macomb intermediate school district
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MACOMB INTERMEDIATE SCHOOL DISTRICT
HOW SCHOOLS ARE FINANCED IN MICHIGAN
Steven B. Barr
Executive Director of Business
Summer 2008
WHY WE ARE – WHERE WE ARE
On July 21, 1993, with PA 145, the legislature wiped out 2/3rds of public school operating revenues (~7.0 Billion Dollars).
On March 15, 1994, the people of Michigan, by a 2 to 1 margin, approved “PROP A” which was an increase in the sales tax from 4 to 6%. This shift in funding responsibility from the local level to the state level also involved other elements:
THE PEOPLE VOTED TO:
1993 Proposal ASales Tax 4% 6%Income Tax 4.6% 4.4%Property Tax (mills) Homestead 34(ave) 6 Second Homes 34(ave) 24 Industrial/commercial 34 24 Enhancement na 3*
Assessment Cap na 5%Real Estate Transfer Tax .0011% .75%Cigarette Tax $.25 $.75Out of State calls 4% 6%
* Only available 1994-95, 1995-96, 1996-97 In 1997-98 became regional enhancement
THE SCHOOL AID FUND
1995 2001 2007Sales and Use Tax 46% 48% 41%State Education Tax 13 18 16Income Tax 10 19 16Tobacco Tax 5 4 4Lottery 6 5 6General Fund 17 1 0 Federal 1 1 11Other 2 4 6 100% 100% 100%
ONE OBJECTIVE OF PROPOSAL A
• Reduced Spending Gap-• 1993
– Lowest 10 districts averaged $3,476/pupil– Highest 10 districts averaged $9,726/pupil– 179% difference
• 2008– Lowest 10 districts averaged $7,204/pupil– Highest 10 districts averaged $11,934/pupil– 66% difference
THE FOUNDATION ALLOWANCE
Min Basic PSA Max Hold Harmless
1995 4,200 5,000 5,500 6,5001996 4,506 5,153 5,653 6,6531997 4,816 5,308 5,808 6,8081998 5,124 5,462 5,962 6,9621999 5,170 5,462 5,962 6,9622000 5,700 5,700 6,200 7,2002001 6,000 6,000 6,500 7,5002002 6,500 6,500 6,800 7,8002003 6,700 6,700 7,000 8,0002004 6,700 6,700 7,000 8,0002005 6,700 6,700 7,000 8,0002006 6,875 6,875 7,175 8,1752007 7,085 7,085 7,385 8,3852008 7,204 up to 8,433 7,475 8,433
Macomb County $ 7,204 to $ 9,978
DISTRICT
Anchor Bay
Armada
Center Line
Chippewa Valley
Clintondale
East Detroit
Fitzgerald
Fraser
Lake Shore
Lakeview
L'Anse Creuse
FOUNDATION
7,204
7,275
9,978
7,204
7,658
7,867
8,433
8,379
8,330
8,192
7,771
DISTRICT
Mount Clemens
New Haven
Richmond
Romeo
Roseville
South Lake
Utica
Van Dyke
Warren Consolidated
Warren Woods
FOUNDATION
8,348
7,447
7,204
7,749
7,820
9,391
7,709
8,111
9,515
8,433
2007-08 MACOMB COUNTY FOUNDATION ALLOWANCES
BLENDED COUNT
1995 50/50
1996 50/50
1997 50/50
1998 40/60
1999 40/60
2000 25/75
2001 20/80
2002 20/80
2003 20/80
2004 20/80
2005 25/75
2006 25/75
2007 25/75
2008 25/75
Fourth Friday in September
Fourth Wednesday after Labor Day 9-26-07
“The Count Day”
Second Wednesday in February 2-13-08
“Supplemental Count Day”
Average Daily Attendance
BLENDED COUNT 2007-2008
FEBRUARY 2007 6,000 x 25 % = 1,500
SEPTEMBER 2007 6,400 x 75 % = 4,800
6,300
FEBRUARY 2004 6,000 x 20 % = 1,200
SEPTEMBER 2004 6,400 x 80 % = 5,120
6,320
LOSS OF 20 FTEs @ $8,050 = $161,000.
Calculation of Foundation Allowance Revenue (Section 20)The total amount of state aid a district will receive for foundation allowances is calculated in Section 20. It is derived from multiplying the number of general education membership pupils a district educates by the district’s foundation allowance, then subtracting the local revenue from levying 18.0 mills. (See note below regarding pupil membership.) Note that the state pays only a portion of a district’s foundation allowance revenue-it pays the amount remaining after subtracting from the foundation allowance amount the local revenue the district collects from its “nonhomestead” property tax. This tax is equal to 18 mills or the number of mills a district levied in 1993, whichever is less, multiplied by the non homestead taxable value (taxable value from business and second homes) in the district.
Foundation allowance calculation (Sec.20): FY 2007-08 State {General Education The lesser of $8433 } Local Revenue from levying 18.0 mills*Portion = { X or the District’s } on nonhomestead property {Membership Pupils Foundation Allow. }
*Or the number of school operating mills levied in 1993, whichever is less.
Example of FY 2006-07 Sec. 20 CalculationFY 2007-08 Foundation = $7,200General Education Membership = 1,000Local Revenue from Nonhomestead Property Tax -= $2,000,000
State and Location Foundation Allowance Revenue = $7,200 X 1,000 = $7,200,000State Portion of Foundation Allowance Revenue = $7,200,000 - $2,000,000 = $5,200,000 State Portion Per Pupil = $5,200,000 ÷ $1,000 = $5,200
There is a maximum amount, called the state maximum foundation allowance, which may be used when calculating the state portion of the foundation allowance. This is the highest foundation allowance that may be used when multiplying the number of general education membership pupils by a district’s foundation allowance to calculate total revenue (as described above). The state maximum foundation revenue was set at $1,500 above the basic foundation allowance each year until FY 2002-03. Beginning in FY 2002-03, the first year following the equity payment, the state maximum foundation is $1,300 above the foundation allowance, which for FY 2006-07 was $8,385 per pupil. Beginning 2007-08 this difference is variable because of the 2X formula. (Districts with a foundation allowance above the state maximum – so-called “hold harmless” districts – must levy additional local millages to make up the difference between this $8433 maximum and their foundation allowances.)
FOUNDATION ALLOWANCE CALCULATIONS
2x FORMULA
• Foundations at the minimum will increase by twice the amount of those at state max
• Those in between on a sliding scale
STATE AID CATEGORICALS
• 11F NONPLAINTIFF DURANT SETTLEMENT• 22a PROP A OBLIGATION-(State portion of Foundation)• 22b DISCRETIONARY PAYMENT-(State portion of Foundation)• 24 COURT PLACED CHILDREN • 26a RENAISSANCE ZONE-(State portion of Foundation) • 29 DECLINING ENROLLMENT• 31A AT RISK• 31d SCHOOL LUNCH• 32d MICH SCHOOL READINESS• 51c SPEC ED HEADLEE OBLIGATION• 53a COURT AND STATE AGENCY PLACED PUPIL• 61a.1 VOCATIONAL EDUCATION• 61a.2 VOC. ED. ADMINISTRATION• 99k DISTRICT GRANTS• 107.1 ADULT EDUCATION PARTICIPANTS
FEDERAL GRANTS
• Title I
• School Lunch/Breakfast
• IDEA (Special Ed)
• Safe and Drug Free Schools
• Voc Ed
• Adult Ed
• Title III
SOURCES OF REVENUE FOR CAPITAL IMPROVEMENTS
• Sinking Funds
• Non-Qualified Bonds
• Qualified Bonds (State Guarantee)
DEBT RETIREMENT
$25,000,000 Elementary School is amortized over 25 years. The payments for principal would be $1,000,000 per year.
First year costs: December Bonds $500,000 Interest @ 4 % 500,000 Paying Agent fees 500
June Bonds 500,000 Interest @ 4 % 490,000 Paying Agent fees 500 TOTAL $1,991,000
First year millage : Total T.V. of District $ 700,000,000
$1,991,000 / $ 700,000,000 = .00284 (or 2.84 mills)
CASH FLOW
• Property taxes-July thru December
• State Aid-11 Payments (Oct to Aug)
• School Bond Loan Fund
MPSERS RETIREMENT RATES
fy 2002 fy 2003 fy 2004 fy 2005 fy 2006 fy 2007 fy 2008 fy2009
Health Costs 6.05 6.05 6.05 6.55 6.55 6.55 6.55 6.81
Pensions 6.06 6.26 6.26 6.31 5.47 5.49 5.28 5.17
Unfunded Pen. .06 .68 .68 2.01 4.32 5.70 4.89 4.56
Subsidized .00 .00 1.38 1.73 .48 1.00 .00 .00
Full Rate 12.17 12.99 14.37 16.60 6.82 18.74 16.72 16.54
Less sub. -1.38 - 1.73 -.48 -1.00 .00 .00 .00 .00
Rate Charged 12.17 12.99 12.99 14.87 16.34 17.74 16.72 16.54
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