A reader on Lebanon Chatter asked me to explain some basics of school finance, specifically how the different funds in the corporation budget work. I'm happy to do this, and hope it's helpful.
The information below, in green, comes directly from LCSC Assistant Superintendent/CFO Charles Tait's explanation on the school web site. I have edited a bit for ease of reading; please go to his page for more detailed information.
Indiana Public School Funding establishes seven (7) main funds. Each of these funds receives local support through License Excise taxes, Commercial Vehicle Excise taxes and Financial Institute taxes. The General Fund receives revenue from the State of Indiana based upon several key data components – student count, vocational programming student enrollment, special education programming enrollment, at risk student component, number of students that graduated with Academic Honors Diploma, special funding to support high ability student programming, professional development for staff, and funds to support remediation programming for students.
The General Fund and the Special Ed. Preschool Fund are 100% state funded [i.e., none of these funds is supplied through local property taxes]. The other funds – Debt Service, Pension/Severance Debt, Capital Projects, School Transportation and Bus Replacement are funded through local property tax.
Seven Main Funds:
1. General Fund – This includes expenses for salaries of teachers, administrators, support staff, fringe benefits, supplies, heat, lights, maintenance and other day-to-day operation expenses. [90% of LCSC's general fund is spent on wages, salaries, and benefits; the remaining 10% goes primarily to supplies, professional development, and utilties.]
2. Debt Service Fund – Expenditures from this fund may be used to make bond and/or lease rental payments and state technology and construction loans. Interest on loans taken for the purpose of any other fund can be paid from the debt service fund. For taxation purposes this fund is only used when there is a need to retire debt. The tax rate must be sufficient to raise the amount necessary to meet the debt obligations during the year.
3. Pension/Severance Debt Fund – used to budget and account for receipts and expenditures necessary to meet the annual debt obligations for the pension/severance for the local school corporation.
4. Capital Projects Fund – used for land acquisition and development, fees for professional services, educational specification development, building acquisition, construction, and improvement, rental of buildings and equipment, purchase of mobile or fixed equipment, certain emergencies, maintenance of equipment, construction, repair, replacement, remodeling or maintenance of a school sports facility as long as the expenditure does not exceed 5% of the property tax levy, certain staff services, allocating funds for future projects, and transferring funds to the Repair and Replacement Fund.
5. School Transportation Fund – exclusive fund for the salaries of drivers, the transportation supervisor, mechanics and garage employees, clerks and other transportation related employees. It will also pay for the cost of contracted transportation services, transportation related insurance, fuel, lubricants, tires, repairs, contracted repairs, parts, supplies, and other transportation related expenses.
6. School Bus Replacement Fund – exclusive fund to pay for the replacement of school buses, either through a purchase agreement or under a lease agreement. A ten (10) year plan must be submitted and approved for the purchase and replacement of school buses. [School buses are currently on a 12-year replacement cycle.]
7. Special Education Preschool Fund – each school corporation is required by state law to provide each pre-school special needs child with an appropriate special education. This fund is used for the revenue and expenses to operate the preschool program.
School corporations are not allowed to mix monies from these funds, or move money from one fund to another during the budget year to cover a shortfall. All of the money for teacher salaries comes from the general fund, and 100% of the general fund comes from the state--not from local property taxes. Until 2009 some of the general fund did come from local property taxes, but the property tax reform package that passed the General Assembly in 2009 included moving all of the general fund to the state. There is no way for the school corporation to use local tax revenues to pay teacher salaries.
Would I like the legislature to change the way these funds work? Generally, I'd like to have more local control for our schools, and if our community would be willing to pay more taxes for teacher salaries I'd like to have that option. But if the change just involves letting schools move money from one fund to another, it would probably end up being a shell game. The state could continue cutting the general fund, and put the burden on schools to raise local taxes and move money around, rather than meeting the obligations the law puts on the state.
If you're interested in more details about our local budget process, I wrote a column in March 2009 that was published in the Lebanon Reporter and that I reprinted in this blog post. If you're really interested in more detail than that, please drop me an e-mail and maybe we can arrange to get into the tall weeds of school finance over a cup of coffee!
Thank you for reading!
Wednesday, January 27, 2010
Wednesday, January 20, 2010
Whiplash
The effect of last night's board meeting was whiplash, with plenty of good news followed by some grim realities.
Here's the good news: Central Elementary and Lebanon Middle School selected as four-star schools, LHS recognized in U.S. News and World Report as one of America's Best High Schools. This on top of Mr. Byron Ernest being selected Indiana's Teacher of the Year and LCSC's selection as an Exemplary school corporation in 2009.
Also, corporation CFO Charles Tait reported on finances. LCSC is operating with a healthy cash balance, money in the Rainy Day fund, even money left in holding corporation funds (these are left over from previous building projects) that allows us to do building maintenance and repairs. Our 2010 budget was certified by the state, which means we know what we're authorized to spend this year. Enrollment is basically steady, and our assessed value actually went up slightly.
Our tax rate was certified as well, and here's an interesting fact: since 2006 the local tax rate for the schools has gone down from $1.7625 (per $100 of assessed value) to $1.1242 in 2010. That's a decline of $.6383, or 36%.
Just when it feels like the best of times, the governor announces a $300 million cut to K-12 education statewide.
So here's the bad news: The state had committed general fund monies to LCSC. That amount will now be cut (starting this month) by 4.56%, which comes to $81,733.67 a month, for a 2010 total of $980,804.02. General fund dollars are the only source of teacher salaries, and 89.6% of our general fund is spent on wages, salaries, and benefits.
These cuts are permanent, and to adjust we'll be looking at permanent, structural changes to the budget.
Mr. Tait and Dr. Taylor reported that over the last 12 months LCSC has already cut more than $661,000 from general fund expenditures, including summer school, positions for five instructional assistants, seven certified staff, a school nurse, custodial/maintenance/grounds crew hours, professional development, and supplies. We have also changed banks and instituted energy savings measures.
Administrators are not receiving any salary or benefit increases this year, and classified staff (bus drivers, custodial, food service workers) are not receiving any cost-of-living increase. The Master Contract that sets teacher salaries is being negotiated right now.
Dr. Taylor is holding four meetings for all LCSC staff to inform them about the local impact of the cuts, and to get input about how to absorb them. Our strong financial position means we are not looking at sudden, draconian cuts, and we can combine some deficit spending with careful budget reductions. But as Mr. Tait said, "It will be necessary to trim our work force, adjust student programs, and evaluate every position in our school corporation to ensure we operate as efficiently as possible."
After the staff meetings, Dr. Taylor plans public meetings to answer questions and get ideas from the community. He anticipates bringing detailed recommendations to the board in March and April.
What are your questions about this situation? Where would you look to make adjustments? How should the board and the administration proceed?
Here's the good news: Central Elementary and Lebanon Middle School selected as four-star schools, LHS recognized in U.S. News and World Report as one of America's Best High Schools. This on top of Mr. Byron Ernest being selected Indiana's Teacher of the Year and LCSC's selection as an Exemplary school corporation in 2009.
Also, corporation CFO Charles Tait reported on finances. LCSC is operating with a healthy cash balance, money in the Rainy Day fund, even money left in holding corporation funds (these are left over from previous building projects) that allows us to do building maintenance and repairs. Our 2010 budget was certified by the state, which means we know what we're authorized to spend this year. Enrollment is basically steady, and our assessed value actually went up slightly.
Our tax rate was certified as well, and here's an interesting fact: since 2006 the local tax rate for the schools has gone down from $1.7625 (per $100 of assessed value) to $1.1242 in 2010. That's a decline of $.6383, or 36%.
Just when it feels like the best of times, the governor announces a $300 million cut to K-12 education statewide.
So here's the bad news: The state had committed general fund monies to LCSC. That amount will now be cut (starting this month) by 4.56%, which comes to $81,733.67 a month, for a 2010 total of $980,804.02. General fund dollars are the only source of teacher salaries, and 89.6% of our general fund is spent on wages, salaries, and benefits.
These cuts are permanent, and to adjust we'll be looking at permanent, structural changes to the budget.
Mr. Tait and Dr. Taylor reported that over the last 12 months LCSC has already cut more than $661,000 from general fund expenditures, including summer school, positions for five instructional assistants, seven certified staff, a school nurse, custodial/maintenance/grounds crew hours, professional development, and supplies. We have also changed banks and instituted energy savings measures.
Administrators are not receiving any salary or benefit increases this year, and classified staff (bus drivers, custodial, food service workers) are not receiving any cost-of-living increase. The Master Contract that sets teacher salaries is being negotiated right now.
Dr. Taylor is holding four meetings for all LCSC staff to inform them about the local impact of the cuts, and to get input about how to absorb them. Our strong financial position means we are not looking at sudden, draconian cuts, and we can combine some deficit spending with careful budget reductions. But as Mr. Tait said, "It will be necessary to trim our work force, adjust student programs, and evaluate every position in our school corporation to ensure we operate as efficiently as possible."
After the staff meetings, Dr. Taylor plans public meetings to answer questions and get ideas from the community. He anticipates bringing detailed recommendations to the board in March and April.
What are your questions about this situation? Where would you look to make adjustments? How should the board and the administration proceed?
Indiana education reform and the "Race to the Top"
The proposed education reforms reported in today's Indianapolis Star could have far-reaching impact. In order to apply for federal "Race to the Top" funds the state had to put together a package of aggressive reforms. State Superintendent of Public Instruction Tony Bennett promises that these reforms are his agenda, whether Indiana get the federal dollars or not.
I heard Dr. Bennett at a conference last week, and he spoke primarily about these proposals and the Race to the Top funds. Indiana is asking for $400 million, but if selected is likely to receive $150-250 million in one-time funds. (These are part of President Obama's larger stimulus package.) The application was submitted yesterday; finalists will be interviewed in March; awards will be announced in April.
If Indiana is a winner, individual school corporations will then apply to the state for some share of the funds. Corporations will have 90 days to submit a "work plan" consistent with Indiana's larger plan, and the superintendent, school board president, and local teacher union must sign on to the corporation's application.
Dr. Bennett laid out four "pillars" of Indiana's reform plan:
I heard Dr. Bennett at a conference last week, and he spoke primarily about these proposals and the Race to the Top funds. Indiana is asking for $400 million, but if selected is likely to receive $150-250 million in one-time funds. (These are part of President Obama's larger stimulus package.) The application was submitted yesterday; finalists will be interviewed in March; awards will be announced in April.
If Indiana is a winner, individual school corporations will then apply to the state for some share of the funds. Corporations will have 90 days to submit a "work plan" consistent with Indiana's larger plan, and the superintendent, school board president, and local teacher union must sign on to the corporation's application.
Dr. Bennett laid out four "pillars" of Indiana's reform plan:
- Standards and assurances: Indiana will start to align itself with national standards referred to as the Common Core. According to the Star's article today, ISTEP+ will also be replaced with a national test.
- Longitudinal data will be collected to follow students' achievement throughout their education.
- Rethinking how teachers and principals are evaluated--the Star article refers to four tiers of teacher performance.
- Turning around lowest-performing 5% of schools.
Wednesday, January 13, 2010
U.S. News and World Report names LHS one of America's "Top High Schools"!
This is a first, and a wonderful distinction for our high school and community! Many congratulations to the LHS administration, teachers, staff, and students.
Central Elementary and LMS achieve four-star distinction!
Great news! Today the Indiana Department of Education released the list of four-star schools for 2008-09, and both Central Elementary and Lebanon Middle School were included. This is the first time LMS has achieved four-star status.
According to the DOE, "Four Star Schools are those public schools who meet AYP (Adequate Yearly Progress) under NCLB (No Child Left Behind) and were in the top 25% of all Indiana Public Schools in four categories:
According to the DOE, "Four Star Schools are those public schools who meet AYP (Adequate Yearly Progress) under NCLB (No Child Left Behind) and were in the top 25% of all Indiana Public Schools in four categories:
- ISTEP+ Percent Passing both English/LA and Math
- ISTEP+ Language Proficiency T-Score
- ISTEP+ Math Proficiency T-Score
- Attendance Rate"
Two more reasons to love Boone County
... as if you needed more!
As reported in this story, graduation rates in Boone County high schools are among the highest in the state, over 90%.
There was also a nice item in Monday's Lebanon Reporter about LHS principal Kevin O'Rourke and assistant principals Kari Ottinger and Chad Briggs scraping the snow and ice off student cars in the parking lot as school is letting out. A parent waiting to pick up her student saw this, took a photo, and submitted it to the paper. When I showed it to my high school daughters, they said they didn't think it was that big of a deal, because they've seen the administrators do this often!
Parking-lot duty is a fact of life for school staff, and I can't imagine they love it, especially in snowy, freezing weather. But the LHS administrators go that extra mile, cleaning off students' cars for safety and just to be helpful. You gotta love it!
As reported in this story, graduation rates in Boone County high schools are among the highest in the state, over 90%.
There was also a nice item in Monday's Lebanon Reporter about LHS principal Kevin O'Rourke and assistant principals Kari Ottinger and Chad Briggs scraping the snow and ice off student cars in the parking lot as school is letting out. A parent waiting to pick up her student saw this, took a photo, and submitted it to the paper. When I showed it to my high school daughters, they said they didn't think it was that big of a deal, because they've seen the administrators do this often!
Parking-lot duty is a fact of life for school staff, and I can't imagine they love it, especially in snowy, freezing weather. But the LHS administrators go that extra mile, cleaning off students' cars for safety and just to be helpful. You gotta love it!
Friday, January 8, 2010
Weather issues and decisions
First of all a big shout-out to the bus drivers (and the whole transportation department, headed up by the very capable Mrs. Becky Nugent), and the grounds crews (LHS's parking lot was plowed beautifully this morning) who work extra-hard when the weather turns foul. You're great, thank you so much!
Second, I'm thankful that I don't make the decision about whether to close, delay, or early dismiss our schools. This is a challenging decision with many things to consider: student and staff safety, changing weather conditions, the timing of bus routes, parents having to scramble for child-care arrangements, state guidelines for instructional days. One thing is pretty certain: superintendents get complaints no matter what they decide. So far this time around I have heard of no accidents resulting from the weather, and I'm grateful for that.
Second, I'm thankful that I don't make the decision about whether to close, delay, or early dismiss our schools. This is a challenging decision with many things to consider: student and staff safety, changing weather conditions, the timing of bus routes, parents having to scramble for child-care arrangements, state guidelines for instructional days. One thing is pretty certain: superintendents get complaints no matter what they decide. So far this time around I have heard of no accidents resulting from the weather, and I'm grateful for that.
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