Supplies and Equipment
This appendix discusses the importance of distinguishing between supplies and equipment and suggests criteria for making that decision.
Reasons for Distinguishing Between Supplies and
Education agencies have found it useful to distinguish between supplies and equipment for several reasons:
A school district can take two basic approaches to distinguish between supplies and equipment in the decision-making situations just mentioned:
- The distinction may assist in deciding how to control or keep track of an item. For example, some funding programs require that all equipment items be inventoried annually. At the same time, many school districts will inventory certain items, regardless of whether they are equipment or whether the districts are required by law to do so.
- The distinction may bear on insurance decisions. Supplies and movable equipment are usually insured as part of the contents of buildings, whereas built-in equipment is usually insured as part of the structure.
- The distinction is important in identifying the funds with which to purchase a given item. For example, some funds, such as bond funds, typically cannot be used to purchase supplies, while other funds might exclude the purchase of equipment.
- The distinction can affect calculations of cost of operations and cost per student. Although most school districts include expenditures for supplies in calculating current operating costs, many school districts treat equipment differently. Some include all expenditures for replacement equipment in the current operating cost total, excluding the cost of new and additional equipment. Others prorate the cost of all equipment over several years. In both cases, the incorrect classification of supplies or equipment items can affect the resulting cost calculations.
- The distinction can affect the amount of State or Federal aid allocated to a school district. Several funding sources use per-student costs as part of their funding formula (see the preceding paragraph). Most funding programs limit the ways in which their funds may be spent, sometimes excluding either supplies or equipment from the list of eligible purchases.
Each approach is discussed in the following text.
- Adopt a predetermined list of items, classifying each entry as either a supply or an equipment item.
- Adopt a set of criteria to use in making its own classification of supply and equipment items.
The Disadvantages of a Supply/Equipment List
State Departments of Education and School Districts maintain detailed lists of material items used in school district operations, identifying each entry as either a supply or an equipment item. These lists are helpful in many situations, but they have at least four limitations in financial reporting:
For these reasons, developing a universally applicable and easily updateable supply/equipment
list is impractical. Instead of presenting a list that might raise
as many issues as it would propose to resolve, this guide suggests
that the distinction between supplies and equipment can better be
made through consistent, statewide application of uniform criteria.
- Various state and federal aid programs offer supply/equipment categorizations that conflict with one another.
- Technological and philosophical changes in education continue at an ever-increasing pace. It is impractical to list and classify the thousands of materials and devices used in school districts today, particularly in the vocational education curricula. Therefore, without periodic updates, supply/equipment lists quickly become obsolete.
- Classifications of certain items change because of changes in price or technology. For example, most school districts classified hand-held, mini-calculators as equipment several years ago when they cost over $100. Now that the price of these items has dropped to the $5 to $25 range, some school districts are changing the classification of these items to supplies;
- Users tend to treat the lists as comprehensive and up-to-date, even when warned otherwise.
Criteria for Distinguishing Supply and Equipment
At one time, the federal accounting handbook contained lists of both supplies and equipment. Such lists can never be comprehensive or exhaustive and quickly become outdated. To resolve the need to differentiate supplies and equipment without exhaustive lists, the NCES has proposed a set of criteria for distinguishing equipment from supply items, listed in priority order. (See figure 2). At the first "no," the item is declared to be a supply, not equipment.
An equipment item is any instrument, machine, apparatus or set of
articles that meets all of the following criteria:
It retains its original shape, appearance, and character with
It does not lose its identity through fabrication or incorporation
into a different or more complex unit or substance.
It is nonexpendable; that is, if the item is damaged or some of
its parts are lost or worn out, it is more feasible to repair the
item than to replace it with an entirely new unit.
Under normal conditions of use, including reasonable care and maintenance,
it can be expected to serve its principal purpose for at least one
An item should be classified as a supply if it does not meet all
the stated equipment criteria.
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Distinguishing Between Built-In and Movable Equipment
Should a school district find it useful to classify certain equipment into built-in and movable categories, and unless otherwise bound by federal, state, or local law, the following criteria should be used.
A built-in equipment item meets these criteria:
Built-in equipment may be incorporated into a building at the time the building is erected or at a later date. Built-in equipment is sometimes referred to as fixed equipment.
- It is an integral part of a building; that is, it is permanently fastened to the building, functions as a part of the building, and causes appreciable damage to the building if it is removed.
- It is permanently attached to a site and functions as part of the site (except buildings or other structures).
Movable equipment consists of items that meet these criteria:
A piece of equipment that is simply bolted or screwed to the floor,
such as a heavy lathe or desk, and that can be moved as a unit once
these fasteners have been removed, is movable equipment. The term
movable refers to the permanency of installation and not to
size or weight.
- They are transportable from one location to another without appreciable damage or change to the location from which they are removed or to the location where they are installed.
- They do not function as integral parts of the building or site and are not permanently fastened or attached to the building or site.
2. Criteria for Distinguishing Equipment From Supply Items
Selecting the Level of
Control for Supplies and Equipment
School district managers carry great responsibilities for stewardship of the funds and property of the school district. They are responsible for tracking and periodically reporting on the condition of these financial and physical resources. A major decision in devising methods for carrying out these responsibilities is selecting the level of control to be applied to various kinds of supplies and equipment.
The level of control applied to any supply or equipment item can be thought of as the amount of time and effort spent in keeping track of the item and the amount of information kept about the condition and whereabouts of the item. The level of control applied to a supply or equipment item usually falls into one of three broad categories:
Little or no control after purchase. Items in this category are of such little value that the cost of implementing procedures to safeguard them, monitor their use, or track their location and condition are not justifiable. Such items include staplers and wastebaskets.
Group control. Items in this category are of little individual value but taken as a group are valuable enough to justify the cost of providing some type of control over their safety, use, location, and condition. Such items include chairs and school desks.
Individual control. Items in this category are of sufficient value to justify applying control measures to each individual item. Such items usually include all relatively expensive pieces of equipment, although the minimum value of such equipment may vary with the school district.
Selecting the level of control to apply to an item is a straightforward process. Often, certain kinds of control are required by law or standard practice. For example, a federal funding program might require that all items purchased from these funds be inventoried and reported on periodically. Similarly, some funding programs require that all items of a certain minimum value must be inventoried and reported on periodically. The school district may decide on its own to inventory certain kinds of items, regardless of their funding source, simply because these items or the inventory information are valuable to the school district. The level of control can range from an annual inventory to daily check-out from and return to a central storage room or station. When applied to a given item, the level should be based on the relative importance of the item to the overall operation of the school district and is usually in direct proportion to the item's purchase, replacement, or repair cost.
It is important to note that deciding how to control an item is relevant not only to equipment but also to certain stocks of supplies. For example, any large stock of supplies-such as instruction supplies, food, or custodial supplies-should be periodically counted and checked for damage, deterioration, and pilferage. Thus, the level-of-control issue applies to all tangible goods of any significant value to the school district.