HomeMy WebLinkAboutRES NO 212-14RESOLUTION NO. 2 12--L4
A RESOLUTION ADOPTING A FUND BALANCE POLICY
FOR THE CITY OF BAKERSFIELD.
WHEREAS, The Government Accounting Standards Board (GASB) issued
Statement number 54 to enhance the usefulness of fund balance information
report by government agencies in their financial reports; and
WHEREAS, The GASB recommends that a formal written policy be established
by a government entity to properly classify the fund balance in each of the City's
governmental funds; and
WHEREAS, A recent review by the Government Finance Officers Association
(GFOA) emphasized the need to establish a written fund balance policy; and
WHEREAS, the GFOA emphasizes the need to comply with GASB rules and
implementation of their recommendations to qualify for the GFOA's financial
reporting award, which the City has received for 32 consecutive years; and
WHEREAS, the City Budget and Finance Committee has reviewed the fund
balance policy at it November 24, 2014 meeting and recommends Council
adoption of the policy; and
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Bakersfield as follows:
1. The foregoing recitals are true and correct and incorporated in their
entirety herein by reference.
2. The "City of Bakersfield - Fund Balance Policy" attached hereto as
Exhibit "A" and incorporated herein by reference, is hereby adopted.
I
SAAccounting\Admin\Admin Reports \Reso for Fund Balance Policy.doc
-- Page 1 of 2 Pages --
Ok A KF9 s -t,
> m
F- r
v o
ORIGINAL.
HEREBY CERTIFY that the foregoing Resolution was passed and
adopted by the Council of the City of Bakersfield at a regular meeting thereof held
on DEC 10 2014 by the following vote:
✓ ✓ ✓ ✓
AY COUNCIL MEMBER: RIVERA, MAXWELL, WEIR, SMITH, _ 1, SULLIVAN, PARLIER
NOES:
COUNCIL MEMBER
ABST N:
COUNCIL MEMBER
BSENT'
COUNCIL MEMBER
CITY CLERK AND EX OFFIPIFD of the
APPROVED
DEC 10 2014 Council of the City of B kersfield
fv►Uyuf
APPROVED AS TO FORM:
VIRGINIA GENNARO
City Attorney
JOSHUA H. RUDNICK
Deputy City Attorney
Attachment: Fund Balance Policy
S:\Accounting\Admin\Admin Reports \Reso for Fund Balance Policy.doc
-- Page 2 of 2 Pages --
O�0AK�9.�
s
F' r
v a
ORIGINAL.
CITY OF BAKERSFIELD
Fund Balance Policy
(Revised for GASB 54)
Purpose
The purpose of this policy is to establish a key element of the financial stability of the City by setting
guidelines for fund balance. Unassigned fund balance is an important measure of economic stability. It is
essential that the City maintain adequate levels of unassigned fund balance to mitigate financial risk that
can occur from unforeseen revenue fluctuations, unanticipated expenditures, and similar circumstances.
The fund balance also provides cash flow liquidity for the City's general operations.
Definitions
Fund Equity — A fund's equity is generally the difference between its assets and its liabilities.
Fund Balance — An accounting distinction is made between the portions of fund equity that spendable and
nonspendable. These are broken up into five categories:
1) Nonspendable fund balance — includes amounts that are not in a spendable form or are required
to be maintained intact. Examples are inventory or permanent funds.
2) Restricted fund balance — includes amounts that can be spent only for the specific purposes
stipulated by external resource providers either constitutionally or through enabling legislation.
Examples include grants and transportation development fees.
3) Committed fund balance — includes amounts that can be used only for the specific purposes
determined by a formal action of the government's highest level of decision - making authority.
Commitments may be changed or lifted only by the government taking the same formal action
that imposed the constraint originally.
4) Assigned fund balance — comprises amounts intended to be used by the government for specific
purposes. Intent can be expressed by the governing body or by an official or body to which the
governing body delegates the authority. In governmental funds other than the general fund,
assigned fund balance represents the amount that is not restricted or committed. This indicates
that resources in other governmental funds are, at a minimum, intended to be used for the purpose
of that fund.
5) Unassigned fund balance — is the residual classification of the general fund and includes all
amounts not contained in other classifications. Unassigned amounts are technically available for
any purpose.
c: \program files ( x86)\ neevia. com\ docconverterpro \temp\nvdc \290ea333 -cf04 -4236 -9881- gAK49
7d8086f4718c \pdfconvert. 1462 .1.cob_fundbalance _policy.docx p1 1'1
� rn
E- r
v o
ORIGINAL
Policy
Committed Fund Balance
• The City Council is the City's highest level of decision - making authority and a formal action by
this body (ordinance /resolution) is required to establish, modify, or rescind a fund balance
commitment. The action must either be approved or rescinded, as applicable, prior to the last day
of the fiscal year for which the commitment is made. The amount subject to the constraint may
be determined in the subsequent period.
Assigned Fund Balance
• The City Council has authorized, by ordinance, the City's Finance Director as the official
authorized to assign fund balance to a specific purpose not to exceed $40,000 as approved by this
fund balance policy.
• The City Council also has the authority to set aside funds for a specific purpose through either a
council approved contract or when approving reservations in the annual budget. Any funds set
aside as assigned require a simple majority vote of the Council and must be recorded in the
minutes. The same action is generally not required to change or remove that assignment.
Order of Expenditure of Funds
When multiple categories of fund balance are available for expenditure (for example, a construction
project is being funded partly by a grant, funds set aside by the City Council, and unassigned fund
balance), the City will start with the most restricted category and spend those funds first before moving
down to the next category with available funds
c: \program files ( x86 )\neevia.com \docconverterpro\ temp\nvdc \290ea333 -cfD4- 4236 -9881-
7d8086fa718c \pdfconvert. 1462 .1.cob_fundbalance _policy.docx
o``0AKF9�
T
> m
~" r
U p
ORIGINAL.