Daniel Lunghofer
School District/ESD Accounting Supervisor
Portions of this presentation adapted from GASB
2
GASB stands for the Governmental Accounting
Standards Board.
 It is the official source of Generally Accepted
Accounting Principles for state and local
governments.
 GASB’s role is to establish and improve
standards of reporting for U.S. state and local
governments.

3
GASB found significant variations in how
standards are applied, leading to significant
divergence in practice.
 Widespread confusion about terminology.
 Mismatch between what governments are
reporting about Fund Balance and what users of
financial statements actually need.
 GASB issued Statement 54 in March 2009.

4

OSPI has adopted GASB 54 for the following
reasons:
 To provide better transparency on the fiscal
health of school districts.
 Easier to respond to data requests about
what is in Fund Balance.
5
Fund Balance is similar to a savings account or
a checkbook balance.
 Like a savings plan for a large purchase or a
monthly budget to pay bills, it’s not all “free
money” for a huge shopping spree.

6
Disclaimer: This is a consolidation of three random districts’ F-196 data, and is does not reflect on any one district.
In 2009–10, our Sample District had a total General
Fund Ending Fund Balance of $60,658,638:
Assets:
$135,009,584
Liabilities:
$74,350,946
Fund Balance: $60,658,638
This looks good on the surface: the district has over
$60 million for new programs, more teachers,
smaller levies, etc. But…
7
$26,055,245 was Reserved Fund Balance –
money reserved for specific items.
 $26,383,164 was Designated Fund Balance –
amounts the district put aside with the intent
that they are used in a specific manner.
 That leaves $8,220,228 in Unreserved,
Undesignated Fund Balance (UUFB) – “free”
money not marked for anything in particular.

8
So, breaking it down a bit, our sample district’s
balances at the end of 2009–10 are:
Assets
Liabilities
Fund Balance:
Reserved
Designated
“Free” UUFB
Total FB
$135,009,584
$74,350,946
$26,055,245
$26,383,164
$8,220,228
$60,658,638
9
Classification Under Old
System (Pre-GASB 54)
Reserved
Fund Balance
Unreserved,
Designated
Fund Balance
Unreserved,
Undesignated
Fund Balance
Change Under
GASB 54
Classification Under New
System (Post-GASB 54)
Split into three
separate
categories
Nonspendable Fund Balance
Restricted Fund Balance
Committed Fund Balance
Name change
Assigned Fund Balance
Name change
Unassigned Fund Balance
10
Not in spendable form, such as:
 Inventory.
 Prepaid items.
 Legally or contractually required to be
maintained intact (i.e. corpus of a permanent
fund).

11
Amounts constrained to being used for a
specific purpose by:
 External sources such as creditors, grantors,
laws or regulations of other governments.
 Imposed by law through constitutional
provisions or enabling legislation.
 Generally, items beyond control of the board
of directors.

12
Constraint on use imposed by the school district
itself, using its highest level of decision making
authority.
 Constraint can be removed or changed only by
the same authority.
 For Washington school districts, this means
either a formal resolution of the board of
directors or adherence to adopted board
policy.

13
Amounts intended to be used for specific
purposes.
 Intent is expressed by:
 The board of directors.
 High-level individual authorized by the
governing body.

14

Starting with the total Fund Balance (Assets minus
Liabilities), take away:
 Any amounts that are not in spendable format
(i.e. Nonspendable).
 Any amounts that are Restricted as to their use.
 Any amounts that have been Committed to a
specific use by the board of directors.
 Any amounts that are Assigned to a specific use
(and recorded in the appropriate GL code).
15

In the General Fund:
 Record the residual amount, either positive or
negative, as Unassigned Fund Balance.
 According to the verbiage in Statement 54,
“governments should not report an assignment
for an amount to a specific purpose if the
assignment would result in a deficit in
unassigned fund balance.”
16

In funds other than the General Fund, the
balance is recorded in one of two places:
 If the balance is positive, record it as
Assigned to Fund Purposes (GL 889).
 If the balance is negative, record it as
Unassigned Fund Balance (GL 890).
17
Let’s take a district with $10,000 in Ending Fund Balance:
 $1,000 in Nonspendable amounts (Inventory)
 $6,000 in Restricted amounts
 $1,000 in Commitments
 $1,000 in Assignments
Nonspendable Fund Balance
Restricted Fund Balance
Committed Fund Balance
Assigned Fund Balance
Unassigned Fund Balance
Total Fund Balance
$1,000
$6,000
$1,000
$1,000
$1,000
$10,000
18
Let’s take a district with $10,000 in Ending Fund Balance:
 $1,000 in Nonspendable amounts
 $6,000 in Restricted amounts
 $1,000 in Commitments
 $3,000 in Assignments
Nonspendable Fund Balance
Restricted Fund Balance
Committed Fund Balance
Assigned Fund Balance
Unassigned Fund Balance
Total Fund Balance
$1,000
$6,000
$1,000
$2,000
$0
$10,000
19
Let’s take a district with $10,000 in Ending Fund Balance:
 $1,000 in Nonspendable amounts
 $6,000 in Restricted amounts
 $5,000 in Commitments
 $1,000 in Assignments
Nonspendable Fund Balance
Restricted Fund Balance
Committed Fund Balance
Assigned Fund Balance
Unassigned Fund Balance
Total Fund Balance
$1,000
$6,000
$5,000
$0
($2,000)
$10,000
20
Let’s take a district with $10,000 in Ending Fund Balance:
 $8,000 is Restricted
 $1,000 is Committed
Nonspendable Fund Balance
Restricted Fund Balance
Committed Fund Balance
Assigned to Fund Purposes
Unassigned Fund Balance
Total Fund Balance
$0
$8,000
$1,000
$1,000
NA
$10,000
21
Let’s take a district with $10,000 in Ending Fund Balance:
 $8,000 is Restricted
 $3,000 is Committed
Nonspendable Fund Balance
Restricted Fund Balance
Committed Fund Balance
Assigned to Fund Purposes
Unassigned Fund Balance
Total Fund Balance
$0
$8,000
$3,000
NA
($1,000)
$10,000
22
“Entire” GL section of Accounting Manual was
re-written in accordance with these standards.
 In most cases, it is a title change (e.g.
“Reserved” to “Restricted”).
 There are some new GL Codes added for a
variety of purposes.

23
GL 821 Restricted for Carryover of Restricted
Revenues (previously rolled into GL 810).
 GL 872 Committed to Minimum Fund Balance
policy (if your district has such a policy).
 GL 889 Assigned to Fund Purposes (for closing
out funds other than GF if a positive amount).

24
WSIPC software has been updated for these new
GL codes.
 Non-WSIPC districts will have to add the codes on
their own or work with their vendor to make the
changes. This information was provided in April
2010 via OSPI Bulletin 017-10.
 The F-196 is being re-programmed to incorporate
these changes for financial statement purposes for
2010–11.
 Changes present more Fund Balance definition than
may be used by every district.

25
Q:My district has a number of computers
purchased in the Capital Projects Fund that we
have classified as inventory while we wait to put
them into service. Are these Nonspendable?
A: Use GL 810 Restricted for Other Items.
The general consensus is that the expenditures
should be recognized when the computers are
purchased.
26
Q: Do we report interest earnings not spent as Restricted
Fund Balance?
A: It depends.
If the source of money generating the interest
earnings is Restricted (i.e. bond money in CPF), then
the interest earnings are also Restricted.
If the source of money has no restrictions and the
interest earnings remain in the fund, they are
recorded in GL 890 (GF) or GL 889 (all others).
If interest earnings are credited to another fund, they
are Restricted.
27
Q:Our county investment pool requires us to set
aside a certain amount of fund balance. Is this
Restricted?
A: No, it should be Nonspendable – it is
contractually required to be maintained intact.
Currently, Nonspendable Items should be
recorded in GL 810 Restricted for Other Items.
28
Q:My district self-insures for industrial insurance.
We are required to keep a reserve amount.
How is should this be reported?
A: It depends on the language in the notice
outlining the reserve.
If you must keep the amount intact and cannot
spend it, it is Nonspendable. As with the last
example, use GL 810 for now.
If the reserve is only to cover excess claim
costs, it is Reserved. Report this in GL 845.
29
Q:My board wishes to identify certain amounts
under the Committed Fund Balance
classification. If the amounts are present in our
budget, do we need to pass a separate
resolution for these commitments?
A: No, if the budget document adequately
describes what the commitments are for.
30
Q:What is a good Minimum Fund Balance policy?
A: Minimum Fund Balance is not required.
However, here are some general
guidelines:
Set a policy based on a percentage (e.g.
percentage of expenditures), rather than a set
dollar amount.
Include a small range of percentages to allow
for swings.
31
Q:What will a Minimum Fund Balance policy look
like on the financial statements?
A: For this, we need a volunteer.
Tenino
FUND BALANCE (as reported on 2009-10 F-196)
Reservation of Fund Balance
$
124,561.15
Unreserved, Designated Fund
Balance
$
Unreserved, Undesignated Fund
Balance
$
771,734.17
TOTAL FUND BALANCE
$
896,295.32
Tenino
FUND BALANCE (2009-10 F-196 data)
Using GASB 54 format
Nonspendable Fund Balance
$
Restricted Fund Balance
$
124,561.15
Committed Fund Balance
$
Assigned Fund Balance
$
Unassigned Fund Balance
$
771,734.17
TOTAL FUND BALANCE
$
896,295.32
Tenino
Minimum Fund Balance Policy Percentage
2.5%
FUND BALANCE (2009-10 F-196 data)
Using GASB 54 format)
Nonspendable Fund Balance
$
Restricted Fund Balance
$
124,561.15
Committed Fund Balance
$
311,549.18
Assigned Fund Balance
$
Unassigned Fund Balance
$
460,184.99
TOTAL FUND BALANCE
$
896,295.32
Actual Committed to Minimum Fund
Balance Policy:
Percentage Committed to Minimum Fund
Balance Policy:
$
311,549.18
2.50%
35
Q: How do we record ASB money that is left over at the
end of the year?
A: Any “free” money, that is, money not tied to a
specific club or class, would be reported in Assigned
to Fund Purposes.
For money that is marked for specific clubs or
classes, that money was supposed to be spent in a
particular manner as outlined by the ASB board and
the district board of directors. It should be reported
as Committed to Other Purposes.
36
Q:Are amounts that are held in imprest accounts
classified as Nonspendable Fund Balance?
A: No. If an imprest account can only be used for
certain designated expenditures, it would be
either Committed or Assigned, as appropriate.
Otherwise, it is Unassigned.
37
Q:When do these changes take effect?
A: GASB’s language is that the changes in
Statement 54 are effective for fiscal years
beginning after June 15, 2010.
For Washington school districts, this means the
2010–11 school year.
38

Fund balance classification was only part of
GASB 54.
 Governmental
Fund definitions.
 Encumbrance accounting.
39
Governmental fund definitions were updated to
match GASB 54 terminology.
 RCWs govern allowable uses of the funds – some
breakage with GASB 54.
 Primary example is Debt Service Fund.

 GASB
54 states it is for principal and interest.
 RCW allows for bond transfer fees as well.

In cases of breakage between GASB 54 and
RCWs, the RCWs won.
40
Encumbrance accounting is discussed in the Accounting
Manual (Chapter 3), but does not appear on F-196
or Notes to Financial Statements.
 GASB 54 (and earlier statements) require financial
statement presentation or note disclosure.
 Instead of reporting Encumbrances on the financial
statements, the SDAAC recommended disclosure in
the Notes to the Financial Statements.

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Daniel Lunghofer
(360) 725-6303
daniel.lunghofer@k12.wa.us
Springtime at OSPI
Daffodils and George
Washington Statue
April 20, 2011
By Daniel Lunghofer