Balancing the budget
Breaking down Fulton County Schools’ annual budget process
Every year, the school board goes through a lengthy process to prepare the following year’s school budget. Click to enlarge.
Graphic by Grace Peng, Managing Editor
Melissa Liu, Managing Print & Design Editor, and Sameeksha Agarwal, Staff Writer
For Fulton County Schools, budgeting is a year-round process that requires cooperation between the school board, district administrators, school governance councils, and community members. In October, the school board initiates budget development for the following school year by establishing the budget calendar, which schedules budget-related activities for the next several months, and budget parameters.
“The budget process starts with and ends with our school board. They approve the recommended budget calendar,” FCS Chief Financial Officer Marvin Dereef said. “They also establish what we call budget parameters, meaning as the superintendent and the administration develop the budget recommendation, we have to stay within those parameters established by the school board, so they give us direction in that manner.”
In December, the school board approves the school allotment guidelines developed by Dereef and his colleagues for the following school year. These guidelines, spanning over 40 pages, provide instructions for both personnel and non-personnel funding and dictate how FCS must allocate money to each school in the district based on enrollment-driven formulas. Currently, a school’s number of required teachers, determined by taking the student enrollment, multiplying this number by six, dividing it by five, and again dividing it by 32, specifies how much a school receives as part of its base allocation, which constitutes the majority of its funding.
“This is a way to ensure equity. The school allotment guidelines, they don't say you allocate such amount of dollars to a specific school. School names aren't included in here,” Dereef said. “How many students are enrolled in your school helps determine how much funding you receive, as well as what type of programs your students are enrolled in. This ensures we treat every school the same way when it comes to how we are allocating funds to each school.”
Once the school allotment guidelines are approved, FCS departments and individual schools build their own budget requests, which are subject to change. Dereef encourages them to develop their budgets based on what they hope to achieve in the coming school year, rather than how much funding they will receive.
“As we go through the budget process, we tell our departments, ‘Establish your goals first, and then let us know what funding is necessary to support those goals, as opposed to ‘This is your pot of money. Now figure out what you want to do.’ That's not the way we operate,” he said.
Because FCS depends partially on state funding for revenue, it must wait until the state legislature gets further along with the state budget to finalize its own budget and approve requests. During this time period, Dereef closely monitors the progress of state funding and gives presentations to the school board regarding any changes.
“For example, when COVID hit last year, the governor had decided initially that he would give us additional funding for raises and everything, [but] all of that went away,” he said. “So come March, we then had to rethink our budget because now the state no longer is going to give us the funds necessary to give raises.”
Georgia school districts receive state funding through the Quality Based Education Act (QBE), a state law enacted in 1985 to ensure school districts could support the education of public school students. The Georgia Department of Education (GaDOE) calculates the foundation amount of school funding each district requires based on the number of full-time equivalent (FTE) students enrolled in the 19 QBE programs, each of which is weighted differently for funding.
“Funding is based on FTEs which we take count from the different districts in March and October, and these are weighted against [19] different cost programs, whether we're talking about kindergarten, middle school, high school, whether it's some special education program or gifted,” Rusk Roam, CFO of GaDOE, said.
To qualify for QBE funding, a county must have a minimum millage rate of five mills, a prerequisite all Georgia counties meet. The millage rate is the amount of tax dollars per $1,000 of a property’s assessed value, and one mill represents one tax dollar per $1,000.
“About 40 to 50% are state funds, so the rest of the funding is coming from these local property taxes that these districts are collecting. As a district, if you want to get state funds, you're going to charge these millage rates, you're gonna collect property taxes, and it's the way a county shows that it is an active participant in educating the students,” Roam said.
QBE reduces funding disparities between poor and affluent school districts through the five-mill share because the amount of funding a district receives is based on the foundation amount subtracted by the amount of revenue gained from the millage rate. Thus, the greater the property wealth of a district, the more revenue it gains from the millage rate, and the less state funding it receives.
“The amount of state money that is paid out is [reduced by] whatever the district can earn by taxing for five mills. If property values are going up for Fulton County, the local five mill share will go up for Fulton County, so it does affect the net amount of state funding paid out,” Amy Rowell, the director of financial review for GaDOE said.
Providing over $330 million a year, QBE accounts for roughly a third of the general fund, or the revenue that FCS uses to operate. Unlike many other districts, FCS relies more heavily on local property taxes, which account for the remaining two-thirds of the general fund.
“The local property taxes [are] basically providing an additional layer of a revenue stream for the district, which allows us to be competitive as it relates to wages and the educational programs we're able to offer our students,” Dereef said.
During March, information regarding district enrollment, the preliminary revenue forecast, and the special revenue fund are presented to the school board. The special revenue fund, which is not considered a part of the general fund, consists of federal grants that designate money for specialized purposes.
“You can only use a particular fund for a particular program. We get what they call Title VI, [Part] B which is for our special ed students. We have what we call Title I funds for certain schools with low-income students,” Dereef said. “The school nutrition program also gets funding from the US Department of Agriculture, and recently we've been receiving what they call CARES funds and resources to help us respond to COVID.”
For the special revenue fund, the federal government establishes specific rules for how each grant may be allocated. Most of them come in the form of reimbursement, which provides funding to recipients after expenditures have already occurred.
“Those expenditures have to comply with the rules to be eligible for the drawdown, so there's a lot of paperwork, a lot of documentation, a lot of support that we have to make sure that we get ahold of,” Dereef said. “And they all have time restrictions, so you have to do it within a certain window, whether it's within a year, or sometimes it's a year plus three more months.”
Rowell and her colleagues in the GaDOE Financial Review Division assist school districts with compiling financial records for federal grants, and GaDOE also monitors schools to ensure they are following the guidelines that come with each grant.
“Each district requires on-site monitoring at least every four years, and some [grants] do have specific situations; they can be monitored more,” Rowell said. “And every school system, regardless of whether it's a school district or state charter school, they're required to have an annual financial audit.”
In addition to federal grants and the general fund, FCS has a local pension fund, in which certain employees are eligible to participate, and each school also has its own student activity fund for athletics and clubs. In April, Dereef also delivers a presentation on the Special Purpose Local Option Sales Tax (SPLOST) to the school board. SPLOST is an optional 1% sales tax that some Georgia counties, including Fulton, levy to fund the construction of public facilities, including schools.
“Every five years, the community votes on whether or not we should have another SPLOST, and that generates about $900 million over the course of five years,” Dereef said. “They help us renovate schools, to help us even build new schools if necessary, and to help us with furniture and equipment.”
Dereef notes that there are limitations on SPLOST funds because they can only be used for capital assets or property that is expected to have a useful life of more than one year. For instance, SPLOST can be used to purchase new laptops, but it cannot be used to hire more teachers or raise salaries. The second major presentation Dereef delivers in April is the superintendent’s budget recommendations, during which he goes over the 500-page budget book he and his colleagues have developed with the school board. The budget book is a comprehensive guide that contains information regarding FCS strategic plans, academic outcomes, history, work calendars, salary scales, as well as finance.
“The idea is, as we go through the budget process, we want to make sure the public has every tool, all the details necessary to help provide input and feedback regarding the budget,” Dereef said. “We like to tell people, a budget is a plan with a dollar sign attached. It’s more than just about the numbers. It's about what we plan to do. The numbers just imply how we're funding our activities, but it's important that the public and the board understand what are our initiatives, what are our objectives, what are the goals that we plan to achieve in the coming year.”
In May, the school board schedules public hearings for community members to come in and express their concerns regarding the next year’s budget, and in June, the school board votes to approve the final budget. Typically, 22% of the budget goes to technology, transportation, including the bus system, and academic supports (zone superintendents and others who make decisions regarding curriculum, textbook adoptions, and teacher training). The remaining 78% is allocated directly to schools to cover employee salaries and benefits and non-personnel costs.
Each school’s principal has the responsibility to develop and implement a budget based on the amount FCS has allocated to their school. When approaching the annual budget request, Principal Brian Downey considers how to best meet the needs of the community by staffing Northview with an appropriate number of counselors and teachers for each subject.
“I firmly believe that I, as a principal, should be squeezing out every dollar possible to create as many teaching positions as possible. That’s really the touchpoint; that’s where the learning and teaching happens, and that’s where the maximum amount of money possible should go,” Downey said.
