February
2010
School Finance 101 by USD 497 How can a school district construct new facilities at a time when monies are not available for teacher pay raises and new classroom instructional materials? To understand the difference between a school district’s General Fund and Capital Outlay Fund, and school district accounting in general, one must first understand Fund Accounting, the prescribed method of accounting for government entities. Unlike a business or a family’s finances, a school’s finances are not accounted for in one fund. The school’s cash activities are accounted for by using different fund accounts or “buckets” to account for different purposes. Examples of the different “buckets” would be, the Bond and Interest Fund which is used solely for the purpose of making debt payments, the Driver Education fund to only be used for Driver’s Education expenditures, the Food Service Fund used solely to pay for expenditures related to serving meals and the Capital Outlay Fund which is used only to pay for the “acquisition, construction, reconstruction, repair, remodeling, addition to, furnishing and equipping of buildings necessary for school district purposes.” In some cases, the state doesn’t allow money from one “bucket”
to be combined with money in another “bucket”. Revenues for the Capital Outlay Fund come primarily from a tax levied specifically for the purpose of capital outlay expenditures. Capital Outlay Funds cannot be used for any other purpose, such as for teacher salaries, books, utilities, transportation or any other similar operating expenditure. If additional funding for capital expenditures is needed, a school district may transfer General Fund monies to the Capital Outlay Fund, however, this transfer is one-way only, as the Capital Outlay Fund cannot transfer to the General Fund. The General Fund and Supplemental General Fund are used to account for all revenues and activities that are not required by law to be accounted for by any other fund or “bucket”. In the Lawrence Public Schools, 83% of the General Fund supports teacher/staff salaries and benefits. The State of Kansas uses a 20-mil, statewide tax levy assessed to property owners to fund the basic K-12 public education. The state allows school boards the authority to use a local property tax levy, a supplemental general fund, or a Local Continued on page 4
Dr. Rick Doll, USD 497 Superintendent, explains school funding to the Leadership Lawrence Class.