BOE Special Meeting January 7, 2016, 1:30 p.m.
Complete agenda can be accessed here.
Financial Services Update
- Director of Government Affairs Carolyn Thompson began by detailing the cuts to the education budget. Full breakdown can be found here.
- SDE is seeking board approval for the revised education budget.
- Per OMES, there is a mandatory 3% cut.
- SDE wanted to do more targeted cuts as opposed to across-the-board cuts. Therefore, while all items tooka cut, different activities were cut by different percentages to lessen the impact to districts.
- Several took deeper cuts than 3%:AP Teacher Training and Test Fee Assistance funds: cut 54.69%School Lunch Match and MOE: cut 30.28%Staff Development for Schools: cut 50%STEM Ready Schools: cut 100% Several were already fully obligated or distributed, so no cuts were necessary:ACE RemediationReading SufficiencyCharter Schools Incentive FundsTestingTotal impact will be $25 million.
- Matt Holder, COO addressed the effect of these cuts.
- FBA cut will affect all districts, but those districts who rely more heavily on state aid are going to be hit hard.
- $23 cut to ADM.
- Many districts will be eating into carry forward budget.
- Difficult decisions will have to be made over the next year or so.
- Hofmeister: “everyone needs to begin thinking about the carryforward fund as the “we want to open school in the fall fund.”
- Matt Holder: “If some schools don’t make difficult decisions, then yes, they could be closing their doors.”
- Hofmeister: “We are open to suggestions, but we will be taking a good, hard look at how both time and money are spent.”
- General Baxter asked about the status of the 1017 fund. Ms. Thompson stated there might be a cut to that fund in February, and SDE won’t be able to do anything about it. 1017 is a combination of various taxes.
- Total cut is 46.7 million at this point.
- Board approves the revised budget.
–Meeting Adjourned–Commentary on the Budget Cuts from Financial Services Director Andy EvansThe Office of Enterprise Management Services (OMES) declared a revenue shortfall on December 23, 2015. The shortfall is due to the loss of income due to the price of petroleum products and the cascading effect that is occurring in Oklahoma’s revenues. The revenues continue to slump in the area of sales tax, gross production and motor vehicle collections. The net result is that due to the requirement to produce a balanced budget, the revenue shortfall has created a serious gap in available funds for disbursements.The SDE had original request directives to reduce state aid by 3% and the Flex Benefit by 3%. Due to the concern for district finances, the SDE is proposing thisalternate budget scenario.The net total losses as proposed by the SDE to OMES include the following:
State Aid including Mid-Term Adjustment, is $25,029, 468.69.This is a 1.33% cut to the SDE budget available to schools through the state aid formula.The preliminary state aid allocations released in December were $1,876,735,176.00.The new State Aid total allocations are $1,851,705,707.31 or a drop of $23 per WADM. The factors are currently as follows:Foundation aid at $1610Salary incentive aid at $73.33If you wish to figure your state aid with today’s numbers, remove $23 from the sum. It will be approximate.Flexible Benefit is reduced by $12,480,706.95.This is a 3% cut.The preliminary allocations were $416,023,565.The new allocations is $403,542,858.05.Support of public school activities is reduced by $8,597,144.79. This includes Alternative Education, School Lunch Match, TLE Implementation, Standards Development, and Staff Development, etc.This is a 6.6% cut.The initial allocation was $130,178,226.The new allocation is $121,581,081.There are items that weren’t cut, but they have already been spent.
There have been several different questions about why the State Aid Factors dropped at Mid-Term.
The primary reason is the increase in the amount of Weighted ADM. Net weighted ADM increased by 5% in the First Quarter Statistical Report.The factors for state aid changed.Chargeables:There is a $10,000,000 decrease between the School Land and Gross Production chargeables.The other chargeable incomes have a budgeted $26,576,784.25 increase.Please remember that these are budgeted but not guaranteed funds.Failure to collect these funds this year will cause a negative effect in the July allocations as well as the Mid-Term allocations next year.Oklahoma’s Adjusted Valuation showed a $30,303,244.24 increase.
Please remember that the chargeable income is placed into your state aid formula based on district records from the Tax Commission, and there is no guarantee of the state-dedicated chargeable revenues. Motor vehicle tax, gross production tax and REA tax are showing a tendency to underperform. This will become an issue as we get closer to June 30, 2016 and will have an adverse effect on next year’s allocations from the formula.
Education Reform Act Fund (1017 Fund)Please do not assume that this is the last cut. The 1017 Fund is not filling as fast as it should, and the SDE budget is directly reliant on this fund. The beginning of the allocations and the allocations on December 21, 2015 show an under collection. The table below shows the anticipated revenues at the beginning of the year and the revised funding from December 21, 2015. The 1017 Fund makes up approximately 30% of the SDE budget. We placed the funding sources as of July 1, 2015 for the 1017 Fund in the pie graphs below.
If you have any questions or concerns about these numbers, please contact me directly.