Accounting Changes Affecting School Districts
Changes in generally accepted accounting principles (GAAP) reporting requirements for fund balances affect NYS school district financial statements for periods ending June 30, 2011. Data elements for the Property Tax Report Card have been renamed and redefined in accordance with these changes.
The Office of the State Comptroller has released an accounting bulletin (71KB) regarding these changes which includes a chart identifying old and new account codes and terminology. For additional guidance, see the New York State "Office of the State Comptroller" . Under these accounting changes, the terms “Reserved Fund Balance”, “Appropriated Fund Balance” and “Unreserved, Unappropriated (or undesignated) Fund Balance” are no longer used. The new classifications are “Nonspendable”, “Restricted”, “Committed”, “Assigned” and “Unassigned”. The Comptroller’s accounting bulletin provides definitions of each of the new terms.
The appropriate terms and categories are reflected on this year’s spreadsheet along with footnotes regarding some calculations. Questions may be directed to the Office of Educational Management Services by phone at (518) 474-6541 or email firstname.lastname@example.org.
New Fund Balance Classifications
- Non-spendable – consists of assets that are inherently non-spendable in the current period either because of their form or because they must be maintained intact, including prepaid items, inventories, long-term portions of loans receivable, financial assets held for resale, and principal of endowments.
- Restricted – consists of amounts that are subject to externally enforceable legal purpose restrictions imposed by creditors, grantors, contributors, or laws and regulations of other governments; or through constitutional provisions or enabling legislation.
- Committed – consists of amounts that are subject to a purpose constraint imposed by a formal action of the government’s highest level of decision-making authority before the end of the fiscal year, and that require the same level of formal action to remove the constraint.
- Assigned – consists of amounts that are subject to a purpose constraint that represents an intended use established by the government’s highest level of decision-making authority, or by their designated body or official. The purpose of the assignment must be narrower than the purpose of the general fund, and in funds other than the general fund, assigned fund balance represents the residual amount of fund balance.
- Unassigned – represents the residual classification for the government’s general fund, and could report a surplus or deficit. In funds other than the general fund, the unassigned classification should be used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned.
Statutory Fund Balance Limitations
School Districts – Real Property Tax Law §1318 limits the amount of unexpended surplus funds a school district can retain to no more than 4 percent of the next year’s budgetary appropriations Funds properly retained under other sections of law (i.e., reserve funds established pursuant to Education Law or GML) are excluded from the 4 percent limitation. In the context of previous fund balance reporting, an unexpended surplus was interpreted to be synonymous with unappropriated unreserved fund balance. Under Statement 54 fund balance classifications, the 4percent limitation would be interpreted to be applied to unrestricted fund balance (i.e., the total of the committed, assigned, and unassigned classifications), minus appropriated fund balance and encumbrances included in committed and assigned fund balance