SchoolBudgets101

Anylocalgovernmentoragencyincludingpublicschoolsusesitsbudgettodescribeitsprogramplansforthe
upcomingyear.Thisbriefwrittentohelpexpandfamiliaritywithandunderstandingofschoolbudgetsandthe
roleofvariouslevelsofgovernmentisabirdseyeviewofschoolbudgetsandanswersthefollowing
questions:
Whoisinvolvedintheschoolbudget?
Whatistheroleandpurposeoftheschoolbudget?
Whatarethemajorbudgetcategoriesforschooldistricts?
Wheredotheresourcesforschoolbudgetscomefrom?
Whenareschoolbudgetsspent?
Howisthisinformationrelatedtothecurrentfederalbudgetproposalandeconomicrealitiesatthe
locallevel?

Thecontentandinformationpresentedhereisageneraloverviewofschoolbudgets.Assuch,specificswillvary
betweenbothstatesanddistricts.Asyouworkthroughtherestofthiswhitepaper,keepinmindthat
atanygiventime,schooldistrictsarelikelymanagingthreebudgets:finishingaudits/evaluationsandfinal
detailsofthepreviousbudget,operatingandmonitoringthecurrentbudget,andplanningforthenextbudget.

Overview:Whiletheconceptofbudgetsiscommonacrossprofessionalsectorsandfields,thebudgetprocessin
publicschoolshasnoticeabledifferencesthatimpacthowdistrictsallocateandprioritizetheirfunds.For
example,whilemostpublicandprivateorganizationsandbusinesseshave35to40percentoftheirbudgetstied
topersonnelandbenefits,thecomparablenumberinpublicschoolsis,onaverage,morethandouble,between
80and85percent.Furthercomplicatingdistrictsabilitytoaddressbudgetpriorities,theremaining15percent
oftheirbudgetsisoftentimesimpactedandlimitedbystate,localandfederalmandatesrelatedtoeverything
frombuildingcodestoclasssizerequirements.

Theschoolbudgetinvolvesmanydifferentindividualsandentitiesacrossseverallevelsofgovernment.The
budgetandaccompanyingprocessprovidesschooldistrictsandtheirleaderswithanopportunitytojustify
thecollectionandexpenditureofpublicfunds.Schoolbudgetresourcescomefromacombinationoflocal,state
andfederalcontributions.The200607schoolyearisthemostrecentyearforwhichwehaveafulltabulationof
theeducationfundingcontributionssplitbetweenlocalgovernment(43.9percent),stategovernment(47.6
percent)andfederalgovernment(8.5percent).

Schoolbudgetsarespentcontinuouslythroughouttheyear.Federaldollarsinschoolbudgetsarealsospent
throughouttheschoolyear,withtheruleoffirstin,firstout.Thatis,moneyisspentintheorderthatitis
received:AschooldistrictcannotspendanyofitsTitleIfundsforthe201112schoolyearuntilitexhaustsits
201011schoolyear.

PreparedbyNoelleEllerson,PolicyAnalyst,AmericanAssociationofSchoolAdministrators,nellerson@aasa.org
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AASAapplaudstheObamaAdministrationscontinuedsupportforandinvestmentineducationwithinPresident
Obamas2011budgetproposal.Theemphasisonimprovingteachingandstrengtheningteachersandschool
leadersisanimportantsteptowardlongtermpositivechangeinourschools.AASAalsoapplaudsthesignificant
increaseinfundingforESEA.Thatsaid,AASAisconcernedwiththelevelfundingofbothTitleIandIDEAfor
FY11,alongwithasignificantincreaseintheproportionofdiscretionaryeducationdollarsdeemed
competitive.
Whoisinvolvedintheschoolbudget?Theschoolbudgetinvolvesmanydifferentindividualsandentitiesacross
severallevelsofgovernment.Atthelocal/districtlevel,budgetdiscussionsandworkwillinvolveschool
administrators,schoolboards,schoolemployeesandcommunitymembers.Atthestatelevel,thegovernor,
statelegislatorsandstateeducationagencyareinvolvedfortheirroleinsettingandmanagingstatefundingand
statepolicy,includingstateequalizationformulas.Atthenationallevel,thefederaleducationdepartmentand
membersofCongressareinvolvedfortheirworkaroundeducationfundingandfederalpolicy,suchasTitleIor
IDEA.

Whatistheroleandpurposeoftheschoolbudget?Theschoolbudgetandaccompanyingprocessprovides
schooldistrictsandtheirleaderswithanopportunitytojustifythecollectionandexpenditureofpublicfunds.In
itsmostsimpledefinition,aschoolbudgetdescribesadistrictsplanfortheupcomingyearasrelatedto
anticipatedrevenuesandexpenditures.Schoolbudgetsallowdistrictstotranslatesometimesintangible
missions,operationsandobjectivesintorealitybyoutliningandprovidingspecificprogramsand
funding/financialterms.Aschoolbudgethelpsbridgethegapthatcanexistbetweenadistrictsstatedgoals
andresourceallocation.Thebudgetprocessforcesthediscussionthatwillinformchoicesamongvarious
programscompetingforthelimitedavailableresources.AsWilliamHartmanwrites,keystepsoftheschool
budgetprocessinclude,establishingthedistrictsobjectivesandpriorities;allocatingresources;involvingthe
publicthroughbudgethearings,schoolboarddecisionsandothermeansofrepresentativedemocracy;and,in
somestates,conductingbudgetelections.(Hartman,1999).

Whatarethemajorbudgetcategoriesforschooldistricts?Whilespecificbudgetlinesanditemsvarydistrictto
districtandstatetostate,therearebroadgeneralcategoriesthatapplytomostschools.Thesecategories
include,butarenotlimitedto:
Transportationbusesanddriverstotransportstudents
Facilitiestoensurestudentsattendschoolsthatarecleanandwellmaintained
Energytheschoolislitduringtheday,heatedinthewinterandcooledinthesummer
HealthandSafetytheschoolnursecaresfortheillstudent,andsecuritymeasureskeepstaffand
studentssafe
Instructionstudentshaveaqualifiedteacher,teachershaveinstructionalaides,andclassroomshave
supplies
CurriculumandStaffDevelopmentcurriculum,trainingandinstructionalsupporttoensureteachersare
abletoprovidestudentswithnecessaryknowledgeandskills
FoodServicesnutritious,affordablebreakfastandlunch
LibraryServicesthelibraryandlibrarian/staffprovideresearchassistanceandresources
CounselingServicescounselorsfortestingprep,collegeprep,drug/alcoholabuseprograms,and
supportingfamilyneedsinseekingoutsidecounseling
SchoolLeadershipandSupportprincipal,assistantprincipalsandadministrativesupportstaff
(Source:RoundRockISD)

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Graphs9and10inAppendixAillustratethepercentagedistributionforcurrentexpendituresforpublic
elementaryandsecondaryeducation,byfunction,forthe200607schoolyear.Graph9showsthat61percent
ofbudgetaryexpensesarerelatedtoinstruction,followedby35percentforsupportservices,4percentforfood
services,andlessthan1percentforenterpriseoperations.Tryingtoinfersalariesfromgraph9istricky,
becausesalariesandbenefitswillbereflectedacrossthecategories,appearingininstruction,supportservices
andenterpriseoperations.Generallyspeaking,aschooldistrictspendsbetween80and85percentofitsentire
budgetonsalariesandbenefits,meaningonly15to20percentremainstoaddressalloftherestofthebudgets
prioritiesandneeds.

Graph10examinesthebreakdownofinstructionandinstructionrelatedexpenditures.Salariesaccountfor67
percentofthebudget,followedby22percentforemployeebenefits,meaningthatschooldistrictshavespent
closeto90percentoftheirinstructionalbudgetonstaffandbenefits.Instructionalsuppliesandpurchased
serviceseachconsume5percentofinstructionrelatedexpenses,followedbytuitiontooutofstateandprivate
schools(justover1percent)andother(lessthan1percent).

Wheredotheresourcesforschoolbudgetscomefrom?Schoolbudgetresourcescomefromacombinationof
local,stateandfederalcontributions.The200607schoolyearisthemostrecentyearforwhichwehaveafull
tabulationoftheeducationfundingcontributionssplitbetweenlocalstateandfederalgovernment.Chart4in
AppendixAillustratesthatlocalandintermediategovernmentsmakeasignificantcontribution(43.9percent),
slightlyoutpacedbystategovernment(47.6percent)andwellabovethefederalcontribution(8.5percent).

Whenitcomestoprocessingthevarioussources,districtsusuallykeeptheirstateandlocalfundsseparatefrom
federalfunds.Federalfunds(especiallygrants,competitivedollars,andthosedollarsoutsideoflongterm
fundingcommitments)representbudgetuncertainty.Sincethemajorityofschooldistrictshavetopassa
balancedbudgeteveryyear,schooldistrictshesitatetoassumeorrelyonfederaldollarsthatmayormaynot
comeintofruition.Threefederalfundingstreamsareanexceptiontothisruleandrepresentfederalfunding
programsaroundwhichschooldistrictsdofeelcomfortableplanninglongterm.TheseprogramsareTitleI,IDEA
andPerkins.Thesethreeprogramshaveextensivefundingcommitmentsandexpendituresatthelocallevel,
especiallyrelatedtopersonnel,programsandequipment.Changestothereliabilityoftheseprogramswould
disruptschoolbudgetinginveryprofoundways,withjobsandcriticalequipmentatstake.

Anotherreasondistrictsseparatefederalfundsfromstateandlocalfundsisthatfederalfundsoftencomewith
additionalreportingandaccountabilityrequirements.Assuch,schooldistrictstreatfederalfundsseparately,for
easeofmonitoringandtrackingfederaldollarswithincomplexdistrictbudgets.

Whenareschoolbudgetsspent?Schoolbudgetsarespentcontinuouslythroughouttheyear.Schooldistricts
havemuchdiscretionoverstateandlocaldollars,andwilldrawdownonthoseaccountbalancesasneededand
inaccordancewithstate/localregulations.Federaldollarsinschoolbudgetsarealsospentthroughoutthe
schoolyear,withtheruleoffirstin,firstout.Thatis,moneyisspentintheorderthatitisreceived:Aschool
districtcannotspendanyofitsTitleIfundsforthe201112schoolyearuntilitexhaustsits201011schoolyear.

Justasimportantaswhenschoolbudgetsarespentishowtheyarespent.Statesanddistrictshave27months
knownastheTydingsperiodtospenddowntheirfederaldollars.Thatis,mostfederalprograms
appropriatedbyCongressincludeacarryoverperiodprovision.TheTydingsAmendment(Section421(b)ofthe
GeneralEducationProvisionsAct(GEPA))statesthatanyfundsthatarenotobligatedorexpandedattheendof
theperiodforwhichtheywereappropriatedremainavailableforthefull27monthperiodofobligation.
(Source:TexasEducationAgency)
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Anotherpointtoconsiderishowthespendingofformuladollarsdiffersfromthatofcompetitivegrantdollars.
Formulagrants,representingamorereliablestreamoffunding,arespentinaconsistent,regularmanner,with
anunderstanding/expectationthatthedollarswillbethereyearin,yearout.Thesamecannotbesaidfor
competitivegrants,whichbytheirverynaturerepresentbudgetuncertaintyastonotonlywhatgrantdollars
willbecomingin,butalsowhentheywillbecomeavailableandhowmanytherewillbe.Formuladollarscanbe
whatwecallforwardfunded.Forwardfundingisaprovisionofbudgetauthoritythatbecomesavailablefor
obligationinthelastquarterofthefiscalyearandremainsavailableduringthefollowingfiscalyear.Thatis,ifa
districthasyettoexpendthefullamountofitsTitleIdollarsinthelastquarterofthefiscalyear,thatbalanceis
carriedovernoterasedandremainsavailableforthenextfiscal(andschool)year.Thisiswherethefirstin,
firstoutrulewouldapply.

Forwardfundingistypicallynotavailableforcompetitivegrantprograms.Assuch,schooldistrictstreatand
spendthesedollarsdifferently.Grantprogramsarefundedonafederalfiscalyear.Becausethegrantdollars
aretypicallyneitherforwardedfundednorsubjecttotheTydingsperiod,schooldistrictswillspend
conservativelyoverthefirstsixmonthssoastoensuretheyarenotleftwithoutfundsinthesecondhalfofthe
grantyear.Asaresult,schooldistrictsoftenfindasurplusofgrantmoniestheyneedtodumpattheendofthe
year,sincethemoneycannotbecarriedover.Thisisneithereffectivenorefficientspending.Funnelingthese
samedollarsthroughmorebudgetreliableformulas(suchasTitleI)wouldallowmoreresponsible,effective
spendingandinvestment.

Howisthisinformationrelatedtothecurrentfederalbudgetproposalandeconomicrealitiesatthelocal
level?Thisbudgetprimer,alongwithAASAsongoingsurveyseriesontheimpactoftheeconomicdownturnon
publicschools,providesarich,informativecontextinwhichCongressandtheadministrationcanworktomake
appropriationandauthorizationpolicydecisionsthatprovideschoolswiththebudgetarystabilitytheyneedto
carryoutthelongterminnovationandreformthatCongressandtheadministrationarestrivingforandschool
administratorsworkhardtoprovide.

AASAapplaudstheadministrationscontinuedsupportforandinvestmentineducationwithinPresident
Obamas2011budgetproposal.Theemphasisonimprovingteachingandstrengtheningteachersandschool
leadersisanimportantsteptowardlongtermpositivechangeinourschools.AASAalsoapplaudsthesignificant
increaseinfundingforESEA.

Competitivevs.Formula:Thepresidentsbudgetproposalincludesa65percentincreaseintheproportionof
discretionaryeducationdollarsdistributedthroughcompetitionprograms,asignificantpolicydecisiontoshift
dollarsawayfromlongtimeformulagrantprograms.Whileunderstandingtheadministrationscommitmentto
rewardingandreplicatingsuccessfulprogramsandpractices,AASAurgesCongresstomaintainformulagrants
toprovideamorereliablestreamoffundingtolocalschooldistricts.Suchastrongemphasisoncompetition
impliesthatcompetitionaloneproducesinnovationandstudentachievement.

Schooldistrictsandsystemsneedacertainleveloffinancialstabilitytoundertaketheambitiousinnovationand
reformproposedbythepresidentsbudget,alevelofreliabilityandconsistencythatcannotbeachieved
throughcompetitivefunding.Formuladrivenfundingrepresentsthededicatedfundingstreamthatallows
schooldistrictstoappropriatelyplanforandinvestininnovationandreform.AASAisconcernedthat
competitivegrantswouldhaveadisproportionatenegativeimpactonruralandsmalldistricts.

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Withlimitedlocalresources,schooldistrictsdonothavethetimeorthecapacitytodevelopextensive
competitivegrantapplicationsinordertobecompetitive.Thiswillleadfederaldollarsawayfromstudentsin
povertyandtodistrictsthathavetheresourcesforgrantwritingteams.

EconomicHardship:AASAwouldberemissifwedidnotaddresstheverytryingeconomicenvironmentschool
districtsarelivingwith.TheconfluenceoftheendofARRAfundingandthedelayedeconomicrecovery
(state/localrecoverylagsfederalrecoveryby18to24months)representaveryrealobstacletoschoolsasthey
trytobalanceincreasedemphasisoninnovationwitheverslimmeroperatingbudgets.

AASAstronglyencouragesbothCongressandtheadministrationtorecognizeandbepreparedtoreactto
thepossibilitythatthesizeableincreaseinfederaleducationfundingmaynottranslateintofundingincreasesat
thelocallevel.AsdemonstratedwithARRAdollars,shortofotherrevenuesourcesorleftwithnootheroption,
someSEAs/LEAsmayreplacewhathadbeenprogramsfundedbyARRAwiththesenewfederaldollars.Inthose
caseswherefederaldollarssimplyfillbudgetholes,itisverydifficulttoinnovateandreform.

IDEA:Thefederalgovernmentlevelfundsitsinvestmentinspecialeducation,holdingsteadyatitscommitment
to17percent,lessthanhalfofthepromised40percentofthenationalaverageperpupilexpenditure.
CongressionalsupportforIDEAcontinuestohoverbelowitshighpointof18.6percentinFY2005.TheFY11
proposalof$11.6billion,whileaslightnominalincrease,representslevelfundingwhencalculatedasthe
federalcontribution,stayingat17percentandeffectivelyreducingthefederalcommitmentatatimeof
increasingneed.Theburdenforpayingforspecialeducationwillcontinuetobeshiftedtolocaldistricts,forcing
schooldistrictstoraiselocaltaxesorcutgeneraleducationprograms.Inthesedifficulteconomictimes,this
remainsanevenbiggerchallenge.Congressmustfulfillitscommitmenttoschoolsandstudentsthroughoutthe
country.AASAstronglysupportsCongressreachingthe40percentlevelthroughmandatoryfundingofspecial
education.

MandatoryfundingIDEAwouldensureschooldistrictsreceivedthefullfederalcommitmentinjustsevenyears.
WhiletheIDEAinvestmentincludedinARRAwassignificant,theimpactofthosedollarswaslimited.Asone
timefunding,districtshaddifficultyspendingARRAIDEAdollarstoexpandservicestostudentswithdisabilities
withoutknowingifthefederalfundingatthatlevel(atemporaryjumpto25percentofthenationalaverageper
pupilexpenditure)wouldcontinue.Thepresidentsbudgetdoesnotmakethiscommitment.

TitleI:Astheeconomicrecessionpushesmorestudentsintopoverty,thepresidentsproposallevelfundsTitleI,
despitetheincreasedneed.Theproposedbudgetincludes$14.5billionfortheCollegeandCareerReady
Studentsprogram(formerlyTitleIGrantstoLEAs).ThisislevelfundingfrombothFY09andFY10levels,and
representsacut,whenadjustedforinflationandincreasingdemand.WhileARRATitleIdollarsrepresenteda
significantincreaseinTitleIfundingforschoolsinthe200809and200910schoolyears,theARRATitleI
dollarswhichplayedavitalroleinsupportingeducationbudgetsinstatesanddistrictsthathaveyettoshow
signsofeconomicrecoverywillnolongerbeavailablein201112,afundingcutthatwillbecompoundedby
theproposaltolevelfundtheFY11levels.

Thecontentandinformationpresentedhereisageneraloverviewofschoolbudgets.Assuch,specificswillvary
betweenbothstatesanddistricts.Ifyouhavefurtherquestionsaboutschoolbudgets,theschoolbudget
processorwouldliketocontactaschooladministratorinyourlegislativedistrict,pleasefeelfreetocontactthe
AmericanAssociationofSchoolAdministrators.AASAwouldbehappytoprovideanyavailableinformationand
putyouintouchwiththeleaderofyourlocalschools.

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 AASAWhitePaper:SchoolBudgets101

Contact:NoelleEllerson,PolicyAnalyst,AmericanAssociationofSchoolAdministrators,nellerson@aasa.org

RESOURCES:
EducationFinanceStatisticsCenterbyU.S.DepartmentofEducation
SchoolDistrictBudgetingbyWilliamHartman(1999)
TheSchoolDistrictBudgetProcessbyEdScource(2006)
TexasEducationAgency
UnderstandingSchoolDistrictBudgetsbyEdSource(2005)
WhereDoestheEducationDollarGo?RoundRockISD(2008)

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AppendixA:GraphsinEducationFinance

AllchartsinthissectionarefromtheEducationFinanceStatisticsCenter(http://nces.ed.gov/edfin)andits
RevenueandExpendituresbyPublicSchoolDistricts:SchoolYear200607(FiscalYear2007)report.

Graph 1. Current per-pupil expenditures for public elementary and secondary education in the
United States: 200607

1
U.S. estimates are for the 50 states and the District of Columbia.
Graph 2. Current per-pupil expenditures for elementary and secondary education in the United
States: 200607

Graph 3. Percentage distribution of total current expenditures for public elementary and secondary
education in the United States, by function: 200607

1
Include current expenditures for classroom instruction (including teachers and teaching assistants), libraries, in-service teacher training, curriculum development, student
assessment, and instruction technology.
2
Include attendance and social work, guidance, health, psychological services, speech pathology, audiology, and other student support services.

Graph 4. Percentage distribution of revenues for public elementary and secondary education in the
United States, by source: 200607

NOTE: Detail may not sum to totals because of rounding.

Graph 5. State revenue as a percentage of total revenues for public elementary and secondary
education in the United States: 200607

NOTE: Classification is based on the unrounded amount. U.S. average: 47.6%. Median: 47.5%.
Graph 6. States ranked by percentage of public education revenues received from state
sources: 200607

SOURCE: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "National Public Education Financial Survey (NPEFS)," fiscal year
2007, Version 1a.

Graph 7. Federal revenues as a percentage of total revenues for public elementary and secondary
education in the United States: 200607

NOTE: Classification is based on the unrounded amount.

SOURCE: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "National Public Education Financial Survey (NPEFS)," fiscal year
2007, Version 1a.
Graph 8. States ranked by percentage of public education revenues received from federal
sources: 200607

SOURCE: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "National Public Education Financial Survey (NPEFS)," fiscal year
2007, Version 1a.
Graph 9. Percentage distribution of current expenditures for public elementary and secondary
education, by function: 200607

1
An expenditure function divided into seven subfunctions: student support services, instructional staff support, general administration, school administration, operations and
maintenance, student transportation, and other support services.
NOTE: Current expenditures include instruction, instruction-related, support services, and other elementary/secondary current expenditures, but exclude expenditures on capital
outlay, other programs, and interest on long-term debt.
SOURCE: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "National Public Education Financial Survey (NPEFS)," fiscal year
2007, Version 1a.

Graph 10. Percent distribution of current instruction and instruction-related expenditures for public
elementary and secondary education, by object: 200607

NOTE: Detail may not sum to totals because of rounding. Instruction-related expenditures include salaries and benefits for teachers, teaching assistants, librarians and library aides,
in-service teacher trainers, curriculum development, student assessment, technology, and supplies and purchased services related to these activities. Values were affected by
redistribution of reported values to correct for missing data items, and/or to distribute state direct support expenditures.
SOURCE: U.S. Department of Education, National Center for Education Statistics, Common Core of Data (CCD), "National Public Education Financial Survey (NPEFS)," fiscal year
2007, Version 1a.
AppendixB:BudgetCalendarfor201112SchoolYear:Thisbudgetcalendarwas
reproduced/modifiedfromUnderstandingSchoolDistrictBudgetsbyEdSource(2005).

ThisflowchartassumesaschoolbudgetyearthatrunsJuly1June30.Theoverallprocessandtimingwill
beverysimilarstatetostate,andwillsimplyreflectearlierorlaterstartingtimelinesdependingoneach
statesfiscalyear.Somedistrictsarefinanciallydependent.Thatis,theirbudgetapprovalissubjectto
reviewbyanadditionallayerofgovernment.Thiscouldbethecounty(forcountywideschooldistricts)or
thetownorcitycouncil,dependingonthedistrictslocallawsandgovernance.

FALL2010:SchoolDistrictsbegin
discussionofpriorities,evaluateexisting
programs,andsetparameters/goalsto
guidebudgetdevelopmentprocess.

MIDWINTER/EARLYSPRING2011:The

districtadoptsitsbudgetcalendarand

reviewsitsguidelinesforbudget

development,includinganticipatedcosts

ofnewdistrictinitiativesandanticipated

savingsfromeliminatingexisting

programs.Thisdiscussionwillinclude

estimatesofsalary/benefitincreasesand

adjustments.Thisiswhenthepreliminary

budgetdocumentiscreated.

MIDWINTER/EARLYSPRING2011:
Governorsubmitsproposedstatebudget,
includingprojectionsforstateanddistrict
educationfunding/revenuesforthe
upcomingyear.Districtstaffusethis
informationtoevaluateandrevisethe
preliminarybudget.Stateleadersbegin
finalizingthe statebudget.

LATESPRING/EARLYSUMMER2011:Final

reviewandpublichearingsprecede

adoptionofthedistrictbudget.

MIDSUMMER2011:Thestatebudgetis
adoptedandsignedintolaw,andfunds
becomeavailabletodistrictsforthe
upcomingschoolyear.