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Questions and Answers
What defines clearing funds in a school setting?
What defines clearing funds in a school setting?
Which of the following is NOT a source of capital funds?
Which of the following is NOT a source of capital funds?
What is a primary use of bonding in district funding?
What is a primary use of bonding in district funding?
How is interest for investors generated from the use of bonds?
How is interest for investors generated from the use of bonds?
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What does the tax base refer to?
What does the tax base refer to?
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Which factor can lead to inequities in the bonding process for school districts?
Which factor can lead to inequities in the bonding process for school districts?
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What is the main advantage of using income as a measure of economic well-being?
What is the main advantage of using income as a measure of economic well-being?
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Which type of tax is levied against the owner of real or personal property?
Which type of tax is levied against the owner of real or personal property?
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What is the primary purpose of equalization grants?
What is the primary purpose of equalization grants?
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How do block grants differ from categorical grants?
How do block grants differ from categorical grants?
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What is a common criticism of block grants?
What is a common criticism of block grants?
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What characterizes categorical grants?
What characterizes categorical grants?
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What is the intent behind land grants?
What is the intent behind land grants?
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Which type of grant is most likely to support a specific local program without many conditions?
Which type of grant is most likely to support a specific local program without many conditions?
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What is a characteristic function of general aid?
What is a characteristic function of general aid?
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What impact do categorical grants have on state and local governments?
What impact do categorical grants have on state and local governments?
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What is the primary purpose of taxation in relation to public funding?
What is the primary purpose of taxation in relation to public funding?
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In the context of school finance, what does the term 'mill levy' refer to?
In the context of school finance, what does the term 'mill levy' refer to?
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What does the term 'allocation' mean in the context of school funding?
What does the term 'allocation' mean in the context of school funding?
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What does 'equitable' imply when discussing financial resources in education?
What does 'equitable' imply when discussing financial resources in education?
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What is a potential negative outcome of early local district financial responsibility?
What is a potential negative outcome of early local district financial responsibility?
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Which of the following describes 'expenditures' in a school finance context?
Which of the following describes 'expenditures' in a school finance context?
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How do bonds generally function in the context of school funding?
How do bonds generally function in the context of school funding?
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What challenge is often associated with the reliance on local funding in education?
What challenge is often associated with the reliance on local funding in education?
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What is the primary basis for developing a budget in the historical budgeting strategy?
What is the primary basis for developing a budget in the historical budgeting strategy?
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What distinguishes performance budgeting from other budgeting types?
What distinguishes performance budgeting from other budgeting types?
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In which budgeting system are budget requests summarized based on broad programs rather than detailed line-items?
In which budgeting system are budget requests summarized based on broad programs rather than detailed line-items?
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What is a key feature of zero-based budgeting?
What is a key feature of zero-based budgeting?
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What is a significant characteristic of site-based budgeting?
What is a significant characteristic of site-based budgeting?
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Which budgeting approach has become more outcome-focused due to legislative changes like the No Child Left Behind Act?
Which budgeting approach has become more outcome-focused due to legislative changes like the No Child Left Behind Act?
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In the context of budgeting, what does 'line-item categories' refer to?
In the context of budgeting, what does 'line-item categories' refer to?
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What is a disadvantage of a historical budgeting strategy?
What is a disadvantage of a historical budgeting strategy?
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What is the main goal of accounting?
What is the main goal of accounting?
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Which equation accurately represents a balance sheet?
Which equation accurately represents a balance sheet?
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What is liquidity primarily concerned with?
What is liquidity primarily concerned with?
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Which type of fund includes revenues for general operational use by the state government?
Which type of fund includes revenues for general operational use by the state government?
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What defines an asset?
What defines an asset?
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How can strategic budgeting be described?
How can strategic budgeting be described?
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What is the role of expenditures in financial management?
What is the role of expenditures in financial management?
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Which of the following describes market liquidity?
Which of the following describes market liquidity?
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Study Notes
School Funding Sources
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Finance: The management of large amounts of money, typically by governments or large companies.
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Funding: Money provided for a specific purpose, often by organizations or governments.
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Enrollment: The number of students registered in a school or program.
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Revenues: Income generated by a company or organization.
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Expenditures: Spending of funds.
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Reauthorization: Renewing the permission or authority to do something.
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Allocation: The distribution of resources.
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Taxation: The collection of taxes by governments.
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Mill Levy: Tax rate applied to the assessed value of property.
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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.
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Equitable: Fair and impartial treatment.
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Disparity: A significant difference in level or treatment, often perceived as unfair.
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Fairness: Impartial and just treatment.
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Yield: To produce or provide something.
Historical Progression of School Finance
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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.
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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
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Capital Funds: Used for expanding or renovating buildings, purchasing major equipment, or constructing new facilities.
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Sources: Pay-as-you-go financing, building reserve funds, and bonding.
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Uses: Investing in infrastructure.
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Bonding
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Bonds: A common way for districts to raise funds for capital projects.
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Districts need a bond to raise money for:
- Building new schools
- Renovating existing schools
- Purchasing materials, textbooks, and computers.
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Process: Funds raised through bonds are used to finance the project, and investors receive their money back with interest.
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Inequities: Wealthier schools can often secure low-interest bonds, while lower-income schools may receive higher interest rates.
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Taxation Systems
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Tax Base: The value of items or objects subject to taxation.
- Includes property, income, sales, and privilege.
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Tax Rate: The tax price applied to the base item.
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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.
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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.
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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
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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.
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Performance Budgeting: Considers the outcomes of government programs.
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Program and Planning Budget Systems:
- Focuses on identifying the school's objectives and relating program expenditures to them.
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Zero-Based Budgeting:
- Assumes a fresh start for each budget cycle.
- Each expenditure needs justification based on new goals and action plans.
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Site-Based Budgeting:
- The superintendent allocates funds to principals, who work with stakeholders to create their own budgets.
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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.
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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.
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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
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Governmental Funds:
- General Fund: Revenues used for the general operation of a government entity.
- Special Revenue Fund: Revenue earmarked for a specific purpose.
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Description
Test your knowledge on the various sources and mechanisms of school funding. This quiz covers topics like financing, revenues, expenditures, and taxation within the context of educational funding. Challenge yourself and see how well you understand the financial aspects that support educational institutions.
