2011-R-20 RESOLUTION NO. 2011-R-20
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF EDGEWATER, FLORIDA; ESTABLISHING A FUND
BALANCE POLICY FOR THE CITY OF EDGEWATER;
REPEALING RESOLUTIONS IN CONFLICT HEREIN;
AND ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the City of Edgewater, Florida, has made the following determinations:
WHEREAS, the City desires to establish a Fund Balance Policy consistent with the
Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions; and
WHEREAS, said policy has been prepared and a copy thereof is attached hereto and
incorporated herein as Exhibit "A ".
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EDGEWATER,
FLORIDA, THAT:
SECTION 1. The City Council hereby adopts the "City of Edgewater Fund Balance
Policy ", which is attached hereto and incorporated herein as Exhibit "A" and hereby directs the
City Manager to implement said policy.
SECTION 2. All Resolutions or parts of resolutions in conflict herewith be and the same
are hereby repealed.
SECTION 3. This Resolution shall take effect immediately upon its adoption.
1
#2011 -R -20
C
0
SECTION 4. After a motion to approve by LADAMA pggQ:{C with second by
rrn HIM Imo n e=pQ r , the vote on this resolution was as follows:
AYE NAY
Mayor Mike Thomas
_ 'x _
Councilman Justin A. Kennedy
X
Councilwoman Gigi Bennington
_ x
Councilman Mike Ignasiak
_^
Councilman Ted Cooper
PASSED, APPROVED AND ADOPTED this 26th day of September, 2011
ATTEST:
CITY COUNCIL OF THE
VC1.0FiFD � WA A
Qchael L. Th runs
Mayor
Robin L. Matusick
Paralegal
For the use and reliance only by the City of Approved by the City Council of the City of
Edgewater, Florida. Approved as to form and Edgewater at a meeting held on this 26th day of
legality by: Aaron R. Wolfe, Esquire September, 2011 under Agenda Item No. 8 P
City Attorney
Doran, Sims, Wolfe, Ansay,
& Kundid
2
02011-R-20
CITY OF EDGEWATER
FUND BALANCE POLICY
I. PURPOSE
The City hereby establishes and will maintain reservations of Fund Balance, as defined
herein, in accordance with Governmental Accounting Standards Board Statement No.
54, Fund Balance Reporting and Governmental Fund Type Definitions. Fund Balance
shall be composed of non- spendable, restricted, committed, assigned and unassigned
amounts.
11. DEFINITIONS
Fund Balance — The difference between assets and liabilities in a governmental fund.
Non - Spendable Fund Balance — Amounts that are not in spendable form (inventory or
long -term receivables) or amounts that are required to be maintained intact (corpus of a
permanent fund).
Restricted Fund Balance — Amounts that can be spent only for specific purposes
stipulated by external resource providers such as creditors, grantors, contributors, or
laws or regulations of other governments, or imposed by law through constitutional
provisions or enabling legislation.
Committed Fund Balance — Amounts that can only be used for specific purposes
pursuant to constraints imposed by formal action (resolution or ordinance) of the City
Council, the City's highest level of decision - making authority. Committed amounts
cannot be used for any other purpose unless the City Council removes or changes the
specified use by taking the same type of formal action (resolution or ordinance) it
employed to commit those amounts.
Assigned Fund Balance - Amounts established by City management intended to be
used for specific purposes.
Unassigned Fund Balance - The residual classification representing fund balance that
has not been restricted, committed or assigned and is available for general purposes.
III. SPENDING ORDER OF FUND BALANCES
The City uses restricted amounts to be spent first when both restricted (Non - Spendable
Fund Balance and Restricted Fund Balance) and unrestricted fund balances (Committed
Fund Balance, Assigned Fund Balance and Unassigned Fund Balance) are available
unless there are legal documents /contracts that prohibit doing this, such as grant
agreements requiring dollar for dollar spending. Additionally, the City would first use
committed fund balance, followed by assigned fund balance and then unassigned fund
balance when expenditures are incurred for purposes for which amounts in any of the
unrestricted fund balance classifications could be used.
IV. ESTABLISH RESERVE BALANCE TARGET
It is essential that governments maintain adequate levels of fund balance to mitigate
risks and provide a back -up for revenue shortfalls. The Government Finance Officers
Association recommends, at a minimum, that general - purpose governments, regardless
of size, incorporate a financial policy maintaining unrestricted fund balance in the
general fund of no less than two months (17 %) of regular general fund operating
revenues or regular general fund operating expenditures.
The City Council according to the City Charter has established the targeted minimum
reserve balance in the City's General Fund Unassigned Fund Balance equal to 15% of
the General Fund's current fiscal year operating expenditures and transfers out
budgeted for the fund with a maximum of 25 %. For purposes of this calculation, the
current fiscal year budget shall be the budget as originally adopted by resolution on or
before September 30 for the subsequent fiscal year.
V. REPLENISHMENT OF RESERVE DEFICITS
If, at the end of any fiscal year, the actual amount of Unassigned Fund Balance falls
below the targeted levels set forth herein, a plan shall be established to achieve the
target by adding a designated amount to the budget to cover the deficiency over a period
not to exceed five (5) fiscal years.
VI. UTILIZATION OF RESERVES
In the event that the Unassigned Fund Balance exceeds the amounts set forth herein,
the excess may be utilized for any lawful purpose. Appropriation of the minimum
reserve balances, once met, shall require the approval of the City Council by inclusion in
the approved annual budget (and revisions thereto).
VII. ANNUAL REVIEW AND DETERMINATION OF FUND BALANCE RESERVE AMOUNTS
Compliance with the provisions of this policy shall be reviewed as a part of the annual
budget adoption process, and the amounts of non - spendable, restricted, committed,
assigned and unassigned fund balance shall be determined during this process.