School Financing Glossary

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.

Equalization Rate 
Represents the average level of assessment in each community. For example, an equalization rate of 80 means that properties in a community are assessed at an average of 80 percent of their market value.

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.

Fund Balance 
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 may be applied at revenues to the district's following year budget. A portion, up to two percent of the total budget, may also be set aside to pay for emergencies or other unforseen problems.

Fundamental Operating Budget (FOB) 
The total amount of money required to pay for current year programs, staffing and services at next year's prices. For example, what the next year's budget would be if the current year's budget were simply "rolled over."

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.

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

Operating Levy 
Issued to obtain money for ongoing operating expenses, such as salaries and supplies, to make up any shortfalls in state funding. Unlike bonds, which borrow and use property taxes to repay the loan, a levy applies the money from property taxes directly to the district's general fund.

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.

Revenue Anticipation Note (RAN) 
A short-term borrowing instrument issued in anticipation of a known and quantifiable future revenue source.

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.

Tax Rate 
The amount of tax paid for each $1,000 of assessed value of property.  In districts that cover just one municipality, the tax rate is figured simply by dividing the total assessed property value by 1,000 and then dividing that again into the taxd levy (the amount of money to be raised locally). In districts that encompass more than one municipality and applying equalization rates to take into account different assessment practices.