What is it? How is equalization aid affected by a Fund 41? How many districts have a Fund 41? Why do districts establish it? Why don’t more districts establish one? What are the advantages & disadvantages to Fund

41? How is it different from Fund 49? What do I have to do to start one?

Authorization to establish a Capital Expansion Authorization to establish a Capital Expansion Fund comes from state statute 120.10(10m);Fund comes from state statute 120.10(10m);

It sets specific procedures a district must do to It sets specific procedures a district must do to establish the fund;establish the fund;

State Statute 121.90 indicates the levy is within the State Statute 121.90 indicates the levy is within the revenue limit.revenue limit.

It’s a fund that segregates money for specific capital projects as determined by the school board and approved at an annual meeting.

Districts may only levy into Fund 41 – transfer from any other fund (including Fund 10) are not permitted.

State Statute 120.10(10m): Vote to create a fund for the purpose of financing all current and future capital expenditures related to buildings and sites. All money raised through taxation or other collected pursuant to this subsection shall be deposited by the school district treasurer in a segregated fund. Such money shall not be used for any other purpose or be transferred to any other fund except by authorization by a majority vote of the electors present at a subsequent annual meeting and only if that notice that the issue would be on the agenda was included in the notice of the subsequent annual meeting under s. 120.08(1) ©.

WUFAR says: Projects financed with tax levy per statue 120.10(10m). State statue restricts the use of this fund for capital expenditures related to buildings and sites. Equipment cannot be acquired through the use of this Fund.

For the purpose of determining eligible expenditures from this Fund, the DPI defines “capital expenditures related to buildings and sites” as being expenditures for acquiring and remodeling buildings and sites, and maintenance or repair expenditures that extend or enhance the service life of buildings and building components, sites and site components.

Aid is affected because the expenditure in Fund 41 is amortized over the number of years the district has levied into the fund.◦ See handout

The Levy into Fund 41 does not count as a revenue in the Shared Costs calculation

Shared costs is affected only when an expenditure from Fund 41 occurs

In 2012-13, 67 districts reported activity in Fund 41, including 3 districts that first established a Fund 41 in 2012-13;

In addition, 21 districts have had Fund 41 authorization previously but did not levy this past year.

5 districts approved the creation of Fund 41 at annual meetings in 2013 (first levy into for the 2013-14 school year).

◦To separate capital improvement funds from general funds;

◦To minimize, or control, shared cost increases as the expenditures are amortized over a longer period

◦It’s within the revenue limit, which reduces a district’s ability to levy into Fund 10;

◦Many districts budget Fund 10 dollars to improve facilities;

◦It adds to a district’s accounting issues;◦It may restrict what a district can do with its

revenue, depending on the annual meeting resolution.

◦For a district in negative tertiary aid, it allows expenditures to be added to shared cost over a period of years instead of all at once. This reduces the amount of “negative” aid a district generates;

◦It allows a district to separate some capital and maintenance projects from the rest of the budget to show the public a district’s effort in these areas.

It may restrict the flexibility a district has in spending its revenue, and although most districts have voters approve a fairly general motion at the annual meeting to provide flexibility in the range of projects that can be funded, it still must be spent only on capital projects related to buildings and sites;

It is within the revenue limit and thus reduces the amount of Fund 10 revenue a district has available;

For a district in positive aid, it may reduce aid in a given year, and defer it to another year, because the amount of shared cost in the aid calculation is added over several years and not all at once.

Fund 49 revenue comes from borrowing proceeds, which is outside the revenue limit;

Fund 41 revenue comes from a district’s levy, and is within the revenue limits.

Fund 49 is set up for capital projects, borrowing proceeds are deposited and spent for the specific project, and expenditures are not subject to the revenue limit;

Fund 41, is also set up for capital projects, but levy proceeds are deposited and spent for specific projects, and revenues are subject to the revenue limit.

Check our website at:http://dpi.wi.gov/sfs/index/

then click on “WUFAR” on the left-hand sidebar and find “Capital Expansion Fund” under “Accounting Issues and Coding” or call Jerry Landmark at 608-267-9209Jerry Landmark at 608-267-9209