HomeMy WebLinkAboutResolution 6105 � o�
O ��� O CITY of ORONO
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� '1;�' � RESOLUTION OF THE CITY COUNCIL
,�� f .�°��:; G� No. 6 1 Q 5
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A RESOLUTION TO AMEND THE FUND BALANCE POLICY TO IMPLEMENT
GASB 54
WHEREAS, the City previously adopted a fund balance policy on Novembe 22,
2010; and
WHEREAS, the Government Accounting Standards Board (GASB) has issued
statement 54 "Fund Balance Reporting and Governmental Fund Type Definitions"; and
WHEREAS, the City the City's current fund balance policy does not comply with
GASB 54
NOW THEREFORE BE IT RESOLVED; that the Orono City Council, hereby
authorizes the adoption of the Amended City of Orono Fund Balance Policy.
Adopted by the City Council of the City of Orono, Minnesota at a regular meeting
held December 12, 2011.
ATTEST:
� � ��� � � ����
Linda S. Vee, City Clerk Lili Tod McMillan, Mayor
61 � 5
CITY OF ORONO
FUND BALANCE POLICY
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.
II. POLICY
1. The City will maintain a minimum��a unassi�ned General Fund balance of 45% of
the fund's annual operating budget.
a) Unassigned fund balances in excess of 50% will be transferred to the Community
Investment Construction Fund. Such transfer is pursuant to Council approval.
b) Unassigned fund balance of less than 45%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 axe rec�uired to be performed in the next fiscal
e� riod•
2. When both restricted and unrestricted resources are available for use, it is the Citv's policv
to first use restricted resources and then use unrestricted resources as they are needed.
When unrestricted resources are available for use it is the Citv's policv to use resources in
the following order• 1) committed 2) assi�ned 3) unassi�ned. These fund balance
classifications apply onlv to Governmental Funds not Enterprise Funds.
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3. T'he Park Fund is a Special Revenue Fund that provides for parkland acauisition and
improvements Its major funding source is Park Dedication Fees which are restricted for
this use.
4. The Dru /F� elonv Forfeiture Fund is a Special Revenue Fund that provides for exuenditures
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 dru�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 bv a stipulation of the propertv's
owner when the land was donated to the Citv.
6. The Senior Housin¢ TIF Fund is a Special Revenue Fund that accounts for the Tax
Increment Financing District No 1-1 which was created to provide housin� opportunities
within for seniors within the City Its fundin� source is the property taxes on the captured
value. The funds are restricted.
7. The Affordable Housin� Fund is a Special Revenue Fund that provided purchase assistance
to qualified home buyers Funding was through g,rants from the Metropolitan Council,
Hennepin CDBG �rants. The funds are restricted.
8. Capital project Funds are used to account for the financin��of street proiects, eQuipment
replacement public safety equipment and facility rehabilitation or renovation. Revenue
sources are provided mainly throu�h transfers special assessments bond sales, and park
dedication fees The Citv's �oal is to maintain fund balances in the Municipal State Aid
�MSA� the Improvement Eguipment Outlay the Community Investment, and the
Pavement Mana�ement Plan (PMP) funds in an amount sufficient to support the on�oin�
capital expenditures planned in the CIP Revenues not le a�lly restricted will be assi�ned.
3 9. Fund balances in Debt Service Funds for future debt payments •���" '�� a���R~��t� are
restricted.
III. PROCEDURES
1. City shall maintain necessary funds in accordance with City policy and Minnesota statutes.
2. Annual financial statements shall be prepared in accordance with generally accepted
accounting principles establishing the fund balance at the end of each year. As part of this
process the Finance Director is authorized to make the appropriate�e�stg�ie�s
assignments of fund balance.
3. As part of the annual budget process the Finance Director shall prepare a current analysis
of the City's fund balance. The analysis shall include the prior year ending fund balance as
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established by the annual financial statements, and the projected fund balance for the
current year.
4. Council shall review the amounts in fund balance in conjunction with the annual budget
approval, and make adjustments as necessary to meet expected cash-flow needs.
5. The policy should be periodically reviewed, especially if the composition or timing of
revenue receipts change.
IV. RESPONSIBILITY AND AUTHORITY
Administrative implementation of policies is the responsibility of staff and council.
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