DBB
Fund Balance Policy in Accordance with GASB Statement No. 54
Purpose
The following policy has been adopted by the Bayfield Board of Education in order to address the implications of Governmental Accounting Standards Board ("GASB") Statement No. 54, Fund Balance Reporting and Governmental Fund Definitions. The policy is created in consideration of unanticipated events that could adversely affect the financial condition of the District and jeopardize the continuation of necessary public services. This policy will ensure that the District maintains adequate fund balances and reserves in order to:
a. Provide sufficient cash flow for daily financial needs,
b. Secure and maintain investment grade bond ratings,
c. Offset significant economic downturns or revenue shortfalls, and
d. Provide funds for unforeseen expenditures related to emergencies.
Fund type definitions
The following definitions will be used in reporting activity in governmental funds across the District. The District may or may not report all fund types in any given reporting period, based on actual circumstances and activity.
The general fund is used to account for all financial resources not accounted for and reported in another fund.
Special revenue funds are used to account and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt service or capital projects.
Debt service funds are used to account for all financial resources restricted, committed or assigned to expenditure for principal and interest.
Capital projects funds are used to account for all financial resources restricted, committed or assigned to expenditure for the acquisition or construction of capital assets.
Fund balance will be reported in governmental funds under the following categories using the definitions provided by GASB Statement No. 54:
Non Spendable fund balance
Definition - includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained in-tact.
Classification - Non Spendable amounts will be determined before all other classifications and consist of the following items (as applicable in any given fiscal year):
   The District will maintain a fund balance equal to the balance of any long term outstanding balances due from other funds
   The District will maintain a fund balance equal to the value of inventory balances and prepaid items (to the extent that such balances are not offset with liabilities and actually result in fund balance)
Restricted fund balance
Definition - includes amounts that can be spent only for the specific purposes stipulated by the constitution, external resource providers, or through enabling legislation.
Committed fund balance
Definition - includes amounts that can be used only for the specific purposes determined by a formal action of the Board of Education.
Authority to Commit -Commitments will only be used for specific purposes pursuant to a formal action of the Board of Education. A majority vote is required to approve a commitment and/or remove a commitment.
Assigned fund balance
Definition - includes amounts intended to be used by the District for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed.
Authority to Assign - The Board of Education delegates to the superintendent or his/her designee the authority to assign amounts to be used for specific purposes. Such assignments cannot exceed the available (spendable, unrestricted, uncommitted) fund balance in any particular fund.
Unassigned fund balance
Definition - includes the residual classification for the District's general fund and includes all spendable amounts not contained in the other classifications. In other funds, the unassigned classification should be used only to report a deficit balance from overspending for specific purposes for which amounts had been restricted, committed, or assigned.
Operational guidelines. The following guidelines address the classification and use of fund balance in governmental funds:
Classifying fund balance amounts - Fund balance classifications depict the nature of the net resources that are reported in a governmental fund. An individual governmental fund may include nonspendable resources and amounts that are restricted, committed, or assigned, or any combination of those classifications. The general fund may also include an unassigned amount.
Encumbrance reporting - Encumbering amounts for specific purposes for which resources have already been restricted, committed or assigned should not result in separate display of encumbered amounts. Encumbered amounts for specific purposes for which amounts have not been previously restricted, committed or assigned, will be classified as committed or assigned, as appropriate, based on the definitions and criteria set forth in GASB Statement No. 54.
Prioritization of fund balance use - When an expenditure is incurred for purposes for which both restricted and unrestricted (committed, assigned, or unassigned) amounts are available, it shall be the policy of the District to consider restricted amounts to have been reduced first. When an expenditure is incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used, it shall be the policy of the District that committed amounts would be reduced first, followed by assigned amounts and then unassigned amounts.
Minimum unassigned fund balance - The District will maintain a minimum unassigned fund balance in its general fund ranging of five percent of the current year's budgeted expenditures. This minimum fund balance is to protect against cash flow shortfalls related to timing of projected revenue receipts and to maintain a budget stabilization commitment.
Replenishing deficiencies - when fund balance falls below the minimum five percent range, the District will replenish shortages/deficiencies using the budget strategies and timeframes described below.
The following budgetary strategies shall be utilized by the District to replenish funding deficiencies:
   The District will reduce recurring expenditures to eliminate any structural deficit or,
   The District will increase revenues or pursue other funding sources, or,
   Some combination of the two options above

Adopted:  October 9, 2012