Lost in translation: A reader’s guide to Georgia school budgets

Learn the language of school budgets in 10 minutes or less— from funding formulas to what changes your tax bill.

School budget talk can sound like a foreign language. A “deficit” does not always mean the district cannot pay its bills. “Instruction” covers more than pencils and paper. And a district can lower its tax rate and still have to advertise a tax increase.

This guide explains the words you are most likely to hear at a school board meeting, plus major budget-related rules Georgia’s county and city school districts have to follow. Some state rules can be waived under a district’s flexibility agreement with the state. Federal requirements still apply.

The basics

Budget vs. actual. A budget is a plan for what the district expects to receive and spend. “Actuals” show what it really received and spent. The two often do not match, so a smaller budget does not always mean less spending. Say a department planned to spend $10 million last year but spent only $8 million. If it budgets $9 million this year, that is a budget “cut” — but it plans to spend $1 million more than it actually spent.

Original and amended budget. The original budget is the plan adopted before the year begins. An amended budget changes that plan during the year. When officials say spending has increased or decreased, ask whether they are comparing original budgets, amended budgets or actual spending.

Fiscal year. This is the district’s money year, which generally runs from July 1 to June 30. “Fiscal 2027” means Jul 1, 2026 through Jun 30, 2027.

Where the money sits

General fund, capital projects and debt service. These are separate funds with separate jobs. The general fund pays for day-to-day costs such as salaries, electricity and transportation. Capital project funds account for major building projects and other capital work. Debt service funds pay back borrowed money and interest. “Capital outlay” describes spending on long-lasting assets, such as buildings and equipment; it is not always the name of a separate fund. When a construction project wraps up, the total budget can shrink even while everyday costs rise.

Special revenue fund. Some districts use a separate fund to account for certain revenue dedicated to particular programs, including state and federal grants. Accounting practices vary. Money dedicated to one program is not necessarily available to pay unrelated operating costs.

Transfers. Money moved between district funds. If the general fund transfers $2 million to a construction fund, the general fund has fewer resources, but the transfer creates no new money for the district. Adding together fund totals without adjusting for internal transfers can count the same money twice.

Fund balance. This represents a fund’s accumulated financial resources after accounting for obligations and other accounting adjustments. It is not the same as the bank balance. Some portions cannot be spent or are restricted to particular purposes. Others are committed or assigned by the district. “Unassigned” fund balance has no such designated purpose, but remains subject to the district’s budget and spending authorization rules.

Beginning and ending fund balance. The balance a fund starts and finishes the year with. A budget’s ending balance is a projection. A year-end financial report shows the reported result, which may later be adjusted through an audit. If the budget assumes the district will start with more money than it actually has, its projected ending balance may also be too high.

Reserve. Money held for unexpected revenue shortfalls or expenses. Georgia law generally limits allocations to a designated statutory reserve fund or account, combined with its existing balance, to 25% of that year’s total budget. The ceiling is not a required minimum. The statutory reserve account, total fund balance and unassigned fund balance are not interchangeable terms. A district’s waiver agreement and local reserve policy may also affect how the rule applies.

Cash flow. The timing of money coming in and bills going out. A district may expect enough revenue for the whole year but need cash to pay employees before property taxes arrive. That is one reason districts maintain reserves.

When spending exceeds income

Deficit and “balanced budget.” A deficit means a district plans to spend more than it brings in that year. It may use savings from previous years to cover the gap, so a deficit does not necessarily mean it cannot pay its bills. A “balanced” budget may include savings, transfers or one-time funding. A district can spend more than it brings in and still have a balanced budget.

Recurring vs. one-time money. Recurring revenue is expected to return each year. A temporary grant or sale of property provides money once. Salaries and other operating costs generally continue. Using temporary money for continuing expenses can leave a gap when that money ends.

Structural deficit. A continuing mismatch between regular revenue and regular costs. Think of a house with a weak foundation. Patching cracks in the walls may help temporarily, but the cracks keep returning because the underlying structure needs fixing. A structural deficit works similarly: savings cover the immediate gap, but the budget’s regular income still cannot support its regular costs.

How spending is sorted

Instruction, administration and support services. Instruction is spending tied directly to teaching students, with teacher pay and benefits making up a large share. Administration includes principals’ offices, as well as the central office. Support services cover such things as counselors, transportation and building upkeep. These labels describe where the money goes. They do not tell whether a cost is necessary.

Function vs. object. These are two labels for the same spending. “Function” tells what activity the money supports, such as teaching or transportation. “Object” tells what the money pays for, such as wages or supplies. A teacher’s paycheck is labeled both “instruction” and “salary.” It is one expense described two ways, so adding those totals together would count the same money twice.

Full-time equivalent, or FTE. This term means different things for employees and students. For employees, it measures how many full-time jobs their combined hours equal: Two people working half-time equals one FTE. For students, Georgia uses FTE counts to help calculate school funding, recording how many students receive different types of instruction, such as general or special education. When you see “FTE,” first ask: Are they talking about jobs or students?

Per-pupil spending. The average amount a district spends per student. Divide total spending by the number of students: $50 million spent on 5,000 students equals $10,000 per student. If enrollment falls to 4,500 but spending stays the same, the average rises to about $11,100. That does not mean the district spent more money. When comparing districts, check that the figures include the same types of spending and use the same method to count students.

Where the money comes from

Quality Basic Education, or QBE. This is the formula Georgia uses to calculate its main funding for schools. It considers how many students a district serves and the types of teaching they need. Some programs, such as special education, receive more money because they cost more to provide. This extra allowance is called a “weight.” The amount calculated for the district is its “allotment.”

Local five-mill share. Think of the state and district splitting a school funding bill. In a simplified example, the funding formula calculates $20 million, with the district expected to provide $3 million locally and the state providing $17 million. If local property wealth grows and the required local share rises to $4 million, the state would provide $16 million, assuming everything else stays the same. This is a funding calculation, not an extra 5-mill tax added to your bill. 

Local wealth and equalization. The same tax rate raises more money in a community with more valuable taxable property. Equalization is extra state funding for eligible districts whose property tax base is weaker. If a district becomes wealthier compared with other districts, that assistance may shrink. The calculation looks at taxable property per student, not families’ paychecks.

Property taxes

Millage, assessed value and the digest. Millage is the property tax rate. One mill means $1 in tax for every $1,000 of taxable assessed value. In Georgia, assessed value is generally 40% of fair market value before exemptions. Setting exemptions aside, a $200,000 home is assessed at $80,000. At 20 mills, the school tax would be $1,600. The digest records assessed property values; the net taxable digest accounts for applicable exemptions. A larger taxable digest can produce more revenue at the same rate.

Homestead exemption and taxable value. An exemption reduces the assessed value subject to a particular tax. Different exemptions may apply to the county, city and school portions of a bill. Do not assume an exemption affecting county taxes also affects school taxes.

Rollback rate and “tax increase.” When existing property values rise, the district can collect more taxes without raising its tax rate. The rollback rate is the lower rate that offsets that extra revenue. For example, if reassessed values rise 10%, a 20-mill rate would roll back to about 18.2 mills. Choosing 19 mills would lower the rate from last year but still bring in more money from that property, so the district must advertise a tax increase and hold public hearings. The advertised percentage does not tell exactly how much a bill will change. New construction is treated separately.

Education sales tax. Commonly called E-SPLOST, this is a 1-cent sales tax voters must approve. It pays for eligible capital projects, equipment and certain debt. It generally cannot pay salaries or everyday operating expenses. The district must use it for authorized purposes approved by voters. No district is required to have one.

Paying employees

Salary schedule, step and supplement. A salary schedule is a pay chart based largely on experience and education. A “step” is a move up that chart, usually after another year on the job. A local supplement is additional pay funded by the district. Some increases follow applicable state rules or contracts; others are local choices.

Benefits and employer contribution. Employee benefits, such as health insurance and retirement, cost the district money beyond salaries. For employees covered by Georgia’s Teachers Retirement System, contribution rates are set statewide: In Fiscal 2027, the district pays 22.32% of covered pay, and the employee pays 6%. These payments are required, not a local board choice. For a teacher earning $50,000 in covered pay, the district contributes $11,160 toward retirement, separate from health insurance costs. Districts make local decisions about staffing, additional pay and some optional benefits, but required benefit costs can rise even when the board gives no raise.

Rules and requirements

Mandate and special education. A mandate is something the law requires. Federal and state law require a free appropriate public education for eligible children with disabilities, generally ages 3 through 21, subject to applicable exceptions. Each child’s individualized education program, or IEP, identifies required services. A smaller grant does not eliminate those obligations. Districts still make choices about how to provide services within legal requirements.

Waiver and flexibility. Many Georgia districts have agreements with the state allowing flexibility from certain rules, potentially including class-size limits, salary schedules, certification and spending controls. The agreement determines what applies. Federal obligations and protected state requirements remain; district flexibility does not remove federal special education personnel requirements. Check the current agreement rather than assuming every district has the same waivers.

Audit. An independent financial examination. An unmodified, sometimes called “clean,” opinion means the statements fairly present the district’s finances, in all material respects, under the applicable accounting rules. An audit provides reasonable assurance, not a guarantee that every error or fraud will be detected.

What Georgia districts must do

Public budget meetings. Before adopting the annual operating budget, the board must hold at least two advertised public meetings, in different weeks, allowing residents to speak. Other qualifying hearings can sometimes satisfy this requirement.

Budgets online. Proposed and adopted operating budget summaries must be posted online. Upon request, the district must provide an electronic copy of its detailed adopted annual operating budget, in a format suitable for analysis, without charge, within three business days. The adopted budget summary must give notice of that right.

Tax increase hearings. If the proposed rate exceeds the rollback rate, the taxing authority must hold three public hearings and comply with notice requirements. At least one hearing must begin between 6 and 7 p.m.

Financial reports. Districts must submit annual budget and financial information to the Georgia Department of Education and make specified information public. These reports are separate from the annual audit.

School calendar. The baseline is 180 school days or equivalent instructional time, subject to applicable exceptions and waivers. Districts set their calendars within those rules. Calendar requirements can affect operating costs but do not establish a particular spending level.

Making sense of the numbers

Budget figures are easier to understand when you know what is being compared. For example, a smaller overall budget may reflect the end of a construction project, even while everyday operating costs rise.

These questions can help:

• Is the comparison comparable to last year’s spending or last year’s budget?
• Which fund will cover the expense?
• Is this a one-time cost or something the district will pay each year?
• Will the district use savings, and how much would remain?
• Which costs follow state or federal requirements?
• Where does the school board have flexibility?
• How would the proposed tax rate affect my bill after exemptions?

This guide covers major budget-related terms and requirements for Georgia’s county and city school districts, not every rule affecting public education. Dollar examples are illustrative. Check current statutes, contribution rates and a district’s waiver agreement before applying a rule locally.