School Budget FAQ
School Budget FAQ1. What are the keydrivers of the budget?2. How has the budgetbeen impacted by the rising costs of mandates like pensions and specialeducation?10. What variablesmust a district consider when preparing its budget? What resources are used tomake informed decisions on projected costs?1. What are the key drivers of the budget?
Fixed costs, including salaries, benefits and debt service continue to be key drivers of the budget, accounting for about 75% of expenditures. Salaries and benefits are determined through a collective bargaining agreement between the District and its employees. Debt service refers to the District’s outstanding obligations on bonds used to finance school construction projects.
2. How has the budget been impacted by the rising costs of mandates like pensions and special education?
Mandates have had a dramatic impact on the budget. Shortfalls in state funding of PSERS (state pension program) have forced local school districts to make up the difference using local tax revenues. Districts are required to contribute at a rate more than 16% higher than last year -- well beyond the established inflationary index. Additionally, the cost of providing appropriate special education services continues to increase while state support remains virtually unchanged. Since 2005, the District's special education budget has increased from about $15M to nearly $30M. At the same time, state contributions for special education are only a portion of that, and have only increased from $4.6M to $5.2M. A growing list of additional unfunded/underfunded mandates include state standardized testing, school health programs and training, transportation services, PA Core compliance, staff development and Act 82.
3. How much funding does the District receive from the state?
In 2016-2017 DASD expects to receive about $46M from the state. About $13M of this is reimbursement of PSERS contributions. The amount received from state sources accounts for about 22% of the District’s total 2016-2017 budget, leaving 78% of the funding for the District’s budget to fall mostly on local taxpayers.
4. What are the District’s primary revenue sources?
Most school districts in PA must rely on property taxes as their primary source of revenue. In Downingtown, all property tax revenue accounts for 68% of total revenue sources. As discussed above, state revenue sources account for 22% of total revenue. The remaining sources of revenue include earned income tax, other local sources, and federal grant funding.
5. What is a fund balance and why is it important for the District to maintain?
Fund balance is a measure of net financial assets, which is similar but not identical to equity or accumulated savings. The fund balance is equal to financial assets less financial liabilities.
A common misconception is that fund balance is a cash account, and therefore corresponds to the district's bank balance. As stated above, fund balance represents the fund's total assets minus its liabilities (what a fund has minus what it owes). Cash is an asset, but it usually is not a fund's only asset. The fund may also have liabilities, such as an accounts payable amount due a supplier that could result in a decrease in fund cash when they are paid.
A district with an appropriate fund balance can:
- avoid excessive short term borrowing thereby avoiding associated interest cost.
- accumulate sufficient assets to make designated purchases or cover unforeseen expenditure needs.
- demonstrate financial stability and therefore preserve or enhance its bond
rating, thereby lowering debt issuance costs.
The most commonly asked question regarding fund balance is how large should it be? Perhaps the best answer would be: "an amount sufficient that short term borrowing for cash flow could be avoided and would also allow the district to set aside sufficient assets to realize its longer range goals."*
* Governmental Accounting Standards Board (gasb.org)6. What is the District's current fund balance and what is it being used for?
The District maintains an unassigned general fund balance of 8% of budgeted expenditures which is about $16.9M of the 2016-2017 budget. The 8% is an amount that is allowed by law. In addition the District has assigned fund balances for future PSERS increases and Health care claims of about $7.6M. The District maintains about $25M in a capital reserve fund for rating agency purposes that allows us to maintain a Aaa bond rating (the highest rating available) which significantly lowers the District’s cost of capital. The District has also established a Debt Service fund with about $33.9M which will be used to pay a portion of existing debt service over the next seven years. The District also maintains a Capital Projects fund of about $77 million that is used to fund facilities construction, renovation, and improvements; and is also used to fund capital equipment purchases including technology equipment and devices. $8M to $10M of these types of capital expenditures is projected to be charged to this fund each year going forward.
7. Why would a District not spend all of the funds it has budgeted in a given year?
Throughout the year, the District makes every effort to reduce expenditures and realize cost savings. The District does not spend budgeted funds if needs change and spending is not necessary. Remaining funds become part of a “fund balance,” reflecting efforts taken by the District to manage its finances in a responsible manner, with an eye on future needs. This fund balance helps to fund the types of future expenditures discussed above.8. What is the breakdown of how the budget is spent?
Approximately 47% of the budget is spent on regular instructional programs and 18% is spent on special education and other instructional programs. 16% is spent on instructional and administrative support services. 7% goes towards facilities maintenance, 5% towards student transportation, and 5% for debt service. 2% is spent on extra-curricular and co-curricular activities. The total salaries and benefits included in each of these areas accounts for 70% of the budget.9. How does the Downingtown’s 0% tax increase compare to other districts in Chester County?
2016-2017 Property Tax increases
Downingtown 0.0% Phoenixville 0.9% Oxford 1.0% Coatesville 2.1% Great Valley 2.4% Kennett 2.4% Unionville 2.7% West Chester 2.7% Owen J. Roberts 2.8% Octorara 3.0% Avon Grove 3.2% Tred-Easttown3.9%10. What variables must a district consider when preparing its budget? What resources are used to make informed decisions on projected costs?
Each year school districts prepare budgets that are an estimation of expenses for the following school year. In Pennsylvania, budgets are prepared almost a year in advance of implementation and must take into account numerous variables like enrollment changes, staffing needs, state budgets (which often aren't determined until late in the budget cycle), the local real estate market and transfer tax revenues, special education costs, facilities planning and emergency needs (winter weather, repairs, etc.), among other factors. Using data and guidance obtained from numerous sources, including its financial advisor, insurance broker, health insurance advisor, energy consultant, various local and state purchasing consortiums and internal staff, the District makes a best estimate as to its projected costs.11. What are some of the distinctive programs and services the District offers?
The DASD experience is defined by the extensive opportunities we provide our students and the extraordinary level of service we share with our families and community. The District’s budget is able to support one of the strongest academic programs in the region and state. Among the distinctive programs and services that DASD offers are:
- International Baccalaureate Program
- Advanced Placement Program
- Career Pathways Program at STEM Academy
- Elementary world language program (Rosetta Stone)
- One-to-one computing at 6th grade center, middle schools, STEM Academy and soon to be implemented in DHS East and DHS West high schools.
- Post-secondary partnerships
- Enhanced summer enrichment programs in partnership with the Downingtown Community Education Foundation
- Camp Success, elementary summer enrichment program for grades k-2
- Extensive elementary music and arts instruction and performance programs
- Extensive field trips to support curriculum at all levels
- After-school programs at all levels
- Extensive array of clubs and athletics
- Drama program at all levels
- Community service programs
- Travel experiences
- Speaker programs
- Internship program
- Television studios in all buildings
Special EducationWe are committed to providing high-quality special education services and proud of our reputation for doing so. Families move into the District specifically to receive these services. The learning environment is considered to be highly inclusive for students with special needs.
Level of Service
- Enhanced academic support services at all buildings (literacy and math specialists)
- Enhanced holistic support services at all buildings (counselors, psychologists, etc.)
- Extensive health service programs (wellness council)
- Healthy youth development program in partnership with “Communities That Cares”
Events of Significance
- Newsweek Magazine’s Top High Schools in the US
- US News and World Reports Best High Schools Rankings
- The Washington Post America’s Most Challenging Schools
- Philadelphia Magazine Top High Schools in Pennsylvania
- Main Line Today Top High Schools in Pennsylvania
- Pittsburgh Business Trimes Top High Schools in Pennsylvania
- International Baccalaureate World School
- Apple School of Distinction
- District Administrators Magazine District of Distinction
- GreatSchools.org rating of 10 out of 10
- Niche.com Best School Districts in PA