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City of Cloquet <br /> • Fund Balance Policy <br /> Purpose: <br /> The purpose of this policy is to establish guidelines for the City of Cloquet's components of fund <br /> balances and net assets. <br /> Primary Policy Considerations: <br /> 1. To meet the cash flow requirements of the City. <br /> 2. To maintain adequate fund balances and net assets in each individual fund of the City. <br /> 3. To provide for emergencies and contingency needs of the City. <br /> Policy Statements: <br /> 1. The Finance Director as a part of the annual budget process shall prepare an analysis of <br /> this policy. The analysis shall project the status of the budget year ending fund balances <br /> and net assets. <br /> 2. The Finance Director shall as a part of the annual audit and year-end financial statement <br /> preparation process see that the appropriate reservations and designations are correctly <br /> made. The designations established through this policy shall be used in designating funds <br /> for the year end financial statement purposes. <br /> 3. Shortages from the requirements of this policy shall be built up through the annual budget <br /> process. Funds shall be budgeted and then not spent in the ensuing year. Shortage shall <br /> be defined as having less than the minimum policy requirement at the prior year-end, or <br /> having a projection at budget time that would indicate the policy will not be met at the <br /> current year-end. Shortages can be made up in one or several years, as determined by the <br /> City Administrator and the Finance Director. <br /> 4. Overages from the requirements shall be used in one of the following ways. First, any <br /> excess, or portion thereof, may be transferred to other funds as authorized by the City <br /> Council (i.e., Revolving Capital Project Fund for future funding source for City projects). <br /> Second, the overage, or any portion thereof, may be used to offset a projected shortfall in <br /> current or future year projections. Third, the excess or any part thereof, may be used to <br /> reduce the property tax levy required for the ensuing year. Fourth, the overage will be <br /> accumulated with the intent to be used in future years as planned by the City <br /> Administrator and Finance Director. <br /> • <br /> Approved <br />