School Finance 101: How Does Richfield Make Its Money?

After the , I was asked many questions about school finance. And, well, to be perfectly honest—I didn’t know much.

So I met with the schools’ business manager, Michael Schwartz, and he helped me piece together a synopsis on how the district makes its money and how it is spent.

Where The Money Comes From

The schools receive funding from sources under four categories: the state, local levies (property taxes), federal government and grants, and rentals, fees and investments.

Schwartz estimated that state aid for most school districts is around 65 to 75 percent.

“The bulk of any district’s funding would be state aid, for sure,” Schwartz said. “While property tax revenues may be different, the percentages even out.”

State aid is projected to make up 71 percent of the Richfield Public Schools budget for the 2011-12 school year. Local property tax revenue at 22 percent, federal 4 percent and rental fees and investments 3 percent.

How The Money Is Divided Among the District

The district works with three pots of money under its budget as a whole: the general or operating fund, capital and transportation for basic school district operations. Other funds include food service, debt service and community education.

The general fund pays out salaries and benefits, pays for school supplies, utilities and so on. The capital fund is for improvement projects such as repairing a roof or large equipment purchases. Obviously, transportation relates to busing.

As far as funding each school, Schwartz said each school is allocated funds based on enrollment. Further, each school is similar to a mini-school district, with each receiving money for general and capital expenses. The schools are not responsible for most staff salaries or benefits, which are budgeted in the central office.

“Each building has it’s own financial plan,” Schwartz said. “And funds to use at their discretion.”

In addition, all schools are part of the free and reduced lunch program through the state—which is part of the large state aid bubble the district receives each year. The food service fund is allocated a certain amount of per-pupil spending to cover meal and preparation costs. As part of that funding, each school also receives compensatory funding to help them go beyond just providing lunches for those kids whole qualify.

“They have more issues than ‘just go to school.’ They need more services,” Schwartz said. “So that’s what that extra money provides.”

Schwartz said compensatory money supports nurses, social workers and health services. In addition, the schools will use this funding to reduce class size, provide additional staff development and other options in an attempt to provide more opportunities for at risk kids.

Levies

The district is allowed to levy taxpayers up to a certain amount each year, without going through voters. The number of dollars is set each year by the state. The board will have two meetings to certify the amount, once in September and once in December.

Schwartz said the district always opts for the full amount at the first meeting.  The district can always reduce the amount, however, it cannot increase the amount if the board certifies the number below the max.

“We do this just to be safe if the calculations that the state provide in the fall are not accurate” Schwartz said.

In addition, as property taxpayers know, the district can also levy for addition funds through a referendum, which needs to be voter approved. . Another will be up for voting in this year’s election as well, however, the amount the district will request has yet to be decided.

Last year the district levied for nearly $16 million dollars in total, which included the voter approved operating levies and technology levy.

Schwartz said the public is welcome to contact him anytime. He can be reached by phone at 612-798-6061 or by emailing michael.schwartz@richfield.k12.mn.us.