Agenda - 09-30-1998 - 1 - Laserfiche WebLink

Browse Search

I INANCE DEPARTMENT Attachment 4 1, geo .: ORANGE COUNTY GORDON R. BAKER DOCTOR To: County Commissioners From: Finance Director Subject: Recommended Policy on Fund Balance of'School Syste- Date: February , During the 198586 budget process, it was decided that a policy should be developed regarding the appropriate amount of fund balance available but ,unappropriated that each school system should maiataiia. This policy would be agreed upon by the County Commissioners and the Boards of Education. This recommended policy regarding the fund balance applies to the local current expense fund and addresses the maximum amount of fund balance available but unappropriated that each system should•have at the beginning of each fiscal year. The school systems should maintain only the fund balance necessary to -meet their cash flow-needs and. to make relatively minor adjustments is their appropriations during the year. The Local Government Commission monitors the fund balance -of the General Fund of all tax levying units of government in North Carolina. They have established a policy that .such. units of. government should maintain each fiscal year a General Fund fund_-balance available in an amount equal to at least 8Z of the total expenditures -of the General Fund for the year. The expenditures on which this 8x -is- computed includes the County's expenditures for the school systems' local current expense as well as for their capital outlay. Thus, in meeting the Local Government Commission's minimum standard of 8z, the County's fund balance avail- able for the General Fund includes a substantial amount that is related to expen- ditures for the school systems. The Local Gcve==enc Commission does not have such a minimum standard for the school systems themselves. _One can conclude from this that they rely on the counties to.maincain an adequate fund balance level..for the school systems. The superintendent and the finance director for Orange County Schools have expressed their desire to build the fund balance available but unappropriated in the local currea; se fund to a level of $L20,000.' This amount would equal approximatel 2.7x�of the budgeted expenditures in this fund for 1985 -86 as originally adopced�-_ Based on the fact that Orange County Schools receive the.:major- portion. of their local current expense revenue from the County in an' equal amount each month, and using the County's 8z minimum standard as a gauge;= :a,2.7% - =. fund - balance level - should - be adequate.