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Step 1
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The first step is to look at the budget program in Form S-W2, which is the budget year worksheet, page 2, for the Actual previous year's total numbers for all funds for resource and expenditure lines of the budget. Double check the totals for the beginning balance on line 21 against your audit of the previous year's material, and also the total expenditures on line 38 again for all funds. Beginning in the FY05 budget, it is anticipated that the ending balances will be automatically carried forward for each fund as a beginning balance for the worksheets for the current school year. These beginning balances will be on line 21 of the current year's worksheet.
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Step 2 |
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Step 2 is the estimate of the current year's revenue and expenditure for each fund. As mentioned previously, the beginning balances should be on line 21 on the current year's worksheets of the program. As you look at your estimates for the current year, the use of the CAR is probably the best guide that a person can use to identify the revenue and expenditures for each fund. It is my recommendation that these revenues and expenditures be estimated slightly higher than the Actual from the previous year. When completing the current year's worksheet 1 and worksheet 2, use the actual numbers for property tax, state foundation aid and income surtax, and AEA flow-through from the final tax report from the Department of Management and the Final Aid & Levy for the current school year.
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Step 3 |
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Double check to make sure the totals from the current fiscal year worksheets are transferred to page 2 of the budget worksheet for the re- estimate for the current fiscal year (the beginning balance total of the current year should equal the ending fund balance from the actual year). If the totals do not transfer automatically to the budget worksheets on page 2 for the re- estimate of the current fiscal year, you may have to re-enter those totals on the budget worksheet, page 2. Then put the ending fund balance from the current year's worksheets for each fund as the beginning fund balance on line 21 in the budget year worksheets, page 1 and 2, for all funds.
We are now ready to begin work on the budget year forms.
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Step 4 |
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Go to Form S-AB, Adopted School Budget Summary Form. At the bottom of this form are two boxes—one labeled GAAP, and the other Non-GAAP. If you are budgeting on a cash basis, put an X in the Non-GAAP. If you are budgeting on a GAAP basis, put an X in the GAAP box. The rationale that I have used for school districts for staying on a Non-GAAP basis, has been that it gives the school district more flexibility of being able to delay expenditures in the General Fund from the current year to the following year. For example, a school district may have an unusual expense that causes them to exceed what was certified for expenditures and, thus, they were able to delay paying one month into the following year. These are one-time stop gap measures, but they do give a school district some flexibility in emergency situations.
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Step 5 |
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To complete Form S-TX, the Adoption of Budget and Taxes Form. This form is where the school district provides the taxable valuation for their total school district. In the lower section of this form is where the district puts the tax increment valuation for both with gas and electric utilities and without gas and electric utilities. This information is received from each of your county auditors that your school district contains taxable property. Add each counties taxable valuation together for both with and without the gas and electric utilities and, likewise, the same for the tax increment valuation, both with and without the gas and electric valuation. You have then completed this form.
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Step 6 |
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The completion of Form 703, your Long-term Debt Schedule, is where the district identifies all of its long-term debt—either through loans through the PPEL or from bond issues. If a district is reducing the property tax askings because of a local option sales tax, the local option sales tax should be placed in column H for that specific bond issue. When you are finished with Form 703, you are now ready to begin the Aid & Levy worksheet for the budget year.
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Step 7 |
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Completing the Aid & Levy Worksheet. Remember to use the tab key to go to the lines that you are being asked to input information on this form. Much of the information has been provided and already placed there by the Department of Management. Also the Department of Management has instructions to follow as you complete the Aid & Levy worksheet. I will highlight some specific sections and comment on those specific areas.
Line 5.10 is allowable growth for dropout prevention. A school district must have approval from the School Budget Review Committee in the form of a letter or as identified on the DE Web page regarding the amount that should be put on line 5.10. Again, the district must apply for additional allowable growth as part of the application process in early fall.
In section 15, line 15.9 asks for cash reserve levy for a School Budget Review Committee. Special consideration should be given for special education deficit, open enrollment students not counted in the previous year, increased enrollment, and if you have a construction project, where additional allowable growth has been granted. Those are the basic items that should be considered for cash reserve on line 15.9.
On line 15.10, consideration should be given for any portion of the Homestead Credit that is not funded by the state on line 14.10. The Juvenile Home reduction and any of the state school reduction from state aid that would diminish the cash to your district should be considered on line 15.10. If there is a state aid reduction, this would be where state dollars could be replaced with property tax dollars. If you need money for cash flow purposes, this would be the line to levy those additional dollars. Line 15.11 is the line where you are reducing property taxes that are required to fund your budget. It is not a line that I recommend school districts utilize unless political forces force you to use the line. Again, it is not a line that I recommend you use unless you have some very specific rationale and reason for justifying the reduction of cash in the bank for your school district.
In section 17, when you are estimating your unspent budget authority, it would be my recommendation to estimate your budget authority based on at least maintaining the unspent balance that you currently have in your district unless you absolutely know that it is going to be reduced. Likewise, with the estimated miscellaneous income on line 17.8, it would be my recommendation that miscellaneous income be estimated in a liberal fashion, versus a conservative fashion. Please recognize that in either of these two cases it is whatever you certify or what actually is received, whichever is less, that credits the final limitation for your district.
In section 21, you have some discretionary levies. In the Management Fund, a guide I have used for many years, is to levy the amount of dollars spent in the previous school year. However, consideration should be given to an unusual number of early retirements, if your district has an early retirement policy.
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Step 8 |
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Step 8 is the Budget Year Worksheet, page 1 and 2, Form S-W1, and Form S-W2. When estimating revenue, I recommend using your current year's worksheets as a guide for the revenue for all funds. You will note that the property tax and state aid, and AEA flow-through have flowed from the Aid & Levy worksheet into this worksheet. Again, double check to make sure you have brought forward the ending fund balances from your current year's worksheet to the budget year beginning balance, line 21. For estimating the expenditures in the General Fund, I would recommend that your total expenditures on line 38 equal line 17.9 from your Aid & Levy worksheet. This would be your estimated, maximum expenditures, and it would mean that you have certified your maximum expenditures even though you may not intend to spend all of your spending authority. In all other funds, I recommend within reason that you spend the amount of resources that are on line 22 for that particular fund. Thus, making your ending fund balance zero, which means that you are certifying the ability to spend what you see as your maximum resources available in that fund. For example, an exception to that general rule would be in the fiduciary trust fund, a scholarship where the principal cannot be spent. In that case, I would leave that unspendable principal as an ending fund balance on line 39. If there are such similar cases for other funds, where you have a reserve that must be maintained, leave as an ending fund balance to identify that it cannot be spent.
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Step 9 |
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After you have completed worksheet 1 and worksheet 2 for the budget year, check your error sheet to see if you are in balance. If you come up with an error message it will be because you have not transferred the ending fund balance to the beginning balance of the following year correctly. All other information that is needed will flow into the different worksheets except in the area of Form S-PB-8, which is your Proposed Budget Summary that will be published in the newspaper. At the bottom of this form, you need to put in the location, date and time of your public hearing. After you have completed the budget forms, remember your publishing requirements. A notice of a public hearing on the budget must be published not less than ten or more than 20 days before the budget hearing. You must file your budget with the controlled county auditor by April 15th, with all forms that are specified in the instructions. This summary, along with the instructions from the Department of Management, should help to facilitate your budget preparation process. |
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