The Kenai Peninsula Borough School District continued its Budget 101 series this week with a presentation about the district’s fund balance.
The series began in September, and is designed to educate the public about the inner workings of the school district’s budget process. Monday’s presentation was delivered by Finance Director Liz Hayes.
“So what is fund balance?” she began. “Fund balance is the difference between your assets and liabilities. Whatever's Remaining is fund balance. So obviously, you always want to have some fund balance in reserve, for those unexpected occasions that you might need it.”
Hayes explained that the fund balance is arranged in five sections. Some items are “non-spendable,” like inventory, course materials and prepaid items. Another type is “restricted”, or money enforced by a legal process, like any unspent funds allocated to a homeschool student enrolled in the district’s program.
Another section, called committed, is set aside by the school board, and the board must take formal action to release those funds for spending.
“The purpose of a fund balance is in case you need those funds to pay bills, if something catastrophic happens and we don’t have the means to pay salaries, something along those lines,” she said.
Another section, the “assigned fund balance” includes items committed for a specific purpose like purchase orders. The final section is the “unassigned fund balance,” which is available to the board for spending.
“It’s not held for anything. The board has the discretion to spend that on whatever the needs of the district are,” Hayes said. “Or you can continue to hold it to make sure that we don’t have a cliff that we might fall off.”
Hayes explained that according to state statute, districts can only roll over 10% of their fund balance year to year. The legislature suspended that rule during the pandemic, when districts received federal funds, but it will return next fiscal year. Board President Zen Kelly explained.
“In the eyes of the state, who’s funding the bulk of education, what they don’t want is for them to be continually giving money to districts to have them just sock it away, and sock it away, and sock it away,” Kelly said. “So it makes fiscal sense that they would implement this.”
Hayes also discussed misconceptions among state legislators about how much money districts have available in the fund balances. She and other district administrators continue to warn about a looming $13 million deficit for the next fiscal year, which will pose an issue unless state legislators pass a school funding increase.
The next Budget 101 presentation is about the district’s chart of accounts, and is on Dec. 4 at 3:30 p.m.
