10-09-07 FPAC Agenda - Laserfiche WebLink

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Undesignated Fund Balance and Unrestricted Net Assets—Current resources available for • which there are no government self-imposed limitation or set spending plan. General Fund—To provide for emergencies or contingencies, such as revenue shortfalls, that the City may encounter as part of its operations, the unreserved undesignated fund balance shall be set at percent ( %) of the ensuing years General Fund operation expenditures (not including capital outlay, debt service or transfers to other Funds). The unreserved fund balance should be at a minimum 50%of operating expenditures (this includes the designation for cash flows). The City's goal will be to follow this recommendation. Special Revenue Funds—Most of these funds will be designated for specific purposes and the undesignated fund balances should be near zero. Debt Service Funds—Most of these funds will be reserved for debt service and the undesignated fund balance should be near zero. Capital Projects Funds—Most of these funds will be designated for the capital improvement plan or reserved for a specific project and the undesignated fund balance should be near zero. Specific capital improvement funds may be negative because they are waiting on funding but should zero our at the end of the project. Enterprise Funds—It is expected that unrestricted net assets will be large. These funds have large investment in infrastructure that need to be maintained. The City will periodically . complete a rate study for these funds to ensure rates and unrestricted net assets are sufficient to operate and maintain these activities. Purpose The purpose of this policy is to establish guidelines for the City of Arden Hills' components of fund balances and net assets. 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 Finance Director shall as a part of the annual audit and year-end financial statement preparation process see that the appropriate reservations and designations are correctly • \\Metro-inet\ArdenHills\Finance\Policies and Pracedures\Policies\Fund Balance Policy.doc Last printed 1/4/2008 3:03 PM