Starting 2018 With Positive Budget News!

It's a miracle--we actually get to begin 2018 with good news for a change! We have included several items within this month’s article to help you prepare for the coming year. One of the most important items is that the State Aid factor changed little, and a “cash flow issue” due to under collections in the 1017 Fund does not seem to be on the horizon. The funding formula on 12/22/2017 is represented in the following tables:

Of note, thankfully, is that we were off on our projected drop in State Aid. The biggest factor in this is the ad valorem chargeable's continued net growth: $25,000,000 and some change. This is a 4.8% growth, and we see a similar growth from FY17 to FY18 in County 4-Mill levy and in the adjusted valuation, which props up the State Aid formula.

Some concerning items moving into spring are:

If the recovery holds, we should pay out similar to the pattern we saw in FY15.
Many schools are on the last year of their high WADM number; therefore, it is vitally important that districts pay attention to their enrollment numbers.
Prepare your monitoring tools to watch gross production in your district. If the oil price keeps climbing, you need to hold those funds in reserve to negate the loss of gross production next year.
We will send a report from the February 20, 2018 State Board of Equalization meeting to give you an idea of where the spending authority for 1017 and Technology
Education Funds are trending.
We included the report from 12/20/2017 with this set of data, as it is relevant to the State Aid factors remaining static during the spring.

State Board of Equalization Notes of Interest

Oklahoma Education Reform Act (1017 Fund)

The 1017 funding levels should remain level through the end of FY19.
The 1017 Fund's project collections should be $708,942,205.00 in FY18.
This is 100% of the fund's estimate.
We expect a $46,213,005 growth in the 1017 Fund by the end of FY19.
One important fact: the authorized spending authority within the 1017 Fund was not reduced at this meeting.
This is 100% of the estimated revenue into the fund, which is in place due to the state budget for FY18 not being
finalized. This could be changed.
This does make the spring look a lot easier and does lessen the likelihood of a cash flow issue or a revenue failure.
We expect there will be $92,700,000 expended from the Ad Valorem Reimbursement Fund. The actual verbiage used at the meeting was ad valorem reimbursement funds paid to schools.

Other Factors in the State Budget

The FY18 recertified revenue is $5,572,860,263 with an available appropriation of $5,294,724,458.
FY17's certified revenue was $5,044,000,000, which was 3.4% or $175,900,000 below the estimated revenue.
There is a net expectation of an $82,916,000 increase in gross production tax (oil) and $117,278,000 gross production tax (natural gas) due to legacy well changes.
We see our sales tax base decline due to a variety of factors.
The actual amount of FY18 revenue must be recertified in the February meeting.

What This Means:

The cash flow issues due to the Technology Education Fund and the 1017 Fund should be mitigated this spring.
Even though there is an $111,000,000 budget issue, it is not expected to cause a revenue failure.
We should expect the allocation received at mid-term to be what you receive the rest of the spring.

Have a great
2018!

‍

Andy Evans

Director, Finance

Andy serves as the Finance Director for OPSRC. In this role, he provides help in financial and business-related areas for schools. This includes budgets, managing cash flow, Estimate of Needs, federal programs and general service to aid in the effective use of district resources. Additionally, Andy serves as a resource in customizing budget spreadsheets, projection sheets, and other financial tools essential to administrators in maintaining their district’s financial health.

Starting 2018 With Positive Budget News!

Andy Evans

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