GFOA Approved 11 Best Practices and an Advisory

11/6/09

The Government Finance Officers Association (GFOA) recently released best practices and an advisory covering several areas of financial management in governmental entities.  The update to "Appropriate Level of Unrestricted Fund Balance in the General Fund" is timely in light of the ongoing serious budgetary challenges facing many governmental entities.  

The GFOA recommends that governmental entities establish a formal policy on the level of unrestricted fund balance to be maintained for the fiscal year end for the General Fund.  The best practice also mentions that an adequate fund balance will vary according to each school district's unique circumstances.  For example, many school districts require a higher fund balance because a greater proportion of the operating budget is funded from property taxes.  Regardless of each governmental entity's unique situation, the GFOA states that the minimum fund balance should be "no less than two months of regular general fund operating revenues or regular general fund operating exenditures." 

The complete listing of GFOA recommended practices is found at http://www.gfoa.org/index.php?option=com_content&task=view&id=118&Itemid=130