We are the same as Erica---
We have a line in our budget that shows 5,000.00
that way our budget balances down to zero and we have the 5,000.00 that is allocated for each year as start-up. Our by-laws state there must be 5,000.00 carryover for start-up each year.

I think you do not stick to your budget, you could get into big trouble and not have funds left at the year---

We've had years where we made more than the budget, so there was carryover, but then the next year, we didn't raise enough to match the budgeted expenses--- we were lucky enough to have a larger carryover to cover these expenses-- but the budget would need to be looked at more closely for the following year and what can be purchased.

We have a budget line item called "Cash Reserve" set to $5,000 every year. That way we balance our budget to approximately $0, but there is $5,000 allocated to the checking account to start the next year off.

There are actually 2 questions:
1) should the budget be balanced for the year (income=expenses)?
2) should there be money left in the bank account at the end of the year?

I agree with the other posters that it's OK to carry over funds, but that doesn't mean that the budget shouldn't be balanced for a given year.

We definitely begin each year with a balance because we have expenses that come up almost immediately such as a Welcome Back Breakfast and membership drive, where we need to spend a little for incentives and such.

Absolutely not! I think it's a mistake to spend down to zero ever, let alone every year, and leave the PTO with nothing in the bank for the following fall. Unless your bylaws specify that you can't carry money over from one year to another -- in which case I think you should amend your bylaws -- it's a good practice to carry some over.

In fact, our bylaws *require* that we leave a minimum balance on hand at the end of the year to start the following year with.