GENERAL FUND BUDGET
District accounting practices will follow state and federal laws and regulations, Generally Accepted Accounting Principles (GAAP), and the uniform financial accounting system provided by the Iowa Department of Education. As advised by the district’s auditor, determination of liabilities and assets, prioritization of expenditures of governmental funds, and provisions for accounting disclosures shall be made in accordance with governmental accounting standards.
The district shall prepare an annual three-year general fund budget forecast that includes estimates of unspent authorized budget (spending authority). The estimates shall be prepared utilizing scenarios for likely Supplemental State Aid (SSA) rates and enrollment projections. The projections shall include estimates of property tax rates and income surtax rates, if applicable.
The treasurer shall report to the board as to actual revenue and expenditures for the month and year-to-date as compared to budgeted revenues and expenditures and compared to historical revenues and expenditures (both in dollar amounts and percentages) for each fund maintained by the district. The treasurer shall provide context with respect to current year variances between budgeted and historical revenues and expenditures.
FINANCIAL METRICS
The district is committed to the following financial metrics:
- Solvency Ratio*: Maintaining a combined unassigned and assigned general fund balance that is at least 7% of annual revenue (actual or anticipated). Prior to setting the current year’s cash reserve levy and before staffing and other spending decisions are finalized, the district will take reasonable steps to achieve a total general fund balance at least equal to its unspent authority. This enables the district to cash flow its legal spending limit.
B. Unspent Authority: Maintaining an unspent authority balance of not less than 7% of that year’s annual expenditures. The current year’s projected balance will be discussed with the board before staffing and other spending decisions are finalized for the succeeding year. The district will measure attainment of these goals as of June 30th, but only after completion of the certified annual report.
*Solvency Ratio Calculation:
Unassigned + Assigned Fund Balances
General Fund Revenues – AEA Flow Through
MODIFIED SUPPLEMENTAL AMOUNT
The district shall solicit from the School Budget Review Committee (SBRC) additional modified supplemental amount (spending authority) where it may be available for items such as special education deficit, increasing enrollment, budget guarantee, open enrollment not on prior year count, English Language Learner (ELL), and any other lawful purposes. The board shall be provided a resolution to approve the maximum request authorized. Any award of modified supplemental amount may be levied as a cash reserve levy, in full, in the next available budget year. For recurring program deficits that are predictable and estimable, the district shall levy in advance for the immediately succeeding year as part of the general cash reserve levy if the deficit causes the estimated assigned and unassigned to fall below the minimum required. Grants of spending authority not funded by the State or other sources may ultimately be levied against property taxes.
FUND BALANCE REPORTING
In the Governmental Accounting Standards Board (GASB) Statement No. 54, the board identifies the order of spending unrestricted resources applying the highest level of classification of fund balance – restricted, committed, assigned, and unassigned – while honoring constraints on the specific purposes for which amounts in those fund balances can be spent. Formal board action is required to establish, modify, and/or rescind a committed fund balance. The resolution will state the exact dollar amount. In the event the board chooses to make changes or rescind the committed fund balance, formal board action is required.
The board authorizes the superintendent [or designee] to assign amounts to a specific purpose in compliance with GASB 54. An “assigned fund balance” should also be reported in the order of spending unrestricted resources but is not restricted or committed.
- Nonspendable Fund Balance: Includes amounts that cannot be spent because they are either not in spendable form, or legally or contractually required to be maintained intact. This includes items not expected to be converted to cash, including inventories and prepaid expenses. It may also include other property acquired for resale and the principal of a permanent fund.
- Restricted Fund Balance: Should be reported when constraints placed on the use of resources are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. This includes “categorical balances.”
- Committed Fund Balance: Reflects specific purposes pursuant to constraints imposed by formal action of the board. Such constraints can only be removed or changed by board action.
- Assigned Fund Balance: Reflects amounts that are constrained by the government’s intent to be used for specific purposes but meet neither the restricted nor committed forms of constraint. Unless the amount is negative, the assigned fund balance is the residual classification for the governmental funds other than the general fund. If the amount is negative, then the residual amount is shown as unassigned.
- Unassigned Fund Balance: The residual classification for the general fund only. As noted above, if a negative residual amount exists in other governmental funds, then the amount is reported as unassigned.
It is the responsibility of the superintendent [or designee] to develop administrative regulations implementing this policy. It is also the responsibility of the superintendent [or designee] to make recommendations to the board regarding fund balance designations.
Adopted: 12/13
Reviewed: 12/18
Revised: 5/15; 1/22; 2/24; 3/25
Legal Reference (Code of Iowa): §§ 257.31(4); 279.8; 291; 297.22-25; 298A
IASB Reference: 701.04