Fund Balance and Reserves Policy
In January 2013 the Board of Trustees of the Davis Cemetery District approved a Fund Balance and Reserves Policy. The policy addresses the order of spending and the use of specific set-asides to maintain long-term financial stability.
Order of Spending
- In order to preserve maximum flexibility, when any expenditure is incurred for purposes for which both restricted and unrestricted fund balances are available, it is presumed that restricted funds are spent first.
- Similarly, when expenditures are incurred for purposes for which amounts in any unrestricted fund balance could be used, it is presumed that the committed amounts are spent first, then the assigned, then the unassigned amounts.
- The Board of Trustees, upon the recommendation of the Davis Cemetery District Superintendent, may authorize a different order of spending.
Reserves and Appropriations for Contingencies
Specific Reserves – Financial reserves are established to accumulate sufficient assets to pay known future liabilities or expenditures associated with known events which can be estimated with a reasonable degree of certainty. The Board of Trustees may establish such reserves upon the recommendation of the District superintendent. The purposes of these reserves may include but are not limited to: self-insurance, capital replacement, infrastructure maintenance, employee separation payments, litigation settlement, and environmental remediation.
The establishment of any reserves shall be clearly stated and include:
- A detailed description of its purpose.
- The target fund balance, with minimum and maximum levels, if applicable, and the method for determining the target.
- Funding plan with identified funding sources and funding schedules.
- Description of triggering events that would justify a drawdown.
- Level of authorization required for the drawdown.
- Plan for replenishment after a drawdown
General Reserve (Assigned Funds) – The purpose of this assigned reserve is to protect the District’s essential services from the potentially devastating impact of unanticipated events and circumstances such as severe economic downturn, severe funding reductions from fund agencies, severe state budget impact and catastrophic disasters. The balance shall be maintained in the range of 5%-15% of the average total expenditures of the preceding three years as reported in the audited financial statements. A drawdown can only be authorized by the Board of Trustees by a four-fifth vote or during the adoption of the annual budget. After every drawdown, the General Reserve shall be replenished to the minimum 5% level within three fiscal years. Reserves are reflected in unassigned fund balance.