Thursday, October 20, 2011

Election Issue #4: The Fund Balance

We don't really see this as an issue at all, but the GOP does, so it's worth responding to. Here's the simple version. If you remember the recent flap about Trumansburg School District and its excessive fund balance, you will find this easier to follow.

Under pressure from state guidelines to reduce the balance of one of its funds from 200% of expenses to the state recommended 16%, the town board implemented a plan establishing specific reserve funds and making advance payments for things like retirement contributions, health insurance, and farmland protection. This plan was widely and publicly discussed in 2009. There was some talk of "giving the surplus back to the taxpayers," but the only way to do that legally is to use a surplus to reduce taxes, make early payments, and establish reserves. Since that time, the board has reduced the balance of that one fund about 50% by making transfers to reserve accounts and early payments on future obligations.

All of the accounts that the town set up in 2009 are doing very well.

Think about the fund balance as a checkbook balance. Through years of surplus budgeting under previous administrations, that checkbook balance grew. In 2009 the board established several savings accounts. Transfers from checking to savings show up as spending on the first page of the state report, which is what the GOP is using as a reference. If you keep reading the report, many pages later, those same transfers show up as income to the savings accounts. It's Accounting 101, but it may confuse people who have little experience with budgets and finance.

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