Fund Balances

1. Fund Balances What are fund balances? Why does _____ ISD maintain a fund balance in the General Fund?

2. Why is Discussion of District Fund Balances Timely? • The State Legislature Convenes on 1/11/2011 • State lawmakers estimate a deficit of $18b.+ • One option for closing this deficit is to require school districts to use local resources in place of state revenue • This option may be attractive to state lawmakers because of misconceptions of fund balance • State-mandated use of our fund balance will be devastating to our district

3. Our District’s Fund Balance Policy • Example: _______ ISD Annual Operating Policy: A financial goal of the district shall be to have a sufficient balance in the operating fund to be able to maintain fiscal independence in case of financial needs or crisis. The district shall strive to maintain a yearly fund balance in the general operating fund in which the total fund balance is 22.5% of total operating expenditures and the unassigned fund balance is 15% of the total operating expenditures.

4. What are Fund Balances? • Districts use the General Fund to pay expenses related to instructing and transporting students. • Within the General Fund: • Assets – Liabilities = FUND BALANCE • The amount reported as district’s fund balance is a snapshot. • A fund balances will fluctuate daily.

5. What are Fund Balances? • A fund balance may be: • “Reserved”, “Designated”, or “Unreserved, Undesignated” • Only the last category of fund balance is available for any legal expenditure • Fund balances are the culmination of the board’s financial decisions over many years

6. What a Fund Balance is not? • Fund Balance is not: • a Savings Account • a Rainy Day Fund • the result of unduly high taxes

7. Why do district’s have fund balances? • Cash Management • Lower interest rates on district bonds • Unforeseen expenditures & Disasters • Ongoing support for educational programs • Best Practices

8. What is the Recommended Level of Fund Balance? • The Government Finance Officers Association (GFOA) recommends an unassigned fund balance of “no less than two months of…regular general revenue operating expenditures.” • The Texas Education Agency’s (TEA) optimum fund balance calculation requires school districts to add two months of cash disbursements to amounts needed to cover any cash flow deficits.

9. _________ ISD’s Fund Balance • ______ ISD’s fund balance as of (end of fiscal year 2009/2010 was $______________ • Reserved balances were $ • Designated balances were $ • The remaining unreserved, undesignated portion of ____________ ISD’s fund balance at (end of fiscal year 2009/2010) was $___________

10. _________Isd’s Fund Balance – By the Numbers • _________ Isd’s fund balance is equivalent to: • $_____ per enrolled student • _____% of our annual operating budget • ____ months of operating expenses • Our district’s fund balance [meets/fall short] of the GFOA/TEA standard.

11. Recent Budget Activities Affecting _______ ISD’s Fund Balance • On July/August XX, the school board approved the 2010-11 school year budget • This budget uses XXXX of the fund balance to • Example 1 (Give teachers/personnel a salary increase) • Example 2 (Provide xxx program to increase student achievement in ___________) • OR: The 2010-11 school year budget added $____ to the fund balance