09-23-2024 CC Agenda Packet - Laserfiche WebLink

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G-1 City of Orono Financial Management Policies Policy 2 - Fund Balance 2-I. PURPOSE The City understands it has a responsibility to maintain prudent financial operations to ensure stable city operations for the benefit of city residents and businesses. Fund balance reserves are an important component in ensuring the overall financial health of a community, by giving the City cushion to meet contingency or cash-flow timing needs. The Office of the State Auditor recommends that at year-end, local governments maintain an unreserved fund balance in their general fund and special revenue funds of approximately 35 to 50% of fund operating revenues, or no less than five months of operating expenditures. 2-2. POLICY 1. The City will maintain a minimum unassigned General Fund balance of 45%40% of the fund’s annual operating budget. a) Unassigned fund balances in excess of 50% will be transferred to the Community Investment ConstructionPavement Management Fund. Such transfer is pursuant to Council approval. b) Unassigned fund balance of less than 4045% will be addressed through the budgeting process or by transfers in from other funds. c) An assignment or restriction of fund balance may be used to offset revenues earned in one year where substantial services are required to be performed in the next fiscal period. 2. 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 unrestricted resources are available for use, it is the City’s policy to use resources in the following order: 1) committed, 2) assigned, 3) unassigned. These fund balance classifications apply only to Governmental Funds, not Enterprise Funds or Internal Service Funds. 3. The Park Fund is a Special Revenue Fund that provides for parkland acquisition and improvements. Its major funding source is Park Dedication Fees which are restricted for this use. 4. The Drug/Felony Forfeiture Fund is a Special Revenue Fund that provides for expenditures related to drug and alcohol enforcement activities. Its major revenue sources are the sale of forfeited vehicles and drug enforcement activities. The funds are restricted for law enforcement use related to drug and alcohol enforcement. 5. The Lurton Park Fund is a Special Revenue Fund that provides for the development and maintenance of Lurton Park. These funds are restricted by a stipulation of the property’s owner when the land was donated to the City. 31