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MACOMB INTERMEDIATE SCHOOL DISTRICT

MACOMB INTERMEDIATE SCHOOL DISTRICT. HOW SCHOOLS ARE FINANCED IN MICHIGAN. Steven B. Barr Executive Director of Business January 2009. FUNDING SOURCES. Local Property Tax State Aid Federal Grants MISD Transfers. WHY WE ARE – WHERE WE ARE.

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MACOMB INTERMEDIATE SCHOOL DISTRICT

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  1. MACOMB INTERMEDIATE SCHOOL DISTRICT HOW SCHOOLS ARE FINANCED IN MICHIGAN Steven B. Barr Executive Director of Business January 2009

  2. FUNDING SOURCES • Local Property Tax • State Aid • Federal Grants • MISD Transfers

  3. 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:

  4. THE PEOPLE VOTED TO: 1993Proposal A Sales 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 $.75 Out of State calls 4% 6% * Only available 1994-95, 1995-96, 1996-97 In 1997-98 became regional enhancement

  5. REVENUE SHIFTS SOURCE 19932007 LOCAL 74% 23% STATE 26% 77%

  6. THE SCHOOL AID FUND 199520012007 Sales and Use Tax 46% 48% 41% State Education Tax 13 18 16 Income Tax 10 19 16 Tobacco Tax 5 4 4 Lottery 6 5 6 General Fund 17 1 0 Federal 1 1 11 Other 2 4 6 100% 100% 100%

  7. ONE OBJECTIVE OF PROPOSAL A • Reduced Spending Gap- • 1993 • Lowest 10 districts averaged $3,476/pupil • Highest 10 districts averaged $9,726/pupil • 179% difference • 2008 • Lowest 10 districts averaged $7,204/pupil • Highest 10 districts averaged $11,934/pupil • 66% difference

  8. THE FOUNDATION ALLOWANCE • MinBasicPSA MaxHold Harmless • 1995 4,200 5,000 5,500 6,500 • 1996 4,506 5,153 5,653 6,653 • 1997 4,816 5,308 5,808 6,808 • 1998 5,124 5,462 5,962 6,962 • 1999 5,170 5,462 5,962 6,962 • 2000 5,700 5,700 6,200 7,200 • 2001 6,000 6,000 6,500 7,500 • 2002 6,500 6,500 6,800 7,800 • 2003 6,700 6,700 7,000 8,000 • 2004 6,700 6,700 7,000 8,000 • 2005 6,700 6,700 7,000 8,000 • 2006 6,875 6,875 7,175 8,175 • 2007 7,085 7,085 7,385 8,385 • 7,204 8,433 7,475 8,433 • 7,316 8,489 7,580 8,489 Macomb County $ 7,316 to $ 10,034

  9. 2008-09 MACOMB COUNTY FOUNDATION ALLOWANCES

  10. BLENDED COUNT • 1995 50/50 • 1996 50/50 • 1997 50/50 • 1998 40/60 • 1999 40/60 • 2000 25/75 • 2001 20/80 • 2002 20/80 • 2003 20/80 • 2004 20/80 • 2005 25/75 • 2006 25/75 • 2007 25/75 • 25/75 • 25/75 Fourth Wednesday after Labor Day 9-24-08 “The Count Day” Second Wednesday in February 2-11-09 “Supplemental Count Day”

  11. BLENDED COUNT 2008-2009 FEBRUARY 2008 6,000 x 25 % = 1,500 SEPTEMBER 2009 6,400 x 75 % = 4,800 6,300 FEBRUARY 2004 6,000 x 20 % = 1,200 SEPTEMBER 2004 6,400 x 80 % = 5,120 6,320 LOSS OF 20 FTEs @ $8,050 = $161,000.

  12. 2x FORMULA • Foundations at the minimum will increase by twice the amount of those at state max • Those in between on a sliding scale

  13. STATE AID CATEGORICALS • 11F NONPLAINTIFF DURANT SETTLEMENT • 22a 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 ENROLLMENT • 31A AT RISK • 31d SCHOOL LUNCH • 32d MICH SCHOOL READINESS • 51c SPEC ED HEADLEE OBLIGATION • 53a COURT AND STATE AGENCY PLACED PUPIL • 61a.1 VOCATIONAL EDUCATION • 61a.2 VOC. ED. ADMINISTRATION • 99k DISTRICT GRANTS • 107.1 ADULT EDUCATION PARTICIPANTS

  14. FEDERAL GRANTS • Title I • School Lunch/Breakfast • IDEA (Special Ed) • Safe and Drug Free Schools • Voc Ed • Adult Ed • Title III

  15. TRANSFERS • MISD Act 18 Millage Distribution • MISD Act 18 Center Program Reimbursement

  16. SOURCES OF REVENUE FOR CAPITAL IMPROVEMENTS • Sinking Funds • Non-Qualified Bonds • Qualified Bonds (State Guarantee)

  17. 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)

  18. CASH FLOW • Property taxes-July thru December • State Aid-11 Payments (Oct to Aug) • School Bond Loan Fund

  19. MAJOR COST COMPONENTS • Salary • Health Insurance Coverage • Retirement System

  20. MPSERS RETIREMENT RATES fy 2002fy 2003fy 2004fy 2005fy 2006fy 2007fy 2008fy2009 Health Costs 6.05 6.05 6.05 6.55 6.55 6.55 6.55 6.81 Pensions 6.06 6.26 6.26 6.31 5.47 5.49 5.28 5.17 Unfunded Pen. .06 .68 .68 2.01 4.32 5.70 4.89 4.56 Subsidized .00.001.38 1.73 .481.00 .00 .00 Full Rate 12.17 12.99 14.37 16.60 6.82 18.74 16.72 16.54 Less sub. -1.38- 1.73-.48-1.00 .00 .00 .00 .00 Rate Charged 12.17 12.99 12.99 14.87 16.34 17.74 16.72 16.54

  21. SOURCES OF INFORMATION • MDE Website • Annual Bulletin 1011 and 1014 • Historical Information • Links to House and Senate Fiscal Agency • State Aid Act with Appendices • MISD Website-Summaries and Surveys • MSBO Website-School Finance Reference Manual

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