Barbara Posthumus, Director of Business Services Lake Washington School District [email protected]

WSSDA Webinar May 14, 2014

     Budgeting for Capital Levies Budgeting for Bonds Debt Service Limitations Front-Funding Monitoring and Reporting 2

    For levies passed in 2014, collection begins in 2015 Typically collect 53% in Spring and 47% in Fall For newly passed levies, your 2014-15 budget will only include the spring collection.

The 2 nd year, 2015-16 will include 100% of annual levy 3

Example: $5.0 Million levy over 4 years = $20Million $5.0 x 53% = $2,650,000 = 2014-15 revenue $5.0 x 53% = $2,650,000 plus $5.0 x 47% = $2,350,000 Total = $5,000,000 = 2015-16 revenue 4

    Technology Levies have special rules Beginning in 2008, OSPI required that expenditures on staff training and software related to technology systems must be spent in the General Fund Capital Technology Levy revenue then must be transferred from the Capital Projects Fund to the General Fund to cover the costs You will see this in the presented budget as a transfer out of capital and a revenue in GF 5

 100% of Revenue and Expenditures are in Capital Projects Fund 6

      Great news – you passed a bond!!

Determination of when to sell bonds Must be able to spend 85% of proceeds within 3 years Business Office will work with underwriter and advisor to sell bonds Board will need to pass resolution Superintendent/Business Office will conduct call with rating agencies to rate the bonds 7

     Bonds impact two funds: Revenue from bond sale and construction expenses go in Capital Projects Fund Principal and Interest Payments on Bonds are paid out of debt service fund.

The presented budget will reflect estimated amounts if prior to actual sale Will need to levy an amount sufficient to pay principal and interest 8

   The total indebtedness of a district can not exceed 5% of the value of taxable property within a school district. This includes all non voted debt and all voted debt (bonds).

Voter approved bond capacity may exceed 5% of the district’s assessed valuation but the principal amount of the bond sale is limited to the available debt capacity.

Small school districts may have to structure bond issues and repayments differently than large districts due to the debt limitations.

◦     ◦  Griffin School District AV=$1,300,000,000 5% debt limitation = $65 million Current outstanding voted debt $13 million Current outstanding non voted debt $300K Cost of a new high school $100 million To construct a high school – would likely need to qualify for state matching funds and would need to ensure funding availability before moving forward. Maximum bond issuance would be about $52 million. In this scenario, a district could issue ½ and then issue the other ½ in the subsequent year. This would increase the cost of issuance but would likely result in more available capacity (if AV increases and additional existing debt is paid down).

  LGOs, lines of credit, capital leases, LOCAL program obligations, conditional sales contracts, and qualified zone academy bonds are all examples of non-voted debt subject to different rules for use of funds.

All non voted debt above is limited to .00375 (3/8 th of 1 percent) of the value of taxable property within the school district

  Utilizing the State Treasurer’s LOCAL program, one local district was able to purchase school buses over a 13 year term. They are making payments utilizing state funds from the depreciation schedule. This funding allowed them to fund buses without utilizing a transportation levy or cutting educational programs.

$6,00 $5,00 $4,00 $3,00 $2,00 $1,00 $0,00 2014 2015 2016 2017 2018 Bond 2015 Levy 2016 2017

     Can you spend dollars from voted levies or bonds prior to collection?

Maybe…….

Need to have other reserves Need to clearly track new expenditures separately Need a clear cash flow plan

  Why you may not want to ◦ If use other reserves to front-fund, then those reserves will not be available for emergencies ◦ May show negative fund balance line item on your budget – requires additional explanations Depends on your level of reserves and need to use those reserves immediately for other things

   For best transparency, sources of funds should be clearly identified.

Bonds vs. levies Multiple Levies crossing over years 16

   Monthly board financial reports provided by district If conducting multi-year construction project, outstanding encumbrances in Capital Projects Fund may exceed budget District staff have reporting requirements to OSPI if receiving State Assistance on construction projects 17

 Organization and Financing of Washington Public Schools http://www.k12.wa.us/safs/PUB/ORG/13/Final%20Edi tion%202013.pdf

 Funding Resources for School Facilities http://www.k12.wa.us/SchFacilities/default.aspx

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