- Westonka Public Schools
- Policies
- 3000 Business/Non-Instructional
POLICY 3110: FUND BALANCE
Reviewed: October 5, 2020
I. PURPOSE
The purpose of this policy is to create new fund balance classifications to allow for more useful fund balance reporting and for compliance with the reporting guidelines specified in Statement No. 54 of the Governmental Accounting Standards Board (GASB).
II. GENERAL STATEMENT OF POLICY
The policy of this school district is to comply with GASB Statement No. 54. To the extent a specific conflict occurs between this policy and the provisions of GASB Statement No. 54, the GASB Statement shall prevail.
III. DEFINITIONS
- “Assigned” fund balance amounts are comprised of unrestricted funds constrained by the school district’s intent that they be used for specific purposes but that do not meet the criteria to be classified as restricted or committed.The School Board designates that the Board Chair, Superintendent, Finance Committee or Director of Finance may opt to assign general fund balance for a specific purpose. The School Board will approve the fund assignment, purpose of the assignment, and amount. Funds can be unassigned by the same four parties with School Board approval. The action to assign a fund balance may be taken after the end of the fiscal year. For all funds other than the general fund, any positive balances not already classified as nonspendable, restricted or committed would also be classified as assigned fund balances.
- “Committed” fund balances amounts are comprised of unrestricted funds used for specific purposes.The School Board may elect to establish fund balances that are committed for a specific purpose. Such designations will be approved by a majority vote of the School Board. Committed fund balance cannot be used for any other purpose until the commitment is removed. The formal action to commit a fund balance must occur prior to fiscal year end; however, the specific amounts actually committed can be determined in the subsequent fiscal year. The School Board may also, by a majority vote, remove dollars from a committed fund balance and place those dollars back into the unassigned fund balance.
- “Enabling legislation” means legislation that authorizes a school district to assess, levy, charge, or otherwise mandate payment of resources from external providers and includes a legally enforceable requirement that those resources be used only for the specific purposes listed in the legislation.
- “Fund balance” means the arithmetic difference between the assets and liabilities reported in a school district fund.
- “Nonspendable” fund balance amounts are comprised of funds that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact. Westonka Public Schools non-spendable fund balance will consist of non-cash assets such as, but not limited to, pre-paid expenditures, inventories, endowments and long-term receivables.
- “Restricted” fund balances amounts are comprised of funds that have legally enforceable constraints placed on their use. Westonka Public Schools will place funds in a restricted fund balance if there are constraints on how resources are spent either by statute, grantors or creditors.
- “Unassigned” fund balance amounts are the residual amounts in the general fund not reported in any other classification. Unassigned amounts in the general fund are technically available for expenditure for any purpose. The general fund is the only fund that can report a positive unassigned fund balance. Westonka Public Schools budget will be developed to maintain an adequate fund balance in the school’s unassigned general fund. The school budget will be constructed to maintain a minimum of 8% of the prior fiscal year’s expenditures and a maximum of 18% of the prior fiscal year’s expenditures.
- Should the Unassigned General Fund balance drop below 8%, the following criteria must be met:
- The action must be temporary and be resolved within the next budgetary cycle and next fiscal year end audit.
- The district shall initiate measures to either generate additional revenue or to reduce expenditures through a budget reduction, or a combination of both.
- If there is a need to move above the set reserve maximum the following criteria must be met:
- The Finance Committee along with the School Board will develop a plan to spend down the excess fund balance in a manner that benefits the district, such as program enhancement.
- If there is a situation in which a fund balance of greater than 18% must be maintained, the increase must be approved by a majority vote of the School Board stipulating the amount of the increase and the duration of time it is to be maintained.
In funds other than the general fund, the negative balances of these funds would be classified as unassigned fund balances.
- Should the Unassigned General Fund balance drop below 8%, the following criteria must be met:
- "Unrestricted" fund balance is the amount of fund balance left after determining both nonspendable and restricted net resources. This amount can be determined by adding the committed, assigned, and unassigned fund balances.
IV. CLASSIFICATION OF FUND BALANCES
The school district shall classify its fund balances in its various funds in one or more of the following five classifications: nonspendable, restricted, committed, assigned, and unassigned.
V. PRIORITY OF SPENDING
The School Board of Westonka Public Schools will make its priority to spend fund balances in the following order: restricted, committed, assigned. An exception to this is restricted balances for operating capital where eligible operating capital expenditures do not use the restricted balance because it is being built for specific future projects. Unassigned funds will be used only if the expenditure does not fit into any of the other categories or fall under the exception.
VI. REVIEW
The school board will conduct an annual review of the sufficiency of the minimum unassigned general fund balance level.
Legal References:
- Statement No. 54 of the Governmental Accounting Standards Board
Adopted: December 8, 1980