FINANCE COMPS PREPARATION STUDY GUIDE

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FINANCE COMPS PREPARATION STUDY GUIDE

  1. 1. FINANCE COMPS PREPARATION STUDY GUIDE
  2. 2. California Statistics <ul><li>student demographics, enrollment growth, expenditures comp. with nation </li></ul>
  3. 3. Budget Estimation <ul><li>Expenditures – enrollment projections factors – births, in-migration, new programs, salaries, & student-teacher ratio (class size, most important) </li></ul><ul><li>Revenues – enrollment, ADA, COLA, Categorical monies, lottery </li></ul>
  4. 4. Categorical Funds <ul><li>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), </li></ul><ul><li>require greater restrictions. </li></ul><ul><li>Block Grants & Mega Item concept. </li></ul><ul><li>Some encroachment for Spec. Ed., Class Size Reduction (also student transportation and food services). </li></ul>
  5. 5. Budget Process <ul><li>ongoing </li></ul><ul><li>public hearing required </li></ul><ul><li>most districts use line item budget for general fund </li></ul><ul><li>historical/incremental process means using the prior year as the starting point </li></ul><ul><li>Program budgeting – PPBS complex process used in past, categorical funds use program budgets more often </li></ul>
  6. 6. Source of Income <ul><li>2/3 or more of district’s money comes from the state (counting redistributed property taxes is 85%+) </li></ul><ul><li>9-13% from the Fed. Gov’t </li></ul><ul><li>The rest is local </li></ul>
  7. 7. School Year length <ul><li>at least 180 days for pupils, Fiscal Year = July 1-June 30 </li></ul>
  8. 8. Types of Districts in CA <ul><li>most are elementary </li></ul><ul><li>unified </li></ul><ul><li>Secondary </li></ul><ul><li>About 1000 Districts </li></ul>
  9. 9. CBO <ul><li>credential not required in CA., qualifications: </li></ul><ul><li>business operations, </li></ul><ul><li>collective bargaining, </li></ul><ul><li>accounting, economics </li></ul>
  10. 10. Funds <ul><li>General fund is largest and most active – required for all districts includes both restricted and unrestricted revenues and expenditures (e.g. special education) </li></ul><ul><li>there are others such as cafeteria, (also bond interest and redemption, building fund, deferred maintenance, adult education, child development etc.) </li></ul>
  11. 11. Taxation <ul><li>consumption tax (sales tax, tobacco, gasoline, etc.) </li></ul><ul><li>Ad Valorem- “According to Value” Examples: Sales Tax- according to price/cost; Property Tax according to property/market value </li></ul>
  12. 12. Student charges by the District <ul><li>Student transportation to and from school (except for indigent, SPED), </li></ul><ul><li>not for textbooks and supplies or fees for extra-curricular activities. </li></ul>
  13. 13. AB1200 <ul><li>Why passed: imposes greater fiscal accountability and control on districts and county offices of education – based on bankruptcy of some districts </li></ul><ul><li>County school superintendent reviews interim reports to check fiscal solvency </li></ul>
  14. 14. Legislation <ul><li>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) </li></ul><ul><li>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 </li></ul><ul><li>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 </li></ul>
  15. 15. Audits <ul><li>annual external audits required (also for student body funds), </li></ul><ul><li>reports financial condition, accounting methods, compliance laws </li></ul>
  16. 16. Gann Spending Limit <ul><li>Approved by voters, 1979, CA Constitutional Amendment </li></ul><ul><li>Limits all state agencies, including school districts, to its max level Gann limit </li></ul><ul><li>Adjusted annually for changes in population and U.S. CPI (lesser) or CA per capita personal income </li></ul><ul><li>Index was changed by Prop 111, (1990) </li></ul>
  17. 17. Revenue Limit <ul><li>Money (income) received by a District for general education from the state (general purpose money) </li></ul><ul><li>Is distributed on a per pupil basis (ADA) </li></ul><ul><li>Made up of state funds and local property taxes </li></ul><ul><li>Categorical Aid is in addition to the revenue limit funding </li></ul>
  18. 18. Student Body Funds <ul><li>frequent problems in audits </li></ul><ul><li>fund raisers to be approved by principal and student council </li></ul><ul><li>value/purpose </li></ul><ul><li>to function properly must have: minutes of meetings, constitution (purpose of organization), policies/procedures for officers, fund-raisers, expenditure approval </li></ul><ul><li>school boards have legal responsibility for regulations </li></ul><ul><li>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 </li></ul><ul><li>Food in Elem Schools – to be sold only after the noon meal </li></ul>
  19. 19. Maintenance and Operations <ul><li>Maintenance – repairs/replacement (grounds, buildings, equipment) </li></ul><ul><li>Operations – housekeeping/custodial to keep plants functional; work order system – advantages to keep track of hours and costs </li></ul>
  20. 20. Facilities <ul><li>Age of CA school buildings – over half over 30 years old </li></ul><ul><li>General Obligation Bonds- most often used method to raise funds </li></ul><ul><li>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 </li></ul><ul><li>state building fund - year-round schools get incentives for construction funds </li></ul>
  21. 21. Food Services <ul><li>contracting out not necessarily better, is a separate fund, free/reduced lunch require record keeping, (again, encroachment an issue in some SDs) </li></ul>
  22. 22. Reserve for economic uncertainties <ul><li>3% for majority of districts in CA </li></ul><ul><li>Range 1-5% </li></ul><ul><li>1% for LAUSD, 5% for small districts </li></ul>
  23. 23. Lottery funds <ul><li>Not major part of revenues (1-2% of district’s budget) </li></ul>
  24. 24. Vouchers <ul><li>recent trend – provide parents options </li></ul><ul><li>related to choice, political issue, </li></ul><ul><li>critiqued as not being in accord with democratic (not party definition) tradition of public education in America </li></ul>
  25. 25. Budget Accounts <ul><li>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. </li></ul><ul><li>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. </li></ul><ul><li>Salaries and Benefits are the largest expenditures (85 + %). </li></ul><ul><li>Revenues are placed in 8000 series. </li></ul>
  26. 26. Budget forms and areas <ul><li>are prescribed by the CA Dept of Educ. and are uniform across the state </li></ul>
  27. 27. Food Sales <ul><li>are restricted and regulated – e.g. in elementary schools may be sold after the noon meal- authorized by School Board </li></ul>
  28. 28. Special Education costs <ul><li>3-7 times higher than regular education </li></ul><ul><li>student encroachment currently 20-25% </li></ul>
  29. 29. Glossary <ul><li>Review terms in text, FCQ #4, For example: </li></ul><ul><li>Employee Benefits </li></ul><ul><li>Revenue Limit </li></ul><ul><li>Second Period </li></ul><ul><li>Attendance / P-2 </li></ul>

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