I should probably clarify that our budget includes a category for planned carryover into the next year ($2,000 as set in our bylaws). That way, we can balance our annual income and expenses to zero and still have $2,000 left in the bank to start the next year. On our budget report, we list carryover at the top of the Income section. It is included in the total income available to spend on our planned expenses. It's hard to show this here, but below is a very simplified version of our budget/treasurer's report to help explain one way to handle this:

ANNUAL BUDGET, ABC PTO

Carryover/Beginning Balance in checkbook Aug 1 = $2,956.33
INCOME
Fundraiser #1 net profit $10,000
Fundraiser #2 net profit $ 6,000
TOTAL PROJECTED INCOME $18,956.33

EXPENSES
Enrichment $7,000
Family Outreach $5,000
Recognition $3,000
Carryover for next year $2,000
Other $1,956.33
TOTAL PLANNED EXPENSES $18,956.33

BALANCE $0

Carryover from the previous year is your starting balance amount. Then you add your projected income, subtract your projected expenses and you should come out ahead or even with what you are starting with. It is NOT added in as income.

For us it is also left in the general "pot" unless it was voted to be earmarked for something specific (playground, books, phys ed equip). Its just a carry over. You don't start your own checkbook off at the beginning of the year with a $0 balance you just carry it over. Also in our bylaws we can't leave more than $1500 without having it marked for something.

Sorry, extreas, but I disagree completely.

The amount carried over should be shown clearly, but included as part of the "pot" of money you have at the start of your fiscal year, like WORKING4KIDS said. You have to budget ALL your on-hand money at the start of every fiscal year (which in our case is August 1). And YES YES YES, the budget must balance to zero. Your annual expense budget should balance to the total projected income, which includes the cash on hand.

If you ignore the carryover balance, how will you ever spend it? You're not giving your members the whole financial picture if you "hide" the carryover. If you are carrying over a good chunk of money, then you might not need to do as much fundraising as you thought. That wouldn't be obvious to your members if the carryover is left off the annual budget. I don't mean to jump up and down about this, but it's a real hot button for me. One of our PTO's tried to do this and the members never knew the PTO actually had an extra $6k in the bank. To me, that's a recipe for disaster.

If you are a plus member you can download a sample budget under the tools drop down then to bonus tools. It is under the treasurer section. It will give you an idea of what a budget should look like.

I wouldn't include an unspent balance as a budget category. It doesn't have to balance out to zero. The budget should be what you plan to spend and take in over the course of the year.

But, we do include a brief cash flow projection at the bottom of our budget.

So it looks something like this:
Income Expenses
$xxx.xx ($yyy.yy)
$xx.xx ($yy.yy)
etc.

At the end we have:
Starting Balance $aaaa.aa
Projected Income $xxxx.xx
Proj. Expenses ($yyyy.yy)
Proj. Ending balance $bbbb.bb

I hope that makes sense! We had a treasurer a few years ago that wanted to make a budget category for the previous year's balance, and it was just too confusing!