Types of Funds
Operating (Supported) Funds
Operating funds are used to support the day-to-day activities of the school district. This includes the payment of salaries and benefits, utilities, student transportation, and supplies and services. This would include the General and Supplemental General Funds. This also includes funds that are supported by transfers from the General and Supplemental General funds, such as Special Education, Vocational, Bilingual and At-Risk funds.
Capital funds are used to repair and maintain buildings and purchase equipment and furniture. While operational funds typically benefit the year the expenditure is made, capital expenditures generally provide benefits for many years. There is a special type of capital fund that is supported by the sale of general obligation bonds. Investors purchase the bonds and the proceeds are used for a major construction program. This would include the Capital Outlay Fund.
Bond and Interest (Debt Service) Funds
The third type of fund is usually called a Debt Service fund, but Kansas law refers to this fund as the Bond and Interest Fund. This fund is used to repay investors for the amount borrowed plus accumulated interest.
The district collects revenue in these funds and all proceeds are turned over to the state. Flow-through funds would include Cost of Living and KPERS Retirement System.
The district receives grants from the federal government that are restricted for specific purposes. Title I supports reading and math in our high poverty schools. Title IIA is used to develop high qualified teachers and principals. Title VIB supports special education.
The self-supported funds are used to account for specific revenues. Kansas law requires districts to use additional accounting funds to separate program expenditures related to these revenues. These self-supported revenue funds include Adult Supplemental, Extraordinary School, Food Service, Gifts and Grants, Special Assessment, Special Liability Expense, Special Reserve, Student Materials, Summer School, and Textbook Rental.
One reason it is difficult to understand school finance is because of the large number of funds and the mechanism to provide revenues to support the expenditures in each of the funds.
How can the district purchase equipment or refurbish buildings while operating funds are so limited?
State law places restrictions on the amount of operating funds a district can spend. This restriction is part of an equalization plan for all districts in the state. Currently state law does not place these restrictions on capital purchases.