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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