HomeMy WebLinkAboutResolution 7851 RESOLUTION NO. 7851
CITY OF MOUNDS VIEW
COUNTY OF RAMSEY
STATE OF MINNESOTA
ADOPTING A FUND BALANCE POLICY
WHEREAS, the City desire to formalize a Fund Balance Policy; and
WHEREAS, the Minnesota State Auditor has provided some best practices with
regard to establishing a fund balance policy; and
WHEREAS, the policy establishes a target for a minimum General Fund balance
between 35 percent and 50 percent of the subsequent years budgeted operating
revenues and transfer or no less than five months of operating expenditures and
transfers; and
WHEREAS, the policy establishes the order of resource use; to use restricted
resources before unrestricted to use committed resources before assigned resources
and assigned before unassigned resources.
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of
Mounds View that the attached Fund Balance Policy is hereby adopted.
Adopted this 14th day of November, 2011.
0
e Flaherty, Mayor
ATTEST:
J 't-t,d
James Ericson, City Administrator
(seal)
City of Mounds View
Fund Balance Policy
Purpose:
It is important to establish sound financial management policies to ensure financial stability of the City
of Mounds View for the benefit of residents and businesses. Fund balance reserves are an important
component in ensuring the overall financial health of a community, by giving the City sufficient funds to
meet contingency and cash-flow timing needs. In establishing an appropriate fund balance,the City
needs to consider the demands of cash flow,need for emergency reserves,ability to manage
fluctuations of major revenue sources,credit rating,long-term fiscal health, and charter restrictions.
Policy:
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Governmental Fund Balance classifications are defined as follows:
- Non-spendable—resources that cannot be spent because they are either not in spendable form
or legally or contractually required to be maintained intact. (inventories,prepaid amounts,long-
term amount of loans and notes receivable,property acquired for resale)
- Restricted—resources that have constraints placed on their use that are externally imposed by i.
creditors,grantors,contributors,or laws or regulations of other governments;or imposed by
law through constitutional provisions or enabling legislation.
- Committed—resources can only be used for specific purposes pursuant to constraints imposed
by formal action of the City Council.
- Assigned—resources that are constrained by the government's intent to be used for specific
purposes. This would include any remaining positive fund balance in all funds other than the
General Fund. The City Administrator and/or Finance Director are authorized to assign fund
balance that reflects the City's intended use.
- Unassigned—is the residual classification for the General Fund.
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Minimum General Fund Balance Target:
The City will strive to maintain an unassigned General Fund balance of between 351 and 50%of the
subsequent years budgeted revenues and transfers or at a minimum five months of expenditures and
transfers;however,this need could fluctuate with each year's budget objectives. The City Council will
strive to take the appropriate steps necessary to maintain this minimum balance if the General Fund '
balance is below the minimum level for three consecutive years. The City Council will review the
sufficiency of the"minimum"balance annually.
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Order of Resource Use:
When both restricted and unrestricted resources are available for use, it is the City's policy to first use
restricted resources,and then use unrestricted resources. When committed,assigned or unassigned
resources are available for use,it is the City's policy to use resources in the following order; 1)
committed,2)assigned,and 3)unassigned.