A Worksheet for Reading Your School District's Budget Line by Line

Every spring your school district publishes a document that is two hundred pages long, written in a dialect found nowhere else on earth, and approved by people who were handed it the Friday before. It has tables inside tables. It has fund codes, function codes and object codes, which sounds like a secret society and is actually an accounting convention. It is also the most important paper in your town, because it decides the biggest bill most families pay after the mortgage.

The good news is that you do not have to read all two hundred pages. You have to run four calculations. Any adult with a calculator and a free evening can do it, and when you walk into the board meeting with your four numbers, you will be the most dangerous person in the room, in the best sense. Not because you are angry. Because you are specific.

This is a worksheet, so the steps stay plain and exact. I have built one hypothetical district to work through, and every number in it is invented, so please do not go looking for it on a map. Swap in your own figures as you go.

Step zero: get the documents

You need three papers. All of them are public, and none of them requires a lawsuit.

1. The adopted budget. This is the final version the board voted on, not the early draft. Most districts post it on their website, usually under "Business Office" or "Finance." State law generally requires a public notice and a public hearing before the vote, so the draft and the hearing date are also posted or published. Check your state's rules for the exact timing.
2. The most recent annual audit. Districts are audited by an outside accounting firm, and the audit report is public. It tells you what was actually spent and what is actually sitting in the bank, not what the district hoped to spend. A district that spends a significant amount of federal money also undergoes a separate federal compliance audit, often called a single audit. Look for it in the same place or ask the business office.
3. The state's published data. Every state education department collects finance reports from its districts, and the federal government's statistics arm, the National Center for Education Statistics, collects district finance data nationally. These let you compare your district with its neighbours.

If any of these is missing from the website, ask the district's business office or file a request under your state's public records law. The district must have them. Asking politely first is more effective, and nobody has ever lost a budget fight by being courteous.

Know your pots: the funds

Here is the first thing the document does to confuse you: it is not one budget. It is several, called funds, and money in one generally cannot be moved to another. Think of the coffee cans in an old-fashioned household, one for the mortgage, one for groceries, one for the car. School accounting works the same way, with a few more cans.

• The general fund. The operating account: teachers' salaries, aides, principals, heating, buses, paper, insurance. When people say "the school budget," this is usually what they mean.
• The debt service fund. The mortgage payment. When voters approve a bond for a new building, the principal and interest on that borrowing are paid from this fund, usually with a separate property tax levy.
• The capital projects fund. Construction, big repairs, roofs, buses and boilers. It is often fed by bond proceeds or by a dedicated levy.
• Food service and other enterprise funds. The cafeteria, which in most districts is meant to pay for itself with meal payments and federal meal reimbursements.
• Special revenue funds. Money restricted to a purpose, most often grants. Depending on the state, federal grants such as Title I and special education money may sit here or inside the general fund. The district's budget document will say which.

State rules differ in the names and the number of funds, but the logic is the same. A district can look flush in the capital fund and be broke in the general fund, and a headline that says "the district has forty million dollars in the bank" may be talking about a can you cannot spend on payroll. Always ask: which fund?

My hypothetical district, which I will call Cedar Hollow Consolidated, has these four:

Check the sum: 60,000,000 plus 4,500,000 is 64,500,000. Add 6,000,000 for 70,500,000. Add 2,500,000 for 73,000,000. Cedar Hollow enrolls 4,000 students.

Calculation one: cost per pupil

The oldest tool in the box is also the most misused. Cost per pupil is total spending divided by the number of students. The trick is that you can get several different numbers depending on what you put on top and what you put on the bottom, and you must say which one you are using.

Cedar Hollow's numbers:

• General fund per pupil: 60,000,000 divided by 4,000 is $15,000.
• All funds per pupil: 73,000,000 divided by 4,000 is $18,250.

Neither is wrong. The first measures what it costs to run the schools day to day. The second includes the mortgage and the construction. When a district says "we spend $18,250 per child" and the family down the street hears $15,000 from a taxpayer group, nobody is lying. They are using different cans.

Now make it useful by comparing the trend. Suppose last year's general fund was $57,000,000 and last year's enrollment was 4,100.

• Last year per pupil: 57,000,000 divided by 4,100 is about $13,902.
• This year per pupil: $15,000.
• The increase: 15,000 minus 13,902.44 is 1,097.56, divided by 13,902.44, which is about 7.9 percent.

Now the part that matters. Spending went up by 3,000,000, from 57,000,000 to 60,000,000, which is 5.3 percent. Enrollment went down by 100 students, which is 2.4 percent. The district is educating fewer children and spending more money, and the per-pupil figure rose faster than the total. That is not automatically a scandal. Some costs (the building, the buses, the retirement system) do not fall when a hundred kids leave. But it is a question, and a good one: which costs went up, and which went down when enrollment did?

Two cautions. First, "enrollment" and "average daily attendance" differ, and some states fund on one, some on the other. Use the same count each year. Second, do not compare your district to the next one without asking about special education, poverty and geography. A rural district with long bus routes and a large special education caseload will always cost more per child than a compact suburb. The comparison that helps is your district against its own past, then against districts of the same size and character.

Calculation two: instruction versus administration

This is the one that gets talked about at barbecues, and it is also the one that gets abused. The idea is simple. Take the general fund and sort it by function. How much goes into the classroom, and how much goes into everything else?

The district's budget will break the general fund into functions, using a state-prescribed chart of accounts. The labels vary. Look for "instruction," "student support services," "instructional support," "district administration," "school administration," "operations and maintenance," "transportation," and a catch-all.

Cedar Hollow's general fund looks like this:

Check: 36.0 plus 6.0 is 42.0. Add 5.4 for 47.4. Add 7.2 for 54.6. Add 3.0 for 57.6. Add 2.4 for 60.0 million. The percentages, 60 plus 10 plus 9 plus 12 plus 5 plus 4, make 100.

Per pupil, instruction is 36,000,000 divided by 4,000, or $9,000. Administration is 5,400,000 divided by 4,000, or $1,350.

Now the warning label, because this calculation can mislead in both directions.

The case that administration is bloated. A conservative reading says: every dollar in the central office is a dollar not in the classroom, and the way to hold a bureaucracy accountable is to measure it. If administration's share has risen for years while enrollment has fallen, that is a legitimate finding.

The case that the ratio proves little. The honest answer is that the categories are not as clean as they look. Is a school secretary "administration" or "support"? Where does the cost of a payroll system go? Do you count the principal, who also observes classes, as instruction? Different states define the lines differently, and districts exercise judgment inside them. Also, a district can make its administration percentage fall by cutting the people who keep records and answer parents, which is not obviously an improvement.

The sound use of the number is to track your district's share from year to year, using the same definitions, and ask the business manager to walk you through any line that jumps. A rise of one percentage point on a $60,000,000 fund is $600,000, which is real money. Ask what bought it. Then ask what it bought.

Calculation three: the fund balance in months

This is the one almost nobody runs, and it is the one that tells you whether the district is a careful household or a reckless one. The fund balance is the money left in the general fund at the end of the year. It is the district's savings account.

The measure that auditors and finance officers use is simple: divide the balance by the average monthly spending, and you get months of operating expenses.

Cedar Hollow's numbers:

• Monthly general fund spending: 60,000,000 divided by 12 is $5,000,000.
• Unassigned general fund balance, from the audit: $9,000,000.
• Months in reserve: 9,000,000 divided by 5,000,000 is 1.8 months.

Government accounting sorts fund balance into categories (under a standard the Governmental Accounting Standards Board issued, they include nonspendable, restricted, committed, assigned and unassigned). Use the unassigned figure when asking how much cushion exists, because the other categories already have a job. The audit reports it.

What counts as enough? The Government Finance Officers Association's published best practice for governments recommends keeping no less than two months of regular operating revenues or expenditures in reserve. Cedar Hollow's 1.8 months is a little below that: two months would be $10,000,000, so the district is $1,000,000 short of the benchmark. That is not a crisis. It is a question about why, and whether the new budget moves it up or down.

There is a flip side, and a conservative should insist on it. A district sitting on a very large balance, say six or eight months, is collecting more of your money than it needs. That might be prudence. It might also be a levy that could be lower. You are allowed to ask the board, in a civil voice, why a district with a deep reserve is asking for a rate increase.

Calculation four: from the mill levy to your bill

Now the part that reaches your mailbox. Property taxes pay for much of a district's budget, and the machinery is a single formula that nobody ever teaches.

A mill is one-tenth of one cent, or one dollar of tax for every $1,000 of assessed value. A levy of 20 mills means $20 for every $1,000 of assessed value. (Not every state says "mills," some say "tax rate per $100," but the arithmetic is the same.)

Here is Cedar Hollow's arithmetic. The general fund needs $30,000,000 from local property taxes. (The rest comes from the state and Washington: $27,000,000 from the state and $3,000,000 from federal grants, and 30 plus 27 plus 3 is 60 million.) The district's total assessed value is $1,500,000,000.

1. Divide the amount to be raised by the assessed value: 30,000,000 divided by 1,500,000,000 is 0.02.
2. Multiply by 1,000 to convert to mills: 20 mills.
3. Add the debt service levy. The mortgage payments are $4,500,000, so 4,500,000 divided by 1,500,000,000 is 0.003, which is 3 mills.
4. The district's total levy is 23 mills.

Now turn it into a bill for a hypothetical home with an assessed value of $200,000:

• 200,000 divided by 1,000 is 200 "thousands."
• 200 times 23 mills is $4,600 a year to the school district.

Of that, 200 times 20 is $4,000 for operations and 200 times 3 is $600 for the debt. Remember that your county, city and other districts bill you separately.

(Many states assess homes at a fraction of market value, so your "assessed value" can be well below what the house would sell for. Look at your own bill, which lists both numbers.)

Now the power move. What does one extra mill cost? 1,500,000,000 times 0.001 is $1,500,000 for the district, and for the home above, 200 times 1 is $200. When the board proposes a "modest two-mill increase," you now know that is $3,000,000 for the district and $400 for that house, every year. Saying it that way is not an attack. It is the job.

Two real-world wrinkles. First, districts rarely collect 100 percent of the levy in a given year, so the actual math builds in a collection rate. Second, many states have rules that force the district to publish a notice, hold a hearing, or even take a recorded vote when the revenue rises because assessments rose, even if the rate stayed the same. A rate that "didn't go up" while the house assessment did is a tax increase in every way a family cares about. Find out what your state requires.

Where to find it, and who to ask

• The adopted budget: the district website's finance page, or the board packet for the meeting at which it was adopted. The board packet is the full document the board members receive before they vote, and it is public.
• The audit: the district's finance page, the state auditor's website in many states, or the business office.
• Board minutes: they record the votes. Read the last year's of them.
• State comparison data: your state education department's finance reports.
• The person to call: the district's chief business official, who is paid to explain these documents and will usually be glad someone asked.

If you want the larger picture of how a budget travels from a request to a vote, How a budget becomes law, from the President's request to the checks walks through the federal version, and your school board's is the same machine on a smaller scale. A school board adopts an appropriation the way Congress does, and the principle that spending must be authorized before it is spent is just as old.

What this worksheet cannot tell you

It cannot tell you whether the money is well spent. A district with a low cost per pupil can be failing children, and a district with a high one can be doing wonderful work. The calculations give you the questions, not the verdicts.

Here is the strongest objection to doing all of this, and it deserves a fair statement. A volunteer board member says: "We're stretched thin. The state sends us restricted money. Half this budget is contracts we signed before you were interested, and a big slice is a retirement system we do not control. Asking us about one percentage point is a distraction." Some of that is true. Salaries, benefits, pension contributions and special education obligations are the biggest items, and much of the budget is committed by contract and by law before the first vote.

The answer is that this makes your numbers more valuable, not less. If most of the budget is fixed, the choices that remain are the ones that deserve the closest look. And the contracts themselves are public records, adopted by the same board in public meetings, and can be read and discussed. A budget that is "locked in" got that way through votes. Those votes can be asked about.

It also helps to know the federal share, because people argue about Washington's role in schools without checking. In the typical district, the federal government supplies a small minority of the money, and state and local taxpayers supply the rest. For the details, see What the Education Department Actually Does, and What It Cannot. In Cedar Hollow, by my invention, it is 3,000,000 of 60,000,000, or exactly 5 percent.

The bottom line

• Run the four numbers once a year: cost per pupil, instruction's share, the fund balance in months, and the mill levy converted to a dollar figure for your own house. It takes an evening.
• Ask which fund and which year. Most budget arguments are two people holding different coffee cans.
• Convert every proposed increase into dollars per house. "Two mills" is a slogan. "$400 a year for the typical home" is a fact.
• Be civil and specific. The business office will help the parent who shows up with a worked calculation. Take the next step with How to Attend a School Board Meeting and Make Your Three Minutes Count, and if you want to be the one voting on the budget, see A Playbook for Running for School Board, From Filing Date to Election Day.
• Remember who pays. Every line in that document was collected from a family that also has a budget. A district that can explain, in plain English and without sighing, what it did with your money has earned the next dollar. One that cannot has not.