FILE:  DCF

Cf:  DCB

FUND BALANCES

The following policy has been adopted by the Lafayette Parish School Board (School Board) in order to address the implications of Governmental Accounting Standards Board (“GASB”) Statement No. 54, Fund Balance Reporting and Governmental Fund Definitions.  This policy is created in consideration of unanticipated events that could adversely affect the financial condition of the school district and jeopardize the continuation of necessary public services.  This policy will ensure that the district maintains adequate fund balances and reserves in order to

1. Provide sufficient cash flow for daily financial needs;

2. Secure and maintain the highest possible School System bond ratings;

3. Offset significant economic downturns or revenue shortfalls; and

4. Provide funds for unforeseen expenditures related to emergencies.

FUND BALANCE REPORTING IN GOVERNMENTAL FUNDS

Fund balance will be reported in governmental funds under the following categories using the definitions provided by GASB Statement No. 54.

Non-spendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact (e.g., inventory, pre-paid items).

Restricted fund balance includes amounts that can be spent only for the specific purposes stipulated by external parties or through enabling legislation (e.g., grants or donations). Effective July 1, 2022, all equity in school activity funds will be considered restricted fund balance for the use of activities in the schools.

Committed fund balance includes amounts that can be used only for the specific purposes determined by a formal action of the School Board or through a School Board policy. (e.g., future anticipated costs).  Any accumulated fund balance resulting from the net activity of the self-funded health insurance plan shall be committed for use by the self-funded health insurance plan.

Assigned fund balance includes amounts intended to be used by the School Board for specific purposes but do not meet the criteria to be classified as restricted or committed. Authority to assign amounts of fund balance to be used for specific purposes is hereby delegated to the Superintendent, the Assistant Superintendent of Business Services, or the Director of Finance.  In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed by the School Board.

Unassigned fund balance includes the residual amount of the School Board’s general fund and includes all spendable amounts not contained in the other classifications.

ECONOMIC STABILIZATION FUND (ESF)

The School Board will maintain a stabilization fund committed to protecting against cash flow shortfalls, volatility of sales tax collections and state revenues, economic downturns, natural disasters and other potential threats to the economic stability of the Lafayette Parish School System.  This stabilization fund shall equal at least two and one-half (2½) months of the budgeted General Fund operating expenditures and General Fund transfers out for debt service.  Group health plan-related expenditures such as group health claims and group health administrative expenses shall not be included in determining budgeted operating expenditures for purposes of this calculation.  Premiums paid to the group health plan by the funds shall be included in the calculation.  For any year in which this stabilization fund is not anticipated to equal two and one-half (2½) months of budgeted General Fund operating expenditures and General Fund transfers out to Debt Service, the operating budget shall include a provision to increase this fund toward the stipulated amount.  Such provision shall be set by the School Board but should be at least 50% of the previous year’s excess revenues over expenditures or $500,000 (whichever is greater).  This provision may be changed at the discretion of the School Board with a two-thirds (⅔) vote of the total membership of the School Board.  Once the two and one-half (2½) months’ level has been obtained, any surplus in excess of $100,000 and the amount needed to adjust the ESF to the three-month level will be transferred to the Self-Funded Construction Fund and Capital Improvements Fund.  The School Board will determine the amounts that get allocated to the “Committed-FYXX Projects” in each of these funds.  Any change to this requirement will require a two-thirds (⅔) vote of the total membership School Board.

Ref:    La. Rev. Stat. Ann. §§17:81, 17:88, 17:89

Board minutes, 4-5-00 (as DM), 8-6-08, 6-15-11, 10-7-15, 9-13-17, 12-13-17, 11-13-19, 11-9-22

Lafayette Parish School Board