Opinion 98026

DATE: June 17, 1998



SUBJECT: School District Activities Funds; Budget Statement Requirements






REQUESTED BY: John Breslow, Auditor of Public Accounts 






WRITTEN BY: Don Stenberg, Attorney General 

Lauren L. Hill, Assistant Attorney General 






This legal opinion is written in response to your request 

that we address the obligations of Nebraska school districts in the 

preparation and filing of the annual budget statements mandated by 

Neb. Rev. Stat. § 13-504 (1997). Specifically, you have asked 

whether school districts are required to submit, as to their school 

activities fund, statutorily-prescribed information in the annual 

budget statements which pertain to "the immediately ensuing fiscal 

year." 






Background






Nebraska Budget Act. 






The Legislature has enacted several statutes which, 

collectively, comprise the "Nebraska Budget Act." Neb. Rev. Stat. 

§ 13-501 (1997). "The purpose of the Nebraska Budget Act is to 

require [certain] governing bodies . . . to follow prescribed 

budget practices and procedures and make available to the public 

pertinent information pertaining to the financial requirements and 

expectations of [those governing bodies]. . . ." Neb. Rev. Stat. 

§ 13-502 (1997). The annual budgets of all school districts are 

subject to requirements of the Nebraska Budget Act. Neb. Rev. 

Stat. § 13-517 (1997). 






Pursuant to Neb. Rev. Stat. § 13-504(1), school districts 

are required, by August 1 of each year, to prepare a proposed 

written budget statement on forms prescribed by the Auditor of 

Public Accounts. Along with other mandated information, the budget 

statement must contain budget information (a) for the immediate two 

prior fiscal years, (b) for the current fiscal year, and (c) for 

the immediately ensuing fiscal year. Neb. Rev. Stat. § 13- 

504(1)(a)-(c). For "the immediately ensuing fiscal year," the 

budget statement shall contain 




an estimate of revenue from all sources, . . . separately 

stated as to each such source, to be allocated to each of 

the several funds, and for each fund: [t]he actual or 

estimated unencumbered cash balances, whichever is 

applicable, to be available at the beginning of the year; 

the amounts proposed to be expended during the year; and 

the amount of cash reserve, based on actual experience of 

prior years, . . . . 




Neb. Rev. Stat. § 13-504(1)(c). 






School Activities Funds.






The Legislature requires the Nebraska Department of 

Education ["NDE"] to prescribe a uniform system of accounting to 

which all Nebraska public school districts shall adhere. Neb. Rev. 

Stat. § 79-1088 (1996). In accordance with that duty, the NDE has 

promulgated Title 92, Nebraska Administrative Code, Chapter 2 

(1996) [hereinafter "92 NAC 2"], its regulation establishing a 

uniform accounting system. The regulation requires that "[a]ll 

school district accounting systems shall be organized and operated 

on a fund basis." 92 NAC 2, § 003.03. One of the authorized 

funds that a school district may establish is a school "activities 

fund." 






The Activities Fund is required to account for the 

financial operations of quasi-independent student 

organizations, interschool athletics, and other self- 

supporting or partially self-supporting school 

activities, not part of another fund. The inclusion of 

such accounts in the [school district's] General Fund ... 

would distort the financial position of the basic school 

operation and would complicate the computation of the net 

expense incurred in conducting school services. The 

Activity Fund shall not be used to record general 

operation revenues or expenditures, nor shall the 

[A]ctivity [F]und be used as a clearing account for the 

General Fund. The school district may divide this fund 

into more than one account to allocate a portion of this 

fund for different purposes. 




92 NAC 2, § 003.03E. 






Analysis 






Having been properly promulgated and adopted, the 

regulatory provisions of 92 NAC 2 have the force and effect of 

statutory law. Nucor Steel v. Leuenberger, 233 Neb. 863, 448 

N.W.2d 909 (1989); Douglas Co. Welfare Admin. v. Parks, 204 Neb. 

570, 284 N.W.2d 10 (1979). Thus, we construe the requirements of 

both Neb. Rev. Stat. § 13-504 and 92 NAC 2 by considering the 

language utilized in each provision in its plain, ordinary, and 

popular sense. OPPD v. Dep't of Revenue, 248 Neb. 518, 537 N.W.2d 

312 (1995). 






We construe Neb. Rev. Stat. § 13-504(1)(c) as clearly and 

unambiguously requiring school districts to include in their annual 

budget statements specified information for the "immediately 

ensuing fiscal year." As an activities fund may properly be 

maintained by a public school district, the budget statement 

information required by Neb. Rev. Stat. § 13-504(1)(c) also 

includes information regarding an existing activities fund. You 

have indicated some concern, expressed by certain schools, that the 

schools might be unable to comply with the § 13-504(1)(c) 

requirements because some of the monies in the activities funds may 

belong to "outside groups." It is clear, however, that "[t]he 

financial operations of all school-connected activities are a legal 

responsibility of the school district board of education." 92 NAC 

2, § 003.03E. Therefore, as school districts are ultimately 

responsible for monies maintained within their activities funds, 

the requirements of § 13-504(1)(c) are applicable to those funds. 

We also note that what the school districts are required by the 

statute to provide are estimated projections of future-year 

financial activity within the fund. 






Sincerely, 






DON STENBERG 



Attorney General










Lauren L. Hill 



Assistant Attorney General