Agenda - 09-27-2004-2 - Laserfiche WebLink

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15 v ; B= sq- - V. FINANCE DEPARTMENT " u '" 6 af. ORANGE COUNTY GORDON R. BARER DMECT0R To: County Commissioners From: Finance Director Subject: Recommended Policy on Fund Balance of-School SystPn . Date: February , During the 1985-86 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 maintain. This policy would be agreed upon by the County Commissioners and the Boards of Education. This recommended policy regarding the fund tbalance euapapplies liesnto available but current expense fund and addresses the max m dub 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 in their appropriations during the year. The Local Government Commission monitors the fund balahce•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 it least 8% of the total expenditures of the General Fund for the year. The expenditures on which this 87.-i.s..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 Commwcsion's minimum standard of 8%, 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 Government 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 maintain an adequate fund balance leve1_ 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 curren se fund to a level of $120,000. This amount would equal approximatel, 2. 7%)of the budgeted expenditu=es in this fund for 1985-86 as originally adopcetf -- Based on the fact that Orange County Schools receive the.:major- portion of their local current expense revenue from the County in an':egial amount each month, and using the County's 8% minimum standard as a -gauge; ad2.7X=fund-balance-lever-should-be adequate.