AP 524

Accumulated Surplus

Background

The purpose of this procedure is to provide clear, transparent guidance on the accumulation of surplus balances, how they are allocated for future spending and the consultation and reporting requirements. 

The Board of Education values sound financial stewardship and takes responsibility for managing its financial resources to ensure the financial health and stability of the school district. 

Procedures   

The purpose of this procedure is to provide clear, transparent guidance on the accumulation of surplus balances, how they are allocated for future spending and the consultation and reporting requirements. 

The Board of Education values sound financial stewardship and takes responsibility for managing its financial resources to ensure the financial health and stability of the School District. 

  1. Authority
    1. The Board of Education will approve all appropriations of surplus and local capital funds.  This may be done as part of the annual financial statement approval or as required throughout the year.
    2. The Secretary-Treasurer has responsibility for the implementation, management and reporting of the accumulated operating surplus as approved by the Board.
  2. Accumulated Operating Surplus 
    1. An operating surplus means the Board has financial resources that can be used to provide services beyond the current year.  It arises when there is an excess of revenues over expenditures in any fiscal year.
    2. These resources are designed to help plan for extraordinary future expenditures and protect the district from unforeseen financial and operating events or circumstances to avoid affecting services to students.  These resources are an important factor in determining the overall financial health of the School District.
  3. Internally Restricted Operating Surplus
    1. Boards can set aside a certain portion of operating surplus for items that are linked to the strategic plan and future operational needs.  When funds are restricted for use in future years, the Board must ensure that the restrictions are made for defined operational needs with reasonable timelines.
    2. Appropriations of surplus funds require Board approval and may be made as part of the annual financial statement approval or as required throughout the year.
    3. There are 3 categories of internally restricted surplus:
      1. Restricted due to constraints on funds - This represents unspent funds that were provided for specific or targeted purposes.
      2. For Planned Future operation spanning multiple years - This is for situations where operating surplus funds need to be carried over to future years for operating purposes beyond the current year.  This includes school budget carry overs, operating budget projects in progress and future years’ budget requirements.
      3. For anticipated future requirements - This is for identified non-recurring or one-time projects or initiatives that cannot be reasonably funded within a current year.
    4. Unrestricted operating surplus (contingency) - The Board is responsible for managing its financial resources and for ensuring the financial health and stability of the school district.  Accordingly, an unrestricted operating surplus or contingency reserve of between 1% - 3% of operating expenditures should be maintained.  This will assist in dealing with emergent issues and unplanned expenditures and deal with unrealized revenues.
  4. Local capital surplus
    1. The Board may maintain funds for future capital expenditures not specifically funded by the Ministry of Education and Child Care.  These funds should be sufficient to cover the requirements for specifically identified capital expenditures for the following three years. 
  5. Interfund Transfers
    1. Interfund transfers are funds transferred from one fund to another (e.g., between Operating Fund and Capital Fund).  Interfund transfers require Board approval.

Last revised: December 2021