Copyright© 2007 by School Services of California, Inc.
Volume 20 For Publication Date: August 17, 2007 No. 18
Is There a Way to Restrict Our Ending Balance?
Q. We are in the process of closing the books for the fiscal year. Because our district is relatively small and has declined in enrollment over the last three years, our Board is considering designating an amount in addition to our state-required minimum as a cautionary measure to provide more fiscal stability. Do you have a resolution that would allow my district to restrict its ending balance?
A. We agree with your Board. Being a small declining enrollment district requires extra fiscal caution. Designating an additional amount of your fund balance for fiscal uncertainties can be a good way to provide more fiscal stability. However, if you choose to propose a resolution to designate balances above your state-required minimum, we recommend an additional caution: designation of reserves should never be for the purpose of misleading your unions or your community about the true financial condition of the district.
Below is the resolution that we would recommend.
Sample Resolution
Resolution Authoring the
Restriction of
Excess Reserves for Specific Purposes
On motion of Member _____________, second by Member _______________, the following resolution is adopted:
WHEREAS, the state Chancellor’s Office requires that each community college district maintain a minimum level of unrestricted general fund monies as an undesignated reserve, and
WHEREAS, the ___________________ Community College District anticipates having an unrestricted reserve at the end of the 2006-07 fiscal year in excess of this minimum reserve requirement, and
WHEREAS, the ___________________ Community College District wishes to specify the uses for the unrestricted reserve in excess of the minimum reserve requirement,
NOW, THEREFORE, BE IT RESOLVED, that the Governing Board of the __________________________Community College District hereby designates the amount of unrestricted monies in the 2006-07 fiscal year ending balance in excess of the minimum reserve requirements specified by the state for the following purposes:
1.
2.
3.
Approved this __________ day of __________________________, 2007.
_______________________________________________________________
Name and title
_______________________________________________________________
Date
[Posted to the Internet 8/10/07] — Ron Bennett and John Gray