Download School Funding Sources - Friess Lake School District

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What are Revenue Limits?
As of the 1993-1994 school year, Wisconsin placed a limit on the revenue a school district is entitled to receive
from general state aid and local levies. The maximum limit is based upon a three-year average of enrollment changes,
the Consumer Price Index, and each district's prior year controlled revenue. A district determines the maximum
allowable levy by subtracting their October 15th general aid certification provided by the state from the revenue limit.
To further clarify this statement, if state aid is reduced, the lost revenue must be made up with the tax levy.
However, a district’s revenue limit can be increased beyond the limit in a few instances such as: when new costs
occur when a district attaches new property or when the district is required to assume new financial responsibilities
from another governmental unit. The revenue limit may also be increased if a district passes a referendum or is
experiencing declining enrollment.
What is a “mill rate”?
In property taxation, the amount of tax to be raised divided by the value of property to be taxed is a “mill rate”
or “levy rate”. The rate is often expressed in mills of the tax per dollar of property value. A mill is equal to $1.00 of
tax for each $1,000 of assessment, hence the term "mill rate”. Taxes on individual properties are calculated by
multiplying the mill rate by the assessed value of the property and dividing by 1,000. Keep in mind that the mill rate
on a tax bill reflects the increases and decreases of all taxing jurisdictions in your municipality such as: state tax,
county tax, town tax, K-8 school tax, high school tax, and technical college tax. For example, a property with an
assessed value of $175,000 located in a municipality with a total mill rate of $20.50 would have a property tax bill of
$3,587.50 per year. Residential taxes may also change if there is a change in the assessment of the property.
Assessment changes occur as the result of additions to the property or changes in the market value of the property.
In what manner do school districts manage their funds?
Governments, such as school districts, usually manage their accounting systems on a "fund" basis. A fund is a
separate set of accounting records, segregated for the purpose of carrying on an activity. A fund is established for
accountability purposes to demonstrate that financial resources are being used only for permitted purposes. The
Wisconsin Department of Public Instruction (DPI) specifies the various funds required to be used by Wisconsin
school districts. All school districts have a General Fund, and may have one or more other funds to account for
specific activities. For example, special education activities are accounted for in the Special Education Fund,
transactions relating to the payment of general obligation debts are accounted for in a Debt Service Fund. A fund will
have "balance sheet" accounts consisting of "assets", "liabilities" and "fund balance," and a series of "revenue" and
"expenditure" accounts.
What is a fund balance?
A "fund balance" is created or increased when fund revenues exceed fund expenditures for a fiscal period. The
difference between the fund's assets and liabilities equals the "fund balance." A positive fund balance represents a
financial resource available to finance expenditures of future fiscal periods. A common misconception is that fund
balance is a cash account, and therefore corresponds to the District's bank balance. As discussed above, fund balance
represents the fund's total assets minus its liabilities (what a fund owns minus what it owes) not the cash balance. An
appropriate fund balance can:
avoid excessive short term borrowing thereby avoiding associated interest costs.
accumulate sufficient assets to make designated purchases or cover unforeseen expenditure needs.
demonstrate financial stability and therefore preserve or enhance its bond rating, thereby lowering debt
issuance costs.
Wisconsin Department of Public Instruction (2005) School District Fund Balance Policy retrieved on September 1,
2005 from:
Wisconsin Department of Public Instruction (2005) Revenue Limit Explanation and Example retrieved on October 26,
2004 from: