District budgets are approved annually, but many of the numbers contained within
reflect long-term commitments, such as labor contracts, ongoing equipment and
building maintenance contracts and long-term commitments to instructional or
professional development strategies. One rule of thumb is that it takes $1 million annually to staff a school, apart from facilities and supplies.
School accounting and the law
School budgets are governed by different regulations and practices than typical business or family budgets. The main differences are:
Fund accounting
School district records, budgeting and reporting are on a fund basis. Nine funds are established for specific activities and objectives and operate in accordance with laws and regulations. Each fund is treated as a separate and independent entity with its own assets, liabilities and fund balance.
Federal and State mandates
Public schools must fund certain programs and services by law, even if it means deficit spending. Some familiar programs governed by mandates include special education, life-safety and ESL and bilingual programs.
Cash balances
Districts are required to keep enough cash on hand so that if revenues are distributed late, they can make their payments and not accrue penalties. On the other hand, keeping more cash on hand than necessary exposes districts to litigation brought by tax objectors, frequently attorneys whose business is to fight taxes. Having too much cash on hand may convince the court that a district is over-taxing its constituents.
Tax Cap
The Tax Limitation Law of 1991 limits the increase of total dollars the district can receive over the previous year to 5% or the CPI (1.6% in 2001; 2.4% in 2002), not including taxes from new construction. This limit is averaged over the entire tax base, which is why the increase in assessed valuation of individual houses does not benefit the district: some residents' taxes may rise more than that, and others' may rise less, but the district can only receive an additional 5% or the CPI, whichever is less.
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