10-09-07 FPAC Agenda - Laserfiche WebLink

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CITY OF CAMBRIDGE • GENERAL FUND FUND BALANCE POLICY Purpose: The purpose of this policy is to establish guidelines for the size of the General Fund fund balance for the City of Cambridge. Policy Considerations: 1. Fund balance is the reserves of the General Fund of the City of Cambridge. The General Fund is the primary operating fund for the City. 2. The designations established through this policy shall be used in designating funds for the year end financial statement purposes. 3. This policy is established to address three(3)primary considerations. First,to meet the cash flow requirements of the General Fund. Second, to cover compensated absences(accrued vacation, compensatory time, and sick leave severance) liabilities. Last, to provide for emergencies and contingency needs of the City. • Policy Statements: l. The City Administrator and Director of Finance as a part of the annual budget process shall prepare an analysis of this policy. The analysis shall include the prior year actual status (where possible) and project the status of the current year. 2. The Director of Finance shall as a part of the annual audit and year-end financial statement preparation process see that the appropriate designations are correctly made. 3. The General Fund fund balance shall be designated for the following purposes in the amounts described below: 1. To meet the cash flow needs of the City a fund balance designation not less than 30% nor more than 50% of the ensuing years General Fund tax levy (less debt service transfers included in the General Fund levy) plus the ensuing years certified Local Government Aid (LGA) and Homestead and Agricultural Credit Aid(HACA). 2. To cover accumulated vacation and compensatory time balances and that portion of sick leave that would be payable under the CityLs severance pay policy or union contracts. This amount shall be adjusted annually as part of the year-end close and annual financial report process. •