The Responsibility of the Board of Education in Managing School District Fiscal Fitness
Develop Fiscal Policies and Procedures Legal Required by law Education General Municipal NYCRR Local Contractual Obligations District policies and procedures
Board of Education Policies Develop strong financial policies Monitor compliance with policy Solve problems through policy development - (Identify, Research, Draft, Review, Implement) Hold employees accountable for compliance with policy Result is increased internal controls
How Do You Measure Fiscal Health?
Sound Fiscal Health Enough cash on hand to pay bills Sufficient revenues to support expenditures on an ongoing basis with minimum reliance on fund equity Meet long term debt & maintain good credit rating Provide education services at a level that meets the needs of all students Administration has demonstrated a commitment to professional development & continuing education
Sound Fiscal Health Long range fiscal plan that is compared frequently to actual progress & adjusted accordingly Maintains buildings to avoid major renovations Files all state & federal claims in a timely & accurate manner Engages experienced auditing firm that encourages discussions regarding district accounting requirements Interaction between the BOE & administration relating to the district s fiscal status & trends
Fiscal Distress Over expended or over encumbered appropriations Inadequate budgetary appropriations and/or revenues to carry the district through a fiscal period Cash flow deficit Fund Balance depletion or erosion Inability of the Special Aid and/or School Lunch Fund to pay back inter-fund loans
Fiscal Management Policy and Procedures
Good Accounting Practices Follows GAAP Addresses GASB Pronouncements Adheres to GML, Ed Law, & NYCRR Provides for Checks & Balances Contains mechanisms to identify & correct fiscal issues Full Disclosure & Complete Transparency Appropriate involvement of the BOE in the monitoring process
Fiscal Procedures Fiscal Policy & Procedures Manual Adhere to Uniform System of Accounts Stipulate the following: The creation, issuance, & analysis of fiscal reports The role of the Treasurer The responsibilities of the various fiscal officers of the district The role of the Internal Auditor The policy/procedure for credit card, travel, & meals The governance of extracurricular funds
Encumbrances Encumbrances Definition: set aside money for anticipated expenditures Methods Purchase Orders Accounting Adjustment Why encumber? Don t spend the same dollar twice Budget monitoring Fund Balance Projections What to encumber? Salaries Debt Service Purchases(supplies, equipment, contracted services) Any other known expenditures (employee benefits, BOCES services, etc.)
Budgetary Transfers Transfers Purpose: to keep budget in balance Board Policy should determine who approves & under what conditions Expenditures that put budget line in negative prior to transfer approval should be limited (non-discretionary costs) Control procedures for transfers should be established
Budgetary Transfer Process Authorized by Board of Education or Superintendent Dollar amount limitation Source documentation Summary report to Board of Education All balances must be positive *Review budget report to assess status*
Contingent & Non-Contingent Expenses Contingent Expense: An expense that does NOT need voter approval. (ex. Salaries) Non-contingent Expense: Does need voter approval (ex. New equipment) What transfers can be made? From one contingent line to another From a non-contingent line to a contingent item Non-contingent to non-contingent NOT from a contingent item to a non-contingent item
Revenue and Expenditure Controls Treasurer s Report Disbursement of funds (Claims Auditor) Certified Payroll Official depositories and bank accounts Fiscal Policy & Procedures Manual Cash procedures (Counting, Deposits, Transit) Check signing Investment policy/procedures Cash flow procedures
Purchasing Policy Appointment of Purchasing Agent Federal, state, and local options RFP, RFI, Bidding Requirements Obtaining verbal & written quotes for items not required to be bid Fiscal Policy & Procedures Manual
Fund Balance
Fund Balance Definition Represents the accumulated excess of revenues over expenditures It is what is left after all liabilities of the district are subtracted from its assets
Reserve Funds Self-imposed saving accounts designated for specific purposes Some may be established by board Encumbrances Retirement Benefits Employee Benefits Accrued Liability Reserve (EBALR) Others require voter authorization Capital projects
Fund Balance Reporting Under GASB 54 RESERVED UNRESERVED Category Non-spendable Restricted Committed Assigned Unassigned EXAMPLES Current BOE approved Legal Reserves What was defined as Designated or the Appropriated Fund Balance What is now defined as Undesignated Unreserved restricted to 4% of Next Years Budget
Fund Balance Projection Begin by January 1st, update monthly Calculate: Revenues projected for the year Expenditures to date Encumbrance Estimated expenditures for year
Common Restricted Fund Balances Encumbrances Retirement Contribution (GML) Worker s Compensation (GML) Unemployment Insurance (GML) Employee Benefit Accrued Liability (GML) Repair (GML) Tax Certiorari (Ed. Law) Capital (Ed. Law)
Unrestricted Fund Balance Unrestricted Assigned Was Appropriated Fund Balance Used to reduce or stabilize tax levy Unrestricted Unassigned Used for revenue short falls or to fund unanticipated contingency expenses Restricted to 4% of the next year s budget