HomeMy WebLinkAbout5.F.3. Fund Balance Policy-Res. No. 7051CITY OF SHAKOPEE
Memorandum
TO: Mayor and Council
Mark McNeill, City Administrator
FROM: Gregg Voxland, Finance Director
SUBJ: Fund Balance Policy, Resolution No. 7051
DATE: October 6, 2010
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Introduction &Introduction & Background
Council has reviewed part of Governmental Accounting Standards Board Statement #54 (an accounting
change) previously. That part focused on merging the Recreation Fund and the operation of the
Telecommunications Fund into the General Fund. Another part of GASB 54 is the reclassification of fund
balance for governmental funds and a policy regarding fund balance.
Attached is a chart showing the old classifications of fund balance (three classes) and the new classes
{five). Also attached is the proposed policy on fund balance. This represents only minor changes to the
way things have been done to date.
Council is requested to adopt the Fund Balance Policy.
Action Requested
Offer Resolution No. 7051 A RESOLUTION ADOPTING A FUND BALANCE POLICY, and move its adoption.
G er' gg Voxland
Finance Director
H:\Finance\cafr\cafrl0
Fund Balance Classification pursuant to GA5B 54
OLD
Deco rcro rl
Designated
----------------------------
Undesignated
NEW
Nonspendable - Comprised of
items such as inventory and
prepaid expenditures.
---------------------------
Restricted - Legally
restricted by some outside
agreement or legislation.
Committed - Constraint on use
imposed by City Council
action.
Assigned - Intended to be
used for a specific purpose
as expressed by the City
Council or Finance Director,
residual amounts in
governmental funds other than
the General Fund and
appropriation of existing
fund balance.
Unassigned - Available for
any purpose and reported only
in the General Fund .except in
cases of negative fund
balance.
RESOLUTION NO. 7051
A RESOLUTION ADOPTING A FUND BALANCE POLICY
WHEREAS, the governmental Accounting Standards Board has adopted statement 54 which changes the
categories for fund balance in governmental funds, and
WHEREAS, it is recommended that a fund balance policy be adopted concerning fund balances,
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, COUNTY OF SCOTT,
MINNESOTA, that the following policy is adopted.
1. This policy applies to the General Fund. Other governmental fund type fund balance
categories are determined by the nature of the fund.
2. This Fund Balance Policy applies to unrestricted fund balances comprised of committed,
assigned, unassigned amounts.
3. The City Council can assign fund balance by expressing its intent or the Finance Director
is hereby authorized to assign fund balance.
4. When more than one category of fund balance can be used to fund an expenditure, the
highest (most restrictive) level shall be used first.
5. The target level of unassigned fund balance is 40 to 45% of expenditures. This is to
provide working capital for cash flow, unexpected decline in revenue such as state aid
unallotment and unforeseen expenditures such as natural disasters.
6. Unrestricted fund balance can be spent down by City Council action or appropriation or
due to emergency situations.
7. Replenishing fund balance when it falls below the target level shall be accomplished by
inter-fund transfers or budgeting for expenditures and other uses to be less than
revenue and other sources over a period not to exceed three years.
Adopted in session of the City Council of the City of Shakopee, Minnesota held this
day of October, 2010.
Mayor of the City of Shakopee
ATTEST:
City Clerk