The annual budget is the financial plan for the operation of the school system. It provides the framework for both expenditures and revenues for the year and future years and translates into financial terms the district’s educational programs and objectives of the district. Colorado school districts are required to operate on a July 1–June 30 fiscal year. Board members should become familiar with state law relating to school district budgets. [C.R.S. § 22-44-101 et seq.]
Budget Adoption Process
Generally, a board delegates to the superintendent overall responsibility for annual budget preparation,
budget presentation and budget administration. As part of this responsibility, the superintendent should
provide a budget preparation calendar that ensures the district meets all the deadlines established by law.
The budget must be presented in a summary format that is understandable by a layperson. Many school
districts choose to include staff and community input in the budget preparation process.
As part of the process, each school-level accountability committee must make recommendations to the
principal relative to priorities for expenditures of district funds by the school. The information from schoollevel
committees is shared with the district accountability committee. All of this information is taken into
consideration on a district-wide basis as the budget is prepared.
It is a board’s responsibility to review the proposed budget in open session, make such changes as it may
deem necessary and adopt a budget and appropriation resolution prior to the end of the fiscal year. After
adoption of the budget, a board may review and change the budget with respect to both revenues and
expenditures at any time prior to Jan. 31 of the fiscal year for which the budget was adopted. If money for
a specific purpose other than property taxes becomes available to meet a contingency after Jan. 31, a board
may adopt a supplemental budget for expenditures not to exceed that amount. Once adopted, the budget
becomes the plan and legal authority for receiving and spending money.
Appeal for Revenue Increase
Total program funding received by a school district may not exceed the amount of total program funding
allowed under the Finance Act unless a board holds a successful election to seek additional funds in
November, either in conjunction with the general election or the regular school biennial election.
The maximum amount of additional local property tax revenue that can be requested from the voters cannot
exceed 25 percent of the district’s total program funding for the first budget year in which the additional
revenues will be collected, or $200,000, whichever is greater. In 2015, legislation passed allowing small rural
districts to seek additional local property tax revenues in an amount not to exceed 30 percent of the district’s
total program funding, or $200,000, whichever is greater. Districts are advised to seek legal counsel about
the specific procedures that must be followed in conducting the election and the requirements under the Fair
Campaign Practices Act pertaining to this election.
Cash Flow Loan Program
Upon application by a school district and approval by the state treasurer, any school district may participate
in an interest-free loan program. The program is designed to mitigate the impact of collecting property
taxes at the end of the fiscal year rather than at the beginning. This law allows the state treasurer to issue tax
and revenue anticipation notes for school districts. Payments of principal on the notes will be made from
property taxes as those revenues are received by the school district.
Financial Accounting and Reports
The board may decide to have the district’s money received and disbursed through the office of the county
treasurer, or it may elect to have district money received by the county treasurer paid over to the treasurer of
the district. The law requires the county treasurer to provide an itemized statement of account not later than
the 10th day of each month.
The law requires school district financial records to be kept in accordance with generally accepted principles
of governmental accounting. Appropriate entries from the adopted budget are made in the records for the
A board has the responsibility to oversee the district’s fiscal affairs. State law requires that a board receive a
quarterly financial report for the general fund and on any other funds in accordance with the board’s request.
More frequent reports can be requested so a board can fulfill its trustee responsibilities. The quarterly report
must include several comparisons so a board can review the current state of revenues and expenditures. All
financial and audit reports are public records.
Since 2010, the Public School Financial Transparency Act has required school districts to post financial
information online in downloadable format and to link to CDE’s website where additional district reports
may be found. [C.R.S. § 22- 44-301 et seq.]
The Local Government Audit Law requires a board to provide for an annual audit of the district’s financial
statements for each fiscal year. [C.R.S. § 29-1-603.] The audit must be conducted in accordance with generally
accepted auditing standards by a certified public accountant licensed to practice in Colorado.
The auditor must ensure that a school district is complying with the Financial Policies and Procedures
Handbook adopted by the State Board of Education. The audit report shall contain a report of receipts and
expenditures of each fund.
The audit report must be filed with the state auditor in accordance with the timeline set out in state law.
A board is authorized to borrow money on a short-term basis with repayment to be made within six months.
[C.R.S. § 22-40-107.] Limits on the amount to be borrowed and interest rates are defined by statute.
The Colorado Constitution provides that a political subdivision (which includes a school district) cannot
incur any multiple-year fiscal obligations or contract a general obligation debt by loan in any form unless
the debt is approved by the voters. Generally, debt is not created by an obligation that can be met out of
current district revenues (within one year’s budget) or by an obligation that does not obligate payments
out of future revenues. Under Colorado law, discretionary or contingent obligations in future years do not
State law requires the district to submit any installment purchase or lease agreement to a vote of the people
when the repayment obligations in the agreement extend beyond one year. This same restriction applies to
expenditures from the capital reserve fund for an installment purchase or lease agreement with an option to
purchase for a period exceeding one year and not to exceed 20 years.
However, Colorado courts have held that the election requirement does not apply to these types of agreements,
even though the terms may be greater than one year, if the district’s obligation to make payments under the
agreement is subject to annual appropriation by the board of the funds necessary to pay those amounts.
These are, in the courts’ view, discretionary or contingent obligations.
Bonded indebtedness may be incurred only (1) to acquire or purchase buildings or grounds; (2) to
remodel or add to any school building; (3) to construct school buildings; (4) to equip or furnish buildings;
(5) to improve school grounds; (6) to fund floating indebtedness; (7) to acquire, construct or improve a
capital asset; or (8) to support charter school capital construction or charter school land and facilities needs.
[C.R.S. § 22-42-101.] The proposition to create bonded indebtedness must be approved at an election, which
can only be held in November each year.
The process of incurring bonded indebtedness is complex and will require the assistance of competent fiscal
agents and bond counsel.