In continuation of providing a general overview of school finance, information this week is regarding revenue funding sources and types of expenses. State statute dictates the fund placement of some revenue and expenses. In the absence of statute, DESE (Department of Elementary and Secondary Education) regulations provide guidance.
Sources of revenue for school districts include the following categories: Local, County, State, Federal, and Other. Local revenue includes local property taxes, Prop C sales tax, tax on banks, M&M Surtax, PK tuition, lunch sales, student activities, community education, and rentals. County revenue includes fines and State Assessed Railroad/Utility Tax. State revenue includes Basic Formula, Transportation, Early Childhood Special Education, Classroom Trust fund, Parents as Teachers, Career Education, and Food Service. Federal revenue includes Medicaid, Perkins, Special Education, Lunch & Breakfast. Other revenue includes Sale of Bonds and tuition.
The types of expenses incurred by school districts include the following categories: salaries, benefits, purchased services, supplies, capital outlay, and principal/interest on debts including fees. State statute provides that all school monies must be accounted for within a framework of four funds; Incidental Fund, Special/Teacher Fund, Debt Service Fund, and Capital Projects Fund. Each of these funds has specific allowable expenses.
Incidental Fund - Books and Supplies, Food Service, Utilities, Support Staff Salaries/Benefits, Professional Development, Student Activities
Special/Teacher Fund - Certified Salaries/Benefits, Substitute Teacher Costs, Tuition to Other Districts
Debt Service Fund - Principal, Interest, and Fees on General Obligation (GO) Bond Debt
Capital Projects Fund - Facility Acquisition, Construction, Lease Purchase Principal and Interest, Other Capital Outlay (big ticket items) Expenditures
Revenue can be received in all four categories of funds. There are restrictions regarding movement of money between the funds. Transfers are allowed from the Incidental Fund to both the Special/Teacher Fund and the Capital Projects Fund (restriction on amount). Transfers are not allowed from Special/Teachers Fund, Debt Service Fund, or Capital Projects Fund to any of the other fund categories.
Next week I will provide information on fund balances and budget requirements