(This week’s column is written by Chad
Smurawa, Director of Business Services for the School District of River
Falls. Chad has been in his position in
this district since 2004.)
What is a Fund Balance?
According to the Wisconsin
Department of Public Instruction (DPI), a fund balance is: “The difference
between the district’s assets and liabilities.”
In essence, a fund balance is the district’s reserve – the funds we can
draw upon in the future to make educational investments and the cushion that
enables us to react to budgetary challenges in a thoughtful, strategic
manner. It is also a critical component
of how we demonstrate good financial management to the financial markets that
fund our bonds and other capital improvements.
It is important to note that a
fund balance is not actually cash in the bank.
Cash is one asset, but not the district’s only asset. Additionally, cash balances may decrease as the
district pays off liabilities, such as payroll or amounts due to a supplier.
Why does the district maintain a
A district like River Falls, with
an appropriate fund balance, can avoid costs associated with expensive short
term borrowing, can accumulate sufficient assets to make planned purchases or
cover unforeseen events, and demonstrates the financial stability necessary to
secure lower debt issuance costs through a solid bond rating.
How does the School District of
River Falls manage its Fund Balance?
River Falls’ board policy is to
maintain an appropriate fund balance that directly benefits students and
taxpayers. Here’s how:
How large should a Fund Balance
What the DPI says…that fund
balance should be "an amount sufficient that short term borrowing for cash
flow could be avoided and would also allow the district to set aside sufficient
assets to realize its longer range goals."
How the School District of River
Falls puts this into practice…The Board and Administration annually approve a
budget that allows us to maintain the fund balance necessary to avoid short
term borrowing and to plan for future spending.
Because we do not need to borrow funds to pay for ongoing direct
operations, we pay zero interest expense to outside banks. This allows us to direct more of your tax and
state aid dollars directly into the classroom providing more teachers, smaller
class sizes and safer schools.
What is the Fund Balance
philosophy at the School District of River Falls?
Simply stated, our fund balance
philosophy is to offer the best education possible by maintaining the minimum
amount of funds necessary to: 1) avoid borrowing and related interest expenses
to pay for operations, 2) have funds available to make needed emergency repairs
or purchases, and 3) maintain a strong bond rating for times when our district
needs to bond for remodeling or building schools. We understand that offering our students and
community the best education possible with the funds entrusted to us is Every
Dr. Tom Westerhaus
Superintendent of Schools
Phone: (715) 425-1800
Fax: (715) 425-1804
852 East Division St.
River Falls, WI 54022