School Finance 101 School Finance Fundamentals

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1 School Finance 101 School Finance Fundamentals January 10, 2015 Zane K. Woolstenhulme Business Administrator Ogden School District

2 Discussion Topics REVENUE SOURCES REVENUE DISTRIBUTION (WPU) MINIMUM SCHOOL PROGRAM GROWTH Q & A

3 REVENUE SOURCES 2013 Public Education General Fund --- Total Revenue $4,977,879,407 USOE Fingertip Facts Federal, 8.01% State, 65.26% Local, 26.73%

4 LOCAL REVENUE PROPERTY TAXES (Taxable Value X Tax Rate) Basic Levy (Set by State) Same for all School Districts) Board Local Levy (Legal Max or ) Voted Local Levy (Voter Authorized, Max ) INTEREST INCOME SCHOOL & ACTIVITY FEES INTER-DISTRICT BILLINGS REDEVELOPMENT AGENCY (RDA) PAYMENTS Source: USOE Fingertip FACTS Local Sources - General Fund 10% Property Taxes 90% Other Sources

5 FISCALYEAR BASIC LEVY Source: Office of Legislative Fiscal Analyst BASIC LEVY HISTORY What If??? $200, $312/yr. or $26 per month $562,578,030 BASIC LEVY 1987-Present

6 FEDERAL REVENUE NCLB NO CHILD LEFT BEHIND --TITLE PROGRAMS Poverty Mobility & Homeless English Language Learners Quality Teaching / Professional Development 21 st Century Schools IDEA SPECIAL EDUCATION PROGRAMS Medicare & Medicaid Reimbursement Programs FEDERAL IMPACT AID DIRECT GRANTS

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8 STATE REVENUE STATE INCOME TAX (Primary Source) SCHOOL LAND TRUST (INTEREST & DIVIDENDS) OTHER STATE EDUCATION FUND $ 3.2 Billion --- FY2013

9 Constitutional Amendment Utah voters passed a ballot measure that enabled legislators to use income tax dollars for higher education. This, combined with the use of sales tax earmarks for roads, started the complex practice of robbing Peter to pay Paul. Natalie Gochnour (Deseret News Op Ed: Oct 3, 2014) Associate Dean, David Eccles School of Business, U of U; Chief Economist, Salt Lake Chamber

10 WHAT CHANGED? Education Fund (Income Tax) General Fund (Sales Tax) Public Education Higher Education Transportation

11 EDUCATION FUND YEAR Public Education % Higher Education & Other Agencies 1995 $ 1,123,510,466 98% $ 18,046,000 2 % 2000 $ 1,564,339,000 88% $ 212,094,000 12% 2003 $ 1,676,555,994 98% $ 33,800,000 2 % 2005 $ 1,813,679,811 86% $ 288,871, % 2008 $ 2,599,935,408 72% $ 1,006,334,700 28% 2013 $ 2,663,650,000 83% $ 563,617, % Source: Appropriations Reports, Office of Legislative Fiscal Analyst %

12 The Rest of the Story In fiscal year 2015, the state spent $630 million from the education fund for higher education, $432 million in general fund for higher education, and $458 million in sales tax earmarks for transportation. The budget buckets have become completely co-mingled. Natalie Gochnour Continued (Deseret News Op Ed: Oct 3, 2014) Associate Dean, David Eccles School of Business, U of U; Chief Economist, Salt Lake Chamber

13 From the Horses Mouth Groups representing public education, transportation and water development will be coming to the 2015 Legislature asking for more money most likely even some kind of tax hike(s). Hughes rules out, from the outset, a general tax increase. I don t think you will see any tax hikes, said Hughes. However, you could see tax revenue shifts along several fronts with no increase in the amount of money state government takes from citizens. For example, some lawmakers want to remove the current sales tax earmark for transportation, or road building. Imposed several years ago over a gubernatorial veto, the earmark sends tens of millions of dollar each year to roadwork. If you gave that money back to the state s General Fund, then you could use that money for colleges and universities, and, in turn, allocate more personal and corporate income taxes to public education. That would not give public education a huge amount of new money, which is what some public school advocates want. But it s a change the Republican House could discuss, said Hughes. Today At Utah Policy Interview by Bob Bernick with newly elected House Speaker Greg Hughes Written November 17, 2014

14 OTHERWISE SAID: Education Fund (Income Tax) General Fund (Sales Tax) Public Education Higher Education Transportation

15 STATE FUNDING How Does The Money Flow? Funding Distribution?

16 MINIMUM SCHOOL PROGRAM (MSP) The Minimum School Program (MSP) is the primary funding source for school districts and charter schools in Utah. The Fiscal Year (FY) 2015 total budget is $3,349,784,700 including state and local dollars. The MSP represents approximately 48.68% of total expenditures, while the balance includes 34.85% of local revenue, 8.73% of federal revenue, and 7.74% comes from other sources of revenue. The funds are used to support over 1,000 traditional, alternative, special education and charter schools for approximately 600,000 Utah students. MSP funds are distributed according to formulas provided by State law, and State Board rules.

17 Weighted Pupil Unit PRIMARY DISTRIBUTION UNIT WITHIN MINIMUM SCHOOL PROGRAM 180 DAYS OF MEMBERSHIP ONE WPU (Membership Driven not Attendance Driven) NOT ALL WPUS HAVE EQUAL VALUE & WEIGHT

18 WPU VALUE($) $ 2,972 Exceptions: Special Education & Career & Tech Ed (CTE) $ 2,726

19 WPU WEIGHTING SCHOOL DISTRICT STUDENTS Kindergarten Students % Grades One thru % CHARTER SCHOOL STUDENTS Kindergarten Students % Grades One thru Six % Grades Seven & Eight % Grades Nine thru %

20 WPU HISTORY FISCAL YEAR WPU VALUE CPI Adjusted $1,204 $2, $1,608 $2, $2,006 $2, $2,417 $2, $2,577 $2, $2,816 $2, $2,972 $2,972 Change: $ 1,768 $ 550 $4,000 $3,000 $2,000 $1,000 $- $4,000 $3,000 $2,000 $1,000 $- WPU Value CPI Adjusted WPU Value Source: Bureau of Labor Statistics

21 Minimum School Programs A.Basic School Programs Regular Restricted B.Related to Basic School Programs C.Board and Voted Local Levy Programs D.School Building Programs (Funded Separately from MSP)

22 MSP ---- The Equalizer DISTRICT ALPINE SALT LAKE PARK CITY SOUTH SANPETE BASIC SCHOOL PROGRAMS Allocation Actual Locally Funded (FY 14 Basic Rate ) Morgan $261,651,891 $ 89,430,154 $ 17,054,766 $ 13,516,830 $ 9,603,534 $ 25,446,597 $ 27,479,103 $ 17,054,766 $ 863,974 $ 1,430,914 MSP STATE FUNDED $236,205,294 $ 61,951,051 N/A $ 12,652,856 $ 8,172,620 Percent State Funded 90% 69% Zero 95% 85% Average All Districts 85% Source: USOE -- FY14 Final Summaries

23 The Infamous LINE

24 Minimum School Programs A.Basic School Programs (WPU Driven) T H E L I N E B.Related to Basic School Programs C.Board and Voted Local Levy Programs D.School Building Programs (Funded Separately from MSP)

25 Basic School Programs - Regular 1. Kindergarten (29,215 WPUs, $86.8 Million) 2. Grades 1-12 (555,130 WPUs, $1.65 Billion) 3. Necessarily Existent Small Schools (9,357 WPUs, $28.5 Million) 4. Professional Staff Cost (53,041 WPUs, $157.6 Million) 5. Administrative Costs (1,505 WPUs, $4.5 Million) Per MSP MIDYEAR UPDATE FY USOE

26 Basic School Programs - Restricted Special Education Programs (100,365 WPUs, $ Million) Regular Add-on (72,991 WPUs, $ 199 Million) Regular Self-Contained (14,285 WPUs, $ 42.5 Million) Pre-School (53,041 WPUs, $ 29 Million) Extended Year Program (429 WPUs, $ 1.3 Million) State Programs (1,505 WPUs, $ 8.6 Million ) Career & Technology Education Add On (29, (29,705 WPU s, $ 81 Million) Class Size Reduction (38,958 WPUs, $115.8 Million) Note: Based on the average teacher s salary --- 1,500 + teachers state-wide.

27 WPU VALUE($) $ 2,972 Exceptions: Special Education & Career & Tech Ed (CTE) $ 2, ,000 $246 $25+ Million 1% Increase on WPU (Approximate cost to Bring Back into Parity)

28 Basic School Programs (WPU DRIVEN FUNDING) ABOVE The LINE BELOW Related to Basic School Programs (Non-WPU Formula Driven Funding)

29 Related to Basic Programs 1.To and From School Pupil Transportation $72 Million 68% -vs- 85% $18 Million 2.Guarantee Transportation Levy $500K 3.Flexible Allocation Distribution $23 Million

30 Related to Basic Programs (Continued) Special Populations Enhancement for At-Risk Students ($24.3 Million) Youth in Custody ($20 Million) Adult Education ($9.8 Million) Enhancement for Accelerated Students ($4.4 Million) Concurrent Enrollment ($9.3 Million) Title 1 Schools in Improvement --- Para-educators ($300K)

31 Related to Basic Programs (Continued) Other Programs 1. School Land Trust Program ($37.6 Million) Avg./$49/Student 2. Charter School Local Replacement ($98.3 Million) 3. Charter School Administrative Costs ($6.7 Million) 4. K-3 Reading Improvement Program ($15 Million) 5. Educator Salary Adjustment ($ 160 Million) 6. Teacher Salary Supplement Restrict Account ($ 5 Million) 7. Library Books & Electronic Resources ($ 550 K) 8. Matching Fund for School Nurses ($882 K) 9. Critical Languages & Dual Immersion ($2.3 Million) 10.Year-Round Math & Science (USTAR Centers) ($6.2 Million) 11.Early Intervention ($ 7.5 Million) 12.Beverly Taylor Sorenson Arts Learning Program ($2 Million)

32 Related to Basic Programs (Continued) One-Time Funding Items 1. Teacher Supplies & Materials ($5 Million) 2. Beverly Taylor Sorenson Arts Learning Program ($3 Million)

33 VOTED AND BOARD LOCAL LEVY PROGRAMS *** Guarantee Rate (per Tax Rate per WPU) $ Voted Local Levy Program $319.6 Million *** 2. Board Local Levy Program $97.2 Million *** (Guarantee on Tax Rate) 3. Board Local Levy Reading Improvement Program $15 Million

34 Voted & Board Levy Guarantee DISTRICT CACHE NEBO PARK CITY PROVO SOUTH SANPETE Voted and Board Levy Program $ 12,263,331 $ 20,482,987 $ 21,696,863 $ 10,192,647 $ 2,774,136 LOCAL TAX RATE (EFFORT) Local Tax Rate Funded $ 7,726,714 $ 10,374,109 $ 21,696,863 $ 7,906,937 $ 1,125,136 MSP STATE FUNDED $ 4,536,617 $ 10,108,878 N/A $ 2,285,710 $ 1,649,000 Percent State Funded 37% 49% N/A 22% 59% Return On Tax Effort N/A Districts Participating Source: USOE -- FY14 Final Summaries

35 School Building Programs Capital Outlay Programs (Reference: Utah Code 53A ,201,301) 1. Foundation ($12.6 Million) Based on local property tax effort and tax yield per student based on a foundation guaranteed funding level. (12 Districts participating; majority, $10.5 Million, to two districts.) 2. Enrollment Growth ($1.9 Million) Provides funding to school districts experiencing net enrollment increases. ( 21 Districts participating; Funding Range -- $1,500 to $320,177)

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37 GROWTH?? 10,000 Students FY15 8,000 Students FY16

38 Funding Enrollment Growth (Continued) Each Program is its own Pizza Above the Line Added WPU Funding for New Students Administrative Cost Class Size Reduction CTE Programs NESS Professional Staff Cost Special Education Below the Line Adult Education Board & Voted Local Levy Programs Concurrent Enrollment Dual Language Immersion Early Interventions Educator Salary Adjustments Enhancement for Accelerated Students Enhancement for At-Risk Students Flexible Allocation WPU Distribution Guarantee Transportation Levy K-3 Reading Improvement Program Library Resources Matching Funds for School Nurses Teachers Supplies Transportation (To & From) Youth in Custody

39 Funding Enrollment Growth (Continued) What Does it Take? 10,000 Students X WPU Value $30 Million For Starters

40 Funding Enrollment Growth (Continued) FY14 600,000 Students FY15 610,000 Students Enrollment Growth Funding FY15 $61.2 Million

41 Funding Enrollment Growth (Continued) USOE and LFA have announced Consensus Growth amount to be: $30,057,540 for FY16. This included only above the line programs. Total growth funding estimate -$65 million. 7,291 Students Related to Basic Programs Basic School Programs The Line

42 Why is this Important? STATE MINIMUM SCHOOL PROGRAM COMPARISON PROGRAM FY 2015 FY2009 CHANGE WPU VALUE $2,972 / $2726 $2,577 $395 / $149 BASIC SCHOOL PROGRAM $ 2,404,364, ,276 WPUs THE LINE $ 1,796,360, ,055 WPUs $ 608,003, ,221 WPUs ================= ================= ================= RELATED TO BASIC PROGRAMS $ 505,568,800 $ 848,834,146 ($ 343,265,346) SS & Retirement NLF $ 349,906,049 ($ 349,906,049) Flexible WPU Distribution $ 23,106,600 N/A $ 23,106,600 Pupil Transportation $ 71,978,000 $ 74,446,865 ($ 2,468,865) Other Related to Basic $ 410,484,200 $ 424,481,232 ($ 13,997,032) Source: USOE Finance & Statistics

43 Case Study Ogden School District PROGRAM FY 2015 FY2011 FY 2010 FY2009 CHANGE BASIC SCHOOL PROGRAM WPU VALUE $2,972 / $2726 $2,577 $2,577 $2,577 $395 / $149 $ 46,925,950 $ 41,559,489 $ 41,565,211 $ 40,948,800 $ 5,977,150 THE LINE ========== ========== ========== ========== ========== RELATED TO BASIC PROGRAMS $ 9,838,338 $ 13,525,497 $ 16,326,771 $ 20,521,283 ($10,682,945) SS & Retirement NLF NLF $6,214,535 $8,003,431 ($ 8,003,431) Flexible WPU Distribution $451,151 $3,619,892 N/A N/A $ 451,191 Pupil Transportation $ 838,636 $793,258 $828,917 $906,311 ($67,675) Other Related to Basic $8,548,511 $9,112,347 $9,283,319 $11,611,541 ($ 3,063,030)

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45 Pulling Together, Great Things Can Happen!!!