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The maximum spending authority can be looked at as the district's total capacity or volume for a given school year. An analogy to this may be a credit card, where your credit card has a specific limit as to what you can spend. Personally, you may have dollars in the bank equal to what your credit card limit has for expenditures. You may also have more dollars in your checking account than what the limit on your credit card is. When a school district has more dollars in the General Fund than they have as far as a spending limitation on the credit card, those dollars cannot be expended for basic General Fund purposes. They may only be used for cash flow or the reduction of property tax asking in future budget years. Thus, controlling the maximum expenditures for your school district according to the State Foundation Formula.
As we look at the budgeting process, we look at another analogy. This analogy would be where a farmer builds a grain bin in the spring to hold the crop that he anticipates harvesting in the fall. Looking at the number of acres with the best possible yield, and using the best seed and fertilizer available to him, he computes a capacity the bin will need to hold the crop that he will harvest in the fall. That capacity is what he builds. In the case of the school district, we again look at the best case scenario as far as our revenue according to the School Foundation Formula and that creates the capacity by which we certify our budget for the next year. However, we know in real life terms we don't always receive everything we anticipate. Likewise, the farmer may have a drought or the farmer may have a situation where the weather is outstanding, and he has underestimated the amount of crop he will receive. Therefore, the farmer may actually have less grain than what he had estimated in which case he cannot sell what is the capacity of the bin but rather the actual crop that was harvested and was placed in the bin. A school district has a similar situation. They can either spend what they certify or what the actual total values are for the Combined District Costs, Miscellaneous Income and the Unspent Balance added together. If a school district receives additional funds over and above what is certified, the only way those dollars may be expended is to amend their budget prior to May 30 of the fiscal year through the amending process outlined in the law. Otherwise those dollars are not available to be expended by the district. |
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