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

2 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 d continuation of necessary public services. Dcm 2. BACKGROUND and DEFINITIONS m v 2. 1 The Government Finance Officer' s Association recommends, at minimum, an u unreserved fund balance in the General Fund of no less than 2 months ( 17%) of n 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. N 2. 3 Credit rating agencies monitor fund balance levels to determine a govemment' s o creditworthiness. 2.4 Fund Balance — As defined by the Governmental Accounting, Auditing and m Financial Reporting of the Govemment Finance Officers Association, " The K difference between assets and liabilities reported in a governmental fund." 2. 5 Nonspendable Fund Balance — The portion of fund balance that cannot be spent mM because of form or because it must be maintained intact. 2. 6 Restricted Fund Balance —The portion of fund balance with limitations imposed by dr creditors, grantors, laws, regulations, or enabling legislation, c 2. 7 Committed Fund Balance - The portion of fund balance that can be used only for mm to the specific purposes determined by a formal action ( resolution) of the City Council, the City' s highest decision making authority. Commitments may be c changed or lifted only by the City Council taking the same formal action LL resolution) that imposed the original constraint. These commitments must be in place prior to September 30. y 2. 8 Assigned Fund Balance — The portion of fund balance that includes spendable. c amounts established by management of the City that are intended to be used for m specific purposes that are neither considered restricted nor committed. I ofof 33 PacketPacket Pg.Pg. 2222  5. 1. a 2. 9 Unassigned Fund Balance — The residual portion of fund balance for the general fund. 2. 10 Unrestricted Fund Balance — The total of convnitted fund balance, assigned fund balance, and mtassignedfund balance. 3. GENERAL FUND 3. 7 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. ENTERPRISE FUNDS 4. 1 The City Council establishes the following unrestricted net asset levels for the Enterprise Funds, with the exception ofthe 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 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 3 operating and debt service expenses and transfers out. Net Assets in excess of 33% will be assigned to the Renewal & Replacement fund. 2 of3 Packet Pg. 23  5. 1. a 5. ANNUAL REVIEW 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. 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 ora Packet Pg. 24