Budget Process Manual

Transcription

1 Budget Process Manual 7

2 Table of Contents Board of Trustees and District Administration...3 District Mission and Goals 4 District & General Economy 5 Budget Preparation Procedures.7 Budget Calendar.. 10 Fund Descriptions General Fund.11 Child Nutrition Fund.16 Debt Service Fund (I&S) Construction Fund Budget Administration & Management Process 23 Financial Structure and Basis of Accounting..26 Significant Financial Policies and Procedures Campus/Department Budget Manager Preparation Appendix A District Schedules Student Enrollment and Program Full Time Equivalents (FTEs) Combined Funds 2011 Budget Summary 199, 240, 5XX All Funds 2011 Budget Summary Five Year Revenue Comparison 2012 Financial Snapshot 2011 General Obligation Debt Report Appendix B - Reference Materials..47 Pentamation Account Code Chart of Accounts Function Code Descriptions Appendix C 2011 Truth-In-Taxation: A Guide for Setting School District Tax Rates...56 Appendix D Tracking the Education Dollar in Texas Public Schools Appendix E - Glossary

3 Belton Independent School District Principal Officials and Advisors Board of Trustees Length of Term Board of Trustees Service Expires Occupation Randy Pittenger, President 18 years 2015 Social Worker/ Administrator Penny Digby, Vice-President 11 years 2013 Commercial Insurance Representative Mike Cowan, Secretary 5 years 2013 Manager, Wildflower Country Club Connie Demerson, Member 8 years 2013 Retired Health Care Rosie Montgomery, Ph.D., Member 2 years 2015 Clinical Psychologist Jason Carothers, Member 1 year 2014 Builder Amanda Winkler, Member 1year 2014 Business Owner Administrative Officials Length of Service in Official Position the District Susan Kincannon, Ed.D. Superintendent of Schools 12 Darrell Becker, Ed.D. Deputy Superintendent of Schools 8 Ed. Braeuer Assistant Superintendent for Curriculum 14 Eric Haugeberg Assistant Superintendent for Finance & Operations 13 Eric Banfield Executive Director of Finance 11 Todd Schiller Executive Director of Human Resources 4 Consultants and Advisors Specialized Public Finance, Inc. Financial Advisor - Austin, Texas Brockway, Gersbach, Franklin, and Neimier, P. C. Independent Auditors - Temple, Texas 9

4 Vision, Mission, & Goals Vision: To be a leader in preparing every student to excel in tomorrow s world. Mission: To provide an education that challenges all of our students to excel. Goals: Belton ISD will 1. Implement and monitor well-designed processes, including long-range planning and budgeting, to address future growth, changing student needs, and the maintenance of effective and efficient operations. 2. Achieve success on the State's student achievement and quality of learning indicators to prepare students to live, learn, and lead in an ever-changing global economy. 3. Attract and retain high performing administration, faculty, and staff who reflect the values of the community, serve as positive role models, exhibit moral excellence and are committed to achieving excellence for all students. 4. Sustain safe and supportive schools that provide secure, nurturing, non-threatening, respectful and disciplined learning environments where all members excel and exhibit moral excellence. 5. Promote shared partnerships of students, parents, schools, community and BISD alumni to include clear, informative, timely, concise communication and recognition of the achievements of all stakeholders. 6. Comply with all state and federal guidelines regarding instructional programs including but not limited to Title I, Special Education, Dyslexia, State Compensatory Education, Bilingual English as a Second Language, Migrant, Career Education, and Gifted and Talented Education. 10

5 The District The Belton Independent School District encompasses an area of 197 square miles in Bell County, located in the central region of the state of Texas. Cities located within the District include Belton, Morgan s Point Resort, and Temple. Belton, the largest city totally within the District, is located 45 miles south of Waco and 60 miles north of Austin. The District has thirteen educational campuses, nine are situated in Belton, and four, in Temple. The facilities include eight elementary schools (grades K-5), three middle schools (grades 6-8), and two high schools (grades 9-12). Official enrollment for the school year is 9,551. The District has a separate administration building, support facility, special education office, transportation facility, and various athletic facilities all located in Belton. South Belton Middle School and Belton New Tech Waskow opened in the 2012 school year. Because of the continued growth in the District, a bond election has been called for May of 2012 for the construction of two elementary schools and one middle school. The District received an Academically Acceptable AEIS rating and an Above Standard Achievement, Financial Integrity Rating System of Texas rating from TEA. Several strategic planning initiatives to improve student achievement are underway. With a focus on increasing student engagement, the District has transformed Waskow High School into Belton New Tech High Waskow, implementing Project-Based Learning with each student issued a MacBook. The project is funded by a $3 million Texas Title I Priority Schools grant. In , the school will welcome its second incoming group of freshmen and will reach half of its expected capacity with a total enrollment of approximately 250 students. In an effort to equip students with the necessary skills for competing in a global economy in the 21 st Century, the District continues to investigate ways to increase the use of technology by students. The pilot 1-to-1 ipad project at South Belton Middle School has shown students are more engaged and produce better quality products when using modern technology. Building upon this initiative, the District is investigating the possibility of expanding the use of ipads by students to Belton High School in Insuring professional development is job-embedded throughout the year is also a priority for High quality sessions covering technology integration, Effective Literacy Teaching, Effective Math Teaching, and other sessions on engaging instructional 11

6 strategies will be offered during the summer. Intentional, structured follow-up and support for teachers will be provided to maximize the effectiveness of the training. Other programs such as Response to Intervention, Safe and Civil Schools, AVID, Advanced Placement, and G/T enrichment will continue to be offered. General Economy The economy of the area is primarily based on agriculture, manufacturing, the Scott & White hospital system, federal military activities (Fort Hood), education, and a rapidly growing retail sector. Fort Hood is expected to maintain its level of troops, and the joint-use military/civilian airport facility in Killeen is in use. A small percentage of the District s students are uniformed military dependents, and more are dependents of civilian employees of the base or military retirees. The Belton area benefits as a recreational center with Lake Belton and Stillhouse Hollow Lake located in the immediate vicinity. Belton is the county seat of Bell County and the home the University of Mary Hardin-Baylor, a four year private college with graduate programs. Belton is the economic and trade center of the District and is extremely aggressive in competing for new business and industry. A new large format HEB grocery store has been completed in Belton. Other retail projects are in progress including a six screen movie theatre in the City of Belton. The District is on the Interstate Highway 35 and Highway 190 corridor and has many areas available for development. Several road expansions and improvements are underway in the area and region. Multiple new home developments are underway in the District, in and around Belton, both single home and multi-unit facilities. The City of Belton operates the water and wastewater systems in the Belton area, contracting its wastewater treatment to the Brazos River Authority. There are a number of other medium sized cities located in the immediate area of the District, these being the city of Temple, immediately adjacent to the north with a population of over 60,000 and the cities of Killeen and Harker Heights located some 15 miles to the west with a combined population of over 140,000. The area has several major health facilities in Temple and one in Killeen. The Olin E. Teague Veterans Medical Center and Scott & White Hospital are both located in Temple. 12

7 Budget Preparation Procedures Budget development will be scheduled through the budget calendar. Budget planning is part of the strategic planning process of the District. This document will outline the budget procedures and responsibilities of the various stakeholders in the process. Resources are budgeted to meet the goals of the District and those of each campus and program of the District. State Aid, $42,338,084, 62.7% Belton ISD Revenue by Source General Fund Federal Revenue, $524,000, 0.8% Local Property Tax Revenue, $24,060,000, 35.6% Other Local Revenue, $613,000, 0.9% The Superintendent is the budget officer of the District and oversees the budget s preparation. The Superintendent reviews the budget allocations and underlying assumptions. Annual budgets are prepared for the General Fund, Food Service Special Revenue Fund, and Debt Service Funds. Budgets are prepared but not adopted for the capital outlay and special revenue funds from State, Federal, and other sources. Special revenue funds are from specific sources and legally restricted to defined purposes. Title I, Fund 211; IDEA B Special Education, Fund 224; and Advanced Placement Incentives, Fund 397 are examples. The Board of Trustees participates in the budget process through Board meetings and budget workshops held as needed for budget development and approval. No line item in the budget has final approval until the budget is adopted by the Board of Trustees after the official public budget hearing. Once the budget is adopted, the property tax rate is adopted by the Board that will support that budget. The Business Office prepares revenue projections for all funds based on State funding formulas and assigned CPTD values, estimates of local tax revenue, enrollment projections, and other factors. The Business Office coordinates the budget request process and enters approved allocations into the finance software budget system for review by stakeholders. During a legislative session, estimates for the following year are made using the current school finance law. Personnel costs accounted for 82% of the General Fund adopted budget in the 2012 school year. 5.4% 3.6% 5.8% 2.0% Belton ISD 2012 Budget By Major Object Category General Fund 0.8% 0.5% 81.8% Salaries & Benefits Contracted Services Utilities & Fuel Supplies & Materials Other Operating Costs Debt Service Capital Outlay 13

8 The new year personnel cost estimates will rely on enrollment projections at the elementary level and master schedules that are built at the secondary campuses as well as other personnel needs. The Human Resources department maintains personnel data in the financial software personnel system through the current school year. This data is transferred to the budget system each spring for planning. Recommendations are made each year and approved by the Board for salary increases as well as for new positions to support the District s goals, growth and enrollment. The remaining budget appropriations are allocated each year for services, supplies, debt service, capital outlay, and other operating costs. Expenditures are estimated and budgets prepared by the various budget managers throughout the District and submitted to the Business Office based on the parameters specific to each given program, campus, or department. These budgets are entered into the budget system and balanced to the available revenue in the General Fund. The Administrative Team reviews the budgets submitted by the budget and program managers for the appropriateness of proposed expenditures in meeting stated program or department objectives and District goals. The Administrative Team reviews non-allocated special requests for capital outlay, maintenance, and program requests and assigns a funding priority for each request. Adjustments to the budget are made continually, based on the latest relevant information, and presented through meetings and budget workshops as the budget is prepared for adoption. Under the current school finance system the District s count of weighted students in average daily attendance is the primary driver of General Fund revenues. The District works with the Bell County Tax Appraisal District to prepare values for the tax roles and to prepare information for the required public hearing to discuss the budget and proposed tax rate for the new school year. The budget currently must be prepared by August 20 of each year and adopted by August 31. Budget Priorities: Improving instruction Improving student achievement Maintaining instructional priorities and programs Maintaining competitive salaries Implementing and monitoring well-defined processes Maintaining effective and efficient operations Issues specific to the 2013 budget process: The State economy is improving but budget cuts instituted in the 2011 legislative session continue in the 2013 school year. No change is expected in the next legislative session to restore the funding cuts. Inflationary cost drivers will continue to increase costs. These include items such as utilities, insurance, and fuel. 14

9 The District strives to maintain a competitive compensation plan through its percent of mid-point pay system. Increasing student enrollment may require additional instructional and support staff. Technology and other capital outlay needs will increase as growth continues. New campuses will be needed to address student growth. Maintaining adequate and appropriate fund balance level is a priority. Unfunded mandates and greater accountability standards continue to impact local expenditures. The District is at the $1.17 cap on the M&O tax rate and cannot raise additional discretionary funds under the current school finance system. Low rates on invested balances represent a significant reduction in local revenues. The District is property-poor. State aid accounts for 65% of the current year s General Fund revenue. 15

10 Belton ISD - Budget Development Calendar 2013 Budget Year Target Date Activity/Process Responsibility January Comptroller's preliminary 2011 CPTD value study State Comptroller (for State funding) - Local value is approved February-March Expenditure projections based on major expense drivers Business Office February-April Begin budget preparation - campus/department budget managers Principals/Directors/Staff including one-time, program, maintenance, and technology requests Early April Budget Managers Meetings with the Administrative Team Administrative Team April 16 Regular Board Meeting, Budget Workshop; calendar, values, revenue School Board April Preliminary review of campus/department budget requests, Superintendent, Adm. Team April DWEIC Meeting - Outline budget process April - May Bell County Tax Appraisal District delivers preliminary taxable values Tax Appraisal District (District calculates local tax revenue for the new year, reviews WADA assumptions for State revenue) May Review of preliminary District budget Superintendent, Adm. Team June 18 Regular Board meeting, Budget Workshop - Review of School Board first draft of budget, staffing plan and salaries June - July Finalize federal and special revenue budgets with TEA Business Office, Directors planning amounts including estimated roll forward amount. June - July Comptroller's certified 2011 CPTD value assigned Comptroller's Office Calculate final State revenue totals and apply to budget July Bell County Tax Appraisal District certified taxable values Tax Appraisal District Calculate final tax revenue totals and apply to budget July 16 Regular Board meeting, Budget Workshop - Second draft of budget School Board Set public meeting time to discuss budget and proposed tax rate July - August Called meeting to propose tax rates for the new-year. School Board (depends on receipt of certified values from the appraisal district) August 8 "Notice of Public Meeting To Discuss Budget And Proposed Tax Rate Board President published." (10 to 30 days before mtg.) Business Office August Official public budget hearing School Board August 20 Regular Board meeting, budget and tax rate adopted School Board 16

11 General Fund The General Fund (Maintenance and Operations) is used to account for all financial transactions not properly included in other funds. The principal sources of revenue include local property taxes, state revenue and some federal aid. Expenditures include all costs associated with the daily operations of the schools with the exception of the Child Nutrition department. Local M&O Revenue Revenue from local sources makes up 37.1% of the District s General Fund revenue. State Aid makes up most of the balance of the $67,535,084 General Fund budget total that was adopted for Revenue from local sources is comprised of tax receipts, interest earnings, gate receipts, tuition, rent, and other miscellaneous revenue. The significant sources of local revenue are described below. Tax receipts are budgeted at a 98.5% collection rate including delinquent collections. In 2011, audited collections came in at 99.60% of the levy, including delinquent collections. This is just above the 99.26% average for the previous five years. For 2012, $23,930,000 is budgeted for M&O tax collections. $150,000 is budgeted for penalties and interest. Penalties and interest are not considered tax collections as audited and reported. Interest earnings on the General Fund invested balances have been a significant sources of revenue to the District. Earnings over the last several years have fallen dramatically. In the short-term interest rates are expected to remain low Interest earnings - $176, Interest earnings - $ 41, Interest earnings - $ 37, Projection - $ 30,000 Gate receipts for athletic events average $230,000 each year. The total is impacted largely by football gate receipts. Season ticket sales in August of each year are recorded in new year, September 1st, revenues as an audit adjustment. The gate receipts are recorded in two different funds, the General Fund and a debt service fund, Fund 515. The District used a revenue bond to finance construction of the multi-sport facility at Belton High School. A revenue bond does not require voter approval but a revenue stream, the gate receipts, must be pledged as the means for payment of the debt service. The last payment on that debt is due in the 2025 school 17

12 year. Voter approved debt for facilities is financed by the Interest & Sinking (debt service) tax rate Gate Receipts - $ 194, Gate Receipts - $ 205, Gate Receipts - $ 281, Projection - $ 240,000 Tuition paid by transfer students is collected primarily from August through December. Tuition payments received in August of each year are recorded in new year, September 1st, receipts as an audit adjustment. Tuition is also received for high school summer school electives. Transfer Students 2009 School Year - $ 88, School Year - $ 84, School Year - $ 91, Projection - $ 99,500 Rent is collected for the use of school facilities by churches and other local groups and organizations. Payments from UMHB for the use of the football field are not included in these totals. For the current school year the UMHB payment is $40,000. Payments will continue through 2014 under the current agreement Rent Receipts - $ 39, Rent Receipts - $ 42, Rent Receipts - $ 79, Projected - $ 85,146 State M&O Revenue A special legislative session was called in 2006 to address the State tax system and public school funding. The special legislative session resulted in significant changes to the State tax system. The manner in which the District s total Maintenance & Operating funding was calculated for the and following school-years also changed. The same weighted funding system was used to distribute State education funds, but the guaranteed yield and basic allotment were increased at that time. This was done to increase the State s share of the District s funding and to replace the local tax revenue lost through the reduction in the property tax rate for schools (tax rate compression). School Year Maintenance Tax Rate $ $ $

13 The funding formulas allowed the District to receive sufficient funds to maintain its revenue per student in Weighted Average Daily Attendance (WADA) at that time. New discretionary funds were only available with the new super pennies of equalized funding. For the 2009 school year the Board approved a Maintenance and Operating tax rate of $1.17 to access the remaining available 13 pennies of equalized enrichment funding provided by the State. The subsequent Tax Ratification Election was successful. The Maintenance and Operating tax rate of $1.17 continues in the current year. School funding formulas were modified in the most recent legislative session to cut public education by approximately $5.4 billion. Cuts to Belton ISD for the 2012 school year totaled approximately $4 million. How the State funds this system is being challenged through several lawsuits. Legislative change as a result of the litigation is not expected in the next legislative session for the biennium. Inequities remain in the system that continue to allow property wealthy school districts an advantage at each level of funding. The Foundation School Program The Foundation School Program has two main components, operations funding and facilities funding, each of which is tied to the tax efforts of school districts. These components provide funding for school district operations and for school facilities. The operations funding component of the FSP provides school districts with assistance in financing their maintenance and operations based on the following three components: o Tier I of the FSP provides school districts a basic level of funding with allotments for regular education; special education; compensatory education, including Pregnancy Related Services; career and technical education; bilingual / English as a Second Language education; gifted and talented education; and public education grants. This tier also includes allotments for transportation, new instructional facilities, and the Texas Virtual School Network as well as an allotment for specialized programs at the high school level. Additional compensatory education funds may be available to serve students who are military dependents. o Tier II of the FSP is intended to supplement the basic funding provided by Tier I. Tier II guarantees a specific amount of funding per student in weighted average daily attendance for each penny of a school district s tax effort above a specified level. The funding provided by this additional tax effort is also referred to as enrichment. o Revenue at the compressed tax rate, provided for in the property-taxrelief law that was passed in 2006 and modified in 2009, guarantees school districts a set amount of funds per student in weighted average daily attendance to compensate for a mandatory reduction in, or compression of, their local maintenance and operations (M&O) tax rates from rates that were adopted in

14 Estimates for the new budget year s State M&O revenue under the current school finance system are made using the latest Summary of Finance template for SB1. Using the current demographic data along with historical trends for students, taxable values, and tax collections can give a good indication of expected new-year state revenues. Revenue from state sources makes up about 65% of this year s General Fund revenue. The basic calculations of the state education funding formula have not changed for many years. However, the tax rate compression and new values used for the basic allotment have skewed the values for the State program allotments that the District earns for programs such as Compensatory Education and Special Education. To adjust for this, the State has adjusted the program expenditure requirements for these programs from the 85% level to 55% for all programs except Career & Technology. The spending requirement for this program was changed from 90% to 60%. The state share of the District s Maintenance and Operating (M&O) funding generally drops each year as the District s property wealth increases. Federal M&O Funding The majority of federal funding the District receives comes in the form of special revenue grants such as Title I (Fund 211) and IDEA B (Fund 224). Education Jobs funding is also a significant funding source in the current year. The General Fund (Fund 199) federal revenues include the Medicaid reimbursement the District receives for qualified services provided to our special education students at school district expense. These reimbursement funds are used to support special education and other programs at the District. The significant increase in receipts is due to changes in the program itself and in the number of services the District has requested reimbursement for Medicaid Receipts - $ 74, Medicaid Receipts - $ 336, Medicaid Receipts - $ 676, Projected - $ 750,000 Other General Fund federal receipts include our Impact Aid, flood control funds, and MJROTC program reimbursement. Impact Aid receipts are approximately $60,000 a year. The flood control funds are approximately $17,000 a year. Discretionary grants received in the past have been generally less than $5000 and occasionally as large as $50,000. They have included the Smaller Learning Communities grants and the LRE Pre- School Special Education grants. 20

15 General Fund Revenue & Expenditure History Beginning Balance 8,989,236 8,181,901 # 10,538,280 11,705,177 13,757,847 16,491,000 Revenues: Local & Intermediate Sources 19,976,038 21,405,946 18,497,909 22,330,279 23,241,866 24,316,249 Revenue from State Sources 27,361,217 30,323,723 37,085,790 39,425,529 40,082,598 42,188,362 Revenue form Federal Sources 188, , , , , ,634 Total Revenues 47,525,999 51,898,541 55,722,014 62,085,883 63,975,231 67,470, Expenditures: Instruction 25,929,518 26,654,718 29,282,920 31,859,711 32,273,392 34,320,084 Instructional Resources & Media 735, , , , , ,929 Curriculum & Staff Development 241, , , , , ,341 Instructional leadership 1,148,019 1,295,918 1,345,877 1,505,256 1,464,301 1,494,146 School leadership 2,825,397 3,144,858 3,223,491 3,463,607 3,615,895 3,764,439 Guidance, counseling, & evaluation serv 1,666,038 1,946,469 1,987,535 2,031,210 2,154,079 2,248,344 Social work services 174, , , , , ,571 Health services 564, , , , , ,439 Student transportation 2,354,420 2,545,654 2,937,453 3,228,642 3,493,173 2,955,119 Cocurricular/extracurricular activities 1,654,912 1,796,924 2,086,589 2,297,789 2,542,008 2,655,975 General administration 1,533,255 1,710,595 1,777,709 1,864,436 2,042,787 2,223,701 Plant Maintenance & Operations 6,205,134 6,666,504 7,917,520 7,833,833 8,218,844 8,459,170 Security and monitoring services 229, , , , , ,304 Data Processing 1,026,353 1,176,409 1,262,802 1,659,286 1,286,724 1,504,102 Community Services 66,705 72, , , , ,959 Debt service 258, , , , , ,658 Facilities acquisition and construction 2,260, ,680 62,765 1,815,186 1,202,904 2,057,422 Payments to fiscal agent 16, Payments to JJAEP 33,516 48,510 64,025 49,335 75,592 28,040 Total Expenditures 48,924,483 50,724,580 55,197,396 61,084,175 62,363,312 65,887,743 Net Revenues (1,398,484) 1,173, ,618 1,001,708 1,611,919 1,582,502 Other Financing Sources (Uses) 591,149 1,182, ,279 1,050,962 1,121,234 0 Ending Balance 8,181,901 10,538,280 11,705,177 13,757,847 16,491,000 18,073,502

16 Child Nutrition Fund The Child Nutrition Fund, Fund 240, is a special revenue fund solely for the operation of the District s school food services. The department employs 121 personnel who feed over 1,600,000 meals to students each year. For the past several years the department has remained self sufficient and has built a solid fund balance to invest in new equipment for the program and for contingencies. 600, , , , , ,000 Belton ISD Lunch Count Paid - Lunch 238, , , , , , ,024 Reduced 87,418 96, , , , , ,850 Free 370, , , , , , ,815 Paid - Lunch Reduced Free The department has previously undergone a management review to study the programs operations and efficiencies. There were many good things reported as a result as well as valuable suggestions for program improvements. The department regularly scores high on the required regulatory visits to monitor the programs procedures and processes. A networked point-of-service system is used to bank student s meal money, to facilitate checkout times at the registers during meals, and to report on meal counts for federal reimbursements. A new freezer for commodity program food has been added to the Support Services facility. The department also offers a summer feeding program in and around the District. The percent of students District-wide who are eligible for a free or reduced price meal is over 45%. As the District s count of eligible free and reduced students grows, the District s ability to operate with a fund balance will continue to improve. Counting and verifying these student applications is an important annual process for the department. The count not only affects federal reimbursements received for this program, but is used for the State General Fund allotment for Compensatory Education (at-risk students) as well. 22

17 For campuses with a free and reduced student count of over 70% the Breakfast In The Classroom program has been implemented. This program allows the District to feed all students at the campus a free breakfast. The National School Breakfast Program reimbursement for the free and reduced price meals covers the cost of the program and improves profitability for the program as a whole. Revenue The program receives its revenue largely from local paid meal revenues and federal reimbursements for meals for free and reduced eligible students. Federal aid is also received in the form of commodity foods received free from the federal government. Several of these items are processed at a cost to the District. The cost is generally less than the cost of purchasing a similar fully prepared food item. The value of these items is booked as revenue to the program and contributes to the overall efficiency of the program. 23

18 Child Nutrition Fund Revenue & Expenditure History Beginning Balance 342, , , , , ,412 Revenues: Local & Intermediate Sources 1,348,003 1,272,405 1,502,727 1,675,740 1,593,345 1,617,472 Revenue from State Sources 106,444 99,221 96,917 96,374 97, ,466 Revenue form Federal Sources 1,720,625 1,692,027 2,014,771 2,169,371 2,591,443 2,771,314 Total Revenues 3,175,072 3,063,653 3,614,415 3,941,485 4,282,773 4,490,252 Expenditures: Child Nutrition Services 2,985,215 3,302,548 3,407,334 3,824,551 4,067,951 4,462,560 Total Expenditures 2,985,215 3,302,548 3,407,334 3,824,551 4,067,951 4,462, Net Revenues 189,857 (238,895) 207, , ,822 27,692 Other Financing Sources (Uses) Ending Balance 532, , , , , ,104

19 Debt Service Fund The Debt Service Funds account for the payments of principal, interest, and related fees on the District s revenue (Fund 515) and general obligation (Fund 511) bonds. Voter approved debt service payments are charged to the Interest & Sinking (I&S) fund, Fund 511. Revenue for Fund 511 is received from the I&S property tax, the State Instructional Facilities Allotment (IFA), and the Existing Debt Allotment (EDA) programs. EDA and IFA funding combined now account for or pay approximately 37% of the eligible debt service. New debt service generally rolls into the State EDA program in the biennium following the year in which the first payment is made on the debt. As the District s property values increase the State award for these programs decreases. The District s bonds presently carry a favorable rating with Moody s Investment Service and with Standard and Poor s Investor Service. Instructional Facilities Allotment Program House Bill 4, originally enacted during the 1997 Legislative session, provided state funding for new instructional school facilities (IFA). This program provides a guaranteed level ($35) of State and local funds per student per penny of tax effort applicable to debt service on eligible bonds. However, limited funds have been appropriated for this program each biennium so districts must apply for funding when it is available. The two Belton bond issues prior to the 2004 bond issue, Lake Belton Middle School and Joe M Pirtle Elementary, qualified for this IFA funding. The 2012 budget includes $358,000 in IFA funding. Existing Debt Allotment Additional state funding for existing debt was first granted during the 1999 legislative session the Existing Debt Allotment (EDA). This allotment guarantees $35 per student in state and local funds for each cent of tax effort (subject to a maximum) to pay the principal and interest on eligible bonds. EDA is a significant source of revenue from the state for the District. The 2012 budget includes $2,220,620 in EDA funding. Debt Service Expenditures The expenditure budget consists of the following amounts: $3,475,000 for bond principal payments and $3,715,587, for bond interest and fee payments. No major assumptions are made for these yearly expenditures, since the amounts are based on debt that has already been issued and scheduled. Historically, the District s Administration and Board have followed the advice of financial advisors and structured debt with a principal retirement schedule that allows the District to continue to issue bonds without significant increases in the debt service tax rate. 25

20 Debt Service (I&S) Fund Revenue & Expenditure History Beginning Balance 126, , ,763 1,082,226 1,388,713 1,722,851 Revenues: Local & Intermediate Sources 2,856,222 4,369,609 4,109,817 4,437,842 4,635,984 5,003,418 Revenue from State Sources 3,116,821 2,822,675 3,363,856 3,113,973 2,675,026 2,064,530 Revenue form Federal Sources Total Revenues 5,973,043 7,192,284 7,473,673 7,551,815 7,311,010 7,067,948 Expenditures: 26 Principal on long term debt 3,155,000 3,295,000 3,625,000 4,030,000 4,155,000 2,339,991 Interest on long term debt 2,528,571 3,664,625 3,381,154 3,201,738 2,997,011 5,306,726 Bond issuance cost and fees 9,709 4,463 20,056 13,590 70,983 7,925 Total Expenditures 5,693,280 6,964,088 7,026,210 7,245,328 7,222,994 7,654,642 Net Revenues 279, , , ,487 88,016 (586,694) Other Financing Sources (Uses) ,122 0 Ending Balance 406, ,763 1,082,226 1,388,713 1,722,851 1,136,157

21 Belton Independent School District Aggregate Unlimited Tax Debt Service Annual Basis Aggregate Debt Service Date Principal Interest Total P+I 08/31/ /31/2012 3,410, ,683, ,093, /31/2013 3,365, ,612, ,977, /31/2014 3,420, ,479, ,899, /31/2015 3,560, ,340, ,900, /31/2016 3,720, ,191, ,911, /31/2017 3,890, ,034, ,924, /31/2018 4,050, ,865, ,915, /31/2019 3,430, ,678, ,108, /31/2020 2,904, ,201, ,106, /31/2021 3,695, ,416, ,111, /31/2022 3,835, ,269, ,104, /31/2023 3,990, ,119, ,109, /31/2024 4,250, ,948, ,198, /31/2025 4,445, ,755, ,200, /31/2026 4,655, ,542, ,197, /31/2027 4,885, ,309, ,194, /31/2028 5,135, ,064, ,199, /31/2029 5,385, , ,192, /31/2030 3,170, , ,768, /31/2031 3,330, , ,768, /31/2032 1,840, , ,150, /31/2033 1,925, , ,146, /31/2034 2,010, , ,145, /31/2035 2,100, , ,145, Total $86,399, $46,070, $132,470, Par Amounts Of Selected Issues 5 7,210, ,710, $29mm (3/1) FINAL 27,680, ref FINAL (3/17) 1,560, u/t ref FINAL (12/5) 7,004, after ref -NM 22,235, TOTAL 86,399, Aggregate 1/ 3/2012 4:14 PM Specialized Public Finance Inc. Austin, Texas 27

22 Construction Funds The District s bond proceeds are accounted for in the 600 series of funds. The proceeds are fully invested and carried as fund balances until they are needed for the costs of construction. Interest proceeds are monitored annually for positive arbitrage earnings on investments. Any positive arbitrage earned is not considered for construction expenditures so that the required payments to the IRS may be made from those earnings. The District utilizes industry professionals and local committees to plan for the growth that is occurring in the area. Since 2002 the District has continually planned for growth through its ongoing Long Range Facilities Planning committee. Facility and demographic studies are used to facilitate planning. The District continues to monitor growth and student populations with its Transfinder software program. This system is used to set the District s attendance boundaries and it is the primary tool for the efficient routing of buses for student transportation needs. Through the Long Range Facilities Planning committee meetings the District has recommended three bond issues in recent years that have been passed by voters. Major improvements and classroom additions to the high school, two middle schools, and two elementary schools were included in the first bond issue in As the result of the second bond issue in 2006, an eighth elementary school campus opened its doors at the beginning of the 2008 school year. In addition, this bond has provided for a new swim center, the Tyler Elementary kitchen renovation, the Sparta Elementary core expansion, and several civil projects. The most recent 2010 bond issue built the South Belton Middle School. A May election has been called for the construction of two elementary schools and a middle school to address capacity issues. Budget Administration and Management Process Adoption of the official budget by the Board of Trustees is only the first step in the budget process. Following adoption, the budget administration and management process begins. The budget administration and management process is the process of regulating 28

23 expenditures throughout the fiscal year to ensure that they do not exceed authorized amounts and that they are used for intended, proper, and legal purposes. Expenditures, Controls, and Approvals Expenditure appropriations are allocated between approximately 30 organizations or cost centers (campuses, departments, divisions, etc.). Each organization is assigned a budget manager (i.e. principal, department head). The budget manager is accountable for their organization s portion of the General Fund budget. Each budget manager is authorized to approve the expenditure of funds within their respective organization, provided that funds are expended in accordance with District purchasing procedures and legal requirements This is accomplished through the use of the standard account code system prescribed by the Texas Education Agency, which includes an organization code. This code system is described in detail within this document. Each budget manager (or designee) is granted on-line access to the accounting codes for their organization. This access includes purchase order and account inquiry capabilities. When fixed costs such as salaries, benefits, utilities, and fuel are set aside, the remainder of the funds available for discretionary expenditures is small in comparison. Expenditures for these services, supplies, travel, training, and other costs to support the goals of the District are approximately 13% of the General Fund budget. These discretionary expenditure appropriations are managed by the budget managers. The budget manager is accountable for their organization s portion of the budget. Each budget manager is authorized to approve the expenditure of funds within their respective organization, provided that funds are expended in accordance with District purchasing procedures and legal requirements. The District s Administrative Cost Ratio has been consistently less than the standard allowable of 12.5%, set on administrative expenditures by the Texas Education Agency. The last calculated rate was 9.63%. This ratio compares the cost for administration to the costs for instructional and counseling services. Purchasing The Board of Trustees approves all bid awards of $50,000 or more and individual purchases of $50,000 (2 nd reading of policy in April) or more. Purchase orders are prepared for all purchases. Once a supply requisition is entered and approved at the campus/department level, the requisitions are reviewed by the purchasing director for verification of compliance with legal purchasing procedures. Once the Purchasing Director approves the requisition, an encumbrance to the account(s) designated will post. Encumbrances are reservations of appropriations for open purchase orders for goods that have not yet been received. The purpose of the encumbrance is to insure that obligations are recognized as soon as financial commitments are made in order to prevent inadvertent over expenditure of funds due to lack of information about future commitments. The Purchasing department then prints and sends the resulting purchase orders to the appropriate department so that they may place their order. 29

24 The goods ordered are generally received at the respective locations placing the order. Once the campus or department has matched the invoice to items received, they submit the invoice and purchase order to the Accounts Payable department for payment. The Comptroller and Accounts Payable staff verify that all policies have been followed, proper documentation has been presented for payment, and that the account codes coincide with the items or service received. Payments are then made to the respective vendors. Payment Authorizations and Travel Forms Payment Authorizations are used for the payment of miscellaneous items such as workmen s compensation insurance payments, sales tax remittance, and refund of fees charged, etc. Pre-approved travel vouchers are used for payment of meals, mileage, registration, lodging, airfare, etc. relating to employee travel. Payment Authorizations and Travel Vouchers, along with the appropriate supporting documentation are forwarded to the Business Office for verification, approval, and payment. Amending the Budget After the District budget has been adopted, it is sometimes necessary for the District or a budget manager to reclassify or make changes to the line item budgets under their responsibility. Since the budget is legally adopted at the fund and function level, the Board of Trustees must approve any budget amendments that transfer funds between funds or functions or that increase or decrease District budget totals. For example, appropriations for Instruction, Function 11, cannot be transferred to an administrative function, Function 23, without Board approval. All other required transfers that do not involve fund or function changes are reviewed, approved, and processed by the Business Office. For a change that does not increase/decrease the total District budget or function totals, a Budget Change Request Form should be completed and submitted to the Business Office for processing. This allows budget managers to move budget amounts between line item accounts within one function and from one object code category (supplies, services ) to another. A copy of the form with signatures and justification will be kept on file for audit purposes. One copy will be returned to the budget manager. For a change that does increase/decrease the total District budget or which moves budget amounts from one function to another, Board approval is necessary. A Budget Amendment Request Form is completed and submitted to the Business Office. This form is due to the Business Office by the Wednesday before the Monday on which Board materials are due to the Superintendent s office. Amendments moving budgeted amounts between Instructional, Administrative, and Student Support functions are common examples of this type of amendment. Donations to the District intended to increase expenditures and increases/decreases to grant funds are also common. 30

25 Monitoring the Budget The District s Pentamation finance system provides many useful tools and reports to Business Office personnel and budget managers in administering, monitoring, and controlling the implementation of the budget. This system provides many checks on account balances to ensure that funds are not over expended at the budgetary level. If sufficient funds are not available at the budgetary account level, purchase orders cannot be generated. The Business Office and budget managers monitor comparisons between budget and actual expenditures to maintain cost control and to protect against overspending for payroll and related accounts On a monthly basis, management reviews financial reports generated by the District s financial accounting system, and those reports generated for the monthly financial report to the Board. At any period of time during the year comparisons to the prior year can be made by functional category and financial projections through the end of the fiscal year can be modeled with the District s cash flow projection report. These and other processes for reviewing projected year-end expenditure levels, as well as current expenditure levels, provide an increased level of comfort in assuring budgetary compliance. Reporting to the Texas Education Agency (TEA) The District s current year budget must be submitted annually to TEA through the Public Education Information Management System (PEIMS) transmission process as part of the fall submission each year. TEA monitors for compliance at the District level only. This monitoring is a legal requirement to ensure mandatory expenditure levels in certain program areas. In addition, actual audited expenditures are submitted through the PEIMS system each year in the winter submission for the prior school year. Financial Structure and Basis of Accounting The Belton Independent School District is an independent public educational agency operating under applicable laws and regulations of the State of Texas. A seven member Board of Trustees elected to staggered three-year terms by the District s residents autonomously governs the District. TEA provides the District s K-12 education accreditation. Fund Accounting The funds and accounts of the District have been established under the rules prescribed in the Financial Accounting and Reporting Module of the TEA s Financial Accountability System Resource Guide (the Resource Guide ). This budget document contains detailed information for all funds for which the Board of Trustees is required to adopt annual budgets. Budgets for all funds are prepared using the same method of accounting as for financial reports (modified accrual), except for the Capital Projects Fund budget. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available, except for principal and interest on general long-term debt, which is recognized when due. Following is a description of the funds for which annual budgets are adopted. 31

26 General Fund The General Fund is used to account for all financial transactions not properly includable in other funds. The principal sources of revenue include local property taxes, state revenues, some federal revenues, and interest on fund investments. Expenditures include all costs necessary for the daily operation of the schools except for the school food services. Child Nutrition Fund The Child Nutrition Fund is used to account for all the District s food service programs, including local, state, and federal revenue sources and all costs associated with the operation of the program. Debt Service Fund The Debt Service Fund is used to account for the payment of interest and principal on all voter approved bonds of the District. The primary sources of revenue for the debt service fund are local property taxes and the State instructional facilities and existing debt allotments. Classification of Revenues and Expenditures Texas Education Code Section requires that a standard school district fiscal accounting system be adopted by each school district. The system must meet at least the minimum requirements prescribed by the State Commissioner and also be subject to review and comment by the state auditor. Additionally, the accounting system must conform with Generally Accepted Accounting Principles (GAAP). A major purpose of the accounting code structure is to establish the standard school district fiscal accounting system required by law. Although certain codes within the overview may be used at local option, the sequence of the codes within the structure, and the funds and chart of accounts, are to be uniformly used by all school districts in accordance with GAAP. Revenues in our Texas school accounting system are divided into three categories. Local (5700), State (5800), and Federal (5900) receipts are the most common. A fourth category of receipts is the Other Resources (7900) category. These are considered nonoperating revenues. Examples include receipts for the sale of real and personal property, operating transfers from other fund categories, lease proceeds, and other infrequent material items. Expenditure budgets are legally adopted at the fund and function level. Major object codes are used to describe the type of items purchased or services obtained. The major object codes are: payroll and related costs (6100), purchased and contracted services (6200), supplies and materials (6300), other operating expenditures (6400), debt service (6500) and capital outlay (6600). Basic System Expenditure Code Composition: Fund Code 199, General Fund A mandatory 3-digit code is to be used for all financial transactions to identify the fund group and specific funds. The first digit refers to the fund group, and the second and third digits specify the fund. 32