Fort Walton Beach Resolution — 2024-12 Amending Admin Policy #14 Fund Balance & Net Assets — reading text

RESOLUTION 2024- 12 A RESOLUTION OF THE CITY COUNCIL OF FORT WALTON BEACH, FLORIDA; AMENDING ADMINISTRATIVE POLICY NUMBER 14, FUND BALANCE AND NET ASSETS, TO AMEND LANGUAGE REGARDING THE FLORIDA BUILDING CODE FUND PER FLORIDA STATUTES, AND UPDATING TERMINOLOGY AND WORDING TO BE CONSISTENT WITH GASB GUIDANCE REGARDING THE GENERAL FUND, FLORIDA BUILDING CODE FUND, AND ENTERPRISE FUNDS; AND PROVIDING FOR AN EFFECTIVE DATE WHEREAS, City Council adopted Resolution 2011- 18 on August 16, 2011 to establish a fund balance policy for the various funds to insure against unanticipated events that would adversely affect the financial condition of the City and jeopardize the continuation of necessary public services; and WHEREAS, City Council adopted Resolution 2022- 15 on September 13, 2022 to establish a Fund Balance Policy consistent with Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions; WHEREAS, City Council desires to establish a Fund Balance Policy consistent with section 553. 80( 7), Florida Statutes; and WHEREAS, the City adopted Administrative Policy Number 14 to implement the Fund Balance and Net Position Policy for the General Fund, Utilities Fund, Sanitation Fund and Stormwater Fund after the adoption of Resolution 2011- 18; and WHEREAS, an update to the Fund Balance and Net Position Policy to incorporate the Florida Building Code ( FBC) Fund into the policy was implemented after the adoption of Resolution 2022- 15; and WHEREAS, an update to the Fund Balance and Net Position Policy is required to update the Florida Building Code ( FBC) Fund policy; and WHEREAS, the City Council has reviewed the updated policy and believes it will benefit the City of Fort Walton Beach to update and implement. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WALTON BEACH, FLORIDA, THAT: Section 1.The City Council hereby amends the " City of Fort Walton Beach Administrative Policy Number 14, Fund Balance and Net Position", and hereby directs the City Manager to implement said Policy. The amendment to the policy includes amending the language regarding fund balance within the Florida Building Code Fund, as well as updating the terminology and wording in the General Fund, Florida Building Code Fund, and Enterprise Funds to be consistent with GASB guidance.  RESOLUTION 2024- 12 Section 2. All resolutions or parts of resolutions in conflict herewith shall be and hereby are repealed. Section 3. This Resolution shall take effect immediately upon its approval by the City Council and signature by the Mayor. Adopted: S'? A, Mb j r a q _ a.o;. 4 2g' L'..' Z x J'' Richard A. Rynearson, ayor Attest: Approved as to form and sufficiency for the City of4 14ton Beach, only. Kim N). Barnes, City ttorney Rld CITY OF FORT WALTON BEACH ADMINISTRATIVE POLICY NUMBER - FIN -14 J SUBJECT: Fund Balance and Net A&sets Position Policy REVISION DATE: September 24 2024 ORIGINAL EFFECTIVE DATE: May 20, 2008 APPROVED: Jeff Peters, City Manager 1. PURPOSEANTENT 1. 1 To establish a fund balance policy, consistent with the Governmental Accounting Standards Board Statement No. 54, to insure against unanticipated events that would adversely affect the financial condition of the City and jeopardize the continuation of necessary public services. 2. BACKGROUND and DEFINITIONS 2. 1 The Government Finance Officers' r'r Association recommends, at minimum, thatgeneral- u ose governments, regardless of size. maintain unrestricted budgetary fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. an , v o ed fund b,,l, nee in the General Fund of .. loss thEl 0 2. 2 A Florida League of Cities revenue expert recommends a fund balance of 25% - 30% of expenses for coastal and barrier island communities. 2. 3 Credit rating agencies monitor fund balance levels to determine a government' s creditworthiness. 2. 4 Fund Balance - As defified by the Goye,.,,ment„ i n ,.,.,, unfi,,., Auditing and F;., aneial assetsand liabilities —r-epeited- ix—a-. 1ei ei mental The Governmental Accounting Standards Board ( GASB) defines fund balance as a governmental fund' s net uosition. or the difference between assets, liabilities, deferred outflows of resources. and deferred inflows of resources. 2. 5 Nonspendable Fund Balance - The portion of fund balance that cannot be spent because of form or because thgy are either a not in spendable form orb le all or contractuallyr2guired to Abe maintained intact. 2. 6 Restricted Fund Balance - The portion of fund balance with limitations externally imposed by creditors [ such as through debt covenants?, grantors, contributors, laws; or regulations of other governments, or imposed by law through constitutional provisions or enabling legislation. 267 Committed Fund Balance - The portion of fund balance that can be used only for the specific purposes pursuant to constraints imposed de* fmrined by a formal action resolution) of the City Council, the City' s highest decision- making authority. 1 of  Commitments may be changed or lifted only by the City Council taking the same formal action ( resolution) that imposed the original constraint. These eemmitments must be in plaee prior-to September- 30. 2. 8 Assigned Fund Balance — The portion of fund balance that are constrained by the government' s intent to be used for specific u oses. but are neither restricted nor Gi+ committed : eludes spendable amounts established by management of the y that onaoa to be used fef sper; f; purposes +t,,, arne o; the- d. 2. 9 Unassigned Fund Balance — The residual portion of fund balance for the general fund. 2. 10 Unrestricted Fund Balance — The total of committed fund balance, assigned fund balance, and unassignedfund balance. 3. GENERAL FUND 3. 1 The City Council establishes the following committed fund balance for the General Fund: 3. 1. 1 Disaster/Emergency Reserve — This reservation of fund balance is committed by the City Council due to the City' s coastal location, hurricanes and other natural disasters, as well as economic changes that severely impact the City' s ability to continue operations and provide services. The City Council hereby establishes this reservation of fund balance at 30% of annual budgeted expenditures. 3. 1. 2 If in the even4 that. committed fund balance falls below 30% of annual budgeted expenditures, the City Manager will so advise the City Council in order for necessary action to be taken to restore the committed fund balance. 3. 2 The City establishes the following assigned fund balance in the General Fund: 3. 2. 1 Assignment to Subsequent Year' s Budget —The subsequent year' s budget fund balance reserve is assigned by City management as set forth in the annual budget ( and any amendments thereto). 3. 3 The City establishes that the use of unassigned fund balance be limited to one-time, non- recurring expenditures. 4. ENTERPRISE FUNDS 4. 1 The City Council establishes the following unrestricted net asse position levels for the Enterprise Funds: 4. 1. 1 Utilities Fund —Unrestricted net assetsosp ition will be maintained at 33% T of operating and debt service expenses and transfers out. '` ts Unrestricted net position in excess of 33% will be assigned te the Renewal esignated for renewal and replacement. In the event that the unrestricted net position available for renewal and replacement falls below 10% of total net assets 12osition, the City shall tr-ansfe ~ a ininifnein of C1% of tetvJ eaek year until the ftmd is r-eplenis allocate and designate a minimum of 5% of the subsequent year's budgeted revenues to renewal and replacement on an annual basis until the balance is restored. 2 of 3  4. 1. 2 Sanitation Fund — Unrestricted net assetsosp ition will be maintained at 33% of operating and debt service expenses and transfers out. Net Assets Unrestricted net position in excess of 33% will be assigned te the Renewal designated for renewal and replacement. In the event that the balanee of the Renewal & Replaeement fund unrestricted net position available for renewal and replacement falls below 10% of total net assetsosp ition, the City shall t a s r-atof 504 - A f- -tet al - subseqtief4 year' s budgeted revenues te the Renewal & Replaeefnen4 funa allocate and designate a minimum of 5% of the subsequent year's budgeted revenues to renewal and replacement on an annual basis until the balance is restored. 4. 1. 3 Stormwater Fund — Unrestricted net assetosp ition will be maintained at 33% of operating and debt service expenses and transfers out. " Tom Unrestricted net position in excess of 33% will be assigned to the Renewal designated for renewal and replacement. 5. FLORIDA BUILDING CODE FUND