Fund Balance Policy Actions/Procedures Dr. Rodney Thompson, Superintendent Mr. Brantley Thomas, Chief Financial Officer September 23, 2014 Berkeley County School District

Fiscal Responsibility Areas of Focus Fiscal Responsibility We will be responsible stewards of our resources and insure that we provide a quality education for all students. 14 – 15 Areas of Focus: 1. Provide transparent financial information and support to the educational process for the students of Berkeley County to include budget reports. 2. Receive overall unmodified audit opinion to ensure the financial stability of the district. Continue to use audit results to determine professional development needs. 3. Implement procedures to support an adequate Fund Balance Policy while providing an exceptional financial value based on per pupil spending.

Fund Balance Policies and Procedures The above Focus on current Fund Balance Policies and Procedures is commonly referred to as the Number One Highly Effective Habits of Finance Officers

2013 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund  Total fund balance increased $2.3 million  Assigned fund balance of $2.2 million for future year’s expenditures (budget shortfall for FY2014)  Non-spendable fund balance of $379k related to prepaid items and inventory

2013 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ General Fund Unassigned fund balance is $36.1 million, which is 18.3% of 2013 actual expenditures and 16.8% of 2014 budgeted expenditures GFOA recommends a minimum of 16.7% (two months)

2013 FINANCIAL AUDIT BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Major Reasons To Maintain An Adequate Fund Balance: Cash flow through second half of calendar year; property taxes are cyclical Significant emergencies and unanticipated expenditures Flexibility for discretionary funding needs Potential for better interest rates on debt issues (can save the School District money). To cover potential shortfalls from the state (a) due to budget cuts or (b) as a result of the change in legislation (i.e. as when residential property taxes from operations were eliminated and replaced by the state with a one cent sales tax increase (“Act 388”)). Extremely important given the uncertain economic times Unique financing requirements of a coastal School District

In 2013 The FINANCIAL AUDIT Revealed That BERKELEY COUNTY SCHOOL DISTRICT ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Summary Unmodified opinion on the Financial Statements from GF&H Good financial condition as of June 30, 2013

Policy and Procedures ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Policy Reference Number 1 Policy DCDCAD Fund Balance Adopted 4/22/14 Minimum 15 % to address Cash Flow, Emergencies, Assist In Budget Balancing, and better bond rating You may remember in FY 2012, we budgeted the use of $ 6 m in Fund Balance so we could protect the classroom. This strategy was used due to state funding issues and multi year cuts. However, we were able to add $ 1.3 million to the fund balance, due to the controls and procedures we have in place. In FY we also budgeted the use of $ 2.1 million of the fund balance. The books are still being reconciled and closed.

Policy and Procedures ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Policy Reference Number 2 Policy DCDCA Annual Operating Budget Goals and Objectives Adopted 4/27/1993 Revised 11/9/2010 Sets to collaborate and cooperate efforts of all concerned with the educational needs of the students in the district. Sets to effectively express and implement priorities, programs, and activities of the school district

Policy and Procedures ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Policy Reference Number 3 Policy DA Fiscal Management Goals and Objectives Revised 4/22/14 Set to accomplish the goals and objectives of board objectives Supports use of long term budget planning Optimization of existing sources of income and exploration of additional sources Supports efficient accounting and reporting procedures Supports prioritization of spending in support of high quality education

Policy and Procedures ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Procedures/Strategies Finance Procedures on line (See Link) Personnel Action Forms (PAF) to track employees and account codes (see following example) Integrated and distributed accounting system that is budgeted by line Item and includes internal procedures to control budgets and budget transfers for all funds. These procedures are tied to state compliance guidelines. Budget Prep System that is integrated to accounting, payroll, and personnel. Employee Profiles are tied to what we call “trees” for position control for all employees and funds. In-service for finance related staff. Looking for ways like e payables to build efficiencies but will also increase revenues. Collaborate with external auditors and peers on best practices. Building a multi year history of per pupil expenditures. (See example)

Policy and Procedures ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ Procedures/Strategies Finance Procedures on line (See Link) 22

Use drop down boxes Enter the account number for the salary Electronically sign and use pull down drop box for date. Required Fields

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