GASB Statement No. 54 and Iowa School Districts

GASB Statement No. 54 and Iowa School Districts

AgendaProvide a brief overview of GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type DefinitionsGovernmental Fund TypesFund Balance CategoriesDiscuss Implementation in Iowa School Districts2GASB Statement No. 54Why?Two overall changes to financial reporting:Revised/Clarified definitions of governmental fundsChanged fund balance reportingEffective for June 30, 2011No effect to the proprietary funds (enterprise funds or internal service funds) or fiduciary fundsNo effect to government-wide statements33GASB Statement No. 54General Fund: to account for and report all financial resources not accounted for and reported in another fund

Special revenue funds: specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projectsStudent Activity FundManagement Levy Fund

Capital projects funds: financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assetsPhysical Plant and Equipment Levy Fund-previously reported as a special revenue fund is now a Capital Projects Fund, Fund 36.Capital Projects Fund44GASB Statement No. 54Debt service funds: financial resources that are restricted, committed, or assigned to expenditure for principal and interestPermanent funds: financial resources that are restricted to the extent that only earnings, and not principal, may be used for the Districts programs

5GASB Statement No. 54NonspendableRestrictedCommittedAssignedUnassigned66GASB Statement No. 54Nonspendable: Not in a spendable formCannot ever be spent: inventories or prepaid itemsCannot currently be spent: Long-term portion of loans receivable or assets held for saleIf the proceeds must be used for a specific purpose, classify based on the constraintOther long-term receivables are usually offset by the deferred revenue liability and there is no fund balance as a resultLegally or contractually required to be maintained intact-permanent fund principal

77GASB Statement No. 54Restricted-externally imposedExternal: Creditors, grantors, contributors or laws or regulations of other governments, such as the StateDifference between restricted fund balance and restricted net assets on the government-wideCommittedHighest level of decision-making authority (Board)MUST be committed by the Board prior to year-end, must be documentedAssignedMay be established by the governing body itself or the governing body may delegate this to an official (Superintendent or Business Manager) or another body within the organization (Finance Committee)Cannot be negative88GASB Statement No. 54UnassignedOnly allowed a positive unassigned fund balance in the General FundOther governmental funds may report deficit balances as unassignedRemember, cannot report an assignment for an amount to a specific purpose if the assignment results in a deficit unassigned fund balanceClassificationDetermine nonspendable amounts first.Apply the Districts policy for whether restricted or unrestricted amounts have been spent when an expenditure is incurred and both types of resources are available.Next, apply the Districts policy for use of committed, assigned or unassigned.Deficit position: Eliminate any amounts assigned and if residual is still negative, then report a deficit unassigned amount99Stabilization ArrangementsFormally setting aside amounts for use only in certain specific circumstancesReported as restricted or committedThe formal action taken for setting aside the amounts specifies the circumstances for use and organization must prove non-routine natureIf the formal action is not sufficient, the fund balance is reported as unassigned

1010ImplementationEstablish District policiesCommitted fund balances-need Board approval prior to JuneAssigned fund balances-need to determine the body or official authorized to make assignments and the policy that delegated entity is to followFlows: In what order will the resources be used?Start now with the prior year audit report and determine the fund balance reportingDraft the footnote disclosures based on the policies that have been adopted

1111ImplementationStudent Activity Special Revenue FundReported as restricted net assets on government wide statementsFund balance is restrictedManagement Levy Special Revenue FundReported as restricted net assets on government wide statementsSource of revenue is the levy annually certified by the DistrictFund balance is restrictedPPEL Capital Projects FundReported as restricted net assets on government wide statementsSource of revenue is the levy annually certified by the DistrictFund balance is restrictedCapital Projects FundReported as restricted net assets on government wide statementsStatewide sales and service tax Fund balance is restricted1212ImplementationDebt Service FundReported as restricted net assets on government wide statementsSource of revenue is the levy specifically approved by votersFund balance is restrictedGeneral FundCategorical funding-restrictedMay have Committed and/or Assigned

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15General Fund exampleFY 2010 Fund Balance=$7,935,158Any Nonspendable? Prepaid items Any Restricted? Federal and state programsAny Committed? NoneAny Assigned? Federal and state programs

What is the Unassigned Balance?1616Sarah Bohnsack, Partner563.343.9595Sarah@governmentalservice.com

Mia Frommelt, Partner913.660.3931Mia@governmentalservice.com

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