A Taste of Pie

By Cindy McMahon

Sometimes topics that seem dry draw a lot of attention — perhaps they’re not so boring after all! The Fund Balance for Buncombe County Schools is one of those topics. It stepped into the spotlight recently as the Buncombe County Commissioners considered their budget and the County’s annual contribution to the schools.

The school system’s fund balance gets publicly reported once a year, and most people look at the large lump sum figure (it was a little over $11.3 million as of June 30, 2016) and assume that the schools have more savings than they need, and shouldn’t this money be going into the classrooms?

What the public often doesn’t realize is that the Buncombe County Schools relies on this fund balance, mistakenly compared to a savings account, to keep our system running every day. Unlike a home savings account, the fund balance is divided into five different classifications, several of which are highly restricted or even unspendable. Here they are:

1. NON-SPENDABLE FUND BALANCE. Approximately 5% of the whole pie, these funds are either non-liquid assets (such as inventories) or are required to be maintained intact, either legally or by contract.

2. RESTRICTED FUND BALANCE (2%). These funds are restricted either by state statute or for a specific purpose (i.e. capital projects or a donor-designated program).

3. COMMITTED FUND BALANCE (45%). This amount is restricted by School Board Policy 8100, which requires that one month’s worth (1/12) of the Local Current Expense Fund be set aside for use in case of emergency and to manage cash flow, since we sometimes have to pay expenses before funding arrives. Since the Local Expense Fund makes up only a quarter of the total budget, this one-month amount would not go far in the case of a catastrophic event.

4. ASSIGNED FUND BALANCE (48%). As of June 30, 2016, Buncombe County Schools had designated nearly half the pie to balance the budget for the 2016-17 school year. Although the books are not yet closed for the year (which ended June 30), it looks likely that careful cost savings allowed the school system to avoid spending this entire amount. This is a good thing, because in all likelihood we will need to tap into this fund again to balance the budget for the upcoming school year. This part of the pie will likely be mostly or completely gone after the 2017-18 school year.

5. UNASSIGNED FUND BALANCE (0%). If we had “extra” funds in the fund balance for Buncombe County Schools, they would fall into this category. But all of the funds are assigned to one of the other classifications; there is no “slush fund.”

It is the responsibility of the Buncombe County Board of Education, as your elected school leaders, to ensure both the long and short-term financial health of our school system. Understanding and monitoring the Fund Balance is a vital piece of that duty.

Cindy McMahon is the Reynolds District Representative, Buncombe County School Board. Contact: cindy.mcmahon@bcsemail.edu.

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