School Funding Sources Quiz

School Funding Sources

• Finance: The management of large amounts of money, typically by governments or large companies.

• Funding: Money provided for a specific purpose, often by organizations or governments.

• Enrollment: The number of students registered in a school or program.

• Revenues: Income generated by a company or organization.

• Expenditures: Spending of funds.

• Reauthorization: Renewing the permission or authority to do something.

• Allocation: The distribution of resources.

• Taxation: The collection of taxes by governments.

• Mill Levy: Tax rate applied to the assessed value of property.

• Bonding: Issuing bonds by companies or governments, generally paying a stated interest rate.

  • The market price of a bond changes over time as it becomes more or less attractive to buyers.
  • Higher quality bonds tend to offer lower interest rates.
  • Bonds with shorter maturities tend to offer lower interest rates.

• Equitable: Fair and impartial treatment.

• Disparity: A significant difference in level or treatment, often perceived as unfair.

• Fairness: Impartial and just treatment.

• Yield: To produce or provide something.

Historical Progression of School Finance

• Local Responsibility: Early periods of financial responsibility rested heavily on local districts, with minimal state assistance.

  • Local or church funding was common.
  • Rate bills or tuition were used to raise funds.
  • This system often resulted in disparities in funding and educational opportunities.

• Early Grants and Allocations:

  • Clearing Funds: Used to track transactions for programs where the school is accountable but does not own the funds.
  • Student Activity Funds: The principal is often responsible for managing these funds.

Capital Funding

• Capital Funds: Used for expanding or renovating buildings, purchasing major equipment, or constructing new facilities.

  • Sources: Pay-as-you-go financing, building reserve funds, and bonding.

  • Uses: Investing in infrastructure.

Bonding

• Bonds: A common way for districts to raise funds for capital projects.

  • Districts need a bond to raise money for:

    • Building new schools
    • Renovating existing schools
    • Purchasing materials, textbooks, and computers.

  • Process: Funds raised through bonds are used to finance the project, and investors receive their money back with interest.

  • Inequities: Wealthier schools can often secure low-interest bonds, while lower-income schools may receive higher interest rates.

Taxation Systems

• Tax Base: The value of items or objects subject to taxation.

  • Includes property, income, sales, and privilege.

• Tax Rate: The tax price applied to the base item.

• Tax Yield: The revenue raised from taxation.

Income Tax

• Derived from salaries, dividends, asset sales, interest, and gains.
• Both individual and corporate income taxes exist.
• Advantages: Measurable and can be taxed over specific time periods.

Property Tax

• Levied against owners of real or personal property.
• Equalizing Grants: Financial transfers between governments to reduce disparities in public service quality and fiscal capacity.
• Block Grants: Federal funds allocated for specific state or local programs.
  • Administered by state or local governments.
  • Often support public housing, health, and social services.
• Categorical Grants: Federal funds given to state and local governments for specific purposes with strict guidelines on how to spend the money.
  • Differ from block grants, which have less restrictive guidelines.
• General Aid: State aid that can be used for general educational programs within a district.
• Land Grants: Provided to provide practical education to the working class, such as farmers and engineers.

Budgeting Systems

• Line-Item Budgeting:

  • A traditional budgeting system based on historical expenditures and revenue data.
  • Easy to prepare, organized, but lacks flexibility and does not consider school goals.

• Performance Budgeting: Considers the outcomes of government programs.

• Program and Planning Budget Systems:

  • Focuses on identifying the school's objectives and relating program expenditures to them.

• Zero-Based Budgeting:

  • Assumes a fresh start for each budget cycle.
  • Each expenditure needs justification based on new goals and action plans.

• Site-Based Budgeting:

  • The superintendent allocates funds to principals, who work with stakeholders to create their own budgets.

• Outcome-Focused Budgeting:

  • Emphasizes the achievements of programs and the efficient use of resources.

Strategic Budgeting

• Forward-Looking: Forecasts future financial needs and allocates resources to meet them.
• Resourceful: Prioritizes investments and optimizes cash flow.
• Adaptable: Can be adjusted in real-time based on updated data.

School Accounting and Applications

• Accounting: The consolidation of financial information to make it clear and understandable for stakeholders.
• Balance Sheet: A financial statement that reports a company's assets, liabilities, and shareholder equity at a specific point in time.
  • The formula is: Assets = Liabilities + Owner's Equity.
• Budget: An estimate of income and expenditure for a set period.
• Asset: Anything of value that is owned.
  • Examples include cash, inventory, property, equipment, investments, and receivables.
• Liability: Financial obligations or debts.
• Liquidity: The ease with which an asset can be converted to cash.
• Expenditure: The act of spending or using money.

Types of Funds

• Governmental Funds:
  • General Fund: Revenues used for the general operation of a government entity.
  • Special Revenue Fund: Revenue earmarked for a specific purpose.