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DBDB - Fund Balance

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Code: DBDB
Adopted: 11/09/11
Revised/Readopted: 2/21/17
Orig. Code(s): DBDB

The Board recognizes its responsibility to maintain an unrestricted fund balance1 in an amount sufficient to: 

1. Protect Northwest Regional Education Service District (NWRESD) from unnecessary borrowing in order to meet cash-flow needs; 

2. Provide prudent reserves to meet unexpected emergencies and protect against catastrophic events;

3. Meet the uncertainties of state and federal funding; and 

4. Help ensure a credit rating that would qualify NWRESD for lower interest costs and greater marketability of bonds that may be necessary in the construction and renovation of NWRESD facilities. 

Consequently, the Board directs the superintendent to manage the currently adopted budget in such a way to ensure an unrestricted ending fund balance of at least 8 percent of total general fund adopted revenues, less the amount allocated for transfer to component school districts. 

In determining an appropriate unrestricted fund balance, the Board will consider a variety of factors with potential impact on the NWRESD’s budget including the predictability and volatility of its expenditures2; the availability of resources in other funds as well as the potential drain upon general fund resources from other funds3; liquidity4; and designations5. Such factors will be reviewed annually.

END OF POLICY 

1The Government Finance Officers Association (GFOA) recommends, at a minimum, that general-purpose governments, regardless of size, maintain an unrestricted fund balance in their general fund of no less than 5 to 15 percent of regular general fund operating revenues, or of no less than one to two months of regular general fund operating expenditures. The Oregon Association of School Business Officials recommends, at a minimum, an unrestricted ending fund balance of no less than 3 to 8 percent of the general fund budget. In general practice, levels of fund balance, typically, are less for larger governments than for smaller governments because of the magnitude of the amounts involved and because the diversification of their revenues and expenditures often results in lower degrees of volatility. 

2 Higher levels of unrestricted fund balance may be needed if significant revenue sources are subject to unpredictable fluctuations or if operating expenditures are highly volatile.

3 The availability of resources in other funds may reduce the amount of unrestricted fund balance needed in the general fund, just as deficits in other funds may require that a higher level of unrestricted fund balance be maintained in the general fund. 

4 The disparity between when financial resources actually become available to make payments and the average maturity of related liabilities may require that a higher level of resources be maintained. 

5 The need to maintain a higher level of unreserved fund balance to compensate for any portion of unreserved fund balance already designated for a special purpose. 

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