This is my final column in the series providing a general overview of school finance. The information this week is regarding budget requirements and fund balances.
The fiscal year for the district is July 1st - June 30th. The budget must be adopted by June 30th of each year. As there is much uncertainty during the spring (final tax assessed value and tax rate, staffing changes, state revenue) and plans are being made a year out, it should be considered a living document adjusted/amended as information gains certainty and the year progresses. The five required components of a school budget include:
Budget Message - describing the important features of the budget and major changes from the preceding year. This section also explains how the budget was developed, who was involved, why needs were selected, and what activities proposed are designed to do to meet goals.
Estimated Revenues - including a comparison of actual or estimated revenue for the prior two years, itemized by year, fund, and source.
Proposed Expenditures - for all areas, including a comparison of actual or estimated revenue for the prior two years, itemized by year, fund, and source.
Debt Schedule - detailing the amount required for the payment of interest, amortization, and redemption charges on our debt.
General Budget Summary - summarizing the budgetary requirement of the district including, assessed valuation and tax levies by fund, estimated: beginning and ending balances, revenues, expenditures, transfers, and restricted fund balance.
Fund Balances are determined by the June 30th cash balance in each fund. The percentage of balance is the amount in the Incidental and Special/Teacher funds divided by the expenses in those funds. The district can have restricted balances. People sometimes question the purpose of the reserve balance. A good "rule of thumb" is to hold a minimum of 15% in reserve. This is enough to fund operations for approximately three months, should there be withholdings in funding. Any district whose fund balance is less than 3% is considered financially stressed and DESE steps in to create a budget and education plan.
The district is required to submit an ASBR (Annual Secretary of the Board Report), containing end of the year annual financial information, by August 15th of each year. This report is used to track payment use, calculate local tax effort and indirect cost rates, calculate dollars spent per pupil, calculate percent of revenue (local, state, federal), and to determine if the district is in financial stress. All Missouri school districts are required to be audited annually and to submit a copy of the audit report to DESE. Audits must be an independent audit contracted by the local Board of Education, and submission is required by December 31st of each year.
District financials are public information. Each month a summary report and invoices are posted to our website, along with the Board minutes. On our current site, these are found under the district tab. Select Lexington R-V School Board from the pull-down menu and select the Board Meeting Open Minutes option you wish to view. Financials and Invoices are linked for each month in ascending order. If you have questions regarding school finance, you can contact the Board of Education office.