fundbalance management

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		$