SCHOOL DISTRICT OF SEWARD FINANCIAL INFORMATION 2005-2006

BUDGET BRIEFS

In spite of the extreme swings in state aid funding and the impact on our schools, the district continues to provide equitable opportunities, services, and instruction of the highest quality to our students. Our challenges remain with the school finance system and the state of Nebraska shifting the tax burden to the local level.

A review of the board's strategic plan provides information about the goals of the district related to finance. New and current programs must be consistent with the Strategic Plan. Lost funding, and the uncertainty over future funding levels have prompted the district to tighten expenditures on supplies, materials, and resources. Working under the state-imposed budget restrictions, our board remains committed to maintaining quality student education, while making fiscally responsible decisions.

GENERAL FUND

Where the Money Comes from . . .

The General Fund is the operating fund of the school district. This Fund is maintained by all operating school districts in the state. General fund expenditures are limited by statute and the tax levy for this fund is restricted.

The school district's General Fund Budget is supported through a combination of local, county, state, and federal money, but the largest single source of revenue is property tax.

Revenues 2005-2006

The main local sources include property taxes, local fines and license fees, interest on investments and motor vehicle taxes. County receipts include county fines and license fees. State aid, special education reimbursement for school age students, other state categorical monies and payments for wards of the state are included in state revenues. Title 1 programs, vocational education, and grants from the U.S. Department of education make up the federal/grant portion of the revenues. "Other" receipts might include the sale of bonds or property, transfers from other funds, and insurance adjustments.

The district also has two bond funds. The high school bond is .0676 cents per $100 of assessed valuation. The elementary school bond is .0241 cents per $100 of assessed valuation.

Where the Money Goes . . .

General Fund expenditures for the 2005-2006 school year were $10,474,316. The largest allocation of general fund expenditures is instruction, which includes activities dealing directly with the teaching of students, including instructional materials, and teacher and teacher assistants' salaries and benefits. General fund expenditures includes special education costs.

Pupil support services includes such areas as guidance services, health services, and transportation. Staff training and curriculum development, school library services, and audio-visual services are included in staff services. District services include board of education expenses, business operations, executive administrative services, and central office staff. Legal expenses, audits, insurance, accounting and financial salaries are included in general business expenditures. Activities connected to the management of the schools, including building principals and office staff would be office of the principal expenditures. Maintenance and operations costs include, utilities, building upkeep, custodial salaries and benefits.

Expenditures 2005-2006

CASH RESERVE

The cash reserve is the checking account for the general fund, which funds a majority of the district expenses: salaries, instructional materials, transportation, etc. Money that will not be needed for expenses during the month is put into CD's or the Money Market account to earn a higher rate of interest. In layman's terms, this is a "savings account". The district's average monthly expenditures for 2005-06 were $894,000.00. The amount the district receives each month from taxes and state aid varies from as much as $1.7 million to as low as $180,000. In the lean months, money is transferred from the CD's or money market (our savings account) back into the general fund checking account to cover expenditures.

The amount of cash reserve varies from month to month, and the anticipated end of the year balance is simply an estimate of what will remain in the general fund savings at the end of the fiscal year. The amount of money not needed to cover expenditures during a fiscal year is carried forward to the next fiscal year. A "rule of thumb" that we use is to put a minimum of 4 months of expenditures in cash reserve - for the Seward District this year that would be about 3.6 million.

State Aid fluctuates from year to year, so another example of how fiscally responsible boards and districts use cash reserve is to offset the loss in state aid. Seward has a history of fluctuating state aid. In the 2006-07 fiscal year, the district will receive $646,161 less than the previous year in state aid. Because the cash reserve has been built back up from the 2003-2004 school year when it fell to 1.2 million at the end of the year, it will allow this loss to be covered with the reserve in place and maintaining all of the current staff and programs.

A cash reserve is also in place to cover unanticipated expenses. For instance, a boiler could go bad or an entire heating system in a school might have to be replaced. Or, as occurred this year, an extra teacher may need to be hired. Because of the growing numbers in first grade and an elementary improvement goal that each student is reading at grade level by the end of the 4th grade, a teacher was hired to start the second quarter this year.

Thus, the school board is being fiscally responsible by not just budgeting for the current school year but by looking to the future -- something that is very difficult under the current school funding system in Nebraska. The cash reserve is a safety net and helps the board to do long term planning and not year-to-year planning. In the lean years it is there to continue to fund expenditures in place, and in good times it can be built up so it is there for the hard times. Just as in personal accounts it is much better to have savings than to be paying interest on borrowed money.

LEVY AND STATE AID

This table provides a history of the total tax levy, including bond funds.

Seward Public Schools Levy Summary

The chart below depicts the amount of property tax collected for the general fund (less exclusions), the tax levy for the general fund and the amount of state aid received for that year.

             General Fund
Property Tax, Levy, and State Aid Comparison

The district is in the process of strategic financial planning. Constancy of purpose and the focusing of resources on district priorities will be facilitated by this comprehensive, systemic, long-range planning process; which includes evaluation of the efficiency and effectiveness of programs, funding based on district mission and goals, and improving public awareness of district financial needs. It also includes long-range facilities and maintenance planning to provide safe, clean, attractive facilities, conducive to learning and capable of meeting the educational needs of students.

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