6022 Minimum Fund Balance

  • The district recognizes the importance of maintaining a prudent fund balance in the general fund to ensure operational cash flow needs are met, to set aside resources for known obligations and to help protect against unforeseen circumstances. Accordingly, the district adopts this policy in regards to those portions of fund balance that are in spendable form but are not legally restricted as to their use from outside sources.

    Annually, the superintendent or designee will present a general fund budget that includes a commitment of at least five percent of the current year’s expenditures toward a minimum fund balance.

    Cross References:    
    Board Policy 6020         System of Funds and Accounts
    Board Policy 6040         Expenditures in Excess of Budget

    ADOPTED: 04/28/2011
    REVISED: 08/22/13

    Procedure No. 6022P Minimum Fund Balance

    The Board of Directors of Yelm Community Schools recognizes the importance of maintaining a sufficient fund balance in each of its funds to assure sound financial practices, provide program stability, and obtain excellent bond ratings.

    The fund balance in the Debt Service Fund, Transportation Vehicle Fund, Capital Projects Fund, and Associated Student Body Fund is primarily a function of the scope of the projects and activities found within the operation of each fund. Stability of revenue and predictability of expenditures in these funds enables the district to establish an appropriate fund balance.

    The complexities of funding and other economic uncertainties in the operation of the General Fund require a different approach in setting the fund balance level. Some of the uncertainties affecting the fund balance for the General Fund include: 

    • Enrollment fluctuations.

    • Unanticipated changes in tax and appropriation levels by state and federal agencies.

    • Legislative mandates having financial impacts on school systems.

    • Passage/failure of voter referendums and levies.

    • Financial impacts of labor agreements including arbitration judgments.

    • Energy cost increases and weather related damages.

    To provide stability of the instructional program and maintain sound financial practices, the district will establish a prudent fund balance level in the General Fund. This will be accomplished through three components of the fund balance: 

    1. Reserved Fund Balance

    2. Unreserved, Designated for Other Items Fund Balance

    3. Unreserved, Undesignated Fund Balance 

    The reserved fund balance will provide sufficient funds for inventory and self-insurance reserves if applicable. The unreserved, designated for other items fund balance allows management to set aside funds for future purposes, which are often designated by contractual agreements. The unreserved, undesignated fund balance should compensate for economic uncertainties and should be targeted at a minimum of five (5) percent of budgeted General Fund. Should the unreserved, undesignated fund balance fall below these targets, a plan to replenish the fund balance will be developed and implemented. If fund balance is targeted for expenditures, it should be used for non-recurring costs.

    ADOPTED: 04/28/2011
    REVISED: 08/22/13

6000 Policies