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EASTON AREA
SCHOOL DISTRICT
No. 623
SECTION:
FINANCES
TITLE:
FUND BALANCE
ADOPTED:
MAY 26, 2011
REVISED:
623. FUND BALANCE
1.
Purpose
The Board recognizes that the maintenance of a fund balance is essential to the
preservation of the financial integrity of the school district and is fiscally
advantageous for both the district and the taxpayer. This policy establishes goals and
provides guidance concerning the desired level of year-end fund balance to be
maintained by the district.
2.
Definitions
Fund balance is a measurement of available financial resources. Fund balance is the
difference between total assets and total liabilities in each fund.
GASB Statement 54 classifies fund balances based on the relative strength of the
constraints that control the purposes for which specific amounts can be spent.
Beginning with the most binding constraints, fund balance amounts shall be reported
in the following classifications:
Nonspendable - amounts that cannot be spent because they are in a nonspendable
form (e.g., inventory) or legally or contractually required to be maintained intact
(e.g., principal of a permanent fund).
Restricted - amounts limited by external parties, or legislation (e.g., grants or
donations).
Committed - amounts limited by Board policy (e.g., future anticipated costs).
1)
Capital Reserve Fund
2)
Other Board-approved designation fund
Assigned - amounts that are intended for a particular purpose, such as a rate
stabilization fund or segregation of an amount intended to be used at some time in
the future.
1)
Medical Claim Stabilization
2)
Retirement Costs Stabilization
Unassigned - amounts available for consumption or not restricted in any manner.
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3.
Guidelines
The school district will strive to maintain an unassigned general fund balance of not
less than five percent (5%) and not more than eight percent (8%) of the budgeted
expenditures for that fiscal year.
The total fund balance, consisting of several portions including committed, assigned
and unassigned, may exceed eight percent (8%).
If the unassigned portion of the fund balance falls below the threshold of five
percent (5%), the Board will pursue variations of increasing revenues and decreasing
expenditures, to restore an unassigned fund balance not to exceed eight percent
(8%).
If the assigned and unassigned portions of the fund balance exceeds eight percent
(8%) of budgeted expenditures, the Board may utilize a portion of the fund balance
by appropriating excess funds for nonrecurring expenditures only.
The Business Manager may designate funds to the Nonspendable, Restricted and
Assigned classification. This may be done after the audit is finished but prior to the
issuance of the financial statements being finalized.
The fund balance shall be assigned upon completion of the year-end independent
audit. The assignment of these funds will be for a specific or tentative future use by
the district.
The Board of Education may, at any time, authorize changes in committed and/or
assigned to meet the financial needs of the school district.
The responsibility for designating funds to specific classifications shall be as
follows:
1.
Nonspendable – may be assigned by the Business Manager.
2.
Restricted – may be assigned by the Business Manager.
3.
Committed – shall be assigned by the Board.
4.
Assigned – may be assigned by the Finance Committee or Business Manager.
4.
Delegation of
Responsibility
The Business Manager or designee shall be responsible for the enforcement of this
policy.
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References:
School Code – 24 P.S. Sec. 218, 688
References:
School Code – 24 P.S. Sec. 218, 688