General Fund. In order to maintain and protect the long-term financial and cash flow stability of the district, the total combined fund balances in the General Fund will be maintained at no less than 15% of total general fund annual revenues. Should general fund fund balances decline below 15% of annual revenues, the district shall develop a multi-year plan to be approved by the Board of Education to restore fund balances to this minimum level.
General Fund Undistributed Reserve – Economic Stabilization. Pursuant to Utah Code 53A-19-103 the district will maintain a General Fund Undistributed Reserve of no less than 4% and no more than 5% of the previous year’s projected total General Fund revenues.
Committed Fund Balances for Taxpayer Appeals. The District shall set aside amounts known and expected for taxpayer appeals as committed fund balances. These fund balances are considered temporary and shall not be included in the overall long-term budget plans of the district and long-term fund balances.
Capital Projects Fund. The Capital Projects fund reserves and fund balances will be maintained at a minimum of $50,000 for emergency repair situations.
Budget Contingency Planning. The district will incorporate a minimum of a 1.5% budget contingency (of projected total General Fund revenues), in the district’s annual General Fund budget to maintain flexibility for unknown contingencies that may negatively affect the operating budget of the district.
Fund Balance Categories. Amounts assigned to the following fund balance categories are subject to the following stipulations and criteria:
Nonspendable Fund Balance. This category includes fund balance amounts that cannot be spent because they are either a) not in spendable form or b) legally or contractually required to be maintained intact. Fund balance amounts related to inventories and scholarships are classified as nonspendable.
Restricted Fund Balance. This category includes net fund resources that are subject to external constraints that have been placed on the use of the resources either a) imposed by creditors (such as through a debt covenant), grantors, contributors, or laws or regulations of other governments or b) imposed by law through constitutional provisions or enabling legislation.
Committed Fund Balance. The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the District’s highest level of decision-making authority. The Board of Education is the highest level of decision-making authority for the District that can, by adoption of a resolution prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. The Board of Education has resolved to commit fund balance amounts in the governmental funds to the following purposes: a) Economic stabilization. As defined in Utah law as an “undistributed reserve,” the District maintains for economic stabilization up to 5% of general fund budgeted expenditures. Potential state budget cuts, disasters, immediate capital needs, and other significant events are circumstances and the use of this reserve requires a written resolution adopted by a majority vote of the Board of Education filed with the Utah State Board of Education and Utah State Auditor. b) Employee benefit obligations for unpaid compensated absences. c) Contractual obligations that will be completed after June 30, 2014. d) Amounts held in other governmental funds for students. Additionally, the commitment is necessary to maintain liquidity (i.e., reducing any disparity between when financial resources are available to make payments and the maturity of related liabilities). Also defined by state law, the commitment is not to be used “in the negotiation or settlement of contract salaries for school district employees”.
Assigned Fund Balance. Amounts in the assigned fund balance classification are intended to be used by the District for specific purposes but do not meet the criteria to be classified as committed. The Board has by resolution authorized the business administrator to assign fund balance. The Board may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment.
Unassigned Fund Balance. Residual balances in the general fund are classified as unassigned.
Fund Balance Flow Assumption – Sometimes the District will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last.