PSCP Bulletin 10-01New April 2014
/ PRIVATE SCHOOL CHOICE PROGRAMSINFORMATIONAL BULLETIN
Bulletin 10-01 / New April 2014
Private School Choice Programs Reserve
Background:
School’s participating in the Private School Choice Programs receive the lesser of the school’s actual per pupil cost or the maximum voucher amount for each Choice eligible full time equivalent (FTE). The Financial Information Report (FIR) determines the school’s actual per pupil cost. The per pupil cost is calculated as the school’s net eligible educational programming cost (net eligible cost) divided by the FTE of the total number of the school’s pupils. Net eligible cost is calculated as eligible costs less offsetting revenue, based on the requirements in PI 35. Beginning in the 2013-14 FIR, schools have the option to establish a reserve for the Private School Choice Programs (PSCP). The PSCP reserve (reserve) fund allows for schools to set aside cash for anticipated future eligible expenditures. The reserve does not allow schools to get more than the maximum voucher amount each year.
Reserve Balance Calculation:
Increases in the reserve increase the net eligible cost and the school’s per pupil cost. Decreases in the reserve decrease the net eligible cost and the school’s per pupil cost. As a reminder, if your school’s per pupil cost is below the maximum voucher amount your school will owe the difference back to the state. The amount that a school may include in the reserve for future eligible costs is determined when the FIR is completed. The audited cash and investment balance is compared to the reserve balance on an annual basis to track when the money in the reserve is expended. If the reserve balance is above the cash and investment balance, the funds in thereserve are considered expended and the reserve must be reduced to the cash and investment balance.The school may also choose to reduce the reserve if they use the funds for a specific purpose. Net eligible costs must be reduced by the same amount as the decrease in the reserve because the school has included those costs as eligible costs in the previous years when it initially established the reserve.
First Year the Reserve is Established: In the first year the school establishes the reserve, the amount that may be included in the reserve isup to 15% of the school’s net eligible cost. Since the reserve represents the amount of money the school has set aside for future eligible costs, the reserve balance may not exceed the audited cash and investment balance included in the FIR.
Example 1: The following is an example of the maximum allowed reserve determination:
Net Eligible Cost: / $1,000,00015% of Net Eligible Cost: / $150,000
Cash & Investment Balance: / $200,000
Maximum Allowed Reserve:
(the lesser of15% of Net Eligible Cost or the cash available to reserve) / $150,000
Subsequent Years: After the first year the school establishes the reserve, the school must annually review the reserve to determine if any adjustments are required.
If any portion of the reserve is used, the reserve and net eligible costs must be decreased by the amount used. On an annual basis, the school must compare the reserve balance to the audited cash and investment balance. If the audited cash and investment balance is less than the reserve, the reserve must be decreased to match the audited cash and investment balancebecause these are considered the expended funds. The school may also choose to reduce the reserve if they use the funds for a specific purpose. The net eligible cost is decreased by the amount of the decrease in the reserve.
If the reserve balance is less than the cash and investment balance, the school may determine if it can increase the reserve by calculating 15% of the net eligible cost.
- If the calculated amount is more than the prior year reserve balance, the school may choose to set aside additional funds in the reserve balance up to 15% of the net eligible cost. As a reminder, since the reserve represents the amount of money the school has set aside for future eligible costs, the reserve balance may not exceed the audited cash and investment balance included in the FIR.
- If the calculated amount is less than the prior yearreserve balance, the school may not increase the reserve balance. The school may maintain the prior year reserve balance.
Example 2: The following is an example where the reserve fund is considered expended and the school must reduce the reserve balance.
Prior Year Reserve Balance: / $200,000Cash & Investment Balance: / $175,000
Conclusion: The reserve balance is decreased to $175,000 due to the expenditure of the reserve. The reserve balance and eligible costs are decreased by $25,000. No additional funds may be added to the reserve.
Example 3: The following is an example where the school may increase its reserve amount.
Prior Year Reserve Balance: / $50,000Net Eligible Cost: / $2,000,000
15% of Net Eligible Cost: / $300,000
Cash & Investment Balance: / $350,000
Maximum Allowed Reserve: (the lesser of15% of Net Eligible Cost or the cash available to reserve) / $300,000
Conclusion: The school may increase its reserve balance up to $300,000. If it increased its reserve to $300,000, it would increase the net eligible cost by $250,000 ($300,000 less the prior year reserve of $50,000).
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