HomeMy WebLinkAboutAgenda - 04-22-2008-aDraft Presented at Joint Meeting of Board of County Commissioners and Boards of Education on 04i'22i08
School Districts Local Current Expense Fund Balance Policy
Joint Policy Between
Drange County Board of County Commissioners
Chapel Hi11 Carrboro Gity Schools Board of Education
Glrange County Schools Board of Education
1. Guidelines
The School Budget and Fiscal Control Act {SBFCA} establishes accounting,
budgetary and fiscal control guidelines for School Systems. The SBFCA is
codified in G.S. Chapter 115C, Article 31, beginning at G.S. 115C-422. This
act parallels the statutes established for Local Government with a few
exceptions.
2. Definitions
2.1. Total Fund Balance -The difference between a school system's total
assets and its total liabilities at the end of the fiscal year.
2.2. Fund Balance Available for Appropriation -The sum of a school system's
assets held in cash and investments minus the sum of the school system's
liabilities and encumbrances at the end of the fiscal year as outlined in G.S.
115C-425 of the SBFCA.
2.3. Designated Fund Balance -The amount of the available fund balance that
has been appropriated for the budget year through budgetary action of the
School Board.
2.4. Undesignated Fund Balance -The difference between Fund Balance
Available for Appropriation and Designated Fund Balance.
3. Policy
3.1. Fund Balance for Cash Flow Purposes -Each school district will strive to
maintain a level of undesignated fund balance that will ensure sufficient
funds are available to address its cash flow needs. The following levels are
to be maintained for cash flow purposes only:
3.1.1. Chapel Hill Carrboro City Schools -The level of fund balance for
cash flow purposes will be at a minimum of 5.5 percent of
expenditures.
Draft Presented at Joint Meeting of Board of County Gommissioners and Boards of Education on 04i'22i08
3.1.2. grange County Schools -The level of fund balance for cash flow
purposes will be at a minimum of 3 percent.
3.2. Fund Balance for Contingency Purposes -School districts will be allowed
to accumulate up to an additional 1.5 percent in fund balance for contingency
purposes.
3.3. Accumulated Fund Balance Above Cash Flow and Contingency
Purposes - In the event that either school district accumulates more than the
percentage amounts allowed for cash flow and contingency purposes, the
respective Board of Education will have a plan in place for spending the
accumulated fund balance surplus far non-recurring purposes. The Board of
Education will share that plan with the Board of Gounty Commissioners
3.4. Fund Balance Appropriation -Appropriation of fund balance is a budgetary
action that rests with elected bodies of each school system. It is highly
desired that fund balance appropriations be limited to non-recurring
expenses. Both school districts have historically appropriated fund balance
as a part of their normal budgeting process, and this practice will remain until
additional revenue is available to eliminate the use of fund balance. Any
significant deviations in the normal budgetary appropriation should be noted
and explained as a part of the budget narrative accompanying the
recommended and adopted budgets.
If the Board of Education finds it necessity to appropriate fund balance, for
recurring expenses, after the original fiscal year budget is adopted, the Board
of Education should notify the Board of County Commissioners and provide a
funding plan that identifies revenues sufficient to cover for future years'
appropriations, if necessary. The Gounty Commissioners are not obligated
to increase local current expense in order to fund recurring items for which
the Board of Education appropriates fund balance outside of the normal
budgeting process.
4. Undesignated Fund Balance -Undesignated fund balance may be allowed to
accumulate above the cash flow percentages under certain circumstances.
School Boards should have a detailed plan for future use of accumulated fund
balance. Boards of Education are to use Undesignated Fund Balance to address
extraordinary issues.