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HomeMy WebLinkAboutRES 19-015 APPROVING FUND BALANCE POLICY REVISIONS EFFECTIVE AS OF 12/31/2018CITY OF ST. ANTHONY VILLAGE STATE OF MINNESOTA RESOLUTION 19 -015 A RESOLUTION APPROVING FUND BALANCE POLICY REVISIONS EFFECTIVE AS OF 12/31/2018 WHEREAS, the City of St. Anthony's present Fund balance policy excludes expenses attributed to the police services contract as part of the calculation of Minimum Fund Balance. WHEREAS, the City of St. Anthony has similar expenses attributed contracted FinanciaM services provided to the Mississippi Watershed Management Organization and the City of Birchwood Village. WHEREAS, the City of St. Anthony has expenses attributed to the Fire State Aid payment to the St Anthony Fire Relief Association, for which a matching intergovernmental revenue source exists. WHEREAS, the City of St. Anthony's Fund Balance policy should be revised to include contracted Financial/HR services provided to the Mississippi Watershed Management Organization and the City of Birchwood Village and the Fire State Aid payment to the St Anthony Fire Relief Association as excluded expenses for the calculation of Minimum Fund Balance. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of St. Anthony Village the approve the Fund Balance Policy revisions state herein, effective as of 12/31/2018. Adopted this 8th day of January, 2019 ATTEST: V AtiG Nic le Miller, City Clerk Reviewed for administration: Mark Casey, City Manager SVCamail .Neetmp1t01D10 /OY ±019Wewhlion 19.DISRevinmb FurMbdwrce �llry doxx Fund Balance Policy Revisions proposed noted below effective 12/31/2018. Purpose: It is important to establish sound financial management policies to ensure financial stability of the City of St. Anthony 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 and long -term fiscal health. General Fund Policy: The City will maintain an unassigned General fund balance (minimum fund balance) in the range of 30 -35% of subsequent year's budgeted operating expenditures (net of expenditures for police services, financial services to other cities along with Fire relief state aid passed through to SAFRA) to meet contingency and cash -flow timing needs; however, this need could fluctuate with each year's budget objectives. • Annual proposed General fund budgets shall include this benchmark policy. Council shall review the amounts in fund balance in conjunction with the annual budget approval, and make adjustments as necessary to meet expected cash -flow needs. • In the event the unassigned General fund balance will be calculated to be less than the minimum requirement at the completion of any fiscal year, the City shall plan to adjust budget resources in the subsequent fiscal years to bring the fund balance into compliance with this policy. • The City Council may consider appropriating (for authorized purposes) year -end fund balance in excess of the policy level or increasing the minimum fund balance. An example of preferred use of excess fund balance would be for one time expenditures, such as capital expenditures, which do not result in recurring operating costs. • Appropriation from the minimum fund balance shall require the approval of the City Council and shall be used only for non - recurring expenditures, unforeseen emergencies or immediate capital needs that cannot be accommodated through current year savings. Replenishment recommendations will accompany the decision to utilize fund balance. • At the discretion of the City Council, fund balance maybe committed for specific purposes by resolution designating the specific use of fund balance and the amount. The resolution would need to be approved no later than the close of the reporting period and will remain binding unless removed in the same manner. Authority to Assign: (All Funds) • The City Council authorizes the Finance Director and /or City Manager to assign fund balance that reflects the City's intended use of those funds. Flow Assumptions: (All Funds) • 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 as they are needed. When committed, assigned or unassigned resources are available for use, it k the City's policy to use resources in the following order; 1) committed 2) assigned and 31 unassigned. Definitions: (General Fund and All Other Governmental Funds) Nonspendable fund balance — amounts that are not in a spendable form or are required to be maintained intact. Restricted fund balance — amounts subject to externally enforceable legal restrictions. Unrestricted fund balance —the total of committed fund balance, assigned fund balance, and unassigned fund balance. Committed fund balance — 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. Assigned fund balance — amounts a government intends to use for a specific purpose; intent can be expressed by the government body or by an official or body to which the governing body delegates the authority. Unassigned fund balance — residual amounts that are available for any purpose in the general fund. Fund balance — the difference between assets and liabilities reported in a governmental fund.