AFR – New Reserve Balance Tab
The Arizona Auditor General added this tab in the FY23 AFR due to the COVID Reporting and Reserve Balance average increase to all Arizona Districts and Charter Schools.
The Reserve Balance tab will also be added to the FY25 Budget forms and will take previously completed/submitted AFR (FY23) Reserve Balance amounts and estimated FY24 Reserve Balances as beginning balances.
The goal of the AZ Auditor General in developing this new Tab is to provide more transparency in regards to Reserve Balances schools have on hand and the school’s vision to use these funds going forward.
What This Means for You
It is recommended for Charter Schools to develop a Targeted Reserve Balance, but not required.
Although not a Board approved official policy, this is already included in the notes to your Audited Financial Statements by your Auditor.
- Ongoing Surplus/Profit will increase the Reserve Balance on AFR.
- Any Deficit/Loss will decrease the Reserve Balance on the AFR.
Any known potential uses of Reserve Funds (above Targeted Reserve Balance) in future years will be required in the AFR.
- For example, if a new roof is needed at the school and the school plans to use Reserve Funds to pay for it in the upcoming Fiscal Year.
- The estimated amount would be separated into a different line to show that Reserve Balance will decrease in the next Fiscal Year.
Since your grants are paid on a Reimbursement basis, Reserve Funds resulting from grant reimbursements are considered Schoolwide Projects (no restrictions).
How EdVantage Partners Can Help
As your Business Services Provider, we will monitor your Reserve Balance and update AFRs and FY25 Budget forms based on your actual/anticipated ending balances for each fiscal year going forward.
We can assist in developing an official Targeted Reserve Balance policy if desired and provide guidance with strategy development.
Please let us know if you have any questions; we are here to help!