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Common Budget Terminology

Below are some common terms used during school budget time to help you follow the process as it unfolds.

 

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

 

A

Administrative Budget Component

One of three categories that must be reported by school districts. These expenditures include: office and administrative costs; salaries and benefits for certified school administrators who spend 50 percent or more of their time performing supervisory duties; data processing; supplies; legal fees; property insurance; and school board expenses.

Appropriated Fund Balance

Any portion of a district's fund balance from the previous fiscal year that is applied as revenue to the district's following year's budget. This reduces the amount of money that must be generated by taxes.

Assessed Value

The value of your property as determined by your local property assessor. This value can change based on your municipality's equalization rate, the market, or in the event your municipality undergoes a reassessment. It is used to determine the amount of taxes you pay and the amount of STAR exemption you receive.

Assessment Roll

A list of properties and their assessed value in your municipality. This is a public document and can be accessed at your local assessor's office.

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B

Board Budget

Spending plan adopted by the Board of Education.

Bond

A written promise to pay a specified sum of money, called the face value or principal amount, at a specified date in the future (the maturity date), together with periodic interest at a specified rate.

Budget

A plan of financial operation outlining the estimates of proposed expenditures for a fiscal year and the proposed means of financing them.

Budget Calendar

The schedule of key dates that the school district, Board of Education, and administrators follow in preparation, adoption, and administration of the budget.

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C

Capital Budget Component

One of three categories that school districts must show in their proposed budgets, this covers: all transportation capital, debt service, and lease expenditures; legal judgments and settled claims; custodial costs and all facility costs, including service contracts, supplies, utilities, maintenance, repairs, construction, renovation, debt and leasing costs.

Capital Reserve

A reserve account the district uses to pay expenses associated with bonds, transportation and facilities. Any use of funds from the capital reserve requires voter authorization (district residents typically see this in the form of BKW's annual bus proposition on budget vote day).

Consumer Price Index (CPI)

An index of prices used to measure the change in the cost of basic goods and services in comparison with a fixed base period. Also called "cost-of-living" index.

Contingent Budget

Under state law, school boards can submit a budget to voters a maximum of two times. If the proposed budget is defeated twice, the board must adopt a contingency budget, which would put a cap on new spending. Under a contingent budget, the district may not increase spending by more than 120 percent of the Consumer Price Index or four percent, whichever is lower. The items exempt from this cap are tax certiorari settlements, debt service (mortgage payments) and costs associated with enrollment growth.

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E

Employee Benefits

Amounts paid by the district on behalf of employees. These amounts are not included in the gross salary. They are fringe benefits, and while not paid directly to employees, are part of the cost of employees. Employee benefits include the district cost for health insurance premiums, dental insurance, life and disability insurance, Medicare, retirement, social security and tuition reimbursement.

Encumbrance Reserve

This reserve account allows the district to pay for budget items that carry from one fiscal year into the next. For example, if the district orders new technology equipment in June of 2010, but the purchase order does not arrive until July (when the new fiscal year begins), the purchase order can be paid without affecting the school budget thanks to the encumbrances reserve.

Equalization Rate

Represents the state's judgment of how closely assessed values in your town match the "true market value" of the properties. It is a ratio of a municipality's total assessed value to its market value. In the case of school taxes, the equalization rate helps determine how the school tax levy is shared among a district's municipalities. A municipality that has an equalization rate of 100 percent means that municipality is assessing property at full market value. Thus, property owners are paying the most accurate share of that municipality's tax burden, including school taxes. Equalization rates for the district's seven towns are sent to the school district by late August.

Expenditure

Payment of cash or transfer of property or services for the purpose of acquiring an asset or service.

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F

Fiscal Year

A fiscal year is the accounting period on which a budget is based. The New York State fiscal year runs from April 1 to March 31. The fiscal year for all New York counties and towns and for most cities is the calendar year. School districts in the State operate on July 1 through June 30 fiscal years.

Fund Balance

A fund balance is created when the school district has money left over at the end of its fiscal year from either under spending the budget or taking in additional revenue. Part of the fund balance (appropriated fund balance) may be applied as revenues to the district's following year budget. A portion may also be set aside (unappropriated fund balance) to pay for emergencies or other unforeseen occurrences.

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P

Program Budget Component

One of the categories that must be presented in the district's proposed budget, this portion includes: salaries and benefits of teachers and supervisors who spend the majority of their time teaching; instructional costs such as supplies, equipment, and textbooks; and transportation operating costs.

Proposed Budget

Also called Administrative Proposal. Spending plan developed by school administrators prior to Board adoption. School districts are required by New York State to show their proposed budgets in three categories: administrative, program, and capital.

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R

Revenue

Sources of income financing the operation of the school district.

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S

Salaries

The total amount paid to an individual, before deductions, for services rendered while on the payroll of the district.

STAR

The New York State School Tax Relief (STAR) Program provides exemption for school taxes for all owner-occupied, primary residents, regardless of income. Basic STAR is available to all homeowners regardless of age or income, while Enhanced STAR is available to seniors ages 65 and older who meet a certain income requirement.

STAR Exemption Floor

The minimum percentage a STAR exemption must represent from the previous year's exemption. Up until 2007, individual STAR exemptions had to be set at least 95 percent of what they were the previous year (meaning they couldn't decrease by more than 5 percent). In 2008, the floor was changed to 90 percent, so STAR exemption amounts could not decrease by more than 10 percent. In 2010, the floor became 89 percent. Currently, the floor is 82 percent. These changes are attributed to the declining housing market. It is important to note this is a minimum percentage and not all STAR exemptions would change by that percentage; STAR exemptions could end up going down by less than 18 percent, not changing at all, or even increasing. These outcomes depend on the municipality.

State Department of Education

The New York administration department that oversees public elementary and secondary education.

Supplies

Consumable materials used in the operation of the school district including food, textbooks, paper, pencils, office supplies, custodial supplies, material used in maintenance activities and computer software.

Support Services

The personnel, activities, and programs that enhance instruction and provide for the general operation of the school district. This includes attendance, guidance, and health programs; library personnel and services; special education services provided by speech and language pathologists, physical therapists and occupation therapists; professional development programs, transportation, administration, buildings and ground operations, and security.

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T

Tax Base

Assessed value of local real estate that a school district may tax for yearly operational monies.

Tax Certiorari

The legal process by which a property owner can challenge the real estate tax assessment on a given property in attempt to reduce the property's assessment and real estate taxes.

Tax Levy

The total sum to be raised by a tax, or the legislative measure by which an annual or general tax is imposed.

Tax Rate

The amount of tax paid for each increment (usually $1,000) of assessed value of property.

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U

Unappropriated Fund Balance

A school district is permitted to keep up to 4 percent of its fund balance in an unappropriated fund. This money may be used to pay for emergency repairs and other unforeseen occurrences.

Unemployment reserve

The district's financial reserve account used to pay unemployment benefits.

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