Transcript Finance Update Back To School MSBA Conference Minnesota Department of Education

Finance Update
Back To School
MSBA Conference
Minnesota Department of Education
August 13, 2009
1
Topics for Discussion
• Recent School Finance Trends
– Enrollments, Staffing, Expenditures, Financial
Condition, Revenues, State & Local Shares of
Funding
• 2009 Changes:
– Legislative Actions
– Executive Actions
• Outlook for the Future
2
STATE TOTAL AVERAGE DAILY MEMBERSHIP
1,000,000
800,000
600,000
400,000
200,000
Uncapped
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
0
Capped
3
Portion of Students in Charter Schools
6%
4.7%
5%
4.3%
3.9%
4%
3.4%
2.9%
3%
2.5%
2.1%
2%
1.2%
1.4%
1.7%
1%
0%
FY 2002
FY 2003
FY 2004
FY 2005
FY 2006
FY 2007
FY 2008
FY 2009
FY 2010
FY 2011
4
Percent Change in Adjusted Pupil Units FY
2003 - 2010
60
55
53
49
50
Number of Districts
55
40
40
33
30
20
18
16
11
10
7
0
Decrease Decrease Decrease Decrease Decrease Increase
20% or 15% -20% 10% -15% 5% -10% 0% -5%
0% -5%
more
Increase Increase Increase Increase
5% -10% 10% -15% 15% -20% 20% or
more
5
Percent Change in Enrollment, FY 2003 – FY 2009
School Districts and Charter Schools
2003
2009
% Change
Total Enrollment:
School districts
825,585
793,886
-3.84%
Charter Schools
12,144
32,776
169.89%
837,729
826,662
-1.32%
Special Education
108,587
116,884
7.64%
Free & Reduced
229,503
270,206
17.74%
51,177
63,627
24.33%
157,840
183,600
16.32%
All Public Schools
Demographics – All Public Schools:
LEP
Students of Color
6
Demographic Trends, FY 2003 – FY 2009
School Districts and Charter Schools
School Districts
Charter Schools
2003
2003
2009
2009
All Public Schools
2003
2009
Special Education
13.0%
14.2%
12.2%
12.0%
13.0%
14.1%
Free & Reduced
27.0%
31.8%
54.6%
53.5%
27.4%
32.7%
6.0%
7.2%
13.0%
18.8%
6.1%
7.7%
18.4%
23.1%
50.6%
51.4%
18.8%
24.3%
LEP
Students of Color
7
PUPIL - TEACHER RATIOS
1996 - 2009
22.0
21.0
20.5
20.0
19.3
19.0
19.4
18.3
18.0
19.0
19.2
19.2
19.2
18.8
19.3
19.3
19.2
19.0
18.3
16.5
17.0
15.7
16.0
16.0
16.1
17.1
15.6
16.2
16.1
15.0
16.1
15.9
16.1
15.8
15.8
15.2
14.0
1996
1997
1998
1999
2000
2001
2002 2003
Fiscal Year
Including Special Educ
2004
2005
2006
2007
2008
2009
Excluding Special Educ
8
General Fund Expenditures by Program
FY 2004
FY 2008
Change
Regular Instruction
Career & Tech Instruction
Special Education
Subtotal, Instruction
47.1%
1.5%
16.7%
65.4%
46.2%
1.5%
17.4%
65.1%
-0.9%
0.0%
0.7%
-0.3%
Administration
8.5%
8.3%
-0.2%
Instr Support Services
Pupil Support Services
4.4%
3.0%
4.7%
2.7%
0.3%
-0.3%
Operation, Maint & Other
Student Transportation
Capital Expenditures
8.2%
5.4%
5.2%
8.3%
5.8%
5.1%
0.1%
0.4%
-0.1%
9
UNRESERVED GENERAL FUND BALANCE OF SCHOOL DISTRICTS AND
CHARTER SCHOOLS AS PERCENT OF EXPENDITURES
16.0%
13.5%
14.0%
12.5%
11.6%
12.0%
11.9%
10.0%
8.0%
10.8%
8.3%
11.4%
8.8%
6.0%
4.0%
2.0%
0.0%
2001
2002
2003
2004
2005
2006
2007
2008
10
PERCENT OF SCHOOL DISTRICTS AND CHARTER SCHOOLS WITH
NEGATIVE FUND BALANCES AND IN SOD
(calculations for FY 1997 - 1999 include all operating funds; calculations
for FY 2000 - 2006 reflect general fund only)
20.0%
17.7%
18.0%
16.6%
16.0%
13.4%
14.0%
13.4%
12.0%
8.7%
10.0%
8.0%
9.3%
10.8%
7.8%
9.7%
8.0%
9.0%
7.0%
8.2%
7.5%
7.3%
6.5%
6.0%
4.0%
5.8%
5.1%
5.5%
5.0%
4.0%
4.1%
4.9%
3.6%
2.0%
0.0%
1997
1998
1999
2000
Negative Fund Balance
2001
2002
2003
2004
2005
2006
2007
2008
In SOD (Deficit > 2.5% of Expend.)
11
STATE AVERAGE ANTC/AMCPU
8,000
7,520
7,489
FY 2010
FY 2011
7,172
7,000
6,461
5,814
6,000
5,233
5,000
4,665
4,097
4,000
3,631
3,000
2,000
1,000
0
FY 2003
FY 2004
FY 2005
FY 2006
FY 2007
FY 2008
FY 2009
12
CONSUMER PRICE INDEX
ANNUAL PERCENT CHANGE
July 2009 Estimate
4.0%
3.8%
3.7%
3.5%
3.0%
3.0%
2.5%
2.6%
2.2%
2.2% 2.2%
2.0%
1.4%
1.5%
1.0%
0.5%
0.5%
0.0%
FY
2003
FY
2004
FY
2005
FY
2006
FY
2007
FY
2008
FY
2009
FY
2010
FY
2011
13
K-12 EDUCATION REVENUE PER ADM
CURRENT DOLLARS, FY 2003 - 2011
End of 2009 Legislative Session Estimates
14,000
13,418
13,000
12,268
12,000
11,022
9,907
9,000
8,000
7,712
7,000
6,484
6,000
13,081
11,572
11,000
10,000
12,624
6,135
5,000
2003
10,255 10,480
9,356
7,898
8,319
7,996
8,776
7,759
7,085 7,507
6,633
6,119
2004
6,776
6,164
6,439
2005
2006
GEN ED REVENUE EXCL REF
GEN FUND STATE AIDS & LEVIES
9,660
6,783
2007
7,982
6,977
7,105
2008
2009
9,626
9,869
8,006
8,164
7,060 7,085
2010
2011
GEN ED REVENUE INCL REFERENDUM
ALL FUNDS ALL SOURCES
14
K-12 EDUCATION REVENUE PER ADM
ADJ FOR INFLATION (2009 $), FY 2003 - FY 2011
End of 2009 Legislative Session Estimates
14,000
13,000
13,452
12,000
11,000
11,663 11,814
11,722
11,877
10,000
9,079
9,000
8,000
7,000
9,099
7,633
7,641
7,222
7,049
2003
2004
8,943
7,578
6,895
8,964
12,154
9,218
12,423 12,624
9,475
12,847
9,660
9,651 9,693
7,982
8,026
8,019
7,078
6,959
7,634
7,885
7,858
6,938
7,124
7,066
7,105
2006
2007
2008
2009
6,000
5,000
2005
GEN ED REVENUE EXCL REF
GEN FUND STATE AIDS & LEVIES
2010
2011
GEN ED REVENUE INCL REFERENDUM
ALL FUNDS ALL SOURCES
15
16
PERCENT CHANGE IN GENERAL ED REVENUE PER ADM
INCLUDING REFERENDUM FY 2003 - 2010 BY STRATUM
30.0%
28.0%
25.5%
25.0%
20.3%
20.2%
21.3%
19.9%
20.0%
15.7%
15.0%
10.0%
5.0%
0.0%
MPLS & ST PAUL
OTHER METRO
NONMET>=2K
NONMET 1K-2K
NONMET 500-1K
NONMET<500
CHARTERS
17
FY 2010 GENERAL EDUCATION REVENUE PER ADM BY
STRATUM EXCLUDING THE STIMULUS REDUCTION
12,000
10,000
8,000
6,000
4,000
2,000
0
MPLS & ST PAUL
Basic
OTHER METRO
Basic Skills
Q Comp
NONMET>=2K
NONMET 1K-2K
Ext Time
Spars
NONMET 500-1K
Tran Spar
NONMET<500
Other
CHARTER
Referendum
18
Referendum Election Trends
•
Year
# Quest.
•
•
•
•
•
•
•
•
•
2000
2001
2002
2003
2004
2005
2006
2007
2008
71
207
111
117
89
106
86
132
68
$ Request
107M
279
185
115
54
84
136
250
129
$ Approved
$%
68M
110
134
76
20
67
64
167
78
63%
39
72
66
37
80
48
67
61
19
RATIO OF 95TH TO 5TH PECENTILES BASIC + REFERENDUM +
EQUITY REVENUE PER PUPIL UNIT
1.400
1.371
1.352
1.350
1.352
1.310
1.299
1.300
1.304
1.298
1.285
1.306
1.278
1.247
1.250
1.268
1.262
1.208
1.205
1.200
1.202
1.239
1.214
1.186
1.150
1.100
1.050
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
19
92
1.000
20
SPECIAL EDUCATION EXPENDITURES AND REVENUES
INCLUDING GEN EDUC REVENUE ATTRIBUTABLE TO SPECIAL EDUCATION
2,500
2,001
2,000
1,829
1,910
1,653
1,507
1,577
S Millions
1,500
1,279
1,068
1,000
937
1,352
1,215
1,070
912
853
767
1,278
1,279
1,432
1,134
1,013
1,747
1,099
1,227
1,225
909
890
818
666
500
724
584
FY
1999
FY
2000
FY
2001
FY
2002
FY
2003
FY
2004
FY
2005
FY
2006
FY
2007
Expenditures
FY
2008
FY
2009
FY
2010
FY
2011
FY
2012
FY
2013
Revenues
21
SPECIAL EDUCATION CROSS SUBSIDIES
800
724
700
685
599
600
554
500
$ Millions
507
520
550
520
462
400
367
352
347
345
FY
1999
FY
2000
FY
2001
426
397
300
200
100
0
FY
2002
FY
2003
FY
2004
FY
2005
FY
2006
FY
2007
FY
2008
FY
2009
FY
2010
FY
2011
FY
2012
FY
2013
22
SPECIAL EDUCATION REVENUES
INCLUDING GEN EDUC REVENUE ATTRIBUTABLE TO SPECIAL EDUCATION
AS A PERCENT OF EXPENDITURES
80.0%
75.0%
70.2%
70.0%
67.6%
69.9%
67.9%
66.7%
65.8%
67.4%
67.7%
65.0%
65.8%
66.5%
64.1%
63.7%
63.9%
62.4%
60.0%
60.3%
55.0%
50.0%
FY
1999
FY
2000
FY
2001
FY
2002
FY
2003
FY
2004
FY
2005
FY
2006
FY
2007
FY
2008
FY
2009
FY
2010
FY
2011
FY
2012
FY
2013
23
SPECIAL EDUCATION CROSS SUBSIDY PER WADM BY
STRATA, FY 2008
900
808
800
700
600
497
500
493
485
484
449
400
300
200
100
0
MPLS & ST PAUL
OTHER METRO
NONMET>=2K
NONMET 1K-2K
NONMET 500-1K
NONMET<500
24
STATE SHARE OF STATE-LOCAL TAX REVENUE
FOR K-12 EDUCATION
100%
93%
90%
75%
80%
70%
64%
70%
66%
60%
77% 77%
91% 90% 89% 87% 87%
85% 85% 83%
86% 84% 83%
73% 71%
70%
82% 80% 79%
78% 75%
75%
61%
50%
40%
30%
20%
10%
0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Fiscal Year
All Funds
School District General Fund
25
STATE SHARE OF STATE-LOCAL TAX REVENUE
Selected Equalized Levy Programs
40%
35%
34%
34%
34%
35%
33%
30%
25%
25%
26%
23%
22%
19%
20%
23%
19%
18%
18%
16%
15%
12%
9%
10%
10%
5%
9%
6%
8%
6%
8%
6%
5%
7%
5%
0%
12%
4%
4%
3%
2%
1%
1%
1%
2%
1%
0%
0%
0%
0%
0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Fiscal Year
Referendum
Debt Service
Health & Safety
26
STATE SHARE OF OPERATING CAPITAL REVENUE
120%
100%
100%
79%
80%
77%
60%
47%
43%
40%
38%
36%
36%
20%
0%
2004
2005
2006
2007
2008
2009
2010
2011
Fiscal Year
27
2009 E-12 Education Act
K-12 SPENDING SUMMARY
FY 10 – 11 Biennium
FY 2010 State General Educ Aid Reduction ($500,000,000)
Federal Fiscal Stabilization Funds
Replacing State Aid
500,000,000
Reduction to MDE Agency Budget (3.7%)
(1,500,000)
Minnesota Reading Corps
Math & Science Teacher Academy
Total Change
750,000
750,000
$
0
28
GENERAL EDUCATION REVENUE
FY 2009 vs FY 2010 and Later
Districts & Charter Schools Lose:
• One-Time Additional General Educ Aid of $51 / PU
and
• One-Time Technology & Operating Capital Aid of $55 /
PU
Districts Gain:
$27 million (about $33 / resident ADM) from elimination
of endowment subtraction enacted in 2008
29
BUDGET FLEXIBILITY
FY 2010 and FY 2011
• Requirement to reserve 2% of Basic Revenue for staff
development is waived for FY 2010 and FY 2011
– District & site staff development committees are still required
to complete a staff development plan and submit an annual
report on staff development activities & expenditures
• Allows districts to transfer up to $51 per pupil unit from
operating capital account to unreserved general fund
in FY 2009 and in FY 2010 (previously authorized for
FY 2008 only)
30
MOE Requirement for Licensed Support Staff
Under existing law:
• Beginning in FY 2010, districts required to maintain effort at FY 2009
level for licensed school support staff, including guidance counselors,
nurses, social workers, psychologists, and alcohol/chemical
dependency counselors from all funding sources other than safe
schools levy
New legislation:
• Modifies maintenance of effort requirement by allowing districts to
calculate MOE using either (1) expenditures or (2) number of FTE
licensed school support staff
• In determining the number of full-time equivalent employees, do not
include contracted services. Contracted services would only be
included in total spending.
31
Other Post Employment Benefits (OPEB)
Bonding and Levy
• OPEB Bonds sold after October 1, 2009, must be
approved by voters
• Creates new levy for school districts to fund annual
costs associated with OPEB, limited to $9 million for
taxes payable 2010, and $30 million for taxes
payable 2011, with an increase of $14 million in the
limit each year thereafter (Commissioner must
prorate levy if requests exceed cap)
• Requirements:
– Create an actuarial liability to pay OPEB
– Sunset clause in effect for current collective
bargaining period
– Apply for levy authority to commissioner
32
Charter Schools
Multiple changes to sponsorship, school formation, and governance
• Clarification of “conflict of interest” related to board and leases
• Clarification of charter contract requirements
• Clarification regarding exemption from statute and rule
• Allows state aid reduction for violation of law
• Changes allowed sponsor fees and requires a sponsor report
regarding sponsor activities
• Provides for payments of an equal amount for all charter schools on 24
payment dates rather than 23
• Establishes procedure for state aid payment close-out of closed or
closing charter schools
• Allows the commissioner to withhold state aid for federal or state funds
not returned upon request, or for unpaid amounts due to another state
agency, a school district, or educational cooperative
33
Superintendent’s Report on Expenditures
and Passage Rates
• Repealed effective the day following final
enactment
34
Integration Revenue
• Adds Mpls, St Paul & Duluth to requirement to submit
integration budget to MDE for approval
• Modifies uses of integration revenue to include sustained
interracial contacts, and improved educational
opportunities designed to close the achievement gap
• Requires MDE to study districts’ use of and need for
integration revenue, with report to legislature by Feb 1,
2011
35
Review and Comment on Facilities
Construction
Prohibits the Commissioner of Education from issuing an unfavorable or
negative review & comment based solely on:
– Too little acreage, or
– The ratio of renovation costs to replacement costs
• Increases the threshold for review & comment from $500,000 to $1.4
million, except for districts with an outstanding capital loan
– Increases the threshold for consultation from $250,000 to $500,000
• Expands info required for R&C to include:
– a description of pedestrian, bicycle and transit connections
– information on how the proposal maximizes cooperative use of existing
park recreation and other public facilities, and
– Any existing info from the local unit of government on cumulative costs to
proved infrastructure to serve the school such as utilities, sewer, roads &
sidewalks
36
Accounting for Separation and Retirement
Benefits
• Clarifies accounting requirements for designated separation and
retirement benefits
– Designated for separation & retirement benefit account (BAL 418)
includes compensated absences, termination benefits, pension
benefits and OPEB not accounted for elsewhere
– BAL 418 will no longer be limited to 50% of the amount necessary
to meet obligations for the portion of severance pay that
constitutes compensation for accumulated sick leave
– MDE will eliminate BAL 411 (Reserve for Severance) beginning
with FY 2010 reporting
37
Separation and Retirement Benefits
• UFARS Balance Sheet Account 418
– Designated account
– No longer limited to 50%
– Will continue to be used as unreserved/undesignated for
Statutory Operating Debt (SOD) calculation
• UFARS Balance Sheet Account 411
–
–
–
–
Reserve account
Not used in SOD calculation
Does not have statutory authority
Does not comply with the applicable Governmental Accounting
Standards Board (GASB) Statements.
– Account will be eliminated in FY 2010
38
Transportation
• Modifies bill passed in 2008 that established
regulations for drivers of Type 3 vehicles
– All type 3 drivers must undergo background check, have
license verified annually by employer, notify employer if
convicted of certain DWI and traffic offenses
– Clarifies exemption from physical exam and drug test for
district employees not employed for the sole purpose of
operating a type 3 vehicle
– Note: Same language passed in separate bill and signed
into law – Chapter 24
39
Tax Policy Act
Truth in Taxation
Districts no longer required to hold separate TNT
meeting
– Instead discuss at regularly scheduled board
meeting
– Announce meeting date when proposed levy is
adopted
– Meeting date also noted on TNT notices
– Must discuss levy and budget
40
UFARS Changes
• Major UFARS changes in FY 2010:
– New finance codes to track the American Recovery and
Reinvestment Act
– New finance codes to track federal competitive awards in
SERVS
– New finance and object codes to track special education activity
that once was collected in EDRS (no longer available in SERVS)
– New course codes to track AYP set-asides for Title programs
– New course codes to track the award year of all federal awards
– New course code to track the special education maintenance of
effort provision
41
Executive Actions to Balance State Budget
• State Aid Payment Deferral
• Property Tax Revenue Recognition Change
• One-Time Aid Adjustment for Property Tax
Revenue Recognition Change
42
State Aid Payment Deferral
For FY 2010 and FY 2011 only:
• All state aids normally paid on a 90 -10
schedule will be changed to a 73 - 27
schedule
• Reduction in current aid payments is spread
fairly evenly throughout the fiscal year
• Final payments will be increased to offset the
reduction in current payments
43
State Aid Payment Deferral – SOD
• For districts and charter schools in Statutory Operating
Debt as of 6/30 of the previous fiscal year, the amount
of the deferral will be reduced by the lesser of:
– 17% of general education aid (the difference between 90%
and 73%), or
– The amount of the district or school’s SOD.
• For a district or charter school where the amount of
SOD exceeds 17% of general education aid, the
payment schedule for general education aid will
remain at 90 -10
• Other state aids will be paid at 73-27
44
State Aid Payment Deferral – SOD
• SOD status will be determined based on
audited UFARS data after the November 30
deadline for data submission
– Districts / charter schools in SOD as of 6/30/09
eligible for FY 2010 adjustment
– Districts / charter schools in SOD as of 6/30/10
eligible for FY 2011 adjustment
• The general education aid adjustment for
affected districts and charter schools will be
made on June 20
45
State Aid Payment Deferral
• Final payments will be paid according to statutory schedule:
– Property tax credits paid on August 15
– Other final payments:
• 30% August 30,
• 40% September 30,
• 30% October 30
• Cash Flow Simulation and annual aid entitlement estimates used
for simulation for FY 2010 and FY 2011 are available on MDE
Web site under Program Finance / MFR
• For additional Information, please refer to July 10 memo from
Commissioner Seagren to Superintendents & Charter School
Directors (copies sent to business managers & auditors)
46
Property Tax Revenue Recognition Change
• Beginning in FY 2011, school districts will recognize
the May, June and July tax settlement revenue
received during the calendar year in Funds 1 and 4,
and not recognized early under MS 123B.75, subd. 5,
paragraph (b), in June of the calendar year in which it
is received, instead of July.
• In the absence of new legislation, this change will be
permanent, and will be reflected in the UFARS manual
47
Property Tax Revenue Recognition Change
• The change in levy recognition policy will create a
large increase in the amount of property taxes
recognized by school districts as revenue during FY
2011.
• For FY 2012 and later, the impact of this change will
be smaller, but still significant:
– Districts with growing operating levies (e.g., new operating
referendum) will recognize the increase in May/June/July tax
settlements earlier (50% of net levy proceeds)
– Districts with declining operating levies (e.g., expiring
operating referendum) will recognize the decrease in
May/June/July tax settlements earlier (50% of net levy
proceeds)
48
One-Time Aid Adjustment for
Property Tax Revenue Recognition Change
• State aid payments during FY 2011 will be reduced by
the difference between the amount each district is
estimated to recognize in FY 2011 under the new
property tax revenue recognition policy, compared with
the amount the district would have recognized in FY
2011 under the old property tax revenue recognition
policy.
• This is a one-time adjustment to state aids for FY 2011
only, which will occur as late in FY 2011 as possible, to
align with the receipt of the levy revenue
49
One-Time Aid Adjustment for
Property Tax Revenue Recognition Change
• Barring a change in law, or an additional unallotment
by the Governor during the next biennium, there will
be no adjustment to state aids for the change in
property tax levy revenue recognition during FY 2012
or later.
• While state policy makers may elect to reverse the
property tax levy recognition change and pay back the
amount of the FY 2011 aid reduction when the state’s
budget outlook improves, without new legislation there
will be no payback in FY 2012 or later.
50
Outlook for the Future
• The compromise that almost was enacted in 2009:
– House: Minnesota Miracle with Phase -In
– Senate: Consolidated General Education Levy
– Governor: Pay for Progress, Q Comp Statewide
• Was this a one-time opportunity lost, or will it be a
blueprint for the future?
51
State Budget Outlook
July 2009 - Executive Actions -- Dollars in Millions
Beginning Balance
Current Revenues
Other Resources
Total Resources Available
Expenditures – K-12 Before Shifts
K-12 Shifts
All Other
Total Expenditures & Transfers
FY 2010-11
$ 538
30,318
824
31,680
FY 2012-13
$ 350
33,527
778
34,655
13,393
(1,760)
19,697
31,330
14,348
1,159
21,120
38,627
350
350
Cash Flow Account
Budgetary Balance
$
0
($
4,431)
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Outlook for the Future
Given the state budget outlook, there are more questions than
answers:
– Can the Minnesota Miracle be enacted, even with a delay/extended
phase-in?
– Will the aid payment schedule be restored to 90-10 in FY 2012,
remain at 73-27, or go to some other level?
– Will the property tax shift be permanent?
– Will there be an increase in state taxes (income, sales)?
– Will there be a consolidated general education levy?
– Will reliance on operating referendum levies increase?
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Outlook for the Future
• How can K-12 education be delivered
more efficiently and effectively?
• Will there be an increase in school district
consolidations?
• Greater pressure for shared services?
• Movement toward a 4 day week?
• Greater use of on-line learning?
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If you have questions or need additional
information
Tom Melcher, Program Finance Director
Phone: 651-582-8828
E-Mail: [email protected]
Lisa Barnidge, Government Relations
Coordinator
Phone: 651-582-8663
E-Mail: [email protected]
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