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Azusa USD |  BP  3100  Business and Noninstructional Operations

Budget   

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The Governing Board recognizes its critical responsibility for adopting a sound budget for each fiscal year which is aligned with the district's vision, goals, and priorities. The district budget shall guide administrative decisions and actions throughout the year and shall serve as a tool for monitoring the fiscal health of the district.

(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 42122)

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 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 budget that is formally adopted by the Board shall be in the format prescribed by the Superintendent of Public Instruction. The Superintendent or designee may supplement this format with additional information as necessary to effectively communicate the budget to the Board, staff, and public.

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 law. (Education Code 33128.3; 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.

(cf. 2210 - Administrative Discretion Regarding Board Policy)

(cf. 3110 - Transfer of Funds)

Fund Balance

The Board hereby establishes and will maintain reservations of Fund Balance, as defined herein, in accordance with Governmental Accounting and Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Policy shall apply only to the District's governmental funds. The Policy is intended to provide guidelines for the preparation and execution of the annual budget to ensure that sufficient reserves are maintained for unanticipated expenditures or revenue shortfall. It is also intended to preserve flexibility throughout the fiscal year to make adjustments in funding for programs approved in connection with the annual budget.

The Fund Balance refers to the difference between assets and fund liabilities in the governmental funds balance sheet and is referred to as fund equity.

It consists of five categories: Non-spendable, Restricted, Committed, Assigned, and Unassigned.

1. Non-spendable Fund Balance consists of funds that cannot be spent due to their form (e.g. inventories and prepaid purchases) or funds that are legally or contractually required to be maintained intact.

2. Restricted Fund Balance consists of funds that are mandated for a specific purpose by external resource providers (such as grantors), or enabling legislation. Restrictions may be changed or lifted only with the consent of the resource providers.

3. Committed Fund Balance consists of funds that are set aside for a specific purpose by the Board. Formal action must be taken prior to the end of the fiscal year. The same formal action must be taken to remove or change the limitations placed on the funds.

4. Assigned Fund Balance consists of funds that are set aside with the intent to be used for a specific purpose by the district's highest level of decision-making authority or a designee that has been given the authority to assign funds. Assigned funds cannot cause a deficit in unassigned fund balance.

5. Unassigned Fund Balance consists of excess funds that have not been classified in the four categories above. All funds in this category which is not obligated or specifically designated are considered available for any purpose. This category also provides the resources necessary to meet unexpected expenditures and revenue shortfall.

Non-spendable and Restricted Funds

Non-spendable funds are those funds that cannot be spent because they are either:

1. Not in spendable form (e.g. inventories and prepaid purchases) or

2. Legally or contractually required to be maintained intact.

It is the responsibility of the Superintendent or designee to report all Non-spendable Funds appropriately in the District's Financial Statements.

Restricted funds are those that have constraints placed on their use either:

1. Externally by creditors, grantors, contributors, or laws or regulations or other government agencies or

2. By law through constitutional provisions or enabling legislation.

It is the responsibility of the Superintendent or designee to report all Restricted Funds appropriately in the District's Financial Statements.

Authority to Commit Funds

The Board, having the highest level of decision-making authority, has the authority to establish funds for a specific purpose through the passage of budget adoption or a resolution by a simple majority vote. Committed Funds may also be modified, or rescinded by the same method. The passage of a resolution must take place prior to June 30th of the applicable fiscal year. If the actual amount of the commitment is not available by June 30th, the resolution must state the process or formula necessary to calculate the actual amount as soon as information is available.

Authority to Assign Funds

Upon passage of the Fund Balance Policy, authority is given to the Superintendent or designee to assign funds for specific purposes. Any funds set aside as Assigned Fund Balance must be reported to the Board at their next regular meeting. The Board has the authority to remove or change the assignment of the funds with a simple majority vote.

The Board also has the authority to set aside funds with the intent to be used for a specific purpose. Any funds set aside as Assigned Fund Balance requires a simple majority vote. The same action is required to change or remove the assignment.

Unassigned Fund Balance

Unassigned Fund Balance is the residual positive net amount in excess of what can properly be classified in one of the other four fund balance categories. It represents the resources available for future spending.

For financial statement reporting purposes Unassigned Fund Balance reserves include Reserve for Economic Uncertainty Reserve. The District will maintain an economic uncertainly reserve as recommended by California Department of Education (CDE). The primary purpose of this reserve is to avoid the need to service level reductions in the event that an economic downturn causes revenues to come in lower than budget.

Classifying Fund Balance Amounts

When both restricted and unrestricted funds are available for expenditure, restricted funds should be spent first unless legal requirements disallow it.

When committed, assigned and unassigned funds are available for expenditure, committed funds should be spent first, assigned funds should be spent second, and unassigned funds should be spent last; unless the governing board has provided otherwise in its commitment or assignment actions.

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)

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.

Legal Reference:

EDUCATION CODE

1240 Duties of county superintendent of schools

33127-33131 Standards and criteria for local budgets and expenditures

35035 Powers and duties of superintendent

35161 Powers and duties, generally, of governing boards

42103 Public hearing on proposed budget; requirements for content of proposed budget

42122-42129 Budget requirements

42130-42134 Financial certifications

42140-42141 Disclosure of fiscal obligations

42602 Use of unbudgeted funds

42605 Tier 3 categorical flexibility

42610 Appropriation of excess funds and limitation thereon

44518-44519.2 Chief business officer training program

45253 Annual budget of personnel commission

45254 First year budget of personnel commission

GOVERNMENT CODE

7900-7914 Appropriations limit

CODE OF REGULATIONS, TITLE 5

15060 Standardized account code structure

15440-15451 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 AZUSA UNIFIED SCHOOL DISTRICT

adopted: June 7, 2011 Azusa, California