Local School District Financial Reporting and Planning
The Northeastern Local School District Board of Education and Administration considers financial accountability and resource planning one the most significant roles of the Treasurer’s Office. The Treasurer’s office published a Comprehensive Annual Financial Report ( CAFR) and a Popular Annual Financial
Report ( PAFR) for fiscal year ended June 30, 2018, to show the dedication the administration and Board has to accountability and transparency. These reports are the audited statements and the highest level of reporting available to governmental entities across the Unites States. Reporting financial results is just one aspect of school finance. Much of the day to day operations of schools start a year or more in advance of a school year with resource allocation and the planning which folds into budgeting not only short term but long term as well. Fiscal Year 2019 reports will be posted as soon as completed. A cash basis summary of fiscal year end
June 30, 2018 is currently available.
Five Year Forecasting
Code 5705.391, amended in 1997 requires school districts to file a Five Year Forecast for the General fund with the Ohio Department of Education. Ohio School districts are the ONLY governmental entity in Ohio which is required to provide or attempt to forecast revenues and expenditures for a five (5) year period. For instance the state of Ohio only estimates it budget for a 2-year biennium period. Northeastern Local Schools gets roughly 44% of operating funds from the state of Ohio. It is clear that projecting district resources for five (5) years would be a daunting challenge even in a stable economy, but adding in the recent difficulty along with the fact that the state of Ohio, a major provider of our operating resources, only projects out two (2) years at a time and it becomes extremely challenging. Never the less the board and Administration work closely for months at a time and on an ongoing basis to estimate project and adjust forecasted revenues and expenditures in its five (5) year forecast.
The five (5) year forecast must be filed with the Ohio Department of Education by October 31, and May 31, in each of the districts fiscal year’s (school district fiscal years are July 1, through June 30) end June 30th . Current school district five (5) year
forecasts are available for all school districts in Ohio at Ohio Department of Education.
District Budgeting Process and School Finance
The five (5) year forecast filed in May of each year is the beginning point and chief planning tool at a macro level for the following fiscal year’s budget. Generally in April of each year the Treasurer’s Office prepares budget estimates of the past couple of years' expenditures in detail to all the Building Principals and Department Directors so they can begin preliminary work on a detailed line item budget which is the baseline of financial accountability. Meetings may be held on budget training and budget hearings on the total combined budget. The finished document is typically done in late May or early June, the Administration manages the budget within the expenditures in the object line of the detailed five (5) year forecast estimates of expenditures. In this way the budget never exceeds the five year forecast. This helps establish the current and long term (up to five years) resource planning of district resources. The public, Board of Education and Administration can use this annual budget tool to understand the financial position of the District in the short term, HERE AND NOW, while the five (5) year forecast which drives the annual budget gives them a level of control over the long term resources of the district. Please review the Appropriation Budget document with an eye on the present – this fiscal year.
Short Term Finances
which should be balanced to the five (5) year forecast, builds the spending
plan for the current fiscal year operations. The tools used to report
short-term financial operations are:
o SM12- a monthly report to review revenues and expenditures budget versus actual down to the monthly level and year to date variance level. We use this report and will be posting the report monthly. The treasurer’s office has adjusted the monthly number to reflect the estimated timing of the revenue or expenditure in the current fiscal year. The Treasurer’s Office explains monthly any significant or material variance from estimates.
o Appropriation Budget– the tool to determine needs and match to available resources. The target at the present time is resource allocation to address building and department needs across the District. We use the appropriation (expenditure) budget because the Board and Administration have greater control over increasing or decreasing these resources as necessary. Revenues are not as easily controlled because over 44% of those come from external sources beyond the district.
o The last piece of the short term financial picture is the current fiscal year within the Five Year Forecast. The Appropriation Budget will be the
projection of the first year in the forecast. The Major Key -We have tied the Board
and Administration short term planning to the five year forecast.
The Five Year
Forecast -as noted above the Ohio Department of Education has mandated the reporting of a five year forecasting model that draws the road map of the general financial direction of the district. Northeastern Local School District involves the Administration in planning the larger picture (Staffing and Capital Needs) over a five year period. The Five (5) Year Forecast model and detailed “Notes to the Five year Forecast” in detail addresses the assumptions made to generate the numbers. The accuracy of the predictions are key to providing a stable educational program to our students. Levy projection, renewals and needs are also a very important factor in the long term plan. The largest issue that a reader of our Five (5) Year Forecast must take into consideration is the outside factors affecting the finances utilized within the system. We use due professional care in estimating all resources in the forecast, therefore the budget and thus all of our operating plans that sit on those estimates are as good as we can humanly make them, but to some extent there will always be variances. That is why each month we report to the Board and Administration what those current year variances are and how they may, if at all, effect the longer term projections of the district.
Five Year Capital Plan – The District has three available funding sources for the Capital needs, the Permanent Improvement Fund, the 034 Building Maintenance Fund for the new buildings, and the General Fund. Every year during the budgetary process the administrators can request items to be considered to be funded from these sources. Every other year we update the Capital Plan with new requests or deleted items no longer needed. The FY19-23 Capital Plan was a tool to plan and assess the needs from the principals and departments as we prepare to move into the new building. The major capital needs and major costs items new assessed and updated to prepare a financial plan around the upgrades – Roofs, Asphalt, Sidewalks, HVAC, and buses carry large dollar amounts. A quarterly report of actual Capital Expenditures is prepared and available on this page -Permanent Improvement Fund Revenue and Expenditures
Feel Free to Contact us
We hope you have
found this introduction to Northeastern Local School finances to be on interest
and informative. We appreciate your feedback on this information and if
you have any questions please feel free to contact our office at 937-325-7615. We
welcome your feedback and questions.