701.5 Governmantal Accounting Practices and Regulations

Code No.701.5

GOVERNMENTAL ACCOUNTING PRACTICES AND REGULATIONS

School district accounting practices will follow state and federal laws and regulations, generally accepted accounting principles (GAAP) and the uniform financial accounting system provided by the Iowa Department of Education.  As advised by the school district’s auditor, determination of liabilities and assets, prioritization of expenditures of governmental funds and provisions for accounting disclosures shall be made in accordance with governmental accounting standards.

In Governmental Accounting Standards Board (GASB) Statement No. 54, the board identifies the order of spending unrestricted resources applying the highest level of classification of fund balance - restricted, committed, assigned, and unassigned - while honoring constraints on the specific purposes for which amounts in those fund balances can be spent.  A formal board action is required to establish, modify and or rescind a committed fund balance.  The resolution will state the exact dollar amount.  In the event, the board chooses to make changes or rescind the committed fund balance, formal board action is required.

The Board authorizes the Superintedent to assign amounts to a specific purpose in compliance with GASB 54.  An ‘assigned fund balance’ should also be reported in the order of spending unrestricted resources, but is not restricted or committed. 

It is the responsibility of the superintendent to develop administrative regulations implementing this policy.  It is also the responsibility of the superintendent to make recommendations to the board regarding fund balance designations.  

Legal Reference: 

Iowa Code §§ 257.31(4); 279.8; 297.22-.25; 298A.        

 

Approved 5-6-13         Reviewed ____________        Revised  11-16-2020

 

701.5 R(1) Fiscal Management - Financial Metrics

The following relevant PK-12 public sector indicators will be provided to the Board annually to better understand the financial trends of the district. These indicators will be an accurate depiction as of June 30th of the preceding fiscal year and will depict at a minimum of 5 years of data.

  • Total revenues and expenditures by fund and major sources;
  • Financial Solvency Ratio - assigned plus unassigned fund balances divided by total revenue minus AEA flow through;
  • Unspent Authorized Budget Ratio - amount of maximum spending authority left at year end after deducting the general fund expenditures incurred during the year;
  • Unspent Authorized Balance Ratio Net of Restricted Fund Balances (Categorical Fund Balances) - amount of maximum spending authority left at year end after deducting both the general fund expenditures incurred during the year and the total restricted fund balances (categorical fund balances) at year end;
  • Enrollment Trend - funding follows the student so it is important to understand district enrollment numbers;
  • Staff costs as a percent of total general fund. 

Financial Projections

Five-year financial projections of the general fund will be prepared and updated annually. The general fund is the operating fund of the district where the majority of salaries and benefits are funded. Projections will help the board determine sustainability of the annual operating budget and help make future budgetary decisions.

The District is committed to utilizing the following financial metrics in determining district financial goals: 

  1. Unspent Authorized Budget Ratio: Maintain unspent authorized budget ratio within the 15-30% target range. The current year’s projected balance will be discussed with the Board before staffing and other spending decisions are finalized for the succeeding year. 
  2.  Unspent Authorized Budget Net of Restricted Fund Balances (Categorical Balances): Maintain unspent authorized budget ratio net of restricted fund balances (categorical balances) within the 15-30% target range. The district will attempt to spend the restricted (categorical) annual allocation in the year received to the extent possible.
  3. Solvency Ratio: Maintain an unrestricted, uncommitted general fund balance within the 15-30% target range with 15% being a minimum goal. The current year’s projected balance will be discussed with the Board before establishing the succeeding year’s cash reserve levy and before staffing and other spending decisions are finalized.
  4. The District will take reasonable steps to achieve a total general fund balance at least equal to its unspent authority. This enables the District to cash flow its legal spending limit.

I.C. Iowa Code References Description Iowa Code § 257.31 Finance Program - Committee - https://simbli.eboardsolutions.com/SU/ULMYdVaoL2saq7ymrAiJKA== Iowa Code § 279.8 Directors - General Rules - Bonds of Employees - https://simbli.eboardsolutions.com/SU/GxLOU5DCQ4lPacx1slshYam7g== Iowa Code § 257.7 Authorized Expenditures - https://simbli.eboardsolutions.com/SU/su01VaPF8GGtL4tQxCZslshrg==