Section 110.50  Expenditure Accounting

a)         Transactions recorded in the appropriation, expenditure, and encumbrance ledger are commonly referred to as expenditure type transactions and represent the payment of cash or the establishment of an obligation (encumbrance) without creating an asset or without canceling a liability. For example, payment of a teacher's salary is an expenditure, but cash disbursed to purchase a United States Treasury Bill is not an expenditure (balance sheet only type) since a concurrent right is created to receive cash at a later date.

b)         There are eleven classification groups (referred to as dimensions) which may be used to describe expenditure transactions. Each dimension is composed of mutually exclusive items or categories of information. An LEA must use the dimensions applicable to its operations to establish a chart of accounts for use in maintaining accounting records and generating management reports. Presented below are the dimensions followed by a brief discussion of each. It should be noted that certain dimensions might be combined into a single account number when an LEA develops its chart of accounts.

c)         Eleven Classifications Listed and Discussed

1)         "Fiscal Year" Fiscal year denotes a twelve-month period of time to which the annual budget applies and at the end of which an LEA determines its financial position and the results of its operations. In some instances, funds are appropriated for a program or activity which may extend into another fiscal period which creates a need for identifying money by fiscal year or, in some cases, by project year (for federal programs). For example, if teachers are employed on a nine-month basis but are paid in twelve equal installments, including one in July and one in August of the following fiscal year, the payroll for these staff members should carry a fiscal year code of the previous fiscal year rather than the one in which they were paid.

2)         "Fund" This dimension is discussed in Table A of this Part.

3)         "Source of Funds" This dimension is used to relate expenditure transactions to the source of categorical funding. It provides the capability of exercising budgetary control and the preparation of special reports. This dimension is not applicable to those transactions which cannot be related to a specific source of funding.

4)         "Instructional Organization" The general types of schools or other organizational entities providing instruction are included in this dimension. Examples of instructional organization would include Elementary, Middle/Junior High School, and High School.

5)         "Operational Unit" The term is used to denote the location of education activities for organizational purposes. It is the site of a physical plant which houses an organizational unit. These units correspond to individual schools, in most cases, and can be used to designate school cost centers. In other words, budgets and expenditures may be made for each school or operational unit. Such units are locations of specific schools, of transportation, of administration, of warehouses, etc.

6)         "Function" Function means the action or purpose for which a person or thing is used or exists. Function includes the activities or actions which are performed to accomplish the objectives of the enterprise. The activities of an LEA are classified into six broad areas:  Instruction, Supporting Services, Community Services, Nonprogrammed Charges, Debt Services, and Provision for Contingencies. Functions and subfunctions consist of activities which have somewhat the same general operational objectives. Furthermore, categories of activities comprising each of these divisions and subdivisions are grouped according to the principle that the activities should be combinable, comparable, relatable and mutually exclusive.

7)         "Object" This dimension is used to describe the service or commodity obtained as a result of a specific expenditure. The object categories are Salaries, Employee Benefits, Purchased Services, Supplies and Materials, Capital Outlay, Other, Transfers, and Tuition. These eight broad categories are further subdivided into subobjects for more detail about the service or commodity acquired.

8)         "Job Classification Activity" Activity assignment refers to a description of the activities assigned to a staff member. This is a dimension used for relating financial information to the various staff assignments so as to interrelate staff activities to a program and its cost.

9)         "Term" Term is a division of the school year (the 12-month period of time denoting the beginning and ending dates for school accounting purposes) which may be divided into regular and summer terms, semesters, trimesters, or quarters.

10)         "Subject Matter Area" This dimension describes a grouping of related subjects or units of subject matter under a heading such as English or Agriculture.

11)         "Program" Program may be defined as a group of interdependent, closely-related services and/or activities progressing toward or contributing to a common objective or set of allied objectives. The program dimension provides the LEA the framework to classify expenditures by program to determine cost. As an example, to gather instructional program information, only direct costs are classified to the instructional function (classroom instructional costs only), and any other costs are classified as support services. For example, special education transportation costs are classified to a support service function (Transportation) even though these costs relate to the special education program. The program dimension allows agencies to charge program costs, instructional and support, directly to the benefiting program. Use of this dimension allows an LEA to classify support services to both programs and functions.

(Source:  Amended at 18 Ill. Reg. 5178, effective March 22, 1994)