State disbursements delayed, varied
July 28, 2016 at 4:25 p.m.
After Indiana school corporations pass budgets and get them approved by the state, when do they get their money?
In the past, schools would receive a payment on the first business day of every month. Since 2002, that has changed. Now schools receive payments anywhere from last business day of the month to the middle of the month.
The state, however, has been trying to get the payment schedule back on track, Wawasee School Corp. Director of Finance Jim Evans and Warsaw School Corp. Chief Financial Officer Kevin Scott said during an interview Thursday afternoon.
The state officially doesn't have to tell schools their budgets are approved until mid-February. A school corporation then has two weeks to question the state on the approved budget.
"There's not a whole lot you can do about it at that point," Evans said.
"They have a legislative date that they have to hit," said Scott.
While the state legislature's budget cycle is from June of one year to July of the next, school corporations' budget cycles are from January to December.
In 2002, Scott said the state made 12 payments to schools, but only five in the first six months of that year. The sixth payment was held until the second six months of 2002, which was the state's next budget cycle. The state, Scott said, was tight on money and holding the sixth payment gave the state more money for this budget cycle.
Every year since, Evans said, the state has continued to do the same thing, including this year. To its credit, however, the state has already given schools half the money they were to receive in September.
Evans said prior to 2002, schools were to receive their payments on the first business day of each month. In 2002, the January payment was received the last business day. Over the years, the state has just adjusted those payment dates. Over time, as the state's finances have improved, the state adjusts the payment dates closer to the original timeframe.
At a conference he recently attended, Scott said, a Purdue economic professor said the state needs to reset that payment schedule before another economic downturn.
If it's not reset, the state won't have any room to adjust payment schedules.
The offset of budget payments also impacts state colleges as well as school corporations, Evans said.
At the end of the year, Scott said, the payment alteration has no affect on schools. The issue is when school corporations receive payments.
Evans said the attempt by the state to get payments back on track is positive. "In the larger scheme, that reflects a better financial picture for the state, which I guess is a good thing," he said.
Scott agreed, saying, "It's a good thing they're heading in the right direction."
There are two other issues which will affect schools in the next few years.
Scott said the authority schools have to pay utilities out of capital projects fund ends in 2007. If that is not extended, Scott said, schools across the state could face problems because paying for utilities will fall back solely to the general fund. Scott believes the state legislature should approve that extension at some point.
"No one really knows what the future of that is," said Evans.
Another issue, Scott said, is the 2 percent cap on property taxes. Evans said it not only will affect schools, but also the amount of money counties and cities collect.
Scott provided an example. If a person's house was assessed at $100,000, and paid $2,100 in property taxes, the cap reduces that amount to $2,000.
"We'll all be short funded," said Scott. Each of the seven funds in the schools' budgets will be short funded, including the debt service. To make up for the loss in the debt service, schools might use money from the general fund, which would result in a double hit to the general fund.
The cap already has been passed. Scott said there will be no impact on Warsaw yet because the school corporation has no new borrowing, but will eventually. Bonding companies also will charge higher interest rates because of the reduction - another financial burden to school corporations.
Scott said when businesses need to save money, they can cut staff or start a new line of products. Schools, however, can't make adjustments that quickly because of factors like teacher contracts. "We're just boxed in, I think," he said.
Despite all the uncertainties of the budget process, Scott said he enjoys it.
"Budgeting is hectic, but it's the fun time because that's when you touch on and think about every facet of the schools," he said. When planning the budget, he talks to every school building administrator and takes a fresh look at the issues and the services schools provide.
"We do the best we can with the financial resources we're entrusted with," Scott said. [[In-content Ad]]
After Indiana school corporations pass budgets and get them approved by the state, when do they get their money?
In the past, schools would receive a payment on the first business day of every month. Since 2002, that has changed. Now schools receive payments anywhere from last business day of the month to the middle of the month.
The state, however, has been trying to get the payment schedule back on track, Wawasee School Corp. Director of Finance Jim Evans and Warsaw School Corp. Chief Financial Officer Kevin Scott said during an interview Thursday afternoon.
The state officially doesn't have to tell schools their budgets are approved until mid-February. A school corporation then has two weeks to question the state on the approved budget.
"There's not a whole lot you can do about it at that point," Evans said.
"They have a legislative date that they have to hit," said Scott.
While the state legislature's budget cycle is from June of one year to July of the next, school corporations' budget cycles are from January to December.
In 2002, Scott said the state made 12 payments to schools, but only five in the first six months of that year. The sixth payment was held until the second six months of 2002, which was the state's next budget cycle. The state, Scott said, was tight on money and holding the sixth payment gave the state more money for this budget cycle.
Every year since, Evans said, the state has continued to do the same thing, including this year. To its credit, however, the state has already given schools half the money they were to receive in September.
Evans said prior to 2002, schools were to receive their payments on the first business day of each month. In 2002, the January payment was received the last business day. Over the years, the state has just adjusted those payment dates. Over time, as the state's finances have improved, the state adjusts the payment dates closer to the original timeframe.
At a conference he recently attended, Scott said, a Purdue economic professor said the state needs to reset that payment schedule before another economic downturn.
If it's not reset, the state won't have any room to adjust payment schedules.
The offset of budget payments also impacts state colleges as well as school corporations, Evans said.
At the end of the year, Scott said, the payment alteration has no affect on schools. The issue is when school corporations receive payments.
Evans said the attempt by the state to get payments back on track is positive. "In the larger scheme, that reflects a better financial picture for the state, which I guess is a good thing," he said.
Scott agreed, saying, "It's a good thing they're heading in the right direction."
There are two other issues which will affect schools in the next few years.
Scott said the authority schools have to pay utilities out of capital projects fund ends in 2007. If that is not extended, Scott said, schools across the state could face problems because paying for utilities will fall back solely to the general fund. Scott believes the state legislature should approve that extension at some point.
"No one really knows what the future of that is," said Evans.
Another issue, Scott said, is the 2 percent cap on property taxes. Evans said it not only will affect schools, but also the amount of money counties and cities collect.
Scott provided an example. If a person's house was assessed at $100,000, and paid $2,100 in property taxes, the cap reduces that amount to $2,000.
"We'll all be short funded," said Scott. Each of the seven funds in the schools' budgets will be short funded, including the debt service. To make up for the loss in the debt service, schools might use money from the general fund, which would result in a double hit to the general fund.
The cap already has been passed. Scott said there will be no impact on Warsaw yet because the school corporation has no new borrowing, but will eventually. Bonding companies also will charge higher interest rates because of the reduction - another financial burden to school corporations.
Scott said when businesses need to save money, they can cut staff or start a new line of products. Schools, however, can't make adjustments that quickly because of factors like teacher contracts. "We're just boxed in, I think," he said.
Despite all the uncertainties of the budget process, Scott said he enjoys it.
"Budgeting is hectic, but it's the fun time because that's when you touch on and think about every facet of the schools," he said. When planning the budget, he talks to every school building administrator and takes a fresh look at the issues and the services schools provide.
"We do the best we can with the financial resources we're entrusted with," Scott said. [[In-content Ad]]