There were some earlier postings and questions about the Equity Fund that I believe need to be answered. First equity in this case is similar to the equity you have in your house as you pay down your mortgage.
The Equity Fund is a consequence of the fact that, by state law, the district operates on a fiscal year budget (July 1-June 30) but the taxes are collected on a calendar year basis. So the 2006-07 year is paid for partially from last year’s tax levy and partially from the 2007 taxes that will be collected in January 2007.
Furthermore, about 75% of total taxes come in by January 31 – the rest come in by July 31. So when the district closes its books at the end of the fiscal year (June 30th) it has some tax funds set aside to pay for the July-Jan portion of the year and bookkeepers and accountants require a label/category for all funds – this is the Equity Fund. It is the funds that (with the additional July collections) are intended to cover the expenses of the district for the July-Jan months.
Another piece of the funding puzzle is that the state funds (both equalized aid and categorical aid) are sent in December, March and June – for expenses incurred from September to June. So there is a cash flow problem which the district solves (as almost all others do) by engaging in short term borrowing. Usually this borrowing pays for itself (through interest earned).
I realize this is fairly complex (and archane) – so I will try to answer whatever questions any reader might have.
Madison School Board
“Until lions have their own historians, the hunters will always be glorified.” – African