Fund Balance Management

An unpredicted fund balance can have an undesirable effect upon the district's tax rate. it may fluctuate dramatically from year to year, or can be excessively high from year to year. District tax payers are likely to take a dime view of this type of fiscal management. The school administration should start a fund balance projection during the month of January and carry it through the remainder of the fiscal year. The business administrator should submit the monthly projection of fund balance to the board of education for its information during this period.

This entails projecting estimated expenditures for the remainder of the fiscal year against appropriated balances and the review of expected revenues against those estimated when the budget was developed, to determine if there will be an excess revenues or a deficiency. This process should be repeated in February, March, April, May and June, with each succeeding month depicting a more accurate prediction of the final fund balance.   

 

SAMPLE SCHOOL DISTRICT

1) BUDGET $25,000,000
2) ESTIMATED FUND BALANCE -

JUNE 30 $1,600,000

KEY ELEMENTS TO PROJECTING FUND BALANCE:

(A) ENCUMBERING
(B) ESTIMATING REVENUES
(C) YEAR-END ACCRUALS

SAMPLE SCHOOL DISTRICT

FUND EQUITY

INVESTMENT IN GENERAL FIXED ASSETS
FUND BALANCE:

RESERVED

RESERVE FOR ENCUMBRANCES

$ 125,000

RESERVE FOR INVENTORY AND SUPPLIES

RESERVE FOR PROPERTY LOSS

RESERVE FOR LIABILITY

INSURANCE RESERVE

RESERVE FOR REPAIRS

RESERVE FOR INSURANCE RECOVERIES

25,000

CAPITAL RESERVE - (BUR PURCHASE)

MANDATORY RESERVE FOR DEBT

RESERVE FOR TAX REDUCTION

RESERVE FOR UNEMPLOYMENT INSURANCE

RESERVE FOR WORKERS' COMPENSATION

RESERVE FOR TAX CERTIORARI

RESERVE FOR EMPLOYEE BENEFIT ACCRUED

LIABILITY

UNRESERVED

FUND DEFICIT

DESIGNATED FOR SUBSEQUENT YEARS'

EXPENDITURES (APPROPRIATED)

800,000

UNDESIGNATED (UNAPPROPRIATED)

500,000

TOTAL FUND EQUITY

$1,450,000

 

 

 

 

SAMPLE SCHOOL DISTRICT

CONSIDERATIONS:
1) WANT TO GET UNDESIGNATED FUND BALANCE DOWN TO (4%).
(REAL PROPERTY TAX LAW 1318)
2) THE AMOUNT OF FUND BALANCE TO BE
APPROPRIATED FOR SUBSEQUENT YEAR'S
TAXES
3)

LONG-TERM PLANNING – RESERVES

4)

WHAT ABOUT NEXT YEAR?

 

 

SAMPLE SCHOOL DISTRICT

APPLICATION OF FUND BALANCE

ASSUME - $25,000,000 BUDGET

"PROJECTED"

Current year :06/30

06/30

06/30

JULY 1  - $700,000

 

$1,300,000

$1,600,000

APPROPRIATED 250,000

800,000

1,100,000*

UNAPPROPRIATED 450,000

500,000

500,000

SURPLUS REVENUE 150,000

(100,000)

150,000

EXCESS APPROP. 700,000

1,200,000

200,000

JUNE 30 - A909 $1,300,000

$1,600,000

$ 850,000

(*) WHAT WILL THE DISTRICT DO FOR THE 200-

BUDGET?

SAMPLE SCHOOL DISTRICT

MANAGEMENT OF FUND BALANCE

OPTIONS 

HOW IS IT DONE

(A) Year-end encumbering Book entry

(B)

Establish or increase funding for unemployment

reserve fund

Board resolution

(C)

Increase accruals for either TRS or ERS if applicable Book entry

(D)

Establish or increase funding for insurance reserve (for self-funding deductibles) Board resolution
(E)

Establish capital reserve fund

Referendum
(F) Establish certiorari tax reserve Board resolution
(G) Establish employee benefit accrual liability Board resolution
(H) Planned balance

Approved w/budget

(I) Establish other reserves Mostly by BOE

 

 

SUMMARY LISTING OF AUTHORIZED RESERVE FUNDS

LAW

CODE

PURPOSE

VOTER

APPROVEALL
l. Capital Reserve

ED 3651

A878

Construction

Yes

Equipment

2. Repair Reserve

GML 6-D

A882

Nonrecurring repairs

Yes

3. Workers' Comp.

GML 6-J

A814

Self-funding

No

4. Unemployment

GML 6-M

A815

Self-funding

No

5. Tax reduction

ED 1709

A891

Reduce taxes

No

6. Debt services

GML 6-L

AV884

Retire. Debt

No

7. Insur. Recover. ED 1718(2)

A887

Unexpended

No

8. Insur. Reserve

GML 6-N

A863

Self-funding

Yes/No

9. Property Loss

ED 1709

A861

Self-funding

No

Liability Loss

ED 1709

A862

Self-funding

No

10.

Tax certiorari

ED 3651

A864

Tax settle.

No

11.

Encumbrances

A821

12. Inventory

A845

13. Reserve for employee

GML 6-P

A830

benefit accrued

No

liability

 

 

SAMPLE SCHOOL DISTRICT

FUND BALANCE ESTI MATE

Fund Balance, Being of Year $
Add: Revenues

Received to date

Additional State Aid

Total Revenues

Less: Expenditures

Per Budget Detail Dated

Additional payroll

Additional Warrants

TRS

ERS

Debt Service Expense

BOCES Expense

Total Expenditures

Fund Balance Estimated, End of Year $
Estimated Fund Balance Consists of:

Reserved

Encumbrances

Employees Retirement

Tax Certiorari

Employee Benefits

Unreserved

Designated for Subsequent Year Taxes

Undesignated

Total Estimated Fund Balance, End of Year

$