What to watch in the budget file before board review, from transfers and Form 150 to cash balances and mill rates

Key Takeaways:
  • Kansas school districts should start with the current KSDE budget file and gather key inputs early so enrollment, valuation, revenue and mill rate changes do not create last-minute surprises.
  • Transfers, Form 150, bond payments and fund cash balances need to tie before board review because small budget file errors can quickly turn into bigger questions.
  • The Revenue Neutral Rate timeline should drive the budget schedule, not the other way around, especially if the district may need to publish notices and hold hearings before the September deadlines.

 

By the time the Kansas State Department of Education (KSDE) budget file is available, most district offices are already juggling year-end cleanup, board packets, payroll changes, enrollment questions, county valuation updates and audit prep.

Then the budget lands on the desk.

For Kansas school districts, preparing the annual USD budget is a familiar process, but that does not make it simple. One change in enrollment can affect state aid. One county valuation update can shift the mill rate. One missed transfer can throw off several funds. One missed publication deadline can create a scramble if the district is planning to exceed the Revenue Neutral Rate.
And in many districts, the person preparing the budget is also the person answering board questions, tracking grant activity, helping with payroll, closing out the fiscal year and trying to keep the district office moving.

That is why the USD budget process is not just about filling out the KSDE forms. It is about building a budget that ties together, supports the district’s plans and can be explained clearly when the board or the public asks, “What changed?”

What budget file should Kansas school districts use to prepare the USD budget?

The first step is simple, but it is worth saying: start with the current KSDE budget software package.

KSDE provides the official Excel worksheets and forms districts use to prepare, publish and submit the budget each year. The files are updated annually for the upcoming budget year and are usually available in late June on the School Finance page of the KSDE website.

Last year’s budget can be helpful, but it should be treated as a reference, not the working file. It can help answer practical questions, such as:

  • What did we budget last year?
  • Which funds had unusual activity?
  • What major expenses will not happen again?
  • What new purchases, programs or staffing changes need to be added?
  • Were there revenues last year that will not repeat?
  • Did we have enough budget authority in the right funds?

Those are the questions that keep a budget from becoming a copy-and-paste exercise.

A school district’s budget should reflect what leaders reasonably expect to happen in the coming fiscal year, not simply what happened in the last one.

What information should be gathered before entering numbers?

One of the easiest ways to lose time during budget preparation is to start entering numbers before the key inputs are ready.

That is how districts end up saying things like, “We’re still waiting on the assessed valuation from the county,” or “The revenue neutral rate changed again,” or “Why did state aid change when I updated enrollment numbers?”

Before getting too deep into the KSDE file, gather the information that drives the budget calculations:

  • Enrollment data
  • County assessed valuation county tax estimates, and revenue neutral rate
  • Prior-year and second prior-year financial results
  • Prior-year tax receipts and collection data
  • Debt and lease information
  • Salary and staffing information
  • A copy of the prior-year budget

These details matter because they feed the formulas and estimates inside the budget software. County assessed valuation, enrollment numbers and tax collection rates can affect estimated state aid, tax receipts and mill rates.

If those numbers are off, the budget may still look complete, but it may not be giving the district an accurate picture.

That can lead to last-minute questions like, “Are we over RNR?” or “Do we actually have enough budget authority for this?” Those are not questions anyone wants to answer for the first time right before publication or a board meeting and budget hearings.

Why do transfers cause problems in the USD budget file?

Transfers are one of the places where small mistakes can create a lot of cleanup.

Transfers must originate in the General Fund or Supplemental General Fund tabs of the budget, not in the receiving funds. The transfers out should then automatically populate in the corresponding receiving fund tabs of the budget based on how much was transferred out of the General Fund and Supplemental General Fund. Transfers out of those two funds should equal the total transfers into all other funds.

If those numbers do not agree, the budget may not tie the way it should.

Certain funds, including Special Education, At-Risk and Bilingual also have required annual transfer amounts that must be met. Those requirements should be reviewed early, not after the rest of the budget is nearly finished.

A common budget-season frustration is, “The transfers aren’t tying.” When that happens, it is much easier to find the issue if transfers have been checked throughout the process instead of saved for the final review.

This is especially important when changes are being made across multiple tabs. A correction in one place can affect several other parts of the file, including the amount of each of the required transfers

How should districts review the General Fund, Form 150 and bond payments?

Some budget checks are easy to skip when the deadline is getting close, but they can prevent bigger issues later.

General Fund total expenditures should match the Legal Maximum General Fund Budget from Form 150. If those numbers do not agree, the district should stop and resolve the difference before moving forward.

Bond payments need the same level of review. Payments shown on the Statement of Indebtedness tab should tie to the Bond and Interest Fund tab. These are not just technical details. They affect how confidently the budget can be reviewed, adopted and explained.

When numbers do not tie, the conversation shifts away from district priorities and toward questions about the file itself. That is not where administrators or board members want to spend their time.

A clean budget file makes the review process smoother and gives district leaders more confidence in the numbers they are presenting.

Why should districts avoid copying last year’s revenues and expenditures?

Last year’s budget is a useful starting point. It is not the whole story.

School districts should take time to look at expected changes in both revenues and expenditures. If a district expects new services, changes in fee rates or other revenue changes, those should be reflected in the budget.

If anticipated revenue changes are not entered properly, budget authority could be overstated or understated. That affects how much cash is available to budget on the expenditure side.

The same is true for expenses.

If the district expects a major purchase in the coming year, it should be added. If the prior year included a major expenditure that is not expected to happen again, it should be removed.

This is where district leaders need to ask plain, practical questions:

  • Is this a one-time expense?
  • Do we need to carry it forward?
  • Are staffing changes reflected?
  • Are benefit changes included?
  • Are grant-funded costs changing?
  • Are there equipment, transportation or facility needs that were not in last year’s budget?
  • Are fee revenues expected to increase or decrease?

A budget that simply repeats the prior year may be easier to prepare, but it may not give the district the authority or flexibility it needs. It may also leave the board with an incomplete picture of what the coming year will look like.

What happens if a fund shows negative cash?

Cash balances for all funds cannot be negative.

If a fund shows negative cash after receipts and expenditures have been budgeted, the district needs to make an adjustment. That may mean increasing receipts or decreasing expenditures so the ending cash balance is zero or positive.

But this is where districts need to be careful.

Increasing receipts may fix the budget file, but it does not create actual cash. If the district budgets more receipts than it actually receives, there may not be enough cash to cover the expenditures budgeted for that fiscal year.

In other words, a negative cash balance is not just a spreadsheet issue. It is a budget planning issue.

The better question is not simply, “How do we make this fund positive?”

The better question is, “What is realistic based on the cash we expect to have?”

That distinction matters. It can help the district avoid building a budget that works on paper but feels tight during the year.

How does the Revenue Neutral Rate affect a Kansas school district budget?

For levied funds, districts need to evaluate the mill rate and total tax dollars levied to determine whether the Revenue Neutral Rate has been exceeded.

This should happen early in the process.

If the district intends to exceed RNR, the County Clerk must be notified by July 20. The budget and RNR hearings must be held between Aug. 20 and Sept. 20. The district must also publish a Notice of Budget Hearing and, if applicable, a Notice to Exceed Revenue Neutral Rate Hearing at least 10 days before the hearings.

The hearings can be held on the same day, but the notice requirements and timing still need to be handled correctly.

RNR is also one of the areas most likely to create board or public questions. People may not ask about every fund in the budget, but they will often ask about the mill rate, tax dollars levied and why those numbers changed.

Several items can affect the mill rate and total tax dollars levied. Increasing nontax revenues or decreasing expenditures can lower the mill rate or tax dollars levied. Increasing expenditures or decreasing nontax revenues can increase them. Enrollment numbers and tax collection percentages can also affect receipts through state aid and tax receipts.
That is why accuracy matters before the notices are published.

No district wants to be chasing a mill rate change two days before publication or trying to explain a number that shifted because an input was updated late in the process.

What are the Kansas school district budget deadlines?

Kansas school districts have several important budget deadlines to keep in mind:

  • The County Clerk must be notified of intent to exceed the Revenue Neutral Rate by July 20.
  • The Notice of Revenue Neutral Rate Hearing and Notice of Budget Hearing must be published at least 10 days prior to the hearings
  • Budget and RNR hearings must be held between Aug. 20 and Sept. 20.
  • The budget must be submitted to KSDE by Sept. 20.
  • The budget must be filed with the County Clerk by Oct. 1.

Those dates come quickly, especially when the district is coordinating publication deadlines, board meeting dates, vacations and final review.

A practical way to manage the process is to work backward from the required dates. Districts should allow time to gather information, prepare the file, review transfers, evaluate RNR, publish notices, answer board questions and make final adjustments before adoption.

The budget process becomes much harder when the timeline is driven by the next deadline instead of by a clear plan.

A USD Budget Should do More Than Meet the Deadline

Preparing a Kansas USD budget will always involve forms, formulas, notices and deadlines. That is part of the process. But the budget should also help district leaders understand where the district stands and what it can responsibly plan for next.

If your district is preparing the KSDE budget file, reviewing Revenue Neutral Rate questions or trying to make sure transfers and fund balances tie before publication, Adams Brown can help provide another set of eyes before the hearing deadlines arrive. Contact an Adams Brown advisor today.