Nic - this may be different from other schools (and it probably varies from state to state) but our booklist at our school covered quite a number of things for the children in grades 1 and 2.
Things like:
* writing books and scrap books for the entire year (they go through A LOT of them - lots of curriculum to cover!).
* paper for arts and craft and project etc.
* pencils and pens (coloured and led pencils - the led pencils tend to go missing easily, get chewed, stood on, used as projectiles... etc. ).
* glue sticks, clag etc.
* text books - some schools use a maths text book for each child.
* scissors (and they ain't cheap if you want good ones!)
* erasers

There's stacks more and I can't think of it all off the top of my head. Anyway... almost $140 sounds like a lot but, keep in mind, it's for the entire year. Kids go through an aweful lot of paper, pencils etc. throughout the year (I had no clue just how quickly until I had my own class and we ran out of led pencils at the end of the year 8-[ ).
So, take heart, the money is put to really good use! The teachers will stretch it as far as it will possibly go!