Budget Development Analysis
Analyzing the budget for the fiscal year 2007-2008, we can firstly divide the sources of revenue into 3 major components; Local, State and Federal. From the figures, we can see that State funding being 56.48% is the highest source of revenue while local funding (26.93%) comes second and lastly, we have federal funding (16.59%). We can clearly see that the estimated revenue collection equals $519,275. Therefore, we can safely conclude that the state spends the most according to the budget allotment.
Now that we’ve divided the revenue sources, let’s take a look at the appropriations that have been mentioned in the budget. Essentially, the budget appropriation list is quite long, inclusive of detailed expenditures that the school incurs over the year. Therefore to provide an analytical view of the entire budget, we shall concentrate on the areas on which the school spends the most. From the information provided to us, we know that the each teacher is either paid $41,100 (Bachelor’s Degree) or $43,100 (Master’s Degree) per year. Consequently, the total allotment of the salary in the budget amounts to $252,135,559.
Next we see that the school has made large expenditures on Food Services as well as the maintenance and operations of facilities, $31,157,445 and $48,934,778 respectively. The budget also entails that the entire food service expenditure is met by federal funding. Therefore we can state that federal funding does indeed play an important role in the development of the budget.
Debt servicing is also a department upon which the school expends a certain portion of its annual budget, $40,119,174 to be exact. From the total expenditure and revenue figures in the budget, we can clearly see that revenues are not sufficient enough to meet the level of expenditure. Therefore like any other institution, the school needs external funding for it to meet its annual expenditures. In consideration of the portion that is allotted in the budget for debt servicing, we can see that the school in the past has taken some heavy loans.
As has been mentioned, the estimated value of the entire school property amounts to $10,576,196,275. Accordingly, the tax rate for the school has been set at $ 1.2497 per $100. Based on the information, the tax has been divided into maintenance of the property and debt servicing, the two major expenditure components after teachers’ salaries.
From the above analysis, we can pinpoint certain important aspects of the above explained budget and its development. The school mainly relies on state funding which is proven by the fact that more than half of the revenues are state generated. Local funding is generated mainly through property taxes. Federal funding although is the smallest source of revenue nevertheless covers an important expenditure that of food services, which is an important part of the expenditure list of the school. Therefore we can safely conclude that the highest importance is placed upon state generated funds. We know that local funding mainly consists of funds generated through property taxes i.e. certain portion of the property taxed collected are routed to school revenues.
The important thing to note is that revenues are markedly less than the expenditure levels. This means that the school requires external funding. Since debt servicing is already a part of the expenditure list and an important one at that, it will have a tendency to increase if the sources of revenue are not broadened or that the generation of revenue from the current sources is not augmented.