Regional Breakout
MASBO Annual Institute
May 2015
1
Monitoring Your School Budget
Presenter
Stephen Hemman
2
School Committee Responsibilities
• Hire the Superintendent
• Budget
• Policy
3
Monitoring Your School Budget
• School Committees are responsible for input
into the preparation of the regional school
district budget and its subsequent certification
and monitoring.
• This presentation will highlight types of
budget reports to provide to school
committees and how often; as well as
recognizing when district finances are stable
verses red flags for trouble.
4
Process to Monitoring Regional School
District Financial Status
• DESE Chart of Accounts
– Function Codes
– Object Codes
• Regional School District
– Income
– Budget
– Assessment
•
•
•
•
Financial Reports
Grants
Revolving Accounts
Special Funds
5
Chart of Accounts
DESE Classifications
Expenditures
•
•
•
•
•
•
•
1000 District Leadership & Administration
2000 Instructional Services
3000 Other School Services
4000 Operation and Maintenance Of Plant
5000 Fixed Charges
6000 Community Services
7000 Acquisition, Improvement and
Replacement of Fixed Assets
• 8000 Debt Retirement and Service
• 9000 Programs with Other School Districts
Revenues
•
•
•
•
General fund receipts
State aid receipts
State and Federal Grant receipts
Revolving and Special Fund Receipts
Object codes
01 Professional Salaries
02 Clerical Salaries
03 Other Salaries
04 Contract Services
05 Supplies and Materials
06 Other Expenditures
09 Transfers (optional)
Program codes
01 Regular Education
02 Special Education
03 Chapter 74 Occupational Day
04 Other Programs
05 Undistributed
See DESE
Chart of Accounts (DESE Classifications)
ref: Notebook for definitions 6
Financial Report
•
•
•
•
•
•
Summary Report
Income Report
Function Budget Summary Report
Function Budget Detail Report
Balance Sheet
Detail Budget Report
7
Revolving Accounts and Funds
• Revolving Accounts
Need a law to create a revolving account
• Funds
8
Revolving Accounts and Special Funds
1 Excess and Deficiency
2 Stabilization Fund
3 Reserve Fund for Compensated Absences
4 OPEB Liability Trust Fund
5 Circuit Breaker – State SPED Reimbursement Fund
6 School Choice Tuition
7 School Rental
8 Use of School Property
9 Student Athletics and Activities
10 Student Activity Agency
11 Vocational Education (Shop Revolving Accounts)
12 Adult Education and Continuing Education
13 Vocational Child Care Programs
14 Culinary Arts
15 Community Schools
16 Non-Resident Student Tuition
17 School Bus Advertising
18 School Day Care
19 School Lunch
20 School Bus Rental
21 Drivers Education
Lost Books/ industrial arts supplies
22 Transportation Fund
9
Montachusett Regional Vocational
Technical School District
• 18 Communities
2 Cities
16 Towns
• 22 School Committee Members
• 1,435 Students
• FY15 Budget $25,640,833
10
Montachusett Regional Vocational Technical School District
Financial Reports
As of September 30, 2014
Included:
• Balance Sheet
• Statement of Income and Expenses
• General Fund Income Summary
• Summary By Function Code (Subtotal)
• Summary By Function Code (Function Detail)
• General Ledger Expense Report
• Grants
• Revolving Funds
11
MONTACHUSETT REGIONAL VOCATIONAL TECHNICAL SCHOOL DISTRICT
BALANCE SHEET
September 30, 2014
ASSETS
CASH INVESTMENT
PETTY CASH
ASSESSMENTS RECEIVABLE
ASHBURNHAM
ASHBY
ATHOL
BARRE
FITCHBURG
GARDNER
HARVARD
HOLDEN
HUBBARDSTON
LUNENBURG
PETERSHAM
PHILLIPSTON
PRINCETON
ROYALSTON
STERLING
TEMPLETON
WESTMINSTER
WINCHENDON
$10,334,481.18
400.00
331,636.50
292,463.25
178,303.50
226,415.25
1,307,226.00
613,839.00
74,211.75
554,411.25
353,296.50
570,043.50
42,381.75
136,900.50
217,273.50
86,604.75
508,401.00
436,876.50
565,710.00
584,981.25
7,080,975.75
ESTIMATED RECEIPTS
AMOUNT TO BE PROVIDED FOR RETIREMENT
OF TAX EXEMPT LEASE PAYMENTS
AMOUNT TO BE PROVIDED FOR RETIREMENT
OF GENERAL LONG TERM OBLIGATIONS
11,295,824.31
9,754,026.00
6,296,000.00
TOTAL ASSETS
$44,761,707.24
LIABILITIES AND RESERVES
PAYROLL DEDUCTIONS PAYABLE
TAXES PAYABLE
REVOLVING ACCOUNTS
GIFTS & CONTRIBUTIONS
FEDERAL, STATE & LOCAL GRANTS
ENCUMBRANCES FY 2013-14
NON-RESIDENT TUITION
SCHOOL CHOICE TUITION
EXCESS & DEFICIENCY
APPROPRIATION CONTROL
PETTY CASH
HEALTH CLAIMS TRUST FUND
TAX EXEMPT LEASE PROGRAM
GENERAL LONG-TERM OBLIGATIONS
TOTAL LIABILITIES AND RESERVES
(2,999.07)
(405.79)
517,412.67
9,026.73
72,966.21
187,461.33
51,489.42
776,929.81
1,206,465.05
21,772,513.00
400.00
4,120,421.88
9,754,026.00
6,296,000.00
12
$
44,761,707.24
MONTACHUSETT REGIONAL VOCATIONAL TECHNICAL SCHOOL DISTRICT
STATEMENT OF INCOME AND EXPENSES
SEPTEMBER 1 THRU SEPTEMBER 30TH, 2014
CASH AVAILABLE AUGUST 31, 2014
INCOME:
ASSESSMENTS
STATE AID CHAPTER 70
SCHOOL CHOICE TUITION
SBAB AID
REVOLVING ACCOUNTS
GIFTS & CONTRIBUTIONS
FEDERAL / STATE GRANTS
INTEREST
MISC. INCOME
PAYROLL DEDUCTIONS
HEALTH CLAIMS TRUST FUND
TOTAL INCOME
9,858,716.12
1,150,056.00
11,242.00
948,213.00
407,912.41
358.05
62,575.04
1,404.38
5,012.18
375,066.91
354,867.63
3,316,707.60
TOTAL CASH AND RECEIPTS
EXPENDITURES:
WARRANT #1508
OPERATING & CAPITAL
WARRANT #1509
OPERATING & CAPITAL
WARRANT #1510
OPERATING & CAPITAL
WARRANT #2015-106
PAYROLL & TAXES
WARRANT #2015-107
PAYROLL & TAXES
SCHOOL CHOICE TUITION ASSESSMENTS
VOID CHECKS # 57831 &57853
TOTAL EXPENDITURES
TOTAL CASH AVAILABLE
13,175,423.72
613,162.63
738,992.79
89,041.74
729,120.85
653,036.93
17,938.00
(350.40)
2,840,942.54
10,334,481.18
13
MONTACHUSETT REGIONAL VOCATIONAL TECHNICAL SCHOOL
General Fund- Income Summary
General Fund Income
Received through
9/30/14
Budgeted
Anticipated
Receipts
Over/(Under)
Budget
State Aid
Chapter 70
13,800,675
3,450,168
10,350,507
-
Transportation Reimbursement
970,481
0
1,279,921
309,440
School Building Authority Aid
948,213
948,213
0
0
9,441,464
4,371,730
5,069,735
0
Interest Income
0
2,264
0
2,264
Miscellaneous Receipts
0
56,470
0
56,470
480,000
480,000
0
0
0
0
0
0
$25,640,833
$9,308,845
$16,700,163
$368,174
Local Receipts
Community Assessments
Appropriation from E&D
Fund Transfers
Total General Fund Income
14
MONTACHUSETT REGIONAL VOCATIONAL TECHNICAL SCHOOL
FY2015 SUMMARY BY FUNCTION CODE
Function Code Function Description
1000 DISTRICT LEADERSHIP
2000 INSTRUCTION
3000 STUDENT SERVICES
4000 OPERATIONS & MAINT
5000 FIXED CHARGES
7000 FIXED ASSETS
8000 DEBT RETIREMENT
9000 TUITION
Transfer to Stabilization Fund
Total
FY14
Approved
Budget
FY15
FY15
FY15
FY15
FY15
Approved
Expenditures Unexpended Bal Encumbrances
Unencumbered
Budget Through 9/30/14 Through 9/30/14 Through 9/30/14 Budget @ 9/30/14
964,228
12,673,632
2,424,489
2,897,024
4,055,702
315,000
1,213,204
242,000
967,104
12,968,750
2,601,919
3,250,626
4,071,835
305,000
1,210,099
240,500
25,000
209,424
1,645,613
233,893
489,068
1,109,958
126,550
53,814
-
757,680
11,323,137
2,368,026
2,761,558
2,961,877
305,000
1,083,549
186,686
25,000
115,305
98,875
1,503,196
848,288
2,915,638
-
642,375
11,224,262
864,830
1,913,270
46,239
305,000
1,083,549
186,686
25,000
$ 24,785,280 $ 25,640,833 $ 3,868,320 $ 21,772,513 $ 5,481,302 $ 16,291,211
15
MONTACHUSETT REGIONAL VOCATIONAL TECHNICAL SCHOOL
FY2015 SUMMARY BY FUNCTION CODE
Function Code
1100
1200
1400
1450
2100
2200
2250
2300
2320
2350
2400
2450
2700
2800
3200
3300
3510
3520
3600
4110
4120
4130
4210
4220
4230
4300
4400
4450
5100
5200
5250
5260
5500
7000
8100
8200
9000
Function Description
School Committee
Superintendent's Office
Finance and Legal
District Technology
FUNCTION 1000 DISTRICT LEADERSHIP
Curriculum Supervision
Principal's Office
Building Technology
Teaching Services
Medical/Therapeutic Services
Professional Development
Textbooks and Instructional Materials
Instructional Technology
Student Services
Psychological Services
FUNCTION 2000 INSTRUCTION
Health Services
Student Transportation
Athletic Services
Student Activities
Security
FUNCTION 3000 STUDENT SERVICES
Custodial Services
Heating of Building
Utilities
Maintenance of Grounds
Maintenance of Buildings
Maintenance of Equipment
Extraordinary Maintenance
Networking & Telecomm
Technology Maintenance
FUNCTION 4000 OPERATIONS & MAINT
Employee Retirement
Employee Benefits
Retired Employee Benefits
Other Non-Employee Insurance
Fixed Charges
FUNCTION 5000 FIXED CHARGES
Acquisition of Fixed Assets
FUNCTION 7000 FIXED ASSETS
Long Term Debt - Principal
Long Term Debt - Interest
FUNCTION 8000 DEBT RETIREMENT
Tuition to other districts
FUNCTION 9000 TUITION
Transfer to Stabilization Fund
Total
FY14
Approved
Budget
FY15
Approved
Budget
40,183
248,750
501,251
174,044
964,228
869,879
354,464
360,732
8,467,943
15,900
200,500
872,535
277,673
1,154,504
99,502
12,673,632
184,980
1,608,903
329,629
184,847
116,130
2,424,489
684,573
380,000
816,000
70,000
421,951
269,000
37,500
140,000
78,000
2,897,024
217,000
2,814,673
909,129
97,900
17,000
4,055,702
315,000
315,000
923,000
290,204
1,213,204
242,000
242,000
38,183
309,126
514,795
105,000
967,104
941,496
349,771
398,802
8,874,326
17,132
184,600
771,488
159,000
1,169,784
102,351
12,968,750
191,605
1,765,156
347,293
181,735
116,130
2,601,919
674,613
240,000
1,437,057
65,000
357,349
271,800
70,000
56,807
78,000
3,250,626
247,000
2,875,782
806,181
121,872
21,000
4,071,835
305,000
305,000
957,000
253,099
1,210,099
240,500
240,500
25,000
$ 24,785,280
$ 25,640,833
FY15
Expenditures
Through 9/30/14
$
FY15
Unexpended Bal
Through 9/30/14
12,897
68,333
123,976
4,218
209,424
158,421
84,073
89,482
930,473
6,758
57,710
119,418
3,200
189,732
6,345
1,645,613
19,493
184,580
12,584
3,220
14,016
233,893
174,098
5,168
74,412
8,668
117,047
46,370
12,750
50,557
489,068
51,525
718,925
215,518
121,872
2,119
1,109,958
126,550
126,550
53,814
53,814
-
25,287
240,793
390,819
100,782
757,680
783,075
265,698
309,320
7,943,853
10,374
126,890
652,070
155,800
980,052
96,006
11,323,137
172,112
1,580,576
334,709
178,515
102,114
2,368,026
500,515
234,832
1,362,645
56,333
240,302
225,430
70,000
44,057
27,443
2,761,558
195,475
2,156,857
590,663
0
18,881
2,961,877
305,000
305,000
957,000
126,549
1,083,549
186,686
186,686
25,000
3,868,320
$ 21,772,513
FY15
Encumbrances
Through 9/30/14
FY15
Unencumbered
Budget @ 9/30/14
5,702
41,026
64,358
4,218
115,305
11,257
54,228
5,123
28,268
98,875
11,321
1,389,663
38,941
63,272
1,503,196
8,452
234,833
431,663
12,514
27,723
105,471
189
27,444
848,288
195,475
2,119,141
590,663
10,358
2,915,638
-
19,584
199,766
326,461
96,564
642,375
783,075
254,441
309,320
7,943,853
10,374
72,662
652,070
150,677
951,784
96,006
11,224,262
160,791
190,913
295,768
178,515
38,842
864,829
492,063
(0)
930,981
43,818
212,580
119,959
70,000
43,869
(0)
1,913,269
0
37,716
0
8,523
46,239
305,000
305,000
957,000
126,549
1,083,549
186,686
186,686
16 25,000
-
$
5,481,303
$
16,291,210
MONTACHUSETT REGIONAL VOCATIONAL TECHNICAL SCHOOL DISTRICT
FEDERAL, STATE AND LOCAL GRANTS
FY15
PERKINS
FY15
SPED 94-142
BALANCE 7/1/14
FY14
FY14
SPED 94-142
PERKINS
85,708.62
25,848.91
FY14
FY14
STATE LEAD
TITLE I TITLE II PART A PROF DEVELOP
(77,352.93)
REVENUE
19,645.00
28,186.00
87,862.00
44,021.00
Subtotal
19,645.00
28,186.00
173,570.62
69,869.91
(77,352.93)
8,730.02
24,711.44
56,417.13
21.00
25,193.75
21,287.32
1,542.00
52,713.96
13,157.00
6,000.00
FY14
(8,405.80)
(8,405.80)
4,575.71
4,575.71
FY14
PERKINS
VOC EQUIPT
JROTC
INITIATIVE
10,000.00
(10,917.76)
5,000.00
40,000.00
121,289.73
50,000.00
110,371.97
SHINE
5,000.00
EXPENSES
Salaries
Fringe
Contract Services
Supplies & Materials
Travel
Other Costs
Indirect Costs
Equipment
1,100.00
8,250.00
3,135.00
8,617.63
20,323.02
1,295.00
50,000.00
Subtotal
9,830.02
24,711.44
81,631.88
34,214.32
71,870.96
1,295.00
Balance at 9/30/14
9,814.98
3,474.56
91,938.74
35,655.59
(149,223.89)
(9,700.80)
4,575.71
50,000.00
-
28,940.65
81,431.32
5,000.00
72,966.21
17
MONTACHUSETT REGIONAL VOCATIONAL TECHNICAL
REVOLVING/SPECIAL REVENUE ACCOUNT BALANCES
JULY 1, 2014 - SEPEMBER 30, 2014
Account Name
Ledger
Balance
7/1/2014
Athletics
Auto Body
Auto Tech
Building and Grounds
Building Use
Bulldog Pride
Carpentry/Cabinetmaking
Child Care
Continuing Education
Construction Cluster
PN Program
Cosmetology
Culinary Arts
Drafting Technology
Driver Education
Electrical
Engineering Tech
Glasses
Graphic Communications
Hazardous Waste
Health Occupations
Industrial Technology
Professional Development
Machine Shop
Masonry
Parking
Plumbing
School Lunch
School Store
Surplus Equipment
Textbooks
Welding/Metal Fab
TOTALS
Revenue
23,282.58
931.82
9,262.73
2,040.04
18,288.11
44.09
8,115.52
152,942.72
7,252.97
156.48
6,299.26
14,080.10
2,359.02
3,812.59
29,755.97
596.99
93.00
7,548.02
7,381.61
5,696.35
154.77
607.13
41.33
22.87
1,602.51
27,594.36
5,345.04
(147,652.90)
3,918.52
5,878.54
5,518.45
5,509.74
$
208,480.33
Expenses
1,118.00
0.00
268.00
0.00
24,410.75
0.00
399.12
23,793.60
219,894.56
982.55
237,630.00
2,003.80
12,548.08
0.00
44,915.00
165.00
0.00
51.00
555.00
21.00
0.00
0.00
0.00
0.00
200.00
4,440.00
0.00
149,889.94
832.08
0.00
233.97
547.63
$
724,899.08
0.00
156.69
445.60
0.00
21,473.56
0.00
0.00
25,125.17
69,184.82
0.00
89,501.97
0.00
13,013.71
0.00
27,234.45
0.00
0.00
95.89
0.00
0.00
0.00
0.00
0.00
0.00
0.00
195.00
0.00
169,539.88
0.00
0.00
0.00
0.00
$
415,966.74
Balance
9/30/2014
24,400.58
775.13
9,085.13
2,040.04
21,225.30
44.09
8,514.64
151,611.15
157,962.71
1,139.03
154,427.29
16,083.90
1,893.39
3,812.59
47,436.52
761.99
93.00
7,503.13
7,936.61
5,717.35
154.77
607.13
41.33
22.87
1,802.51
31,839.36
5,345.04
(167,302.84)
4,750.60
5,878.54
5,752.42
6,057.37
$ 517,412.67
Receivables
25,460.00
46,607.31
$ 72,067.31
Balance after
Receivables
24,400.58
775.13
9,085.13
2,040.04
46,685.30
44.09
8,514.64
151,611.15
157,962.71
1,139.03
154,427.29
16,083.90
1,893.39
3,812.59
47,436.52
761.99
93.00
7,503.13
7,936.61
5,717.35
154.77
607.13
41.33
22.87
1,802.51
31,839.36
5,345.04
(120,695.53)
4,750.60
5,878.54
5,752.42
6,057.37
$ 589,479.98
18
Regional School District
Transportation Reimbursement Fund
Presentation to
MA Association of School Business Officials
Christine M. Lynch, DESE
19
Transportation Reimbursement Fund
 Chapter 233 approved on August 5, 2014.
 Allows regional school committees to establish a Regional
Transportation Reimbursement (RTR)Fund and deposit
regional transportation reimbursements into the fund.
 Once deposited, any remaining funds at the end of the
year are allowed to carry forward for one FY.
Currently regional school districts must estimate future reimbursements as they compile
their budgets for the next fiscal year. This activity can occur in the fall or early winter before
the Governor’s proposed budget is released. Allowing regional school districts to carry
forward current reimbursements allows them to more accurately plan for the following
year’s budget.
20
Establishment of Fund
School Committee votes once to establish the
RTR Fund.
The district then is allowed to deposit state
transportation reimbursements into the RTR
Fund, with approval of school committee.
21
Use of RTR Fund
 May only be used for transportation expenses.
 Must use to decrease the town’s transportation
assessments. Towns should assume that
whatever is deposited in previous year will be
used to offset assessments for the current year.
 Should inform the member towns of amounts
available within the RTR Fund.
22
Restrictions
Deposited funds can be used only in the
current fiscal year or the subsequent fiscal
year.
If prior year reimbursements remain in the
RTR Fund at the close of the subsequent fiscal
year, those funds must then revert to the
district’s Excess & Deficiency (E&D) balances.
23
General Fund Exceptions
Expenditures are made directly from the RTR
Fund; a transfer into the general fund is not
allowed.
Balances within the restricted amount are not
part of the district’s general fund and do not
impact the district’s E&D calculation.
24
Budget Development and
Amendments
The RTR Fund can be used by the school
committee without requiring approval of the
member towns during the budget process.
HOWEVER, in the event that use of these
funds increases the budget, the regional
school committee must amend its budget by
following the process outlined in 603 CMR
41.05 (5). Regional School District Budgets.
25
Reporting
 Report as a normal budgeted expense. (funds
approved as part of the budget or through an
amendment to the budget.)
 Expenditures from the RTR Fund, are reported on the
EOY Report as an additional appropriation of the
school committee.
 Report revenue on EOY Report as assessment
revenue.
26
Incurring Debt and Capital Issues
Presenters
Christine M. Lynch
Camie Lamica
27
Methods of Incurring Capital Debt
1. M.G.L Chapter 71, § 16(d)
“. . . no debt may be incurred until the expiration of sixty days from the date
on which said debt was so authorized; and prior to the expiration of said
period any member town of the regional school district may hold a town
meeting for the purpose of expressing disapproval of the amount of debt
authorized by the district committee, and if at such meeting a majority of the
voters present and voting thereon express disapproval of the amount
authorized by the district committee, the said debt shall not be incurred.”
 Written notice must be provided to the member towns.
 If any member town holds a town meeting within 60 days of the school
committee’s authorization to disapprove the amount of debt, the debt will not
be incurred.
28
Methods of Incurring Capital Debt continued
2. M.G.L Chapter 71, § 16(d)
In the case of a vocational RSD, if the agreement so provides, such debt may also be incurred:
 If 2/3 of the member towns do not vote disapproval within a sixty day period provided that
said towns which have not voted disapproval agree within ninety days of the date on which
said debt was authorized to pay the total bond indebtedness authorized by the district
committee without contribution by the member towns which voted disapproval of the
amount of said debt.
 Member towns which voted disapproval of the amount of said debt shall have the right to
retain their membership except that they shall not be allowed any added enrollment that
might result solely from the expansion of facilities that occurs on account of said new
indebtedness.
 Debt incurred under § 16(d) shall be payable within 30 years, but no such debt shall be issued
for a period longer than the maximum useful life of the project being financed as determined
in accordance with guidelines established by the division of local services of the department
of revenue.
29
Methods of Incurring Capital Debt continued
3.M.G.L Chapter 71, § 16(n)
“To incur debt for the purposes and terms specified in clause (d); provided
that the vote of the district committee authorizing such debt is approved
by a majority of the registered voters in member towns voting on the
question at an election…”
 The election must be called and held pursuant to the provisions of § 16(n).
 Vote of district committee authorizing debt must be approved by majority
of registered voters throughout the district ballot.
 Expenses of the election are paid by the RSD.
30
School Committee Choice on Options
M.G.L Chapter 71, § 14 D
 Use the method outlined in the RSD Agreement for incurring
debt; - § 16(d) or § 16(n)
 If the RSD Agreement does not include a method for incurring
debt:
 The provisions of § 16(d) apply or
 The regional school committee may, by a 2/3 vote choose
§ 16(n).
31
Purpose for Borrowing – C.71, §16(d)
 Acquiring land and constructing, reconstructing, adding to, and equipping
a school building;
 Remodeling and making extraordinary repairs to a school building;
 Constructing sewerage systems and sewerage treatment and disposal
facilities, or for the purchase of use of such systems with municipalities;
 Purchasing departmental equipment;
 Constructing, reconstructing or making improvements to outdoor
playground, athletic or recreational facilities or roadways and parking lots;
 Any other public work or improvement of a permanent nature, and
 For planning, architectural or engineering costs relating to any of above
purposes.
32
Capital Definition in RSD Agreement
Chapter 71, § 14B: RSD Regulations - Contents of Agreement:
 The Regional Agreement must include the method of apportioning the
expenses of the regional school district.
 Operating and Capital Costs are typically defined in the regional
agreement before addressing the apportionment methods.
 Recommend that language defining capital costs in agreements retain
flexibility for school committee to include certain categories as net school
spending eligible.
33
Net School Spending Categories
603 CMR10.06: Annual School Spending Requirements
 Extraordinary maintenance
 150,000 or less, at the discretion of the school committee.
 Student instructional services, materials and equipment.
 All Instructional equipment.
 Expendable items with a useful life of less than a year or a
per unit acquisition cost of less than $5000.
34
Definitions
603 CMR 10.02: School Finance Regulations –
 Equipment means machines, tools, furniture, vehicles, and other non-expendable
items with a useful life of more than one year and a per unit acquisition cost not
less than $5000.
 Extraordinary maintenance means the periodic servicing, repair or reconditioning
of school buildings, grounds, or equipment to extend the useful life of an existing
asset, provided that the total cost per project per school of an extraordinary
maintenance project shall not exceed $150,000.
EOY Report Instructions
 Expenditures for instructional equipment, including vocational equipment and
science lab equipment irrespective of unit costs.
35
Examples of Capital Definition in RSD
Agreements
 Capital costs will include capital outlay appearing in the 7000 DESE function codes. Capital
costs also include principal and interest debt service. Instructional capital expenditures
which qualify under net school spending are not included under capital costs and
instead are included as an operating cost.
 Capital costs shall consist of the costs of acquiring land and constructing, reconstructing,
adding to, and equipping a school building or buildings; remodeling and making
extraordinary repairs to a school building or buildings; constructing sewerage systems and
sewerage treatment and disposal facilities; purchasing or using such sewerage systems with
municipalities; leasing, with an option to purchase, equipment for educational purposes; any
other projects or acquisitions of a capital nature which the District is or may be authorized to
finance by borrowing; and debt service on bonds or notes of the District issued to finance
capital costs. The categorization of costs into either of these sub-categories is to be
determined by the Regional District School Committee.
36
Assessment Methods
Presenter
Mark Abrahams
37
Assessments
• Statutory Method
–Outlined by statute
• Agreement Method
–District proposes method to be
approved by DESE.
38
Assessments
Statutory Assessment Method. The calculation of members'
assessments pursuant to the provisions of M.G.L. c.70, § 6. Each such
assessment shall be the sum of the following amounts:
(a) the member's required local contribution to the regional school
district as determined by the Commissioner;
(b) the member's share of that portion of the regional school district's
net school spending, as defined by M.G.L. c.70, § 2, that exceeds
the total required local contribution for all members, this share to
be allocated pursuant to the assessment provisions of the regional
agreement; and
(c) the member's share of costs for transportation, capital project
debt service, other capital costs, and all other expenditures not
included in the regional school district's net school spending, this
share to be allocated pursuant to the assessment provisions of the
regional agreement.
39
Assessments
Alternative Assessment Method. The calculation of members'
assessments pursuant to the local option provided in the
fourth paragraph of M.G.L. c.71, § 16B. Each such assessment
shall be the sum of the following amounts:
(a) the member's share of the regional school district's net
school spending, as defined by M.G.L. c.70, § 2; and
(b) the member's share of costs for transportation, capital
project debt service, other capital costs, and all other
expenditures not included in the regional school district's
net school spending; both such shares to be allocated
pursuant to the assessment provisions of the regional
agreement.
40
Assessments
Statutory
• Notification to the DESE is not required.
• An annual affirmative vote of the appropriating authorities
of 2/3 of the members is required.
• “Preferred” methodology
• About 2/3 of MA districts
Alternative
• All members of the regional school district must
unanimously approve this method.
• A vote must be taken each year to utilize this method.
• Notification to the DESE is required.
• About 1/3 of MA districts
41
Governance—School Committee
Presenter
Stephen Hemman
42
Constitutional Law
• One Person One Vote
• School Committee membership must conform
to One Person One Vote
• Representation on the Committee is based on
the populations of the towns
43
Meeting One Person One Vote
Requirement
• Options
• CHAPTER 71 - PUBLIC SCHOOLS
• Section 14E:
Regional school district committee membership
44
Section 14E
• A regional school district may, by amendment
to its regional school district agreement,
provide for one of the following options
concerning the members of its regional district
school committee:
45
Options
• (1) electing committee members by voters in
member communities with each community’s
representation apportioned according to
population;
• (2) electing members in district-wide
elections to be held at the biennial state
elections;
46
Options
• (3) electing members with residency
requirements in district-wide elections to be
held at the biennial state elections;
• (4) weighing the votes of committee
members according to the population they
represent;
47
Options
• (5) appointing committee members by locally
elected officials such as school board
members.
• Each regional school district shall designate an
individual to serve as district clerk.
48
Elections at Biennial State Elections
• If a regional school district decides to elect
members in district-wide elections to be held
at the biennial state elections or if any vacancy
is to be so filled, the district clerk shall notify
the state secretary by April fifteenth of the
year of the biennial state election of that fact
and also of his name and mailing address.
49
Special Legislation
• A Regional School District can file special
legislation to have the school committee
members elected for a different number of
years and at the local elections rather than
biennial state election .
50
Segregation of Duties
Presenter
Camie Lamica
51
Remember: Two are Better than One
52
Control Environment
• Policy and Procedures
– ADEQUATE Separation of Duties
– Proper Authorization of transactions and activities
– Adequate documents and records
– Physical control over assets and records
– Independent checks on performance
53
Segregation (or Separation)
• Custody of Assets from Accounting
– Excessive Risk when one person performs both
functions
– Disposing of Asset and adjusting the records for
personal gain relieves themselves of responsibility
– Treasurer maintains bank accounts and the School
Business Administrator records the activities in
the general ledger.
54
Authorization
• Authorize transactions should have no control
over asset.
– Person authorizing payment of a vendor’s invoice
should not be same person who verifies receipt of
goods.
- Athletic Director signs receiving slip, business
administrator authorizes invoice and treasurer pays
bill.
55
Independent Checks
• Basic Internal Controls – HELPS PREVENT
FRAUD
– Management Tone
– Operating Style – Ask questions and Reviews
– ****RECONCILIATION****
56
Post Employment Benefits
(OPEB)
Presenter
Mark Abrahams
57
OPEB
Other (than Pensions) Post Employee Benefits
GASBS 43
Applies to trusts that are established in order
to prefund or pay OPEB benefits
1.
2.
3.
4.
Administered as trusts, or
equivalent arrangements
Employer contributions to the
plan are irrevocable
Plan assets are dedicated to
providing benefits to their
retirees and their beneficiaries in
accordance with the terms of the
plan
Plan assets are legally protected
from creditors of the employer(s)
or the plan administrator
GASBS 45
Applies to the financial statements
issued by employers that offer OPEB.
1.
2.
3.
Establishes standards for the
measurement, recognition, and
display of OPEB
expense/expenditures and
related liabilities (assets)
Consistent with GASB 27;
Accounting for Pensions
Intended to improve financial
reporting
58
1) Project Benefits
25
40
62
80
2) Discount
A.P.V.
3) Actuarial cost method
Normal Cost $ 1.6m
Prior Serv
$ 2.2m
ARC
$ 3.8m
UAAL
$37.2m
Discount Rate
4.0%
59
Vehicles to Accumulate Funds to Meet
OPEB Liabilities
Massachusetts
1. Establish an OPEB Liability Trust Fund - MGL 32B:20
2. Establish a Special Purpose Stabilization Fund –
MGL 40:5 or 71:16B
3. Special legislation
60
32B:20 Planned Revisions
•
•
•
•
•
•
•
•
•
Total replacement of 32B:20
All inclusive - any political subdivision of the commonwealth
The treasurer of the governmental unit shall be the custodian of the OPEB
Establishes “OPEB Fund board of trustees”; an independent board of trustees
selected by the governmental unit with investing authority for the OPEB Fund
Complemented by a “declaration of trust to be adopted by the trustee or
board”
The assets of which shall be held solely to meet the current and future
liabilities of the governmental unit for group health insurance benefits for
retirees and their dependents
All monies held in the fund … shall not be subject to the claims of any general
creditor of the governmental unit
An actuarial valuation report shall be submitted no later than 90 days after
receipt of such report
See Section 4: House 3611
61
Financial Statement Impact
Governmental Fund
General Fund
• No 32B:20 acceptance
• No declaration of trust
• Does not matter how much
money is invested
• Assets not considered plan assets
Major or Non Major Fund
• 32B:20 acceptance
• No declaration of trust
• Other non major fund or major if
satisfies 10% rule
• Assets not considered plan assets
Fiduciary Fund
•
•
•
•
32B:20 acceptance
Declaration of trust
Assets considered plan assets
An immaterial amount of $
invested may trigger a
governmental fund presentation
62
What’s Ahead
GASB 67 and 68, Pensions for FY 2015 statements
• Separates funding from accounting
• Reporting the Pension UAAL on the balance sheet
OPEB GASB 67 and 68 Equivalent
• Forthcoming guidance for OPEB plans for FY 2017?
statements
• Reporting the OPEB UAAL on the balance sheet
63
Today’s
Agenda a Nutshell:
OPEB Summary
GASB No.(GASB
45 for
(continued)
Requirements
43)Employers
Actions
1.
2.
3.
4.
Administered as trusts, or
equivalent arrangements
Employer contributions to the
plan are irrevocable
Plan assets are dedicated to
providing benefits to their
retirees and their beneficiaries
in accordance with the terms of
the plan
Plan assets are legally protected
from creditors of the
employer(s) or the plan
administrator
1.
2.
Adopt 32B:30
Accept Declaration of Trust
–
–
3.
4.
Irrevocable
Trustee
Reasonably fund portion of ARC
annually
Prudent investments
64
Closing the OPEB Gap –
Yes, It Can Be Done!
Avi Urbas
Director of Finance & Operations
Manchester Essex Regional School District
Why Bother?
• Will pay-go costs eventually ‘crowd out’ the
rest of your budget?
• Planning to borrow money any time soon?
• Would your town(s) support an override to
pay for retiree health insurance?
• Is MA legislature is likely to slash a massive
labor benefit or bail us all out?
• Remember: as time passes, cost of closing
OPEB gap increases
66
With No Action, OPEB Will Outgrow Budget
• MERSD pay-go payments forecast to grow from $560K/yr to $1.1M by 2020,
$2.0M by 2030, and $3.6M by 2043
• Retiree health would grow from 2.5% to 6% of annual spending (assuming 3.5% budget
growth), and crowd out educational program
$4,000,000
7.0%
$3,500,000
6.0%
$3,000,000
5.0%
$2,500,000
4.0%
$2,000,000
3.0%
$1,500,000
2.0%
$1,000,000
1.0%
$0
0.0%
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
$500,000
Benefit Payments
% of MERSD Spending
67
What Options Are Available?
• Broadly, OPEB challenge requires changes on both sides of the
equation: costs and funding
• Cost of benefits must be reduced to avoid crowding out of
educational program
$
• There is no magic big bag of money!
• Q: How does your benefits program compare to similar districts?
• Q: Which changes must be collectively bargained?
•
Increased, recurring funding must be set aside in annual budget
as well
•
•
$
Restructuring benefits unlikely to close entire gap
Even gradual added funding signals commitment to important employee benefit
3-Phase Roadmap to Close OPEB Gap
1. Take steps within your control to reduce/control costs
•
Solicit competitive bids for health insurance annually
•
Migrate eligible retirees to Medicare as primary insurer
•
Municipal Health Reform (MHR) process enables plan design changes outside of
collaborative bargaining process
•
Require retirees to opt in to coverage at/prior to retirement only
•
Be sure to fully load budget for all new hires w/health and OPEB
(OPEB Load = Actuarial “Normal cost” divided by # of retirees)
2. Negotiate cost reductions that must be bargained by law
•
3.
Contribution rate changes must be negotiated, but easier to lower % for future
hires…they don’t vote!
Increase budget funds over time to close remaining gap
•
Gradually ramp up pre-funding over multi-year (5-15 yr?) time frame
Labor Has Incentive to Collaborate
• Reality: sustainable OPEB solution can preserve a highlyprized retiree benefit
• Negotiated agreement always preferable to unilateral cost
cutting by administration
• Lack of OPEB solution will eventually threaten personnel
budget as well
• Labor role in OPEB solution creates political support for future
compensation agreements
70
MERSD’s Approach
• MHR process brought labor to the table
– Contribution rate and minor plan design changes were more palatable
than GIC alternative
• Created goodwill by pledging 100% of insurance
cost savings to OPEB
– Emphasis on shared goal of putting OPEB benefit on path to
sustainability
– Exempted existing retirees + those near retirement
• Engaged actuary to run scenarios of OPEB gap
savings from various benefit change proposals
– Gave labor choice between options of equal value
71
The Key Ingredients
The Challenge:
– MERSD’s $2.3M ARC vs. $554K Pay-Go = $1.8M annual OPEB gap
(8.8% of entire General Fund budget)
The Solutions:
– Plan Changes: migrate all actives to 8% cheaper plan and lower contribution rate to 75/25
from 80/20
– Bring actuarial cost trend assumptions in line with health procurement results
– Invest funds to achieve market rate of return (8% vs. 4%)
Component of Annual Funding/Gap Reduction
Pre-Existing Budget Funds
$554,069
Historical Cost Trend vs. Initial Assumptions
$273,861
Plan & Contribution Changes
$779,062
Investment Return
$476,248
Remaining Unfunded Gap
$235,445
Annual Required Contribution
$2,318,685
23.9%
11.8%
33.6%
20.5%
10.2%
100.0%
$235K remaining gap (just
10% of ARC) to be closed over
5-10 years via gradual
increase in budget funding
72
RESOURCES
 Department’s web site on RSD issues:
http://www.doe.mass.edu/finance/regional/.
 Advisory on the Establishment of a Transportation Reimbursement
Fund.
http://www.doe.mass.edu/news/news.aspx?id=17814.
 Chapter 70, Section 16
 CMR 41.05 Regional Regulations
http://www.doe.mass.edu/lawsregs/603cmr41.html.
 UMAS Manual:
http://www.mass.gov/dor/docs/dls/publ/misc/umas.pdf.
73