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A chart is attached with the Local fund balance history for the past several years and a <br />projected fund balance for the current fiscal year. <br />Current plans are to use $500,000 to fund opening costs for Carrboro High School that <br />are not budgeted in the Capital Fund. These are one -time start-up costs for athletic and <br />band equipment that had to be removed from the capital budget because of the funding <br />shortfall. <br />The CHCCS Board of Education has also earmarked $500,000 of fund balance to <br />complete the financing of Elementary #10. ' Our Board is also discussing the need to use <br />additional fund balance to cover the cost of non - recurring expenditures such as <br />replacement of old technology and installation of security equipment. <br />The district experienced an almost zero fund balance just two years ago and implemented <br />many financial constraints to restrict spending to rebuild it. This was successfully done <br />in a timely manner which enables the district to meet two major funding needs, Carrboro <br />High and Elementary #10. <br />It is the Board's intention to maintain a fund balance close to the recommended 5.5% <br />each year. We believe this fund balance target will be sufficient to cover the cash flow <br />needs of the Local fund. As long as fund balance is used to balance the Local fund, the <br />district will need to maintain its current pattern of un.derspending -the total budget to <br />ensure that the target is reached. A reduction of the appropriated fund balance will <br />require an influx of new revenues to cover the revenue shortfall. <br />Fund balance is also needed for unforeseen emergencies and events. Fortunately, there <br />have not been any events that have required the use of fund balance, but maintenance of a <br />material fund balance is, certainly, important for this purpose. <br />In summary, the use of Local fund balance is needed for school one -time start-up costs, <br />for unforeseen emergencies and events, for cash flow, and to balance the budget when the <br />current revenues are not sufficient to fund priority budget requests. After appropriating <br />$1,000,000 to support the 2007 -08 budget, the district projects to have a 6.88% <br />undesignated fund balance at the end of 2006 -07. We believe this is a reasonable and <br />fiscally responsible level. <br />Lincoln Center, 750 S. Merritt Mill Road - Chapel Hill, NC 27516 -2878 - (919) 967 -8211 - www.chccs.k12.nc.us <br />