Agenda - 04-30-2007-d - Laserfiche WebLink

Browse Search

�- April 25, 2007 TO: Orange County Board of County Commissioners FROM: Neil G. Pedersen, Superintendent RE: Local Fund Balance In anticipation of the upcoming 2007 -08 budget discussions, we are providing some historical data on the fund balance in the Local Fund of Chapel Hill — Carrboro City Schools ( CHCCS). In tbis*discussion we will explain how the district has used Local fund balance in prior years as well as how we plan to use in the future. In 1986 the Board of County Commissioners adopted a school fund balance policy which established a maximum fund balance of 5.5% of expenditures for CHCCS and 2.75% for Orange County Schools. The fund balance percentage was described as "fiend balance available but unappropriated." Fund balance is reported in the annual financial statements. The Local fund balance serves as a cash flow or working capital. CHCCS receives equal, monthly payments from the County appropriated ad valorem tax, however, the majority of the special district tax revenue is collected on a cyclical schedule in late November through February. When the Local fund balance amount is low in the Fall, prior to receiving an allotment of the special district tax revenue, the district has experienced cash flow problems. A few years ago, the General Assembly adopted a law requiring school districts to pay teachers a full month of pay for the month of August even though schools were not allowed to open prior to August 25. This situation contributed to the cash flow problem for CHCCS since the amount collected. from our Local budget. The OrangeyCounty� not enough to cover monthly expenditure g Finance Director has helped us through those cash flow issues by advancing payments to us until the special district tax funds were collected. It has been the practice of CHCCS to increase the Local budget using unappropriated fund balance for items that are not covered by the projected revenues in a given year. These budgeted items should be non - recurring expenditures and not recurring costs such as salaries and benefits, although this has not always been the case.