Academic Employee
A district employee who is required to meet minimum academic standards as a condition of employment. Note that this could be an academic administrator – see Educational Administrator, below.
Account Code
A sequence of numbers and/or letters assigned to general ledger accounts to classify transactions by fund, object, activity, etc.
Accounts Payable
Amounts due and owing to persons, business firms, governmental units or others for goods and services not yet paid.
Accounts Receivable
Amounts due and owing from persons, business firms, governmental units or others for goods and services provided, but not yet collected.
Accrual Basis
The method of accounting that calls for recognizing revenue/gains and expenses/losses in the accounting period in which the transactions occur regardless of the timing of the related cash flows. (Contrast with cash basis.)
Activity
A set of institutional functions or operations related to an academic discipline or a grouping of services.
Actuarial Basis
A basis used in computing the amount of contributions to be made periodically to a fund or account so that the total contributions plus the compounded earnings will equal the required payments to be made out of the fund.
Administrator
For the purpose of Education Code Section 84362, “Administrator” means any employee in a position having significant responsibilities for formulating district policies or administering district programs. Note that there are academic and classified administrators/managers.
Adoption Budget
The district budget that is approved by the board in August, after the state allocation is determined.
Allocation
Division or distribution of resources according to a predetermined plan.
Annual Appropriation Limit (Gann Limit)
In California, all governmental jurisdictions, including community college districts, must compute an annual appropriation limit based on the amount in prior years adjusted for changes in population, cost-of-living, and other factors, if applicable (Article XIII-B of the State Constitution). Calculated on CCSF 311 report.
Appropriation
An allocation of budgetary funds made by a governing board for specific purposes and limited as to the time period in which it may be expended.
Apportionment
Federal, state or local monies distributed to college districts or other governmental units according to legislative and regulatory formulas.
Apportionment – Advance
In July (or whenever a budget is enacted), CDE and the Chancellor’s Office determine monthly allocations to districts from July through January based on the “advance.” The advance is based on prior–year funding levels adjusted by the estimated statewide change in K–12 average daily attendance (ADA)/CCC enrollment growth, any applicable COLA, local property tax estimates, and CCC fee revenue estimates.
Apportionment – First Principal (P-1)
In February, CDE and the Chancellor’s Office use actual ADA and enrollment information from the fall, as well as revised property tax estimates, to recalculate monthly payments for each district. These revised estimates, known as the “first principal apportionment” (or P–1), are used to make payments from February through May.
Apportionment – Second Principal (P-2)
The “second principal apportionment” (or P–2) uses revised attendance/enrollment information up to April 15 and is used for the June payment for each district.
Assessed Value
The value of land, homes or businesses set by the county assessor for property tax purposes. Assessed value is either the appraised value of any newly built or purchased property or the value on March 1, 1975 of continuously owned property, plus an annual increase. This increase is tied to the California Consumer Price Index but may not exceed 2 percent per year.
Assessment Districts
A geographical area—much like a school, water or college district—created by residents to pay for special projects, such as capital improvement programs.
Asset Management
Managing assets, such as excess district property or facilities, to reduce costs or generate revenue. Common examples are golf driving ranges and leased property for private development.
Attendance Accounting
Apportionment is based on student attendance accounting mechanisms which can be calculated in a variety of ways, including Weekly Student Contact Hours, Daily Student Contact Hours and Actual Hours of Attendance (Positive Attendance). More details can be found in the Chancellor’s Office Student Attendance Accounting Manual.
Audit
An examination of financial statements and related documents, records, and accounts for the purpose of determining the propriety of transactions, whether transactions are recorded properly and whether statements drawn from accounts reflect an accurate picture of financial operations and financial status. Audits may also include reviews of compliance with applicable laws and regulations, economy and efficiency of operations and effectiveness in achieving program results. The general focus of the annual audit conducted on the district is usually on financial statements and compliance with certain regulations.
Audit Report
The report prepared by an external or independent auditor. As a rule, the report includes: a) a statement of the scope of the audit; b) explanatory comments (if any) concerning exceptions by the auditor as to application of generally accepted auditing standards; c) opinions; d) explanatory comments (if any) concerning verification procedures; e) financial statements and schedules; and f) statistical tables, supplementary comments, and recommendations.
Auditor’s Opinion
A statement signed by an external or independent auditor which states that she or he has examined the financial statements of the entity in accordance with generally accepted auditing standards (with exceptions, if any) and expresses an opinion on the financial position and results of operations of some or all of the constituent funds and balanced account groups.
Auxiliary Operations. Service activities of the college, the finances of which must be accounted for separately. Food service, bookstores, dormitories, and certain types of foundations are examples of auxiliary operations. These will appear as separate funds (rather than the general fund) in budget documents.
Average Daily Attendance
The unit that was used as the basis for computation of support for California Community Colleges until July 1, 1991. One requirement of State law is that the regular college day must be maintained not less than three hours per day, per five-day college week, for thirty-five weeks (175 days times three hours per day equals 525 hours = 1 ADA). The unit now used for computation of support is Full-Time Equivalent Student (FTES).
Balance Sheet
A basic financial statement that shows assets, liabilities, and equity of an entity as of a specific date, in accordance with GAAP.
Base Year
A year to which comparisons are made when projecting a specific condition.
Basic Aid Districts
There are a few districts in which the property tax revenues generated in the district are equal to or greater than the state allocation amount generated through the state apportionment formula. They receive the amount of the revenue generated from local property tax and fee revenues, and are known as “basic aid districts.” There are a handful of basic aid districts, and MCCD is one of these. Basic aid status sometimes exempts such districts from other Title 5 provisions or penalties.
Block Grant
A fixed sum of money, not linked to enrollment measures, provided to a college district by the state. Now a component of the new SB 361 budget formula.
Bonds
Investment securities (encumbrances) sold by a district through a financial firm for the purpose of raising funds for various capital expenditures. A written promise to pay a specified sum of money, called the face value, at a specified date or dates in the future, called the maturity date(s), together with periodic interest at a specified rate.
Bonded Debt Limit
The maximum amount of bonded debt for which a community college may legally obligate itself. The total amount of bonds issued cannot exceed a stipulated percent of the assessed valuation of the district.
Budget
A plan of financial operation for a given period for specific purposes consisting of an estimate of proposed income and expenditures.
Budget Document
A written statement translating the educational plan or programs into costs, usually for one future fiscal year, and estimating income by sources to meet these costs.
Budget Act
The legislative vehicle for the State’s appropriations. The Constitution requires that it be passed by a two-thirds vote of each house and sent to the Governor by June 15 each year. The governor may reduce or delete, but not increase, individual items.
Budget Change Proposals (BCPs). Documents developed by the Chancellor and provided to the Governor to request changes and increases in the amount of money the state provides to community colleges.
Capital Outlay
The acquisition of or additions to fixed assets, including land or existing buildings, improvements of grounds, construction of buildings, additions to buildings, remodeling of buildings, or equipment.
Cash
An asset account reflecting currency, checks, money orders, bank deposits, and banker’s drafts either on hand or on deposit with an official or agent designated as custodian of cash. Any restrictions or limitations as to the use of cash must be indicated.
Cash Basis
Method of accounting in which income and expenditures are recorded only when cash is actually received or disbursed.
Categorical Funds
Also called restricted funds, these are monies that can only be spent for the designated purpose. Examples: funding to serve students with disabilities (DSPS) or the economically disadvantaged, low-income (EOPS), scheduled maintenance, and instructional equipment. They are often exempt from certain requirements, for example, the Basic Skills Initiative funds are exempt from the 50% law calculations.
CCFS
The form number/name/acronym of a variety of financial status reports in the California Community College system – such as 311 for annual financial report, 311Q for quarterly reports and 320 for enrollment.
CDE
California Department of Education.
Census and Census Week
The number of students enrolled in a full semester course on the Monday of census week, which is the third week of a full semester or 20% of the course. Apportionment funding is based on enrollment at census week rather than beginning or ending enrollment.
Compensated Absences
Absences, such as vacation, illness and holidays, for which it is expected employees will be paid. The term does not encompass severance or termination pay, postretirement benefits, deferred compensation or other long-term fringe benefits, such as group insurance and long-term disability pay.
Consumer Price Index (CPI)
A measure of the cost of living compiled by the United States Bureau of Labor Statistics. These indices of inflation are calculated regularly for the United States, California, some regions within California, and selected cities. The CPI is one of several measures of economic stability or change.
Contingencies Fund (also Undistributed Reserve)
That portion of the current fiscal year’s budget not appropriated for any specific purpose and held subject to transfer to other specific appropriations as needed during the fiscal year.
Cost of Living Adjustments (COLA)
An increase in funding for revenue limits or categorical programs tied to increases in the cost of living. Current law ties COLAs to indices of inflation, although different amounts may be appropriated by the legislature.
Current Expense of Education
A term used to refer to the unrestricted general fund expenditures of a community college district in Objects of Expenditure 1000 through 5000, and 6400 for activity codes 0100 through 6700. Excluded from the current expense of education are expenditures for student transportation, food services, community services, lease agreements for plant and equipment, and other costs specified in law and regulations. Amounts expended from state lottery proceeds are also excluded. (EC sections 84362, Title 5 CCR sections 59200 et seq. This is used in the calculations for the 50% law.
Deficit
The excess of liabilities over assets or the excess of expenditures or expenses over revenues during an accounting period.
Deficit Factor. One common method for reducing funding allocations to districts in times of budgetary shortfalls or reductions is known as a deficit factor whereby each district receives only a percentage of the originally allocated funds.
Designated Income
Income received for a specific purpose.
Disabled Student Programs & Services (DSPS)
Categorical or restricted funds designated to provide services that integrate disabled students into the general college program.
Education Code
The body of law that regulates education in California. Other laws that affect colleges are found in the Government Code, Public Contracts Code, Penal Code and others. Available online at http://www.leginfo.ca.gov/calaw.html.
Employee Benefits
Amounts paid by an employer on behalf of employees. Examples are group health or life insurance payments, contributions to employee retirement, district share of O.A.S.D.I. (Social Security) taxes, and worker’s compensation insurance payments. These amounts are over and above the gross salary. While not paid directly to employees, they are a part of the total cost of employees.
Educational Administrator
Education Code Section 87002 and California Code of Regulations Section 53402(c) define “educational administrator” as an administrator who is employed in an academic position designated by the governing board of the district as having direct responsibility for supervising the operation of or formulating policy regarding the instructional or student services program of the college or district. Educational administrators include, but are not limited to, chancellors, presidents, and other supervisory or management employees designated by the governing board as educational administrators.
Educational Master Plan
Title 5, Sections 55402-55404 require that each community college district submit an educational master plan for each college and the districts as a whole. The plan addresses the educational objectives and future plans for transfer, occupational, continuing education, and developmental programs. It includes enrollment projections and related needs for ancillary services.
Encumbered Funds. Obligations in the form of purchase orders, contracts, salaries, and other commitments for which part of an appropriation is reserved.
Ending Balance
A sum of money available in the district’s account at year end after subtracting accounts payable from accounts receivable or the difference between assets and liabilities at the end of the year.
Enterprise Funds
Used to account for operations when the governing board has decided either that the total cost of providing goods and services on a continuing basis is financed or recovered primarily through user charges; or that the periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Examples include bookstore and food services funds.
Equipment
Tangible property with a purchase price of at least $200 and a useful life of more than one year, other than land or buildings and improvements thereon. (See the Budget and Accounting Manual for current dollar limits).
Estimated Income
Expected receipt or accruals of monies from revenue or non-revenue sources (abatements, loan receipts) during a given period.
Expenditures
Amounts disbursed for all purposes. Accounts kept on an accrual basis include all charges whether paid or not. Accounts kept on a cash basis include only actual cash disbursements.
Expense of Education
This includes all General Fund expenditures, restricted and unrestricted, for all objects of expenditure 1000 through 5000 and all expenditures of activity from 0100 through 6700. See Current Expense of Education.
Extended Opportunity Programs and Services (EOPS)
Categorical funds designated for supplemental services for disadvantaged students.
Faculty Obligation Number (FON)
The annual figure provided to each district by the Chancellor’s Office for the number of full-time credit faculty positions required to comply with “75/25” goals.
FCMAT
Fiscal Crisis and Management Assistance Team, a non-profit organization that provides fiscal advice, management assistance, training and other related educational business services.
Fee
A charge to students for services related to their education. The System Office annually publishes a list of mandated, authorized and prohibited fees.
Fifty-Percent Law (50 % Law)
The “50 Percent Law”, as defined in Education Code Section 84362 and California Code of Regulations Section 59200 et seq., requires California Community College districts to spend each fiscal year 50% of the current expense of education for payment of salaries of classroom instructors. The intent of the statute is to limit class size and contain the relative growth of administrative and non-instructional costs. The Annual Financial and Budget Report (CCFS-311) includes actual data on the district’s current expense of education and compliance with the 50% Law.
Fiscal Year
Twelve calendar months; for governmental agencies in California, it begins July 1 and ends June 30. Some special projects have a fiscal year beginning October 1 and ending September 30, which is consistent with the federal government’s fiscal year.
Foundation
A separate entity created by the districts as an auxiliary organization and/or 501(c)3 to receive, raise and manage funds from private sources.
Fixed Assets
Long-lived tangible assets having continuing value such as land, buildings, machinery, furniture, and equipment.
Fixed Costs
Costs of providing goods and services that do not vary proportionately to enrollment or to the volume of goods or services provided (e.g., insurance and contributions to retirement systems).
Full-Time Equivalent (FTE) Employees
Ratio of the hours worked based upon the standard work hours of one full-time employee. For example, classified employees may have a standard work load of 40 hours per week, if several classified employees worked 380 hours in one week, the FTE conversion would be 380/40 or 9.5 FTE. FTEF may be used to refer to faculty positions.
Full-Time Equivalent Students (FTES)
An FTES represents 525 class (contact) hours of student instruction/activity in credit and noncredit courses, generally 15 semester credit hours. Full-time equivalent student (FTES) is the workload measure used to compute state funding for California Community Colleges.
Fund
An independent fiscal and accounting entity with a self-balanced set of accounts for recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein.
Fund Balance
The difference between assets and liabilities in a fund. The fund balance is measured at a specific point in time and represents the balance from a prior specific point in time, plus revenues received during the intervening time period, minus expenditures made during the same time period.
GAAP (Generally Accepted Accounting Principles) and GAAS (Generally Accepted Audit Standards)
Uniform minimum standards and guidelines for financial accounting and reporting.
Gann Limitation
A ceiling on each year’s appropriations supported by tax dollars. The limit applies to all governmental entities, including school districts. The base year was 1978-79. The amount is adjusted each year, based on a price index and the growth of the student population.
General Fund
The fund used to account for the ordinary operations of the district. It is available for any legally authorized purpose not specified for payment by other funds.
General Obligation Bonds (GO Bonds)
Debt instruments issued by districts (or other state or local public governmental bodies) to raise funds for public works and capital expenditures. These bonds are backed by the taxing and borrowing power of the entity that issues them.
General Reserve
An account to record the reserve budgeted to provide operating cash in the succeeding fiscal year until taxes and state funds become available.
Governmental Accounting
The composite activity of analyzing, recording, summarizing, reporting, and interpreting the financial transactions of a governmental entity.
Governmental Accounting Standards Board (GASB)
The national authoritative accounting and financial reporting standard-setting body for governmental entities.
Governor’s Budget
The Governor proposes a budget for the state each January, which is revised in May (the May Revise) in accordance with updated revenue projections.
Grants
Contributions or gifts of cash or other assets from a government or private organization to be used for a specified purpose, activity or facility.
Headcount
Represents an unduplicated count of students enrolled in at least one credit course.
Indirect Expenses or Costs
The elements of cost necessary in the production of a good or service that are not directly traceable to the product or service. Usually, these costs relate to expenditures that are not an integral part of the finished product or service, such as rent, heat, light, supplies, management and supervision.
Internal Control Structure
An organization plan in which employees’ duties are arranged and records and procedures are designated to provide a self-checking system, thereby enhancing accounting control over assets, liabilities, income, and expenditures. Under such a system the employees’ work is subdivided so that no one employee performs a complete cycle of operations.
Invoice
An itemized statement of charges from the vendor to the purchaser for merchandise sold or services rendered.
Lease Revenue Bonds
Bonds secured by a lease agreement and rental payments. Community colleges use lease revenue bonds to finance construction or purchase of facilities.
Levy
The imposition of taxes, special assessments, or service charges for the support of governmental activities; the total amount of taxes, special assessments, or service charges imposed by a governmental unit.
Long-term debt
A loan that extends for more than one year from the beginning of the fiscal year.
Lottery Funds
The share of income from the State Lottery, which has added about 1-3 percent to community college funding. A minimum of 34 percent of state lottery revenues must be used for “education of pupils.”
Mandated Costs
Expenditures that occur as a result of (or are mandated by) federal or state law, court decisions, administrative regulations, or initiative measures.
May Revise
The Governor revises his or her budget proposal in May in accordance with up-to-date projections in revenues and expenses.
Marginal costs
Costs incurred as a result of adding one unit of enrollment or production.
Modified Accrual Basis (modified cash basis)
The accrual basis of accounting adapted to governmental funds. Revenues and other financial resources (e.g., bond issue proceeds) are recognized when they become susceptible to accrual, that is, when they become both “measurable” and “available” to finance expenditures of the current period. “Available” means collectible in the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recognized when the fund liability is incurred (except for inventories of materials and supplies that may be considered expenditures either when purchased or when used, and prepaid insurance and similar items that may be considered expenditures either when paid for or when consumed). All governmental funds, expendable trust funds and agency funds use the modified accrual basis of accounting.
Noncredit
Courses that are taught for which no college credit is given. Adult education and basic English as a Second Language are two examples. The state reimbursement for non-credit education is less than for credit courses.
Nonresident Tuition
A student who is not a resident of California is required, under the uniform student residency requirements, to pay tuition. The fee shall not be less than the average statewide cost per student, and is set by the local board of trustees.
Object Code
The system of codes used in the California community colleges to classify budget and expenditures. The general classification numbers are:
- 1000 Certificated salaries
- 2000 Classified salaries
- 3000 Employee benefits
- 4000 Books, supplies, materials
- 5000 Operation expenses
- 6000 Capital outlay
- 7000 Other outgo
- 8000 Revenues
OPEB
Other Post-Employment Benefits, primarily retiree healthcare benefits. Operating Expenses. Expenses related directly to the fund’s primary activities. Operating Income. Income related directly to the fund’s primary activities.
Operating Budget
The current General Fund operating expenditures excluding food services, community services, capital outlay, and outgoing transfers.
Outsourcing
The practice of contracting with private companies for services such as data processing, food services, etc.
P1 and P2
See Apportionment, above.
PERS (or CalPERS) California Public Employees’ Retirement System
One of the two major retirement systems in which community college employees participate. State law requires district classified employees, districts and the State to contribute to the fund for full-time classified employees.
Proposition 13
An initiative passed in June 1978 adding Article XIII A to the California Constitution. It provided that tax rates on secured property were restricted to no more than 1 percent of full cash value. Proposition 13 also defined assessed value and required a two-thirds vote to change existing or levy new taxes.
Proposition 39
An initiative passed in 2000 that reduced the voting threshold required for local bonds from two-thirds to 55% and added conditions for proposing and using bond funds.
Proposition 98
An initiative passed in November 1988, guaranteeing at least 40 percent of the state’s budget for K-12 and the community colleges. The split was proposed to be 89 percent (K-12) and 11 percent (CCC), although the split has not been maintained.
Purchase Order
A document authorizing the delivery of specified merchandise or the rendering of certain services and charging for them.
Reserves
Funds set aside in a college district budget to provide for future expenditures or to offset future losses, for working capital, or for other purposes. There are different categories of reserves, including contingency, general, restricted and reserves for long- term liabilities.
Restricted Funds
Money that must be spent for a specific purpose either by law or by local board action. Revenue and expenditures are recorded in separate funds. Funds restricted by board action may be called “designated” or “committed” to differentiate them from those restricted by external agencies. Examples of restricted funds include the federal vocational education act and other federal program funds; state “categorical” programs such as those for disabled and disadvantaged students; state monies targeted for specific purposes, such as instructional equipment replacement; grants for specific programs; and locally generated revenues such as the health and parking fees. Funds restricted by local board action may later be unrestricted by board action.
Retiree Health Benefits
Benefits provided to retirees provide health insurance, negotiated through collective bargaining. Also called “Other Post-Employment Benefits.”
Revenue
Income from all sources.
Revenue Bonds
Bonds whose principal and interest are payable exclusively from earnings of the funded facilities operations.
Revenue Limit
The specific amount of student enrollment fees, state and local taxes that a college district may receive per student for its general education budget. Annual increases are determined by Proposition 98 formula or the Legislature.
Revolving Fund
A revolving cash account used to secure or purchase services or materials.
Rollover Budgeting
A budget constructed by rolling forward the previous year’s budget as the starting point and then making adjustments.
75/25 Ratio
The goal established by AB1725 for the ratio of classes taught by full-time faculty to those taught by part-time faculty. Districts not at the 75% level have an obligation to make progress toward the goal—a “full time faculty obligation (FTO).” Compliance is achieved through the use of the annual Faculty Obligation Number (FON).
Scheduled Maintenance
A defined schedule for major repairs of buildings and equipment. Some matching state funds may be available to districts for a scheduled maintenance program.
Shortfall
An insufficient allocation of money, which will require additional appropriations, reduction in expenditures, and/or will result in deficits.
Short-Term Debt
Debt with a maturity of one year or less after the date of issuance. Short-term debt usually includes variable-rate debt, bond anticipation notes, tax revenue anticipation notes and revenue anticipation notes.
Special Revenue Funds
A category of funds used to account for proceeds of specific legally restricted revenue for and generated from activities not directly related to the educational program of the college.
State Apportionment
An allocation of state money paid to a district on a monthly basis once the state budget is enacted.
STRS (CalSTRS) California State Teachers’ Retirement System. State law requires that school district employees, school districts and the State contribute to the fund for full- time academic employees.
Student Financial Aid Funds
Funds designated for grants and loans to students; includes federal Pell grants, College Work-Study, and the state funded EOPS grants and fee waiver programs.
Subventions
Provision of assistance or financial support, usually from higher governmental units to local governments or college districts, for example to compensate for loss of funds due to tax exemptions.
Supervisor
For the purpose of Education Code Section 84362 (the Fifty Percent Law), “Supervisor” means any employee having authority, on behalf of the district, to hire, transfer, suspend, layoff, recall, promote, discharge, assign, reward, discipline other employees, adjust their grievances, or effectively recommend such action, if the exercise of such authority is not of a merely routine or clerical nature.
Supplanting
To use one type of funds to provide goods or services previously paid for with another type of funds. Generally, it is prohibited to use state or federal funds to replace local funds.
Tentative Budget
The preliminary budget approved by the Board of Trustees in June, prior to when state allocations have been finalized.
Title 5, California Code of Regulations
The section of the California Administrative Code that regulates community colleges. The Board of Governors adopts Title 5 regulations. Available online at http://government.westlaw.com/linkedslice/default.asp?RS=GVT1.0&VR=2.0&S... 1000&Action=Welcome
TOP Code
Taxonomy of Programs, in which numbers are assigned to programs to use in budgeting and reporting.
TRANs
Tax and Revenue Anticipation Notes: instruments issued to secure short-term moneys borrowed in expectation of collection of taxes and other revenues. The notes are paid off with operating revenue.
Unappropriated Fund Balance
The portion of a fund balance not segregated for specific purposes. All assets and estimated income available for appropriation are credited to the account and General Reserve; budgeted appropriations and other obligations are debited. The net value of the account represents the Unappropriated Fund Balance.
Unencumbered Balance
That portion of an appropriation or allotment not yet expended or obligated.
Unfunded FTES
FTES that are generated in excess of the enrollment/FTES cap.
Unrestricted Funds
Generally those monies of the General Fund that are not designated by law or a donor agency for a specific purpose. They are legally regarded as unrestricted since their use is at the Board’s discretion.
Vacation Accruals
The amount of vacation accrued by employees but not yet taken. It may be shown as a liability.
Warrants
A written order drawn to pay a specified amount to a designated payee.
Work Order
A written authorization for the performance of a particular job containing a description of the nature and location of the job and specifications for the work to be performed.
WSCH
Weekly Student Contact Hours, the number of weekly hours that a student spends in classes for a full-census course (17 weeks), e.g. three WSCH for a three unit course. It is part of the formula used to determine faculty workload as well as apportionment.
Zero Based Budgeting
A budget constructed by starting each line allocation from zero – rather than the previous year’s figure – and then justifying additions.