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Home My Public Portal About11) 7I Reaffirmation of Committed and Assigned Fund Balance GASB 54AGENDA ITEM 7.1. ADMINISTRATIVE SERVICES DEPARTMENT MEMORANDUM DATE: June 20 , 2017 TO : The Honorable City Council FROM : Bryan Cook , C ity Manager By: Tracey L. Hause , Administrative Services Di rector SUBJECT : REAFFIRMATION OF COMMITIED AND ASSIGNED FUND BALANCE CLASSIFICATIONS FOR THE GENERAL FUND FOR FINANCIAL STATEMENT REPORTING PURPOSES AT JUNE 30 , 2017 , IN ACCORDANCE WITH THE ADOPTED GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) 54 FUND BALANCE POLICY RECOMMENDATION: The City Counci l is requested to reaffirm the Comm itted Fund Balance of $3 ,50 0,00 0 and the Assigned Fund Balance of $11 ,513 ,004 for the General Fund . This is for fi nancia l statement reporting purposes at June 30 , 2017, 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 Report ing and Government Fund Type Defi nitions " (GASB 54 ). The Stateme nt requ ired governmental entities, li ke the City , to adhere to the reporti ng requirements and adopt a policy implementing GASB 54 if they were to receive a qualified or "clean " audit op inion . 2 . On May 15 , 2012 , the C ity Council adopted the GASB 54 Fund Ba lance Po li cy . 3. On June 21 , 2016 , the City Council adopted the Fiscal Year (FY) 2016-17 City Budget. As part of the City Budget document, General Fund Balance Reserves were appropriated from Ass igned Fu nd Balance (Attachment "B "). ANALYSIS: In order to be in com pl iance 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 Ba lances for the General Fund prior to the end of the fiscal year for f inancial statement City Counci l June 20 , 2017 Page 2 of 2 reporting purposes at June 30 , 2017 . 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 2016-17 City Budget appropriating the following Assigned Fund Balance Reserves : Techno logy Reserve-Document Imaging Economic Development-General Plan Update One-Time Expenditures -Las Tunas Drive Study One-Time Expenditures-Temple City Blvd Parking Lot $ 5 ,000 $1,025 ,990 $ 200 ,000 $ 550 ,000 As a result of the year-end analysis of the Genera l Fund Reserves completed as part of the FY 2017-18 City Budget process , if the City Counci l reaffirms the Fund Ba lance classifications for the General Fund for financial statement reporting purposes at June 30 , 2017, the classifications and the respective funding w ill be as follows : Committed Fund Balance (General Fund ) Assigned Fund Balance (General Fund ) $ 3,500 ,000 $11,513 ,004 Any rema ini ng Fund Balance at the close of the fiscal year w ill be designated as Unass igned . Unassigned fund balance is the residua l 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 Assigned 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 w ill promote or further the City's Strateg ic Goal of Good Governance. FISCAL IMPACT: This action does not have an impact on the FY 2016-17 City Budget. ATTACHMENTS: A. Fund Balance Policy B. General Fund Balance Classifications as of June 30 , 2017 L 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 classifi ca tions 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 i n conformance with GASB 54 . a . Nonspendable fund balance b . Restricted fund balance c . Committed fund balance d . Assigned fund bala nce e . Una ssigned fund balance The authorization level for comm itting is established by th e City Counc il. Formal act ion of the City Council will be defined as an adoption of a Reso lution taken at a pub li cly noticed meeting . The City Counci l will undergo an annual reaffirmation process prior to the fisca l yea r-end , to review the Restricted , Comm itted 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 clas sifications . As part of the reaffirmation process , the C ity Council wi ll review all leve ls of Fund Balance and determine what action -if any-is needed to mod ify the existing Fund Balance leve ls or to leave them as is . DEFINITIONS AND REPORTING : Fund Balance is defined as all financial assets , less liabilities normally ex pected to be liquidated with current financ i al 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 ., i nventories and prepaid amounts). Th is 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 in cluded 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 constra ints imposed by formal action of the adoption of a Resolution , the government's highest level of decision-making authority should be reported as Committed Fu nd 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 ha ve been specifically committed for use i n 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 res tricted 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 i nclude amounts that have been constrai ned to being used for specific purposes by actions taken by the government itself. Assigned Fund Balance includes (a) all rema in ing amounts (except for negative ba lances) that are reported in governmenta l 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, remove or modify this constraint and formal action has Yes No taken place before end of reporting period e . Unass igned Unass igned 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 with in the general fund . The general fund should be the on ly 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 Estimated General Fund Balances -June 30, 2017 Committed Emercency/Olsuters Liq u idity OPE B (FY 2012·13) Loc.al Economk Uncertainty Asslcned Fleet Manacement leue and Maint enance Proaram Facilities Manacement Pl Masterplan s Council Chamber Remodel-Accounted for In CIP s $ Technolocv Re p lacement Document lmaalnina Automation of personnel processes Community Development Permit Software Uperade of Pentamallon (Financial) Softw1re Economic Developmen t Rosemead Blvd Enhantemenu (FY 2012-14) Account~ for in CIP 5800 Temple C1ty Boulevar d {FY 2012-131 Spent Prior Yea r 5800 Temple City Boulevard (D emo and Site Prep FY 2013·14) Spent Prior Vee $ Pnmrose Property General Plan Updt~tel2 Yurs) lAs Tunas/Roserne1d Specific Plan Economic Development Strate1v Five Ye.r Str~tec ic Pt1n lAs Tunas Drive Study Temple C1ty Boulevard Parkin& lot Opponunities for One·Tlme EKpend ltures Ho usln1 Element S•an Code Upd1te Complete Nel1hborhood lnitatlve Historic Preservation Ordinance Analysis o f waste Manqement COntrlct Analysis of Public S.fety Contract Business llsence Software UPCarcle Greenstreet NPOES Prior Ynrs Appropraltlons so,ooo 2,000,000 1,000,000 1,4 50,000 4,500,000 400,000 400,000 4 ,000,000 (150,000) (310,000) 3,540,000 200,000 (91,000) (15,000) (110,000) (16,000) 8,000,000 (1,000,000) (1,050,000) (1.276,175) (750,000) (650,000) (25,000) (40,000) (200,000) (550,000) 2,4 58,825 4,600,000 (15,000) (55,000) (40,000) (30,000) (50,000) (SO,OOO) (40,000) 4 ,3 20,000 21,700,000 Expended Prior Years ( 1,000,000) (1,000,000) (150,000) (310,000) (460,000) (60,318) (15.290) (66,000) (141,608) (944,964 ) (1,029,328) (92,283) (1,268,420) (725,070) (28,280) (23,682) (4 ,112,0 27) (15,870) (36,694) (40,937) (93,501) (5,807,136) Budeeted Re st~HVe Spending FY 2016·17 Estimated Reserve Spendins FY 2016·17 (S,OOO) S (5,000) (5,000) s (S,OOO ) ( 1.025,990) $ (600,000) (200,000) (10,000) (550 ,000) (250,000) (1,775,990) (860,000) (14,860) $ (14,860) (100,000) (114,860) (1 4 ,860) (1,895,850) (8 79,860) ATIAC HM ENTB s Est imat ed Re serve Fund Balances June 30, 2017 3,500,000 400,000 400,000 3,540,000 53,392 3,027,973 4,491,639 15,013,004