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Operational Fund Cash Balance Procedural Directive

Operational Fund Cash Balance Procedural Directive

For purposes of this procedural directive, “operational fund” means the specific 11000 sub-fund of the general fund as designated by the New Mexico Public Education Department.

For purposes of this procedural directive, “cash balance” means the total of the beginning balance of a specific fund plus revenue minus expenditures of that same specific fund.

The chief financial officer shall manage the district’s finances and take appropriate action to ensure an operational fund cash balance of at least five-percent (5%) of the current year’s budgeted operating expenditures for any given fiscal year.

The chief financial officer shall take the appropriate action necessary to ensure all provisions of this procedural directive are implemented.

District finances shall be managed to accumulate and maintain a three-percent (3%) minimum operational fund cash balance by the end of the fiscal year 2012, or June 30, 2012.

District finances shall be managed to accumulate and maintain a four-percent (4%) minimum operational fund cash balance by the end of fiscal year 2013, or June 30, 2013.

District finances shall be managed to accumulate and maintain an operational fund cash balance of at least five-percent (5%) of the current year’s budgeted operating expenditures by the end of  fiscal year 2014, or June 30, 2014, and thereafter.

Upon accumulation of the operating fund cash balance of at least five-percent (5%), the operational fund cash balance only may be drawn down below that level under the following circumstances:

  1. An unexpected loss of revenue which includes, but is not limited to a mid-year reduction in operational revenues from the New Mexico Legislature and/or the New Mexico Public Education Department which were not included in the final approved budget, or
  2. Approval from the Board of Education for a non-budgeted expenditure.
  3. Upon approval from the New Mexico Public Education Department through a budget adjustment request.  In an emergency, the chief financial officer may spend the operational fund cash balance prior to approval of the budget adjustment request.

Upon receiving any indication that the operating fund cash balance may not equal at least five-percent (5%) at any point within a rolling five-year financial forecast period, the chief financial officer shall immediately report the information to the superintendent and the Board of Education.  It shall be the responsibility of the chief financial officer to provide recommendations to the superintendent and the Board of Education that may assist in accumulating and maintaining the operating fund cash balance as outlined in this procedural directive.

Administrative Position: Chief Financial Officer

Department Director: Executive Director of Accounting, Executive Director of Budget Planning and Analysis

References

Legal Cross Ref.:

  • 22-8-5 NMSA 1978
  • 22-8-41 NMSA 1978
  • 6.20.2 NMAC

Board Policy Cross Ref.:

  • D.01 Budget Process
  • D.09 Operational Fund Cash Balance

Procedural Directive Cross Ref.:

  • Annual Budget Formulation

NSBA/NEPN Classification: DB

Approved: April 16, 2010
Reviewed: June 11, 2014
Revised: June 12, 2014

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