Budget and Financial Reportingto the Board

TASBO

2009 Business Manager’s Academy

Welcome

Jon Graswich, CPAChief Financial Officer

DeAnne Hatfield, RTSBAExecutive Director Business Services

Northwest Independent School Districtjgraswich@nisdtx.org (817) 215-0025dhatfield@nisdtx.org (817) 215-0041

www.nisdtx.org

Agenda

Introduction

Legal Requirements

Financial Cycle

Summary

Questions and Answers

IntroductionCub Scout Motto

Legal Requirements

Legal requirements for school district budgets are formulated by the State of Texas and implemented by TEA

Statement of Texas Law

Sections 44.002 through 44.006 of the Texas Education Code establish the legal basis for budget development in school districts. The following six items summarize the legal requirements from the code:

The superintendent is the budget officer for the district and prepares or causes the budget to be prepared.

The district budget must be prepared by a date set by the state board of education, currently August 20.

The president of the board of trustees must call a public meeting of the board of trustees, giving ten days public notice in a newspaper, for the adoption of the district budget. Any taxpayer in the district may be present and participate in the meeting.

Statement of Texas Law

No funds may be expended in any manner other than as provided for in the adopted budget. The board does have the authority to amend the budget or adopt a supplementary emergency budget to cover unforeseen expenditures.

The budget must be prepared in accordance with GAAP (generally accepted accounting principles) and state guidelines.

The budget must be legally adopted before the adoption of the tax rate. However, if a school district has a July 1st fiscal year start date, then a school district must not adopt a tax rate until after the district receives the certified appraisal roll for the district required by Section 26.01, Tax Code. Additionally, a school district must publish a revised notice and hold another public meeting before the district may adopt a tax rate that exceeds the following: (1) The rate proposed in the notice prepared using the estimate; or (2) The district’s rollback rate determined under Section 26.08, Tax Code, using the certified appraisal roll.

TEA Legal Requirements

TEA has developed additional requirements for school district budget preparation as follows:

The budget must be adopted by the board of trustees, inclusive of amendments, no later than August 31.

Minutes from district board meetings will be used by TEA to record adoption of and amendments to the budget.

Budgets for the General Fund, the Food Service Fund (whether accounted for in the General Fund, a Special Revenue Fund or Enterprise Fund) and the Debt Service Fund must be included in the official district budget (legal or fiscal year basis). These budgets must be prepared and approved at least at the fund and function levels to comply with the state's legal level of control mandates.

TEA Legal Requirements

The officially adopted district budget, as amended, must be filed with TEA through PEIMS (Public Education Information Management System) by the date prescribed in the annual system guidelines. Revenues, other sources, other uses, and fund balances must be reported by fund, object (at the fourth level), fiscal year, and amount.

Expenditures must be reported by fund, function, object (at the second level), organization, fiscal year, program intent and amount.

A school district must amend the official budget before exceeding a functional expenditure category, i.e., instruction, administration, etc., in the total district budget. The annual financial and compliance report should reflect the amended budget amounts on the schedule comparing budgeted and actual amounts. The requirement for filing the amended budget with TEA is satisfied when the school district files its Annual Financial and Compliance Report.

Board Policy

The District derives its legal status from the Constitution of the State of Texas and from the Texas Education Code as passed and amended by the Legislature of Texas. Texas Const., Art. VII

Board Policy

CE(LEGAL) ANNUAL OPERATING BUDGET

CE(LOCAL) ANNUAL OPERATING BUDGET

CDA(LEGAL) OTHER REVENUES: INVESTMENTS

CDA(LOCAL) OTHER REVENUES: INVESTMENTS

CFA(LEGAL) ACCOUNTING: FINANCIAL REPORTS AND STATEMENTS

(The Board Policy On Line is posted on the School Board web site)

The Financial Cycle

The Financial Cycle starts with strategic planning and

ends with the audited financial statements.

The Financial Cycle

The seven steps of the Northwest ISD Financial Cycle are:• Budget Planning January-March 2010• Budget Preparation February-March 2010• Board of Trustee Budget Review April-May 2010• Budget Adoption June 2010• Tax Rate Adoption July-August 2010• Financial & Investment Reporting July-June 2010-2011• Audited Financial Statements November 2011

Budget Planning

The Budget Planning steps of the Northwest ISD are: Review Budget Calendar 01/11/10 Board Meeting Approve Budget Calendar 01/28/10 Board Meeting Review Five Year Financial Forecast 01/28/09 Board Meeting Review Strategic Plan - Goals & Objectives 01/28/10 Board Meeting Approve Strategic Plan - Goals & Objectives 02/08/10 Board Meeting Review District Improvement Plan 03/08/10 Board Meeting Approve District Improvement Plan 03/29/10 Board Meeting

(Board Demographic reports and Construction reports on a quarterly basis)

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Vision

Mission

Strategic Goals

and Objectives

District Improvement Plan

Campus Improvement Plan Department Action Plans

Beliefs

BOARD approves Beliefs, Vision, Mission, Goals and Objectives. GOALS are broad -based descriptions of desired future accomplishments. OBJECTIVES flow from goals and are measurable descriptions of what is to be accomplished. TARGETED OBJECTIVE – Identified District Goals and Objectives to be addressed during current year.

Budget Preparation

The Northwest ISD Budget Preparation steps are: Budget Training/ Distribute Budget Packages 01/28/10 DLT Meeting Complete Budget Packages February Return Budget Packages 02/25/10 DLT Meeting Cabinet Reviews Budget Requests 03/01/10 Cabinet Meeting

Budget Preparation

Incorporate Student Art

Art Contest for AP Art students

Financial Services staff vote

Board of Trustees recognition and nominal cash reward ($100)

Frame for conference room

Budget Manual is posted on the Financial Services department web site along with previous student art winners

Board of Trustee Budget Review

The Northwest ISD Board of Trustee Budget Review steps are: Budget Update 03/08/10 Board Meeting Budget Update 03/29/10 Board Meeting Budget Update 04/12/10 Board Meeting Budget Update 04/26/10 Board Meeting Budget Workshop 05/10/10 Board Meeting Review Personnel & Compensation Plan 05/10/10 Board Meeting Budget Workshop 05/24/10 Board Meeting Adopt Personnel & Compensation Plan 05/24/10 Board Meeting

(The Budget Updates are posted on the School Board web site)

Budget Adoption

The Northwest ISD Budget Adoption steps are: Certify Estimated Rolls to Taxing Units 06/07/10 CAD Calculate Estimated Rollback Rate 06/09/10 DCTA/C Budget Update 06/14/10 Board Meeting Publish Notice of Public Meeting 06/16-17/10

Conduct Public Meeting and Adopt Budget 06/28/10 Board Meeting

ASBO International’s Meritorious Budget Award

The Meritorious Budget Awards Program (MBA) uses examples of the latest techniques from school business

administrators to build your skills for developing, analyzing, and presenting your school system budget.

Criteria Checklist

General Requirements

Introductory Section

Organizational Section

Financial Section

Informational Section

2007-2008 Texas Recipients

Alief Klein

Allen Lewisville

Carrollton-Farmers Branch Northwest

Clear Creek Pasadena

Conroe Rockwall

Fort Worth San Antonio

• Houston

GFOA Distinguished Budget Presentation Award

The Budget Awards Program is designed to

encourage governments to prepare budget documents

of the highest quality to meet the needs of

decision-makers and citizens.

Criteria Guide

Policy Document

Financial Plan

Operations Guide

Communication Device

2007-2008 Texas Recipients

Alief Houston Austin Klein Big Spring Laredo Carrollton-Farmers Branch Lewisville Clear Creek North east Conroe Northwest Corpus Christi Rockwall Dallas San Antonio Fort Bend United

What The Budget Document Is

The budget document is a policy document, an operations guide, a financial plan, and a communications medium

designed to meet the needs of decision-makers and citizens.

What The Budget DocumentAin’t

It is not a “magic” bullet.

What The Budget DocumentAin’t

It will not cause money to rain from the heavens.

The “Magic” Bullet is the Strategic Plan

The Northwest Independent School District approach to coping with thecombination of fast student growth in a restricted funding environment with

increasing academic standards has been to ensure that the budget process is driven by the Strategic Plan. The Board of Trustees and Administration review the

Strategic Plan. The Administration performs a detailed review of all revenues and expenditures. The focus is on aligning the allocation of resources, both personnel

and financial, with the accomplishment of the goals and objectives which are directly linked to the plan as described in the budget document.

(The Budget Document is posted on the Financial Services department web site)

Receiving the Award Board of Trustee Recognition

Tax Rate Adoption

The Northwest ISD Tax Rate Adoption steps are: Certify Final Rolls to Taxing Units 07/25/10 CAD Calculate Final Rollback Rate 07/31/10 DCTA/C Propose Tax Rate 08/09/10 Board Meeting Publish Notice of Public Meeting 08/11-12/10 Conduct Public Meeting and Adopt Tax Rate 08/23/10 Board

Meeting

Financial & Investment Reporting

The Northwest ISD Financial & Investment Reporting steps are: Review Financial & Investment Reports Monthly Board Meeting Approve Budget Amendments Monthly Board Meeting Approve Final Amended Budget 06/27/11 Board Meeting

Financial & Investment Reporting

All investments made by the District shall comply with the Public Funds Investment Act (Texas Government Code Chapter 2256, Subchapter A) and all federal, state, and local statutes, rules or

regulations. Gov’t Code 2256.026

Financial and Investment Report Cover Sheet Financial and Investment Report Spreadsheets Investment Portfolio Summary Economic Summary 3rd Quarter 2009

(The Monthly Financial & Investment Reports are posted on the School Board web site)

Audited Financial Statements

The Northwest ISD Audited Financial Statement steps are: Approve Annual Financial Report 11/14/11 Board Meeting

What is a CAFR?

The Comprehensive Annual Financial Report (CAFR) is a report that tells the financial story of

the school system through narrative, financial statements, and chart/graphs. The CAFR not only

gives the summary and detailed information for the school year being reported, but also includes

information for the previous ten years.

ASBO International’s Certificate of Excellence in Financial Reporting

The Certificate of Excellence in Financial Reporting (COE) Program reviews the accounting practices and reporting

procedures used by school districts in their Comprehensive Annual Financial Reports (CAFR), and enhances the award

winners' credibility among stakeholders.

2007 Texas Recipients

Independent School Districts 35

GFOA Certificate of Achievement for

Excellence in Financial Reporting

The Certificate Program, which was established in 1945, is designed to recognize and encourage excellence in financial

reporting by state and local governments.

2007Texas Recipients

Independent School Districts 51

Why Should My School System Participate?

CredibilityParticipation validates a school system’s commitment to fiscal

and financial integrity and enhances its credibility with the school board and community

ConfidenceReceiving the Certificate of Excellence Award gives the

superintendent and school board confidence about their school system and the business management staff.

Why Should My School System Participate?

Savings

A CAFR complies with disclosure requirements by providing ninety percent of what is needed for credit evaluation.

(The CAFR is posted on the Financial Services department web site)

Receiving the Award Board of Trustee Recognition

SUMMARY

Questions and Answers

Workshop Concluded