HomeMy Public PortalAbout10) Item 7E Fund Balance Classifications in accordance with GASB 54 Fund Balance PolicyAGENDA
ITEM ?.E.
ADMINISTRATIVE SERVICES DEPARTMENT
MEMORANDUM
DATE: June 21 , 2016
TO: The Honorable City Council
FROM: Bryan Cook, City Manager
By: Tracey L. Hause, Administrative Services Director
SUBJECT: REAFFIRMATION OF COMMIITED AND ASSIGNED FUND BALANCE
CLASSIFICATIONS FOR THE GENERAL FUND FOR FINANCIAL
STATEMENT REPORTING PURPOSES AT JUNE 30, 2016, IN
ACCORDANCE WITH THE ADOPTED GASB 54 FUND BALANCE
POLICY
RECOMMENDATION:
The City Council is requested to reaffirm the Committed Fund Balance of $3,500,000 and
the Assigned Fund Balance of $12,302,864 for the General Fund . This is for financial
statement reporting purposes at June 30, 2016, in accordance with the City of Temple City's
adopted Fund Balance Policy (Attachment "A").
BACKGROUND:
1. In February 2009, GASB issued Statement No. 54, "Fund Balance Reporting and
Government Fund Type Definitions" (GASB 54). The Statement required
governmental entities, like the City, to adhere to the reporting requirements and adopt
a policy implementing GASB 54 if they were to receive a qualified or "clean" audit
opinion.
2. On May 15, 2012, the City Council adopted the GASB 54 Fund Balance Policy.
3. On June 16, 2015, the City Council adopted the Fiscal Year (FY) 2015-16 City Budget.
As part of the City Budget document, General Fund Balance Reserves were
appropriated from Assigned Fund Balance (Attachment "B").
ANALYSIS:
In order to be in compliance with the City's GASB 54 Fund Balance Policy adopted on
May 15, 2012, the City Council must reaffirm Committed Fund Balances and Assigned
Fund Balances for the General Fund prior to the end of the fiscal year for financial statement
City Council
June21,2016
Page 2 of 2
reporting purposes at June 30, 2016. All other funds (i.e., Special Revenue Funds) are
automatically classified as restricted by the nature of the revenues received , as they are
required to be used for specific purposes.
The City Council adopted the FY 2015-16 City Budget appropriating the following Assigned
Fund Balance Reserves:
Technology Reserve -Document Imaging
Economic Development -General Plan Update
One-Time Expenditures-Sign Code Update
One-Time Expenditures -Business License Software
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$ 13,000
$ 1,311 '190
$ 14,860
$ 40,000
As a result of the year-end analysis of the General Fund Reserves completed as part of the
FY 2016-17 City Budget process, if the City Council reaffirms the Fund Balance
classifications for the General Fund for financial statement reporting purposes at June 30,
2016, the classifications and the respective funding will be as follows:
Committed Fund Balance (General Fund)
Assigned Fund Balance (General Fund)
$ 3,500 ,000
$ 12,302,864
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 ,
(i.e., Fund Balance that has not been assigned to other funds and that has not been
Restricted, Committed, or Assig ned to specific purposes within the General Fund).
CITY STRATEGIC GOALS:
By reaffirming the Committed and Assigned Fund Balances in the General Fund, the City
Council will promote or further the City's Strategic Goal of Good Governance.
FISCAL IMPACT:
This action does not have an impact on the FY 2015-16 City Budget.
ATTACHMENTS:
A. Fund Balance Policy
B. General Fund Balance Classifications as of June 30, 2016
----------------------------------------
PURPOSE:
CITY OF TEMPLE CITY
FUND BALANCE POLICY
ATIACHMENT A
The purpose of this po licy 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 ba lance
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 spend able 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 sa le of those properties is Restricted ,
Committed , or Assigned, then th ey shou ld 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 amou nt that is legally or contractually required to be ma intained
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 ba lance 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 leg islation.
c. Committed
Amou nts that can on ly be used for the specific pu rposes 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 Com mitted amounts ca nnot 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 co ntractual 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 wh ich will be
reported as restricted or committed or unassigned . Intent can be expressed by (a)
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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 •tt d omm1 e 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, remo ve 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 Fu nd 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.
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ATIACHMENT 8
CITY OF TEMPLE CITY
Estimated General Fund Balances -June 30, 2016
Committed
Emercenc;v/Disasters
Uquidlty
OPEB (FY 2012-13)
loul Economic Uncertainty
Asstcned
Fleet Management
Lus.e 1.nd Maintenance Proaram
FaCihtles Mana&ement
P3 M;uterp!.n
Council Chamber Remodel -Accounted for 1n CIP
Technology Repl1cement
Document lmacintn&
Auto~m~tlon of personnel processes
Community Development Permit SOftware
EconomiC Development
Rosemead BNd Enhancements (FY 2012-14) Accounted for 1n CIP
5800 Temple City Boulev•rd (FY 2012·13) Sp<~nt Prior Yeor
5800 Temple City Boulevard (Demo and Site Prep FY 2013-14) Spent Prior Yeat
Primrose Property
Goner~ I Pion Upd•to (2 Yeor>)
Us Tunu/Rosemud Specific Plan
EconomK Development Striitecv
Five Year Strilteck Plan
Us Tunas Drive Study
Temple City Bou~vird Pirkinclot
Opponunities for One· Time Expenditures
HouJII'\1 Element
Slcn Code Upd•t•
Complete Nelehborhood lnttitive
Hatork: Preserw1tion Ord1n.ance
An.tysls of Wute M1n1cement Contfilct
An• lysis of Public S1fety Contr.act
8us1neu Usence Software Upt1rde
Greenstrt!et NPOES
PrtorYurs
Appropraitions
1,000,000
2,000,000
1,000,000
500,000
4,500,000
400,000
400,000
4,000,000
(150,0001
(310,0001
3,540,000
200,000
(91,000)
(15,000)
(110,000)
(16,0001
8,000,000
(1,000,000)
(1,050,0001
(1.276,175)
(750,000)
(650,000)
(25,000)
(40,000)
3,208,825
4,600,000
(15,000)
(55,000)
s (40,0001
s (30,000)
s (50,000)
(50,000)
(40,000)
4,320,000
21,700,000
Expended Pnor
Years
(1,000,000)
(1,000,000)
(21,574)
(310,000)
(331,574)
(52,318)
(15,290)
(66,0001
(133,608)
(944,964)
(1,029,328)
(92,283)
(1,268,420)
(439,870)
(28,2801
(23,682)
Budeeted ReseNt
Sp<~ndin& FY 2015·16
Estimated ReseNe
Spondin& FY 2015·16
(128,4261
(128,426)
(13,000) s (8,000)
(13,000) s (8,0001
(90,000)
(1,311,190) (285,200)
(3,826,8271 s (1,311,190) s (375,200)
(14,8601
(15,870)
(36,694)
(40,000) (40,937)
(52.5641 (54,860) (40,931)
(5,344,573) ( 1,379,050) (552,563)
Esttmilted Reserve Fund
Bal1nces June 30, 2016
3,500,000
400,000
400,000
3,540,000
$ 58,392
s 3,797,973
4,506,499
15,802.864
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