Schools Looking At 2007 Funding
July 28, 2016 at 4:25 p.m.
Sept. 20 is the last day for school corporations to adopt a 2007 budget.
But planning for the budgets may have started anywhere from a few months to a couple of years before the deadline.
Warsaw Community Schools Chief Financial Officer Kevin Scott and Wawasee Schools Director of Finance Jim Evans talked Thursday afternoon about the ins and outs of budgeting.
Local schools may have up to eight different funds in their budget. Neither Wawasee or Warsaw has a referendum fund, leaving the school corporations with seven funds, including general fund, debt service, retirement/severance bond debit service, capital projects, school transportation, bus replacement and special education preschool.
The general fund is the largest and includes expenses for salaries, benefits, supplies, utilities, maintenance and other day-to-day operations. Money for the general fund comes from the state and local property tax. General fund money from the state includes tuition support and categorical grants. Categorical grants include money for special education, vocational education, supplemental remediation, enrollment growth, honors diploma grant and Prime Time.
"They keep playing with these from year to year," said Evans of the categorical grants. The amount of money a school corporation receives from categorical grants is dependent on the population of students that fit into those categories. For example, Evans said the more students in a school corporation's vocational program, the more money from the state the school corporation will receive.
Money from the state also is dependent on a complexity index. The purpose of the index is to assist schools with students with more needs, such as low-income families, English as a Second Language students, etc. The idea, said Evans, is that students with greater needs get more money. Scott said the index tries to level the playing field between urban and rural schools.
"This magical school formula has morphed over time," Scott said. Evans said it's political in a sense it's determined by the State General Assembly. Over time, Evans said, the purpose of the formula now is to reduce the connection between a school corporation's wealth as determined by property values and school funding. As it affects Wawasee, Evans said there's a tendency on the part of some people to look at the big houses on Lake Wawasee and think Wawasee Schools is a wealthy corporation. They fail to realize the money Wawasee receives, like every other school corporation is based on the number of students.
"It's still all formula based, not assessed valuation," said Scott. Assessed valuation does have an effect on property taxes collected, but that is only a small part of how school funding is determined.
Debt service, retirement/severance bond debit service, capital projects, school transportation and school bus replacement funds are funded solely through local property taxes.
Debt service is used to account for the resources and expenses of long-term debt, according to information provided by Scott. The fund also pays the interest expense of short-term borrowing for cash-flow purposes.
The retirement/severance bond debt service fund pays for contractual retirement or severance liability.
The CPF accounts for revenue and expenses associated with the purchase and development of land, fees for professional services, educational specifications development, building acquisition, construction and other building projects costs.
Operation of a school corporation's transportation program is funded through the school transportation fund. It pays for salaries of drivers, transportation supervisor, mechanics, garage employees, clerk and other transportation-related employees. It also covers costs of contracted transportation services and wages and other transportation expenses. Money to replace school buses comes from the school bus replacement fund. No more than 10 percent of a school corporation's fleet may be replaced per year.
The special education preschool fund is funded by the special education preschool grant from the state as well as some local property taxes. The fund was enacted by the 1991 General Assembly. Indiana Code requires school corporations to provide each preschool handicapped child with appropriate special education. Each school corporation also is required to establish a special education preschool fund to account for the revenue and expenses to operate the preschool program.
When it comes to determining how much money to budget for each of the funds, Evans said they have to make certain assumptions based on the best information available from county and state officials. "We try to remind our people, as it relates to the general budget, we don't set our budget. We do our best to live within the budget (the state) sets," he said.
Scott said they try to put together the best estimate for the budget, but it may change once the state gets involved. Evans said once the state has determined what monies a school corporation will receive, the corporation can't change it. Some of the funds are controlled by a rate cap and others by a dollar amount.
Scott said he provides Warsaw School Board members with all his assumptions. He discusses the budget with the superintendent and assistant superintendent and they try to fit what they can in the budget based on their needs.
"We try to take a conservative approach," Scott said.
"We're not going to take in any more than what the state is going to give us," said Evans.
Scott and Evans present their budget proposals to board members slightly differently for discussion. All budgets must be approved by the school boards in a public meeting. Scott said he has informal work sessions with each of the board members to go over the budgets. Evans said Wawasee has public work sessions to go over their budgeting.
The state sets a timeline for when budget items must occur. The budget must be advertised twice, followed by a public hearing by the school board. After at least 10 days, the school board holds another public hearing to approve the budget.
Even though parts of the budget process seem cumbersome, Evans said he can see the value in the way it's done. Scott said a simplification of the complexity index would be like trying to rewrite the tax laws. The idea behind it, Evans said, of trying to provide an equal education to all students, makes it worthwhile. [[In-content Ad]]
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Sept. 20 is the last day for school corporations to adopt a 2007 budget.
But planning for the budgets may have started anywhere from a few months to a couple of years before the deadline.
Warsaw Community Schools Chief Financial Officer Kevin Scott and Wawasee Schools Director of Finance Jim Evans talked Thursday afternoon about the ins and outs of budgeting.
Local schools may have up to eight different funds in their budget. Neither Wawasee or Warsaw has a referendum fund, leaving the school corporations with seven funds, including general fund, debt service, retirement/severance bond debit service, capital projects, school transportation, bus replacement and special education preschool.
The general fund is the largest and includes expenses for salaries, benefits, supplies, utilities, maintenance and other day-to-day operations. Money for the general fund comes from the state and local property tax. General fund money from the state includes tuition support and categorical grants. Categorical grants include money for special education, vocational education, supplemental remediation, enrollment growth, honors diploma grant and Prime Time.
"They keep playing with these from year to year," said Evans of the categorical grants. The amount of money a school corporation receives from categorical grants is dependent on the population of students that fit into those categories. For example, Evans said the more students in a school corporation's vocational program, the more money from the state the school corporation will receive.
Money from the state also is dependent on a complexity index. The purpose of the index is to assist schools with students with more needs, such as low-income families, English as a Second Language students, etc. The idea, said Evans, is that students with greater needs get more money. Scott said the index tries to level the playing field between urban and rural schools.
"This magical school formula has morphed over time," Scott said. Evans said it's political in a sense it's determined by the State General Assembly. Over time, Evans said, the purpose of the formula now is to reduce the connection between a school corporation's wealth as determined by property values and school funding. As it affects Wawasee, Evans said there's a tendency on the part of some people to look at the big houses on Lake Wawasee and think Wawasee Schools is a wealthy corporation. They fail to realize the money Wawasee receives, like every other school corporation is based on the number of students.
"It's still all formula based, not assessed valuation," said Scott. Assessed valuation does have an effect on property taxes collected, but that is only a small part of how school funding is determined.
Debt service, retirement/severance bond debit service, capital projects, school transportation and school bus replacement funds are funded solely through local property taxes.
Debt service is used to account for the resources and expenses of long-term debt, according to information provided by Scott. The fund also pays the interest expense of short-term borrowing for cash-flow purposes.
The retirement/severance bond debt service fund pays for contractual retirement or severance liability.
The CPF accounts for revenue and expenses associated with the purchase and development of land, fees for professional services, educational specifications development, building acquisition, construction and other building projects costs.
Operation of a school corporation's transportation program is funded through the school transportation fund. It pays for salaries of drivers, transportation supervisor, mechanics, garage employees, clerk and other transportation-related employees. It also covers costs of contracted transportation services and wages and other transportation expenses. Money to replace school buses comes from the school bus replacement fund. No more than 10 percent of a school corporation's fleet may be replaced per year.
The special education preschool fund is funded by the special education preschool grant from the state as well as some local property taxes. The fund was enacted by the 1991 General Assembly. Indiana Code requires school corporations to provide each preschool handicapped child with appropriate special education. Each school corporation also is required to establish a special education preschool fund to account for the revenue and expenses to operate the preschool program.
When it comes to determining how much money to budget for each of the funds, Evans said they have to make certain assumptions based on the best information available from county and state officials. "We try to remind our people, as it relates to the general budget, we don't set our budget. We do our best to live within the budget (the state) sets," he said.
Scott said they try to put together the best estimate for the budget, but it may change once the state gets involved. Evans said once the state has determined what monies a school corporation will receive, the corporation can't change it. Some of the funds are controlled by a rate cap and others by a dollar amount.
Scott said he provides Warsaw School Board members with all his assumptions. He discusses the budget with the superintendent and assistant superintendent and they try to fit what they can in the budget based on their needs.
"We try to take a conservative approach," Scott said.
"We're not going to take in any more than what the state is going to give us," said Evans.
Scott and Evans present their budget proposals to board members slightly differently for discussion. All budgets must be approved by the school boards in a public meeting. Scott said he has informal work sessions with each of the board members to go over the budgets. Evans said Wawasee has public work sessions to go over their budgeting.
The state sets a timeline for when budget items must occur. The budget must be advertised twice, followed by a public hearing by the school board. After at least 10 days, the school board holds another public hearing to approve the budget.
Even though parts of the budget process seem cumbersome, Evans said he can see the value in the way it's done. Scott said a simplification of the complexity index would be like trying to rewrite the tax laws. The idea behind it, Evans said, of trying to provide an equal education to all students, makes it worthwhile. [[In-content Ad]]