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Budget Approval Process for FY 2008-09

ADMINISTRATIVE LETTER:  38
POLICY CODE: DBG

 

TO:     Superintendents of Schools

FROM:     Susan A. Gendron, Commissioner

DATE:     May 01, 2008

RE:     Budget Approval Process for FY 2008-09

 

The April 18, 2008 enactment of PL 2007 Chapter 668 (LD 2323) that corrects technical errors in the original reorganization law passed in June 2007 (PL 2007 Chapter 240) has resulted in some questions by school administrative units regarding which budget approval process to follow for the 2008-09 budget.

Chapter 668 (LD 2323) affects the budget process this year, especially for school administrative districts (SADs), community school districts (CSDs) and municipal school units run by charter municipalities.

Chapter 668 (LD 2323) was not passed as an emergency measure and therefore does not become law until July 18, 2008.  The later effective date has added confusion over whether to apply previously-passed law or the new law.  Chapter 668 (LD 2323) contains a retroactivity clause which allows units to use the new format and timeline or the old one and have a valid budget.

SADs and CSDs

SADs and CSDs are now subject to the same requirements as regional school units.

  1. Budgets presented by the school board and approved by district meeting and budget validation must be in the 11 cost-center format pursuant to 20-A MRSA Sections 1485 and 1486 instead of the 6 cost-center format that was previously required for SADs (Sections 1305-A and 1305-B) and CSDs (Sections 1701-A and 1701-B).
  2. The validation referendum must follow the district meeting and be held within 14 calendar days instead of the three business days required in prior SAD and CSD law.

 

Chapter 668 (LD 2323) was not passed as an emergency measure and will only become effective July 18, 2008. However, Chapter 668 included a retroactivity clause making the changes from sections 1305-A and 1305-B and 1701-A and 1701-B to sections 1485 and 1486 retroactive to January 1, 2008. Additionally, Section 55 of the enacted Law Chapter 668 states that the retroactivity to January 1, 2008 applies “as long as the retroactive application does not affect the validity of any budget meeting or budget validation referendum called or conducted in accordance with prior law before the effective date of the act.” In other words, if the 2008-09 budget has been or will be approved using the prior law’s 6 cost-center format or the new 11 cost-center format, it will be valid.  Districts already going down one path or the other may stick with that path for this year.  SADs and CSDs are required to use the 11 cost-center format for 2009-10 budgets and beyond.

Municipal school units with some types of charters

This section applies only to certain municipal school units, whose municipal charter confers upon their municipal council the authority to determine only the total amount of the school budget and confers upon the school board the authority to direct the expenditures of these schools. These councils will not be allowed to set or approve separately each of the 11 cost-center articles required per legislative body approval procedures in PL 2007 Chapter 240 of the reorganization law. The council will instead approve the total expenditures and the school board will assign that approved total to the required 11 cost centers. Their collective action becomes the approved school budget subject to referendum validation per requirements in 20-A MRSA section 1486, sub-section 2.

  • PL 2007 Chapter 668, Section 28 revises 20-A MRSA section 2307 and these changes are retroactive pursuant to Section 55 of PL 2007 Chapter 668 (LD 2323) as long as the retroactive application does not affect the validity of any budget meeting or budget validation referendum called or conducted in accordance with prior law before the effective date of this act.

 

In all other cases, school administrative units with budget approval for FY 2008-09 must follow the same procedures for regional school units in 20-A MRSA sections 1485 and 1486, as enacted June 7, 2007 in Chapter 240. Although PL 2007 Chapter 668 (LD2323) made other changes to the budget approval process, those changes will not become effective until July 18, 2008 and will therefore be effective for the preparation and approval of FY 2009-10 budgets.

What happens if the budget doesn’t pass at referendum?

Before July 18, 2008:  If a budget is approved by the school board, goes to district budget meeting or the municipal legislative body, and then is turned down by the voters, the last budget approved by the school board is the one that goes into effect. This is simply a caretaker budget to allow the school to raise funds and pay its expenses.  The school board must still prepare another budget and send it through the same process. If the budget is again rejected at referendum, the last school board budget will now be the operational budget until one is finally adopted by the voters.

On and after July 18, 2008: The last budget approved by the legislative body becomes the operational budget until such time as the voters approve a budget at referendum. In an SAD, CSD or RSU, this means the last budget approved by the district or regional budget meeting.  In a municipal system, it means the last budget approved by the town meeting or city/town council.

Adult education budget approval

It is important to clarify that the adult education budget approval process – warrant article language – has been amended by PL 2007 Chapter 599 (LD2299). The approval of adult education expenditures and the amount to be raised and appropriated must be approved by the legislative body of each school administrative unit participating in the adult education program.

  • In a program run by a school administrative district (SAD) or a community school district (CSD), the approval of the new adult education warrant article will be at the district meeting (legislative body) and be separate from the 11 cost center articles required by 20-A MRSA section 1485 and supporting revenue articles required by 20-A MRSA section 15690. The amount to be appropriated for adult education and the local share of that appropriation must be in a separate article. The amount of the local appropriation to be assessed to each member municipality of the SAD or CSD will continue to be determined by the established SAD or CSD cost sharing formula. Since the adult education article is not part of the 20-A MRSA section 1485 cost centers it is not subject to the 20-A MRSA section 1486 validation referendum.

 

  • In a program run by multiple school administrative units, the approval of the new warrant article will be at each participating school administrative unit’s legislative body meeting: town meeting, town council meeting, or district meeting. The total amount to be appropriated for the adult education program and the local share to be raised by each participating school administrative unit must be in an article separate from those required by 20-A MRSA sections 1485 and 15690 for K-12 education. Again, since the adult education article is not part of the 20-A MRSA section 1485 cost centers, it is not subject to the 20-A MRSA section 1486 validation referendum.

 

Proper application of the new adult education warrant requirements will ensure that adult education funds are raised and appropriated correctly and that those funds are not commingled with K-12 funds and not subject to 20-A MRSA section 15690 (3) requirements that relate to maximum state and local spending targets - the amount (if applicable) that the school administrative unit will exceed the Essential Programs and Services funding model.