Administrative Procedure 502

RESERVE FUNDS

Background

Capital costs associated with capital equipment acquisition and replacement, and facility enhancements and repairs which are not covered in the lease agreement, can place a substantial financial burden on the Charter Board. Accordingly, a capital plan is required whereby the Charter Board can allocate funds each year into capital reserves to distribute these costs more evenly over several budget years. The Charter Board has endorsed the creation of capital reserves through the regular budget process for the purchase, replacement or upgrading of capital assets.

Procedures

1. The following type of reserve funds may be established for the Charter Board:
1.1 Land improvements;
1.2 Building improvements;
1.3 Equipment; and
1.4 Vehicles.
2. In establishing reserves, the following factors will be considered:
2.1 Current value of assets — equipment and vehicles;
2.2 Life expectancy of these assets and estimated replacement value;
2.3 The current Three-Year Capital Plan and Ten-Year Master Plan;
2.4 Debt — both interest and principle and, specifically, the unsupported amounts.
2.5 Current Charter Board budget plans and the financial plan of the provincial government; and
2.6 Current level of educational services being provided.
3. The Superintendent in consultation with the Secretary-Treasurer, will make recommendations to the Charter Board with regard to reserve funds.
4. The Board may, by resolution, approve transfers to and from the reserves. The resolution will state clearly the purpose for the transfer.
5. A Board may not borrow for operating expenses without consent of the Minister and therefore whenever a deficit is projected in a particular budget allocation, or in the overall operating budget, the Secretary Treasurer shall:
5.1 Promptly advise the Superintendent who will advise the Board; and
5.2 Recommend the appropriate action(s) to avoid an overall operating deficit.
6. The Budget approved by the Board and submitted to Alberta Education shall not be altered without Board resolution and notification to Alberta Education.

References: Section 25, 26, 33, 52, 53, 68, 137, 138, 139, 140, 141, 143, 197, 222 Education Act Fiscal Planning and Transparency Act
Guide to Education ECS to Grade 12