The Board of Education is looking to establish a minimum general fund balance for the first time.
A 3 percent bottom has been proposed for inclusion in board policy.
Assistant Superintendent Dave Jones said the decision to establish a minimum is in response to moves made by the state during the legislative session in regard to funding for education.
“We need to have the ability to react to unexpected situations,” Jones said.
Gov. Bill Walker discontinued previously promised one-time funding, which would have amounted to an additional $2.2 million from the state, and in effect reduced the maximum allowable contribution by the Kenai Peninsula Borough, Jones said.
Jones also said language in the proposed change is notable. Policy states the district “should” maintain a minimum, suggesting the district should keep a close eye on how low the balance is dropping.
The proposal allows the school district to go below the minimum, but requires board approval to do so. It also sets guidelines that must be followed within a determined time frame to bring the fund balance back up to the 3 percent minimum.
Board member Dan Castimore said he is concerned if the board establishes a range for the fund balance, it will send the wrong message to the borough assembly and other entities.
“The purpose of a fund balance is a range,” said board member Tim Navarre. “We have never had a bottom prior to this, and 10 percent is the state’s maximum requirement, so that is the maximum we could set, just so we don’t get ourselves into trouble.”
The school district will not know the final percentage of remaining fund balance in relation to expenditures for the previous school year until an audit in early August, but at the end of the 2013-2014 school year the remainder was around 8.5 percent, Jones said.
Changing policy takes multiple readings and discussions between administration and the board before any decisions will be made, Jones said. The board decided to set 3 percent as the minimum to strike a balance between being too conservative or too generous, he said. The board also considered keeping the minimum at 4 or 5 percent.
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