The Budget Process

1
The Budget Process

• Part 1
• Overview

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
2
Purposes of Budgeting Process and Document

• Resource allocation Budget is a spending plan,
  and is principal mechanism for deciding
  priorities between programs.
• Examine percent distribution and trends in budget
  share by program.
• Financial control One of the principal
  mechanisms for assuring resources are spent as
  decided by school board.
• Compare actual spending to budget by object of
  expenditure, and organizational unit.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
3
Purposes of Budgeting Process and Document

• Management control Use budget to help improve
  efficiency and effectiveness.
• Compare trends in enrollment, productivity
  ratios, and student performance.
• Planning tool Budget can be connected to the
  strategic plan.
• Provide long-range forecasts of revenues,
  spending, enrollment, and student performance.
• The budget can be thought of as the continuous
  improvement plan translated into a performance
  plan. Keuren (2002)

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
4
Purposes of Budgeting Process and Document

• Communications device Budget can be used to
  communicate goals and objectives of an
  organization, and how resources are allocated to
  meet this objectives.
• Post the budget on-line
• Prepare a popular budget
• Create forums for citizen participation beyond
  the traditional budget hearing.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
5
What Makes Public Budgeting Different?

• Open process public manager serves many masters
  (school board, mayor, parents/other citizens,
  state education department).
• Objectives of public agencies are complexseldom
  is there one bottom line like profit.
• Many constraints on decision making (state and
  federal mandates, court orders, financial
  regulations, timing of state aid, etc.)
• Limited control of clientele public agencies
  have to serve all qualified residents (cant
  choose student body).

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
6
Budget Process

• Budget guidance (top down part of process)
• Priorities and changes Superintendents sets out
  new programs, and major changes to curriculum,
  staffing, and facilities.
• Forecasts of enrollment, staff turnover.
• Constraints on size and distribution of budget
• Revenue forecastsceiling on expenditure growth
  or total budget (ks)
• Legal constraints, mandates, categorical aid
  requirements.
• Mandatory spendingdebt service, contractual
  obligations (teacher salaries).

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
7
Budget Process

• Budget guidance (top down part of process)
• Preparation guidelines
• Forms
• Budget calendar (timetable)
• Inflation rates, salaries.
• Special procedures for estimating costs.
• Instructions on how to categorize
  spendingbaseline vs. improvements, operating vs.
  capital, etc.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
8
Figure 5-3 Budget Development Timeline Salt Lake
City Schools (FY 2002-03 Budget)

• December/January
• Begin review of capital projects
• Current enrollment projections ready
• Budget development schedule sent to program
  managers
• Determine general budget policy plans directions

• May
• Begin printing budget
• Board study session, presentation and discussion
  of executive budget (prior to June 1)

• July
• Advertise to hold hearings on budget tax rate
  that exceeds certified tax rate (if necessary)

• March
• Textbook, supply library budgets set up
• BG review of capital projects

• February
• Begin review of special programs
• Meet with program managers dept heads to review
  revise special programs

• April
• Budget tied together, reviewed, and budget book
  prepared egin review of capital projects

• June
• Publish newspaper notice of public hearings to
  revise current adopt new year budget tax
  rates.
• Board meeting public hearings to revise current
  budget and adopt new year budget tax rates.

• August
• Final budget tax rate adoption public
  hearings (if it is necessary to exceed the
  certified tax rate)

For full SLC budget go to http//www.slc.k12.ut.u
s/budget/03/03budget.pdf
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
9
Advantages of a Carefully Constructed Budget
Calendar

• It improves planning and budget preparation by
  providing advance notice of when particular
  information is required. Facilitates analysis of
  how budget relates to educational plan.
• It facilitates gathering opinions/data from key
  staff, board members, etc. by providing clear
  timeline on when decisions have to be made.
• Helps to assure that legal dates/requirements of
  the budget process are met.
• Facilitates informing the public about the
  process, and how and when citizens can comment.
• Source Budgeting Handbook 3. Full list is on
  the website
• http//www.emsc.nysed.gov/mgtserv/budget-02.htmP
  240_19485

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
10
Missouri Budget Calendar

• February - Preliminary budget estimates of
  revenues and expenditures should be prepared and
  distributed to members of the board of education.
• March - Preliminary budget hearing should be held
  by the board. Revisions of preliminary budget,
  based upon recommendations of the board of
  education, should be made following the February
  meeting.
• April - Revisions of the preliminary budget
  should be approved by the board of education. The
  tentative tax levy for the next school year
  should be determined. (However, in light of the
  significant legislation in 1995 and anticipated
  future legislation regarding changes in assessed
  valuation of property as a result of reassessment
  and the implications for tax levies, the board of
  education should cautiously and carefully
  approach staff salary and personnel increases at
  this time of the year. Significant changes
  through May of any legislative session may alter
  funding available to school districts. The board
  of education would not want to extend itself
  beyond what it is capable of funding from local
  and state sources.)
• May and June - The June Core Data Collection
  Cycle and end-of-year reports should be prepared.
  If at all possible, budget approval should occur
  prior to the beginning of the subsequent fiscal
  year.
• June - Final balances should be determined and
  the budget may be adjusted accordingly. The board
  of education should approve the levy. The
  tentative budget should formally be adopted by
  the board of education.
• July - The statutory and constitutional
  compliance checks for the district's tax rate
  ceiling for operations and the establishment of
  the debt service levy need to be completed and
  filed with the County Clerk(s) and State
  Auditor's Office. The Proposition C rollback
  should be calculated from the tax rate ceiling
  after any voluntary rollback to determine the
  adjusted tax rate to submit to the County
  Clerk(s).
• August - The Board should authorize the
  preparation of Estimate of Required Local Taxes
  (Form No. 3-660-160). When completed, this form
  should be forwarded to the County Clerk(s) NO
  LATER THAN SEPTEMBER 1. The August Core Data
  Collection Cycle should be filed with the
  Department of Elementary and Secondary Education.
  The Annual Secretary of the Board Report should
  by filed by August 15 with the School Finance
  Section.

11
Budget Process

• Budget preparation (bottom up part of process)
• Units within district prepare operating and
  capital budgets, estimate staffing requirements,
  and prepare justification for expansions of
  budget.
• Key issue is how decentralized this process is.
  Is budget prepared only by central
  administration, or are schools involved in
  developing and allocating budget (school based
  budgeting)?
• If school-level budgeting exists, what do they
  have control over (enrollment forecasts,
  personnel, facilities, other operating spending)?

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
12
Budget Process

• Budget review and approval
• Unit budgets are reviewed by SBO and
  superintendentunits usually required to make
  modifications. The more decentralized, the more
  time consuming this process is.
• Final budget is presented to school board, which
  can usually modify before budget vote.
• Public hearings are often held in conjunction
  with board review of the budget.
• Other states
• After board vote, may be public vote on budget
  (3rd Tuesday in May in NY). District gets
  several chances to pass budget.
• In New York, if budget doesnt pass, then
  district uses a contingency budget.
• SBO plays key role in preparing and presenting
  final budget.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
13
Budget Process

• Budget execution and audit
• Budget execution is managing the budget as it is
  implemented
• Checking for variance of actuals and budget.
• Adjusting budget targets as actual tax and aid
  figures become available.
• Modifying budget to meet unanticipated
  circumstances (transferring funds across
  accounts).
• At least once a month, a budget status report
  should be prepared The report should include
  estimated revenues, revenues received to date,
  and estimated revenues yet to be received
  original appropriations, adjustments and
  transfers, revised appropriations, expenditures,
  encumbrances, and unencumbered balances
• Budgeting Handbook 3, http//www.emsc.nysed.gov/
  mgtserv/budget-04.htmP530_45112

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
14
Budget Process

• Budget execution and audit
• Budget audit is the use of internal and external
  (independent) auditors to verify financial
  statements, and identify irregularities, control
  system problems, and pending financial problems
  facing the district.
• The annual independent audit should serve as a
  valuable tool in the budgeting processsince the
  audit is prepared at the close of the year by an
  outside independent certified public accountant
  or public accountant, it represents an unbiased
  look at the major categories of expenditures and
  revenues. The audit can serve to point out areas
  for improvement in the budget development
  process, as well as to serve as a review of the
  district's compliance with laws, regulations and
  accounting practices.
• Budgeting Handbook 3, http//www.emsc.nysed.gov/
  mgtserv/budget-07.htmP686_57665
• Missouri Statute (Section 165.121, RSMo) states
  that the school board of each six-director
  district shall cause an audit examination to be
  made at least biennially of all financial,
  transportation and attendance records of the
  districts.... Included in this statutory
  provision is authorization for the State Board of
  Education, with approval of the State Auditor, to
  prescribe minimum regulations and report form for
  the biennial audit. Cost of the audit report
  shall be paid for out of the General (Incidental)
  Fund of the district.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
15
The Budget DocumentMatching Information
Objectives

• Resource allocation (spending plan)
• Information by program
• Financial control
• Information by object of expenditure, and
  organizational unit.
• Management control
• Historical information on enrollment by type,
  productivity ratios, and student performance.
• Planning tool
• Long-range forecasts of finances, enrollment, and
  performance.
• Communication device
• User friendly formatpopular budgetexplanation
  of budget process, glossary, and summaries of key
  priorities, and program changes.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
16
Problems with Line-Item Budgets

• No visibility on programs
• No visibility on enrollment trends by type. No
  link between spending per pupil and student
  performance.
• Short-term focusOnly look at one-year in the
  future. No link to strategic plans, and capital
  improvement plans.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
17
Other Types of Budget Formats

• Planning, programming, budgeting (PPB)
• Budget organized by program areas. Includes
  program mission statements, objectives, and
  indicators of success.
• Long-range planning of goals, programs, and
  required resources.
• Policy analysis, cost-benefit analysis, program
  evaluation.
• Limited success because of heavy information
  requirements, incompatibility of program format
  with control mission.
• Zero-based budgeting (ZBB)
• Efficiency and effectiveness of programs to be
  reevaluated on regular basis.
• Agencies to prepare decision packages for each
  program that look at impact on mission of low,
  medium, and high funding.
• Decision packages of all programs are ranked by
  executive. Facilitates budget cuts by
  legislature (school board).
• Limited success because of heavy information
  requirements, and limited benefit to managers.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
18
PPBES - Planning, Programming, Budgeting
Evaluation SystemFrom Hack, Candoli Ray,
School Business Management

• Pupil Data - How many pupils will need
  programming? In general, and by special
  classification?
• Program Data - What do you intend to offer, where
  and to whom?
• Personnel Data - How many people are needed to
  offer what you want to offer to whom you wish to
  offer it? What is the average cost and
  distribution of cost of personnel?
• Facilities Data - What is the current condition,
  capacity etc. of your facilities? What
  changes/renovations/additions will be needed to
  offer your desired program?
• Financial Data - How much is there to go around?
  How might we raise more?

19
PPBES (Flow of the Process)
Proposed Programs
Decisions
Program Implementation
Objectives
School Program
Alternate Programs
Systems Analysis CE, CB, CU
Commitment
Long Range Plan
Output Evaluation
Program Operation
Annual Budget
20
Other Types of Budget Formats

• Performance-based budget
• Use of traditional function/object budget
• Includes performance information on workload
  (enrollment by type), productivity (class size),
  outputs (courses offered), and outcomes (student
  performance, violence, drop-out rates, etc.)
• Performance and spending may be linked through
  cost analysis, and program evaluation.
• Essentially merging of school budget and school
  report cards.
• Major budget reform of the last decade. (Used
  in federal government, many state and local
  governments.) Limited use in school districts.
  Standard Poors is now producing reports on
  school districts linking performance data and
  budgets in Michigan and Pennsylvania (see
  following).

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
21
SP Written Report

SP Observations


Detailed written analysis summarizing comparative
strengths, challenges, risks, and o
verall educational return on
resources. In addition, for each category of
analysis, the report provides a snapshot table of
important statistics,

detailed analytical commentary, and graphs
illustrating key data.
Comparisons, Trends, and Data Analysis

Parents Cor
ner
Revenue, Taxes, Debt





Summary of key information for parents,
Information on
revenue sources, financial margins, reserve
including test scores, spending, classroom
levels, property values, school tax rates, and
outstanding

information, tax and debt burden, and
bonds.

demographics.
Student Res
ults
Demographics





Scores and participation rates for MEAP, ACT,
Socioeconomic characteristics of students,
the community

SAT, PSAT, and AP. Also, graduation, dropout,
(district boundaries), and the region.

and attendance rates.
Spending
Schools In This District





Where dollars are spent including
Snapshot of information on each school in the
district,

compensation, academic programs, instruction,
including enrollment, test scores, and
demographics.

administratio
n, and debt.
Return on Resources
General Information





Includes the Performance Cost Index (PCI), a
Descriptive information regarding the district,
including

quantitative measure of the spending
location, number of schools, square miles, etc.

associated with a level of student achievement.
Learning Environment





Information on class and school sizes,
enrollment stability, staffing levels and
profiles,

safety, technology, and facilities.
School Administrator Commentary



School District Perspectiv
es


A description written by the school administrator
of the qualitative aspects of the school system,
including recent
developments, special circumstances, programs or
facilities, and accomplishments or distinctions.


For reports for Michigan and Pennsylvania
http//www.ses.standardandpoors.com/
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
22
Budget DocumentWhat is Recommended by ASBO

• Association of School Business Officials
  International recognizes excellence in budgeting
  through Meritorious Budget Awards Program.
  http//www.asbointl.org/Recognition/index.asp?s0
  bid69
• ASBO recommends four sections to budget
• Introduction executive summary, organization,
  financial summary in user friendly format.
• Organizational mission statements, major goals,
  budget and financial policies, budget preparation
  and management processes.
• Financial financial structure, detailed budget
  tables, capital budget, debt, accounting
  classifications and basis of budgeting.
• Information section historical data, forecasts,
  enrollment and personnel, property values and tax
  collections, debt schedules, performance
  measures.
• Award criteria http//www.asbointl.org/asbo/file
  s/ccPageContentdocfilename000370705546criteria.pdf

23
Example Salt Lake City Budget
24
Example Salt Lake City Budget
25
Example Salt Lake City Budget
 
 
26
Example Salt Lake City Budget
   
27
Budget Development

• Technical Issues

28
Integrated Planning Model
Core Operational Expenses
Staffing
Aid Allocations
General Fund Budget
Enrollment Number Type
Local Revenue
Facilities
Bond/Cap Budgets
29
Policy Levers

• Average Class Size
• What does lowering the average class size do to
  short and long run costs?
• Hiring Practices (new vs. experienced)
• How does hiring predominantly new teachers affect
  short and long run costs?
• Teacher Salaries (negotiable)
• Local Tax Rates (negotiable)

30
Exogenous Factors

• Population changes
• Not entirely exogenous because perceived quality
  of district (as assessed by things like P/T
  ratios) affects where people choose to live
  (which in local control states affects property
  values, hence local revenues.
• Teacher Attrition Rates
• Obviously, teaching environment affects
  attrition. Changes in P/T ratios or class size
  might have significant effects on attrition.
• State Aid (Foundation) Levels
• Administrators can affect aid levels through
  active lobbying.

31
Demographic Planning Analysis

• Data Driven
• Spreadsheet analyses of matrices of student
  enrollment data
• Typically involves cohort survival method
• Useful for projecting enrollments from year to
  year
• Spatial
• Maps enrollment and housing data to geographic
  zones using Geographic Information System (GIS)
  software.
• Useful for optimizing busing routes (traveling
  salesman problem) and for setting within district
  school boundaries
• Model Driven (Integrated)
• Involves constructing simulation models that link
  enrollment data to other system features for
  integrated financial planning

32
Data Driven
33
Model-Driven
34
Spatial
35
Enrollment Projections

• Enrollment drives staffing changes and the
  operating budget.
• Projecting enrollment by grade is one of the
  first steps in budget preparation.
• Possible approaches
• Naïve forecast assume no change. Simple, and
  can be accurate if enrollment is stable.
• Trend line fit trend line to historical data.
  Assumes history will repeat itself. Forecast can
  be sensitive to time period selected.
• Example used in this lecture--Jane Doe Elementary
  School in the Heartland School District (Figure
  6-6). For simplicity, example does not consider
  special needs students or staff.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
36
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
37
Enrollment Projections

• Cohort survival method (Figure 6-7)
• Follow cohorts of students across grades (see
  shaded boxes).
• Calculate the percent of students that move from
  one grade to the next. For example, the number
  of 1st graders at this school in 1996 are 87.6
  of the number of kindergarteners in 1995
  (92/105).
• For kindergarten, use information on live births
  for five years earlier (assuming children are 5
  early in kindergarten). For this example, the
  number of kindergartners in 1995 is 74.5 of the
  number live births in 1990 (105/14574.5).
• Strengths of this method
• Based on actual demographic and enrollment
  information
• Accounts for all reasons enrollment may change
  across grades.
• Does not assume fixed enrollment change every
  year.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
38
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
39
Enrollment Projections

• Cohort survival method
• Calculate survival rates for each grade across
  multiple years (see Figure 6-8).
• Take average of survival rates by grade--can
  examine how sensitive rates to length of average.
• For kindergarten, multiply survival rate by
  births five years earlier (Figure 6-9).
• For other grades, multiply enrollment in previous
  grade in previous by survival rate (Figure 6-9).
• Result is projection by grade and for the whole
  school (see Figures 6-9 and 6-10).

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
40
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
41
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
42
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
43
Revenue Forecasting

• Revenue forecasting is imprecise, but necessary
  function.
• Should look at trends over at least 10 years to
  determine
• Average growth rates in the past
• Volatility, particularly to economic changes.
• How district compares to neighboring districts.
• Example Onondaga Central School District
• Growth in property tax revenue has slown down
  significantly in the last four years (Figure
  6-1).
• Growth in state aid has remained between 5 and
  7 per year for the last 15 years. The one
  exception is 1989-1990 when aid dropped by 3.7
• Federal aid is a small share of revenue, but
  increased rapidly from 1996 to 2000.

44
Figure 6-1 Revenue Trends by Source Onondaga
School District
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
45
Property Tax TrendsOnondaga Central Schools

• Market property values grew faster (10.5) than
  property tax revenue (8.3) from 1986 to 1994
  (Figure 6-2). Effective tax rates dropped from
  2 to 1.7.
• The reverse is the case since 1994 with property
  values dropping 1.5 per year, while revenue has
  grown by 5 per year, because of rising tax
  rates.
• Onondaga SD has had a steeper decline in its
  property tax base after 1994 than the neighboring
  school districts (Figure 6-3).
• Ideally, the district would do an analysis of the
  possible reasons for decline, such as
• Loss of population, and impact on residential
  property values
• Loss of jobs, and impact on commercial and/or
  industrial property values.
• Change in income and poverty rates of residents.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
46
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
47
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
48
Forecasting Property ValuesOnondaga Central
Schools

• Property tax revenue is set by the district.
  Forecast should be of market value of property
  (and possibly assessed value).
• Look at possible scenarios (Figure 6-4)
• High scenario no loss of property value
• Medium scenario same decline (3.75 per year) as
  from 1994.
• Year High case Medium case
• 2001 212 m. 209 m.
• 2002 212 m. 206 m.
• 2003 212 m. 203 m.
• 2004 212 m. 200 m.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
49
Figure 6-4 Projecting Market Value of
Property Onondaga School District
240.000
235.000
Projection
Actuals
230.000
225.000
Trendline
220.000
High Case
215.000
Property values (millions)
210.000
205.000
Medium Case
200.000
195.000
190.000
185.000
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Year
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
50
Estimating Required Teachers and Resulting Class
Size

• Determining required number of teachers is a
  crucial step in estimating operating budget.
  Estimate should be based on projected enrollment
  and class sizes.
• Examine average class size by grade over several
  years compared to target level set by the
  district.
• In this example, the district has set a target of
  18 for K3 and 22 for 3rd-6th grades. Because
  enrollment has been declining, and number of
  teachers has changed little, class sizes have
  been dropping.
• In 2001, actual class sizes were below the target
  in all grades, but 2nd.
• Substitutes teachers have averaged 10 of regular
  teachers.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
51
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
52
Estimating Required Teachers and Resulting Class
Size

• Based on enrollment projections, estimate the
  resulting class sizes with different number of
  teachers.
• Assume same staff as 2001 (5 teachers per
  grade)Figure 6-12a Average class size well
  below target except in 2nd grade, especially for
  4th-6th.
• Assume number of teachers are reduced to 4 per
  gradeFigure 6-12b Average class size is well
  above target for K3, but on target for 4th-6th.
• Compromise might be to maintain staff of 5 for
  K3, but cut to staff of 4 for 4th-6th.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
53
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
54
Teacher Salary Schedules and Staffing by
Education and Experience

• Traditional teacher compensation systems have
  rewarded more experience and education. Salary
  schedules give the teacher salaries for each
  education and experience category (Figure 6-13a).
  For example, a teacher with an MA and 8 years of
  experience will have a salary of 47,107 in 2002.
• To determine the salary budget, you first need to
  know what experience and education level teachers
  had last year (Figure 6-13b).

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
55
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
56
Estimate Teachers by Education and Experience
Category

• Determine how many teachers move to a higher
  experience level. Teachers at the top level do
  not move up.
• Determine if there are teachers likely to move
  into higher education class. Some teachers are
  required to increase their education (e.g., move
  from BA to MA).
• Example (Figure 6-14) Assumes existing staff, no
  turnover, and only required education change.
• Assume state requires teachers to get MA by 5th
  year. Teacher in 4th year with BA in 2001 is
  assumed to have MA by 2002.
• All other teachers assumed to be same education
  class, and to move up one year of experience,
  except those in highest experience class.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
57
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
58
Determining Staffing with Staff Reduction

• How staff reduction (layoffs) are handled is
  typically determined under the teacher contract.
• Common approach is to layoff least senior staff
  and possibly staff with lowest educational
  attainment.
• Figure 16-15 illustrates a staff reduction for
  Jane Doe ES, based on seniority (and education
  level).
• Another approach to staff reduction is to
  encourage retirement of senior staff through
  golden handshake (early retirement plan). The
  reduction of salary costs through retirement of
  senior staff should be compared to cost of early
  retirement.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
59
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
60
Calculating Teacher Salary Budget

• Multiply estimated staff in each category by the
  salary for this category. Sum for all teachers
  in a school.
• For example, taking the salary for a teacher with
  an MA and 8 years of experience (Figure 6-13),
  and number of teachers in this category in 2002
  (Figure 6-14), the salary budget is
• 6 teachers x 47,107 282,642 (Figure 6-16a)
• Reducing 7 teachers (with least seniority)
  reduces salary budget by 18 (1,274,446/1,549,45
  7)compare Figures 6-16a and 6-16b.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
61
Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
62
Pupil/Staff Ratios for Other Staff in School

• Staffing patterns should be examined for other
  major types of staff in school
• Administration (principal, assistant principal)
• Other certified staff (social worker, librarian,
  etc.)
• Non-certified staff (nurse, secretarial,
  custodian, school lunch, etc.)
• Ideally, district would have targets for
  pupil/staff ratios by staff type to use as
  benchmark.
• In example, staffing has generally been within
  the target except for classroom aides (Figure
  6-17).

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Impact of Staffing Decisions on Pupil/Staff
Ratios for Other Staff

• Based on previous analysis, it appears that
  staffing is generally adequate, especially with
  declining enrollment.
• Using enrollment projections, compare staffing
  ratios with existing staff, and with a staff
  reduction (Figure 6-18).
• Without staff reduction, staff ratios are below
  target or close to target (Figure 6-18a).
  Possible to significantly reduce staff, and still
  remain within district target (Figure 6-18b).

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Calculating Salary BudgetOther Staff

• Salary schedules for other staff typically exist,
  and include salary increases with seniority.
  Administrator salary schedules typically dont
  include education adjustment, and have fewer
  seniority steps. Other certified staff may use
  same salary schedule as teachers (Figure 6-19).
• Shift staff forward with one year of experience.
  Need to make assumptions about turnover, and
  changes in education for non-administrative
  certified staff (Figure 6-20). If staff
  reduction, decision has to be made about which
  staff are laid off.
• Multiply staff by category by salary schedule to
  get the salary budget for other staff (Figure
  6-21).

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Employee Benefits

• Employee benefits represent an increasing share
  of compensation budget. Typically, fall into 4
  categories
• Required by law Social Security, Unemployment
  Insurance, Workers Compensation (calculated as
  percent of salaries)
• Determined by employer (same for all employees)
  Health insurance, child care credit.
• Determined by employer (differs across
  employees) Typically calculated as percent of
  salary--life insurance, accident insurance.
• Pensions Can be determined by district, or can
  be statewide system, which is the case in both
  Kansas Missouri. Employer contribution
  typically is a percent of salary. Two general
  types of systems
• Defined benefit
• Defined contribution (Most private pensions, and
  universities)

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Calculating the Total Personnel Budget

• Include estimated salary budgets for teachers and
  other staff.
• Add in estimated salaries for substitute
  teachers, and other employee compensation (often
  calculated as rough percentages).
• Calculate fringe benefits by type (see Figures
  6-23 and 6-24).
• Figures 6-23 and 6-24 illustrate salary budgets
  for Jane Doe ES with existing staff and reduced
  staff. Reduction in budget with reduced staff is
  19. Doing several versions of the personnel
  budget allows you to test for sensitivity of
  assumptions.

Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Special thanks to Bill Duncombe, Maxwell School
of Public Policy, Syracuse University
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Budget Development

• Notes on Participatory Processes

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What Site-Based Budgeting Does Doesnt Mean

• Site Based budgeting means a participatory
  process in determining budgetary needs down to
  the school and department levels. The goal is to
  get people involved in the decision making
  process (not to pass the buck on decisions)
• Site Based budgeting does NOT mean the total
  decentralizing of all financial management
  (purchasing etc.). This can lead to major
  inefficiencies.

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SBB Cautions

• SBB planning only works with Informed
  Constituents!
• Participants should be informed regarding the
  general financial issues, goals and objectives of
  the districts
• Planning team members need to be trained in the
  process of site based budgeting.
• This process should typically involve a
  simulation activity including both the technical
  side of cost calculation and the interpersonal
  aspects of inter-school and inter-departmental
  budget compromise.
• The potential for Inefficiency
• SBB means school site level planning, not
  necessarily all financial management, purchasing
  etc. When it comes to purchasing, theres power
  in numbers!
• Potential lack of congruence coherence
• For example, efforts like technology planning,
  while they may be participatory, should be
  ultimately centralized such as to create a
  theoretically congruent and coherent plan and
  technically compatible plan.

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School Level Discretionary Funds(?)

• District Controlled
• Central district admin (3 - 5)
• Teacher contracts (salaries benefits) (40 -
  50)
• Capital projects (8 - 10)
• Food Transport (5 - 10)
• Operations and Maintenance (5 - 10)
• School Controlled
• equipment (capital?) - may include instructional
  equipment (computers, microscopes), athletic
  equipment and furniture
• materials and supplies
• Activities funds (based on school collected fees)
• Kansas Note - Staff Development

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Site Planning Time LineKansas

• December - Form committees
• January - Procedure review
• March - Presentation of requests (internal)
• April - Compilation of requests priorities at
  district level
• Through July - Tinkering
• August - Public hearing
• note this is LATE

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Integrating Budget Concepts
81
Kansas Notes

• Budget Planning Fund Structure

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Kansas Fund Structure

• General Fund 3,870 per weighted pupil (01-02)
• Supplemental Fund Derived from LOB, can equal up
  to 25 addition to GFB (supplemented by state to
  75ile level)
• Special Education Fund Reimbursement of costs
  (focus on catastrophic personnel)
• Capital Fund Can be derived from 3 to 5
  additional mills of local levy (formally capped
  at 4 mills)
• Bond Derived from additional local mill levy
  (interest payment supplemented by state)
• Transportation, Food, Staff D., Activities

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Kansas Funds
General Fund
State Aid
Annual Operating Expenses
Supplemental Fund
LOB
Optional/limited transfer
Required transfer
Special Ed.
State Aid
Fed. Aid
Equipment, Improvements etc.
Capital Outlay
Capital Levy
Bond Mill Levies
New Buildings Major Renovations
Capital Outlay
Special State Aid