Fund Balances
What are fund balances?
Why does _____ ISD maintain a fund balance in the
General Fund?
Why is Discussion of District Fund
Balances Timely?
• The State Legislature Convenes on 1/11/2011
• State lawmakers estimate a deficit of $18b.+
• One option for closing this deficit is to require
school districts to use local resources in place of
state revenue
• This option may be attractive to state lawmakers
because of misconceptions of fund balance
• State-mandated use of our fund balance will be
devastating to our district
Our District’s Fund Balance Policy
• Example: _______ ISD Annual Operating Policy:
A financial goal of the district shall be to have a
sufficient balance in the operating fund to be able to
maintain fiscal independence in case of financial
needs or crisis.
The district shall strive to maintain a yearly fund
balance in the general operating fund in which the
total fund balance is 22.5% of total operating
expenditures and the unassigned fund balance is
15% of the total operating expenditures.
What are Fund Balances?
• Districts use the General Fund to pay expenses
related to instructing and transporting students.
• Within the General Fund:
o Assets – Liabilities = FUND BALANCE
• The amount reported as district’s fund balance
is a snapshot.
• A fund balances will fluctuate daily.
What are Fund Balances?
• A fund balance may be:
• “Reserved”, “Designated”, or “Unreserved,
Undesignated”
• Only the last category of fund balance is available
for any legal expenditure
• Fund balances are the culmination of the board’s
financial decisions over many years
What a Fund Balance is not?
• Fund Balance is not:
– a Savings Account
– a Rainy Day Fund
– the result of unduly high taxes
Why do district’s have fund balances?
•
•
•
•
Cash Management
Lower interest rates on district bonds
Unforeseen expenditures & Disasters
Ongoing support for educational
programs
• Best Practices
What is the Recommended Level of Fund
Balance?
• The Government Finance Officers Association
(GFOA) recommends an unassigned fund balance
of “no less than two months of…regular general
revenue operating expenditures.”
• The Texas Education Agency’s (TEA) optimum fund
balance calculation requires school districts to add
two months of cash disbursements to amounts
needed to cover any cash flow deficits.
_________ ISD’s Fund Balance
• ______ ISD’s fund balance as of (end of fiscal year
2009/2010 was $______________
• Reserved balances were $
• Designated balances were $
• The remaining unreserved, undesignated portion of
____________ ISD’s fund balance at (end of fiscal
year 2009/2010) was $___________
_________Isd’s Fund Balance – By the
Numbers
• _________ Isd’s fund balance is
equivalent to:
• $_____ per enrolled student
• _____% of our annual operating
budget
• ____ months of operating expenses
• Our district’s fund balance [meets/fall
short] of the GFOA/TEA standard.
Recent Budget Activities Affecting _______
ISD’s Fund Balance
• On July/August XX, the school board approved
the 2010-11 school year budget
• This budget uses XXXX of the fund balance to
– Example 1 (Give teachers/personnel a
salary increase)
– Example 2 (Provide xxx program to increase
student achievement in ___________)
• OR: The 2010-11 school year budget added
$____ to the fund balance