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MACOMB INTERMEDIATE SCHOOL DISTRICT

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MACOMB INTERMEDIATE SCHOOL DISTRICT. HOW SCHOOLS ARE FINANCED IN MICHIGAN. Steven B. Barr Executive Director of Business Summer 2008. FUNDING SOURCES. Local Property Tax State Aid Federal Grants MISD Transfers. WHY WE ARE – WHERE WE ARE. - PowerPoint PPT Presentation
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  • MACOMB INTERMEDIATE SCHOOL DISTRICT HOW SCHOOLS ARE FINANCED IN MICHIGAN Steven B. BarrExecutive Director of BusinessSummer 2008

  • FUNDING SOURCESLocal Property TaxState AidFederal GrantsMISD Transfers

  • WHY WE ARE WHERE WE ARE

    On July 21, 1993, with PA 145, the legislature wiped out 2/3rds of public school operating revenues (~7.0 Billion Dollars). On March 15, 1994, the people of Michigan, by a 2 to 1 margin, approved PROP A which was an increase in the sales tax from 4 to 6%. This shift in funding responsibility from the local level to the state level also involved other elements:

  • THE PEOPLE VOTED TO: 1993 Proposal ASales Tax 4% 6%Income Tax 4.6% 4.4%Property Tax (mills) Homestead 34(ave) 6 Second Homes 34(ave) 24 Industrial/commercial 34 24 Enhancement na 3*

    Assessment Cap na 5%Real Estate Transfer Tax .0011% .75%Cigarette Tax $.25 $.75Out of State calls 4% 6%

    * Only available 1994-95, 1995-96, 1996-97 In 1997-98 became regional enhancement

  • REVENUE SHIFTSSOURCE 1993 2007

    LOCAL 74% 23%

    STATE 26% 77%

  • THE SCHOOL AID FUND

    1995 2001 2007Sales and Use Tax 46% 48% 41%State Education Tax 13 18 16Income Tax 10 19 16Tobacco Tax 5 4 4Lottery 6 5 6General Fund 17 1 0 Federal 1 1 11Other 2 4 6 100% 100% 100%

  • ONE OBJECTIVE OF PROPOSAL AReduced Spending Gap-1993Lowest 10 districts averaged $3,476/pupilHighest 10 districts averaged $9,726/pupil179% difference2008Lowest 10 districts averaged $7,204/pupilHighest 10 districts averaged $11,934/pupil66% difference

  • FOUNDATION AMOUNTS

  • THE FOUNDATION ALLOWANCE

    Min Basic PSA Max Hold Harmless

    1995 4,200 5,0005,500 6,5001996 4,506 5,1535,653 6,6531997 4,816 5,3085,808 6,8081998 5,124 5,4625,962 6,9621999 5,170 5,4625,962 6,9622000 5,700 5,7006,200 7,2002001 6,000 6,0006,500 7,5002002 6,500 6,5006,800 7,8002003 6,700 6,7007,000 8,0002004 6,700 6,7007,000 8,0002005 6,700 6,7007,000 8,0002006 6,875 6,8757,175 8,1752007 7,085 7,0857,385 8,3852008 7,204 up to 8,4337,475 8,433Macomb County $ 7,204 to $ 9,978

  • 2007-08 MACOMB COUNTY FOUNDATION ALLOWANCES

  • BLENDED COUNT

    1995 50/501996 50/501997 50/501998 40/601999 40/602000 25/752001 20/802002 20/802003 20/802004 20/802005 25/752006 25/752007 25/752008 25/75Fourth Friday in SeptemberFourth Wednesday after Labor Day 9-26-07The Count DaySecond Wednesday in February 2-13-08Supplemental Count DayAverage Daily Attendance

  • BLENDED COUNT 2007-2008FEBRUARY 2007 6,000 x 25 % = 1,500SEPTEMBER 2007 6,400 x 75 % = 4,800 6,300 FEBRUARY 2004 6,000 x 20 % = 1,200SEPTEMBER 2004 6,400 x 80 % = 5,120 6,320

    LOSS OF 20 FTEs @ $8,050 = $161,000.

  • FOUNDATION ALLOWANCE CALCULATIONS

    Calculation of Foundation Allowance Revenue (Section 20)The total amount of state aid a district will receive for foundation allowances is calculated in Section 20. It is derived from multiplying the number of general education membership pupils a district educates by the districts foundation allowance, then subtracting the local revenue from levying 18.0 mills. (See note below regarding pupil membership.) Note that the state pays only a portion of a districts foundation allowance revenue-it pays the amount remaining after subtracting from the foundation allowance amount the local revenue the district collects from its nonhomestead property tax. This tax is equal to 18 mills or the number of mills a district levied in 1993, whichever is less, multiplied by the non homestead taxable value (taxable value from business and second homes) in the district.

    Foundation allowance calculation (Sec.20): FY 2007-08 State {General EducationThe lesser of $8433 } Local Revenue from levying 18.0 mills*Portion = { X or the Districts } on nonhomestead property {Membership Pupils Foundation Allow. } *Or the number of school operating mills levied in 1993, whichever is less.

    Example of FY 2006-07 Sec. 20 CalculationFY 2007-08 Foundation = $7,200General Education Membership = 1,000Local Revenue from Nonhomestead Property Tax -= $2,000,000

    State and Location Foundation Allowance Revenue = $7,200 X 1,000 = $7,200,000State Portion of Foundation Allowance Revenue = $7,200,000 - $2,000,000 = $5,200,000 State Portion Per Pupil = $5,200,000 $1,000 = $5,200

    There is a maximum amount, called the state maximum foundation allowance, which may be used when calculating the state portion of the foundation allowance. This is the highest foundation allowance that may be used when multiplying the number of general education membership pupils by a districts foundation allowance to calculate total revenue (as described above). The state maximum foundation revenue was set at $1,500 above the basic foundation allowance each year until FY 2002-03. Beginning in FY 2002-03, the first year following the equity payment, the state maximum foundation is $1,300 above the foundation allowance, which for FY 2006-07 was $8,385 per pupil. Beginning 2007-08 this difference is variable because of the 2X formula. (Districts with a foundation allowance above the state maximum so-called hold harmless districts must levy additional local millages to make up the difference between this $8433 maximum and their foundation allowances.)

  • 2x FORMULAFoundations at the minimum will increase by twice the amount of those at state maxThose in between on a sliding scale

  • STATE AID CATEGORICALS11F NONPLAINTIFF DURANT SETTLEMENT22a PROP A OBLIGATION-(State portion of Foundation)22b DISCRETIONARY PAYMENT-(State portion of Foundation)24 COURT PLACED CHILDREN 26a RENAISSANCE ZONE-(State portion of Foundation) 29 DECLINING ENROLLMENT31A AT RISK31d SCHOOL LUNCH32d MICH SCHOOL READINESS51c SPEC ED HEADLEE OBLIGATION53a COURT AND STATE AGENCY PLACED PUPIL61a.1 VOCATIONAL EDUCATION61a.2 VOC. ED. ADMINISTRATION99k DISTRICT GRANTS107.1 ADULT EDUCATION PARTICIPANTS

  • FEDERAL GRANTSTitle ISchool Lunch/BreakfastIDEA (Special Ed)Safe and Drug Free SchoolsVoc EdAdult EdTitle III

  • TRANSFERSMISD Act 18 Millage DistributionMISD Act 18 Center Program Reimbursement

  • SOURCES OF REVENUE FOR CAPITAL IMPROVEMENTSSinking FundsNon-Qualified BondsQualified Bonds (State Guarantee)

  • DEBT RETIREMENT$25,000,000 Elementary School is amortized over 25 years. The payments for principal would be $1,000,000 per year.

    First year costs: December Bonds $500,000 Interest @ 4 % 500,000 Paying Agent fees 500

    June Bonds 500,000 Interest @ 4 % 490,000 Paying Agent fees 500 TOTAL $1,991,000

    First year millage : Total T.V. of District $ 700,000,000

    $1,991,000 / $ 700,000,000 = .00284 (or 2.84 mills)

  • CASH FLOWProperty taxes-July thru DecemberState Aid-11 Payments (Oct to Aug)School Bond Loan Fund

  • MAJOR COST COMPONENTSSalaryHealth Insurance CoverageRetirement System

  • MPSERS RETIREMENT RATES

    fy 2002 fy 2003 fy 2004 fy 2005 fy 2006 fy 2007 fy 2008 fy2009

    Health Costs 6.05 6.05 6.05 6.55 6.55 6.55 6.55 6.81Pensions

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