Policy 5512 – Fund Balance

In February 2009, the Governmental Accounting Standards Board (GASB) issued GASB Statement Number 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB 54 is intended to enhance the usefulness of the financial statements prepared by governmental entities (including school districts) specifically with regard to their reporting of fund balances. The new standard establishes a hierarchy of fund balance classifications based primarily on the extent to which a government must observe spending constraints imposed upon how resources reported in governmental funds can be used.

GASB 54 new fund balance classifications distinguish between amounts that are considered nonspendable (for example fund balance associated with inventory) and other amounts that are classified as restricted, committed, assigned, and unassigned based on the relative strength of the constraints that control how specific amounts can be spent. Accordingly, the new GASB fund balance categories are as follows:

  1. Restricted — includes amounts subject to externally enforceable legal purpose restrictions imposed by external resource providers or through enabling legislation.
  2. Committed — includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority.
  3. Assigned — includes amounts intended to be used by the government 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.
  4. Unassigned — is the residual classification for the government’s General Fund and includes all spendable amounts not contained in the other classifications.

General Policy

  • If a reserve (restricted fund balance) is appropriated, either through a provision in the approved budget or a board approved revision, the district will not make any entry before the end of the year;
  • Before the end of the year, the District may choose to transfer all or part of the original appropriation from the reserves to the fund balance through an entry debiting the reserve (restricted fund balance) and crediting fund balance (unassigned fund balance) up to the amount of the appropriation, but limited to the amount of related expense.
  • Additionally, before the end of the year, the District may chose through a board approved resolution to further increase the reserve by debiting fund balance (unassigned fund balance) and crediting the reserve (restricted fund balance).
  • The Board of Education shall delegate the authority to assign fund balance, for encumbrance purposes, to the person(s) to whom it has delegated the authority to sign purchase orders.

Likewise, the District will ensure that appropriate reserve funds are established and utilized, consistent with applicable law and District policy, to ensure the fund balance is sufficient to meet District needs.

Spending Prioritizations

In circumstances where an expenditure is incurred for a purpose for which amounts are available in multiple fund balance classifications, it is the policy of the Greater Johnstown School District for the School Business Manager or his/her designee to determine the order of the expenditure of funds, on an annual basis.

Annual Review

The school board will conduct an annual review of the sufficiency of the minimum unassigned general fund balance level.

Adopted:10/20/11