2013 casbo annual conference & school business expo slicing and dicing your principal...
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2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO
Slicing and Dicing Your Principal Apportionment
FIN-20
APRIL 3-6, 2013, LONG BEACH, CA
These materials have been prepared by the CASBO Finance Professional Council – Southern Section. They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO.
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO
Slicing and Dicing Your Principal ApportionmentMarlene DunnDirector, Business Advisory Services
Los Angeles County Office of Education
Ambur BorthDirector, Fiscal Services
Palos Verdes Peninsula Unified School District
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO
Slicing and Dicing Your Principal Apportionment• Components of Principal Apportionment• Apportionment Calculations• Payment Schedule• Deferral Schedule• Cash Flow Management Options• Impact of LCFF
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO4
Principal Apportionment• Delivers funding for several different
programs including:– Revenue Limit– Special Education– GATE– ROC/P– Adult Education– Supplemental Instructional Programs
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO5
Principal Apportionment• Since 2008-09, amounts for all but
revenue limit and special education have not changed.
• Revenue Limit experiences greatest variances due to changing factors:
Taxes ADA COLA
PERS UI Deficit
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO6
Principal Apportionment• Recalculated four times annually:• Advance Apportionment (July through January)
– Estimate based on prior year P-2 and adjusted for current year COLA, deficits, and other factors contained in enacted Budget
• First Principal (February through May)– Based on P-1 data including estimated taxes, ADA, and other data
• Second Principal (June)– Based on P-2 data including estimated taxes, ADA (final data for
most programs), and other• Annual (Adjustment paid February through June)
– Based on final year-end data included actual taxes, ADA (P-2 for most programs, Annual for specific), and other data
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO7
5-5-9 Schedule - The monthly payment schedule used in a
“normal” year with no deferrals (if apportionments are equal, then Feb through June would be 9%)
Month Payment Amount
July 5% of the Advance Apportionment
August 5% of the Advance Apportionment
September 9% of the Advance Apportionment
October 9% of the Advance Apportionment
November 9% of the Advance Apportionment
December 9% of the Advance Apportionment
January 9% of the Advance Apportionment
February 1/5 of the difference between the amount received YTD and the P‑1 Apportionment
March 1/5 of the difference
April 1/5 of the difference
May 1/5 of the difference
June Difference between the amount received YTD and the P‑2 Apportionment
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO8
Principal Apportionment• CDE releases:
– “Apportionment Summary” that details the amount for each program for each district
– “Payment Schedule Summary” that details the amount the monthly payment for the total PA for each district
• The 2012-13 P-1 Apportionment documents are posted on the CDE’s Web site at:http://www.cde.ca.gov/fg/aa/pa/iassf12p1.asp
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO9
Deferrals2012-13 Deferrals
(Updated by CDE February 2013)
TimeframeExemption Available?
AmountPrincipal Apportionment
Payment Impact
July 2012 to Sept. 2012 Yes $700 million 75%
July 2012 to Jan. 2013 Dec. 2012 Yes $500 million 25%
Aug. 2012 to Jan. 2013 Dec. 2012 Yes $600 million 60%
Oct. 2012 to Jan. 2013 Dec. 2012 Yes $800 million 46%
Feb. 2013 to July 2013 No $531.7 million 31%
March 2013 to April 2013 Yes $900 million 27%
March 2013 to Aug. 2013 No $1.3 billion 60%
April 2013 to July 2013 No $594.7 million 35%
April 2013 to Aug. 2013 No $763.8 million 45%
May 2013 to July 2013 No $1.98 billion 100%
June 2013 to July 2013 Yes $474 million 100%
Deferred across fiscal years $5.64 billion
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO10
2012-13 Adjusted Payment Schedule (Assumes Equal Apportionments)
2012-13 2013-14
Advance P-1 P-2 Advance
Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept
5-5-9 Schedule 5.00% 5.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 9.00% 5.00% 5.00% 9.00%
Actual Percentages Paid 0.00% 2.02% 9.00% 4.86% 9.00% 9.00% 9.00% 6.19% 0.00% 1.82% 0.00% 0.00% 0.00% 2.02% 9.00%
Deferred from July Advance 3.73% 1.27% 3.73%
Deferred from August Advance 2.98%
Deferred from October Advance 4.14%
Deferred from February P-1 7.88%
2.81%
Deferred from March P-1 5.12% 3.56% 5.44%
Deferred from April P-1 1.65% 5.68% 3.14% 4.04%
Deferred from May P-1 3.15% 3.94%
9.00%
Deferred from June P-2 9.00% 9.00%
Total Received from Current
Year 0.00% 2.02% 12.73% 4.86% 9.00% 17.39% 9.00% 6.19% 3.56% 1.82% 0.00% 0.00% 0.00% 2.02% 12.73
Grand Total Received from CY 66.57%
Total Received from Prior Year 21.68 14.74% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 23.95 9.48% 0.00%
Grand Total Received from PY 33.46%
Grand Total Received 21.68 16.76% 12.73% 4.86% 9.00% 17.39% 9.00% 6.19% 3.56% 1.82% 0.00% 0.00% 23.95 11.50 12.73
Grand Total Deferral for CY
33.43%
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO11
Revenue Limit Cash Flow1. For 2012-13, understand what payments
have been made YTD (CDE’s Payment Schedule Summary)
2. Calculate what you expect final Revenue Limit will be using:
– Projected P-2 ADA– Estimated Taxes, other data (i.e., PERS, UI,
etc.)– Estimated other data (i.e., PERS, UI, etc.)
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO12
Revenue Limit Cash Flow3. Create table that calculated monthly
payments based on % of each apportionment
4. Fill in Advance Apportionment and Projected Apportionment amounts
5. Confirm that YTD totals match CDE’s data6. Adjust to match as CDE releases
apportionment and as projected data is revised
OR
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO13
Revenue Limit Cash Flow• Use Revenue Limit Cash Flow developed by
LACOE, Division of BAS• Reflects:
– Current Adjusted Monthly Payment Schedule– CDE’s Advance Apportionment data– Projected Revenue Limit Allows for changes to
projection by user– Adjust as appropriate – trigger reductions, major
PY adjustments (RDA recovery or other audit findings)
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO14
Revenue Limit Cash Flow
• Sample District Revenue Limit Cash Flow.xls
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO15
Principal Apportionment Accruals• Accruals:
– Annual Apportionment• Difference between PY P-2 and Annual applied as an adjustment to
CY P-1 in February– CY Deferral
• Amount deferred from 2012-13 to 2013-14– PY Unsatisfied Accruals
• Portion of PY Accruals deferred to following year• Ex: Annual Apportionment is adjustment to P-1, which is paid Feb
through May. Any deferral of Feb through May payments to 2013-14 results in deferral of accrued amounts resulting in unsatisfied accruals.
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO16
Taxes• Assume taxes to be same as prior year
– Same amounts– Same monthly distribution
• County A-C Estimates drive revenue limit calculation– Actual taxes not considered in revenue limit until
Annual Apportionment
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO17
Taxes• Any change to tax estimate has
corresponding change to revenue limit– If taxes go up, state aid portion of revenue limit
goes down and vice-versa• Most RDA revenue is treated as tax revenue
– Exception is facilities portion of pass-through payments
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO
EPA Cash Flow • EPA is now third component of Revenue Limit
(State Aid, Property Tax are other two)• Based on DOF estimates• Offset State Aid for each EPA dollar ()• For 2012-13, lump-sum payment in June 2013• Thereafter, to be paid quarterly (September,
December, March & June)
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2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO
Prop 30 EPA• The vehicle to collect and disburse
revenues generated by temporary taxes from Prop 30
• State Aid is reduced for each dollar districts received from EPA
• Treat as a third revenue limit source: – Total Revenue Limit less Property Taxes and
EPA equals State Aid
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2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO
Prop 30 EPA• For 2012-13, distributed by June 30, 2013• State Aid payments already reduced by
estimated EPA (about 21.2% of revenue limit - refer to EC 14140 Reduction)
• P-2 State Aid payment to be based on updated estimate to be released by DOF
• For 2013-14, distributed on quarterly basis
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2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO21
Considerations• Should prepare 24-month cash flow
projection to allow time to address issues• TRANs require 90-120 days to prepare
– Mid-year issuance in March (covering deficiencies in Spring and Summer) S/B identified and process initiated by December
– July 1 issuance by March/April– Cash flow projection should cover pledge dates
and subsequent months
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO22
Considerations (cont.)• Principal Apportionment and Taxes are not posted until
the end of the month– Typically rec’d around the 27th-29th
– With processing time, may not be reflected for several days but will be posted with date of receipt
• Consider Payroll Cycles and Amounts– Month-end cash balances must be sufficient to cover payrolls
issued prior to receipt of revenue– Ex: month-end balance of $1 M, but $2 M payroll issued on 5th
means insufficient cash of $1 M
• Don’t wait for projected negative month-end balances – may be too late
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO23
Cash Flow Deficiency Management Tools• TRANs• Inter-fund Borrowing• Borrowing from County Office• Borrowing from County Treasurer• All have restrictions and requirements• Responsibility of District to manage cash
2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO24
Questions?
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