CSET Financial Management & Budgeting 5 — Questions and Answers
Question 1: A school district wants to evaluate whether its programs are achieving desired outcomes relative to their costs. Which analytical approach is most appropriate?
- Cost-benefit analysis (Correct answer)
- Break-even analysis
- Trend analysis
- Ratio analysis
Correct answer: Cost-benefit analysis
Cost-benefit analysis compares the monetary value of program outcomes to their costs, helping decision-makers determine whether resources are producing sufficient results.
Question 2: Which of the following describes the 'supplemental' requirement under Title I funding rules?
- Federal funds must increase the total resources available beyond the state/local baseline (Correct answer)
- Districts must provide supplemental after-school programs for all students
- Federal programs must be evaluated annually with supplemental assessment data
- Districts must hire supplemental staff with Title I funds only
Correct answer: Federal funds must increase the total resources available beyond the state/local baseline
The supplement, not supplant rule requires that Title I funds add to—not replace—the educational services that would be provided using state and local funds.
Question 3: What is the primary advantage of program-based budgeting over traditional line-item budgeting?
- It simplifies the chart of accounts and reduces reporting burdens
- It links resource allocation directly to program goals and outcomes (Correct answer)
- It eliminates the need for budget amendments during the year
- It reduces the total number of budget categories required
Correct answer: It links resource allocation directly to program goals and outcomes
Program-based budgeting organizes expenditures around programs and their objectives, making it easier to evaluate whether spending achieves educational goals.
Question 4: A district administrator is reviewing invoices before payment. This practice is an example of which type of internal control?
- Detective control
- Preventive control (Correct answer)
- Corrective control
- Compensating control
Correct answer: Preventive control
Reviewing invoices before payment is a preventive control designed to stop errors or unauthorized transactions before they occur.
Question 5: Which of the following is a characteristic of a fiscally stable school district?
- Fund balance near zero to maximize current spending
- Recurring revenues consistently exceeding recurring expenditures (Correct answer)
- High reliance on one-time grants for ongoing operating costs
- Frequent budget amendments to address structural deficits
Correct answer: Recurring revenues consistently exceeding recurring expenditures
Fiscal stability is indicated when recurring revenues reliably cover recurring expenditures, avoiding dependence on one-time funds for ongoing operations.
Question 6: What is the purpose of a 'reserve for economic uncertainties' in a school district's budget?
- To fund planned capital improvement projects
- To maintain a financial cushion against unexpected revenue shortfalls or expenses (Correct answer)
- To accumulate funds for future employee pension obligations
- To offset anticipated increases in state aid
Correct answer: To maintain a financial cushion against unexpected revenue shortfalls or expenses
A reserve for economic uncertainties provides a financial buffer that allows the district to manage unexpected downturns in revenue or unanticipated cost increases.
Question 7: An administrator is comparing the district's per-pupil expenditure to similar districts. This is an example of which type of financial analysis?
- Vertical analysis
- Horizontal analysis
- Benchmarking (Correct answer)
- Sensitivity analysis
Correct answer: Benchmarking
Benchmarking compares a district's financial metrics—such as per-pupil spending—to peer districts or standards to assess relative efficiency and equity.
CSET Financial Management & Budgeting 5
A school district wants to evaluate whether its programs are achieving desired outcomes relative to their costs.
Which analytical approach is most appropriate?