Fort Walton Beach Resolution — 2022-15--Amend Aministrative Policy 14 Fund Balance for FBC — reading text

RESOLUTION 2022- 15 A RESOLUTION OF THE CITY COUNCIL OF FORT WALTON BEACH, FLORIDA; AMENDING ADMINISTRATIVE POLICY NUMBER 14, FUND BALANCE AND NET ASSETS, TO CREATE A FLORIDA BUILDING CODE FUND (SF106) EMERGENCY FUND BALANCE POLICY; 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 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, the City adopted Administrative Policy Number 14 to implement the Fund Balance and Net Assets 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 Assets Policy is required to incorporate the Florida Building Code (FBC) Fund into the 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 Assets", and hereby directs the City Manager to implement said Policy. The amendment to the Policy includes establishing a restricted fund balance within the Florida Building Code Fund ( SF106) at 33% of total annual expenditures. This fund balance shall be restricted for use during disasters or emergencies. 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 All resolutions or parts of resolutions in conflict herewith shall be and hereby are repealed.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: SQ -4tn 13 AQ Richard A. Rynearson, Ma or CITY OF FORT WALTON BEACH ADMINISTRATIVE POLICY NUMBER —FIN -14 SUBJECT: Fund Balance and Net Assets Policy REVISION DATE: September 13. 2022 ORIGINAL EFFECTIVE DATE: May 20 2008 APPROVED: Michael D. Beedie, P. E., ICMA-CM, 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. BACKGROUND and DEFINITIONS 2. 1 The Government Finance Officer' s Association recommends, at minimum, an unreserved fund 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 barrier 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 creditors, grantors, laws, regulations, or enabling legislation. 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 changed or lifted only by the City Council taking the same formal action ( resolution) that imposed the original constraint. These commitments must be in place prior to September 30. 2. 8 Assigned Fund Balance — The portion of fund balance that includes spendable amounts established by management of the City that are intended to be used for specific purposes that are neither considered restricted nor committed. 2. 9 Unassigned Fund Balance — The residual portion of fund balance for the general fund. 1 of 3  2. 10 Unrestricted Fund Balance — The total of committed fund balance, assigned fund balance, and unassigned fund 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 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. 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 asset levels for the Enterprise Funds: 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 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. 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. 1. 3 Stormwater 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 of 5. FLORIDA BUILDING CODE FUND 5. 1 The City Council establishes the following committed fund balance for the Florida Building Code Fund: 5. 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 33% of annual budgeted expenditures. 5. 1. 2 In the event that committed fund balance falls below 33% 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 6. ANNUAL REVIEW AND DETERMINATION 6. 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. 7. ADDITIONAL INFORMATION. REQUIREMENTS AND RESPONSIBILITIES 7. 1 It will be the responsibility of the Finance Director to uphold this policy and keep it current. 8. 1 Resolution 2022- 15, adopted on September 13 2022. 3 of 3  RESOLUTION 2011- 16 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 14, 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 A,4, Mike Anderson, Mayor Attest: Approved For Legal Sufficiency 13 , " U, Helen Spence City Clerk Attorney  5. 1. a CITY OF FORT WALTON BEACH ADMINISTRATIVE POLICY NUMBER - + Deleted: xx SUBJECT: Fund Balance Policv REVISION DATE: Au ust 16 2011 ORIGINAL EFFECTIVE DATE: May 20 2008 APPROVED: Robert T. Meams, City Manager I. PURPOSE/ INTENT