Glossary of Budget Terms
Below are definitions to help you follow the school budget process in New York State.
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.
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.
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.
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 2013, 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.
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.
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.
Revenue
Sources of income financing the operation of the school district.
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.
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.
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.
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.
