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Home My WebLink About3D, Fund Balance Policy and the New GASB 54 Statement.� �SRD�EN HILLS Request for Council Review Prepared By: Sue Iverson, Director of Finance Work Session Date: November 21, 2011 and Administrative Services Fund Balance Policy and the New GASB 54 Statement Discussion Topic: Review the New Fund Balance Classifications and the changes due to Government Accounting Standards Board 54. SuAportin� Documents: 1. Memorandum from Sue Iverson. 2. Financial System Structure. 3. Fund Balance Classifications. 4. Proposed Fund Balance. 5. Proposed Fund Balance Blacklined Version. �� EN HILLS MEMORANDUM DATE: November 21, 2011 TO: Honorable Mayor and City Council Patrick Klaers, City Administrator FROM: Sue Iverson, Director of Finance and Administrative Services SUBJECT: Fund Balance Policy and the New GASB 54 Statement INTRODUCTION The Government Accounting Standards Board (GASB) issued Statement 54 "Fund Balance Reporting and Governmental Fund Type Definitions " in February 2009 and is effective with the 2011 reporting year. These new requirements will require us to change our presentation of fund balance and modify our fund balance policy. DISCUSSION New Fund Balance Classifications GASB 54 separates fund balance into five new categories. Under the old standards, there were three categories: Reserved, Designated, and Undesignated. The new categories are more descriptive, and focus o how the City plans to use its resources. A brief description of each of the new categories is listed below along with examples of each. Nonspendable fund balance — The nonspendable fund balance classification includes amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact. "Not in spendable form" means items that are not expected to be converted to cash. Examples of items that are not in spendable form include inventories, prepaid items, long-term amounts of loans and notes receivable, and land held for resale. Restricted fund balance — Fund balance should be reported as restricted when constraints placed on the use of resources are either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. Examples of items that may be considered restricted include unspent bond proceeds, unspent grant proceeds, tax increments, certain property tax levies approved by a referendum, and accumulated funds in debt service funds. Memo City Council Fund Balance Policy and the New GASB 54 Statement 2 Committed fund balance — Fund balance should be reported as committed for amounts that can only be used for specific purposed uses pursuant to constraints imposed by formal action of the government's highest level of decision-making authority (City Council). Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. An example of committed fund balance would be the City Council committing funds for economic development purposes. Assigned fund balance — Amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance. Assigned fund balance includes (a) all remaining amounts (except for negative balances) that axe reported in governmental funds other than the general fund, that are not classified as nonspendable and are neither restricted nor committed and (b) amounts in the general fund that are intended to be used for a specific purpose in accordance with first sentence of this paragraph. Intent can be expressed by the government body or by an official or body to which the governing body delegates the authority (Director of Finance and Administrative Services and/or City Administrator). An example of assigned fund balance would be the City's portion of a construction project where other funding was received with the requirement of a match. Unassigned fund balance — residual amounts that are available for any purpose in the general fund. This category can only be found in the general funds, as by being in any other fund, the City has stated its intent to use if for the purpose of that fund. Committed, assigned, and unassigned fund balance combine to make unrestricted fund balance. Chan�es Due to GASB 54 This does not change how the City of Arden Hills conducts business. All of the changes will be from a presentation standpoint in the City's Comprehensive Annual Financial Report (CAFR) and the Fund Balance Policies. This will also affect how we present the budget. Other than the new classifications being presented in the CAFR and budget, there are several other changes of note. One change will be related to the classification of the City's current Special Revenue Funds. I have attached an illustration of the City's current financial structure and the proposed financial structure with the implementation of GASB 54. The only funds that will remain Special Revenue Funds will be the Cable Fund and the EDA funds. The Cable Fund has external restrictions and the EDA is a blended component unit of the City which requires this to be reported as a Special Revenue Fund. The Community Service Fund and Parks Fund are used for capital purposes and thus, reassigned to Capital Funds. Since the charitable gambling revenue (currently in the Community Service Fund) is restricted for public safety capital uses, this will be folded into the Public Safety Capital Fund and the Parks Fund will just be moved to the Capital Fund category. Per GASB 54, TCAAP must be folded into the General Fund as a department, Memo City Council Fund Balance Policy and the New GASB 54 Statement 3 thus eliminating the need to transfer General Fund monies to sustain this fund, and Risk Management will be moved to an Internal Service Fund. The second change is related to fund balance commitments. To meet the definition of committed fund balance, the Council is required to adopt a resolution "committing" specific revenues prior to the end of the year. This resolution will be presented to the City on November 281h. Attached is the anticipated fund balance classifications for each Governmental Fund with balances as of 2010. The commitments made by the Council cannot change without Council taking similar action to remove them. The final change is related to the City's Fund Balance Policies originally adopted on February, 25, 2008. The Fund Balance Policies need to be revised to authorize the Director of Finance and Administrative Services and/or City Administrator to assign fund balances to reflect the City's intended use of funds. This does not change the authority to actually spend resources, but to assign resources for a presentation standpoint only. The Fund Balance Policies also need to include how the City intends to use its resources when multiple categories of fund balance are available. The revised Fund Balance Policies are attached. There have been several minor changes made to reflect the new terminology used in GASB 54 and to reflect how funds are currently being used. Again, the revised policy does not change how the City conducts business or the General Fund reserve. Changes to the policies have been shown in the black-lines revision attached. One item that the Council might want to consider is to address how the General Fund reserve would be replenished in the event that the Fund Balance falls below 50%. This could be done by adding wording shown in this example: In the event the unassigned General fund balance will be calculated to be less than the minimum requirement at the completion of any fiscal year, the City shall plan to adjust budget resources in the subsequent fiscal years to bring the fund balance into compliance with this policy. DIRECTION REQUESTED: 1. Direction to staff regarding the revised Fund Balance Policy, reassignments of funds, and classifications of commitments. Attachment A Financial System Structure Attachment B Fund Balance Classi#ications `o � u � � � `o_ Kb Y� - _ « c'G 9 C m W1 o �� o�.� � w c Bi E o o w� �� o w o � m'o :� a m q v F w�E i� Z o `°� �E � o o� m E i�- o .o '^ u i- '� o ��-- «,. •- e c r r v �Eoac9 E`�'- ��v�33'Sn � z° 6 c W � u° W a � � z 0 � �; N .0 � N O q � .0 N � � �" iV e = v a � � � � « ' 5 � v � E H u 'a 'a N Q 0 L 0 0 P c u .� W « 2 Attach ment C Proposed Fund Balance �� 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 Office of the State Auditor (OSA). Amounts that exceed 50% may be transferred out to other funds. An assignment or restriction of fund balance may be used to offset revenues earned in one year where substantial services are required to be performed in the next fscal period. b. The City will maintain an amount sufficient to cover accumulated vacation and compensatory time balances and that portion of PTO leave that would be payable under the City's severance pay policy or union contracts. This amount shall be adjusted annually as part of the year-end close and annual financial report process. c. Far specific purposes as authorized by the City Council or the City's intended use of the funds. Funds shall be assigned frst for compensated absences, second for cash flow needs and lastly for emergencies/contingencies. 4. The Cable Fund is a Special Revenue Fund that provides for cable and communication related expenses to disseminate information to the public. It receives the majority of its funding from franchise fees which are restricted for this use. The City will strive to maintain a fund balance in the Cable Fund in an amount sufficient to support the ongoing operating expenditures and capital expenditures planned in the CIP and in congruence with the Long Range Financial Management Plan. 5. EDA Funds are Special Revenue Funds that carryout economic and industrial development and redevelopment consistent with policies established by the City Council. It receives the majority of its funding from specific taxes or other earmarked revenue sources. The City will strive to maintain fund balances in the EDA Funds in an amount sufficient to support the ongoing expenditures, obligations and in congruence with the Long Range Financial Management Plan. Revenues not legally restricted will be committed. 6. Fund balances in Debt Service Funds far future debt payments are restricted. 7. Capital Funds are used to account for the �nancing of street rehabilitations projects, equipment replacement, public safety equipment, and facility rehabilitation or renovation. Revenue sources are provided mainly through property taxes, special assessments, Park dedication fees, and charitable gambling. Street projects, equipment purchases, and renovations are programmed into the City's Capital Improvement Plan and are generally planned years in advance. The City will strive to maintain fund balances in the Equipment Building & Replacement Fund, Public Safety Capital Fund, Parks Fund, and the Permanent Revolving Improvement Fund in an amount sufticient to support the ongoing capital expenditures planned in the CIP and in congruence with the Long Range Financial Management Plan. Revenues not legally restricted will be assigned. 8. Enterprise Funds were established to account for the operation of Water, Sanitary Sewer, Recycling, and Surface Water Management. These operations are designed to be self-supporting from user charges. City enterprise funds shall have operating cash reserves sufficient to provide for monthly cash flow, and for a reasonable level of equipment and infrastructure replacement. Major P:\Finance�Policies and Procedures�Policies\Fund Balance Policy-201 l.doc Adopted 11/28/20ll reconstruction or system upgrades, may need to be funded from enterprise revenue bonds. Annual utility rate reviews will be made in regard to projected operating expenses and capital improvements. The Council will, on an annual basis, establish rates in accordance to operating cost recovery and the projected capital improvement. 9. Internal Service Funds were established to account for operations which are designed to be self- supporting from "internal" user charges. a. Risk Management Fund This fund was established to pool dividends received the City's insurance providers for positive claims experience. This funds tracks dividend revenues and deductible costs for claims. The goal of this fund is to build a fund balance that would allow the City to increase deductible limits in order to reduce premium costs. Dividends from the City's health insurance provider are also used to provide wellness programs. Funds received from the League of Minnesota Cities Insurance Trust are committed while funds received from the City's health insurance carrier are assigned. b. Engineering This fund is used to account for the provision of engineering services to development projects, infrastructure projects, and the City in generaL This fund is fnanced predominantly through user charges both internally and externally to developers and is normally not expected to carry a fund balance at year-end. c. Central Garage and Equipment This fund is used to account for the materials, supplies, and expenses of the Central Garage and equipment of Public Works which is comprised of the following departments; Streets, Parks, Water, Sanitary Sewer, and Surface Water Management. This fund is financed predominantly through user charges internally to the public works deparhnents. Fund balance is assigned for the purchase, replacement, and repair of equipment and vehicles used. by public works. 10. Fund balances will be assigned according to the above guidelines up to the amount available after restrictions and other commitments. This policy is not intended to require the reporting of deficit unassigned fund balances. Nonspendable Fund Balances — consists of amounts that are not in spendable form. The City has several amounts unavailable for appropriation such as: prepaid items, inventories, etc. Restricted Fund Balance and Restricted Net Assets — consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. It is the portion of fund balance that is not appropriable for expenditure or is legally segregated (restricted net assets) for specifc future uses. The City has several items that are legally restricted to a certain use such as: police forfeiture iunds, federal and state economic development revolving loans, park dedication fees, and bond proceeds. Committed Fund Balance - consists of internally imposed constraints. These constraints are established by Resolution of the City Council. Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. P:\Finance\Policies and Procedures\Policies\Fund Balance Policy-2011.doc Adopted 11/28/2011 Assigned Fund Balance — consists of internally imposed constraints. These constraints reflect the specific purpose for which it is the City's intended use. These constraints are established by the City Council and/or management. Pursuant to City Council Resolution, the City's Director of Finance and Administrative Services and/or City Administrator is authorized to establish assignments of fund balance. Unassigned Fund Balance — is the residual classification for the general fund and also reflects negative residual amounts in other funds. General Fund — The uassigned 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 strive to follow this recommendation. Enterprise Funds — It is expected that unrestricted net assets will be large. These funds have large investment in infrastructure that needs 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. Review and Approval The fund balance policy shall be formally approved and adopted by resolution of the City Council and any future changes to the policy must be approved by the City CounciL Approval by the City Council the 28th Day of November, 2011. ATTEST: Patrick Klaers, City Administrator David Grant, Mayor P:\Finance�Policies and Procedures\Policies\Fund Balance Policy-201 l.doc Adopted 11/28/2011 Attac hment D Proposed Fund Balance Blacklined Version i�� 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 k�� •��a ��* �*� The purpose of the fund balance policies is to establish ap}�ro}�i`iate fund balance lcv�ls for eacl� fiand that is�ririiarilv sup�or-ted b�pra�crty taa i•evenues or uscr fees. 7'hese palicies wil( ensLire that adequatc resources are availa:ble to riieet casl� flow needs for cart��iug out tlie re�ular operations of the Citv as well as to tneet the fund balance requirements identiiicd in the Citv's Lon� RangP Fin�i�cial Mana�ement Pla�i The iimd� thai will be addressed in this policv are: General Fund, Cable Furid EDA Funds E�c i�ipment Buildin� & Re��lacement Fu.nd Parks Fund. Publio Safetv Cat�iial Funti Perrnanent Improvenaent Revolviil r F� ,ul�d (PIR) Risk Manat7ernent :I� u:nd anci �;nterprise I'unds. 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. ` a+;�.,.,,.;.,� �+.,+,,,,,.,�.+.,,,..,, ;;�,� �The City Council authorizes fhe Director of Finance and Administrative Services and/or City Administrator tc� assinn fund balance thai reflects the Citv's intended �,rse of those Fimds. Wl�en bc�th resixicied and unrestY•icted resources are avai_lzble for use it iti the Cit ��palicy to tirst u5e restricted res�urces and then use uilrestricted resouz•ces as thev are needed When unrestricted resources are available for use, it is fhe Citv's polit tcy > use resc�urce5 in the followin�.7 �rder� l) coiiimitted 2 assigned 3 unassi�ued These furad. ballnce classific�tions a��l,y on� to Go�erni��enta:l Funds, not Entcrprise Funds. 3. The General Fund balance shall be �e��-t�ssigned as of December 31St for the following purposes in the amounts described below: I':\r'inance\I'olieies and Yroccdures\Yolicies\Fur� Balancc Policv-201l.dac":`:��„�_��^^`°^'�� r1 p �,a \U i' 'n \l� +�+rl R.}l..v.na D�l:,..� .-l�n _�.-. _ �.,� _. _ , ._. „__ __...... ._ _"____ _ ________ _ - _" __ �J " __ .. _ . . T.,r, ,,,,;�+,�,a i i i� ni�n� i�.� r nr�rAa�pted 11/28/201.1 .....Tl 1 lYI.. � a. The City will str:i:ve tc� maintain an unassi�ned balauce in tlie General. T'unCi --��a t�ser�e of 50% of the general fund's total annual operating budget (this reserve includes the designation far cash flows). "T�' � __. ___ _ _ *"�* *' �'�*`•', ^�'^ '*� } � " '' +^ � u«cr�inz . ¢� , • . . ..• , • , . . , .' . �l]"1C0 c� S��niCcant so�rrce of �•evenue in the Ueneral. Fund comes ('rom propert�ta�es, mainta.inii�� f'u�nd bala��ce that is equal to at least six moni;hs of ��perati�n� e�p�nd.itures ensures tliat suffcieiit res�urces are av�ilable to fiind basic City fimctions bet��een. pi�opez-ty tax settlerr�ents Tl�is range is in canformance with guidance fr�m tl�e O�ce of the State Auditor �OSA� Amouilts that exceed 50% ma.y be tra.nsferrecl out to other funds An assi�;i�ment or restriction of fund baiaiicc �11av Uc used to offset revenues earnccl in ane vear where substantial services are re�uired to be pe-rforined in fhe next tiscal period. b. The City will maintain an amount sufficient to cover accumulated vacation and compensatory time balances and that portion of PTO leave that would be payable under the City's severance pay policy or union contracts. This amount shall be adjusted annually as part of the year-end close and annual financial report process. c. For specific purposes as autharized by the City Council or the Citv's intended use o:t lhe TLiriaS. Funds shall be �'°.��°;;-��'��' assi 7i� led first for compensated absences, second for cash flow needs and lastly for emergencies/contingencies. 4. Tl�e Cable Fu:nd is a T', � a�.,'�,,,� �,, �, .'� �.� Special Revenue Fund s-�:� N.�w'.'.' �V�+ r::��-that �rayides for cable and camn�unicatic�n refated expenses to dissen�inate inform.ation ta tl�e pub(ic. It receives the majori � of its fundin J�, fi.otn franchise fees �vhich are restricted fo�• this use. �:---"I'l�e Citv «�i11 strive to maintaiu a fiuld balance in thc Cable Fund in an �mount sufticient ta su�port t11e ongoing operatin�penditures arid ca�ital expenditures �laniaed in the CIP a.nd in congruence �vith ihe Long Ran�e Financial :Man.a�ement Pla.n. r r,,...,.� ..,,,,.t..,.�� .,.,ai,....,H,,,o,.+- 5 EUA runds �re S�eciallZeveni�c Fu»ds that carryout cconomic and industrial devclopment and redeveloUment consistcnt with policies established by fhe CitkCouncil. It receives the i�iajoritv of' its funding frcxn s�eciCc ta�es or c�ther earma.r.ked revenc►e souxces. The City wil] strive to maii�tain fund balances in the rDA rui�ds in an amouiit sutticient to su�pc7rt the c�ngoin * expendit�res obligation5 and in congruence witli the I.,on� Ran�e Fi�aanc;ial Management Plan. Revenues not leg,allv restricted will be committed. 6. Fund balances in Debt Service Funds for future debt payments �=r�" "^ �'��+^�'are restricted. 7 Capital Funds are used to accouni for the financing of steeei: rehabilitations projects, equip.ment reulacement �t�blic safety ec�ui�ment and facilitv rehabilitation or renovatron. Revem�e sources are provided mainly tlrr�ugh pro�erty taxes 5�ecial a5�;essi�ient5 Park �iedication fees an�i 1':\Financc\Policies and Pracedure;s\I'�iicies\Furr� Balance Policy-2011.dac":"�Y�^��^�,`D�,';�;�°` ,� pr .� \l� l'�' \�' ,a R 1..,.. T)„t;� ..a.,� � .. � �,�..J�.�,..,.. r„�, r,.:r+_o,a 1 i ii ni�ni y �•z �_n�Ado��ted 11/28/2011 , -�-� z. ��z,-. charitable �a�alblin�; Street projects ec�ui�ment �urelaases and renovations a�re pra�rramtned into the C'it �'� s Capit�l ti��prc�veme��t Plan �iiid are e� nerall�planned vears in advar�ce. 'l he City «�i11 strive to mavitaiii fund balances u1 the Ec�uiUment Buildiu� & R�place7ilent F,7nd Public S�afetv Ca��ital F►,md Parks I'und and tlie Perminent Rev�lvin� Im�rovement Fund i�i an am�unt sufC�cient t� str�art the on oin� ca�ital expendii:ures ��latrned. in the C[P and in c��nRruence with the Lon� Ran�e Financial Mana�ement Plan. Reve�mes n�t le�,ally restricted will be assi i� led. 8 Enter�rise Funds were c- stablisl�ed to account for the o�eration of Wa.ter Sanitary Sewer, Recyclii�� and Surtace Water 1Vlana�crnent 'I'hese o�erations are desi�rned to be self-su�nortin� fiom user cha�,cs. City enterprise funds shall have operating cash reserves sufficient to provide for monthly cash flow, and for a reasonable level of equipment and infrastructure replacement. Major reconstruction or system upgrades, may need to be funded from enterprise revenue bonds. Annual utility rate reviews will be made in regard to projected operating expenses and capital improvements. The Council will, on an annual basis, establish rates in accordance to operating cost recovery and the projected capital improvement. 9 Internal Seivice Funds were established to accaunt for�eraticzn� which are desi�ned to be se.l.f su:�ortin� from "internal" user c.har�es. a. Risk Mana�euient I'unci "I'his fund �vas es#ablished to pool dividerids received the Cit�'s insurance providers for t�ositive claims ea�erience This funds ir�cks dividend revenues and ded.uctible costs f�r claims The gc�al of'this fund is tc� huild a C�ind balance thai ��ould allow tl�e Citv to increase deductible limits in order to reduce �rerniu�n costs. Dividenc�s f�-om the �;ity's health. insurance provider are also used to_provide wellness�rograms T'unds received from tl7e L ea�,ue of Minnes�ta Cities In�;ura��ce Trust at•e committed while funds received from the City's health insurance cari•ier arc assi >>� ied• b, En�ineerin�; T1�i5 fund is used to account fc�r the pravision of en 7in�_ee�•in,� set�vices �:o develo�ment t�rojects infrastruc.ture p��ojects and the CitX i►� �.7eneral This fuild is financed predoix�inantly tlu�oiigh user ch�r�es bc�tl� internallv aud externallv to developers and is noz•naally n.ot expected to cariy a fund balance at year-end. c. Central Gal�age a�id Ec�uipmellt � This f'und i� used t� account for the ma:terials, su��lies and ex��enses of the Central Ciarage �nd equiprnent of Pu�lic Wo��lcs whiclz is coir►prised of the followin�; departments; Streetti ParkS Water Sanitary Sewer aud Surface Waier Management. This fund is financed predc�minantiv thrau�li t�ser charge5 internal{y ta the pul�lic w�rks dep�rtments. rund. balance is assi�;ne�1 for the �urchase, replacement and i•epair of e uipment and vehicles used by public works. �I 0. Fund balances will be c�e��-i�-assigned. according to the above guidelines up to the amount available after restrictions and other �' �� '�m�coinmitments. This policy is not intended to require the reporting of deiicit •n ��_'._��:o�:rt;*G:' ui�assi si� ieci fund balances. P•\F`inanec\I't�licies anc� 1'rocedures�I'olicies\Fur� Balai�ce P�licv-2011.dacl':`�';N^„^^"'�';,,;"" r.. ,,,..;ri+�,a � i i7 ni�n7 �'�� nr�rAdo'pted 11/28/2011 , , �._,r..�..... Non�pendable Funcl 13alances — consists of an�ourjts that are not in s�enciable fc>rm. "I'l�e Cit.�ias several arnounts unavailable for ap�opriation such as• �repaid items inventories etc '�Restricted Fund Balance and Restricted Net Assets — consists of ar�n�un:ts related to externallv im��osed con�traitits esfal�lished hy creditors. �rantc�rs or cc�ntributors• or constraints im�osed by st�te statutar��rovisior7s. It is the R�ortion of fund balance that is not appropriable for expenditure or is legally segregated (restricted net assets) for specifc future uses. The City has several items that are legally restricted to a certain use such as: police forfeiture funds, federal and state economic development revolving loans, park dedication fees, and bond proceeds. '� ,• . . .. . . �, ., . 7��.-, �a��;« ��-a�u-��Committei� Funtl I3alance — consists of internally imposed amstraints. 'I'hese constraints are established by Resolution of the Cit� Cou�icil. Commitments may be cha.n�ed or lifte�i only bv the <*overnment taking fhe same formal action that im� osed thc constra.int or.i�;iiia:llv. . . . . . .. . . •b • . r.,. .;,,�.-,;;n� z�Assi�ned Fund Balance — • . , • � � ' � ' � � , , . .. . , ,. _ , , , . . � , , , . . .� ��,;,�.,,,�o,a �;,.. ,. ,.t, - , , - � , , . , . „ , , .. , , . , .. . .consists of intel-nally irn�osed constraints Thesc constrairits reflect the s��ecific �urnose for tivllich it is the Citv's inte�idecl use. `These c��nstraints are established b�y the City C;ouncil and/<�r inan��ement. Pursu.ant to City Caui�cil Resolution, the City's Director oi' Finance an�l �dministrative Services andJor C;rty /ldminisCrator is authorized to estaUlisl� assi�7nments of fund balatice. . Unassi�ned Fuixc� Iittlance — F��-e�t� b , .is tl�e residual classification fot• the �;enei�a( fiind and also reflects ne�ative residual amounts in otlier fu�ids. General Fund — The �-Llassi � ned 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 si-rive to follow this recommendation. I'•\Finance\Pc�licics and Procedures\I'olicies\Furr� Balance: Policy-2011.doc":`'��^��-•`r'^';,.�,," r„n, ,,,.:�,o,a i i ii ni�n� t.�.zi_n�.�Ad.o��ted 11/28/2011 . G.J A. !. lYl.. ,� , . . . , a „+,,;� f,.r,� �,., i„ ��,,, , iu-�� ::.,,.�. �... �. ti i i ..ia �.o .. � �8� Enterprise Funds — It is expected that unrestricted net assets will be large. These funds have large investment in infrastructure that needs 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. Review and Approval The fund balance policy shall be formally approved and adopted by resolution of the City Council and any;future changes to the policy must be approved by the City CounciL Approval by the City Council the_ _ 28t11 Day of , Nove��lbet�, 209� 1]. �, ' '�Tr'.T uu��G�David Gi•ant, Mayor ATTrST: — Bat�— r:� �x':",�, T,° �, .:.:.Patrick I�laers, City Administrator —A�e--� P•\Finance\Policies anc� l'rocedures�P�licies\�un�i Bal��i�ce I'olicy-2011.doc":`'��^��"��.�`,°:;'.'::�� r.,�, ,,,.;riE�,a i i ii n��n7 i ��zi_n�.�Ad.opted 11/28/2011 1 r. Z c.. �z i. i r �. .