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HomeMy WebLinkAboutReso 108-12 Govt Acct Standards Board RESOLUTION NO. 108 - 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 A); 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. 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, by the following vote: AYES: Councilmembers, Biddle, Hart, Hildenbrand, Swalwell, and Mayor Sbranti NOES: None ABSENT: None ABSTAIN: None i� �! Mayor ATT T: City Clerk Reso No. 108-12, Adopted 6-19-12, Item 4.14 Page 1 of 1 EXHIBIT A 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. Ill. 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 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. 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 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. 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. 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 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.