xt7dz02z6943 https://exploreuk.uky.edu/dips/xt7dz02z6943/data/mets.xml Kentucky. Department of Education. Kentucky Kentucky. Department of Education. 1946-02 bulletins English Frankford, Ky. : Dept. of Education This digital resource may be freely searched and displayed in accordance with U. S. copyright laws. Educational Bulletin (Frankfort, Ky.) Education -- Kentucky Educational Bulletin (Frankfort, Ky.), "Official Manual of Instructions for the Kentucky Uniform Financial Accounting System", vol. XIII, no. 12, February 1946 text
volumes: illustrations 23-28 cm. call numbers 17-ED83 2 and L152 .B35. Educational Bulletin (Frankfort, Ky.), "Official Manual of Instructions for the Kentucky Uniform Financial Accounting System", vol. XIII, no. 12, February 1946 1946 1946-02 2022 true xt7dz02z6943 section xt7dz02z6943

Ofﬁcial Manual of Instructions

for

BOARDS OF EDUCATION,
ADMINISTRATORS, TREASURERS AND
SECRETARIES .
OF KENTUCKY SCHOOL DISTRICTS

To be used with

THE KENTUCKY UNIFORM
FINANCIAL ACCOUNTING SYSTEM

Prepared by

J. D. FALLS, Chief
Bureau of Finance
and
KENNETH T. MARSHALL, Assistant
Director of School Finance
State Department of Education

Published by order of the

STATE BOARD OF EDUCATION
Frankfort, Kentucky
1946

Part II—The Accounting System

Part VI—Supplies and Equipment

TABLE OF CONTENTS

Part I—Legal Authorities of School Officials ....................................

I. State Board of Education ....................................................
II. State Superintendent

v III. Local Boards of Education ....................................................
IV. Fiscal Court or Levying Authority ....................................
V. Local Superintendent of Schools ..........................................
VI. Secretary to Board
VII. Treasurer of Board

Pages
1016
1016
1016
1017
1020
1021
1021
1021

VIII. Audits
IX. The School Law

I. The Budget

Part III—Forms Used in the Uniform Financial System ..................
Part IV—Due Date for Report Forms ....................................................

Part V—Receipts ' ..................

1. Classification of Revenues ....................................................
II. Detail Code Classification of Receipts ..............................
III. Detail Code Classification of Expenditures ....................

I. Definitions of Supplies ..........................................................
II. Alphabetical List of Supplies ______________________________________________
III. Equipment .............. _ .....
IV. Alphabetical List of Equipment ________________________________________
V. Built-In or Fixed Equipment ______________________________________________
VI. Equipment Secured to Grounds __________________________________________

Part VII—State School Accounting Terminology ____________________________
Part VIII—Index

1022
1022

1024
1031

1032
1032
1032
1035

1045
1047
1047
1064
1064
1072
1074

1075

111

to
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ges
016
,016
.016
017
020
.021
.021
.021
.022
.022

022
.022

024
.031

032
.032
.032
035

.045
.047
.047
064
.064
.072
074

FOREWORD ‘

The purpose of this Manual is to revise the official Kentucky
Uniform Financial Accounting System previously adopted by the
State Board of Education, so as to include much additional. material
necessary to furnish a more complete guide for all administrative
officials in keeping a State Uniform Accounting System. Further,
this publication is to incorporate:

(a) The best current national practices

(b) Certain legal bases according; to the Kentucky Revised
Statutes

(0) Some of the latest rules and regulations of the State Board
of Education

(d) The classifications of supplies and equipment

(6) A summary of definitions of standardized school financial
accounting terminology

This Manual conforms, insofar as our administrative and statu-
tory limitations will permit, to the procedures, codifications and
terminology recommended by the United States Office of Education
and the National Committee on Municipal Accounting, as well as
those used by the California State Department of Education. .

This Manual was prepared by J. D. Falls, Chief of the Bureau of
Finance, and Kenneth T. Marshall, Assistant Director of Finance,
and to them sincere appreciation is extended for their professional
leadership shown herein.

JOHN FRED WILLIAMS
State Superintendent of Public Instruction

INTRODUCTION

The success of school administration depends largely on visualiz-
ing the overall needs of the school community, planning for those
educational needs, and then promoting financial requisites to execute
the program best suited to the youth being served. These can be ac-
complished more wisely by providing a sound accounting system such
as this which is adopted for the public school systems in the Common-
wealth.

Under the education code of the State of Kentucky it is made
mandatory that each county and independent school superintendent
make monthly and annual financial reports to the Superintendent of
Public Instruction, showing therein a strict accounting of the district
receipts'and expenditures for each major classification, and other
necessary financial and administrative data. These major expenditure
classifications are in conformity with the best practices throughout
the 48 states, and those employed by the United States Office of
Education in collecting data from the various state departments of
education. .

In order to provide detailed instructions for uniform accounting,
to establish common terminology in keeping with national practices,
and to entail acceptable codifications for all major receipts and ex-
penditures, the State Board of Education of Kentucky, through the
recommendation of the State Superintendent of Public Instruction,
has adopted the contents of_this Manual. It will be expedient for
many local districts to maintain even more detailed analysis of their
financial activities than is provided herein. This is especially true
in the larger districts. However, in all cases, district accounting
should be in agreement with these adopted expenditure classifications.

There is a high correlation between the efficiency and education
success of a school system, and the accuracy and thoroughness of its
financial records. Such accounting is not ‘i‘ red tape.” It is incum-
bent upon all school personnel concerned, to operate within the State
School Code and to abide by the rules and regulations of the State
Board of Education. The official documents, instruments and reports
from all local school districts become the bases for records and data
filed in the office of the State Superintendent of Public Instruction.
Therefore, there are three chief purposes for adopting the Kentucky
Uniform Financial Accounting System:

Ftrst, to aid auditors, accountants, and other representatives of

1014

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the State Department of Education in examining and interpreting
records of all financial transactions. This not only safeguards the
reputation of those school officials responsible for the handling of
public school funds, but also protects the interest of the public “foot,—
ing the bills.”

Second, to guide local executives and administrators in projecting
more efficient school programs and to enable them to determine With
more accuracy which practices, procedures, and/or agencies should be
eliminated, modified or continued for the common welfare of the
school community._

Third, to display at'all times the exact financial status of the
local school system; and depict to the State Department of Education,
local board of education, and the school administrators and local
citizens, their obligations, assets, and the soundness of the financial
structure established primarily for the education of youth.

These purposes alone are sufficient to justify the adoption of a
sound accounting system. Neatness and accuracy of records and re-
ports tend to inspire confidence in personnel responsible for the ad-
ministration and supervision of a progressive school system.

Therefore, this Manual is designed to facilitate the work of super-
intendents, secretaries, treasurers, and clerical personnel in realizing
these and other minor purposes for establishing and revising a modern
and effective Uniform Financial Accounting System for the Public
Common Schools of Kentucky.

The instructions throughout this Manual are effective as of July
1, 1946. All official documents, instruments and reports after this
date, should be prepared on the revised forms in keeping with these
instructions, and processed in the light of the information provided
herein. Questions arising as to the interpretations of procedures
outlined in this Manual, should be referred to the Bureau of Finance,
State Department of Education.

J. D. FALLS, Chief
Bureau of Finance

KENNETH T. MARSHALL,
Assistant Director of Finance

1015

INSTRUCTIONS FOR USING THE UNIFORM FINANCIAL
ACCOUNTING SYSTEM FOR KENTUCKY
SCHOOL DISTRICTS

PART I—SOME LEGAL AUTHORITIES OF
SCHOOL OFFICIALS

I—STATE BOARD OF EDUCATION

Section 156.070 KRS defines the powers and duties of the State
Board of Education as follows: “ (1) The State Board -,of Education
shall have the management and control of the common schools .....
(2) The State Board of Education may, on the recommendation and
with the advice of the Superintendent of Public Instruction, pre-
scribe, print, publish and distribute at public expense such rules,
regulations, courses of study, curriculums, bulletins, programs, out-
lines, reports and placards as it deems necessary for the efficient
management, control and operation of the schools under its jurisdic-
tion.”

A State Board Regulation, based 011 Sections 156.130, 156.160,
156.230, 157.050, 157.052, and 157.053 KRS—“The Superintendent
of Public Instruction is hereby directed at his discretion to withhold
installments of the State'Per Capita and Equalization Fund from any
school district of the State which fails to file or to have on file in the
State Department of Education approved budgets, salary schedules,
bonds, or any and all reports as required by the Statutes or the rules
and regulations of the State Board of Education or for failure to file
any and all information requested of such school district by the De-
partment or any division or subdivision thereof.

II—STATE SUPERINTENDENT
1. Forms and Blanks—Section 156.160—10—11 KRS provides
that the Superintendent of Public Instruction shall prepare or cause
to be prepared, and submit for approval and adoption by the State
Board of Education:

“ (10) Rules and regulations governing the preparation of budg-
ets and salary schedules for the several school districts
under the. management and control of the State Board of
Education.”

“(11) A uniform series of forms and blanks, educational and
financial, including forms of contract, for use in the sev-
eral school districts.’ ’

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2. Supervision—Section 156.200 KRS gives to the Superinten-
dent of Public Instruction, by and through the cooperation of his
assistants. the power to “receive and examine all reports required by
law or by the State Board of Education and, in person or through his
assistants. shall examine and advise on the expenditures, business
methods and accounts of all boards of education and all institutions
placed under the management and control of the State Board of
Education. He shall see that all financial and educational accounts
are accurately and neatly kept and that all reports are made accord-
ing to the forms adopted by the State Board of Education.”

3. Authority Under State Board—Section 156.130 KRS author-
izes that “The Superintendent of Public Instruction shall be the
executive officer of the State Board of Education in its administration
of all public education placed under its management and control, and
shall perform such duties as are assigned to him by the board. He
shall be responsible for the administration of the Department of
Education. He shall execute, under the direction of the State Board
of Education, the educational policies decided upon by the Board, and
shall direct. under general rules and regulations adopted by the
Board. the work of all persons engaged in the administration of the
common schools, public higher education for negroes, and public
vocational education and vocational rehabilitation.”

III—LOCAL BOARDS OF EDUCATION

1. Nature and Corporate Powers—Section 160.160 KRS pro-
vides that “Each Board of Education shall be a body politic and
corporate with perpetual succession. It may sue and be sued; make
contracts; purchase, receive, hold and sell property; issue its bonds
to build and construct improvements; and do all things necessary to
accomplish the purposes for which it is createc .”

2. General Powers and Duties—Section 160.290—1—2 KRS pre-
scribes other powers and authority of boards of education;

“(1) Each board shall have control and management of all
school funds and all public school property of its district
and may use such funds and property to promote public
education in such ways as it deems necessary and proper.

(2,) Each board shall make and adopt, and may amend or re-
peal, rules, regulations and by-laws for its meetings and
proceedings for the government, regulation and manage-
ment of the public schools and school property of the dis-
trict, for the transaction of its business. . . .”

1017

3. Per Diem and Expenses—Section 160.280 KRS permits
members of county boards of education to draw five dollars per diem
and their actual expenses for each regular and special meeting at-
tended, but “In no case shall the expenses (and) or per diem of any
member exceed one hundred dollars per annum,” or a total of $500
for the entire board during any one fiscal year.

4. The School Budget—(a) General Budget, section 160.470—1
KRS provides that “Each board of education shall prepare a school
budget, showing the amount of money needed for current expenses,
debt service, capital outlay, and other necessary expenses of the
schools during the succeeding fiscal year, also the estimated total
amount that will be received from the common school fund and the
amount that will be needed to be raised by local taxation, including
the rate of levy necesssary to raise such an amount. A copy of the
budget shall be filed with the clerk of the tax levying authority of
the district on or before March 20. At the same time a copy of the
budget shall be filed with the State Board of Education for its apv
proval. The clerk shall present the budget to the proper tax levying
authority when the authority convenes to make its school levy.”
(b) Close Estimate 01‘ Working Budget, section 160.470—2 KRS pro-
vides that, “Each board of education shall, if required by the State
Board of Education, prepare and submit to it not later than fifteen
days after the state per capita has been officially declared, a close
estimate or working budget which shall conform to the rules and regu-
lations prescribed by the State Board of Education, and which shall
be consistent in its major divisions with the general budget previously
prepared.” (0) Not to Exceed Budget—section 160.550 KRS stipu-
lates that “No superintendent shall recommend and no board mem-
ber shall vote for an expenditure in excess of the income and revenue
of any year, as shown by the budget adopted by the board and ap-
proved by the State Board of Education, except for a purpose for
which bonds have been voted or in case of an emergency declared by
the State Board of Education.” A board of education may borrow
not to exceed seventy-five per cent of the anticipated revenue, but
said loan must be paid within the fiscal year in which it is borrowed.

5. Salary Schedule—Section 161.150 KRS prescribes that
“Each school district shall pay its teachers according to a salary
schedule based on training, quality of service, experience, and such
other items as the State Board of Education approves. A copy of the
salary schedule prepared by each district board shall be filed with the
State Board of Education.” This legal single-salary schedule makes

1018

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no distinction between salaries of elementary and high-school teach-
ers, or between the salaries of white and colored teachers regardless
of teaching levels. Where teachers are paid for “ Quality of Service,”
calculations of increments should be determined quantitatively.
Quality of Service, as defined by the State Board of Education, is
Extra Service, which refers only to supervision, and extra school
activities and responsibilities outside of the regular class periods. No
factor extraneous to generally recognized school activities may be
considered in building a salary schedule. Strict adherence to the
following will greatly aid in the preparation of the Salary Schedule:

(1) Set up sufficient revenue for teachers salaries before de-
duction for contingencies is made. This amount must be the same as
the total revenue allocated for teachers salaries in the Working
Budget, Form F—lO. Then subtract from this total the percentage
for contingencies (not to exceed 6%) and place the remainder in
blank following “Available Revenue for Teachers” which is the
amount required for contracted and part-time salaries.

(2) Calculate basal salary according to designated procedure
outlined on face of Salary Schedule, Form F—10—6, after local board
has fixed rate per hour of college training, rate per year of previous
experience, and the number of years of experience for which the rate
is paid.

(3) See that the length of school term in months and the num-
ber of teachers teaching such term, are correct according to the num-
ber of teachers listed on succeeding pages which should be numbered
consecutively.

(4) List each group of teachers alphabetically indicating sex,
type and number of certificate, college hours, years of experience
up to the number on which the board pays, grade or grades taught or
position filled.

(5) Substitute and part-time teachers should be paid according
to their qualifications just the same as regular full-time teachers.
Inasmuch as a salary schedule usually represents from 65 to 90 per
cent of the total current expenditures in the working budget of a
district, it must be officially adopted and signed before it can be ap-
proved by the State Board of Education. When it is so adopted it
becomes imperative that the salaries therein be paid according to
schedule. It is incumbent upon the board and the superintendent to
consider each salary therein as a binding contract between the teacher
and the board, and both superintendent and board of education may
be held liable for any variations thereof.

6. Minutes of the Board of Education—It is essential that the

i019

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minutes of each and every board meeting be revealing, full, complete
and replete with all transactions. ’ Before any transaction can become
officially binding, it must be [authorized by a majority vote of the
board in an official meeting. '

The minutes are the basic records of financial accounting, and
represent the formal records for all legal procedures. When accounts
are audited these records will be fundamental in checking the legality
of all business transactions.

Each and every policy and act of the board, every bill paid, and
every obligation incurred, must be ordered and approved by the
board of education in session, and recorded in pages numbered con-
secutively in the minutes of the board.

IV—FISCAL COURT OR LEVYING AUTHORITY

1. The Levy—When a budget has been submitted to the fiscal
court, it is the duty of the fiscal court to make the levy therein recom—
mended. Section 160.460 KRS prescribes that “All school taxes shall
be levied by the fiscal court of each county except in independent
school districts embracing cities of the first four classes when the
boundary lines of independent districts in such cities are coterminous
with the municipal limits of such cities. In such districts the tax
shall be levied by the governing body of the city. The tax levying
authority shall levy an ad valorem tax at the rate specified by the
district board of education and approved by the State Board of Edn~
cation, within the limits prescribed in KRS 160.480.

Note, for example, the following court decisions: (a) Madison
County Board of Education V. Madison County Fiscal Court, 246 Ky.
20]. “County Board of Education is judge of needs of school dis-
tricts and rate of taxation to be levied to meet board’s requirements.
Fiscal court must make levy demanded within statutory limits in
absence of bad faith or inclusion of illegal items in budget. Where
board demands rate patently insufficient to meet budget require-
ments, fiscal court must make adequate levy within statutory lim-
its.” (b) Further, in the case of the Elliott County Fiscal Court v.
Elliott County Board of Education, 193 Ky. 66, 234 S. W. 947, the
following is set forth: “Where the county board of education pre—
pares and submits to the fiscal court a detailed expense budget for
the succeeding year, it is incumbent on the fiscal court to make a
levy for the amount required unless the board acted corruptly or in

bad faith, or embraced in their expenditures items not authorized by
law.”

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V——LOCAL SUPERINTENDENT or SCHOOLS

1. Preparation of Reports—Section 160.390-2 KRS reads as
follows: “The superintendent shall devote himself exclusively to his
duties. He shall exercise general supervision of the schools of his
district, examine their condition and progress, and keep himself in-
formed of the progress in other districts. He shall prepare or have
prepared all budgets, salary schedules and reports required of his
board by the State Board of Education.”

2. Outgoing Sapertntcndent~$ection 160.400 KRS states that
“An outgoing superintendent shall, before his last month’s salary is
paid, make all reports required by law to date of his retirement and
shall have information assembled to date Of his retirement for any
reports to be made by the incoming superintendent.”

VI—SECRETARY OF BOARD

Section 160.440 KRS provides that “Each board Of education
shall appoint a secretary for a term of one, two, three or four years.
The secretary shall not be a member Of the board of education. The
board of education of any district may appoint its superintendent as
secretary, and the board of education of an independent school dis-
trict embracing a city of the first or second class, may appoint its
business manager or assistant superintendent of schools in charge of
business affairs as secretary. The board may fix a reasonable salary
for the secretary. The secretary shall keep the records of the board
and perform other duties imposed upon him by the board. All orders
of the board must be signed by the secretary and counter-signed by
the chairman of the board. The secretary shall be custodian of all
securities, documents, title papers and other papers of the board under
such conditions as the board may direct. The secretary, when other
than the superintendent, shall make all records of the board available
to the superintendent at any time and shall furnish the superinten-
dent Of schools such information .as is revealed by his records at any
time upon the request of the superintendent.”

VII—TREASURER OF BOARD

Under Section 160.560—1—2 it is mandatory that “(1) Each
board of education shall elect a treasurer for the board. (2) The
treasurer shall execute an official bond for the faithful performance
of the duties of his office to be approved by the local board and the
State Board of Education.” The treasurer shall report all funds
due the Board and deposit all such funds in the designated depository.
The treasurer should use the Treasurer’s Monthly Report, Form F—45,

1021

in making his report .to the secretary; said report should be accom-
panied by duplicate deposit slips or tickets. A treasurer cannot be
paid a salary as such.

VIII—AUDITS

Annual financial accounts shall be audited as soon after June 30
as possible by an auditor or accountant from the Bureau of Finance,
State Department of Education.

IX—THE SCHOOL- LAW

The first step toward keeping within the law is to know the laws
and their interpretations. This, Within itself, is not so easy. Yet, it
is theiduty of superintendents and boards of education to familiarize
themselves with the laws relating to their respective duties. When in
doubt, they should secure sound and reliable legal advice, or call upon
the State Department of Education for guidance.

It is of little value to know the law, if it is not followed. Admin-
istrators should not only know the salient points of the school law
governing their official conduct, but they should also observe the man-
dates of the law in the performance of their various duties. Whenever
patrons of a district question the authority for any procedure in the
schools, the school officials should be readily informed and willing
to enlighten the citizens.

Since expenditures are limited by law to the amounts allocated
to the different major expenditure classifications in the close estimate
or working budgets of the districts, the same financial procedures
must be adhered to in budget making and in expenditure classifica-
tion.. Therefore, there is an absolute necessity in having a state ac-
counting system that applies to all school districts uniformly.

PART II—THE ACCOUNTING SYSTEM
The Kentucky Uniform Accounting System primarily comprises
two parts: (a) budget receipts and (b) disbursements.

I—THE BUDGET

1. Definition—A budget is an estimate of receipts and proposed
expenditures for a given fiscal year and for a planned purpose, ex-
pressed in appropriation and revenue acts, ordinances, or resolutions
(estimates must be approved by the board of education).

2. The General School Budget is the general financial plan for a
school system, large or small, for the ensuing fiscal year. It sets forth:
(a) Estimated receipts from sources other than district tax, (1))

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Sources and income of district taxation, (c) Tax Levy, and estimated
expenditures. It is due in the office of the Bureau of Finance of the
State Department of Education on or before March 20 of each year.

3. The Close Estimate or Working Budget is made in compli-
ance with the law, and pertains to the particular school district for
which a levy has been made. The close estimate or working budget
is really the operating budget. It is made in triplicate and two copies
are filed with the State Department of Education for approval. This
part of the budget is due on or before July 15 of each year. It is the
administrator’s blueprint for the fiscal year, and should be looked
upon as a contractual obligation of expenditures.

4. Preparation—The preparation of a school budget is not a
simple task to be performed in a few hours. It requires much time,
information, scrupulous care, accurate data as to the education needs
and financial ability of the district, and the cooperative efforts of
administrators and the board. Advice and assistance of public-spirited
citizens. would be very helpful and should be welcomed.

It is noted (section 160.470 KRS) that the responsibility of pre-
paring the school budget is placed by law upon the board of education.
As the professional advisor and executive officer of the board, the
superintendent is held responsible for the success of the school system.
It is, therefore, his duty and responsibility to see that this important
task is performed with the utmost care and financial soundness.

It should be borne in mind that no activity involving expenditure
0f public funds can be legally carried out unless provided for in the
working budget approved by the local and State boards of education.

Superintendents can avoid errors of the past by observing these
three steps: (a) Know what data are needed for building a sound
budget; (b) obtain and properly classify these data and (c) base all
estimates of receipts and disbursements upon all reliable information
thus acquired.

5. Information concerning receipts and expenditures. a. Es-
timating the income—Proceed with equal care and accuracy in Oh-
taining and classifying data relative to anticipated revenue. The local
superintendent must have a fairly definite idea of the amount of in—
Come expected in order that he may know what sort of an educational
Program he may plan. This may be predicted with a reasonable de—
gree of accuracy if certain facts are available. Among these are: (1)
sources of revenue, (2) the ratio of amounts previously collected and
amounts certified to be raised for a similar period, (3) the trend of
income from other than local sources, (4) the trend in local assessed

1023

valuations over a period of years, and (5) a fair knowledge 'of the
laws relating to levying and collecting school taxes.

b. Sources of this informatiow—The most reliable sources of
such information are (1) county assessor, (2) county court clerk, (3)
sheriff, (4) special tax collector, (5) State Tax Commission, (6) State
Auditor, and (7) State Department of Education.

c. Sources of school revenue—A careful study should be made
of the sources as well as the amounts of school revenue, including (1)
federal and state aid, (2) district funds, (3) subdistrict taxes, (4)
transferred tuition, and (5) the various types of non-revenue receipts.

The superintendent should familiarize himself especially with
the manner of collecting taxes on bank shares, polls, and taxpaying
franchise corporations within the school district. Considerable school
money may be lost every year in school districts by overlooking these
and other sources of local revenue.

See KRS Sections: 132.010 to 132.990; 133.010 to 133.990;
134.010 to 134.990; and 136.010 to 136.990.

PART III—FORMS USED IN THE UNIFORM FINANCIAL AC-
COUNTING SYSTEM

“Adequate financial information and accurate records and re-
ports are the foundation and framework for an efficient administra-
tion of any school system; without such information the superstruc-
ture of the system is not well buttressed.”1 School officials and em-
ployees need financial information in the daily administration of the
schools.

Accurate accounting for school moneys is a basic obligation of the
local board of education, which is the agency that is directly respon-
sible to the taxpayers .for all phases of the educational program.

Kentucky’s financial accounting system for schools has been so
revised as to reflect the most useful and helpful financial information
through the improved reports and financial statements. The various
accounting records and forms are so drawn as to make available ade-
quate and accurate information for the sound financial accounting
of all school funds. They have been so planned as to: (1) assist
school executiv