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FINANCE

COMPS PREPARATION STUDY GUIDE

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California Statistics

student demographics, enrollment growth, expenditures comp. with nation

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Budget Estimation

Expenditures – enrollment projections factors – births, in-migration, new programs, salaries, & student-teacher ratio (class size, most important)

Revenues – enrollment, ADA, COLA, Categorical monies, lottery

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Categorical Funds

Categorical Funds are restricted funds for specific purposes only, from both the state and Fed. gov’t. (Title I and Child Nutrition largest from Fed. gov’t),

require greater restrictions. Block Grants & Mega Item concept. Some encroachment for Spec. Ed., Class

Size Reduction (also student transportation and food services).

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Budget Process

ongoing public hearing required most districts use line item budget for general

fund historical/incremental process means using

the prior year as the starting point Program budgeting – PPBS complex process

used in past, categorical funds use program budgets more often

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Source of Income

2/3 or more of district’s money comes from the state (counting redistributed property taxes is 85%+)

9-13% from the Fed. Gov’t The rest is local

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School Year length

at least 180 days for pupils, Fiscal Year = July 1-June 30

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Types of Districts in CA

most are elementary unified Secondary About 1000 Districts

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CBO

credential not required in CA., qualifications: business operations, collective bargaining, accounting, economics

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Funds

General fund is largest and most active – required for all districts includes both restricted and unrestricted revenues and expenditures (e.g. special education)

there are others such as cafeteria, (also bond interest and redemption, building fund, deferred maintenance, adult education, child development etc.)

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Taxation

consumption tax (sales tax, tobacco, gasoline, etc.)

Ad Valorem- “According to Value” Examples: Sales Tax- according to price/cost; Property Tax according to property/market value

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Student charges by the District

Student transportation to and from school (except for indigent, SPED),

not for textbooks and supplies or fees for extra-curricular activities.

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AB1200

Why passed: imposes greater fiscal accountability and control on districts and county offices of education – based on bankruptcy of some districts

County school superintendent reviews interim reports to check fiscal solvency

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Legislation SERRANO V. PRIEST - Calif. Supreme Court Case (1976 –

orig. filed in 1968) that held the CA system of funding schools unconstitutional - because its reliance on property taxes made per pupil expenditures unequal. Court ordered that property taxes and per pupil expenditures should be equalized (within a $100 band)

PROPOSITION 13 - An initiative proposition (1978) creating a constitutional amendment to limit property tax increases to 1% a year and limited increases on assessed value to 2% a year. Effect was to shift funding schools from local property taxes to state funding of schools (also cities/counties) Impact on schools - more dependent on the state economy

PROPOSITION 98 - and its amendment “Proposition 111” A constitutional amendment to establish base minimum funding for K-14. It had four provisions and 3 tests modified by Prop. 111. . Prop. 98 also modified the Gann limit. Impact on schools - guaranteed funding, also tied in to the state economy

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Audits

annual external audits required (also for student body funds),

reports financial condition, accounting methods, compliance laws

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Gann Spending Limit

Approved by voters, 1979, CA Constitutional Amendment

Limits all state agencies, including school districts, to its max level Gann limit

Adjusted annually for changes in population and U.S. CPI (lesser) or CA per capita personal income

Index was changed by Prop 111, (1990)

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Revenue Limit

Money (income) received by a District for general education from the state (general purpose money)

Is distributed on a per pupil basis (ADA) Made up of state funds and local property

taxes Categorical Aid is in addition to the revenue

limit funding

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Student Body Funds

frequent problems in audits fund raisers to be approved by principal and student

council value/purpose to function properly must have: minutes of meetings,

constitution (purpose of organization), policies/procedures for officers, fund-raisers, expenditure approval

school boards have legal responsibility for regulations what are legitimate fund raisers – not recommended are

rummage sales, can’t raise funds for what school district should buy (e.g. textbooks), raffles are illegal

Food in Elem Schools – to be sold only after the noon meal

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Maintenance and Operations

Maintenance – repairs/replacement (grounds, buildings, equipment)

Operations – housekeeping/custodial to keep plants functional; work order system – advantages to keep track of hours and costs

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Facilities

Age of CA school buildings – over half over 30 years old

General Obligation Bonds- most often used method to raise funds

Bonds: State (requires simple majority, also for other state facilities such as prisons) and District bonds (require 55% majority), have been inadequate to meet the needs

state building fund - year-round schools get incentives for construction funds

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Food Services

contracting out not necessarily better, is a separate fund, free/reduced lunch require record keeping, (again, encroachment an issue in some SDs)

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Reserve for economic uncertainties

3% for majority of districts in CA Range 1-5% 1% for LAUSD, 5% for small districts

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Lottery funds

Not major part of revenues (1-2% of district’s budget)

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Vouchers

recent trend – provide parents options related to choice, political issue, critiqued as not being in accord with

democratic (not party definition) tradition of public education in America

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Budget Accounts

Account codes are prescribed by the state and found in the California School Accounting Manual. Account codes have 6 elements: fund/group, resource, project year, goal, function, and object/services.

Expenditures are shown in the series 1000-7000 – 1000’s are certified personnel, 2000’s are classified personnel, 3000’s benefits, 4000’s books and supplies, 5000’s are services and other operating expenditures, 6000’s capital outlay, 7000’s other outgo.

Salaries and Benefits are the largest expenditures (85 + %).

Revenues are placed in 8000 series.

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Budget forms and areas

are prescribed by the CA Dept of Educ. and are uniform across the state

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Food Sales

are restricted and regulated – e.g. in elementary schools may be sold after the noon meal- authorized by School Board

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Special Education costs

3-7 times higher than regular education student encroachment currently 20-25%

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Glossary

Review terms in text, FCQ #4, For example:

Employee Benefits Revenue Limit Second Period

Attendance / P-2