HomeMy WebLinkAboutCity of Tamarac Resolution R-2003-138Temp. Reso. #10142
May 28, 2003
Revision 1: June 9, 2003
Revision 2: June 18, 2003
Page 1
CITY OF TAMARAC, FLORIDA
RESOLUTION NO. R-2003- j 3 K
A RESOLUTION OF THE CITY COMMISSION OF THE CITY
OF TAMARAC, FLORIDA, ADOPTING A FUND BALANCE
POLICY; PROVIDING FOR CONFLICTS; PROVIDING FOR
SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE
DATE.
WHEREAS, the City of Tamarac desires to develop and follow sound
financial policies, and
WHEREAS, rating agencies consider fund balance a critical factor in
determining financial strength; and
WHEREAS, the National Advisory Council on State and Local Budgeting
recommends maintaining a prudent level of financial reserves to protect against
reducing service levels or raising taxes and fees because of temporary revenue
shortfalls or unexpected one-time expenditures; and
WHEREAS, the Government Finance Officers Association recommends
municipalities adopt a formal fund balance policy; and
WHEREAS, the City has established prudent ranges to maintain in funds
containing operating expenses, after reviewing predictability of revenues,
volatility of expenditures, availability of resources in other funds, liquidity,
designations and legal and regulatory restrictions; and
Temp. Reso. #10142
May 28, 2003
Revision 1: June 9, 2003
Revision 2: June 18, 2003
Page 2
WHEREAS, the City Manager and Director of Finance recommend the
adoption of the proposed Fund Balance Policy; and
WHEREAS, the City Commission of the City of Tamarac deems it to be in
the best interest of the citizens and residents of the City of Tamarac to adopt the
proposed Fund Balance Policy.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
THE CITY OF TAMARAC, FLORIDA:
SECTION 1: The foregoing "WHEREAS" clauses are hereby
ratified and confirmed as being true and correct and are hereby made a specific
part of this Resolution.
SECTION 2: The Fund Balance Policy hereto attached as Exhibit 1
is hereby adopted.
SECTION 3: All resolutions or parts of resolutions in conflict
herewith are hereby repealed to the extent of such conflict.
SECTION 4: If any clause, section, other part or application of this
Resolution is held by any court of competent jurisdiction to be unconstitutional or
invalid, in part or application, it shall not affect the validity of the remaining
portions or applications of this Resolution.
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Temp. Reso. #10142
May 28, 2003
Revision 1: June 9, 2003
Revision 2: June 18, 2003
Page 3
SECTION 5: This Resolution shall become effective immediately
upon its passage and adoption.
PASSED, ADOPTED AND APPROVED this 25t" day of June, 2003.
ATTEST:
MARION SWENSON, CMC
CITY CLERK
I HEREBY CERTIFY that
I have approved this
RESOLUTION as to form.
1 MITCHELL S. KRAF
CITY ATTORNEY
JOE SCHREIBER, MAYOR
RECORD OF COMMISSION VOTE:
MAYOR SCHREIBER
DIST 1: COMM. PORTNER
DIST 2: COMM. FLANSBAUM-TALABISCO
DIST 3: COMM. SULTANOF 1
DIST 4: V/M ROBERTS l
FUND BALANCE POLICY
Purpose:
Temp Reso #10142
EXHIBIT 1
For increased financial stability, the City of Tamarac desires to manage its
financial resources by establishing fund balance ranges for selected funds. This
will ensure the City maintains a prudent level of financial resources to protect
against reducing service levels or raising taxes and fees because of temporary
revenue shortfalls or unexpected one-time expenditures.
Definitions:
Fund Balance: Fund balance means the difference between fund assets and
fund liabilities. Fund balance is also referred to as net assets..
Reserved Fund Balance: Reserved fund balance is the portion of fund balance
that is legally restricted and is not available for appropriation or expenditure.
Unreserved Fund Balance: Unreserved fund balance represents expendable
available financial resources.
Designated Fund Balance: Designated fund balance is that portion of
unreserved fund balance that reflects the City's self-imposed limitations on the
use of otherwise available expendable financial resources.
Undesignated Fund Balance: Undesignated fund balance represents available
financial resources which have not been obligated to a specific purpose.
Net Assets: Net assets is another term for fund balance.
Restricted Net Assets: Restricted net assets is equivalent to reserved fund
balance.
Unrestricted Net Assets: Unrestricted net assets in proprietary funds is roughly
equivalent to unreserved fund balance in governmental funds; however, in the
case of proprietary funds unrestricted net assets does not necessarily represent
funds available for appropriation. This is due to the fact that some of the
unrestricted net assets offset capital assets such as buildings and equipment.
Fund Balance Range: Fund balance range is the range of amounts this policy
has set within which the City means to maintain the undesignated fund balance.
Surplus: Surplus is the amount by which undesignated fund balance exceeds
the upper limit of the fund balance range.
City of Tamarac
Prepared by D. Newman
Temp Reso #10142
EXHIBIT 1
Shortfall: Shortfall is the amount by which the lower limit of the fund balance
range exceeds undesignated fund balance.
Expenditures: Expenditures are all uses of financial resources, budgeted for any
purpose, and include operating and capital expenses, debt service, and transfers
to other funds.
Operating Expenditures: Operating expenditures are uses of financial resources
for personnel, supplies, services and materials, and exclude capital expenses,
debt service, and transfers to other funds.
Fund Balance Range:
Fund balance ranges are established for each City fund which contains operating
expenses, as well as, the Utilities Re. -e- al and Replacement Fund. The .
amounts set for each fund are based on the predictability of revenues, volatility of
expenditures, and liquidity requirements of each fund and may need to be
reviewed periodically.
In calculating the ratio of undesignated fund balance to proposed expenditures,
the latest audited Comprehensive Annual Financial Report (CAFR) shall be
compared with the budget in effect when the CAFR is released. In essence this
will mean the current year budgeted expenditures will be compared with the prior
year's undesignated fund balance.
Designations Proprietary Funds:
Unrestricted net assets in proprietary funds does not necessarily represent
resources available for appropriation. This is due to the fact that capital assets
are included in proprietary funds and are offset in unrestricted net assets. Since
it is not likely the organization will sell the capital asset in order to fund
operations, it's value is not available for appropriation. In order to take this into
account when calculating the ratio related to the fund balance range, staff will
identify the portion of unrestricted assets that does not represent resources
available for appropriation and consider the amount "designated".
General Fund:
The fund balance range for the General Fund shall be not less than 7.5% and not
more than 10% of the total budgeted expenditures of the General Fund budget.
City of Tamarac
Prepared by D. Newman
Temp Reso #10142
EXHIBIT 1
Fire Rescue Fund:
The fund balance range for the Fire Rescue Fund shall be not less than 5% and
not more than 7.5% of the total budgeted expenditures of the Fire Rescue Fund
budget.
Stormwater Fund:
The fund balance range for the Stormwater Fund shall be not less than 5% and
not more than 7.5% of the total budgeted expenditures of the Stormwater Fund
budget.
Utilities Operating Fund:
The fund balance range for the Utilities Operating Fund shall be not less than 90
days and not more than 120 days of the total budgeted operating expenses of
the Utilities Operating Fund.
Utilities Renewal and Replacement Fund:
The fund balance range for the Utilities Renewal and Replacement (R & R) Fund
shall be not less than 5% and not more than 7.5% of the operating expenditures
budgeted in the Utilities Operating Fund.
Insurance Fund:
The fund balance for the Insurance Fund shall be set at an amount determined
by an annual actuarial report at a range with the lower limit at 75% confidence
level and an upper limit of 90% confidence level.
Surplus:
If it is determined there is a surplus (an amount in excess of the upper limit of the
fund balance range for any fund), the funds are to be designated or appropriated
at the next quarterly budget amendment for the following purposes in order of
priority:
1. Eliminate shortfalls in related funds. Any General Fund surplus shall be
transferred to cover shortfalls within Fire Rescue Fund, Stormwater Fund,
Insurance Fund, or any other fund initiated by the City to provide City
services. Any Utilities Operating Fund surplus shall be transferred to the
R & R Fund to cover shortfalls and/or a proportionate share amount to the
Insurance Fund if needed.
2. Reduction or avoidance of debt. If there is short-term debt within the fund
the surplus may be applied to reduce or eliminate the debt if financial
City of Tamarac
Prepared by D. Newman
Temp Reso #10142
EXHIBIT 1
analysis proves this to be advantageous for the City. If a borrowing is
scheduled, the surplus may be used to reduce the principal amount the
City needs to obtain if financial analysis proves this to be advantageous
for the City.
3. Applied to a replacement program. Surplus funds may be used to
supplement or enhance a capital replacement program such as vehicle,
personal computer, or heavy equipment replacement, or any other capital
replacement program initiated by the City.
4. One-time capital needs. Since a surplus does not represent a recurring
source of revenue it should not be used to fund a recurring expense;
however, if a one-time capital expenditure has been identified, but not
already funded through an appropriation, the surplus may be appropriated
for this use.
5. Tax, fee, or rate stabilization. Surplus funds may be designated for
stabilization in order to avoid raising taxes, fees, or rates related to the
fund in subsequent years.
Shortfall:
If it is determined there is a shortfall (an amount below the lower limit of the fund
balance range for any fund), the fund balance is to be rebuilt through the
following mechanisms in order of priority:
Distribution of surplus from other related funds as delineated under
"Surplus" category.
2. An appropriation during the next annual budget process of at least 20% of
the lower limit of the fund balance range until the lower limit has been
reached. If this is financially infeasible, a written plan shall be forwarded
by the City Manager to the Commission for approval in order to restore the
fund balance to an amount within the range within a reasonable time
frame. This plan may require reduction of services, increases in taxes,
fees, or rates, or some combination thereof.
City of Tamarac
Prepared by ll. Newman