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33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Statement only applies to the City's governmental funds; funds that are established to account for the activities of general programs and services. It does not apply to the City's water, sewer, or other `enterprise'- type funds. Under GASB Statement #54, a government's highest level of decision - making authority is required to assign these classifications — in our case, the City Council. The information presented below provides a brief overview of the classifications along with City Staff s recommendation on how to classify existing fund balances. Fund Balance Classifications GASB Statement #54 provides for 5 distinct classifications of fund balance. It should be noted that GASB's focus is primarily towards practitioners and the technical reader (as is probably evident by the terms and definitions). Nonetheless, the Council is asked to review the classifications in advance of making a formal determination of where City funds ought to be categorized. City Staff will be available at the Council meeting to provide additional interpretation and guidance. The classifications are summarized in the table below. GASB Statement #54 Fund Balance Classifications Classification Definition Examples Amounts that cannot be spent because they are either; * Inventories Nonspendable * Prepaid items a) Not in a spendable form. * Long -term receivables b) Legally or contractually * Permanent principal of endowment funds required to be maintained intact. Amounts that have constraints placed on them by either; * Restricted by State Statute Restricted * Unspent bond proceeds a) External creditors such as debt * Grants earned, but not spent covenants, grantors, * Debt covenants contributors, or laws or * Taxes dedicated to a specific purpose regulations of another * Revenues restricted by enabling government legislation b) Law through constitutional provisions or enabling legislation Amounts that have constraints placed * The City Council decides to set aside Unrestricted — Committed on them by formal action of the monies for a new facility government's highest level of decision- * Property tax levies set for a specific making authority. purpose by resolution Amounts that are constrained by the * The City Council delegates the authority Unrestricted — Assigned government's intent to be used for to assign fund balances in specific - purpose specific purposes, but are neither funds to the City Manager or Finance restricted nor committed. Director Applies solely to the General Fund, and Unrestricted - Unassigned includes any amounts not reported under * Not applicable other classifications. Page 2 of 7