Fort Walton Beach Resolution — 2011-18--fund balance policy — reading text

RESOLUTION 2011 -16 A RESOLUTION OF THE CITY COUNCIL OF FORT WALTON BEACH, FLORIDA; AN ESTABLISHING EFFECTIVE DATE. A FUND BALANCE POLICY; AND PROVIDING FOR WHEREAS, the City desires to establish a Fund Balance Policy consistent with Govemmental Accounting Standards Type Definitions, and Board Statement No. 54, Fund Balance Reporting and Governmental Fund WHEREAS, such a policy has been prepared and a copy thereof is attached hereto; NOW, THEREFORE, WALTON BE IT RESOLVED BEACH, FLORIDA THAT: BY THE CITY COUNCIL OF THE CITY OF FORT SECTION 1. The City Council hereby adopts the " City of Fort Walton Beach Administrative Policy Number implement 14, Fund Balance and Net Assets ", and hereby directs the City Manager to said Policy. 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 All resolutions or parts of resolutions in conflict herewith shall be and hereby are repealed.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: August 16, 2011 M2i ke Anderson, Mayor Attest: Approved For Legal Sufficiency Helen Spence City Clerk a ywaid D s, C ttomey  FT, -.1 CITY OF FORT WALTON BEACH ADMINISTRATIVE POLICY NUMBER— Fig= - 1J1-3 oei. onc. x - SUBJECT: Fund Balance Pclic REVISION DATE: Aueust 1,0 2011 ORIGINAL EFFECTIVE DATE: May 20 2008 APPROVED' Robes T. Meams, City Manager L PURPOSE /INTENT I To establish a fund balance policy, consistent with the Governmental Accounting Standards Beard Statement Ne. 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 Officer' s Association recommends, at minimum, an tc unreserved fund balance in the General Fund of no less than 2 months ( 17 %) of regular operating revenues or expenditures. 22 A Florida League of Cities revenue expert recommends a fund balance of 25% - 30% ofexpenses for coastal and barrier island communities 23 Credit rating agencies monitor fund balance levels to determine a government' s creditworthiness. C 2.4 Fund Balance — As defined by the Governmental Accounting, Auditing and m Financial Reporting of the Government Finance Officers Association, " The ar difference between assets and liabilities reported in a governmental fund." 2. 5 Nonspendoble Fund Balance — The portion of fund balance that cannot be spent en because of form or because it most be maintained intact 2b Restr(cted Ford Balance —The portion of fund balance with limitations imposed by v creditors, grantors, laws, regulations, or enabling legislation. C 2.7 Committed Fund Balance - The portion of fund balance that can be used only for m the specific purposes determined by a formal action ( resolution) of the City m a Council, the City' s highest decision making authority. Commitments may be changed or lifted only by the City Council taking the same formal action LL resolution) that imposed the original wnsnaint. These commitments must be in Place prior to September 30. d 2. 8 Assigned Fund Balance — The portion of fund balance that includes spendable t amounts established by management of the City that are intended to be used for M specific purposes that are neither considered restricted nor wmmitted. G raft Packet PB. 22  5. i. a 2 Unassigned Fund Balance — The residual portion of fund balance for the general fund. 2. 10 balance, Unrestricted Fund Balance —The total of committedfund balance, assignedfund and unassigned jund balance. 3. GENERALFUND 3. 1 Fund: The City Council establishes the following committed fund balance for the General 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. 12 In the event 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. 32 The City establishes the following assigned fund balance in the General Fund: 3. 2. 1 Assignment to Subsequent Year' s Budget — The subsequent years 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 Pond balance be limited to one -time, nonrecurring expe rdltures- ENTERPRISE FUNDS 4. 1 The City Council establishes the following unrestricted net asset levels for the Enterprise Funds, with the exception of the Golf Fund: 4. 1. 7 Utilities Fund — Unrestricted net assets will be maintained at 33% of Operating and debt service expenses and transfers out. Net Assets in excess m` 33% will be assigned to the Renewal & Replacement fund. In the event that the balance of the Renewal & Replacement fund falls below 10% of total net assets, the City shall transfer a minimum of 5% of total subsequent year' s budgeted revenues to the Renewal & Replacement fund each year until the Pond is replenished. 4. 1, 2 Sanitation Fund — Unrestricted net assets will be maintained at 33% of operating and debt service expenses and transfers out Net Assets in excess of 33% will be assigned to the Renewal & Replacement fund. In the event that the balance of the Renewal & Replacement fund falls below 10% of total net assets, the City shall transfer a minimum of 5% of total sol s aphem year' s budgeted revenues to the Renewal & Replacement fund each year until the fund is replenished. 4, 13 Stormwatc, Fund — Unrestricted net assets will be maintained at 33% of operating and debt service expenses and transfers out. Net Assets in excess of 33% will be assigned to the Renewal & Replacement fund_ z of Packet Pg. 23  5. 1. a 5. ANNUAL REV] EW AND DETERMINATION 5. 1 Compliance with the provisions of this policy shall be reviewed as part of the annual budget adoption process and revisions to the levels of fund balance will be determined during this process 6 1 It will be the responsibility of the Finance Director to uphold this policy and keep it current. 7 AUTHORITY T 1 Resolution 2011 - 13, adopted on August 16, 2011, vc amnc u. tvLE Z. J Oft Packel Pg. 2d