FinancialPlanning in a Small
District:
What is Sacred?
What can be Sacrificed?
What needs to Be
Considered?
IASB State Convention
November 2010
Denver Community School District
Denver, Iowa
Kathy Enslin – Superintendent of Schools – 15 years Supt. experience
Craig Lohmann, Board President – 7 years board experience
Kerri Wilson, Board Vice President – 6 years board experience
Carter J. Stevens Board member – 13 years board experience
Dale Schneider, Board member – 6 years board experience
Ken Kuennen, Board member – 7 years board experience
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OBJECTIVE OF THIS SESSION

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Basic Information on School Finance Goals
and Principles
Basic History of School Finance
Financial Indicators to watch
Identifying Areas of Expenditures
Basic Information on Denver Budget
◦
◦
◦
◦
Cash Reserves
Staff reduction
One time monies (ARRA stimulus)
Building with Revenue Bonds
2
School Finance
Goals and Principles
3
Equity in Expenditure
Property Tax Relief
Equalize Taxation
Uniform State Aid Allocation Formula
Predictable
Simple
Pupil Driven
Goals and Principles
4
Goals and Principles
Provide for Local Discretion
Establish Maximum Spending Control
One Funding Formula (AEA + K-12)
Provide Adequate Funding
Promote High Achievement
Modify the Impact of Community and
Family Background on Achievement
5
History of School
Finance in Iowa
6
In 1950
4,652 school districts
Reorganization Plan adopted in 1950’s
Currently
361 school districts
Brief History of School Finance
in Iowa
7
Brief History of School
Finance in Iowa
•Until
the mid 1960’s –school district funding
was all property tax
•In
1971, school foundation program adopted
(enrollment based) –substantial increase in
State aid to school districts
8
Brief History of School Finance in Iowa
(continued)
 In
1992, allowable growth adopted
 In 1996, increased Regular Program
Foundation Level from 83.0% to
87.5% beginning in FY 1997
(increased the portion of State aid
paid from the State General Fund and
provided property tax relief)
9
Brief History of School Finance in
Iowa (continued)

In 2001, eliminated the 100.0% budget
guarantee and replaced it with phase-out
or alternate budget adjustment to begin
in FY 2004. Made the on-time funding
provision permanent
10
Brief History of School Finance in
Iowa (continued)
2008 - State Sales/Use Tax for school
infrastructure - excess funds after school
infrastructure allocations will be used for
property tax relief through school aid
formula
 2010-11 - State Categorical –Additional
categorical program funding rolled into
the school aid formula beginning in

11
Brief History of School Finance in
Iowa (continued)

2009 Legislative Session: Across-theBoard Reduction of 1.5% for FY 2009

2010 10% Across-the-Board Reduction
October 2009
◦ American Recovery and Reinvestment Act (ARRA) Education Fiscal
Stabilization:$40.0 million in FY 2009

Established 2.0% allowable growth rate
for FY 2011
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Financial Indicators to
Watch
Unspent Balance
Spending Authority
Cash Balance
State Funding Formula
Enrollment Patterns
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Unspent
Balance
AKA……….Unspent Budget Authority
 Creates Confusion/Not well understood
 2-separate books…

 Fund Balance (Annual Audit)
 Spending Authority (Unspent Balance)
14
Understanding Spending
Authority
Each child has a “credit card limit” on spending. Each year
“Credit Card Limit” is paid through a combination of State
Foundation Aid and local property taxes (cash).
Unspent Balance (Unspent Budget Authority) simply is the
unused credit card limit for all of the children who have ever
attended school in the district.
The goal is to have cash and
authority equal.
Cash rarely equals
Authority
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Why is Spending Authority So
Important?
?
17
It is the legal
spending limit for
the district!
18
This is not the same as
Cash Balance.
This is not the fund balance.
It is illegal for districts to
overspend their Allowable
Spending Authority.
19
Understanding Spending
Authority is more
important than ever!
20
Additional Levy
Foundation Formula Levy
State Aid
FY2010:
87.5% of State Cost
($5,768) =$5,047 per
pupil
Uniform Levy
$5.40 per $1000 Valuation
Foundation Formula
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22
Property poor districts would be
able to generate very little
spending with very high tax
rates.
This would eliminate per pupil
student funding equity in the
finance formula - the main
stated goal of the formula.
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What is the Value of Spending
Authority?
Spending Authority is especially
important when the state is
unable to fulfill its obligations.
24
In Across the Board
Cuts…
When the state has to reduce its
expenditures mid-year through an Across
the Board (ATB) cut, cash to school
districts is reduced, but not Spending
Authority.
25
Cash is impacted
But Credit Remains
Virtually all of a district's spending is
obligated, so in the case of an ATB
cut, the reduction impacts a district's
bank balance, but does not impact
their Spending Authority.
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Identifying Areas of
Expenditures
Energy
Facility Physical Plant and Equipment
Transportation
Staffing
Curriculum and Supplies
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What is Sacred?
What can be Sacrificed?
What needs to be Considered?
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Reduction Areas to be
Considered
Staff (Sacred? Sacrificed? Considered?)
Class size (Sacred? Sacrificed? Considered?)
Energy (Sacred? Sacrificed? Considered?)
Transportation
Technology
Curriculum
Extra-Curricular
Administration
Sharing Opportunities
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Energy –
What are the room temperatures?
Are lights being turned off?
Is there a better building arrangement/
structure?
Do windows, boilers, roofing, insulation need
replacing?
Transportation- Can we consolidate routes?
Can we share team buses?
Can we schedule activities more efficiently?
Field Trips?
Professional Development Travel?
StaffingWhat are our pupil : teacher ratios?
How big are we willing to go with class sizes?
Can we reduce in any area?
Will negotiations committee work with us?
Can we alter benefits? (insurance, TSA,
extended contracts?
What are our Administrative Costs?
Professional Development Costs?
Curriculum – Can we postpone the curriculum cycle?
Do we have classes with low numbers?
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SOLVENCY RATIO
SACRED?
SACRIFICED?
CONSIDERED?
31
Solvency Ratio (Cash Balance) by
District Size
Small
Medium
Large
Minimum
0%
0%
0%
Average
15%
10%
5%
Maximum
40%
25%
15%
32
Enrollment Patterns
Are you gaining in enrollment?
Are you losing in enrollment?
Is your enrollment stable?
What are your Enrollment patterns?
33
Certified Enrollment

Certified Enrollment provides two
key pieces of information.
◦ Enrollment served (not headcount)
◦ Teacher FTE’s

Divide enrollment served by FTE’s
and you end up with a de-facto
class size measure.
34
STAFFING NUMBERS
SACRED?
SACRIFICED?
CONSIDERED?
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Key Measures
Total number of staff
Average Pay
Students per Staff
Payroll per Student
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STAFFING DECISIONS
are critical to school districts because
once the year is started, there is
very little ability to reduce
expenditures.
Schools are required to provide
contracts to certified staff by April 30
of the year prior to the budget year
they are planning. Districts may not
reduce or eliminate these contracted
staff mid-year.
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Variables in Data
Enrollment served
Full-time Staff
Part-time Staff
Total Number of Staff
Full-time pay
Part-time pay
Total Licensed Staff
Students per Licensed Staff
Percent of Staff Part-time
Total Licensed Payroll
Payroll per Student
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Conclusions for Staffing
Trends
You may be surprised that your most
expensive staff may be at your
elementary level
Massive differences in Class size
expectations between districts
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Are We Missing
Something?
Are all programs equal? elementary,
middle and high school
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Energy Costs
42
Other Things to
Consider…
Transportation costs
43
Curriculum/Technology Costs
44
Extra-Curricular Costs
45
Administrative Costs
46
Sharing Options/Incentives
47
How Did Denver Schools
Meet the Shortfall?
RAISED TAXES
$1.00 /$1,000.00
•Levied
Cash Reserve
•Budget Guarantee due to loss in enrollment
•Levied for special education deficit
•Levied for on-time funding (open enrollment/new
to district)
•Levied for At-Risk Allowable Growth
•Cut expenditures (energy, transportation,
curriculum, staff)
•Froze administrative salaries
•Building addition with Revenue Bonds to reduce
future costs
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Cash Reserve Levy
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Staff Reductions -16%
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Reduced 1-full-time music position
Reduced 1-full-time K-8 guidance position
Shared business education with
neighboring district
Shared FFA with neighboring district
Did not replaced teachers who left
◦ 2 positions

Offered Early Retirement Incentive
◦ 4 staff members
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Summary and Review
Understand your District
Know what is Sacred
Know what can be Sacrificed
Know what needs to be Considered
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Develop a Clear
Understanding of Your
Budget
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Kathy Enslin, Superintendent
Denver Community School District
520 Lincoln Street
Denver, IA 50622
319-984-6323
http://www.denver.k12.ia.us
Thank you for attending our
session today!
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Thanks to the Denver School
Board!
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