Wellesley Public Schools: Fiscal Year 2026 Budget
Basis of Accounting
Wellesley Public Schools utilizes a modified accrual method of accounting. Modified accrual accounting recognizes revenues when they become available and measurable. Measurable means that the amount can be reasonably estimated. Available means that the revenues collected during the current year or soon thereafter are accessible to pay current liabilities. Expenditures are recorded when the liabilities are incurred. An encumbrance is a commitment of funds for contracts not yet performed or goods not yet received. An encumbrance is created when a contract is signed or a purchase order is issued. At year end, the purchase order is recorded as a reservation to fund balance. Although not considered to be Generally Accepted Accounting Procedures (GAAP) expenditures, encumbrances are treated as expenditures on a budgetary basis of accounting. 13 School Department Funds Wellesley utilizes fund accounting as a means of organizing the financial records into multiple, segregated locations. A fund is a distinct entity within the municipal government in which financial resources and activity (assets, liabilities, fund balances, revenues, and expenditures) are accounted for independently in accordance with specific regulations, restrictions or limitations. There are four main funding sources for the Wellesley Public Schools: General Fund, Grant Funds, Revolving Funds and Capital Funds. General Fund revenue is derived from three sources: local property taxes, state education aid (Chapter 70), and budgeted offsets. Chapter 70 refers to the school funding formula created through the Student Opportunity Act. In November 2019, the Massachusetts State Legislature passed an Act Relative to Educational Opportunity for Students, commonly known as the Student Opportunity Act (SOA). The Act makes significant changes to the Chapter 70 formula, previously updated in 1993 through the passage of the Education Reform Act. The Act establishes new, higher foundation budget rates in five areas: benefits and fixed charges, guidance and psychological services, special education out of district tuition, English learners, and low-income students, all to be phased in over an seven-year period (FY’23-FY’29). In Wellesley, Chapter 70 funds account for $10,345,036 or 11.35% of the total FY’25 budget. Local property taxes are our primary funding source and account for $75.76 million or 83.18% of the total FY’25 budget. With the reliance of local property taxes, the School Committee and School Administration are mindful in developing a budget that is fiscally responsible as indicated by the annual Budget Guidelines. The expenses charged to the General Fund are the core educational costs including administrator, teacher, and staff salaries; instructional materials; textbooks and library materials; special education; math and literacy support; transportation; and professional development. Cash Capital are budgeted general fund revenues dedicated to smaller equipment or maintenance projects. In FY’26, the Select Board set aside $8.5M for all cash capital projects. The Town’s budget preparation manual includes a definition that the threshold for cash capital items is $10,000. The schools cash capital account funds new and replacement information technology. When resources allow, the district will also use cash capital funds to replace furniture, fixtures, and equipment (FF&E). Grant Funds are awarded in one of five methods: entitlement, allocation, continuation, other non-competitive and competitive processes and must be used for their stated purpose. There are three main sources of grant funds: Federal, State and Private. Examples of these funds include: Federal: Title I, Title IIA, Title III, Title IV
13 Massachusetts Department of Elementary and Secondary Education, End-of-Year Financial Reporting Instructions: Introduction.
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