Policy 701: Budget
701.1 Planning the Budget
PREPARATION
The preparation of the certified budget will be done under the supervision of the Superintendent. The “Adoption of Budget and Taxes” of anticipated revenue and expenditures of the school district for the ensuing school year will be presented to the Board of Education prior to certification as required by law. The Board will conduct a hearing for budget certification as prescribed by law.
The budget document will also contain a brief explanatory section to demonstrate which program changes for the ensuing year are responsible for any changes in expenditures.
LINE-ITEM Complete line-item budget appropriations for the school year will be presented to the Board no later than the last regular meeting in November.
PUBLICATION OF CERTIFIED BUDGET The administration shall file with the Secretary of the Board and the Board of Education the budget estimate required by law, at least twenty (20) days prior to the budget certification deadline. The Board will cause to have established and published the time and the place where a public hearing will be held for the purpose of public review of the budget document. Notice of the public hearing will be published at least ten (10) days prior to such hearing.
The verified proof the publication of such notice together with the certified budget will be filed in the office of the County Auditor and preserved by said office. No levy will be valid unless and until such notice is published and filed.
PUBLIC HEARING
The Board will meet at the time and place designated in the notice of public hearing on the certified budget, at which meeting any resident of the district or any person who would be affected as a result of the adoption of such budget, will be heard in favor of or against such budget or any part thereof.
ADOPTION
The Board will, after the public hearing, adopt the certified budget for the ensuing fiscal year and will certify the same in duplicate to the county auditors per deadlines as specified by law and on forms provided by the Department of Management.
IMPLEMENTATION The final certified budget will be considered as the authority for all expenditures to be made during the fiscal year. Any expenditure to be made that exceeds the final certified budget will be made only in accordance with procedures specified in the Code of Iowa. These procedures permit a budget amendment.
PUBLICATION OF BUDGET AMENDMENT The administration shall file with the Secretary of the Board and the Board of Education the budget amendment required by law, at least twenty (20) days prior to the budget amendment deadline. The Board shall establish and publish the time and the place where a public hearing will be held for the purpose of public review of the budget amendment document. Notice of the public hearing will be published at least ten (10) days prior to such hearing.
The verified proof the publication of such notice together with the certified budget will be filed in the office of the County Auditor and preserved by said office.
All current expenditures will be made using current revenues except as approved by the Board of Education. Budgetary procedures, which balance current expenditures at the expense of meeting the needs of future years, such as postponing expenditures, accruing future years’ revenues or rolling over short-term debt, will be avoided.
The budget will provide for adequate maintenance of capital plant and equipment and for their orderly replacement. The budget also will provide for adequate funding of all retirement systems permitted by Iowa law.
A budgetary control system will be maintained to insure adherence to the budget.
Date of Adoption: November 12, 1974
Reviewed: April 13, 1992; Dec. 14, 1998; May 14, 2001; Feb. 14, 2006; Jan. 10, 2011; March 9, 2015; November 12, 2018; Nov. 8, 2021
Amended: Jan. 8, 1980; June 9, 1986; Jan. 11, 1999; Jan. 10, 2011
Legal References: (Code of Iowa) Chapters 24, 257
701.2 Line Item Transfer Authority
After the budget is finalized, the authority to transfer line item appropriations or to increase program appropriations shall be as follows:
- Line Item Transfer
The Superintendent or Superintendent designee may authorize transfers of line item appropriations within a program in response to requests from the appropriate administrator if in the opinion of the Superintendent the rationale for the request is consistent with the program needs or goals.
- Increasing Program Budgets
The Board of Directors must authorize transfer of funds between programs or the increasing of a program appropriation.
Date of Adoption: January 11, 1999
Reviewed: May 14, 2001; February 14, 2006; Jan. 10, 2011; March 9, 2015; November 12, 2018; Nov. 8, 2021
Amended:
701.3 Financial Accounting System
The Board of Directors of this School District adopts the Uniform Financial Accounting for Iowa Schools, as approved by the Iowa Department of Education, as its system for financial accounting.
The Mount Pleasant Community School District will use the Generally Accepted Accounting Principles (GAAP) as its basis of accounting.
Date of Adoption: November 12, 1974
Reviewed: April 13, 1992, Dec. 14, 1998; May 14, 2001; Feb. 14, 2006; Jan. 10, 2011; March 9, 2015; November 12, 2018; Nov. 8, 2021
Amended: January 8, 1980; January 11, 1999
701.4 GASB 54
Inasmuch as GASB 54, Fund Balance Reporting and Governmental Fund Type Definitions, which establishes accounting and financial reporting standards for all governments that report governmental funds requires the District to disclose certain requirements, the District identifies the following as District operating policy.
The fund balance identified as ‘committed fund balance’ will be determined by the Board of Directors and will require formal board action. An identified committed fund balance should be for a specific purpose pursuant to constraints imposed by the formal action of the Board of Directors. The Board of Directors will take action to ‘commit’ a fund balance prior to year-end (June 30) of the year the original committed amount is determined. The exact amount of the committed balance may be determined after the year-end; however, in compliance with GASB 54, the intended committed purpose must be identified prior to year-end (June 30).
In the event that a committed fund balance is identified subsequent to year-end (June 30), the amount will be reflected on the balance sheet as assigned for that year.
The committed amounts cannot be used for any other purpose unless the Board of Education, at a public meeting, by formal action makes changes or rescinds the committed balance.
The Board of Directors authorizes the Business Manager to assign amounts to a specific purpose in compliance with GASB 54. An assigned Fund Balance should be reported for constraints by the District’s intent to be used for specific purpose, but are not restricted or committed.
In accordance with the GASB 54, the District identifies that when an expenditure is incurred, it is applied to the highest level of classification of fund balance and then subsequently applied to honor constraints on the specific purposes for which amounts in those fund balances can be spent.
Legal Reference: Governmental Accounting Standards Board(GASB) Statement 54
Approved: June 13, 2011
Reviewed: March 9, 2015; November 12, 2018; Nov. 8, 2021
Amended:
Policy 701.5 GENERAL FUND RESERVES AND FUND BALANCE REPORTING
Financial Metrics
The District is committed to the following financial metrics:
1) Solvency Ratio*. Maintaining unrestricted/uncommitted general fund balance that is at between 7% and 17% of annual revenue.
2) Unspent Authority. Maintaining unspent authority (balance) of not less than 7% of that year’s annual expenditures.
The district will measure attainment of these goals as of June 30, but only after completion of the Certified Annual Report.
Fund Balance Reporting
Financial reporting for the balances in the district’s governmental funds is based on Governmental Accounting Standards Board (GASB) Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions. Fund balance refers to the difference between assets and liabilities in the governmental funds balance sheets. GASB 54 established a hierarchy that is based on “the extent to which the government is bound to honor constraints on the specific purpose for which the amounts in those funds can be spent.”
The governmental funds can have up to five fund balance classifications. The classifications are defined below from most to least restrictive:
Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. This includes items not expected to be converted to cash, including inventories and prepaid expenses. It may also include other property acquired for resale and the principal of a permanent fund.
Restricted fund balance should be reported when constraints placed on the use of resources are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. This includes “categorical balances.”
Committed fund balance reflects specific purposes pursuant to constraints imposed by formal action of the Board. Such constraints can only be removed or changed by Board action.
Assigned fund balance reflects amounts that are constrained by the government’s intent to be used for specific purposes but meet neither the restricted nor committed forms of constraint. Unless the amount is negative, the assigned fund balance is the residual classification for the governmental funds other than the general fund. If the amount is negative, then the residual amount is shown as unassigned.
Unassigned fund balance is the residual classification for the general fund only. As noted above, if a negative residual amount exists in other governmental funds then the amount is reported as unassigned.
The Board authorizes the Chief Financial Officer to assign general fund balance amounts for specific purposes in compliance with GASB 54. The Board directs the Chief Financial Officer to provide to the Board, at least annually, reports of the fund balances for each of the five fund balance classifications under GASB 54.
*Solvency ratio calculation: Unassigned /General Fund Revenues
Date of Adoption: March 10, 2014
Reviewed: March 9, 2015; Nov. 12, 2018; Nov. 8, 2021; March 13, 2023
Amended: March 13, 2023