Why not wipe out the fund balance?
The fund balance is not a slush fund as some have suggested. It is an important part of the budget. Independent auditors have told the district that it should be 5 percent of the budget. It protects the districts against emergencies. It has been used for physical needs, such as boilers, the new roof at Concord following a windstorm, anew bus, stop gap in budget crunches. It has shrunk as low as 1.5 percent of the budget. Utilizing fund balance is by and large an exercise in deficit funding, i.e., spending more money than we are receiving in a given year. Reducing or eliminating that account makes the district fiscally vulnerable. Fund balance provides cash flow and interest earnings. Reducing fund balance to minimal levels will severely reduce interest earnings and could force us to borrow money to make timely payment of expenses. The current fund balance is below $2 million after the district cut more than $4 million from the fund balance in June to help meet the budget reductions. Q:
