HomeMy Public PortalAbout08) 7E REAFFIRMING COMMITTED AND ASSIGNED FUND BALANCE CLASSIFICATIONSAGENDA
ITEM ?.E.
ADMINISTRATIVE SERVICES DEPARTMENT
MEMORANDUM
DATE: June 16, 2015
TO: The Honorable City Council
FROM: Bryan Cook, City Manager
By: Tracey L. Hause, Administrative Services Director
SUBJECT: REAFFIRMATION OF COMMITTED AND ASSIGNED FUND BALANCE
CLASSIFICATIONS FOR THE GENERAL FUND FOR FINANCIAL
STATEMENT REPORTING PURPOSES AT JUNE 30, 2015 , IN
ACCORDANCE WITH THE ADOPTED GASB 54 FUND BALANCE
POLICY
RECOMMENDATION:
The City Council is requested to reaffirm the Committed Fund Ba lance of $3 ,500 ,000 and
the Assigned Fund Balance of $12,868,392 for the General Fund . This is for financia l
statement reporting purposes at June 30, 2015, in accordance with the adopted
Government Accounting Standards Board (GASB) issued Statement No. 54, "Fund Balance
Reporting and Government Fund Type Definitions" (Attachment "A").
BACKGROUND:
1. In February 2009, GASB issued Statement No. 54 , "Fund Ba lance Reporting and
Government Fund Type Definitions " (GASB 54). The Statement required
governmental entities , like the City, to adhere to the reporting requirements and adopt
a policy implementing GASB 54 if they were to receive a qualified or "clean " audit
opinion .
2. On May 15, 2012, the City Council adopted the GASB 54 Fund Balance Pol icy .
3. On June 3, 2014, the City Council adopted the Fiscal Year (FY) 2014-15 City Budget.
As part of the City Budget document, General Fund Balance Reserves were
appropriated from Assigned Fund Balance , (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
City Council
June 16, 2015
Page 2 of 2
Fund Balances for the General Fund prior to the end of the fiscal year for financial
statement reporting purposes at June 30, 2015. 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.
The City Council adopted the FY 2013-14 City Budget appropriating the following
Assigned Fund Balance Reserves:
Facilities Management Reserve-P3 Masterplan
Technology Reserve-Document Imaging
Economic Development-General Plan Update
$150,000
$46,000
$1 '196,000
As a result of the year-end analysis of the General Fund Reserves completed as part of
the FY 2015-16 City Budget process, if the City Council reaffirms the Fund Balance
classifications for the General Fund for financial statement reporting purposes at June
30, 2015, the classifications and the respective funding will be as follows:
Committed Fund Balance (General Fund)
Assigned Fund Balance (General Fund)
$3,500,000
$12,868,392
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, 2015, 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 2014-15 City Budget.
ATTACHMENTS:
A. Fund Balance Policy
B. General Fund Balance Classifications as of June 30, 2015
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 in 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 (a)
2
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.
Comparison: Committed vs. Assigne 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
ATTACHM ENT B
CllY OF TEMPLE CITY
Estimated General Fund Balances -June 30, 2015
Prior Years Budgeted Reserve Spending FY Estimated Reserve Estimated Reserve Fund
Appropraitions Exp ended PriorY ears 2014-15 Spending FY 2014-15 Balances June 30, 2015
Committed
Emergency/Disasters $ 1,000,000
Liquidity $ 2,000,000
OPES (FY 2012·13) $ 1,000,000 $ (1,000,000)
Loca l Econom ic Uncertainty $ 500,000
$ 4,500,000 $ (1,000,000) s -3,500,000
Assig ne d
Fleet Management s 400,000 $ 400,000
Lease and Ma in tenance Program
s 400,000
Facilities Management $ 4,000,000
P3 Masterplan $ (150,000) s (150,000) $ (60,000)
Council Chamber Remodel -Accounted for in CIP $ (3 10,000) $ (3 10,000)
$ 3,540,000 s (3 10,000) s (150,000) s (60,000) s 3,630,000
Technology Replacement s 200,000
Document Imagining $ (45,000) $ (23,682) $ (46,000) s (25,000)
Automation of personnel processes $ (15,000) $ (15,290)
Comm unity Development Permit Software $ (110,000) $ (66,000)
$ 30,000 $ (104,972) $ (46,000) $ (25,000) $ --70,028
Economic Deve lopment $ 8,000,000
Rosemead Blvd Enhancements (FY 2012-14) Accou nted for in $ (1,000,000) $ (1,000,000)
5800 Temple City Boulevard (FY 2012-13) Sp ent Prior Year $ (1,050,000) $ (1,050,000)
Primrose Property $ (1,276,17S) $ (1,268,420)
General Plan Update (2 Years) $ (750,000) $ (206,890) $ (450,000) $ (20 0,000)
Las Tunas/Rosemead Specifi c Pl a n s (650,000) $ $ (550,000)
Economic Development Strategy $ (25,000) $ (28,280)
Five Yea r Strategic P $ (40,000) $ (23,682)
$ 3,208,825 $ (3,577,272) $ (1,000,000) $ (200,000) $ -4,222,728
Opportunities for One-Time Expenditures $ 4,600,000
Housing El ement $ (15,000)
Sign Code Update $ (55,000)
Complete Neighborhood lnitative $ (40,000) s (15,870)
Historic Pr eservation Ordinance $ (3 0,00 0) $
Analysis of waste Management Contra ct $ (50,000) $ (36,694) $ (1,800)
Anal ysis of Public Safety Contract $ (50,000) $
Suniess Lisence Softwar e Upgarde $ (40,000)
$ 4,320,000 $ (52,564) $ (1,800) s 4,545,636
$ 21,700,000 $ (5,044,808) s (1,196,000) $ (286,800) $ 16,368,392