The Budget

  • 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.

    Financial Accounting

    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 respective funds.

    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.

    Creating Debt

    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 constitute debt.

    Installment Purchase

    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

    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.