Trial Court Budget: Encumbrances

The Judicial Council of California provides guidance on encumbrance policies. Encumbrances can be established for contracts with specific scopes of work and deliverables, but not for ongoing expenses like system maintenance fees or monthly leases. Prepaid amounts can be considered equivalent to encumbrances for the 1% fund balance calculation. Costs associated with a contract to move into a new facility in the next fiscal year cannot be encumbered this fiscal year, unless the costs are related to planning and preparation rather than the actual move itself. The Court Facilities Architectural Revolving Fund (CFARF) can be used to transfer funds for court-approved facilities projects, including moving costs, with approval from the state Department of Finance.