2003-04 |
| A fiscally healthy school district
is necessary to support educational programs both now
and into the future. A review of the 501 annual
financial reports received by PSBA's research department
shows that 17 districts are operating with a negative
fund balance. |
| Table 1A |
Range
of Fund Balance, 2003-04 |
| Range |
Fund
Balance |
| |
Number |
Percent |
| Below
0.00% |
20 |
3.99% |
| 0.00-4.99% |
61 |
12.18% |
| 5.00-9.99% |
160 |
31.94% |
| 10.00-14.99% |
107 |
21.36% |
| 15.00%
& Over |
153 |
30.53% |
Source: Annual Financial Reports,
501 districts, 2003-04
| Table 1A presents a distribution of district fund balances for the 501 districts. Financial industry guidelines recommend that fund balances be between 5% and 10%. At the end of the 2003-04 school year, 81 districts were below 5%. |
| |
| Table 1B |
Range
of Operating Position, 2003-04 |
| Range |
Operating
Position |
| |
Number |
Percent |
| Below
0.00% |
233 |
46.51% |
| 0.00-4.99% |
236 |
47.10% |
| 5.00-9.99% |
27 |
5.39% |
| 10.00-14.99% |
2 |
0.40% |
| 15.00%
& Over |
3 |
0.60% |
Source: Annual Financial Reports,
501 districts, 2003-04
| Table 1B presents the operating position of the districts. The operating position is the difference between actual revenue and actual expenditure in the same year. As shown, there were 233 districts where expenditures exceed revenues. Financial industry guidelines recommend that the district operating position always be positive (greater than zero). According to the annual financial reports, 233 districts did not meet the guidelines. |
|
Unique or unusual circumstances can cause the fund balance to be below
5%. The same can be stated for the operating position. Among the 233 districts
where the operating position was negative, several districts had planned
to consume their fund balances, which would result in a negative operating
position. If the operating position is negative over several years, or
the negative position was not planned, problems could arise. |
| |
| Table
2 |
Fund
Balance and Operating Position, 2003-04 |
| |
Fund
Balance |
Operating
Position |
| High |
143.90% |
22.63% |
| Low |
-14.65% |
-26.11% |
| Median |
10.29% |
0.18% |
| Average |
13.15% |
-0.01% |
Source: Annual Financial Reports,
501 districts, 2003-04
| Table 2 shows the high, low and median (mid-point) along with the average percentages for both fund balance and operating position. The range of fund balance was from -14.65% to 143.90%. The median was 10.29%. For the operating position, the range was from -26.11% to 22.63%. The operating position median was 0.18% and the average was -0.01%. |
| |
| Table 3 |
Percent
of Expenditures, 2003-04 |
| |
High |
Low |
Median |
Total |
Average |
| Instruction |
78.45% |
23.26% |
57.92% |
57.84% |
57.31% |
| Support |
41.64% |
12.19% |
29.68% |
29.62% |
29.44% |
| Noninstruction |
6.49% |
0.00% |
1.79% |
1.85% |
1.83% |
| Facilities |
16.88% |
-0.13% |
0.00% |
0.19% |
0.36% |
| Debt |
51.47% |
-0.03% |
5.97% |
6.37% |
5.96% |
| Other |
63.92% |
-0.14% |
1.75% |
4.13% |
5.10% |
Source: Annual Financial Reports,
501 districts, 2003-04
| Table 3 shows the pattern of expenditures and the range (high-low), along with the median and total percentages as well as the average. |
| |
| Instructional expenditures are between 23.26% and 78.45% of all spending. The median is 57.92% and the total for the 501 districts is 57.84%. Within individual districts the amount of debt service will significantly alter the distribution. For example, a small district with a new building usually will have a high percentage of debt service and thereby reduce the relative percentage of all other expenditures. In 2003-04, the range of debt service was from -0.03% to 51.47%. The median was 5.97% and the total for all the districts was 6.37%. |
| |
| Table
4 |
Distribution
of Revenue, 2003-04 |
| |
High |
Low |
Median |
Average |
| Local |
90.34% |
13.01% |
52.83% |
53.70% |
| State |
76.88% |
8.47% |
40.74% |
41.17% |
| Federal |
17.84% |
0.00% |
2.60% |
3.40% |
| Other |
59.22% |
-7.21% |
0.00% |
1.73% |
Source: Annual Financial Reports,
501 districts, 2003-04
| Table 4 shows the range of revenue by source. In 2003-04, local source revenue had a range from 13.01% to 90.34% of total revenue received by districts. The median local revenue is 52.83% and the average is 53.70%. State revenues from all sources range from 8.47% to 76.88%. The median is 40.74% and the average is 41.17%. |
| |
| Table 5 |
Distribution
of Districts by Expenditure, 2003-04 |
| Total Expenditures |
Number of Districts |
Percent of Districts |
| $0-$10,000,000 |
51 |
10.18% |
| $10,000,001-$20,000,000 |
159 |
31.73% |
| $20,000,001-$30,000,000 |
107 |
21.36% |
| $30,000,001-$40,000,000 |
64 |
12.77% |
| $40,000,001-$50,000,000 |
34 |
6.79% |
| $50,000,001-$60,000,000 |
26 |
5.19% |
| $60,000,001-$70,000,000 |
20 |
3.99% |
| $70,000,001-$80,000,000 |
9 |
1.80% |
| $80,000,001-$90,000,000 |
8 |
1.60% |
| $90,000,001 &
Over |
23 |
4.59% |
Source: Annual Financial Reports,
501 districts, 2003-04
| Table 5 shows the distribution of districts by total expenditure. In 2003-04, 51 districts (10.18%) operated with less than $10 million. About 42% of all districts operated with less than $20 million annually. At the other end of the spending, only 23 districts (4.59%) operated with more than $90 million each. |
| |
| Table
6 |
Distribution
of Districts by Per Pupil Expenditures, 2003-04 |
| Total Expenditure
Range |
High |
Low |
Median |
Average |
| $0-$10,000,000 |
$17,366.91 |
$7,355.29 |
$9,871.09 |
$10,252.59 |
| $10,000,001-$20,000,000 |
$19,794.77 |
$7,189.10 |
$9,356.68 |
$9,770.50 |
| $20,000,001-$30,000,000 |
$20,090.75 |
$7,383.33 |
$9,381.32 |
$9,990.65 |
| $30,000,001-$40,000,000 |
$20,849.57 |
$7,382.09 |
$9,739.02 |
$10,103.29 |
| $40,000,001-$50,000,000 |
$19,870.23 |
$7,788.38 |
$10,210.23 |
$10,650.45 |
| $50,000,001-$60,000,000 |
$16,724.97 |
$8,610.85 |
$10,515.68 |
$10,525.40 |
| $60,000,001 &
Over |
$19,076.38 |
$7,677.28 |
$10,625.85 |
$11,055.52 |
| Total |
$20,849.57 |
$7,189.10 |
$9,766.91 |
$10,199.35 |
Source: Annual Financial Reports,
501 districts, 2003-04
| Table 6 shows the range of expenditures based on average daily membership. It shows the ADM expenditures according to the range of total expenditures. Also shown are the median and average expenditures for each range. As total expenditures increase, the low ADM spending increases. However, this is not the case for the highest ADM spending. The median ADM spending in 2003-04 for each group generally was consistent. |
| |
In conclusion
Each of the above elements is an important part
of a district's overall financial well-being. A good fund balance provides
a district with the ability to adapt to unique or unusual circumstances.
Relying only on percentages for fund balance can distort the picture. While
the financial industry standard is between 5% and 10%, a district may need
to maintain a larger balance if it has a small operating budget and aging
facilities. Anticipated or planned use of fund balance will result in a
negative operating position.
Percentage distributions of expenditures in school finances generally will show the largest element of spending being used for instruction. In a small district, a large debt payment can distort the distribution and reduce the percentage used for instruction.
If you have questions about your district's fiscal health, PSBA is prepared to assist you. Services include customized workshops, responding to questions or a fiscal health evaluation. For more information contact PSBA's research department. |
| |
For questions or comments, contact David
W. Davare, PhD
at (717) 506-2450, ext. 3372, or (800) 932-0588. |
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