What is a School District Budget?
Definition
The California School Accounting Manual defines "budget" as "a plan of financial operation consisting of an estimate of proposed income and expenditures for a given period and purpose."
It is important to note that while the budget of any public entity may appear complicated, the purposes of the District's budget are quite understandable: to plan, manage, and control the District's revenue and expenditures.
Legal Requirements for School District Budgets
Education Code (EC) Section 42122 mandates that budgets must show a complete plan of all proposed expenditures and of all estimated revenues for the fiscal year.
EC Section 42127 requires that districts choosing to implement a dual adoption budget schedule adopt and file a budget with the County Office of Education on or before July 1 and revisions to the adopted budget on or before September 8. When September 8 does not fall on a weekday, the budget must be filed on the following Monday.
EC Section 42600 mandates that districts may not spend more than authorized in their adopted budgets as adjusted during the fiscal year.
Administrative Regulations for School District Budgets
Each year, the Superintendent of Public Instruction issues documents specifying the income and expenditure categories to be reflected in each school district budget. Detailed definitions of these categories, together with approved budget and accounting practices, are described in the California School Accounting Manual published by the California State Board of Education.
Budget by Fund
A "Fund" is defined as a sum of money set aside for the purpose of carrying on specific activites or attaining specified objectives. A fund is a distinct financial and fiscal entity with its own budget.
The District utilizes both operational funds, which support the basic, daily operations of the District and its schools, and capital funds, which are utilized for budgeting and accounting for the District's facilities needs. To avoid potential confusion, the distinction between the operating budget and the District's total budget must be emphasized. Operating funds are generally intended to be expended, or nearly expended, during the course of the budget year. Capital fund amounts may carry forward over a number of years, given that construction of schools and other facilities may begin in one fiscal year and continue into one or more subsequent fiscal years.
In calculating annual per-student costs, it is generally advisable to consider only operational funds, since the service life of capital improvements is usually delivered over a period longer than one fiscal year.
Revenue Budget
Each fund has a revenue budget consisting of beginning balance and income. The beginning balance is the amount remaining from the previous fiscal year, which may be restricted to specific purposes or committed to specific obligations, such as partially completed construction projects. The portion of the beginning balance which is not obligated or otherwise committed is called the "undesignated beginning balance."
Estimated beginning balances for the Superintendent's Provisional Budget reflect the District's Second Period Interim Financial Report, which is based upon the financial condition of each fund as of January 31. If the District is required to prepare a Third Period Interim Financial Report, the information from that report will form the basis for the beginning balances in the Superintendnent's Provisional Budget. Beginning balances for the Superintendent's Final Budget reflect the financial condition of each funds as of June 30 of the prior year.
The State's budget process largely dictates the District's calendar for calculating revenue. For the Preliminary Budget, published in February or March, the Governor's Proposed Budget for the coming fiscal year will form the basis for State revenue calculations. The Governor's May Revision forms the basis for State revenue calculations reflected in the Provisional Budget, published in June. The District's Final Budget, published in August or September of the budget year, will generally be based on the State Budget Act, as adopted by the Legislature and signed by the Governor.
In years in which the State Budget Act is adopted and signed subsequent to the September 8 deadline for submittal of the District budget to the County Office, an extra budget edition may be published, or a presentation may be made to the Board regarding the impact of the signed State Budget Act on the District's financial condition. Late adoption by the Legislature or signing by the Governor of the State Budget Act does not absolve the District from delivering its budget to the County Office on or prior to September 8.
The revenue budget specifies various sources of expected income from federal, state, and local sources. Many income items are restricted as to use and must be separately identified in both budget and expenditure records. The total beginning balance and expected income for each fund is the maximum amount a school district may legally budget to spend for that fund in any fiscal year.
Expenditure Budget
Each fund has an expenditure budget consisting of one or more appropriations. An appropriation is an allocation of budgetary funds made by the governing board for specific purposes. The total of all appropriations in a fund including reserves may not exceed the total beginning balance and expected income for that fund. The District budgets reserves for various purposes, but is required by staute to budget only a Reserve for Economic Uncertainties. This reserve, generally funded at 1% of the District's total General Fund budget, was reduced to 0.5% in 2003-04 and 2004-05, but was expected to revert to the 1% level effective with the 2005-06 budget.
Budget Development and Reporting System
The dollar amount required for each appropriation is determined from information entered in the District's Budget Development System. The budget files include details of authorized positions and other information necessary for budget development, control, and reporting. The required annual financial and budget report, State Form SACS, is prepared using summary reports from the budget development system.
Budget Reporting Analysis and Support System (BRASS) and Position Control
BRASS: Beginning with the 2002-03 fiscal year, the District's budget is developed on a system known as BRASS, which has replaced the previous MAPPER system. BRASS has a variety of advantages over MAPPER:
- Improved capacity for decentralized budget development.
- Enhanced forecasting capability, including impact analysis of changes to salary/benefit rates.
- Ability to calculate programmatically norm positions based on projected/actual enrollment.
- Support for position control and monitoring functions.
Position Control: A district-wide position control system is also in the process of implementation. Position control supports the duties and decisions necessary for staff planning, human resource budgetary control, position monitoring, and analysis. Perhaps the most important role of the position control system is to ensure that all employees are assigned to funded and authorized positions, thereby minimizing the number of employees being paid without budget authority and increasing the District's ability to control expenditure levels.
Adopted Budget
After the Board adopts the Superintendent's Provisional Budget, appropriation dollar amounts are interfaced from the budget development system to the District's Integrated Financial System (IFS) in order to authorize expenditures beginning July 1. Should the Board adopt revisions to the Supertintendent's Provisional Budget, appropriation dollar amounts will again be interfaced from the budget development system to IFS, where they will replace the Superintendent's Provisional Budget spending authority. Following adoption of the Superintendent's Final Budget, the appropriation amounts in that budget remain as the "approved budget" in IFS for the duration of the fiscal year.