A wealth of data is available regarding a school district's finances. Sometimes it seems like too much data and not enough helpful information. Some basic understanding about what data and reports are available, the shape they take, and the information they are intended to convey can help make all these numbers more meaningful.

District financial data

The state's standardized account code structure (SACS) provides all California school districts with a uniform and comprehensive chart of accounts that they must use to categorize each revenue and expenditure. When this system was first introduced in the 1990s it represented a major transition from previous accounting requirements. As of the 2003-04 school year, all districts must report their financial information electronically using SACS.

Sophisticated use of these codes enables school districts and the state to do detailed analyses of school expenditures that can yield useful information for policymakers, educators, and the public. Districts vary in how skilled and how motivated they are to take advantage of these capabilities.

See Taking Advantage of SACS to Improve Financial Information

The General Fund

California school districts use a system called "fund accounting." All revenues and expenditures are recorded in one of several funds, but the vast majority of a district's financial transactions flow through the General Fund. This is what most people think of as the district budget.

The largest part of the money in the General Fund is for general purposes and is categorized as unrestricted. Some revenues, however, are restricted to specific uses, usually in compliance with state or federal regulations. This includes most special purpose or categorical programs. There are dozens of these programs, such as Special Education, transportation, instructional materials, and Title I of the federal No Child Left Behind Act (NCLB) that supports disadvantaged students.

See How to Read a School District Budget

General accounting guidelines require that districts place certain revenues into governmental funds that are separate from the General Fund. Most often, these revenues are to be used for purposes other than providing K-12 instruction. Districts, at their discretion, can also set up some optional funds outside the General Fund, such as special reserves.

See More on Fund Accounting

Interim reports

School districts formally adopt their budget each year, but inevitably the estimates used to create it will change somewhat as the year progresses. There are too many unknowns at the time of budget adoption to expect anything else. Even the most skillfully prepared budget is just a snapshot in time, and it is imperative that the assumptions upon which it was based are reviewed regularly.

Districts are required to certify their financial condition twice during the school year, for the periods ending Oct. 31 and Jan. 31. They do this by filing interim reports in a format specified by the state. These reports compare the ongoing financial conditions to what was projected in the district's original budget. They include updates on staffing and student attendance, year-to-date accounting, and projections of future expenses. They can also shed light on potential cash flow problems. Through this review of anticipated versus actual revenues and expenditures, districts certify whether they will be able to meet their obligations. The school board is responsible for monitoring the interim reports to ensure that the district remains on a solid financial footing throughout the year.

See Interim Reports

Making finances understandable

The budget documents and official financial reports that districts prepare for the county office and state follow prescribed governmental accounting conventions and state requirements. They must be accurate and thorough. But the format needed for consistent state reporting often differs from what the lay public-including school boards and many district officials-needs in order to understand the significance of the information.

While the official budget is important for understanding a district's overall fiscal condition,it leaves many of the most important day-to-day questions about district decision making unanswered. Districts can use the same data they compile for these official documents to create reports for their boards and the public that make school district finances clearer. These reports can illuminate a district's fiscal condition, provide important details related to specific schools and programs, look at change over time, and facilitate comparisons. In other words, they can describe how effectively the district is managing its resources to meet its priorities, address performance issues, and control its future.