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Breaking Down the School Budget: Revenues vs. Expenditures

budget video series continues with budget basics

November 20, 2014

Each year, all school districts in New York state (except the “Big 5”) develop and adopt a proposed budget for the following school year. That proposed spending plan is presented to district voters for their approval at the Annual School Budget Vote on the third Tuesday in May. A school district budget must be balanced — i.e., total expenditures must equal total revenues.

What are expenditures?

An expenditure is the payment of cash or transfer of property or services for the purpose of acquiring an asset or service. In other words, expenditures are what it costs to run the school district—the “spending” side of the budget.

School districts are required to publicly report their annual expenditures using a “three-part budget” format:

Program Budget Component: Includes items such as salaries and benefits of teachers and supervisors;
instructional costs such as supplies, equipment and textbooks; and transportation operating costs.

Administrative Budget Component: Includes items such as office and administrative costs; salaries and benefits for certified school administrators; data processing; public relations; supplies; legal fees; property insurance; and school board expenses.

Capital Budget Component: Includes items such as all transportation capital, debt service, and lease expenditures; legal judgements and settled claims; custodial costs; and all facility costs, including service contracts, supplies, utilities, maintenance, repairs, construction, renovation, debt (payment for building projects), and leasing costs.

What are revenues?

Revenues are sources of income financing the operation of the school district. Generally, the typical sources of school district revenues are the following:

State and federal aid: Includes an assortment of aids (Foundation aid, expense-driven aids, building aid etc.). State and federal aid amounts vary by district and change annually.

Fund balance: A fund balance is created when the school district has money left over at the end of its fiscal year from either underspending the budget or taking in additional revenue. Part of the fund balance (appropriated fund balance) may be applied as revenues to the district’s following-year budget. A portion may also be set aside (unappropriated fund balance) to pay for emergencies or other unforeseen occur- rences.

Interest payments: For example, from money market and checking accounts.

Misc. income: Includes items such as rental income, day-school tuition, summer school tuition, athletic admissions, and funds received for providing various services to outside organizations/agencies (e.g., transportation).

Tax levy: The total sum the district raises in property taxes. This is generally the last piece of the revenues puzzle, after all other revenue sources are accounted for.

View the second installment of the Budget Basics video series here: