District finance director warns of state funding formula changes and new restrictions

Katie Harder, the district finance director, briefed trustees on major provisions of the recently passed school finance bill and how they will affect local budgeting.

Harder said the state will begin calculating Average Daily Membership on a two-year rolling average beginning next fiscal year, a change that could drop district funding if higher prior-enrollment years fall out of the calculation. The bill caps decreases at 5% but achieving that cap would require an additional loss of about 16 students, she said. Harder also said health-insurance funding will be based on actual employee enrollment and retirement costs will be reimbursed monthly based on actual expenditures. Bus purchases and out-of-district special-education placements will be reimbursed on faster schedules (bus reimbursements within roughly 90 days; special-education placements reimbursed quarterly).

Other changes include the creation of an instructional funding silo, new restrictions on transfers of foundation program funds (they can no longer be used for capital construction), and pre-1997 (pre-97) funds being rolled into reserve balance calculations, which will subject them to reserve limits. Harder recommended staff present a more detailed impact analysis prior to the April meeting so trustees can plan reserve use and capital projects in light of the new rules.