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Chargeables & Building the Revenue Budget for FY 20

Chargeables & Building the Revenue Budget for FY 20

Our May finance report did not have any of the normal data that we normally include. Thus, we have included the chargeables here with some points for building the revenue budget for FY20. We can assist if you require help projecting out revenue sources and student revenues for FY20. Our chargeable collections will be making their way to you in July, and our June finance report will include discussions about the pay raise, the Board of Equalization meeting and other relevant tax changes that may affect your district.

Here's a short summary of chargeable recommendations with more in-depth discussion to follow:

  • Gross production collections show large growth since November. There are several factors affecting gross production. The best revenue source to consider for next year’s budgeting would be a projected revenue stream from November 2018 to June 2019.
  • REA tax shows continued growth; the best source for future projections is the FY18 collections.
  • Motor vehicle tax will be moderate this year. The FY19 collections are the best collections for projections. They appear to be the average collections for the time period from FY15 to FY19.
  • School Land Commission payments for year-to-date collections are ahead of the FY18 level. Keep treasurers alert for significant payments toward the end of June.

Gross Production

Everybody’s favorite speculation point is gross production. Before getting the vapors over this revenue source's outstanding performance, there are several different issues to consider:

  1. This revenue source's taxes were increased last year, and that is having a considerable effect on the revenue. Looking at the baseline collections by month, we see the same peaks and troughs and collections with an increased upward trajectory in revenue for year-to-date collections.  
  2. Political and supply-related market factors are influencing oil prices. There is a strong move to backwardation in the oil market futures (the futures actually make sense to buy to hedge against spot price loss). The only problem is that political events can rapidly affect supply and demand. This could become an unwelcome rollercoaster.
  3. Not every county with gross production is seeing the same level of income increase due to expanded revenues. The past three years have seen extremely concentrated collections in a few counties; fortunately they are fast growing counties where  collections are having a positive chargeable effect on the State Aid formula.
  4. Enjoy the gross production if you are receiving it, but don’t become attached. The last half of FY19 is probably the most likely model for revenue we will see over the next few year. If you need help projecting this into next year's budgeting, we will help you build a model.



REA collections continue to perform at an increasing rate. This doesn’t mean everyone is seeing an increase, but a good percentage of the state has to be receiving at least a small increase in the revenue stream. FY18 is a good middle-of-the-road revenue pattern for this revenue stream.  

Motor Vehicle

Motor Vehicle payments don’t give much to be excited about. We are looking at the third highest collection year since FY15. Unfortunately, the collections since FY15 have not been much to write home about. Our new normal is to expect a high collection in December, February, May and September. However, as you build your budget, remember this funding source has been shrinking and will continue to do so moving forward. The safest allocation number to accept for estimate of needs is probably this year’s receipts--it is the most middle-of-the-road receipt level.  



School Land Commission

We have been discussing School Land Commission payment trends for the past several months. Currently, total payments are at $82,132,702.00. Payments at the same time last year were $77,566,237.00. The eventual ending last year was $103,430,605.00. You should expect that total payments will increase over the last two months of the year to meet the previous year's level. This should happen, and it would be a good idea to keep your treasurer on watch for the payment(s) at the end of June.  

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.

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