3D, Fund Balance Policy and the New GASB 54 Statement

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�� EN HILLS CITY OF ARDEN HILLS COUNTY OF RAMSEY STATE OF MINNESOTA FINANCIAL POLICIES- FUND BALANCE Fund Balance and Net Asset Guidelines (Fiscal Year-End) Purpose The purpose of the fund balance policies is to establish appropriate fund balance levels for each fund that is primarily supported by property tax revenues or user fees. These policies will ensure that adequate resources are available to meet cash flow needs for carrying out the regular operations of the City, as well as to meet the fund balance requirements identified in the City's Long Range Financial Management Plan. The funds that will be addressed in this policy are: General Fund, Cable Fund, EDA Funds, Equipment, Building & Replacement Fund, Parks Fund, Public Safety Capital Fund, Permanent Improvement Revolving Fund (PIR), Risk Management Fund, and Enterprise Funds. Primary Policy Considerations 1. To meet the cash flow requirements of the City. 2. To maintain adequate fund balances and net assets in each individual fund of the City. 3. To provide for emergencies and contingency needs of the City. Policy Statements 1. The Finance Director as a part of the annual budget process shall prepare an analysis of this policy. The analysis shall project the status of the budget year ending fund balances and net assets. 2. The City Council authorizes the Director of Finance and Administrative Services and/or City Administrator to assign fund balance that reflects the City's intended use of those funds. When both restricted and unrestricted resources are available for use, it is the City's policy to first use restricted resources, and then use unrestricted resources as they are needed. When unrestricted resources are available for use, it is the City's polity to use resources in the following order; 1) committed, 2) assigned, 3) unassigned. These fund balance classifications apply only to Governmental Funds, not Enterprise Funds. 3. The General Fund balance shall be assigned as of December 31St for the following purposes in the amounts described below: a. The City will strive to maintain an unassigned balance in the General Fund of 50% of the general fund's total annual operating budget (this reserve includes the designation for cash flows). Since a signiiicant source of revenue in the General Fund comes from property taxes, maintaining a fund balance that is equal to at least six months of operating expenditures ensures that sufficient resources are available to fund basic City functions between property tax settlements. This range is in conformance with guidance from the P:\Finance�Policies and Procedures\Policies\Fund Balance Policy-2011.doc Adopted 11/28/2011