HomeMy WebLinkAbout4.14 Fund Balance Classor
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DATE:
TO:
FROM:
STAFF REPORT
CITY COUNCIL
June 19, 2012
Honorable Mayor and City Councilmembers
Joni Pattillo City Manager""'
CITY CLERK
File #300 -20
SUBJECT: Amendment to Policy for Establishing Fund Balance Classifications in
Accordance with Governmental Accounting Standards Board (GASB)
Requirements
Prepared by Paul S. Rankin, Administrative Services Director
EXECUTIVE SUMMARY:
On June 21, 2011 the City Council adopted Resolution 106 -11 which established classifications
for Fund Balance in accordance with requirements established by the Governmental Accounting
Standards Board (GASB). The rules require that the City Council make any adjustments to the
classifications and policies prior to June 30th if they are to be reflected on the final financial
statements for the year. The City Council will consider adjustments to the resolution to reflect
estimated financial results developed during the preparation of the Fiscal Year 2012/2013 and
2013/2014 Two Year Budget.
FINANCIAL IMPACT:
There is no direct fiscal impact of adopting amendments to the categories used. The amounts
reported as total fund balance will not change.
RECOMMENDATION:
It is recommended that the City Council: 1) Adopt the Resolution Amending the Principal
Components of Fund Balance; 2) Adopt the Resolution authorizing a special designation of
General Fund balance for Fiscal Year 2011 -2012; and 3) Direct Staff to implement the changes
in the financial records.
Submitted By Reviewed By
Administrative Services Director Assistant City Manager
Page 1 of 4 ITEM NO. 4.14
DESCRIPTION:
In 2009, the Governmental Accounting Standards Board (GASB) issued Statement No. 54,
"Fund Balance Reporting and Governmental Fund Type Definitions ". The principal operating
fund for the City of Dublin is the General Fund. The term fund balance is used to describe the
difference between Assets and Liabilities.
On June 21, 2012 the City Council adopted Resolution No. 106 -11 which established the
hierarchy and policies related to Fund Balance reporting. Based on financial estimates
prepared as part of developing the Fiscal Year 2012/2013 Budget, Staff has prepared
amendments to the policy adopted as part of Resolution 106 -11.
The following outline describes the five classifications which are allowed for presentation of fund
balances in the current policy as recognized by GASB:
1) Nonspendable (Inherently nonspendable based on the form of the asset or a requirement
to remain in tact)
• Resources that, by their very nature, cannot be spent (e.g., prepaid rent,
Inventory)
• Resources that are not yet available for spending (e.g., long -term
portion of loans receivable)
• Resources externally restricted to a purpose narrower than the fund
(Cemetery Endowment)
2) Restricted (Net fund resources subject to externally enforceable legal restrictions)
• Externally imposed by creditors (such as through debt covenants),
grantors, contributors, or laws or regulations of other governments.
• Imposed by law through constitutional provisions or enabling legislation.
• Note that there is no need for the limitation to be narrower than the
purpose of the fund.
• Examples would include special revenue funds which have a legal
restriction imposed by external sources (e.g., grant funds, gas tax,
impact fees, etc.)
3) Committed (Self- imposed limitations based on formal action of the highest level of the
governing body)
• The action to commit funds must occur before the end of fiscal year.
• Can only be changed by action of Governing body.
• Examples in this category would be similar to designations made in the
past by the City Council (e.g. the allocation of funds for a future Emerald
Glen Aquatic Center scope change, Civic Center expansion etc.)
4) Assigned (A limitation based on intended use - authorization to assign may be
delegated by the City Council - similar to designations expressing intent)
■ Intent would have to be established at either the highest level of
decision making, or by a body (e.g., finance committee) or an official
(i.e. City Manager) designated for that purpose.
Page 2 of 4
■ It is proposed that the authority to calculate the assigned items be
granted to the City Manager. Examples include: e.g. accrued leave,
carry -over appropriations, etc.
5) Unassigned (Available for any purpose and has not been restricted, committed, or
assigned to specific purposes within the General Fund)
Proposed Adjustments To Current Policy
Attachment 1 is a redline mark -up which displays the proposed changes to the current policy.
The current policy included language specific to the initial establishment of reserve balances.
For example, the policy recited certain appropriations made by the City Council as part of the
Fiscal Year 2010 — 2011 budget. It also listed specific starting balances. The policy is intended
to address in general terms how reserves are listed in accordance with accounting rules. Given
that the balances will vary from year to year in accordance with the policy, it is recommended
that the stated balances and references to specific appropriations be removed from the policy.
The June 30, 2011 balances are recorded in the City financial records and will continue to be
updated and reported as part of the Comprehensive Annual Financial Report.
In addition, the proposed adjustments will establish new categories to be added to the current
allocation of Fund Balance.
Committed — Fund Balance
The following are added to the listing of commitments:
A) Public Safety Complex - A new commitment shall be established and designated with
$907,960 to be utilized for funding of estimated costs to establish the initial work required at the
Public Safety Complex planned for the property acquired adjacent to the Civic Center on Clark
Avenue.
B) Heritage Park — As part of the Schaefer Ranch South Development Agreement, the
Developer agreed to provide to the City certain funds to be used at the Heritage Park. The first
payment may occur during FY 2012/2013 so it is appropriate to have a commitment of the fund
balance until a specific project is presented for funding. These funds are anticipated to be used
for a future phase of the park.
C) Assigned For One — Time Initiatives (Operating) - The City Council recognizes that there may
be fluctuations in revenues and expenditures over time. Periodically, the City Council may
determine that funds are best set -aside to address certain one -time initiatives within the
operating budget. This item will be discussed further in the next section as it relates to projected
Fiscal Year 2011/2012 fund balance.
D) One Time Initiatives (Capital) - The City Council recognizes that there may be fluctuations in
revenues and expenditures over time. Periodically, the City Council may determine that funds
are best set -aside to address certain one -time capital expenditures. This item will be discussed
further in the next section as it relates to projected Fiscal Year 2011/2012 fund balance.
Page 3 of 4
Assigned — Fund Balance
One additional category is added to the commitments: Carry -Over Fiscally Responsible
Adjustment: The Fiscal Year 2011/2012 adopted budget included a contingency for fiscally
responsible adjustments. The contingency was budgeted with the expectation that, if the City
completed the year with operating expenditures covered by current operating revenue, the funds
would carry -over for appropriation in the subsequent fiscal year. As an assigned fund balance,
the City Manager determines the amount that is subject to carry -over.
Attachment 2 is the recommended resolution adopting the revised policy.
Special Designation of Fiscal Year 2011/2012 Fund Balance
The exact amounts of change as of June 30, 2012 will not be available until all of the closing
entries are made. However, Staff has completed updated information and analysis during the
preparation of the Fiscal Year 2012/2013 and 2013/2014 budgets. This included examining
current year expenses funded from reserves as well as the receipt of one -time revenues such
as Community Benefit payments. Based on this analysis, Staff estimates that $2,249,368 will
be available for future expenditures.
The Preliminary Two Year Budget incorporates these funds for one time purposes over the next
two year budget cycle. In order to be consistent with the proposed budget, it is recommended
that the City Council authorize the appropriation to reserves. In order to be included in the year-
end financial reports, the City Council must take this action prior to June 30th. The Appropriation
will allocate funds to some of the new commitments discussed above as follows:
Assigned Fund Balance for One -Time Initiatives (Operating) $ 503,860
Assigned Fund Balance for One -Time Initiatives (Capital) 837,548
Committed Balance for Public Safety Complex 907,960
Total Special Allocations $ 2,249,368
In the event that there is additional General Fund Balance at the end of the year, it will be
assigned as described in the policy: 50% to the Catastrophic Facility / Infrastructure Loss & City
Business Recovery; b) 25% to Pension and Other Post - Employment Benefits; and c) 25% to
Unassigned for Cash Flow Purposes. A Resolution authorizing these assignments is attached
as Attachment 3.
NOTICING REQUIREMENTS /PUBLIC OUTREACH:
Not Applicable
ATTACHMENTS: 1. Amended Redline Policy Changes Presented June 19, 2012
2. Resolution amending Resolution 106 -11 and providing principal
components of fund balance in accordance with GASB
Statement 54.
3. Resolution authorizing a special designation of General Fund
balance for Fiscal Year 2011 -2012
Page 4 of 4
(Amended Redline Policy Changes Presented June 19, 2012)
CITY OF DUBLIN ESTABLISHMENT OF
PRINCIPAL COMPONENTS OF FUND BALANCE
IN ACCORDANCE WITH GASB STATEMENT 54
This document shall establish the foundation for the components of fund balance. The
presentation of fund balances is also presented in the Comprehensive Annual Financial
Report (CAFR) and the official City financial records. This document is intended to comply
with Governmental Accounting Standards Board (GASB) Statement No. 54. In the event of a
conflict between this policy and the provisions of GASB Statement No. 54 the accounting
statement shall prevail.
. .
In accordance with the requirements of GASB, the City Council also confirms as part of this
policy the order of expenditures from resources available. The City considers "Restricted"
amounts to have been spent prior to "unrestricted" amounts when an expenditure is incurred
for purposes for which both are available ( "unrestricted" would include Committed, Assigned,
and Unassigned). Similarly, when an expenditure is incurred for purposes for which
amounts in any of the unrestricted classifications of fund balance could be used, the City
considers "Committed" amounts to be reduced first, followed by assigned amounts and then
the unassigned amounts.
I. Nonspendable Fund Balance
Nonspendable fund balances are amounts in a form that cannot be spent because they are
either (a) in a non - spendable form such as pre -paid items or loans receivable; or (b) they
have external restrictions imposed by creditors, grantors, contributors, laws, regulations, etc.
The following are items that are expected to be recorded as "Nonspendable ":
Prepaid Expenditures: The portion of fund balance that represents the asset amount of
prepaid expenditures, held by a given fund.
Endowments: The portion of fund balance established as an endowment by the donor and in
which the principal balance is not intended for expenditure. As of June 30, 2010, the City
recorded an endowment in the General Fund for the Cemetery of $60,000.
Advances To Other Funds: The portion of the fund balance that represents the asset amount
of cash advanced to other funds, held by a given fund. As ^f j„no 30 2010 the Gity reGGrded
e the PERS Side FuR d of $2,642,846.
Notes /Loans Receivable: The portion of fund balance that represents the asset amount of
notes or loans receivable, held by a given fund.
Page 1 of 8
(Amended Redline Policy Changes Presented June 19, 2012)
CITY OF DUBLIN ESTABLISHMENT OF
PRINCIPAL COMPONENTS OF FUND BALANCE
IN ACCORDANCE WITH GASB STATEMENT 54
II. Restricted Fund Balance
Restricted Fund Balance shall reflect that portion of fund balance that reflects constraints
placed on the use of resources (other than nonspendable items) that are either: (a) externally
imposed by creditors (such as through debt covenants), grantors, contributors, or laws or
regulations of other governments; or (b) Imposed by law through constitutional provisions or
enabling legislation.
The following are items that are expected to be recorded as "Restricted ":
Public Safety Special Revenue Funds: The portion of fund balances derived from funds
collected to be used for Public Safety related activities.
Transportation Special Revenue Funds: The portion of fund balances derived from funds
collected to be used for Transportation related activities.
Environmental Special Revenue Funds: The portion of fund balances derived from funds
collected to be used for Environmental related activities.
Parks Special Revenue Funds: The portion of fund balances derived from funds collected to
be used for Parks related activities.
Assessment District Special Revenue Funds: The portion of fund balances derived from
funds collected to be used for Public Safety and Transportation related activities, consistent
with the purpose under which the fee is collected.
Cultural & Arts Special Revenue Funds: The portion of fund balances derived from funds
collected to be used for Cultural & Arts related activities.
Health & Welfare Special Revenue Funds: The portion of fund balances derived from funds
collected to be used for Social Services and Housing related activities.
Impact & Mitigation Capital Project Funds: The portion of fund balances derived from funds
collected to be used for parks, public facilities, fire and transportation related activities,
consistent with the purpose under which the fee is collected.
Other Restricted: The portion of fund balance in any governmental fund (except the General
Fund) that is restricted under the "Restricted Fund Balance" definition as otherwise
prescribed by Governmental Accounting Standards Board Statement No. 54 and not
otherwise described in this category above.
Page 2 of 8
(Amended Redline Policy Changes Presented June 19, 2012)
CITY OF DUBLIN ESTABLISHMENT OF
PRINCIPAL COMPONENTS OF FUND BALANCE
IN ACCORDANCE WITH GASB STATEMENT 54
III. Committed Fund Balance
Committed Fund Balance shall be comprised of amounts in which the City Council has taken
action to commit the funds before the end of fiscal year. The decision to modify the amount
or use of funds designated as committed can only be changed by action of the City Council.
Economic Stability: The portion of General Fund Balance committed for the purpose of
stabilizing the delivery of City services during periods of severe operational deficits and to
mitigate the effects of uncertainties from unforeseen change in revenues and / or
p The halos ^f li in^ ` 0 2010 is established as $5,868,847. City expenditures. nEe- �s����ti� it Council
approval shall be required before expending any portion of this fund balance. Reserve shall
be used only if: a) Sudden and unexpected decline in ongoing revenues greater than
5% of General Fund operating revenues; and /or b) Elimination or reduction of State revenue
source(s) received consistently for municipal purposes; and /or c) Reduction in projected or
actual property tax or sales tax of $1 million or more; and /or d) An increase in contracted
Police or Fire Services in excess of 10 percent more than the previous year.
Downtown Public Improvements Seed Funding: The portion of General Fund Balance
established by the City Council for public improvements in the downtown. Th,�- balanGe as m
Ju„e30,2010 is established as $1,000,000. The use of this balance is intended to address
public improvements within the Downtown Specific Plan Area. The expenditure is to be
identified as a specific appropriation made by the City Council. The appropriation shall be a
minimum of $50,000.
Open Space Funding: The portion of General Fund Balance established by the City Council
for the acquisition and long term protection of open space in the City. The acquisition may be
in cooperation with other agencies. The is ^f�- 'tea- 30, 201established as
$1,000,00 The expenditure is to be identified as a specific appropriation made by the City
Council.
Affordable Housing Funding: The portion of General Fund Balance established by the City
Council to support the construction, acquisition, or creation of affordable housing in the City.
The acquisition may be in cooperation with other public and private entities. The
of june 30, 2010 is stablished as $1,000,000. The expenditure is to be identified as a
specific appropriation made by the City Council.
Emerald Glen Recreation and Aquatic Center Scope Change: The portion of General Fund
Balance established by the City Council to support the design and construction of added
features (beyond facilities described in the Park and Recreation Master Plan and impact fee
program). In 2007 the estimated cost was $6.93 million. The hobs^^ as ^f juRe 30 2010 is
established as $1 50 GG( The expenditure is to be identified as a specific appropriation
made by the City Council.
Page 3 of 8
(Amended Redline Policy Changes Presented June 19, 2012)
CITY OF DUBLIN ESTABLISHMENT OF
PRINCIPAL COMPONENTS OF FUND BALANCE
IN ACCORDANCE WITH GASB STATEMENT 54
Emergency c Communications System: The portion of General Fund Balance established by
the City Council to fund the purchase of emergency radio system equipment. This includes a
pro -rata share of regional radio infrastructure as well as City owned radios for Police, Fire,
and Public Works. Further the reserve may be used to fund the upgrade of centralized City
telephone and communication systems. The of I„ne 30 2010-2011, 2010 iisestablished -as
port of budgeted onr atieRs mono in FOGGal eec x Gests fey
regiORal infrastruGture were fuRded frefrem this balaRee. The expenditure is to be identified as a
specific appropriation made by the City Council.
Fire Retiree Other Post - Employment Benefits (OPEB): The portion of General Fund Balance
established by the City Council for the future liability related to retiree medical benefits offered
to the inactive Dougherty Regional Fire Authority Staff, as well as the City share of
obligations with the OPEB benefits for Alameda County Fire Department. The bilaRGe-asef
jWRe 300, 2010 is established as $4,500,000.—The expenditure is to be identified as a specific
appropriation made by the City Council.
Innovations & New Opportunities: The portion of General Fund Balance established by the
City Council to fund potential projects which require up -front costs, but would provide longer
term benefits and / or potential operating cost reductions. These as 9f Ii Re 30 2010
�e 1sests fer aR F=ReFgy Audit and M st Inn wer�Qer freRgrthis ne.—The
expenditure is to be identified as a specific appropriation made by the City Council.
Future Maintenance Facility : The portion of General Fund Balance established by the City
Council to fund design, improvements, and equipment required for the establishment of a City
The holon of li Re 30 2010 is established as $6641 602 As mart of
maintenance yard. Ee-�s �ti�t -ash ,��r
budgeted apprepriatieRS made 'R F'GGal Year 2010 2011, PFejeGt GeStS weFe budgeted 0
Capit-al Impre4erneRt °regram. The expenditure is to be identified as a specific appropriation
made by the City Council.
Civic Center Expansion: The portion of General Fund Balance established by the City
Council to fund design, improvements, and equipment required for the expansion of the Civic
The b laR of li Re 2010 is established $1 44 257 In ereenriRg s
Center. T wee- �s��8�- �s��,��t#i�
budgeted apprepriatieRs made 'R FisGal Year 2010-2011, prejeGt Gests were budgeted 0
Gapit-al Impre4emeR . The expenditure is to be identified as a specific appropriation
made by the City Council.
Civic Center Emergency Generator. The portion of General Fund Balance established by the
City Council to fund design, improvements, and equipment required for the replacement and
Page 4 of 8
(Amended Redline Policy Changes Presented June 19, 2012)
CITY OF DUBLIN ESTABLISHMENT OF
PRINCIPAL COMPONENTS OF FUND BALANCE
IN ACCORDANCE WITH GASB STATEMENT 54
improvement of emergency power supplies at the Civic Center. °wee -ef$400
budgeted —O r- apitnl Impreyernent Dregrnm_ Upon completion of all Generator related
upgrades, any remaining balance shall be transferred to the Civic Center Expansion
committed balance. The expenditure is to be identified as a specific appropriation made by
the City Council.
Public Safety Complex: In Fiscal Year 2011-2012, the City acquired a building and site at_the - - - Form
southeast corner of Clark Avenue and Dublin Boulevard. The plans are to program the site
for future use as a public safety complex. The expenditure is to be identified as a specific
appropriation made by the City Council.
Heritage Park: This commitment shall be initially used to capture the receipt of Developer Form.
contributions specifically identified for additional development of the Dublin Heritage Park and
Museums. The commitment is beyond amounts collected under existing fee programs. The
expenditure is to be identified as a specific appropriation made by the City Council.
One Time Initiatives (Operating): The City Council recognizes that there may be fluctuations
in revenues and expenditures over time. Periodically the Council may determine that funds
are best set -aside to address certain one -time initiatives within the operating budget. The
expenditure is to be identified as a specific appropriation made by the City Council.
One Time Initiatives (Capital): The City Council recognizes that there may be fluctuations in
revenues and expenditures over time. Periodically the Council may determine that funds are
best set -aside to address certain one -time capital expenditures. The expenditure is to be
identified as a specific appropriation made by the City Council.
Fund Balance - Committed: The portion of Fund Balance that is in any non - general fund
governmental fund that is committed under the "Committed Fund Balance" definition as
otherwise prescribed by Governmental Accounting Standards Board Statement No. 54 and
not otherwise described in this category above. The portion of Fund Balance that was
restricted but later found to be unrestricted shall be designated as a "Committed" balance.
IV. Assigned Fund Balance
Assigned fund balances are amounts constrained by the City's intent to be used for a specific
purpose, but are neither restricted nor committed.
Page 5 of 8
(Amended Redline Policy Changes Presented June 19, 2012)
CITY OF DUBLIN ESTABLISHMENT OF
PRINCIPAL COMPONENTS OF FUND BALANCE
IN ACCORDANCE WITH GASB STATEMENT 54
The City Council has authorized the City Manager or his /her designee to make assignments
in accordance with this policy and in conformance with any formal direction provided by the
City Council.
Accrued Leave Subject To Year End Calculations: Certain fund balances are calculated
based on the financial performance of the reporting period including accrued Leave. These
amounts fluctuate each year and are reflected as part of the year -end financial statements.
The balanee as of li inn 30, 2 $802,311 in GGrued Leave
Carry -Over Items (Operatinc Budget & Capital Improvement Projects): Fund balance may be
assigned for operating expenditures (excluding personnel costs) which were not expended in
the current year and the expense will occur in the following year, i.e. encumbrances.
Similarly, a Capital Improvement Project may have funds allocated in a specific year and the
project remains incomplete at year end. The City Manager or his /her designee may assign
fund balance representing the unexpended funds. These funds are available for authorized
appropriations in the subsequent year. The hnlnnnn of IWnn 40 2010 was $203,507 in GIP
G rr yeyers aR d $171,100 in QperotiRg B irdge! C rr y-eyorc
Carry -Over Fiscally Responsible Adjustment: + In an ry y_ear that an appropriation was made to , , - Form.
the cpntingencyfor Fiscally_ Responsible Adjustment, the unused fund balance may be _ _ - Form
assigned as a carry -over for personnel costs. The City Manager or his /her designee may \ ` Form
assign fund balance representing the unexpended funds. These funds are available for
authorized appropriations in the subseauent vear in conformance with personnel policies and
procedures.
Catastrophic Facility / Infrastructure Loss & City Business Recovery: The City Council
recognizes the importance to maintain funds to recover from a catastrophic loss which are
unexpected and incur more than $500,000 in expenses to public facilities and infrastructure.
This may also be used for short -term recovery and business operations following a
catastrophic loss pending the reimbursement from insurance or grants to the extent that they
are available. The balance is established in the General Fund and the expenditure shall be
made only by City Council appropriation, which shall include a special emergency
appropriation. The target established for the maximum balance in this category is an amount
equal to 15% of the reported book value of the City owned Buildings and Improvements
recorded as Capital assets. The holonno establisher) of j6lRe 40 2010 is $8,420,000.
Service Continuity ObA atc� ions: The City Council recognizes the importance to maintain
funds for continued obligations to provide Building and Safety inspections in the event that
program supporting fees are collected in one year and the expenditures occur in a
subsequent year. The City Council hereby establishes as policy that the assigned funds shall
not exceed 125% of the budgeted Building and Safety Division operating cost. The haianno
as of Ii inn 20 2010 was $1 350 nnn
Page 6 of 8
(Amended Redline Policy Changes Presented June 19, 2012)
CITY OF DUBLIN ESTABLISHMENT OF
PRINCIPAL COMPONENTS OF FUND BALANCE
IN ACCORDANCE WITH GASB STATEMENT 54
Pension and Other Post Employment Benefits: The City Council recognizes that investment
earnings can fluctuate from year to year and they are an important component of the funding
of retiree benefits. Investment performance impacts annual contributions and expenditures
made towards retiree obligations. The intent of the City Council is to establish a fund balance
that can provide supplemental financing to lessen the impacts from decreases in investment
performance on retiree obligations. The City Manager or designee may allocate from what
would otherwise be "Unassigned" fund balance to increase the fund balance. The use of
funds from this fund balance may be used: (a) if the City Employer share of the Public
Employee Retirement System (PERS) rate increases by 3 percent; and / or (b) If the City
Annual Required Contribution (ARC) for retiree medical benefits increases by 3 percent or
more; and / or (c) If the City Council by majority vote authorizes a lump sum use of the fund
balance to reduce pension or OPEB liabilities. The ee-- as ef jHRa -30, 22010 was
$2,375,00&.
IV. Unassigned Fund Balance (General Fund Only)
Unassigned fund balance represents amounts that have not been restricted, committed, or
assigned and is available for any purpose. The City Council at its discretion may modify
unassigned fund balance, and designate in the future an intended "Commitment" or
"Assignment ".
Unrealized Gain on Investments: Used to account for that portion of fund balance that is the
result of unrealized investment gains that have been recorded in accordance with
Governmental Accounting Standards Board Statement No. 31. The aRGe -as ef� 'tee
201 n was $1,516,5 6 9
Unrestricted For Cash Flow Purposes: The City Council recognizes the importance to
maintain funds for cash flow purposes to balance the fact that the receipt of major revenues
and major expenditure disbursements are not evenly distributed throughout the year. The
City Council establishes as policy that this fund balance shall be at a minimum equal to two
months of budgeted operating expenditures with a goal to achieve a maximum of 4 months.
As part of the annual budget appropriation, the City Council may also appropriate as a source
of funding "Unrestricted - Capital Contribution" from this source. This shall typically be done
only for high priority one time capital expenditures, provided the minimum fund balance would
remain. The b laRGe as of li inn 30 201 n was $9,360,000.
Changes In General Fund Resources
Page 7 of 8
(Amended Redline Policy Changes Presented June 19, 2012)
CITY OF DUBLIN ESTABLISHMENT OF
PRINCIPAL COMPONENTS OF FUND BALANCE
IN ACCORDANCE WITH GASB STATEMENT 54
In accordance with the requirements of GASB the City Council also confirms as part of this
policy how General Fund resources shall impact changes in balances.
Revenue Sources Allocated to Fire OPEB: The entire amount of the General Fund resources
derived from the repayment of funds advanced to the PERS Side Fund, shall be assigned to
the Fire OPEB Committed Balance, until such time that either there are no longer any
repayments made, or the balance equals $8.6 million, whichever occurs first.
Revenue Sources Allocated to Service Continuity If the "Assigned" balance is below the
target maximum of 125% of Building & Safety Expenditures, the following criteria shall be
used for calculating an adjustment only if annual building permit revenue exceeds annual
Building and Safety expenditures. The Administrative Services Director shall complete an
analysis of major building permits issued in the period April — June and shall assign an
allocation of the portion of revenue that is expected to be related to expenditures occurring in
the subsequent year. The amount derived shall be recommended to the City Manager. If
annual building permit revenue is less than the annual Building and Safety expenditures, the
City Manager is authorized to reduce the assigned amount by the amount necessary to
balance revenues and expenditures.
Revenue Sources Allocated to Assignment For Cash Flow Purpose: The portion of fund
balance derived from General Fund sales tax shall be allocated as follows: Annually, prior to
the end of the Fiscal Year, the City Council may elect to direct a specific assignment of the
fund balance derived from general fund sales tax. based on an adopted resolution. Any
remaining fund balance, or if a specific direction is not adopted, then the funds shall be
allocated as follows: a) 50% to the — Catastrophic Facility / Infrastructure Loss & City
Business Recovery; b) 25% to Pension and Other Post Employment Benefits; and c) 25% to
Unassigned for Cash Flow Purposes.
City Council Modifications To Policy
Periodically the City Manager may recommend to the City Council a review of this policy
based on overall City initiatives and current balances. Any adjustments to the policy shall be
adopted by the City Council.
RESOLUTION NO. - 12
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
* * * * * * * * * * * * * * * * * * * * * * * * * **
AMENDING RESOLUTION 106 -11 AND PROVIDING PRINCIPAL COMPONENTS OF FUND
BALANCE IN ACCORDANCE WITH GASB STATEMENT 54
WHEREAS, the City of Dublin incorporates into its financial records the requirements issued
by Governmental Accounting Standards Board (GASB); and
WHEREAS, On June 21, 2011 the City Council adopted Resolution 106 -11 which established
components of fund balance for the City of Dublin; and
WHEREAS, the adopted policy identified that the City Manager may recommend to the City
Council a review of this policy based on overall City initiatives and current balances; and
WHEREAS, any adjustments to the policy shall be adopted by the City Council; and
WHEREAS, the City Council received a report recommending certain adjustments to the
policy on June 19, 2012; and
WHEREAS, the amended language has been incorporated into the comprehensive fund
balance policy ( "Exhibit X); and
WHEREAS, the Principal Components of Fund Balance in Accordance with GASB Statement
54 (Exhibit A) attached hereto and made a part of this Resolution, reflects the categorization of fund
balance; and
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does
hereby find, determine, declare and resolve as follows-
1 . The Dublin City Council does hereby adopt Principal Components of Fund Balance, as
contained in Exhibit A.
2. This shall serve as the basis for presenting fund balance in the Comprehensive Annual
Financial Report beginning with the report covering the period ending June 30, 2012 and beyond.
3. The City Manager is responsible for administering and interpreting this policy, and has
been designated by the City Council to determine funds to be classified in the "Assigned" category in
accordance with this policy.
PASSED, APPROVED AND ADOPTED this 19th day of June, 2012.
AYES:
NOES:
ABSENT:
Mayor
ATTEST:
City Clerk
C: \Users \agenda \Desktop \Item 4.14 Attachment 2.doc
ATTACHMENT 2
CITY OF DUBLIN
PRINCIPAL COMPONENTS OF FUND BALANCE
(As Amended and Presented June 19, 2012)
This document shall establish the foundation for the components of fund balance. The presentation
of fund balances is also presented in the Comprehensive Annual Financial Report (CAFR) and the
official City financial records. This document is intended to comply with Governmental Accounting
Standards Board (GASB) Statement No. 54. In the event of a conflict between this policy and the
provisions of GASB Statement No. 54 the accounting statement shall prevail.
In accordance with the requirements of GASB, the City Council also confirms as part of this policy
the order of expenditures from resources available. The City considers "Restricted" amounts to have
been spent prior to "unrestricted" amounts when an expenditure is incurred for purposes for which
both are available ( "unrestricted" would include Committed, Assigned, and Unassigned). Similarly,
when an expenditure is incurred for purposes for which amounts in any of the unrestricted
classifications of fund balance could be used, the City considers "Committed" amounts to be reduced
first, followed by assigned amounts and then the unassigned amounts.
I. Nonspendable Fund Balance
Nonspendable fund balances are amounts in a form that cannot be spent because they are either (a)
in a non - spendable form such as pre -paid items or loans receivable; or (b) they have external
restrictions imposed by creditors, grantors, contributors, laws, regulations, etc.
The following are items that are expected to be recorded as "Nonspendable ":
Prepaid Expenditures: The portion of fund balance that represents the asset amount of prepaid
expenditures, held by a given fund.
Endowments: The portion of fund balance established as an endowment by the donor and in which
the principal balance is not intended for expenditure. As of June 30, 2010, the City recorded an
endowment in the General Fund for the Cemetery of $60,000.
Advances To Other Funds: The portion of the fund balance that represents the asset amount of
cash advanced to other funds, held by a given fund.
Notes/ Loans Receivable: The portion of fund balance that represents the asset amount of notes or
loans receivable, held by a given fund.
II. Restricted Fund Balance
Restricted Fund Balance shall reflect that portion of fund balance that reflects constraints placed on
the use of resources (other than nonspendable items) that are either: (a) externally imposed by
creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other
governments; or (b) Imposed by law through constitutional provisions or enabling legislation.
The following are items that are expected to be recorded as "Restricted ":
Public Safety Special Revenue Funds: The portion of fund balances derived from funds collected to
be used for Public Safety related activities.
Transportation Special Revenue Funds: The portion of fund balances derived from funds collected
to be used for Transportation related activities.
Environmental Special Revenue Funds: The portion of fund balances derived from funds collected to
be used for Environmental related activities.
Parks Special Revenue Funds: The portion of fund balances derived from funds collected to be used
for Parks related activities.
Assessment District Special Revenue Funds: The portion of fund balances derived from funds
collected to be used for Public Safety and Transportation related activities, consistent with the
purpose under which the fee is collected.
Cultural & Arts Special Revenue Funds: The portion of fund balances derived from funds collected
to be used for Cultural & Arts related activities.
Health & Welfare Special Revenue Funds: The portion of fund balances derived from funds
collected to be used for Social Services and Housing related activities.
Impact & Mitigation Capital Project Funds: The portion of fund balances derived from funds collected
to be used for parks, public facilities, fire and transportation related activities, consistent with the
purpose under which the fee is collected.
Other Restricted: The portion of fund balance in any governmental fund (except the General Fund)
that is restricted under the "Restricted Fund Balance" definition as otherwise prescribed by
Governmental Accounting Standards Board Statement No. 54 and not otherwise described in this
category above.
III. Committed Fund Balance
Committed Fund Balance shall be comprised of amounts in which the City Council has taken action
to commit the funds before the end of fiscal year. The decision to modify the amount or use of funds
designated as committed can only be changed by action of the City Council.
Economic Stability: The portion of General Fund Balance committed for the purpose of stabilizing
the delivery of City services during periods of severe operational deficits and to mitigate the effects
of uncertainties from unforeseen change in revenues and / or expenditures. City Council approval
shall be required before expending any portion of this fund balance. Reserve shall be used only if:
a) Sudden and unexpected decline in ongoing revenues greater than 5% of General Fund operating
revenues; and /or b) Elimination or reduction of State revenue source(s) received consistently for
municipal purposes; and /or c) Reduction in projected or actual property tax or sales tax of $1 million
or more; and /or d) An increase in contracted Police or Fire Services in excess of 10 percent more
than the previous year.
Downtown Public Improvements Seed Funding: The portion of General Fund Balance established
by the City Council for public improvements in the downtown. The use of this balance is intended to
address public improvements within the Downtown Specific Plan Area. The expenditure is to be
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identified as a specific appropriation made by the City Council. The appropriation shall be a
minimum of $50,000.
Open Space Funding: The portion of General Fund Balance established by the City Council for the
acquisition and long term protection of open space in the City. The acquisition may be in
cooperation with other agencies. The expenditure is to be identified as a specific appropriation
made by the City Council.
Affordable Housing Funding: The portion of General Fund Balance established by the City Council
to support the construction, acquisition, or creation of affordable housing in the City. The acquisition
may be in cooperation with other public and private entities. The expenditure is to be identified as a
specific appropriation made by the City Council.
Emerald Glen Recreation and Aquatic Center Scope Change: The portion of General Fund Balance
established by the City Council to support the design and construction of added features (beyond
facilities described in the Park and Recreation Master Plan and impact fee program). In 2007 the
estimated cost was $6.93 million. The expenditure is to be identified as a specific appropriation
made by the City Council.
Emergency Communications System: The portion of General Fund Balance established by the City
Council to fund the purchase of emergency radio system equipment. This includes a pro -rata share
of regional radio infrastructure as well as City owned radios for Police, Fire, and Public Works.
Further the reserve may be used to fund the upgrade of centralized City telephone and
communication systems. The expenditure is to be identified as a specific appropriation made by the
City Council.
Fire Retiree Other Post - Employment Benefits (OPEB): The portion of General Fund Balance
established by the City Council for the future liability related to retiree medical benefits offered to the
inactive Dougherty Regional Fire Authority Staff, as well as the City share of obligations with the
OPEB benefits for Alameda County Fire Department. The expenditure is to be identified as a specific
appropriation made by the City Council.
Innovations & New Opportunities: The portion of General Fund Balance established by the City
Council to fund potential projects which require up -front costs, but would provide longer term benefits
and / or potential operating cost reductions. The expenditure is to be identified as a specific
appropriation made by the City Council.
Future Maintenance Facility:: The portion of General Fund Balance established by the City Council
to fund design, improvements, and equipment required for the establishment of a City maintenance
yard. The expenditure is to be identified as a specific appropriation made by the City Council.
Civic Center Expansion: The portion of General Fund Balance established by the City Council to
fund design, improvements, and equipment required for the expansion of the Civic Center. The
expenditure is to be identified as a specific appropriation made by the City Council.
Civic Center Emergency Generator. The portion of General Fund Balance established by the City
Council to fund design, improvements, and equipment required for the replacement and improvement
of emergency power supplies at the Civic Center. Upon completion of all Generator related
upgrades any remaining balance shall be transferred to the Civic Center Expansion committed
balance. The expenditure is to be identified as a specific appropriation made by the City Council.
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Public Safety Complex: In Fiscal Year 2011 -2012 the City acquired a building and site at the corner
of Clark Avenue and Dublin Boulevard. The plans are to program the site for future use as a public
safety complex. The expenditure is to be identified as a specific appropriation made by the City
Council.
Heritage Park: This commitment shall be initially used to capture the receipt of Developer
contributions specifically identified for additional development of the Dublin Heritage Park and
Museums. The commitment is beyond amounts collected under existing fee programs. The
expenditure is to be identified as a specific appropriation made by the City Council.
One Time Initiatives (Operating) The City Council recognizes that there may be fluctuations in
revenues and expenditures over time. Periodically the Council may determine that funds are best
set -aside to address certain one -time initiatives within the operating budget. The expenditure is to
be identified as a specific appropriation made by the City Council.
One Time Initiatives (Capital) The City Council recognizes that there may be fluctuations in revenues
and expenditures over time. Periodically the Council may determine that funds are best set -aside to
address certain one -time capital expenditures. The expenditure is to be identified as a specific
appropriation made by the City Council.
Fund Balance- Committed: The portion of Fund Balance that is in any non - general fund
governmental fund that is committed under the "Committed Fund Balance" definition as otherwise
prescribed by Governmental Accounting Standards Board Statement No. 54 and not otherwise
described in this category above. The portion of Fund Balance that was restricted but later found to
be unrestricted shall be designated as a "Committed" balance.
IV. Assigned Fund Balance
Assigned fund balances are amounts constrained by the City's intent to be used for a specific
purpose, but are neither restricted nor committed.
The City Council has authorized the City Manager or his /her designee to make assignments in
accordance with this policy and in conformance with any formal direction provided by the City
Council.
Accrued Leave Subiect To Year End Calculations: Certain fund balances are calculated based on
the financial performance of the reporting period including accrued Leave. These amounts fluctuate
each year and are reflected as part of the year -end financial statements.
Carry -Over Items (Operating Budget & Capital Improvement Projects): Fund balance may be
assigned for operating expenditures (excluding personnel costs) which were not expended in the
current year and the expense will occur in the following year, i.e. encumbrances. Similarly, a Capital
Improvement Project may have funds allocated in a specific year and the project remains incomplete
at year end. The City Manager or his /her designee may assign fund balance representing the
unexpended funds. These funds are available for authorized appropriations in the subsequent year.
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Carry -Over Fiscally Responsible Adjustment: In any year that an appropriation was made to the
contingency For Fiscally Responsible Adjustment the unused fund balance may be assigned as a
carry -over for personnel costs. The City Manager or his /her designee may assign fund balance
representing the unexpended funds. These funds are available for authorized appropriations in the
subsequent year in conformance with personnel policies and procedures.
Catastrophic Facility / Infrastructure Loss & City Business Recovery: The City Council recognizes
the importance to maintain funds to recover from a catastrophic loss which are unexpected and incur
more than $500,000 in expenses to public facilities and infrastructure. This may also be used for
short -term recovery and business operations following a catastrophic loss pending the
reimbursement from insurance or grants to the extent that they are available. The balance is
established in the General Fund and the expenditure shall be made only by City Council
appropriation, which shall include a special emergency appropriation. The target established for the
maximum balance in this category is an amount equal to 15% of the reported book value of the City
owned Buildings and Improvements recorded as Capital assets.
Service Continuity Obligations: The City Council recognizes the importance to maintain funds for
continued obligations to provide Building and Safety inspections in the event that program
supporting fees are collected in one year and the expenditures occur in a subsequent year. The City
Council hereby establishes as policy that the assigned funds shall not exceed 125% of the budgeted
Building and Safety Division operating cost.
Pension and Other Post Employment Benefits: The City Council recognizes that investment
earnings can fluctuate from year to year and they are an important component of the funding of
retiree benefits. Investment performance impacts annual contributions and expenditures made
towards retiree obligations. The intent of the City Council is to establish a fund balance that can
provide supplemental financing to lessen the impacts from decreases in investment performance on
retiree obligations. The City Manager or designee may allocate from what would otherwise be
"Unassigned" fund balance to increase the fund balance. The use of funds from this fund balance
may be used: (a) if the City Employer share of the Public Employee Retirement System (PERS) rate
increases by 3 percent; and / or (b) If the City Annual Required Contribution (ARC) for retiree
medical benefits increases by 3 percent or more; and / or (c) If the City Council by majority vote
authorizes a lump sum use of the fund balance to reduce pension or OPEB liabilities.
IV. Unassigned Fund Balance (General Fund Only)
Unassigned fund balance represents amounts that have not been restricted, committed, or assigned
and is available for any purpose. The City Council at its discretion may modify unassigned fund
balance, and designate in the future an intended "Commitment" or "Assignment ".
Unrealized Gain on Investments: Used to account for that portion of fund balance that is the result of
unrealized investment gains that have been recorded in accordance with Governmental Accounting
Standards Board Statement No. 31.
Unrestricted For Cash Flow Purposes: The City Council recognizes the importance to maintain
funds for cash flow purposes to balance the fact that the receipt of major revenues and major
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expenditure disbursements are not evenly distributed throughout the year. The City Council
establishes as policy that this fund balance shall be at a minimum equal to two months of budgeted
operating expenditures with a goal to achieve a maximum of 4 months. As part of the annual budget
appropriation the City Council may also appropriate as a source of funding "Unrestricted — Capital
Contribution" from this source. This shall typically be done only for high priority one time capital
expenditures, provided the minimum fund balance would remain.
Changes In General Fund Resources
In accordance with the requirements of GASB the City Council also confirms as part of this policy
how General Fund resources shall impact changes in balances.
Revenue Sources Allocated to Fire OPEB: The entire amount of the General Fund resources
derived from the repayment of funds advanced to the PERS Side Fund, shall be assigned to the Fire
OPEB Committed Balance, until such time that either there are no longer any repayments made, or
the balance equals $8.6 million, whichever occurs first.
Revenue Sources Allocated to Service Continuity: If the "Assigned" balance is below the target
maximum of 125% of Building & Safety Expenditures, the following criteria shall be used for
calculating an adjustment only if annual building permit revenue exceeds annual Building and Safety
expenditures. The Administrative Services Director shall complete an analysis of major building
permits issued in the period April — June and shall assign an allocation of the portion of revenue that
is expected to be related to expenditures occurring in the subsequent year. The amount derived
shall be recommended to the City Manager. If annual building permit revenue is less than the
annual Building and Safety expenditures, the City Manager is authorized to reduce the assigned
amount by the amount necessary to balance revenues and expenditures.
Revenue Sources Allocated to Assignment For Cash Flow Purpose: The portion of fund balance
derived from General Fund sales tax shall be allocated as follows: Annually prior to the end of the
Fiscal Year, the City Council may elect to direct a specific assignment of the fund balance derived
from general fund sales tax. based on an adopted resolution. Any remaining fund balance, or if a
specific direction is not adopted, then the funds shall be allocated as follows: a) 50% to the
Catastrophic Facility / Infrastructure Loss & City Business Recovery; b) 25% to Pension and Other
Post Employment Benefits; and c) 25% to Unassigned for Cash Flow Purposes.
City Council Modifications To Policy
Periodically the City Manager may recommend to the City Council a review of this policy based on
overall City initiatives and current balances. Any adjustments to the policy shall be adopted by the
City Council.
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RESOLUTION NO. -12
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
* * * * * * * * * * * * * * * * * * * * * * * * * **
AUTHORIZING A SPECIAL DESIGNATION OF GENERAL FUND
BALANCE FOR FISCAL YEAR 2011 -2012
WHEREAS, On June 19, 2012 the City Council an amended policy as it relates to establishing
components of fund balance for the City of Dublin; and
WHEREAS, the revised policy allows the City Council to take action prior to the end of the
Fiscal Year, to direct a specific assignment of the fund balance; and
WHEREAS, Staff reviewed updated information regarding fund balance and estimated one-
time revenues during the preparation of the Fiscal Year 2012/2013 and 2013/2014 budgets; and
WHEREAS, based on this analysis it is estimated that at June 30, 2012 approximately
$2,249,368 would be available in assigned fund balance; and
WHEREAS, the City Council in accordance with the adopted policy desires to allocate for one-
time purposes these reserves as part of its two -year budget cycle planning for one time purposes;
and
WHEREAS, any the policy requires this special allocation to be adopted by the City Council.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does herby make
a special allocation of the estimated Fiscal Year 2011 -2012 year -end balance to the following
designations:
Assigned Fund Balance For One -Time Initiatives (Operating) $ 503,860
Assigned Fund Balance For One -Time Initiatives (Capital) 837,548
Committed Balance For Public Safety Complex 907,960
Total Special Allocations $ 2,249,368
BE IT FURTHER RESOLVED that this allocation shall be made in accordance with the allocation of
revenue sources, as described in the revised fund balance policy. In the event that the General Fund
Balance at the end of the year exceeds $2,249,368, it will be assigned as described in the policy: a)
50% to the Catastrophic Facility / Infrastructure Loss & City Business Recovery; b) 25% to Pension
and Other Post - Employment Benefits; and c) 25% to Unassigned for Cash Flow Purposes
PASSED, APPROVED AND ADOPTED this 19th day of June, 2012.
AYES-
NOES-
ABSENT-
Mayor
ATTEST-
City Clerk
ATTACHMENT 3