6022 Policy – Financial Management – Fund Balance

Bellingham Public Schools recognizes the importance of maintaining a sufficient fund balance in each of its funds to assure sound financial practices, provide program stability, and obtain excellent bond ratings. Fund balance is the excess of a fund over its liabilities and reserves.

The fund balance in the Debt Service Fund, Transportation Vehicle Fund, Capital Projects Fund, and Associated Student Body Fund is primarily a function of the scope of the projects and activities found within the operation of each fund. Stability of revenue and predictability of expenditures in these funds enables the district to establish an appropriate fund balance.

The complexities of funding and other economic uncertainties in the operation of the General Fund requires a different approach in setting the fund balance level. Some of the uncertainties affecting the fund balance for the General Fund include:

  1. Enrollment fluctuations.
  2. Unanticipated changes in tax and appropriation levels by state and federal agencies.
  3. Legislative mandates having financial impacts on school systems.
  4. Passage/failure of voter referendums and levies.
  5. Financial impacts of labor agreements including arbitration judgments.
  6. Litigation.
  7. Energy cost increases and weather related damages.

To provide stability to the instructional program and maintain sound financial practices, the district will establish a prudent fund balance level in the General Fund. This will be accomplished through five components of the fund balance:

  1. Restricted Fund Balance
  2. Non-spendable Fund Balance
  3. Committed Fund Balance
  4. Assigned Fund Balance
  5. Unassigned Fund Balance

The above classifications represent those fund categories established and directed by the Governmental Accounting Standards Board (GASB) and are defined as:

Restricted Fund Balance represents those amounts that are restricted to specific purposes as a result of externally imposed by laws or regulations.

Non-spendable Fund Balance represents those portions of fund balance that cannot be spent either because they are not in a spendable form, or are legally required to be maintained intact. i.e. Food service inventory.

Committed Fund Balance represents those amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the school board.

Assigned Fund Balance represents those amounts that are constrained by the school district’s intent to be used for specific purposes, but are neither restricted nor committed. Authority for making these assignments may rest with senior administration of the school district, i.e., labor agreement obligations, legislative action regarding retirement rates, etc.

Unassigned Fund Balance is the residual fund balance designation for the General Fund. The amount contained in this account within the General Fund represents that amount of fund balance that is spendable but has not been restricted, committed, or assigned to specific purposes within the General Fund.

The Unassigned Fund Balance should include an Unassigned to Minimum Fund Balance account.  This account should be sufficient to compensate for economic uncertainties and shall be maintained at a minimum of three percent (3%) and within a range of three (3) to five (5) percent of General Fund expenditures.

The board establishes the order in which fund balances will be spent when multiple fund balance types are available for a specific purpose is committed, assigned, and lastly unassigned. The superintendent or designee shall establish and maintain procedures for determining if resources would meet the definition of assigned.




Approved By: Greg Baker
Adopted/Previous Revisions: 11/06/08
Updated: 11/09/15
Superintendent or Board Approved: Superintendent Approved
Legal References: Content

RCW 28A.320.070   School District as Self-insurer – Authority

RCW 28A.505.130     Budget – Requirement for Balancing Estimated Expenditures

RCW 28A.505            School District Budgets

Management Resources: Content

GASB Statement 54