Strategic School Finance Training

CDE/CSFP

Feb 1-2, 2024

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Introduction to School Finance

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Mark Rydberg

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Agenda

• CDE Public School Finance Unit
• School Finance Overview
• Accounting/Tactical
• FPP Handbook/Chart of Accts
• Grants Accounting
• Getting Ready for the Audit
• Mill Levy Certification

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Public School Finance Overview

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CDE Public School Finance Unit’s “Charge”

The Public School Finance Unit provides support to school districts in the implementation of requirements set forth by the legislature and Colorado state statute.

This includes implementation of the distribution of school finance formula funding and other funding streams.

In addition, we provide support to districts and boards of cooperative educational services (BOCES) by assisting with submission of required financial data, providing reports of financial data and assisting with the implementation of various school finance legislation.

The School Finance Unit also provides technical guidance and capacity building to district finance teams.

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High Level

Every District/BOCES/Charter

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Budget

(Dec-Jun)

Audit & Pipeline & CDE-40

(Aug-Dec)

Mill Levies

(December)

Grants

(Monthly/Quarterly)

High Level are requirements of all finance teams throughout the year to ensure effective finance operations, planning, strategy and leadership for the district. Policies, Procedures, Practices are “Local” decisions, and vary widely across the state.

PSFU supports districts to ensure compliance with statute.

Local District/BOCES/Charter

Finance Operations

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Payroll

Accounts Payable

General Ledger &

Bank Reconciliation

Receipt Revenue

Other Duties??

These are requirements of all finance teams throughout the year to ensure accurate finance operations & reporting. Policies, Procedures, Practices, & Systems are “Local” decisions, and vary widely across the state.

Limited PSFU supports, as no guiding CDE statute for these activities.

Theory of Action: Provide a Tiered System of Supports

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CDE/PSFU Website Navigation

Public School Finance Unit

https://www.cde.state.co.us/cdefinance

• Auditing, Capital Construction, Grants Fiscal, School Nutrition, School Transportation (Upper Right)
• Join the School Finance ListServ-Send email to
• FINANCE-subscribe-request@cdelist.cde.state.co.us
• PSFU Contact List
• School Finance Training

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CDE/PSFU Website Navigation

Public School Finance Unit

• Public School Finance Act (SFA) (Below Quick Links)
• Funding and Payment Information
• Latest “Runs”
• Financial Policies and Procedures (Right of Public SFA)
• FPP Handbook
• Chart of Accounts
• State and Federal Grant Codes
• Advisory Committee (FPP) Meetings and Minutes
• Financial Transparency
• Recent GASB Fact Sheets

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CDE Website Navigation

Public School Finance Unit -Continued

• Categorical and Other State Funding (Below Public SFA)
• Elections and Mill Levies (Right of Categorical…Funding)
• Reports by other Agencies (Below Categorical)
• Other Resources (Below Elections & Mill Levies)
• Statutory Compliance and Reporting (Bottom of Page)
• Critical Dates & Monthly Business Manager Calendar
• Templates
• Data Pipeline-Check Figures
• FDW, now being updated monthly
• Assurances of Financial Accreditation
• Required Finance Statutes that are signed off by Superintendent, Business Official, BOE President

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CDE/PSFU Overview

Public School Finance Unit

• Stay connected with Listserv and FPP meetings
• Keep Critical Dates in mind
• Network
• Neighboring districts and/or similar characteristics-Others will be helpful
• CASBO - Colo Assoc of School Business Officials
• CSFP - Colo School Finance Project
• CASE- DBO Colo Assoc of School Executives-Dept of Business Officials
• CASB - Colo Assoc of School Boards
• COCPA - Colo Society of CPAs
• CGFOA - Colo Gov’t Finance Officers Assoc

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School Finance Overview

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FY24 K12 Education January Funding

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School Finance Total Program Funding

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• Total Program Funding

Equals Funded Pupil Count (Greater of current OR highest average of the last two to five years)

• times Per Pupil Funding formula

with adjustments for Size of District and Cost of Living

• plus At-Risk funding plus ELL Funding plus Multi-District Online

plus Extended High School funding

then…Budget Stabilization Factor is applied

Total Program Funding Components

• Local: Property Taxes & Portion of Specific Ownership Taxes “applied”
• State Equalization: “backfills” the remaining
• At State Level: 55% State 45% Local. % Varies widely by District.

PSFU website Resource: Funding Calculation Worksheet Rows 292-298

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Timeline of Total Program Revisions

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• July-November: Projections From School Finance Act
• Based on Legislative Council funding projections and will include rescissions
• December-January: “True Up”
• Pupil count and Assessed Valuations updated for the second half of the year payments
• Rescissions updated
• February-March: Supplemental Appropriations, if Applicable

• - English Lang. Proficiency Act (ELPA)
• - Gifted & Talented
• - Small Attendance Centers
• - Special Education (ECEA)
• - Transportation
• - Vocational Education

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Categorical Funding (Main ones)

• PSFU website Resource:

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School Finance Factors

District Voter Approved Tax increases (C.R.S. 22-54-108)

• Maximum General Fund MLOs – 25% or 30%(small rural) of Total Program-Allowable for Capital or Operating
• Election Question-MLO Spending Plan-Charter School Allocations
• PSFU website Resource: Mill Levy Table comes from Mill Levy Certification process in December done by District.
• PSFU website Resource: Mill Levy Override Report

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Mill Levy Overrides

Bonds & COPs

General Obligation (GO) Bonds

• Backed by the full faith and the credit of all taxpayers
• District is REQUIRED to levy enough mills for debt service
• Requires voter approval of voters
• Limited to 20% of Assessed Valuation (with exceptions)
• Bond mill levy covers annual principal and interest
• Bonds typically come in $5,000 increments and pay interest semi-annually

Certificates of Participation (COPs)

• Are a lease-purchase transaction
• Do NOT require voter approval
• Do NOT have a mill levy, debt service funded by GF or CRF
• Are not limited by Assessed Valuation
• Trade just like bonds in terms of $5,000 increments
• The Board of Ed CAN non-appropriate and default on COPs

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Financial Transparency

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Accounting/Tactical

Group

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Chart of Accounts

https://www.cde.state.co.us/cdefinance/sfcoa

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Pipeline Tip: Submit Early & Often

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Chart of Account Chart fields

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For Expenditures:

• Certain Program Codes are allowed with certain Location Codes
• Certain Job Codes are allowed with certain Program Codes
• PSFU website: Business Rules (Tier I & Tier II) & Helpful Hints

Appendix N: Rolling to the Bold. Chart of Accounts page 217 (221 pdf)

Basic Accounting Principles

Accounting Equation

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Accounting Equation

The Trial Balance generated from general ledger system must balance to Zero.

• Assets and Expenses have Debit Balances.
• Liabilities, Fund Balances, and Revenues have Credit Balances.
• At Close of year, Revenues & Expenses “close” to Fund Balance

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Fund Accounting-Chart of Accounts

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Trial Balance = The Object(Expense), Source(Revenue), or Balance Sheet Code has to Equal 0.

The Chart of Accounts are structured to align with the Federal Reporting Standard for Public Education.

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Chart of Accounts - Rolling to the Bold

Chart of Accounts - Appendix N: Rolling to the Bold*

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The Chart of Accounts is designed to meet legal and regulatory requirements and generally accepted accounting principles while providing as much flexibility as possible for the local school district. For instance, code structure and definitions allow for varying degrees of detail depending upon local district reporting needs.

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CDE will aggregate data upon receipt of electronic data files by “rolling” unbold code data into appropriate BOLD code data. An example follows on the next slide which demonstrates how “rolling to the bold” works.

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* NOTE: This is also referred to ‘rolled-up’ data (2nd Tier in data pipeline)

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Rolling to the Bold - Example

From Appendix N:

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Chart of Accounts - Funds

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Location Codes

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If using 100, 200, 300, & 500s. District may want to clean up or stay consistent.

Optional

Special Reporting Element OR 00

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Pipeline has no rules regarding SREs

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Program Codes - Instructional

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Program Codes - Non-Instructional

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Object Codes

• Expense Object Codes- Start with a “0”
• 0100 - Salaries
• 0200 - Benefits
• 0300 - Purchased Svcs
• 0400 - Purch Prop Svcs
• 0500 - Oth Purch Svcs
• 0600 - Supplies & Mats
• 0700 - Capital Outlay
• 0800 - Overh & Ind Costs
• 0900 - Other Svcs/Debt Svc

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Object/Source Code Also Includes:

Revenue/Source Codes

• 1XXX - Local Sources
• 2XXX - Intermediate Sources
• 3XXX - State Sources
• 4XXX - Federal Sources
• 5XXX - Transfers/Allocation/Other Financing

Balance Sheet Codes

• 6XXX - Fund Balance/Equity
• 7XXX - Liabilities
• 8XXX - Assets

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Job Codes

Needed for all Salary (01XX) & Benefit (02XX) Object codes

• 100 Administrator
• 200 Professional - Instructional/Instructional Support/Other Support
• 300 Professional - Non-Licensed Support
• 400 Paraprofessional -
• 500 Business/Office/Administrative Support
• 600 Crafts, Trades, and Services
• In terms of Fair Labor Standards Act
• Exempt means salary - 100/200/300
• Non-Exempt means Hourly - 400/500/600
• Hourly must be paid for all hours actually worked, not what they are scheduled to be paid.

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Project/Grant Codes

Project Codes:

• 0001 - 1999 - Project Codes

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Grant Codes:

• 3XXX’s State Grants via CDE
• 4XXX’s - 9XXX’s Federal Grants
• Assistance Listing Numbers (ALN) F.K.A.Catalog of Federal Domestic Assistance (CFDA)

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0000

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FPP Handbook

https://www.cde.state.co.us/node/59416

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The FPP Handbook is your School District Accounting Textbook!

Purpose of the Handbook

The 2022-2023 edition of the Financial Policies and Procedures Handbook (Handbook) is a publication of the State Board of Education. The Handbook is designed to achieve the following purposes:

• To summarize general state and federal requirements regarding the management and reporting of financial data.

• To ensure that financial data is reported in a comprehensive and consistent manner.

• To provide information and guidance to school districts, the Charter School Institute (CSI), charter schools, charter school collaboratives, charter school networks, and boards of cooperative educational services (BOCES) regarding budgeting, accounting, reporting, auditing, investment and cash management.

• To conform to generally accepted accounting principles (GAAP) for governments and to comply with legal provisions.

• To ensure consistency in, and compliance with, federal data collections, reporting and U.S. Department of Education oversight (e.g., OIG). See Appendix B.

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Sections of the FPP Handbook

Sections of the FPP Handbook:

• Budget
• Accounting Principles
• Accounting Procedures
• Internal Controls
• Payroll
• Sales Tax
• General Requirements
• Audit & Financial Reporting
• Audit Process
• Sample Audit RFP
• Investment & Cash Mgmt
• Legal Investments
• Investment Eligibility
• Borrowing & Creation of Debt
• Sample Investment Policy

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Bank Reconciliations

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Why is the Bank Rec Important?

Why Do A Bank Reconciliation: 5 Reasons to Reconcile Monthly

• Catch Errors. Misread receipts, transposed numbers and forgotten entries in the check register are common accounting errors and are easily rectified.
• Avoid Surprises.
• Save Money.
• Verify Cash Flow.
• Prevent Fraud.

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• Thursday, September 29, 9:00am-10:30am: Bank Reconciliations Training.

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Materials Needed

• Bank Statement

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• Check/EFT Register

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• General Ledger Detail Report

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• Spreadsheet Template

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Check to make sure G/L = Bank Rec

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Grants/Special Ed

Accounting

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Grants

Grant Management Best Practices

• Training: 10/19/23
• Location of Grant Codes. PFSU website-Under Chart of Accounts

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• Fund 22 or Fund 10?
• If Fund 22 only Request for Funds Grants.
• Communication & coordination is needed between District Program & Fiscal staff from start to finish
• Monthly reconciliation & Request For Funds

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Grant Revenue Accounts

• If Distributed through CDE-Source code:
• 3000 for State
• 4000 for Federal.
• If Distributed NOT through CDE-Source code:
• 3010 for Other State Agency
• 4010 for Federal from other state or local agencies.
• 4020 if direct from Federal Gov’t. (REAP)
• If Distributed from Boces
• 3951 if State Grant
• 4951 if Federal Grant
• Three main types of grants
• Categorical
• Request For Funds-State and Federal
• Upfronted Revenue-Mostly State

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Grants Balance Sheet Accounts

Grants-Chart of Accounts

• Balance sheet accounts
• Accounts Receiveable 8142-000-XXXX, if a RFF grant and money is received after 6/30/XX.
• Clears when money is received, booked to 8142 not revenue..
• Unearned Revenue 7482-000-XXX if Paid in Full grant is not completely spent
• Clears by “Reversing” in the following year by a manual journal entry.

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Grants Overview

End of Year Grant Reconciliation

• Resources on Website Lower Right hand side under Pipeline
• Financial Data Warehouse Sub-Recipient Report
• Shows the cash disbursements from 7/1/21-6/30/22
• Grants Receivable from FY21 will be in FDW, and should NOT be in FY22 Revenue
• Grants Receivable from FY22 will NOT be in FDW, but should be in FY22 Revenue
• State revenue check figures (XLS)
• Provides correct State Share, Charter school allocation, CPP allocation
• Grant Revenue Received Reconciliation Report in pipeline from FY21
• Provides Cash Disbursed vs Revenue booked with FY21 & FY22 Grants Receivable & Unearned Revenue from FY21 & FY22
• USDA Foods check figures (XLS) Commodities
• Revenue 21-XXX-XX-XXXX-4010-XXX-4555 & Expense 21-XXX-XX-3100-0633-000-0000
• Close out or make inactive grants that have expired-Keep Chart of Accounts clean.
• District and School Grant Payment Information

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Special Education

Maintenance of Effort

Maintenance of Effort

• Basic, spend a $1 more in 3130 & 3131 expenses than previous year’s 3130 & 3131 at the Administrative Unit level (BOCES)
• Can get complicated if not passing first hurdle, but some exceptions are valid
• Staff Change (Retired Senior teacher)
• Student change (loss of High Cost)
• Termination of costly expenditures of Long-Term Purchases
• Best Practice Continually Track district by district Actual and Budget for 3130 & 3131 costs.
• Reporting tool by district for Previous year Audit $s, Current Year Budget/Forecast $s, Next Year Budget $s.
• This should be a recurring document. Updated in February and June.
• Suggestion: check last years 3130 expense on the Preliminary MOE pipeline report. Check FY22 against it.

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Grants

Categorical-from the State

• Colorado school districts may receive state funding to pay for specific programs designed to serve particular groups of students or particular student needs. Such programs often are referred to as “categorical” programs. While there are many different programs which may be funded, the six primary categorical program areas which regularly receive state funding are:
• English language proficiency education-3140 - Book Actual Expense
• Gifted and talented education-3150 - Book Actual Expense
• Small attendance centers-3170 - Book Actual Expense
• Special education-3130/3131 - Book Actual Expense
• Review your Preliminary Maintenance of Effort, by reviewing FY21 total 3130/3131 expense to FY22 total 3130/3131 expense
• Transportation-3160-No Expenses Booked to 3160
• Vocational education-3120 - Book Actual Expense - (CTA Pipeline Warning)
• Expenses by Grant code must equal or be greater than Revenue, except 3160
• Should report exact costs-DO NOT manipulate expenses.

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Grants

Request For Funds (RFF)-State and Federal

• Federal grants are RFF
• Revenues MUST equal Expenses at the end of the year for the pipeline.
• If using Optional Fund 22, there is no Fund Balance
• End of year Accounting
• Manual AJE(booking) done at end of year.
• Grants Receivable balance sheet is booked, when the RFF was done, but money was received AFTER 6/30/XX.
• Debit 8142-000-XXXX & Credit Revenue.
• BEST PRACTICES–RFF done in Oct, Dec, Mar, & May. Earlier and more often if cash flow is a district concern.
• Receivable is “cleared” when the cash is received by booking:
• Debit to Cash & Credit to 8142-000-XXXX in Following Fiscal Year.
• SHOULD NOT have Unearned Revenue 7482-000-XXXX end of year booking. Only should Request for Funds that have been already disbursed.
• Some State grants are RFF
• Library
• Some CDE competitive, including BEST

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Grants

Grant Requests for Funds - 1st or 15th of every month

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What is it? Drawing down reimbursement for expenditures in your federal funds (Title, ESSER, etc.)

What do you need to get it done?

• Your monthly expenditures by federal grant.

Contact: GFMU - grants_fiscal@cde.state.co.us

Link: https://www.cde.state.co.us/cdefisgrant/requestforfundsforms

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ESSER III Deadlines

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• All ESSER III Application Post Award Revisions (PARs) must be submitted by 6/30/24.
• All Funds need to expended by 9/30/24

Steps:

1. Review remaining dollars.
1. On Track to Spend?
2. Request as soon as possible to avoid an Accts Rec’v
2. Go to current approved ESSER II application/budget. The budget is by Program and Object.
3. Review the FY21 & FY22 & FY23AFR
• Recognize the FY22 AFR expense might not equal FY22 Audit, due to timing.
• Reconcile GL System to AFRs, more importantly to the ESSER budget
4. Make any PAR changes as soon as possible

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Grants

Paid in Full Funding

Paid in Full funding Grant Revenue-Mostly State, including some Categoricals

• Revenues must be equal to OR be less than Expenses.
• End of year Accounting
• Manual AJE may be done at end of year-Check Grant requirements.
• Impossible to have Accounts Receivable end of year booking. 8142-000-XXXX, cash was advanced.
• When Revenue is less than Expenses. Unearned Revenue balance sheet is booked:
• Debit Revenue & Credit Unearned Revenue 7482-000-XXXX
• In Following Fiscal Year, Unearned revenue is “cleared” by Debit 7482-000-XXX and Credit to Revenue, then spend the remaining.

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Grants Indirect

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Indirect Cost Page:http://www.cde.state.co.us/cdefinance/icrc

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Grants Indirect

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Indirect Cost Page:http://www.cde.state.co.us/cdefinance/icrc

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Funding Sustainability

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Funding Sustainability

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As Grant Revenue expires, What happens to the expense?

• Non-Recurring items are purchased once or have long useful lifes: Temporary FTE, Curriculum, HVAC renovations, Vehicles, Bonuses, PPE, deferred maintenance, Network IT equipment, etc.
• Perfect Items for Grants.

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• Recurring items are ongoing expenses: Salary increases, permanent FTE, maintenance/HVAC supplies, other supplanting items (chromebooks).
• Can be problematic without a plan on how to fund when Grant Revenue expires.
• This applies to all expiring grants: ESSER, Small Rural(expiring after 6/30/23), CDE competitive grants, & using Beginning Fund Balance.

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Funding Sustainability

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Next Steps-Determine Financial Risk/Cliff

• Determine which expenses are recurring & non-recurring.
• For recurring, supplanting, & indirect revenue: forecast and/or plan how it will be funded for in the future.
• Be thinking about other district fiscal issues: declining enrollment, inflation, labor scarcity, impacts of slowing economic growth…

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Audit Preparation

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Audit

Audit Prep

PSFU website Resource: Audit prep Training 8/18/23, 8/25/23, 6/26/23, 7/20/23

• Auditor Vacancies or New for FY 22?
• if New Auditor, coordinate a pre-visit
• Ask for Performed by Client (PBC) list
• Sign ENGAGEMENT LETTER in Spring
• Sign Multi-Year agreement, with auto-renewal
• Confirm FY22 Ending Balance Sheet Totals are FY23’s beginning Totals
• Bank Reconciliations
• First thing Auditor will ask for June 30 Bank Recs and previous Months.
• Fiscal Year Timing
• Not when invoice is paid.
• When services is provided or good delivered to district determines which Fiscal Year.

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Role of the Auditor

• The primary role of the auditor is to render an opinion on the accuracy of the financial statements.
• Heavy emphasis on the Balance Sheet.
• Modified Accrual vs Cash Basis
• Auditors are Independent Reviewers
• Independence means that the district should be booking all transactions and year-end audit entries, and Auditor reviews entries. Perhaps, adding some entries to correct submitted.
• It is not the auditor’s primary responsibility to detect fraud, although they do have to perform procedures to check for it.
• The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud.

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Audit Preparation

Entries Districts should Perform

• Grant Reconciliations & RFF
• Through June
• July and August payroll may still affect
• Property Tax Entry
• Ask Auditor if Use August or September as last month
• Salary & Benefit Accrual
• What month does new contract/payroll change
• System should help make entry
• TABOR calculation
• Food Service
• Inventory (any material GF inventory items)
• Patron Liability
• Fixed Asset-Depreciation - Calculation/not an entry.

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Timeline July-December

Late July/Early August

Reports and Activities posted on School Finance website

• Financial Data Warehouse Sub-Recipient Report
• Shows on a “Cash Basis” grant revenue that was distributed from CDE. Revenue Source Code 3000 for State & 4000 for Federal
• State revenue check figures (XLS)
• Check figures for State Share, ELPA, Charter & CPP allocations
• PERA: Modified Accrual Calculation (XLS) The District/BOCES percentage to populate the Calculation Worksheet is available on the School Division Trust Fund report accessed through the PERA STARS portal.
• USDA Foods check figures (XLS)
• Shows the amount to book for commodities
• Revenue Source Code 4010, not distributed by CDE

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Timeline-Continued

August/September/October/November

Pipeline opens up

• Received an email on 8/1/22 through the Listserv from Yolanda Lucero
• Suggestion to submit early to pass 1st Tier Error Detail Report (Chart of Account combination elements)
• All Tier 1 errors must be resolved before moving to Cognos reports & Tier 2 errors
• Pipeline Tier II error corrections
• Submit financial data through Pipeline to pass Tier 2 errors & edits (Business Rules-comparing amounts expected to be reported, required Grant reporting, & other requirements)
• All Tier 2 errors must be resolved before final submission.
• Auditor Review & Draft financial statements

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Timeline-Continued

Before December 31

• Final Audit must contain a district provided Management Discussion and Analysis (MD&A)
• Should have a template from previous year
• Specific detail must be covered, work with Auditor
• Assurances for Financial Accreditation
• Finalize, Report (No Action) to BOE, send in documents to State Auditor & CDE, and post the Audit on your Financial Transparency webpage.

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Audit Extension

• Best Practice is be done by 12/31/XX…don’t let it drag on.
• Extension request sent to State Auditor, who then either grants or denies the extension request.
• CDE honors the State Auditor’s decision.
• Extensions MAY be granted to March 1st
• No Extensions are allowed after March 1st
• What happens if you go past March 1st
• State Auditor notifies the County Treasurer to suspend Property Tax Remittances

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School Internal Controls

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Audit Controls - Reporting

• Student Activity Fund
• Reports are run and approved monthly
• Negative Balances are reviewed & corrected
• SAF Bank Account Reconciliation reviewed monthly

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• Physical Inventory
• Report Reviewed Annually
• Special Consideration for Grant Assets
• Additions and Deletions reported to District

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Audit Controls - School Checkbook

• Check stock is secured in a Safe/locked cabinet
• Custodian of check stock is NOT an authorized signer
• All Invoices are approved/initialed by Principal
• Blank check signing is prohibited
• Invoices are paid within 30 days

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Audit Controls - P-Cards/Credit Cards

• Understand the Difference
• Tax Exemption is important
• CC is debt (TABOR restrictions)
• Assigned Cards vs “general” cards
• Accountability for purchases
• Timely Reconciliation for each card
• Coding of Expenditures
• Documentation of Purchases
• Submission of records to the District
• Principal Review & Approval

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Audit Controls - Fundraisers & Sales Tax

• Are fundraisers pre-approved by the Principal, bus Manager, Superintendent?
• Do you have a fundraiser Reconciliation Form?
• Funds are secured when collected
• Funds are remitted to business office for reconciliation
• Vendors are paid in a timely manner
• Sales Tax is considered for the fundraiser

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Audit Controls - PTA/PTO

• PTA/PTO funds are not commingled
• PTA/PTO fundraising activities are coordinated
• Best Practice:
• PTA/PTO does the fundraiser then donates funds to the school
• Glenn’s PTO Example

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Audit Controls - Sales Tax/Tax-Exempt

• School Districts are Tax-Exempt
• FOR PURCHASES not SALES
• Purchases
• Check your State, County and City sales tax requirements
• Official PO/Check or P-Card with Tax-exempt number should always be used
• Copy of Sales Tax Exemption should be included for purchases
• Sales
• Services are usually exempt from Sales Tax
• Goods are NOT (Shirts, supplies, etc)
• Food consumed on premises is taxable
• Games (Drinks and Snacks)
• Food NOT consumed on premiss is non-taxable

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Audit Controls - Cash Management

• Funds are kept in a safe location (safe?)
• Not a teacher desk!
• Funds are remitted to business office daily
• Checks received by the school are made out to the school/district
• School does not have any unauthorized bank accounts or credit cards
• Receipts are issued for all funds received

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Audit Controls - Other Items

Gate Receipts

• Mostly cash
• Separation of duties
• Are tickets issued?
• Timely collection/remittance of athletic fees

Payroll

• School Timesheets submitted timely (if appl)
• No “off-books” comp time

Other Security

• Password Protection
• Signature stamps should not be used

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Mill Levy Certification

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Mill Levy Certification

• Current Law SB 22-238 Summary

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• Review the August 25 Preliminary AVs from Assessor
• It may or may not comply with SB 22-238. The reduction of Actual Valuation ($15K Residential & $30K for some Commercial), new construction, assessment rates.

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Mill Levy Certification -Prop HH will be decided by voters Nov. 7th

• CSFP Link to HH information
• Conditional on voter approval, changes property tax law including changes to assessment rates, valuations, classifications, deadlines for administering taxes…allows the state to retain more revenue by modifying TABOR refund mechanism.
• Increase the residential Actual reduction from $15K to $50K. No change to commercial Actual reduction, $30K.
• Lowers residential Assessment rates, 6.7% instead of current law’s 6.765%. Some Commercial ratchet down to 27.85% from 27.9%
• Deadline change if passed:
• Current Dates Dec 10 Assessor provides AV. Changes to Dec 29
• Current Dates Dec 15 District return Certified mills to County. Changes to Jan 5th.
• At a minimum, alert Superintendent/BOE that normal dates might change.

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Mill Levy Certification

Prop HH & SB22-238 Example

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What About Pooled Cash?

• Make sure the total for all funds matches
• Make sure you are making any needed interfund AJEs

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What if I can’t get it too balance?

The Bank Rec will always balance:

• You just have to find the differences between the bank statement and the General Ledger.
• It’s like a puzzle, but it always works out

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Cash Mgmt & Banking

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Banking

• Must be a local Colorado Bank
• Remember FDIC insurance limits
• Colorado PDPA Rules for banks
• Bank collateralization of public deposits at 103%

Local Govt Investment Pools (LGIPs)-FPP Handbook pages 70-84

• ColoTrust & CSAFE
• Safety, Liquidity and Yield

Investment Portfolio

• Certificates of Deposit
• Federal Treasuries & Agencies (Inv Policy)

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Budgeting Strategies

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Budget Planning & Preparation

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Finance Professional Budgeting Primary Roles:

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• Source of creditable accurate financial information & stewardship
• Resource the organization in a responsible way.
• Ensure District statutory compliance
• Knowledge of Resources & Events

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PSFU website Resource: Budget Training 10/26/23, 2/8/23, 2/15/24 & 3/7/24

Budget Template on webpage-Far Bottom Left

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Budgeting Strategy #1

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• Build a Budget Development Calendar that does the following:
• Communicates the timeline
• Communicates the process
• Allows for key stakeholder participation

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Budget Planning & Preparation

Budget Development Components

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• Develop Timeline and Calendar to BOE
• Develop Guiding Principles
• Develop Changes in Revenue Forecasts
• Develop Changes in Expense Forecasts
• Forecast Compensation Scenarios
• Forecast Positions & FTE
• Communicate with Vendors (health & liability insurance, utilities, supplies, purchased services, etc) to gauge cost increases
• Current program reviews & replacement schedules
• New programs (Recurring vs. Non-Recurring)

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The Budget Cycle

• Preparation of Budget (May 31)
• AFA 44-8 22-44-108(1)(c). The proposed budget shall be submitted to the board at least thirty days prior to the beginning of the next fiscal year.
• Notice of Proposed Budget
• AFA 44-8 22-44-109 Must be posted 10 days after the BOE meeting. Do it the next day!
• Adopted Budget (June 30)
• AFA 44-10 22-44-110(4)
• Mid-Year Budget (January 31)
• Pupil Count, Property Taxes, Audited Fund Balance
• Staffing & Compensation
• Adjustments and Changes
• Supplemental Budget
• AFA 44-11 22-44-110(5) After January 31, the board shall not review or change the budget except as authorized by this article;  except that, where money for a specific purpose from other than ad valorem taxes subsequently becomes available to meet a contingency, the board may adopt a supplemental budget for expenditures not to exceed the amount of said money and may appropriate said money therefrom.

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Budgeting Strategy #2

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• Prepare a Preliminary Budget document for awareness and prioritization
• methodologies
• Incremental-Based Budgeting
• Student-Based Budgeting
• Zero-Based Budgeting

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Budgeting Strategy #3

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• Remember the Pareto principle:

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• If you nail Total Program Funding and Categoricals (and MLOs) you have easily nailed 90% of your revenues

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Revenue Forecasting Models

Annual Total Program Questions

• Is Funded Pupil Count(FPC) growing or decreasing?

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• Is Per Pupil Funding (PPF) growing or decreasing?
• How much is CPI?
• 5.2%. Annually the Base funding amount increases by CPI, per Amendment 23
• What is the Budget Stabilization Factor (BSF) going to do, increase/decrease/flat?
• Early indications, the BSF will be $0 this year.
• Long Bill not introduced as of today

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Budget Planning & Preparation

Forecast Funded Pupil Count (FPC)

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Items to Forecast: Total Program is largest portion of revenue

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• Funded Pupil Count (FPC):
• K-12 FTE
• Five Year Averaging slows the impact of a declining enrollment district
• Be careful for large count years dropping off
• Rely on district enrollment estimates more than the State’s. District knowledge is more accurate than the State’s.
• Forecast Suggestion: Use a Low, Mid, High Values for possible Student count changes.

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RESOURCE: School Finance Unit page

• Rows 83-98 contain 5 years of count and the average formula.
• Rows 91-109 On-line, Ascent, Charter Institute if applicable. Row 100 is total FPC.

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Budget Planning & Preparation

Forecast Per Pupil Funding (PPF)

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Items to Forecast: Total Program is largest portion of revenue

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• Per Pupil Funding (PPF) : 5-6 Possible dollar amounts in one fiscal year
• Preliminary look given in Governor’s November/January request
• March Forecast is published
• Long Bill is introduced in late March
• The School Finance Act is introduced in April/May
• The School Finance Act is passed in early to mid May(hopefully)
• January adjustment after count and local property tax are finalized.
• Possible March Supplemental

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• Resource: - School Finance Unit page-Under Public School Act-Funding and payment information - Pick correct year. Careful on what periods are being compared.

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Budget Planning & Preparation

Total Program Y.O.Y. Change

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Budget Planning & Preparation

Total Program Wrap Up

• Total Program is the largest revenue item.
• Use District Count compared to State Count figures
• PPF is best place to be aggressive or conservative in budget
• Per Pupil Funding estimate timeline
• Governor’s November/January
• March Forecast & Long Bill late March-Best early estimate
• School Finance Act (SFA) Mid May-Best estimate.
• True up in January when Count and Property Tax is known
• Forecast Funded Pupil Count
• 5 year averaging: FY24’s Preschool Special Education FTE in not included. Previous years the Preschool FTE is included.
• CPP is no longer in Total Funded Pupil Count
• Known November/December 2023

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Budget Planning & Preparation

Forecast Expenses Changes from Previous Year

Items to Forecast: What’s changing in FY24?

• District programs and services should be considered for redesign, reduction, supplementation or elimination.
• PERA rate 21.5% & Medicare rate 1.45%
• What is your net effective rate? FY23 Total PERA/Medicare divided by FY23 Gross Salary.
• Health Care & other Benefit cost changes
• Operating expenditure growth
• Utilities, Internet/telecom, Insurance, other Purchased Services, Supplies, & Equipment.

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Budgeting Strategy #4

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• Remember the Pareto principle:

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• If you nail Staffing (FTEs) and Compensation you have easily nailed 80% of your expenditures

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Forecasting Expenditures

• What are the key expenditures to forecast:
• Staffing & Compensation (salaries & benefits)
• Utilities & Other Bldg Costs
• Large Purchased Services
• Legal Contract
• Audit Contract
• Curriculum Subscriptions
• IT Subscriptions
• Professional Development
• Capital Outlay
• Facilities
• Technology
• Vehicles
• Curriculum
• School Accounts
• Instructional Supplies & Materials
• Non-Instructional Supplies & Materials

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Budget Planning & Preparation

Forecast Expenses Changes from Previous Year

Items to Forecast: Salary & Benefit

• Anticipated salary/staffing change
• For each wage schedule
• # of FTE(Don’t forget Vacancies), Cost of Current Schedule, Cost of Step, Cost of Adding 1%. Don’t forget to add PERA, Medicare, other payroll employer paid items.
• Know what a step is in $ and % terms
• Know the staff demographics
• Experienced vs New
• Masters vs. BA
• General Ledger/Payroll system may produce a report. If not create manually in excel.
• Wage growth happens when the % increases is larger than the CPI

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Budget Planning & Preparation

Forecast Expenses Sample Scattergram

• PFSU website - under the Statutory Compliance & Reporting
• Both Licensed/Salary and Classified/Hourly Scattergrams
• Input current schedules & FTE, don’t forget vacancies.
• Next tab calculates the cost of step
• Next tab has the “stepped FTE” with the ability to add a % to the schedule or to add a fixed dollar to the base
• Things to consider:
• Fixed Dollar or Fixed Percentage step schedule?
• Fixed percentage is equal to all.
• Growing the Salary schedule is important to attract new staff
• How competitive is your schedule to neighbors
• Calculates average wage & benefit cost.
• Is this the year to add significant dollars to schedule
• Minimum wage 1/1/25 with ~$14.74-15.14, may want to adjust in June instead of January on Hourly schedule.

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Forecasting Expenditures

Scattergrams

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Forecasting Expenditures

Scattergrams

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Forecasting Expenditures

Scattergrams

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Forecasting Expenditures

Scattergrams

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Forecasting Expenditures

Scattergrams

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Budget Planning & Preparation

Replacement Schedule Items

Strong Fiscal Stewardship includes establishing a Replacement Schedule to avoid fiscal cliffs

• Curriculum
• Best Practice 5-8 year rotations
• Transportation
• 15-20 year replacement schedule
• By 1/1/25, can’t use 15 passenger vans after 2025
• Possibly by 1/1/2025, busses (B,C,D vehicles) older than XX years can’t be used any longer
• Possibly by 1/1/2025, 9-12 passenger vans if XXX,XXX miles or XX years can’t be used any longer
• Technology
• Technology 5-8 years
• Facilities
• Facilities requires constant investment-Build 5 year plan
• Excellent non-recurring items to spend on Fund Balance

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Budgeting Strategy #5

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• Examine Budget Variances
• There are always pockets of underutilized resources
• There may be legitimate reasons to increase budgets
• It’s important to keep your budgets efficient in times of scarce resources

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Other Funds

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Budget Planning & Preparation

Other Funds

• Fund 18 Risk Management (sub-fund of General Fund)-Optional
• Strongly consider collapsing into the General Fund. A few checks and one less fund to manage. (same program & object codes in fund 10)
• Fund 19 CPP (sub-fund of General Fund)-Optional
• Strongly consider using the General Fund for UPK. If holding a CPP reserve, can either spend out of Fund 19 or the General Fund by coding expenses to grant code 3141. (same program & object codes in fund 10)
• Fund 22 Government Designated-Purpose Grants. Optional
• Depending on number of Grants, consider collapsing into the General Fund. (same program & object codes in fund 10)
• If maintaining Fund 22, only grants that are Request for Funds or grants that must have Revenue = Equal should be in Fund 22
• Fund 23 Pupil Activity Special Revenue
• Does district subsidize/transfer GF dollars to Fund 23 for Athletics? Consider moving the Programs supported by GF to GF and have the remaining money be fundraised or donation, not taxpayer funds.
• Fund 4X Capital Projects
• Revenue is usually a transfer from GF or Bond Proceeds in Fund 41
• Expenses are the expected project costs.

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Budget Planning & Preparation

Fund 21 Nutritional Services

• Optional-Healthy School Meals for All-FPP Meeting 2/23/23 Slides 20-34. FAQ
• Participation in the National School Lunch Program.
• Including collecting Free & Reduced Forms for district under 40% free/reduced percentage (More complicated)
• State reimburses the paid students to the level of the federal free rate for breakfast and lunch.
• Conveniently, FY21 & FY22 all students were treated for free under the Summer Seamless Option, comparing to this year’s should provide variance on quantity of meals to expect.
• How are food costs trending?
• Excess Cash Issues?
• Less GF Transfer
• Spend on Kitchen equipment

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Budget Planning & Preparation

Fund 31 Bond Redemption

• For Expense:
• Review district bond schedule for 12/1/23 Principal/Interest payments & 6/1/24 Interest payment. Include any pay agent fees
• For Revenue:
• Consider the Cash Balance of 12/2/22 to the scheduled FY24 debt service payments.
• If that percentage is greater than 5-10% for stable assessed valuation(residential) or 15-20% for less stable assessed valuation(oil & gas) districts, consider how much Property Tax to budget as revenue.
• Particularly, for districts that have to increase Total Program mills to comply with HB20-1418, if you have a high % of 12/2/22 cash compared to FY24 payments, this can give tax relief by certifying less revenue.
• Building up a Fund balance in fund 31 is effectively over charging taxpayers in earlier years to the benefit of taxpayers later.

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Budget Planning & Preparation

Professional Budget Document FPP Handbook

• Cover Sheet & cover sheets for each category listed below
• Executive Summary-Statement of Major Budget Objectives, Key Assumptions, Graphs and Charts of data.
• 3-5 talking points answering “what are the 3 major changes with the budget this year?”
• All Resolutions
• Multi Year Budget Document by: Program & Object & Revenues & expenses per pupil.
• Uniform Budget Summary (located at bottom left under Statutory Compliance and Reporting section)
• Salary Schedules & FTE Summary(staffing rules summary if using school based budgeting)
• Other District Info -District Strategic Plan, Performance Framework, School Calendar, Health Benefit Guide, Bond Schedule, etc

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Make it look Professional

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Budgeting Strategy #6

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• Your job is to resource the District on behalf of students, staff and taxpayers
• You’re not a policymaker
• You’re not the Superintendent

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• You don’t get a vote!

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Mill Levy Options

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General Fund Levy

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• General Fund Levy
• HB 20-1418 REQUIRES the lesser of:
• 27 mills
• Number of mills De-Tabored at
• Number of mills that you could have been fully funded
• Districts not at target levy are required to increase General Fund levy by one mill per year until they reach the target amount

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• Penalty for non-compliance:
• Loss of State equalization equal to the value of one mill + equivalent State share amount

• District Voter Approved Tax increases
• C.R.S. 22-54-108
• Maximum General Fund MLOs – 25% or 30%(small rural) of Total Program-Allowable for Capital or Operating
• Governing Documents
• Election Question
• MLO Spending Plan
• Charter School Allocations
• PSFU website Resource: Mill Levy Table comes from Mill Levy Certification process in December

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Mill Levy Overrides

Other Mill Levies

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Bond Fund

Property Tax to pay voter approved debt

Special Building & Technology Fund

Capital Construction

New & Existing technology

Maintenance Needs

3 Years & 10 Mills Maximum

Transportation Fund

For excess transportation costs-Bus Fleet?

Supplemental Cap Const., Technology & Maint.

Capital Construction

New & Existing technology

Maintenance Needs

Mill Levy Match

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• New CDE Program designed to increase local share
• Formula is based on a combination of variables including median household income (from census data) and property tax assessed valuation
• MUST have a MLO to qualify
• Statewide Budget for FY 23/24 = $23M
• Funds are distributed in June each year
• Districts should treat as non-recurring
• Other thoughts:
• Not intended for more affluent districts or districts with with high AV
• Legislative changes continue to develop

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Mill Levy Strategy #1

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• Bonds for Capital
• MLO for Operating or Capital
• Suppl Tech, Maint & Capital to avoid Debt

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• Go for #3 and consider issuing COPs instead of a bond election

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Mill Levy Strategy #2

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• How do you win an election?
• Teach your allies
• Staff
• PTA/PTO/SAC
• School Board
• Present to the Community
• City Council
• Service Clubs
• Community Meetings
• Turn it over to the Campaign Committee

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Fund Balance

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Fund Balance Strategy #1

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• What is the right amount of fund balance?
• It Depends!
• Depends on your cash flows
• Depends on the CFO/Business Manager
• Depends on the Board/Supt
• Depends on how accurate you budget
• 1-2 Months of Expenditures + TABOR

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Fund Balance

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• Fund Balance is your cumulative net income since the beginning of time
• Assets = Liabilities + Fund Balance

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• Fund Balance is District’s reserves
• Fund Balance is non-recurring
• You may have a Fund Balance policy
• Categories of Fund Balance
• Restricted
• Committed
• Assigned
• Unassigned

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Fund Balance Strategy

FUND BALANCE USAGE-Training 1/19/23

• Deficit Spending, expenses higher than revenues, is not a long term fiscally responsible position.
• It is easy to deficit spend, it is difficult to correct
• No Optimal Amount or % for all districts.
• What is cash Flow on 2/28/XX, before first Property tax payment on 3/10/XX?
• When considering using Beginning Fund Balance, focus on non-recurring items that do not create ongoing deficits. Careful funding wage schedules using fund balance.
• Using Beginning Fund Balance on recurring expenses (compensation) leads to ongoing deficits.
• Role of Administration is to ALERT B.O.E. and district of consequences of using Beginning Fund Balance
• 22‑44‑105(1.5)(a)&(c).

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Categories of Fund Balance on Balance Sheet (Source Codes listed)

Balance Sheet

• Each type of Fund Balance Category should be coded to the specific Balance Sheet Source code depending upon its specific characteristics.

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• The Pipeline Report, Bolded Balance Sheet should Align with the published Audit report by category.
• The TABOR will almost always need to be adjusted, Increase or decrease using 6770 as the other account.

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• Many GL systems “close” Revenue and Expense to 6770. Districts need to make manual journal entries to match the categories listed on the Audit.

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• Unassigned Fund balance is used to calculate “reserve” % to fund expense

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Budgeting Fund Balance Categories

Appropriated Reserve Expense Accounts

• Communicate all District’s available resources in the Budget, not what it is planning on being spent.
• Ensures that the District’s Appropriation is statutorily correct.
• Location code 800 and Object code 0840
• No Expenses are ever booked to these accounts. Expense is booked to the proper Expenditure account.
• If Appropriated Reserve(i.e. Ending Funding Balance) is less than Beginning Fund Balance,
• Expenses are Higher than Revenue
• Beginning Fund Balance Resolution is needed.

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Balance Sheet & Budgeted Appropriation Example

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Budget Planning & Preparation

FUND BALANCE USAGE-Training 1/19/23

• Deficit Spending, expenses higher than revenues, is not a long term fiscally responsible position.
• When considering using Beginning Fund Balance, focus on non-recurring items that do not create ongoing deficits. It is easy to deficit spend, it is difficult to correct
• Using Beginning Fund Balance on recurring expenses (compensation) leads to ongoing deficits.
• Role of finance is to alert BOE and district of consequences of using Beginning Fund Balance 22‑44‑105(1.5)(a)&(c).

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Questions to ask when considering fund balance

• What is the budget to actual variance for revenues?
• What is the budget to actual variance for salaries & benefits?
• What is the budget to actual variance for other expenses?
• Is the district saving up for major expenses (BEST/Construction)
• Are certain schools/depts NOT spending their budget? Why?
• Are certain departments regularly overspending their budget?
• Are there controls to prevent this?
• Is it a result of unforeseeable circumstances?
• Is it a recurring or non-recurring problem?
• Is there a process to address these challenges on a regular basis?
• What is the budgeted recurring/non-recurring mismatch?
• What is the calculation of recurring revenues - recurring expenditures?
• If spending FB on recurring items, what is the plan for how deficit spending will end?
• Are there unusual non-recurring items included in the budget?
• Grants, especially ESSER, expire. What expenses are not expiring.

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Fund Balance Strategy #2

If trying to decrease Fund Balance

• Use more aggressive budgeting. Revenues < Expenses will lower Fund Balance.
• Need to understand historical actual to budget variances
• How up to date are the following replacement plan items:
• Vehicle Fleet (yellow and white fleet)
• Curriculum
• Technology
• Deferred Facility Maintenance
• Other non-recurring items:
• Staff Bonuses (with or without PERA)
• Professional Development
• Facilities always has needs (carpet, paint, mowers, plows, small equip, building improvements, etc)
• Special projects or events

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Fund Balance Strategy #3

If trying to grow Fund Balance

• Revenues > Expenses will grow Fund Balance
• Budget FPC & PPF conservatively
• Make sure staffing budgets are accurate
• Build cushion into expenditure budgets in order to mitigate surprises
• Capture the savings from staffing vacancies
• Make sure you use modeling for more accurate expenditure estimates
• Consider leveraging alternative sources of revenue:
• Indirects on Nutritional Services(only applicable if you are not transferring money from GF) & Grants
• Investment Income
• Maximize State categoricals
• Capture General Fund savings from grant covered expenses-Supplanting issue-

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Fund Balance Wrap up

• Determine the correct categories of Fund Balance

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• Use the Appropriation Reserve to accurately appropriated not only expected spending, but what is available to spend.

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• Communicate with Superintendent and BOE to determine Fund Balance levels. Consider “assigning” unrestricted fund balance to cover replacement schedule items.

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• Fine tune your budget to maximize resources on the students of today, while being prepared for the future. After a January revised budget revenue variance can be +/- 2% & expenses can be +/-2-5%

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Wrap Up

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Wrap up & Conclusion

What would did you learn today?

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What else keeps you up?

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