warehouse

Purchasing The RequisitionThe Purchase OrderThe Receiving DocumentResponsible for purchasing materials and services for

the District Warehouse Responsible for inventory control, deliveries,

shipping and receiving for the District

26

Purchasing/Warehouse

• Methods of Purchasing• Under $15,000 for Public Works, Under $81,500 for

equipment, supplies, materials and services and must go out to bid or be able to ride on a piggyback bid

• The acquisition of material and/or services totaling less than $6,500 (including sales tax - IST)

• Written quotations for more than $6,500 (IST) for materials and /or services shall be solicited to obtain at least three quotes

27

How To Find Out More• For more detailed information and tools for understanding and

explaining California School Finance, go to: www.edsource.org/iss_fin_tools.html

• For detailed financial data on districts, counties, and the state, go to the Ed-Data Partnership website: www.ed-data.k12.ca.us

• For information and publications about California’s education issues, go to EdSource’s website: www.edsource.org

• Also visit the Palmdale School District website: www.palmdalesd.org

• Linda Miller, Director of Accounting, Palmdale School District at: lmmiller@palmdalesd.org or 661-266-7228