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Home My Public Portal About11) 7H Reaffirmation of Committed and Assigned Fund Balance Classifications for General FundCity Council June 17, 2014 Page 2 of 3 4. On May 15, 2012, the City Council adopted the GASB 54 Fund Balance Policy. 5. On June 19, 2012, the City Council reaffirmed the Committed Fund Balance of $4,500,000 and the Assigned Fund Balance of $17,200,000 for the General Fund for financial statement reporting purposes as of June 30, 2012. 6. On October 2, 2012, the City Council appropriated $510,625 from the Assigned Fund Balance (Economic Development Fund Reserve) for the Rosemead Boulevard Safety Enhancement and Beautification Project. 7. On October 16, 2012, the City Council appropriated $1,050,000 from the Assigned Fund Balance (Economic Development Fund Reserve) for the purchase of the property at 5800 Temple City Boulevard ($1 ,000,000) and related appraisal and environmental review services ($50,000). 8. On November 6, 2012, the City Council appropriated $475,375 from the Assigned Fund Balance (Economic Development Fund Reserve) for the Rosemead Boulevard Safety Enhancement and Beautification Project. 9. On June 4, 2013, the City Council adopted the Fiscal Year (FY) 2013-14 City Budget which included allocations from Assigned Fund Balance (Economic Development Fund Reserve -$1,465,000 and Opportunities for One-Time Expenditures - $240,000) in the amount of $1,705,000. 10. On December 3, 2013, the City Council appropriated $1,250,000 for the purchase of the property located at 5922 Primrose Avenue. In addition, the City Council appropriated $26,175 for an appraisal and all environmental site assessment work for the property. Both appropriations came from Assigned Fund Balance (Economic Development Fund Reserve). 11. On June 3, 2014, the City Council adopted the FY 2014-15 City Budget. As part of the City Budget document, an analysis of General Fund Balances Reserves was completed, estimating anticipated actual expenditures through June 30, 2014, (Attachment "B"). ANALYSIS: In order to be in compliance with the City's GASB 54 Fund Balance Policy adopted on May 15, 2012, the City Council must reaffirm Committed Fund Balances and Assigned Fund Balances for the General Fund prior to the end of the fiscal year for financial statement reporting purposes at June 30, 2014. All other funds (i.e., Special Revenue Funds) are automatically classified as restricted by the nature of the revenues received, as they are required to be used for specific purposes. During the FY 2013-14, the City Council took action to fund the purchase of the property at 5922 Primrose Avenue in Temple City and related appraisal and environmental review City Council June 17, 2014 Page 3 of 3 services. As a result of the appropriations during FY 2013-14 and the year-end analysis of the General Fund Reserves completed as part of the FY 2014-15 City Budget process, if the City Council reaffirms the Fund Balance classifications for the General Fund for financial statement reporting purposes at June 30, 2014, the classifications and the respective funding will be as follows: • Committed Fund Balance (General Fund) • Assigned Fund Balance (General Fund) $ 3,500,000 $ 12,769,580 Any remaining Fund Balance at the close of the fiscal year will be designated as Unassigned. Unassigned fund balance is the residual classification for the General Fund. Fund Balance that has not been assigned to other funds and that has not been Restricted, Committed, or Assigned to specific purposes within the General Fund. CONCLUSION: In order to be in compliance with the GASB 54 Policy and to ensure the General Fund Balance is classified at June 30, 2014, as intended, the City Council is requested to reaffirm the Committed and Assigned Fund Balances as designated for financial statement purposes before the end of the fiscal year. FISCAL IMPACT: This action does not have an impact on the FY 2013-14 City Budget. ATTACHMENTS: A. Fund Balance Policy B. General Fund Balance Classifications as of June 30, 2014. PURPOSE: CITY OF TEMPLE CITY FUND BALANCE POLICY ATTACHMENT A The purpose of this policy is to classify current fund balance categories to be in accordance with the fund balance classifications contained in the reporting requirements of Statement 54 of the Government Accounting Standards Board (GASB) effective June 15, 2010. The elements of the policy are created by the City of Temple City for its own purposes and may, therefore, be revised by the City as needed in the future. STATEMENT OF POLICY: The following classifications of Fund Balance are established 1n conformance with GASB 54. a. Nonspendable fund balance b. Restricted fund balance c. Committed fund balance d. Assigned fund balance e. Unassigned fund balance The authorization level for committing is established by the City Council. Formal action of the City Council will be defined as an adoption of a Resolution taken at a publicly noticed meeting. The City Council will undergo an annual reaffirmation process prior to the fiscal year- end, to review the Restricted, Committed and Assigned amounts to be reported as a result of previous actions in the fiscal year in accordance with the adopted Policy, to ensure they accurately reflect the City Council's desired Fund Balance classifications. As part of the reaffirmation process, the City Council will review all levels of Fund Balance and determine what action-if any-is needed to modify the existing Fund Balance levels or to leave them as is. DEFINITIONS AND REPORTING: Fund Balance is defined as all financial assets, less liabilities normally expected to be liquidated with current financial resources. The following are categories of fund balance: a. Nonspendable The Nonspendable Fund Balance classification includes amounts that cannot be spent because they are either (a) not in a spendable form or (b) legally or contractually required to be maintained intact. The "not in spendable form" criterion includes items that are not expected to be converted into cash (e.g., inventories and prepaid amounts). This also includes long-term loans and notes receivable and property held for resale. However, if the use of the proceeds from the collection of those receivables or from the sale of those properties is Restricted, Committed, or Assigned, then they should be included in the appropriate fund balance classification (Restricted, Committed, or Assigned), rather than Nonspendable Fund Balance. The corpus (or principal) of a permanent fund is an example of an amount that is legally or contractually required to be maintained intact b. Restricted Except as provided for in the Nonspendable Fund Balance definition, amounts that are restricted to specific purposes, should be reported as Restricted Fund Balance. Fund balance should be reported as restricted when constraints placed on the use of resources are either: (a) externally imposed by creditors, grantors, contributors, or regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation. c. Committed Amounts that can only be used for the specific purposes pursuant to constraints imposed by formal action of the adoption of a Resolution, the government's highest level of decision-making authority should be reported as Committed Fund Balance. Those Committed amounts cannot be used for any other purpose unless the government removes or changes the specified use by adoption of a Resolution. Committed Fund Balance also incorporates contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. d. Assigned Amounts that are constrained by the government's intent to be used for specific purposes, but are neither Restricted nor Committed, should be reported as an Assigned Fund Balance, except for stabilization arrangements which will be reported as restricted or committed or unassigned. Intent can be expressed by 2 (a) the governing body itself or (b) a body (Ad Hoc Budget Committee) or official to which the governing body has delegated the authority to assign amounts to be used for specific purposes. By adoption of this Policy, the City Council delegates the authority to the City Manager to assign amounts to be used for specific purposes. Both the Committed and Assigned Fund Balance classifications include amounts that have been constrained to being used for specific purposes by actions taken by the government itself. Assigned Fund Balance includes (a) all remaining amounts (except for negative balances) that are reported in governmental funds, other than the general fund, that are not classified as Nonspendable and are neither Restricted nor Committed and (b) amounts in the general fund that are intended to be used for a specific purpose. c ompanson: c omm1 e 'tt d vs. A ss1gne d Committed Assigned A decision to use funds for a specific purpose requires action of governing Yes No body Formal action of governing body is necessary to impose, remove or modify this constraint and formal action has Yes No taken place before end of reporting period e. Unassigned Unassigned fund balance is the residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been Restricted, Committed or Assigned to specific purposes within the general fund. The general fund should be the only fund that reports a positive Unassigned Fund Balance amount. In other governmental funds, if expenditures incurred for specific purposes exceeded the amounts Restricted, Committed, or Assigned to those purposes, it may be necessary to report a negative Unassigned Fund Balance 3 CITY OF TEMPLE CITY PROPOSED BUDGET FY 2014-2016 General Fund Balances Reserved and Unreserved at 6-30-14 Appropriations Committed Emergency /Disasters $ 1,000,000 liquidity $ 2,000,000 OPEB (FY 2012-13) $ 1,000,000 Local Economic Uncertainty $ 500,000 $ 4,500,000 Assigned Fleet Management Facilities Management $ 4,000,000 P3 Masterplan $ (150,000) Council Chamber Remodel-Accounted for in CIP $ (310,000) $ 3,540,000 Technology Replacement $ 200,000 Document Imagining $ (45,000) Automation of personnel processes $ (15,000) Community Development Permit Software $ (110,000) $ 30,000 Economic Development $ 8,000,000 Rosemead Blvd Enhancements (FY 2012-14) Accounted for in Cll $ (1,000,000) 5800 Temple City Boulevard (FY 2012-13} $ (1,050,000) Primrose Property $ (1,276,175) General Plan Update (2 Years) $ (750,000) Las Tunas/Rosemead Specific Plan $ (650,000) Economic Development Strategy $ (25,000) Five Year Strategic Plan $ (40,000) $ 3,208,825 Opportunities for One-Time Expenditures $ 4,600,000 Housing Element $ (15,000) Sign Code Update $ (55,000) Complete Neighborhood lnitative $ (40,000) Historic Preservation Ordinance $ (30,000) Analysis of Waste Management Contract $ (50,000) Analysis of Public Safety Contract $ (50,000) $ 4,360,000 Unreserved Internal Reserves (City Loans) Total Fund Balance ATIACHMENT B Expended Reserve Balance $ (1,000,000) $ (1,000,000) $ 3,500,000 $ 400,000 $ $ (340,000) $ (340,000) $ 3,660,000 $ (22,000) $ (15,000) $ (110,000) $ (147,000) $ 53,000 $ (1,000,000) $ (1,050,000) $ (1,268,420) $ (300,000) $ (100,000) $ (25,000) $ (40,000) $ (2,733,420) $ 4,216,580 $ (15,000) $ (55,000) $ (40,000) $ $ (50,000) $ $ (160,000) $ 4,440,000 $ (3,380,420) $ 16,269,580 $ 1,586,504 $ 395,793 $ 18,251,877