Butte School District

Financial Management

7515

Fund Balances

I. PURPOSE

The fund balance policy establishes a framework for the management of all excess funds managed by the Butte School District. The policy is in accordance with GASB Statement 54; management of fund balance. It also provides guidance and direction for elected and appointed officials as well as staff in the use of excess funds at year-end.

II. SCOPE

This fund balance policy applies to all funds in the custody of the School District Business Manager/Clerk of the Butte School District, Butte, Montana. These funds are accounted for in the District's annual audited financial reports and include, but are not limited to, the following:

• General Fund
• Special Revenue Funds
• Capital Project Funds
• Enterprise Funds
• Any new funds created by the District, unless specifically exempted by the governing body; in accordance with state law or GASB pronouncements.

CLASSIFICATION OF FUND BALANCES

The school district shall classify its fund balances in its various funds in one or more of the following five classifications: nonspendable, restricted, committed, assigned, and unassigned.

IV. DEFINITIONS

Fund balance---means the arithmetic difference between the assets and liabilities reported in a school district fund.

Committed fund balance—amounts constrained to specific purposes by the District itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the District takes the same highest-level action to remove or change the constraint

Assigned fund balance—amounts a school district intends to use for a specific purpose; intent can be expressed by the District or by an official to which the Board of Trustees delegates the authority

Nonspendable fund balance—amounts that are not in a spendable form (such as inventory) or are required to be maintained intact (such as the corpus of an endowment fund)

Restricted fund balance—amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation

Unassigned fund balance—amounts that are available for any purpose; these amounts are reported only in the general fund.

V. MINIMUM FUND BALANCE

The school district will strive to maintain a minimum unassigned general fund balance of 10% percent of the annual budget.

VI. ORDER OF RESOURCE USE

If resources from more than one fund balance classification could be spent, the school district will strive to spend resources from fund balance classifications in the following order (first to last): restricted, committed, assigned, and unassigned.

VII. COMMITTING FUND BALANCE

A majority vote of the school board is required to commit a fund balance to a specific purpose and subsequently to remove or change any constraint so adopted by the board.

VIII. ASSIGNING FUND BALANCE

The school board, by majority vote, may assign fund balances to be used for specific purposes when appropriate. The board also delegates the power to assign fund balances to the following: Superintendent or Business Manager. Assignments so made shall be reported to the school board on a monthly basis, either separately or as part of ongoing reporting by the assigning party if other than the school board.

An appropriation of an existing fund balance to eliminate a projected budgetary deficit in the subsequent year’s budget in an amount no greater than the projected excess of expected expenditures over expected revenues satisfies the criteria to be classified as an assignment of fund balance.

IX. REVIEW

The school board will conduct, at a minimum, an annual review of the sufficiency of the minimum unassigned general fund balance level.

Legal References:
Statement No. 54 of the Governmental Accounting Standards Board

Policy History:
Adopted on: 10/18/04
Reviewed on:
Revised on: 12/19/11