R-091-17 Adopting the Fund Balance Reserve Policy for the General Fund (11.07.17)

Browse Search

Committed Fund Balance The City Council, as the City's highest level of decision-making authority, may commit fund balance for specific purposes pursuant to constraints imposed by formal actions taken, such as an ordinance or resolution. These committed amounts cannot be used for any other purpose unless the City Council removes or changes the specified use through the same type of formal action taken to establish the commitment. City Council action to commit fund balance needs to occur within the fiscal reporting period; however, the amount can be determined subsequently. Assigned Fund Balance Amounts that are constrained by the City's intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance. Such intent needs to be established at either the highest level of decision making, or by an official designated for that purpose. This policy hereby delegates the authority to assign amounts to be used for specific purposes to the City Manager or his/her designee for the purpose of reporting these amounts in the annual financial statements. Unassigned Fund Balance These are residual positive net resource of the general fund in excess of what can properly be classified in one of the other four categories. Reserve Policies The City shall maintain a minimum unassigned fund balance of at least 15% of General Fund operating expenditures. This policy also requires that internal service funds be funded every fiscal year to ensure there is no deficit at June 30. This is considered the minimum level necessaryto maintain the City's credit worthiness and to adequately provide for: • Economic uncertainties, local disasters and other hardships/downturns in the local economy • Contingencies for unforeseen operating or capital needs • Cash flow requirements At the end of the fiscal year end close, the annual excess revenues over expenditures in the General Fund will be automatically allocated as follows, unless the transfer is overridden by an action of the City Council: • 10% retained in General Fund Balance unassigned reserves; • 50% committed for pension obligation; • 25% committed for the City's OPEB liability; • 10% is transferred to the City's Building Maintenance Fund to address deferred maintenance to City buildings and facilities; and • 5% is transferred to the City's Autoshops Fund to address deferred fleet purchases for General Fund Departments If the reserve level falls below 15%, the City must amend this policy with a plan to rebuild it within three years. 2