Q: Can a district avoid a budget overdraft by paying after 6/30 for goods and services received by 6/30?
A: No. Generally Accepted Accounting Principles (GAAP) require that goods and services received by 6/30 must be charged to the budget of the year ended 6/30, regardless of when the cash is paid. Districts may need to amend the budget before 6/30 in order to comply with GAAP and avoid a budget overdraft.
Q: How can general fund "Excess Reserves" be used in budgeting?
A: "Excess Reserves" reported on the general fund budget for FYX1 may be used to fund the OverBASE budget for FYX2. The advantage is a savings of guaranteed tax base (GTB) subsidies. Levies to support the OverBASE budget are not subsidized with state GTB payments, but BASE levies are subsidized. By reappropriating excess reserves to fund the OverBASE budget, the district minimizes BASE levies and maximizes GTB subsidies, saving taxpayers money.
Rather than using them as funding sources on the next year's budget, a district may re-identify "Excess Reserves" each year until used. Excess reserves are "used" intentionally for budget amendments or unintentionally to fill the general fund operating reserve or make up for revenue shortfalls. Excess reserves can be used to fund certain types of budget amendments.
OPI Contact: Janelle Mickelson at (406) 444-3249 or email firstname.lastname@example.org
3rd of February, 2010