The Hudson School Board had a final policy reading regarding the updated version of its Fund Balance policy during the board’s most recent meeting.
As part of the policy, it states that, “In accordance with the governmental accounting standard, GASB Statement No. 54,” the School Board recognizes “five categories of fund balance for financial reporting purposes.”
Those include:
- Nonspendable Fund Balance – non-cash assets such as inventories or prepaid items.
- Restricted Fund Balance – funds legally restricted for specific purposes, such as grant, food service and expendable trust funds.
- Committed Fund Balance – amounts that can only be used for specific purposes pursuant to a formal vote of the School Board.
- Assigned Fund Balance – amounts intended by the Board for specific purposes. The Board can choose to delegate this authority to the Superintendent or Business Administrator, depending on the situation. Items that would fall under this type of fund balance could be encumbrances.
- Unassigned Fund Balance – residual spendable fund balance after subtracting all the above amounts.
For Committed Fund Balance, it states that “The School Board, as the government’s highest level of decision-making authority, may commit fund balance by a formal vote prior to the government’s fiscal year-end for that fiscal year.”
“Future modification or rescission of committed funds must likewise be accomplished by a formal vote of the School Board prior to fiscal year-end,” the policy states.
Under Assigned Fund Balance the policy states that the “School Board expressly delegates to the Superintendent, through the Business Administrator, the authority under this policy to assign funds for particular purposes.”
The policy also lays out “spending prioritizations” which is the following:
- When an expenditure is incurred that would qualify for payment with either restricted or unrestricted funds, it will be paid from restricted funds.
- When an expenditure is incurred that qualifies for payment from either of the three unrestricted fund balance categories, it will be applied in the following order:
1) Committed
2) Assigned
3) Unassigned
Under Deficit Fund Balance, the policy states that at “year end if any of the special revenue funds (i.e. food service, vocational education funds, etc.) has a deficit unassigned fund balance then the Superintendent is authorized to transfer funds from the general fund to cover the deficit, providing the general fund has money to do so.”
It also states as part of the policy that the “School Board will return to the town any unassigned general fund balance at year end to offset the next fiscal year’s tax rate unless the school district legislative body authorizes the school district to retain year-end unassigned general funds in accordance with RSA 198:4-b.”
Under annual review the policy states “compliance with the provisions of this policy shall be reviewed as a part of the annual budget adoption process.”
The School Board unanimously approved the updated policy.