TYPE ACTUAL 2002-03 ACTUAL 2003-04 ACTUAL 2004-05 BUDGETED 2005-06 BUDGETED 2006-07 PERCENT INCREASE (DECREASE) BETWEEN 2002-03 AND 2006-07 Revenues State $43,336,782 $43,613,971 $50,933,220 $53,072,458 $58,229,837 34.4%
State Sales Tax $8,739,719 $9,516,793 $11,191,232 $12,050,078 $13,447,973 53.9%
Federal Revenue $117,949 $135,834 $132,359 $125,000 $142,500 20.8% Other Revenue $2,466,261 $2,992,875 $2,453,408 $2,720,100 $2,643,000 7.2% Total Non-City $54,660,711 $56,256,473 $6,471,219 $67,967,636 $74,463,310 36.2% City Funds $47,478,060 $49,547,632 $51,889,926 $54,352,299 $64,727,817 36.3% Total Operating Revenue $102,138,771 $105,807,105 $116,600,145 $122,319,935 $139,191,127 36.3% Expenditures Instruction $75,988,520 $78,887,410 $88,259,813 $90,958,935 $102,003,936 34.2% Support Services $4,044,229 $4,307,726 $5,397,807 $5,335,547 $6,862,597 69.7% Transportation $4,024,033 $4,499,385 $5,445,412 $5,119,916 $6,572,057 63.3% Operations and Maintenance $10,417,202 $10,796,601 $11,971,000 $12,577,074 $14,623,592 40.4% Facilities $1,981,564 $3,632,684 $2,115,286 $1,083,215 $1,044,783 (47.3%) Debt Service $4,515,312 $5,384,670 $4,559,474 $7,245,248 $8,002,478 77.2% Total General Fund $100,970,859 $107,508,476 $117,748,792 $122,319,935 $139,109,443 37.8%
Source: RCPS 2006-07 adopted budget.
RCPS’ budget has received the Association of School Business Officials International Meritorious Budget Award for five consecutive years, with the last being received for the 2005-06 adopted budget. The 2006-07 budget has been submitted and is expected to again receive the award.
FINDING
RCPS and the City of Roanoke created a joint funding committee to carefully review the current funding formula used to provide financial resources to the division. The current funding formula which basically represents 36.42 percent of county revenues has been in existence from the late 1980s and has not changed since that time. Certain city revenues such as specific taxes for the express purpose to increase economic development are exempt for total city revenues for the 36.42 percent calculation.
A number of purposes were identified as the reasons the funding committee was created. These were stated as: to create the best city/school relationship in the nation, ensure effective use of all available resources, promote community development to grow resources, communicate for full community understanding, create community ownership through involvement, create a system that is successful for the long term, and create methodology for sharing resources.
Roanoke is not alone in its approach of funding the school division based on a funding formula applied to city revenues. A report published by the Virginia Education Association in July 2005 indicated that 18 other Virginia localities use a school funding formula to determine the amount of revenue that the School Board receives from the local government. The report also states that Roanoke City’s funding formula agreement was established in 1982 and was the first established in Virginia.
The report identifies certain issues that possibly should be addressed when creating or revising funding agreements. These are:
Changes in school-age population relative to changes in the overall locality population.
Changes in student enrollment and changes in the number of special needs students – special education, at-risk, gifted, etc.
Assuming that needs will increase commensurate with revenues or vice-versa ignores the demographics that drive needs and related costs.
There is the possibility of lag time between the conversion of economic growth into tax revenues and the growth in expenditures related to that economic growth.
Disproportionate changes in funding of debt service and capital projects from year to year raise the question of whether these funds should be included in a revenue sharing plan.
Revenue sharing plans should take into account reductions in federal revenues and state revenues for education as well as changes in federal/state mandates for education programs and services.
Changes in the local composite index under the state education funding formula could reduce state funding without an equal
increase in local funding based on revenue sharing. A revenue sharing plan must provide for making up funding reductions and/or eliminations of other funding resources.
Under a revenue sharing plan, will locality general fund balances be available to both the governing body budget and the School Board budget in future years.
The revenue sharing plan should be developed cooperatively by School Board representative and governing body representative.
The joint funding committee has a goal of implementing a possible revised funding formula in 2008-09.
COMMENDATION 4-A:
The Roanoke City Public Schools is commended for participating with the City of Roanoke to address the funding formula used to allocate local revenues to the division.
FINDING
RCPS does not charge all allowable costs to the food services fund, thus decreasing the funds available in the division’s general fund for education purposes. For example, utility costs for the division’s cafeterias and other allowable costs are paid from the general fund when they could be paid for with food service funds. Utility costs for cafeterias located within schools are not separately metered and thus, utility companies do not invoice the cost of utilities for the cafeterias separately. When invoices for utility costs for the schools are paid, the division elects to charge the entire cost to the division’s general fund and the cafeteria portion is not allocated to the food service fund.
All costs related to division utilities, custodial and maintenance services are currently budgeted to and expended from the division's general fund. Costs of the division’s food services program are accounted for and charged to the food service fund; however, utility, custodial, and maintenance costs are not charged to the fund. In general, food service operations are expected to be self-sufficient and to run like a business.
By not allocating operations cost such as utility, maintenance, and custodial services to the food service operating expenditures, the department overstates its profit and fund balance. Since the general fund has been used in the past to pay for these costs, general fund expenditures have been overstated and fewer funds have been available for classroom use.
Exhibit 4-7 presents the revenues, expenditures, and fund balance for the division’s food service fund for the 2004-05 and 2005-06 school years. The food service fund had a balance of $106,818 at end of the 2004-05 school year, which increased by $44,935 during the 2005-06 year.
EXHIBIT 4-7
RCPS FOOD SERVICE FUND