Fort Walton Beach Council agenda — 08-16-11 special budget — reading text

FY2011 -12 budget year, the level of committed fund balance in the General Fund is anticipated to be approximately $5. 14M. 4. 1. Staff requests City Council adoption of Resolution 2011- 13. ATTACHMENTS: Fund Balance ( DOC) Brandy Wunker Completed 07/ 21/ 2011 11: 07 AM Finance Completed 07/ 21/ 2011 11: 08 AM City Attorney Completed 08/ 09/2011 12: 12 PM Carole Jones Completed 08/ 09/2011 1: 27 PM Doc m: 1339 Page 1 _  RESOLUTION ( ID # 1339) City Manager Completed 08/ 09/ 2011 1: 35 PM City Council Pending Packet Pg. 20  0 RESOLUTION ( ID # 1339) RESOLUTION 2011 -13 A RESOLUTION OF THE CITY COUNCIL OF FORT WALTON BEACH, FLORIDA; ESTABLISHING A FUND BALANCE POLICY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City desires to establish a Fund Balance Policy consistent with Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions; and WHEREAS, such a policy has been prepared and a copy thereof is attached hereto; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WALTON BEACH, FLORIDA THAT: SECTION 1. The City Council hereby adopts the " City of Fort Walton Beach Administrative Policy Number XX, Fund Balance and Net Assets ", and hereby directs the City Manager to implement 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 All resolutions or parts of resolutions in conflict herewith shall be and hereby are repealed.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 Mike Anderson, Mayor Attest: Approved For Legal Sufficiency Helen Spencer, City Clerk Hayward Dykes, City Attorney Packet Pg. 21  5. 1. a r;- CITY OF FORT WALTON BEACH ADMINISTRATIVE POLICY NUMBER—Yin- 13 4 SUBJECT: Fund Balance Policy REVISION DATE: Aueust 16. 2011 ORIGINAL EFFECTIVE DATE: May 20 2008 APPROVED: Robert T. Meams, City Manager 1. PURPOSE/ INTENT 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. 1 The Government Finance Officer' s Association recommends, at minimum, an unreserved fond balance in the General Fund of no less than 2 months ( 17 %) of regular operating revenues or expenditures. 2. 2 A Florida League of Cities revenue expert recommends a fund balance of 25% - 30% of expenses for coastal and barier island communities. 2.3 Credit rating agencies monitor fund balance levels to determine a government' s creditworthiness. 2.4 Fund Balance — As defined by the Governmental Accounting, Auditing and Financial Reporting of the Government Finance Officers Association, " The difference between assets and liabilities reported in a governmental fund." 2. 5 Nonspendable Fund Balance — The portion of fund balance that cannot be spent because of form or because it must be maintained intact. 2.6 Restricted Fund Balance —The portion of fund balance with limitations imposed by U creditors, grantors, laws, regulations, or enabling legislation. n 2.7 Committed Fund Balance - The portion of fund balance that can be used only for the specific purposes determined by a formal action ( resolution) of the City Council, the City' s highest decision making authority. Commitments may be mNc u_ changed or lifted only by the City Council taking the same formal action resolution) that imposed the original constraint. These commitments must be in c place prior to September 30. E 2. 8 Assigned Fund Balance — The portion of fund balance that includes spendable u amounts established by management of the City that are intended to be used for specific purposes that are neither considered restricted nor committed. 1 of3 Packet Pg. 22 2. 9 Unassigned Fund Ba lance — The residual portion of fund balance for the general fund. 2. 10 Unreacesed Fund Balance — The total of committed fund balance, assignedfund balance and unassignedfund balance. GENERALFUND 3. l The City Council establishes the following committed fund balance for the General Fund: 3. 1. 1 DisastedEmergancy 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. 11. 2 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 mature 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. 1 The City Council establishes the following unrestricted net asset levels for the Enterprise Funds, with the exception of the Golf Fund: 4. 1. 1 Utilities 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 fond. 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 fund 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 subsequent year' s budgeted revenues to the Renewal & Replacement fund each year until the fund is replenished. 4. L3 Sturrawmer 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. 2 or3 Packet Pg. 23  5. 1. a 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. ADDITIONAL INFORMATION, REQUIREMENTS AND RESPONSIBILITIES 6. 1 It will be the responsibility of the Finance Director to uphold this policy and keep it current. 7 AUTHORITY 7. 1 Resolution 2011 - 13, adopted on August 16, 2011. 3 ar3 Packet Pg. 24  5. 2 City Council of Fort Walton Beach FINANCE MEMORANDUM To: Robert T. Meams, City Manager From: Brandy Wunker, Finance Director Date: August 16, 2011 Subject: Resolution 2011 - 19 Budget Transfers 1. 1 Resolution 2008 -31 was adopted by City Council on August 18, 2008 to formalize budget transfer procedures. However, there is no requirement by Florida Statutes, City Charter, or the Governmental Accounting Standards Board that the governing body adopt such procedures. Florida Statutes addresses increases /decreases to appropriations, budgets, and budget amendments, but not transfers within funds. 2. DISCUSSION 2. 1 Operationally, the City functions at a fund level basis allowing budget transfers within funds for individual line items that exceed the budgeted amount without a formal budget amendment. 2. 2 Budget transfers me used only to transfer appropriations between line items within a fund, not to transfer resources between funds or to increase the total budget. All budget transfers are performed in the City' s accounting system by the Finance Department. 2. 3 Transfers between funds and increases to a fund' s total budget are only permitted after adoption by resolution of the City Council. 2. 4 The