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14 <br />SECTION 6 - FUND BALANCE –GOVERNMENTAL FUNDS <br />Purpose <br />The City is committed to maintaining a stable financial environment for the City’s operations that <br />allows the City to provide quality services to its residents in a fiscally responsible manner. This <br />policy also provides a measure of financial protection against unanticipated events that would <br />adversely affect the financial condition of the City and jeopardize the continuation of necessary <br />public services. <br />This policy will ensure that the City maintains adequate fund balance and reserves in order to: <br /> Provide sufficient cash flow for daily financial needs <br /> Secure and maintain bond ratings <br /> Offset significant economic downturns or revenue shortfalls, and <br /> Provide funds for unforeseen expenditures related to emergencies. <br /> <br />Definitions <br />Fund Balance – Net position of a governmental fund (the difference between assets and liabilities <br />reported in the governmental fund). <br /> <br />Governmental Funds – These are the General Fund, Special Revenue Funds, Debt Service Funds, <br />and Capital Project Funds. <br /> <br />Nonspendable Fund Balance – Amounts that are not in a spendable form, or are legally or <br />contractually required to be maintained intact. “Not in spendable form” includes items that are not <br />expected to be converted to cash (such as inventories and prepaid amounts) and items such as the <br />long-term amount of loans and notes receivable, as well as property acquired for resale. <br /> <br />Restricted Fund Balance – Amounts that can be spent only for specific purposes stipulated by (a) <br />external resource providers such as creditors (debt covenants), grantors, contributors, or laws or <br />regulations of other governments; or (b) imposed by law through constitutional provisions or <br />enabling legislation. <br /> <br />Committed Fund Balance – Amounts constrained for a specific purpose by formal action of a <br />government using its highest level of decision-making authority. Action to constrain resources <br />must occur prior to year-end. However, the amount can be determined in the subsequent period. <br /> <br />Assigned Fund Balance – Amounts that are constrained by the City’s intent to use for specified <br />purposes, but are neither restricted nor committed. Assigned fund balance in the General Fund <br />includes amounts that are intended to be used for specific purposes. <br /> <br />Unassigned Fund Balance – Unassigned Fund Balance is the difference between total fund balance <br />in a governmental fund minus its nonspendable, restricted, committed, and assigned components. <br />The unassigned fund balance is only used in the General Fund or when there is a negative fund <br />balance in another governmental fund.