When conventional and intermediate school districts and charter schools receive revenues from the state and from local taxes, the Michigan Public School Accounting Manual (promulgated by the Michigan Board of Education) requires that this money be deposited into and spent from seven specific “funds” or accounts. This stipulation is important, because monies may be spent only for the purposes for which they were allocated. For instance, a school district may not spend capital funds for general expenditures (see Graphic 24).
The budget component of a district’s fiscal responsibilities will be discussed further below. First, however, we will examine briefly the means by which districts receive their revenue.
The seven funds mentioned above — generally known as “revenue funds” — are designed to allow districts to separate their revenues and expenditures correctly.[ccxii] Graphic 24 shows each fund’s name, the source of the fund’s revenue and the types of expenditures that can be made from the fund.
[ccxii] Not all costs can be easily tracked to a particular program. Therefore, the state Education Department has established an accounting method that includes “indirect costs,” because always identifying “the specific program or project served would take an effort disproportionate to the results achieved.” (“Michigan Public School Accounting Manual (Bulletin 1022): Section II Requirements,” 29.)