Managing Capital Assets in Illinois School Districts: What You Need to Know

Carl Thomas

CPA | Manager

Illinois K-12 school districts manage significant assets including; schools buildings, administrative buildings, furniture, vehicles, athletic facilities, and maintenance equipment. Schools need to be mindful of record keeping and reporting of capital assets to avoid auditing and reporting issues down the road.

What Is a Capital Asset?

In simple terms, a capital asset is:

• An item that has a useful life longer than one year and
• Costs more than the district’s established dollar threshold for capitalizing items instead of expensing them. 

For example, a laptop may be expensed, while a school bus or major HVAC system would likely be recorded as a capital asset.

Because these assets affect a school district’s financial statements and compliance reporting, having a clear system in place with respect to capital assets is essential.

Choose a Tracking Method

Every district needs a reliable way to track its capital assets. There are several options.

Handle It In-House

Many modern school district ERP systems have a capital asset module. A district business office employee can use this module to perform regular record keeping tasks.

Outsource to an  Accountant  

An external accounting firm can maintain your capital asset records, for a fee, ensuring technical accuracy and compliance.

Use a Capital Asset Inventory or Appraisal Company

Some districts work with an external asset appraisal company, typically the one that performs the district’s insurance valuation. These firms can maintain capital asset records for the district and assist with updates.

No matter which option you choose, a district employee must provide accurate information and oversee the process. Good data input and regular supervision are critical.

Establish or Review the District’s Capital Asset Policy

A strong financial policy should clearly address capital assets. Your policy should include: 

• Capitalization thresholds (the dollar amount at which purchases are recorded as assets rather than expenses). 
• Useful life estimates for each asset category (buildings, vehicles, equipment, etc.) 
• Procedures for recording additions and disposals

Create a Clear Process

Policies set expectations. Processes ensure they are followed. Documented processes and procedures should answer such questions as:

• Who will oversee the capital asset tracking?
• How will new purchases be identified and recorded?
• How are disposals tracked and documented?
• How often are records updated? Monthly? Quarterly? Annually?

Watch for Hidden Compliance Requirements

If your district purchases equipment or does construction with Federal or state funds, you may have additional rules to consider. For example:

• Current federal regulations require property purchased with federal funds to be tracked as separately. 
• There are also compliance requirements to consider when disposing of federally funded property.

Why It Matters

Capital assets represent some of the largest investments an Illinois K-12 school district will make. With clear policies, well-defined processes and consistent oversight, districts can avoid audit issues, stay compliant with funding requirements and maintain accurate financial reporting. If you have any questions, the trusted advisors at Cray Kaiser can help you. You can contact us here or call us at 630.953.4900.