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HomeMy WebLinkAbout6. Oshkosh Fund - Draft 7-27-2020 CITY OF OSHKOSH CITY COUNCIL POLICY STATEMENT General Subject: Administration Date Drafted: 7/29/2020 Revised: Special Subject: Fund Balance Effective Date: General: The objectives of this policy are as follows: - Provide working capital for the City to meet cash flow needs during the year(while avoiding the need to cash flow borrow). - Preserve the credit worthiness (credit rating) of the City for borrowing funds at favorable interest rates. - Provide a comfortable margin of safety to address unanticipated expenditures / emergencies and unexpected declines in revenue due to economic downturns, natural disasters, etc. - Provide a resource to stabilize fluctuations from year to year in the property taxes paid by the (city, City, town, county) taxpayers. Policy: The City of Oshkosh has implemented Governmental Accounting Standards Council (GASB) Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. All definitions within the Fund Balance Policy will be in agreement with GASB No. 54. GASB No. 54 has identified 5 levels of restrictions on fund balance. The levels are defined below. - Nonspendable fund balance—amounts that are not in a spendable form (such as inventory) or are required to be maintained intact (such as the corpus of an endowment fund) - Restricted fund balance—amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation - Committed fund balance—amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest-level action to remove or change the constraint - Assigned fund balance—amounts a government intends to use for a specific purpose; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority - Unassigned fund balance—amounts that are available for any purpose; these amounts are reported only in the general fund. CITY OF OSHKOSH CITY COUNCIL POLICY STATEMENT General Subject: Administration Date Drafted: 7/29/2020 Revised: Special Subject: Fund Balance Effective Date: Procedures: In order to achieve the objectives of this policy, the following guidelines shall be adhered to by the City Council: 1. As part of the annual budget process, the Financed Director will estimate the surplus or deficit for the current year and prepare a projection of the year-end fund balance. Such projection will include an analysis of trends in fund balance levels on a historical and future projection basis. 2. Withdrawal of any amount of the fund balance in excess of the targeted maximum of the amount budgeted under(1) above, for the sole purpose of reducing the ensuing year's property tax levy, may be made only upon a two- thirds vote of the City Council. 3. The City Council, by a two-thirds vote, can declare a fiscal emergency and withdraw any amount of general fund balances for purposes of addressing the fiscal emergency. Any such action must also provide for necessary appropriations to restore the general fund balance to the minimum balance with a set plan approved by the City Council 4. The unassigned general fund balance shall be maintained as of December 31 of each year equal to a minimum of 16% of the ensuing year's budgeted general fund expenditures, with a targeted maximum of 30% of the ensuing year's budgeted expenditures. 5. Funds in excess of 30% of the unassigned fund balance target may be considered to supplement "pay as you go" capital outlay expenditures (including reduction of anticipated debt issues) or to prepay existing debt via cash defeasance as allowable. The decision of how to use these funds will be made by the City Council. Unassigned fund balance shall not be used to support recurring operating expenditures. 6. If, at any time, the unassigned general fund balance is lower than the above stated amount, the City Council, shall implement a plan to rebuild the unassigned fund balance to the minimum level. This may include increasing the annual budget to replenish the fund (over a period of one or more years) or applying the remaining unexpended general fund resources at the end of a fiscal year. CITY OF OSHKOSH CITY COUNCIL POLICY STATEMENT General Subject: Administration Date Drafted: 7/29/2020 Revised: Special Subject: Fund Balance Effective Date: 7. The City of Oshkosh will report at the end of each fiscal year the portion of the fund balance that is not in spendable form as Non-spendable fund balance on the financial statements. 8. At the end of each fiscal year, the City will report "restricted" fund balance for amount that have applicable legal restriction per provisions of GASB #54. Normally fund balances in debt service funds and capital project funds with remaining long-term debt proceeds will be reported as "restricted". 9. The City of Oshkosh will maintain appropriate commitments or assignments of general fund, special revenue funds, debt service funds and capital projects funds for specified purposes, including but not limited to contingencies, compensated absences, or similar items. Commitments and / or assignments of fund balance shall be made by the City Council. Balance Requirements: General Fund • The targeted unassigned fund balance restrictions shall apply to the General Fund only. The General Fund has greater bearing on the outlook of the City as a whole compared to the other City Funds. All Other City Funds • Every City Fund will have its fund balance categorized with the five categories pursuant to GASB 54. While the City encourages each fund to meet the 16% minimum balance, the General Fund is the only fund that has the requirement. The revenues, expenditures, and functions of each fund are different making the 16% minimum difficult to require.