Common City Finance Terms

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Commonly used terms in school finance and operation:

Bond 
Bonds are issued to obtain money for permanent capital projects, such as purchasing technology or building a new school. Bonds are a promise to repay a specified amount of principal (face value), plus interest, at a specific time (maturity date). The money to repay the bonds comes from increased property taxes. Bonds are different than operating levies, which apply property tax dollars directly to the district's general fund so they can be used for ongoing operating costs.

Bond Referendum 
The process by which voters approve or reject a proposed bond.

Collective Bargaining Agreement 
A contract between the district and representatives of a recognized bargaining unit for specifi terms and conditions of employment, such as hours, working conditions, salary and benefits.

Debt Service 
The amount needed to make interest and principal payments on a bond issue during a given time period.

Enterprise Fund 
A schoool district function that is self-supporting or produces revenue, such as vending machines, wschool stores or class ring sales, whereby revenues cover the cost of the service.

Full-Time Equivalent (FTE) 
A method of measuring the number of authorized employees based on a full-time equivalent of 2,080 hours per year.

Governmental Accounting Standards Board (GASB) 
Establishes and improves accounting and financial reporting standards for government entities.

Generally Accepted Accounting Principals (GAAP) 
Uniform minimum standards for financial accounting and recording, encompassing the conventions, rules and procedures that define accepted accounting principles.

General Fund 
Used to account for all financial resourcews and transactions not accounted for in another fund.

Governmental Funds 
The funds through which most governmental activities are financed.  The four fund types are general, special revenue, debt service and capital projects.

Millage Rate 
The rate in mills (1 mill = 1/1000 of a dollar or $0.0010) at which property is taxed.

Pay-As-You-Go Basis 
A term used to describe a financial policy by which projects are financed from current revenues rather than through borrowing.

Public Purpose Expenditure 
An expense that benefits the community as a whole and is directly related to functions of government. Some expenses commonly included in this budget category that shouldn’t be are staff or council retirement or holiday parties, flowers for the service desk and refillable water coolers unless they are in areas accessible to the public.

Reserve 
An account used either to set aside budgeted revenues that are not required for expenditure in the current budget year or to earmark revenues for a specific future purpose.

Special Assessments 
A levy made against certain properties to defray all or part of the costs of a specific improvement, such as new sewer mains or sidewalks, deemed to benefit primarily those properties.

Tax Increments 
Taxes collected on tax increment financing (TIF) projects. Tax increment financing is a tool cities use to redevelop a portion of the city. The increase in taxes on the redeveloped area is used to cover the city costs associated with the project.