Resource: What is a District's 'General Fund' Balance?

With the Minneapolis Public Schools District facing a $25 million shorfall in the next school year, the finance department presented a preliminary budget proposal March 15.

Among the changes called for in the proposal was the cutting of 50 staff members at the central office, the addition or 12 English as a Second Language teachers, reduction of full-day kindergarden at some schools and the shifting of funds between different accounts.

What do you think of the budget proposal? Take the district's survey.

The following information was provided on the school district's website, and details what the general fund balance is:

(The information in its entirety has also been attached as a PDF to this article.)

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Fund Balance (Updated 3-19-13)

A fund balance allows the school district to manage risk and to respond to unforeseen circumstances without having to borrow money. We assess risk to determine how large a fund balance MPS needs. If the fund balance is too large, we might be unduly restricting services for today’s students. If the fund balance is too small, we will not be able to manage risks.

In general, the more risk a school district faces, the larger its fund balance should be. Examples of current risks are:

• State aid funding shifts;
•  Federal funding reductions;
• Contract settlements;
• and Uncertain utility costs.

The fund balance can grow in two ways. The school district may plan to increase the fund balance when it is too low. The fund balance also grows if revenue exceeds expenses. For several years, MPS’ revenue exceeded its expenditures and therefore the fund balance grew. We expect to use all of our revenue in FY 13 and do not expect the fund balance to grow.

The last audited statement (2012) reports a general fund balance of $128.7 million.

See the attached PDF for tables showing all the different funds that contribute to the balance.

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More resources:

• Where Does Minneapolis Get its Public School Funds?
• Resource: Understanding Property Tax Levies
• Resource: Minneapolis Schools Budget Challenges and Risks

Other related articles:

• Why Is the School District Drastically Cutting Local School Budgets?
• What Could Your School Lose?
• Parents Ring Alarm Bells Over "Catastrophic" Schools Cuts

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