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Department Approval <br />e,4 7"e. /nA <br />qASFAE-hE <br />REQUEST FOR COUNCIL ACTION <br />Date: 1/23/12 <br />Item No.: 7 • 1 <br />City Manager Approval <br />�.J <br />Item Description: Categorizing City Fund Balances in Accordance with New Governmental <br />Standards <br />1 BACKGROUND <br />2 At the November 28, 2011 City Council meeting, the Council adopted a resolution categorizing the City's <br />3 fund balances in accordance with new governmental standards. After further discussion with the City's <br />4 Auditors it has been determined that four City Funds were inadvertently placed in the wrong category. The <br />5 Funds include: <br />6 <br />7 ❖ Information Technology <br />s •:* License Center <br />9 ❖ Parks & Recreation (Programs) <br />10 •:* Parks & Recreation Maintenance <br />11 <br />12 It was Staff s intent to leave these Funds in their current classification as a Special Revenue Fund — where <br />13 the primary revenues are kept separate from the General Fund to carry out specific functions. However, <br />14 this requires that these funds be categorized as `Committed' under the new governmental standards; rather <br />15 than 'Assigned'. A revised list of fund balance categorizations is included in Exhibit B. Exhibit A is also <br />16 included for continuity purposes. No changes are proposed for Exhibit A, or the attached resolution. <br />17 <br />18 The following is an excerpt of the narrative provided to the Council on November 28, 2011 explaining the <br />19 new governmental standard: <br />20 <br />21 jExcerpt from the November 28, 2011 City Council Meeting} <br />22 <br />23 The presentation of municipal financial statements is guided by a number of oversight agencies <br />24 including the Government Accounting Standards Board (GASB), a national organization that <br />25 establishes generally accepted accounting and reporting standards for governmental entities. In <br />26 February 2009, GASB Statement #54: Fund Balance Reporting and Governmental Fund Type <br />27 Definitions was issued. <br />2s <br />29 This Statement prescribed a new financial reporting requirement designed to enhance and clarify <br />30 fund balance classifications and to promote greater consistency in governmental financial reporting. <br />31 The Statement establishes fund balance classifications that comprise a hierarchy based on the extent <br />32 to which a government is bound to constraints imposed upon the use of its financial resources. This <br />Page 1 of 7 <br />