School Budgeting

Best Practices VGFOA Presentation 10/22/2015

Deborah White, CPA, Certified Va. Finance Officer

Director of Finance, Goochland County Public Schools

We aren’t in Kansas

anymore!

• School budgeting is a lot different than private sector or local government budgeting, especially in Virginia

• No fund balance—School Business Officers must continually be attuned to the budget and know when there is a problem with their projections

• No reserves or “fluff” in the budget anymore—School Business Officers must quickly get a feel for spending patterns and summer sales tax receipts

• Significant reporting/compliance requirements

• Difficult balancing act—“Bankruptcy” can be a criminal offense for both the finance officer and Superintendent; too much “turn-back” has political repercussions

Critical budget projections

• Average Daily Membership of students – monitor first 10 days of enrollment against budgeted ADM; review Fall SRC (9/30 ADM); ask for 12/30 ADM and then 3/31 ADM (basis of current year state funding)

• Virginia sales tax – based on state-wide earnings, not local economy; be conservative on published governor’s projections (5% lower?); create own spreadsheet based on previous years to estimate July/August receipts

• Health insurance – revise budget after renewal rates known, review again after open enrollment changes

• Ask staff to review some state reports before submittal – Remedial summer school, Foster Care, and Spring SRC (3/31 ADM) – state revenue impact

School spending patterns

• A position control system is critical – 80% of budget is in salary and benefits. Compare September payrolls to budget and understand whose salary and what benefits are 10 months, which are 12 months

• If possible, develop a projection model based on spending patterns (from previous years or interviews with budget managers) – front-loaded, 1 month delay, “always uses budget given” or spends in June, 10 month, 12 month

• VDOE dictates chart of accounts – lots of numbers to monitor. More if using “program” subset to monitor state and federal grant expenses

GCPS Budget to Actual 9/30/2015

Compliance - Categorical budgets

• Local governments dictate whether a school must adhere to a categorical budget, doing so increases the workload of the School finance officer tremendously

• Technology category – hardest to keep within budget - rapidly changing technology environment

• Admin category (including Finance and health) – most politically sensitive

• VDOE account changes/clarifications

• Categorical budget transfers require Superintendent review (for political sensitivity), School Board approval, Board of Supervisor or City Council approval

Compliance - Federal

• High dependence on federal grants – with many strings attached

• New OMB requirements (time certifications ?!?)

• Annual financial “single audit” for large grants (Special Ed, economically disadvantaged schools, Cafeteria); periodic state audits for all grants

• Must understand “supplement” versus “supplant”

• Maintenance of Effort – watch being too efficient with your special education spending. Must maintain level of spending from one year to next!

Rookie mistake: GCPS SpEd

Maintenance of Effort

FY

Local

expen-

diture

State

+

local

Local

per

capita

State +

local

per

capita

Child

count

2012 3.4M Pass 3.7M Fail 10.5K Pass 11.5K Fail 321

2013 3.93 Pass 4.26 Pass 13.5 Pass 14.8 Pass 288

2014 3.87 Fail 4.27* Pass 13.3 Fail 14.7 Fail 291

2015 3.93 Reqd 4.27 Reqd 13.5 Req 14.8 Req 293

Starting July 1, 2015 the Maintenance of Effort level is the last level passed for

each test! A seasoned School Finance Officer would have under-reported 2013

expenditures so that the bar didn’t rise so high for 2014 & 2015.

Common Areas of Savings

• Staff Turn-over – terminations & retirees (but estimate

payout); don’t assume every new teacher will be at the bottom

of the scale but assume full year salary when budgeting

• Leave without pay – calculate savings on salary and benefits

net the cost of substitutes

• Fuel (last year particularly)

• FICA/Medicare – budget at 7.65% but know that tax deferred

benefits/employee health insurance payments will create some

employer savings

• Don’t skimp on Special education (MOE)

End of year balancing act

• Third quarter projections should be carefully prepared with

3/31 ADM/state revenue calculated (latest VDOE calc tool)

• Control all purchase order activity after May 15

• Stop all credit card purchases by June 25

• Make sure you understand which grants and funds can carry a

balance forward into next year

• Develop an understanding with local government on what will

happen with year-end “turn back”

• The encumbrance roll-over can help with end of year

uncertainties (but don’t abuse it)

• Don’t be afraid to ask for help from seasoned colleagues

Planning for FY17 budget

• VRS rates just announced—teacher pension 14.66%, GLI

1.31%, RHCC 1.23%

• Rebenchmarking coming—new state revenue allocations

• Get to know your budget managers and who needs help

• Year long – make sure you are in all leadership meetings,

walk around your schools, bus garage, eat lunch in the

cafeterias so that you can…

• Know your school priorities and help the leadership team

creatively fund them

GCPS budget manager’s response

to the kick-off of the FY17 budget

season last week!

Current GFOA Budget Award

• Encourages you to raise your budget document to the next level with specific guidelines and peer review/ professional feedback

• Can add credibility or “transparency” for your local government or community leaders

• Same requirements as the local government award which can be difficult for most Virginia schools

• Fund structure and fund balance policy

• Long term sustainability plan

• Debt and capital plan and policies

New GFOA School Best Practices

Smarter School Spending

• Smarter School Spending (SSS) website was developed

in conjunction with the GFOA Best Practices in School

Budgeting

• SSS contains free information, tools, and an on-line

forum

• In process of re-design to enhance search feature and also

better user interface

• www.smarterschoolspending.org

Proposed New Process

• Combine GFOA Best Practices in School Budgeting guidelines and Smarter School Spending resources • Pro-active and modernized approach

• Alignment of scarce resources to student outcomes

• Credibility:

• Continuous improvement principles

• Academic Return on Investment (A-ROI)

• Strategic Finance Plan

New GFOA School Budget Award

• New award centered on the core principles of the Best Practices in School Budgeting

• Award will be phased in beginning with the fiscal years beginning in calendar year 2017

• FY18 for those on a July 1 – June 30 fiscal year

• Basic process for new Award similar to other GFOA awards with an application process and peer review, but will also include:

• Applicant interview

• Submission of supplementary materials to show budget process (more focused on process than budget document)

Alliance for Excellence in

School Budgeting

• Four school divisions across the country were part of initial pilot group which expanded to eight divisions; heavily funded by Gates Foundation

• Alliance: Early adopter group of 34 divisions now includes Goochland and Hanover County

• 2nd Alliance cohort will form in Spring 2016: Benefits of participating in the ‘Early Adopter’ group include: • Hands on meetings

• Access to ‘eLearning’ modules on each of Best Practices in School Budgeting

• If interested apply at: http://www.gfoa.org/alliance-excellence-school-budgeting

Goochland’s Alliance

experience

• Finance officer and academic officer were trained together in Chicago—partnership is critical first step

• Together we are working on incorporating the strategic plan and tactics into the budget process

• The academic officer is the bridge to setting goals for instructional priorities so that the budget reflects our desired academic outcomes for our students

• We are looking forward to the eLearning modules that were demonstrated at the training event to help train our leadership team in this new process

Goochland’s Strategic Plan is

working to maximize the

potential of all students

• Strategic Plan “commercial”

• Now we just need to use some of these

best budget practices to engage our

community to keep up the momentum

and financially support the Schools!

Questions?