Budget Terminology

Here are some terms you should be familiar with as you work with school budgets.

Adopted budget - The financial plan adopted by the governing body that forms a basis for appropriations.

Appropriation - Based on an adopted budget, an authorization for spending specific amounts of money for specific purposes during specific periods of time. Presented in a resolution or ordinance adopted by the governing body.

Assessed value - Value set on real and personal taxable property as a basis for levying taxes.

Associated payroll costs - Amounts paid by the district on behalf of employees. These amounts are not included in the gross salary, but are in addition to it. Such payments are fringe benefit payments that, while not paid directly to employees, nevertheless are part of the cost of salaries and benefits. Examples are:

• Group health or life insurance,
• Contributions to Public Employees Retirement System,
• Social security (FICA),
• Workers’ compensation,
• Unemployment insurance.

Budget - Written report showing the local government’s comprehensive financial plan for one fiscal year. Must include a balanced statement of actual revenues and expenditures during each of the last two years, estimated revenues and expenditures for the current and upcoming years.

Budget committee - Fiscal planning board of a local government, consisting of the governing body plus an equal number of the district’s legally registered voters.

Budget message - Written explanation of the budget and local government’s financial priorities prepared by the executive officer or chairperson of the governing body.

Budget officer - Person appointed by the governing body to assemble budget material and information and to physically prepare the proposed budget.

Capital outlay - Items which generally have a useful life of one or more years, such as machinery, land, furniture, equipment or buildings.

Contingency Fund - Money allocated for use in cases of emergency or to cover unforeseen expenditures. School boards must take action to approve expenditures of these funds in specific budget areas.

Expenditures - Total amount incurred if accounts are kept on an accrual basis; total amount paid if accounts are kept on a cash basis.

Fiscal year - Twelve-month period beginning July 1 and ending June 30.

Fund - A division in a budget segregating independent fiscal and accounting requirements. An entity within a government’s financial plan designated to carry on specific activities or to reach certain objectives.

Governing body - County court, board of commissioners, city council, school board, board of trustees, board of directors or other governing board of a local government.

Program - A group of related activities to accomplish a major service or function for which the local government is responsible.

Proposed budget - Financial and operating plan prepared by the budget officer, submitted to the public and budget committee for review.

Reserve fund - Established to accumulate money from one fiscal year to another for a specific purpose.

Resolution - An order of a governing body. Requires less legal formality and has lower legal status than an ordinance. Statutes or charter specify which actions must be by ordinance and which may be by resolution.

Resources - Estimated beginning fund balances on hand at the beginning of the fiscal year, plus all anticipated revenues.

Revenues - Monies received or anticipated by a local government from either tax or non-tax sources.

State School Fund - The major appropriation of state support for public elementary and secondary schools. The State School Fund is distributed to school districts according to a legislature-adopted formula.

Supplemental budget - Prepared to meet unexpected needs or to spend revenues not anticipated at the time the regular budget was adopted. A supplemental budget cannot be used to increase a tax levy.

Transfers - Amounts distributed from one fund to finance activities in another fund. Shown as an expenditure in the originating fund and revenue in the receiving fund.

Unappropriated ending fund balance - Amount set aside in the budget to be used as a cash carry over to the next year’s budget. This balance provides the local government with needed cash flow until other money is received. This amount cannot be transferred by resolution or used through a supplemental budget during the fiscal year it is budgeted.

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