Utah Law and USOE regulation provide limits and policies on the use of "Fund Balances" in School Budgets. While it appears that Wasatch School District has excessive unallocated funds,
it is entirely possible that the district has complied with the strict legal requirements; however,
the excellent procedures of ANNUAL budgets, with certain specific and limited "fund balances," should be applied and used and the current excess funds should be returned to the Wasatch taxpayers through an immediate property tax cut.
In the
Annual
audit that is done on the School District,
the Independent Auditors basically report that the numbers add up
correctly and proper procedures are followed. No opinion is rendered as to how, or where, the money is
spent or the prudence of the actions, merely the that the numbers
balance properly.
That audit report is followed by the Wasatch District
“Management's
Discussion and Analysis (Unaudited).”
This
contains items apparently deemed of importance to management - Spending
overviews, assets, balances, construction, etc. - items such as this:
Salary
expenses increased 3.2% during fiscal year 2011, which is in line
with the enrollment growth during the year. Employee benefits costs,
however, increased 10.5% during the same time period. This increase
included a substantial adjustment to the amount the District
contributes to the Utah Retirement System for its employees, as well
as a slight increase in the cost of health insurance. Benefits costs
totaled 49.4% of salaries expenses for fiscal year 2011, as compared
to 46.2% for fiscal year 2010.
An
explanation then follows about financial statements: “The
District's basic financial statements comprise three components: 1)
government-wide financial statements, 2) fund financial statements,
and 3) notes to the financial statements. “
Contained
in this explanation is this:
"Governmental
funds
– The focus of the District's governmental funds is to provide
information on how money flows into and out of the funds and to show
balances left at year-end available for spending. Under Utah law, it
is illegal to budget for an undesignated fund balance. This is in
alignment with the concept that
the
revenues provided to a District are intended to be used during the
period for which they were generated.
That is to say that at the beginning of a fiscal year, undesignated
fund balance is budgeted to be $0. If over the course of the year,
the difference between budgeted and actual revenues and expenditures
leaves an unspent balance, that
unspent balance must be budgeted to be used in normal operations
during the next fiscal year so as to prevent a District from
accumulating excess funds.”
This
seems to be good budgeting philosophy: determine the amount of money
you will need and the amount of taxpayers' money you will receive,
allocate that money where it is needed, and if some of the money is
NOT spent it can be moved to the NEXT (one) year – AND it would
appear that the next year's revenue request should be REDUCED, if not
needed. Then after determining the money NECESSARY to provide the
funding needed, set a tax rate to provide that amount of revenue –
limited, of course, by the “certified tax rate” maximum. The
recent, and current philosophy, seems more attuned to: 1 - Determine
how much the “certified tax rate” will bring. 2 – Spend it.
The
Wasatch School District's explanation in the audit continues:
“Fund
balances may (and in some cases must) be reserved or designated and
carried over to the next year for specific
purposes. As those specific purposes are part of next year's budget
and are identified as specific reservations and/or designations of
fund balances, they are not available for appropriation. Fund
balances for the capital projects and other governmental funds are
restricted by State law to be spent for the purpose of the fund and
are not available for spending at the District's discretion.Utah
law allows for an undistributed reserve fund balance not to exceed 5%
of the general fund budget.
Total
fund balances in the governmental funds were $13,458,556 as of June
30, 2011, and $14,161,089 as of June 30, 2010."
Regrettably it is unclear of the
meaning of “governmental funds,” “general fund budget,” but
if the aforementioned “governmental funds” balance of about $14
million IS the subject of the 5% limit then the budget must have
been $280 million, (over fives times actual) or the funds should have
a limit of nearer $2 million - or this explanation is simply lacking in
clarity, or meant to confuse.
The actual Utah Code reads in part
“53A-19-103. Undistributed reserve in school board
budget.
(1) A local school board may
adopt a budget with an undistributed reserve. The reserve may not
exceed 5% of the maintenance and operation budget adopted by the
board in accordance with a scale developed by the State Board of
Education. The scale is based on the size of the school district's
budget.
A
power point USOE presentation teaches this:
"Unassigned
Fund Balance
◦
Will
only occur in the General Fund
◦
Formerly
called Unreserved – Undesignated Fund Balance"
Further,
LEGAL COMPLIANCE AUDIT GUIDE Reference: GC-18
| School Districts: |
There
is no limitation on school district fund balances except for
amounts designated to meet unexpected and unspecified
contingencies. Such “undistributed reserves” may not exceed
5% of the maintenance and operations budget. (53A-19-103(1))
|
These procedures ARE fairly complex, arcane and often difficult to comprehend, especially for the average taxpayer. The Wasatch School Audit also contains this statement:
“This
financial report is designed to provide our citizens, taxpayers,
students and all other interested parties with a general overview of
the District's finances and to show accountability for tax dollars.
If you have questions about this report or need additional financial
information, contact the Treasurer and Business Administrator,
Wasatch School District, 101 East 200 North, Heber City, UT 84032. “
At the risk of being called 'negative,' through analyzing this, and previous, budgets, attempting discover information over the years, the 2007 so-called Truth in Taxation hearing, unwieldy requirements for GRAMA requests, unclear Board agendas, legislative audits and a general lack of communications concerning financial matters indicate to me that the Wasatch School District is not truly providing "citizens, taxpayers,
students and all other interested parties with a general overview of
the District's finances and to show accountability for tax dollars."
Robert Wren, Wasatch Taxpayer
