1. 1 GASB Statement 54 Fund Balance Reporting and Governmental Fund Types deene.dayton@state.sd.us 773-5932

2. 2 Intro Statement No. 54 Released March 11, 2009 Effective for periods beginning after June 15, 2010

3. 3 Current F/B  Fund balance is a term used for assets minus liabilities in a “governmental” fund

4. 4 Current F/B  Reserved F/B Resources not available for spending  Reserve for inventory  Long-term loan receivable Legal restrictions on spending  Restriction narrower than the purpose of the fund itself  Bond covenants

5. 5 Current F/B  Designated F/B Management’s intended future use of resources  Designated for future projects  F/B applied to subsequent year’s budget

6. 6 Current F/B  Unreserved, Undesignated F/B What’s left May even represent what’s left in a Special Revenue Fund

7. 7 Current Proprietary – Food Service  Net Assets – Invested in Capital Restricted Unrestricted

8. 8 New F/B - Listing  Nonspendable  Restricted  Committed  Assigned  Unassigned

9. 9 New F/B - Nonspendable  Not in spendable form, such as: Inventory Long-term loans and notes receivable Prepaids  Amounts legally or contractually required to be maintained intact The principal balance of a permanent fund

10. 10 New F/B - Restricted  Similar definition as for net assets in Statement 34 – when constraints are placed on resources in the following manner – External parties  Debt covenants  Contributors The constitution State law (CO, SPED, Pension)

11. 11 New F/B - Committed  Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the highest level of decision making authority (governing board)  Constraint can be removed or changed only by the same body (governing board)  Action to constrain resources should occur prior to the end of fiscal year, though the exact amount may be determined subsequently

12. 12 New F/B - Assigned  Amounts that are constrained by the government’s “intent” to be used for specific purposes  Intent is expressed by – The governing body A body or individual to which the governing body has delegated the authority to assign amounts to be used for specific purposes

13. 13 New F/B - Assigned  Constraints imposed on the use of assigned amounts are more easily removed or modified than those imposed on amounts that are classified as committed.  Some governments may not have both committed and assigned fund balances, as not all governments have multiple levels of decision-making authority.

14. 14 New F/B - Assigned  By reporting particular amounts that are not restricted or committed in a special revenue, capital projects, debt service, or permanent fund, the government has “assigned” those amounts to the purposes of the respective funds.  In other words, the non-general funds will only have an unassigned balance if it is negative.

15. 15 New F/B - Assigned  An appropriation of existing f/b to eliminate a projected budgetary deficit in the subsequent year’s budget (f/b applied) satisfies the criteria to be classified as an assignment of fund balance.  An assigned f/b is created if the proposed budget at the May meeting contains “fund balance applied” in the General Fund.

16. 16 New F/B - Assigned  GASB believes that an appropriation of existing fund balance does not meet the criteria for a commitment because the government does not have to take action to remove the constraint---it expires at the end of the budgetary period.

17. 17 New F/B - Assigned  Because outlying funds are generally already “restricted” f/b, it would not be appropriate to peel out some of the restricted to report as an “assigned” f/b for subsequent year’s budget.  May record such assignments as a layer of restricted for internal tracking but may not “display” it as such on GAAP f/s.

18. 18 New F/B - Unassigned  The residual classification for the General Fund.

19. 19 New F/B - ALL  The amount that should be reported as nonspendable f/b should be determined before classifying amounts in the restricted, committed, and assigned f/b classifications.  Place balances of a given fund from the top down, until the balances are gone. 1. nonspendable, 2. restricted, 3. committed, 4. assigned, and 5. unassigned

20. 20 New F/B - Negative  Nonspendable, Restricted and Committed balances should always be reported at their full established amounts – even if they cause a negative unassigned.

21. 21 New F/B - Negative  An assigned f/b cannot cause a negative unassigned.  A district can only assign what it has.

22. 22 New F/B - Negative  A negative residual amount should not be reported for restricted, committed or assigned fund balances in any fund.

23. 23 Special Laws  Stay vigilant of special laws that establish levels of authority Interest Earned Sale of Surplus Property Transfers out of CO & SPED SDCL 13-16-26

24. 24 Closing Revenues  Go back to each fund and each revenue account and ask yourself where that account should be closed at the end of the year.  Keep in mind the Special Laws

25. 25 Spending Priority  All governmental funds should have a spending priority policy established  Does your district want to spend restricted or committed dollars first….and so on.

26. 26 Closing Expenditures  Review the expenditure accounts for each fund and determine if the established closing process coincides with the district’s spending priority.

27. 27 New F/B - Display  The following components of f/b: Two components of nonspendable Major restricted purposes Specific purposes of committed and assigned The preceding may either be reported separately in the f/s’s or aggregated in the f/s’s and disclosed in the notes

28. 28 New F/B - Disclosures  The disclosures for committed f/b should identify the government’s highest level of decision making authority AND the formal action that is required to be taken to establish a f/b commitment

29. 29 New F/B - Disclosures  The disclosures for assigned f/b should identify the body or official authorized to assign amounts to a specific purpose AND the policy established by the governing body pursuant to which that authorization is given.

30. 30 New F/B - Disclosures  If a governing body has established a minimum f/b policy, then the policy should be described in the notes to f/s

31. 31 Fund Types – Special Revenue  Special revenue funds “are used” to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes.  The proceeds of specific revenue sources should be the foundation for a special revenue fund.

32. 32 Fund Types – Special Revenue  The restricted or committed proceeds of specific revenue sources should be expected to continue to comprise a substantial portion of the inflows reported in the fund.

33. 33 Fund Types – Special Revenue  Note disclosures should disclose the purpose of each major Special Revenue Fund as well as identifying which revenues are reported in each of these funds.

34. 34 Special Revenue – Impact Aid  Impact Aid is special revenue but it is not spent on a special purpose so it technically is not a special revenue fund.  But state law (SDCL 13-16-31) references a separate Impact Aid fund.

35. 35 Special Revenue – Impact Aid  When a GAAP/Compliance conflict exists, we try to satisfy both  Maintain a separate Impact Aid Fund throughout the year……blend it with the General Fund for year end financial reporting  Note – Transfers from the Impact Aid Fund to non-General Funds would be reported as a transfer out of the General Fund (permissible under SDCL 13-16-26.2)

36. 36 Special Revenue – Impact Aid  All funds are required to be budgeted (SDCL 13-11- 2), such as General, Impact Aid, CO…  GASB requires budgetary RSI for General and major special revenue funds  Impact Aid is not a GASB recognized major special revenue fund so it will not be reported as budgetary RSI  General Fund budgetary RSI will include only the budgeted General fund and not any blended Impact Aid amounts (explain in notes to RSI)

37. 37 Fund Types – Capital Projects  To account for the expenditure on capital outlays, including the acquisition or construction of capital facilities and other capital assets. (broader definition)

38. 38 Fund Types – Capital Projects  Although the use of a capital projects fund is not required, its application will prevent distortions of trend data in an entity’s operating funds.

39. 39 Fund Types – Debt Service  To account for financial resources that are restricted, committed or assigned to expenditure for principal and interest.  All debt does not trigger/mandate the use of a debt service fund…….however

40. 40 Fund Types – Debt Service  Debt service funds “should be used” to report resources if legally mandated.  Debt service funds “should be used” to account for resources that are being accumulated for principal and interest maturing in future years. (term bond)

41. 41 Fund Types – Permanent  “Should be used” to account for resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government’s programs.  Not to include private purpose trust money that is for individuals, private organizations, or other governments.