(cf. 0000 - Vision)
(cf. 3000 - Concepts and Roles)
(cf. 3300 - Expenditures and Purchases)
(cf. 3460 - Financial Reports and Accountability)
(cf. 9000 - Role of the Board)
The district budget shall show a complete plan and itemized statement of all proposed expenditures and all estimated revenues for the following fiscal year, together with a comparison of revenues and expenditures for the current fiscal year. The budget shall also include the appropriations limit and the total annual appropriations subject to limitation as determined pursuant to Government Code 7900-7914. (Education Code 43122)
Budget Development and Adoption Process
The Superintendent or designee shall establish an annual budget development process and calendar in accordance with the single budget adoption process described in Education Code 42127(i). He/she shall annually notify the County Superintendent of Schools of the district's decision to use the single budget adoption process in the subsequent year.
In order to provide guidance in the development of the budget, the Board shall annually establish budget priorities based on identified district needs and goals and on realistic projections of available funds.
The Superintendent or designee shall oversee the preparation of a proposed district budget for approval by the Board and shall involve appropriate staff at all levels in the development of budget projections.
The Board encourages public input in the budget development process and shall hold public hearings and meetings in accordance with Education Code 42103 and 42127.
(cf. 9320 - Meetings and Notices)
(cf. 9322 - Agenda/Meeting Materials)
(cf. 9323 - Meeting Conduct)
The Superintendent or designee shall ensure that the proposed budget is clearly presented and effectively communicated to the Board, staff, and public. He/she may adapt or supplement the format prescribed by the Superintendent of Public Instruction (SPI) as necessary for these purposes. However, the budget that is formally adopted by the Board shall be in the state-required format.
Budget Criteria and Standards
In developing the district budget, the Superintendent or designee shall analyze criteria and standards adopted by the State Board of Education which address estimation of funded average daily attendance (ADA), projected enrollment, ratio of ADA to enrollment, projected revenue limit, salaries and benefits, other revenues and expenditures, facilities maintenance, deficit spending, fund balance, and reserves. The budget review shall also identify supplemental information regarding contingent liabilities, use of one-time revenues for ongoing expenditures, use of ongoing revenues for one-time expenditures, contingent revenues, contributions, long-term commitments, unfunded liabilities, and the status of labor agreements. (Education Code 33127, 33128, 33129, 5 CCR 15440-15451).
The Board shall establish and maintain a general fund reserve for economic uncertainty that meets or exceeds the requirements of 5 CCR 15450.
The Board may establish other budget assumptions or parameters which may take into consideration the stability of funding sources, legal requirements and constraints on the use of funds, anticipated increases and/or decreases in the cost of services and supplies, categorical program requirements, and any other factors necessary to ensure that the budget is a realistic plan for district revenues and expenditures.
Long Term Financial Obligations
The district's current-year budget and multi-year projections shall include adequate provisions for addressing the district's long-term financial obligations, including, but not limited to, long-term obligations resulting from collective bargaining agreements, financing of facilities projects, unfunded or future liability for retiree benefits, and accrued workers' compensation claims.
(cf. 4141/4241 - Collective Bargaining Agreement)
(cf. 4143/4243 - Negotiations/Consultation)
(cf. 4154/4254/4354 - Health and Welfare Benefits)
(cf. 7210 - Facilities, Financing)
(cf. 9250 - Remuneration, Reimbursement and Other Benefits)
The Board shall approve a plan for meeting the district's long-term obligations to fund nonpension, other postemployment benefits (OPEBs). The plan shall include a specific funding strategy and the method that will be used to finance the district's annual fiscal obligations for such benefits in a manner that continually reduces the deficit to the district to the extent possible. The Board reserves the authority to review and amend the funding strategy as necessary to ensure that it continues to serve the best interests of the district and maintain flexibility to adjust for changing budgetary considerations.
When the Superintendent or designee presents a report to the Board on the estimated accrued but unfunded cost, OPEBs, the Board shall disclose, as a separate agenda item at the same meeting, whether, or not it will reserve a sufficient amount of money in its budget to fund the present value of the benefits of existing retirees and/or the future cost of employees who are eligible for benefits in the current fiscal year. (Education Code 42140)
When the Superintendent or designee presents a report to the Board on the estimated accrued but unfunded cost of workers' compensation claims, the Board shall disclose, as a separate agenda item at the same meeting, whether or not it will reserve in the budget sufficient amounts to fund the present value of accrued but unfunded workers' compensation claims or if it is otherwise decreasing the amount in its workers' compensation reserve fund. The Board shall annually certify to the County Superintendent the amount, if any, that it has decided to reserve in the budget for these costs. The Board shall submit to the County Superintendent any budget revisions that may be necessary to account for this budget reserve. (Education Code 42141)
Budget Amendments
Whenever revenues and expenditures change significantly throughout the year, the Superintendent or designee shall recommend budget amendments to ensure accurate projections of the district's net ending balance. When final figures for the prior-year budget are available, this information shall be used as soon as possible to update the current-year budget's beginning balance and projected revenues and expenditures.
In addition, budget amendments shall be submitted for Board approval when the state budget is adopted, collective bargaining agreements are accepted, district income declines, increased revenues or unanticipated savings are made available to the district program proposals are significantly different from those approved during budget adoption, interfund transfers are needed to meet actual program expenditures, and/or other significant changes occur that impact budget projections.
(cf. 3110 - Transfer of Funds)
Fund Balance for the General Fund
Purpose
The Fund Balance Policy establishes the procedures for reporting unrestricted fund balance in the General Fund financial statements. Certain commitments and assignments of fund balance will help ensure that there will be adequate financial resources to protect the district against unforeseen circumstances and events such as revenue shortfalls and unanticipated expenditures. The policy also authorizes and directs the Chief Business Official to prepare financial reports which accurately categorize fund balance as part Government Accounting Standards Board (GASB) Statement No. 54, Fund Balance and Governmental Fund Type Definitions.
General Policy
Fund balance is essentially the difference between the assets and liabilities reported in a governmental fund. There are five separate components of fund balance, each of which identifies the extent to which the district is bound to honor constraints on the specific purpose for which amounts can be spent.
мя Nonspendable fund balance (inherently nonspendable)
мя Restricted fund balance (externally enforceable limitations on use)
мя Committed fund balance (self-imposed limitations on use)
мя Assigned fund balance (limitation resulting from intended use)
мя Unassigned fund balance (residual net resources)
The first two components listed above are not addressed in this policy due to the nature of their restrictions. An example of nonspendable fund balance is inventory. Restricted fund balance is either imposed by law or constrained by grantors, contributors, or laws or regulations of other governments. This policy is focused on the financial reporting of unrestricted fund balance, or the last three components listed above. These three components are further defined below.
Provisions
Committed Fund Balance
The Governing Board, as the district's highest level of decision-making authority, may commit fund balance for specific purposes pursuant to constraints imposed by formal actions taken, such as a majority vote or resolution. These committed amounts cannot be used for any other purpose unless the Board removes or changes the specific use through the same type of formal action taken to establish the commitment. Board action to commit fund balance needs to occur within the fiscal reporting period, no later than June 30th, however, the amount can be determined subsequent to the release of the financial statements. At the time of adoption of this policy, the district does not have any reserves that meet this component of fund balance.
Assigned Fund Balance
Amounts that are constrained by the district's intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance. This policy hereby delegates the authority to assign amounts to be used for specific purposes to the Chief Business Official for the purpose of reporting these amounts in the annual financial statements.
Unassigned Fund Balance
These are residual positive net resources of the general fund in excess of what can properly be classified in one of the other four categories. There are some reserves that do not meet the requirements of the fore mentioned components of fund balance. For financial statement reporting purposes these reserves are included in unassigned fund balance. This includes:
Reserve For Economic Uncertainty Reserve - The district will maintain an economic uncertainty reserve of at least 3% of total General Fund operating expenditures (including other financing). The primary purpose of this reserve is to avoid the need for service level reductions in the event of an economic downturn causes revenues to come in lower than budget. This reserve may be increased from time to time in order to address specific anticipated revenue shortfalls (state actions, etc.)
Fund Balance Classification
The district considers restricted fund balances to have been spent first when an expenditure is incurred for purposes for which both restricted fund balance is available. Similarly, when an expenditure is incurred for purposes for which amounts in any of the unrestricted classifications of fund balance could be used, the district considers committed amounts to be reduced first, followed by assigned amounts and then unassigned amounts.
This policy is in place to provide a measure of protection for the district against unforeseen circumstances and to comply with GASB Statement No. 54. No other policy or procedure supersedes the authority and provisions of this policy.
Legal Reference:
EDUCATION CODE
1240 Duties of county superintendent of schools33127-33131 Standards and criteria for local budgets and expenditures35035 Powers and duties of superintendent35161 Powers and duties, generally, of governing boards42103 Public hearing on proposed budget; requirements for content of proposed budget42122-42129 Budget requirements42130-42134 Financial certifications42140-42141 Disclosure of fiscal obligations42602 Use of unbudgeted funds42605 Tier 3 categorical flexibility42610 Appropriation of excess funds and limitation thereon44518-44519.2 Chief business officer training program45253 Annual budget of personnel commission45254 First year budget of personnel commission
GOVERNMENT CODE
7900-7914 Appropriations limit
CODE OF REGULATIONS, TITLE 515060 Standardized account code structure15440-15451 Criteria and standards for school district budgets
Management Resources:
CSBA PUBLICATIONS
Maximizing School Board Governance: Budget Planning and Adoption, 2006
Maximizing School Board Governance: Understanding District Budgets, 2006
School Finance CD-ROM, 2005
CALIFORNIA DEPARTMENT OF EDUCATION PUBLICATIONS
California School Accounting Manual
FISCAL CRISIS AND MANAGEMENT ASSISTANCE TEAM PUBLICATIONS
Fiscal Oversight Guide for AB 1200, AB 2756 and Subsequent Related Legislation, September 2006
GOVERNMENT FINANCE OFFICERS ASSOCIATION
Best Practice: Appropriate Level of Unrestricted Fund Balance in the General Fund, 2009
GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS
Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions, March 2009
Statement 45, Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions, June 2004
Statement 34, Basic Financial Statements and Management's Discussion and Analysis - For State and Local Governments, June 1999
WEB SITES
CSBA: http://www.csba.org
Association of California School Administrators: http://www.acsa.org
California Department of Education, Finance and Grants: http://www.cde.ca.gov/fg
California Department of Finance: http://www.dof.ca.gov
Fiscal Crisis and Management Assistance Team: http://www.fcmat.org
Government Finance Officers Association: http://www.gfoa.org
Governmental Accounting Standards Board: http://www.gasb.org
Legislative Analyst's Office: http://www.lao.ca.gov
School Services of California, Inc.: http://www.sscal.com
Policy ALHAMBRA UNIFIED SCHOOL DISTRICT
adopted: September 9, 1997 Alhambra, California
revised: April 5, 2011
revised: June 28, 2011