4:07 - Fund Balances

Policy 4:07

Business and Non-Instructional Operations

Fund Balances

Purpose

Wilmette Public Schools District 39 is dedicated to maintaining a reasonable fund balance sufficient to mitigate current and future financial risks and to ensure stable tax rates. This policy establishes goals and provides guidance concerning the desired level of year-end fund balance to be maintained by the District as well as categories of reported fund balance.

Definitions

Fund - For purposes of this policy a fund is defined as a fiscal and accounting entity with a self-balancing set of accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures. The District maintains separate funds as required by the Illinois State Board of Education (ISBE). The record of fund activity is maintained in the District's financial accounting software and is reported annually in the District's annual financial report (AFR).

Governmental fund types used by the District include the general fund, special revenue funds, debt service funds and capital projects funds. Student activity funds maintained by the District are fiduciary in nature and are not governed by this policy.

General Fund - The general fund should be used to account for and report all financial resources not accounted for and reported in another fund.

Special Revenue Funds - Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The term proceeds of specific revenue sources establish that one or more specific restricted or committed revenues should be the foundation for a special revenue fund. If the District no longer expects that a substantial portion of the inflows will derive from restricted or committed revenue sources, the District should discontinue reporting a special revenue fund, and instead report the fund's remaining resources in the General Fund.

Debt Service Funds - Debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Debt service funds should be used to report resources if legally mandated.

Capital Projects Funds - Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets.

District Funds

Fund
Fund Type
Educational    General
Operations & Maintenance
Special Revenue or General
Debt Services
Debt Service
Transportation
Special Revenue
Municipal Retirement/Social Security
Special Revenue
Capital Projects
Capital Projects
Working Cash
Special Revenue (or General, depending on policy/tax levy)
Tort
General
Fire Prevention & Safety
Capital Projects

Fund Balance - Fund balance is a measure of available financial resources. Fund balance is the difference between a fund's assets and liabilities.

Statement No. 54 of the Governmental Accounting Standards Board (GASB) Fund Balance Reporting and Governmental Fund Type Definitions establishes two categories of fund balance for use by governmental entities:

  1. The Nonspendable Fund Balance classification includes amounts that cannot be spent because they are either (a) not in spendable form, such as inventories and prepaid amounts or (b) legally or contractually required to be maintained intact.
  2. The Spendable Fund Balancecategory includes all resources not included in the Nonspendable Fund Balance category. The Spendable Fund Balance category has four sub-categories as follows:
    1. Restricted Fund Balance reflects resources that are subject to enforceable legal restrictions by outside parties such as creditors (through debt covenants), grantors, contributors, or other governments. Such restrictions include property taxes other than those reported in the General Fund, grants other than general state aid, proceeds from debt issuances, and other restricted sources.
    2. Committed Fund Balance is government imposed constraints on the use of resourcs by formal action of the District's Board of Education through Board Resolution. The constraint remains binding unless removed by formal action of the Board of Education. The formal action should describe the revenue source considered to be committed, and the specific purpose of its use.
    3. Assigned Fund Balance reflects the District's intended use of resources for a specific purpose and assigned in accordance with the Board of Education or the Superintendent. Fund balance may be assigned after the end of the fiscal year. Non-negative residual unrestricted or uncommitted fund balance in funds other than the General Fund will be considered to be assigned.
    4. Unsassigned Fund Balance is the residual balance reported in the General Fund or a negative fund balance in a fund other than the General Fund.

The categories and subcategories set forth by GASB are used for District general purpose external financial reporting in accordance with GAAP accounting principles. The District may use other or additional designations for internal accounting and special purpose reporting. Authority for use and transfer of District funds arises under State law; the GASB designations are used for descriptive reporting purposes only and are not intended to express or imply limitation on that authority. Individual District funds maintained as required by state law and ISBE regulations may contain monies described under more than one GASB category or sub-category.

Policy

Days Cash on Hand

Wilmette School District 39 will strive to maintain 150 days Cash on Hand as defined in the Financial Profile Summary of the Illinois State Board of Education Annual Financial Report.

Resource Use Policy

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available the District considers restricted amounts to have been spent first. Also, when an expenditure is incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used the District considers committed, assigned, and then unassigned amounts, in that order, to have been spent.

Deficits

Fund balance deficits in any fund will be budgeted to be reduced and eliminated in a systematic manner through the transfer of resources from other funds as allowable, the distribution of property taxes as permitted by the Property Tax Extension Limitation Law or through the allocation of unrestricted General State Aid.

Adopted: December 12, 2011

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