CFO explains January financial statement: encumbrances and apportionment timing affect apparent budget percentages

At the Feb. 25 meeting, the district’s finance lead explained why the January 2025 budget status report appears to show expenditures above the year-to-date benchmark and revenue below it.

Jennifer (CFO) told the board the report includes both actual expenditures and encumbrances (open purchase orders), which represent future payments for contracts such as custodial services, running start, and utilities. Including those encumbrances inflates the apparent percent spent; when measured using only the actual expenditures column, the district is close to where it “should be” for January (about 41.5% of the year elapsed).

Jennifer also explained that state apportionment payments are not distributed evenly across months. She said the state pays apportionment at irregular monthly rates (for example, low November payments and larger payments in later months), which causes revenue to appear low in some months and high in others. The fund-balance chart shown to the board illustrated seasonal cash-flow swings driven by property-tax receipts and the apportionment schedule.

Why it matters: Understanding how encumbrances and apportionment timing affect monthly budget reports helps board members and the public interpret the district’s fiscal position and cash-flow needs. The CFO said these timing issues are why the district maintains a fund balance to handle low‑cash months.

The CFO answered board questions and described how encumbrances total roughly $31 million in future payments reflected on the report; she recommended reviewing the actuals column for a clearer month-to-month picture. No changes to policy or budget allocations were approved at the meeting.