Chapter 3.1


3.1 - What are the Type of School District Expenditures?

We've covered the two major sources of state funding over the last several weeks and now we move on to local revenues and the cost drivers that impact local school district budgets. Over the coming weeks, we'll review change over time in expenditures and local revenue, highlighting state and federal mandated costs and their impact on local revenues. But first, here's a review of the types of school district operating expenditures and their uses.

Whether a school district has a $200 million budget or a $10 million budget, the accounting structure driving those budgets are similar. Expenditures are assigned a function and object. Function and object codes are dimensions of the state’s accounting system for school districts. A function code is used to describe what the program or function is for that expenditure in the operation of the school district. An object code is used to describe "which service or commodity is obtained as the result of a specific expenditure." A look at the object level expenses allows a comparison of expenses by specific categories. We have 8 major object codes in the school accounting system as follows:

  • Object 100—Personnel Services: Salaries for all school district employees.
  • Object 200—Personnel Services: Benefits provided to school employees.
  • Object 300—Professional and technical services (for example legal counsel and local auditors
  • Object 400—Purchased property services (for example contracted transportation and custodial services)
  • Object 500—Other Purchased Services (includes tuition payments to charter schools)
  • Object 600—Supplies (classroom materials, utilities and energy, books and software)
  • Object 700—Property
  • Object 800—Other
Over 80% of total expenditures are covered by objects 100, 200, 300, and 500, all of which represent purchased services and employee compensation for services.

Personnel Services: Salaries, object 100, are defined as "gross salaries paid to employees of the school district who are considered to be in positions of a permanent nature or hired temporarily, including personnel substituting for those in permanent positions." These include professional staff, such as teachers and administrators, and support staff, such as in-house custodial workers and some instructional support staff.

Personnel Services: Benefits, object 200, are defined as amounts paid by the LEA on behalf of employees that are not included in gross salary, but are in addition to that amount, such as fringe benefit payments for healthcare, retirement, professional development, and social security payments.

Purchased professional services, object 300, are defined as purchased "services that by their nature require persons or firms with specialized skills and knowledge, including some services of architects, engineers, auditors, dentists, medical doctors, lawyers, consultants, teachers, accountants, tax collectors etc. For example, instructional and non-instructional services provided to the school district by an intermediate unit (IU) would be classified an object 300 expenditure.

Purchased property services, object 400, are defined as purchased "services to operate, repair, maintain, and rent property owned and / or used by the LEA and are performed by persons other than the school district's employees."

Other purchased services, object 500, are services not included under object 300 or 400 that are provided to/for the school district by outside entities that include purchased transportation services, tuition to charter schools, nonpublic schools, career and technical schools and other educational institutions as required by law, and food service management services.

Supplies, object 600, are defined as "amounts paid for material items of an expendable nature that are consumed, worn out, or deteriorate in use; or items that lose their identity through fabrication or incorporation into different or more complex units or substances," including classroom materials, energy and fuel, food, books, and software.

Property, object 700, are defined as "expenditures for the acquisition of fixed / capital assets, including expenditures for land or existing buildings and improvements of grounds; initial equipment; additional equipment and replacement of equipment."

You can use object code data expressed as a percentage of total operating expenditures to compare districts or to compare to the statewide average. The object code data provides a big picture, quick summary of school district spending.

In sum, there are many different types of expenditures in a school district budget. The object expenditures that have had a significant impact on school district budgets are charter school tuition (562 sub-object within the 500 - Other Purchased Services) and pensions (230 sub-object within the 200 - Benefits). The interactive graphic below illustrates statewide the overall change in object-level expenditures from to . During this time, object 200 (primarily pensions) and object 500 (charter schools and other tuition) had the largest change.

Click on the image link below to view our interactive Infogram illustrating the object-level expenses on a state wide basis.

The largest single share of school district spending statewide is object 100 (salaries) at about 42.58% of school district operating expenditures in 2016-17.

However, as illustrated in the Infogram, salaries as a percent of operating expenditures has been dropping year over year from 50.07% in 2010-11. While decreasing over time as a share of operating expenditures, the overall dollar amount in salaries in 2016-17 was $11.4 billion, $540 million less than dollar amount in salaries in 2010-11 ($11.54 billion) or a total six-year decrease of -1.13%.

Simultaneously, however, pension costs have grown most significantly from 2.82% in 2010-11 to 12.60% in 2016-17. With the massive growth in pension expenses for school districts, object level expenditure summaries now include breakout codes for pension (230) and Social Security (220) payments made by school districts. Object Code 230 (pension costs) represents the total pension cost without offsetting state reimbursement.