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5 as �oaaty of <br /> ib�Ot �+.^ rd9 <br /> 7wl <br /> FINANCE DEPARTMENT <br /> Opt esTe Q <br /> ORANGE COUNTY <br /> GORDON R. BAKER <br /> DIRECTOR <br /> To: County Commissioners <br /> From: Finance Director <br /> Subject: Recommended Policy on Fund Balance of-School Systems. <br /> Date: February 13, 1986 <br /> During - <br /> ring the 19$5 86 'budget process, it was decided that a policy should be <br /> developed regarding the appropriate amount of fund balance available but <br /> unappropriated that each school system should maintain. This policy would <br /> be agreed upon by the County Commissioners and the Boards of Education. <br /> This recommended policy regarding the fund balance applies to the local current <br /> expense fund and addresses the maximum amount of fund balance available but <br /> unappropriated that each system should have at the beginning of each fiscal <br /> year. <br /> The school systems 'should maintain only the fund balance necessary to meet their <br /> cash flow.needs and to make relatively minor adjustments in their appropriations <br /> during the year. <br /> The Local Government Commission monitors the fund balance of the General Fund of <br /> all tax levying units of government in North Carolina. They have established a <br /> policy that such units of government should maintain each fiscal year a General <br /> Fund fund balance available in an amount equal to at least 8% of the total <br /> expenditures of the General Fund for the year. The expenditures on which this <br /> 8% is computed includes the County's expenditures for the school systems' local <br /> current expense as Well as for their capital outlay. Thus, in meeting the Local <br /> Government Commission's minimum standard of 8%, the County's fund balance avail- <br /> able for the General Fund includes a substantial amount that is related to expen- <br /> ditures for the school systems. The Local Government Commission does not have <br /> such a minimum standard for the school systems themselves. One can conclude <br /> from this that they, rely on the counties to maintain an adequate fund balance <br /> level for the school systems. <br /> The superintendent and the finance director for Orange County Schools have <br /> expressed their desire to build the fund balance available but unappropriated <br /> in the local current expense fund to a level of $120,000. This amount would <br /> equal approximately 2.7% of the budgeted expenditures in this fund for 1985-86 <br /> as originally adopt'ed. Based on the fact that Orange County Schools receive <br /> the major portion of their local current expense revenue from the County in <br /> an equal amount each month, and using the County's 8% minimum standard as a <br /> gauge, a 2.7% fund balance level should be adequate. <br /> 106 EAST MARGARET LANE • HILLSBOROUGH, NORTH CAROLINA 27278 • 919/732-8181 <br />