6022 Fund Balance
Policy: 6022 Section: 6000 – Management Support
Fund Balance The Board of Directors of the Ridgefield School District recognizes the importance of a sufficient General Fund balance to assure sound financial practices, provide program stability, and obtain excellent bond ratings. Given the continual complexities associated with educational funding and the many new and ongoing economic uncertainties, planning for and meeting the operational needs of the District within the constraints of the General Fund requires setting a consistent and adequate fund balance level. Economic uncertainties, for which a budgeted fund balance must be set aside, include but are not limited to: Enrollment fluctuations Legislative mandates having financial impacts on school systems. Passage/failure of voter levies and referendums. Financial impacts of labor agreements including arbitration judgements. Litigation. Energy cost increases and weather-related damages. Major maintenance projects such as HVAC and roof replacement and maintenance emergencies. Maintaining adequate cash flow to meet monthly obligations in lieu of registered warrants. To provide a stable instructional program and maintain sound financial practices, the District will establish a prudent fund balance level in the General Fund. This will be accomplished through the use of varying fund balances: 1. Nonspendable Fund Balance – Nonspendable accounts represent those portions of fund balance that cannot be spent either because they are not in a spendable form (prepaid items), or are legally required to be intact. 2. Committed Fund Balance – Committed accounts can only be used for specific purposes pursuant to constraints imposed by formal action of the District’s highest level of decisionmaking authority. The Board of Directors is the highest level of decision-making authority that can, by adoption of resolution, commit fund balance. Once adopted, the limitation imposed by resolution remains in place until a similar action is taken to remove or revise the limitation. 3. Restricted Fund Balance – Restricted accounts represent those amounts that, except those items reported as nonspendable, are restricted to specific purposes. These restrictions may either be (a) externally imposed by creditors, grantors, contributors, laws, or regulations of other governments, contracts and agreements or (b) imposed by law through constitutional provisions or enabling legislation. 4. Assigned Fund Balance – Assigned accounts represent those amounts that are constrained by the district’s intent to be used for specific purposes, but are neither restricted nor committed. Authority for making these assignments rests with the Superintendent, and may include but not limited to assignments for items such as building maintenance, technology, curriculum and future capital purchase related needs. 1|Page
5. Unassigned Fund Balance – Unassigned fund balance is the residual fund balance designation for the General Fund. The amount contained in this account within the General Fund represents the amount of fund balance that is spendable but has not been restricted, committed, or assigned to specific purposes within the general fund. In other funds, the unassigned fund balance is used only if the district has over spent the resources available within the fund resulting in a negative unassigned balance. The unassigned fund balance shall be available to compensate for economic uncertainties, assure adequate level of reserves to meet monthly cash flow demands, and provide sufficient reserves to meet ensure an excellent bond rating. At the close of the fiscal year, the unassigned fund balance level shall be a minimum of seven (7) percent of the budgeted General Fund expenditures. Legal References:
RCW 28A.505.130 Budget-Requirements for Balancing Estimated Expenditures
Adoption Date: 08.23.16 Ridgefield School District Revised: 05.25.04; 05.27.08; 06.12.12 Classification: Optional
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Fund Balance The Board of Directors of the Ridgefield School District recognizes the importance of a sufficient General Fund balance to assure sound financial practices, provide program stability, and obtain excellent bond ratings. Given the continual complexities associated with educational funding and the many new and ongoing economic uncertainties, planning for and meeting the operational needs of the District within the constraints of the General Fund requires setting a consistent and adequate fund balance level. Economic uncertainties, for which a budgeted fund balance must be set aside, include but are not limited to: Enrollment fluctuations Legislative mandates having financial impacts on school systems. Passage/failure of voter levies and referendums. Financial impacts of labor agreements including arbitration judgements. Litigation. Energy cost increases and weather-related damages. Major maintenance projects such as HVAC and roof replacement and maintenance emergencies. Maintaining adequate cash flow to meet monthly obligations in lieu of registered warrants. To provide a stable instructional program and maintain sound financial practices, the District will establish a prudent fund balance level in the General Fund. This will be accomplished through the use of varying fund balances: 1. Nonspendable Fund Balance – Nonspendable accounts represent those portions of fund balance that cannot be spent either because they are not in a spendable form (prepaid items), or are legally required to be intact. 2. Committed Fund Balance – Committed accounts can only be used for specific purposes pursuant to constraints imposed by formal action of the District’s highest level of decisionmaking authority. The Board of Directors is the highest level of decision-making authority that can, by adoption of resolution, commit fund balance. Once adopted, the limitation imposed by resolution remains in place until a similar action is taken to remove or revise the limitation. 3. Restricted Fund Balance – Restricted accounts represent those amounts that, except those items reported as nonspendable, are restricted to specific purposes. These restrictions may either be (a) externally imposed by creditors, grantors, contributors, laws, or regulations of other governments, contracts and agreements or (b) imposed by law through constitutional provisions or enabling legislation. 4. Assigned Fund Balance – Assigned accounts represent those amounts that are constrained by the district’s intent to be used for specific purposes, but are neither restricted nor committed. Authority for making these assignments rests with the Superintendent, and may include but not limited to assignments for items such as building maintenance, technology, curriculum and future capital purchase related needs. 1|Page
5. Unassigned Fund Balance – Unassigned fund balance is the residual fund balance designation for the General Fund. The amount contained in this account within the General Fund represents the amount of fund balance that is spendable but has not been restricted, committed, or assigned to specific purposes within the general fund. In other funds, the unassigned fund balance is used only if the district has over spent the resources available within the fund resulting in a negative unassigned balance. The unassigned fund balance shall be available to compensate for economic uncertainties, assure adequate level of reserves to meet monthly cash flow demands, and provide sufficient reserves to meet ensure an excellent bond rating. At the close of the fiscal year, the unassigned fund balance level shall be a minimum of seven (7) percent of the budgeted General Fund expenditures. Legal References:
RCW 28A.505.130 Budget-Requirements for Balancing Estimated Expenditures
Adoption Date: 08.23.16 Ridgefield School District Revised: 05.25.04; 05.27.08; 06.12.12 Classification: Optional
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