Subtest 1 - Foundational Policies and Practices of School Leadership · 12 min read
Resources and Fiscal Management
This chapter covers Subtest 1, Competency 2: resources and fiscal management. You will learn how Florida funds its public schools through the Florida Education Finance Program (FEFP), what other federal, state and local sources a school can use, how school internal accounts must be handled, how property and inventory are managed, and how a leader ties every resource, financial or not, to instructional priorities. Questions in this area are often short and factual, such as naming an FEFP component, or practical, such as what to do with car-wash proceeds or an unapproved purchase receipt.
Why School Finance Matters to a Principal
A principal does not set the district's tax rate or write the state budget, but the principal decides how the school's share of resources is used. Every staffing plan, master schedule, purchase and fundraiser is a resource decision. The exam expects you to know the basic structure of funding, to follow accounting rules exactly, and to direct resources toward the goals in the School Improvement Plan rather than toward habit, convenience or the loudest request.
Exam Tip: When a question asks how to spend limited funds, the best answer is almost always the option that links the expense to identified student needs and school improvement goals, uses the funding source for its legal purpose, and involves the appropriate stakeholders, such as the SAC or leadership team.
The FEFP: Florida's Primary Funding Formula
The FEFP is the formula the state uses to allocate operating funds to school districts. Its central idea is equalization: each student should have access to similar educational programs and services regardless of where the student lives or the local property tax base. The formula starts with students, adjusts for the cost of the programs they receive and for differences in the cost of living between districts, and then adds specific allocations.
FEFP Formula Factors
| Factor | What It Means |
|---|---|
| Full-time equivalent (FTE) student | One student enrolled full time in a program for the school year equals 1.0 FTE; students are counted during FTE survey periods |
| Program cost factor | A weight that reflects how much more or less a program costs than the basic program, such as ESE, ESOL or career education |
| Weighted FTE | FTE multiplied by the program cost factor |
| Base student allocation (BSA) | The dollar amount per weighted FTE set by the Legislature each year |
| District cost differential (DCD) | An adjustment that reflects the relative cost of living in each district |
| Allocations (categoricals) | Additional funds for specific purposes, such as ESE guaranteed allocation, supplemental academic instruction, reading, safe schools, mental health assistance and transportation |
| Required local effort (RLE) | The property tax each district must levy, at a rate set by the state, as its share of FEFP funding |
A Worked Weighted-FTE Illustration
The following example uses invented round numbers to show how the formula works. The program names, cost factors and dollar amounts are purely illustrative and are not actual Florida values, which the Legislature sets and changes.
Illustrative Weighted FTE Calculation (invented numbers)
| Program | FTE | Cost Factor | Weighted FTE |
|---|---|---|---|
| Program A (basic) | 400 | 1.00 | 400 |
| Program B (higher-cost support) | 50 | 1.20 | 60 |
| Program C (intensive support) | 10 | 3.50 | 35 |
| Total | 460 | 495 |
Next, apply an illustrative base student allocation of $5,000 and an illustrative district cost differential of 1.00: 495 weighted FTE x $5,000 x 1.00 = $2,475,000 in base funding. If the district cost differential were 1.02 instead, the result would be 495 x $5,000 x 1.02 = $2,524,500. Notice what drives the result: the number of students, the programs they are enrolled in, and the accuracy of the FTE count.
The practical lesson for a school leader is that FTE reporting matters. If students are not correctly coded in the programs they actually receive, such as ESOL or ESE services, the weighted FTE and the funding will be wrong. Accurate scheduling, coding and record-keeping during FTE survey periods are leadership responsibilities, and falsifying or carelessly reporting FTE can trigger audit findings and repayment.
Required Local Effort and Other Local Revenue
Required local effort is the minimum property tax millage each district must levy to participate in the FEFP. The state calculates the amount, and the local school board levies it. Districts may also levy additional discretionary millage within limits set by law, including millage for operations and for capital outlay. Capital outlay funds pay for buildings, major renovations, equipment and vehicles, so an item such as a new driver education vehicle is generally purchased with capital funds or a dedicated grant or partnership, not with operating categorical allocations meant for instruction or student services.
Funding Streams at a Glance
| Stream | Typical Use |
|---|---|
| FEFP base funding | Salaries, operating costs and instructional programs |
| FEFP allocations | Specific purposes defined by law, such as ESE, reading, safe schools, mental health and transportation |
| Capital outlay and capital millage | Construction, renovation, major equipment, buses and vehicles |
| Lottery (Educational Enhancement) funds | School improvement uses, with school-level funds spent on SAC-approved priorities |
| Federal grants | Supplemental services for targeted populations and purposes |
| Grants, partnerships and donations | Specific projects defined by the grantor or donor |
| Internal funds | School-level activities, clubs, fundraisers and student organizations |
Federal Funding Sources
Federal funds are supplemental. They add to, rather than replace, the services the state and district already provide. The supplement-not-supplant principle means a school may not use federal money to pay for something it would otherwise pay for with state or local funds, or that the law already requires it to provide.
Major Federal Programs
| Program | Purpose |
|---|---|
| Title I, Part A | Supplemental services to help students in high-poverty schools meet standards; schoolwide or targeted assistance programs; family engagement requirements |
| Title II, Part A | Preparing, training and recruiting effective teachers and leaders; professional learning |
| Title III | Language instruction for English learners and immigrant students |
| Title IV, Part A | Student support and academic enrichment, such as well-rounded education, safe and healthy schools, and effective use of technology |
| IDEA Part B | Special education and related services for students with disabilities |
| Perkins career and technical education funds | Improving career and technical education programs |
| Federal school nutrition programs | Free and reduced-price meals and food service |
Exam Tip: Match the need to the source. Professional learning for teachers points to Title II, extra support for English learners points to Title III, special education services point to IDEA Part B, and supplemental supports in a high-poverty school point to Title I.
Maximizing Resources for Instructional Goals
A skilled principal looks at all available sources together and asks which source is legally and practically best for each need. Common strategies include braiding funds, where different sources pay for distinct parts of a program within each source's rules; applying for competitive grants aligned to school goals; building business and community partnerships; and using lottery funds through the SAC for improvement priorities. The decision always starts with the needs assessment and the School Improvement Plan, not with the money that happens to be available.
Leadership Scenario: Budget cuts require the principal to reduce spending, and teachers send many comments. One says the school should protect intervention time for students below grade level in reading, which is the top goal in the SIP. Another wants to keep the annual staff retreat. A third wants to cut the bus for field trips. Best Response: The principal first considers the comment tied to the school's documented instructional priority, protecting reading intervention. Decisions based on data and SIP goals are easier to defend and keep the focus on student learning.
School Internal Accounts
Internal accounts, also called internal funds, are the monies collected and spent at the school level for clubs, classes, student activities, fundraisers and similar purposes. They are public funds. Florida's Financial and Program Cost Accounting and Reporting for Florida Schools, known as the Red Book, provides the rules for internal funds, and each district adopts its own internal accounts policy based on it. The principal is responsible for the school's internal funds even though a bookkeeper handles daily transactions.
Internal Accounts Procedures
| Procedure | Required Practice |
|---|---|
| Fundraiser approval | Obtain advance approval through the district's process before any fundraising begins |
| Receipts | Use prenumbered receipts or the approved collection form for every amount received |
| Counting | Two people count collections and sign the count |
| Deposits | Deposit funds promptly and intact; never keep money in a desk or take it home overnight |
| Restricted use | Money raised for a specific club or purpose stays in that account and is used for that purpose |
| Purchases | Obtain prior approval, such as a purchase order or requisition, before buying |
| Disbursements | Pay by check or approved electronic method with two authorized signatures and supporting documents |
| Audit | Internal funds are audited annually, and findings must be corrected |
Intact deposits means the money collected is deposited exactly as received. Collections are never used to make change, pay a vendor in cash, or reimburse someone before deposit. Commingling, such as putting a club's money into a general account or a staff member's personal account, is prohibited.
Leadership Scenario: The student council holds a Saturday car wash and collects cash. The sponsor wants to keep the money at home until Monday and use some of it to buy pizza for the volunteers. Best Response: The fundraiser should have been approved in advance; the money is counted by two people, recorded on the approved collection form, and deposited intact through the school's procedure, such as a night deposit or a secure safe until the bookkeeper receives it. Pizza for volunteers would be paid later through an approved disbursement from the student council account, if permitted. Taking money home or spending cash before deposit violates internal accounts rules.
Purchases and Checks
Purchasing rules exist to protect the school and the employee. Before buying anything with internal funds, the employee must receive prior written approval through the district's process. When a teacher presents a receipt for something purchased without approval and asks to be reimbursed, the principal should not simply reimburse it. The principal follows the district's policy on unauthorized purchases and uses the situation to remind staff of the approval process. Depending on the policy, the purchase may be denied, reviewed for ratification, or become the employee's personal expense.
Check-writing rules are similarly strict. A check from internal funds needs supporting documentation, such as an approved purchase order, invoice and receiving report, and the signatures of two authorized people, usually the principal and a designee. Checks are never signed blank, never made payable to cash, and never pre-signed for convenience.
Common Trap: Signing several blank checks before leaving for a conference so the bookkeeper can "keep things moving" is a classic wrong answer. It defeats the two-signature control and violates internal accounts procedures.
Memory Aid: "Approve, Receipt, Count, Deposit, Document, Disburse, Audit." Seven steps keep internal funds safe.
Property, Inventory and Facilities
School property, including technology devices, furniture, equipment, textbooks and vehicles, belongs to the district and must be tracked. Property above the district's capitalization threshold is tagged and recorded on the inventory. The principal ensures an accurate annual inventory, follows procedures for transfers between schools, reports missing or stolen items promptly and as required, and disposes of surplus property only through the district's approved process. Employees may not take school property for personal use or give it away, even if it seems outdated.
Facility use also follows policy. Community groups may use school facilities through the district's facility-use agreement process, often with insurance and fee requirements. Approving use informally, or letting a group use a building without an agreement, exposes the district to liability.
Ethical Use of Non-Financial Resources
Time, people, facilities and materials are resources just as dollars are. Competency 2 includes managing them ethically and equitably.
Non-Financial Resources and Ethical Use
| Resource | Ethical, Effective Use | Misuse to Avoid |
|---|---|---|
| Time | Protect instructional time; schedule interventions and planning purposefully | Frequent interruptions, unnecessary assemblies, meetings that could be an email |
| People | Assign staff by certification, strengths and student need; distribute duties equitably | Favoritism in assignments; placing the least experienced teachers with the neediest students by default |
| Facilities | Use spaces for instruction first; follow facility-use procedures | Personal or political use of school buildings |
| Materials and technology | Distribute based on need and goals; keep inventory | Hoarding, personal use, using school email or supplies for private business |
Equity means distributing resources based on need, not identical shares. A school might assign its strongest reading teacher to the students furthest behind or place additional devices in classrooms that need them for intervention software. The exam rewards these need-based decisions when they are tied to data.
Budgeting to Instructional Priorities
A sound school budget process follows a predictable cycle.
Review student achievement and needs-assessment data and the School Improvement Plan goals.
Identify all available revenue sources and their restrictions.
Involve stakeholders, such as the leadership team and SAC, in setting priorities.
Allocate resources to the highest-priority instructional needs first.
Monitor spending and program results throughout the year.
Evaluate whether expenditures produced results and adjust next year's plan.
Leadership Scenario: A vendor offers the principal a discount on an expensive new software program if the school commits by Friday. Several teachers like the demonstration. Best Response: The principal reviews whether the program addresses an identified need in the SIP, whether evidence supports it, which funding source could legally pay for it, and whether district purchasing procedures permit the purchase. A deadline set by a vendor is not a reason to skip needs analysis or procurement rules.
Key Takeaways
The FEFP formula is FTE x program cost factor = weighted FTE, then x base student allocation x district cost differential, plus allocations; required local effort is the district's property tax share.
The base student allocation is the per-FTE dollar amount, and accurate FTE coding is a leadership duty because funding depends on it.
Federal funds supplement rather than supplant: Title I for high-poverty schools, Title II for educator quality, Title III for English learners, Title IV for enrichment and safe schools, IDEA Part B for special education.
Internal funds follow the Red Book and district policy: advance approval, prenumbered receipts, two-person counts, prompt intact deposits, prior purchase approval, two signatures and annual audits.
Capital items such as vehicles come from capital funds; property is tagged, inventoried and disposed of only through district procedures.
Time, people, facilities and materials are resources too, and every allocation should trace back to student needs and SIP goals.
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