HomeMy WebLinkAboutResolution No. 11-08 Amend Financial Management Policies
RESOLUTION NO. 11-08
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UNIVERSITY
PARK, TEXAS, AMENDING RESOLUTION 10-11, FINANCIAL
MANAGEMENT POLICIES FOR THE CITY; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, formal financial management policies serve as an ongoing context
for management decisions and thereby provide consistency and quality control; and
WHEREAS, such policies are evidence of prudent stewardship and are
recommended by the National Advisory Council on State and Local Budgeting and the
Government Finance Officers Association; and
WHEREAS, such policies promote long-term and strategic thinking and establish
guidelines that outlive their creators; and
WHEREAS, the City Council last approved a resolution adopting comprehensive
financial management policies for the City on June I, 20 I 0; and
WHEREAS, Governmental Accounting Standards Board (GASB) Statement
Number 54 requires local governments adhering to generally applied accounting
principles to enact specific policies regarding classification and use of fund balance in
governmental funds; and
WHEREAS, the City of University Park becomes subject to GASB Statement
Number 54 takes effect for financial statements in periods beginning after June 15,2010;
and
WHEREAS, the attached amendment to the policies has been reviewed and
recommended for approval by the City's Finance Advisory Committee and the City's
external auditors;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF UNIVERSITY PARK, TEXAS:
SECTION 1. That the Financial Management Policies, dated June I, 2010, are
hereby amended for the City of University Park as attached hereto as Exhibit "A", for the
reasons set out in the premises of this Resolution. The policies shall be reviewed and
renewed on a regular basis by the City Council.
SECTION 2. That the City shall commit a spendable part of fund balance in the
General Fund totaling $2,500,000, which shall be available for expenditure upon
authorization by the City Council for emergency relief of economic or natural disaster or
other urgent purpose for which the Council sees fit.
SECTION 3. This Resolution shall take effect immediately from and after its
passage, and it is accordingly so resolved.
DUL Y PASSED by the City Council of the City of University Park, Texas, on
the 6th day of September, 2011.
APPROVED:
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w. RICHARD DAVIS, MAYOR
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ROBERT L. DILLARD, III
CITY ATTORNEY
ATTEST:
EXHIBIT A
City of University Park, Texas
Financial Management Policies
June 1, 2010/Amended September 6, 2011
6: Fund Balance
6-1 Purpose
The purpose of this policy is to establish guidelines for governmental fund balances in
accordance with Governmental Accounting Standards Board Statement 54, Fund Balance
Reporting and Governmental Fund Type Definitions.
6-2 Definitions
6-2-1 Nonspendable fund balance - includes amounts that are not in a spendable form
or are required to be maintained intact. (Examples are inventory or permanent funds.)
6-2-2 Restricted'fund balance - includes amounts that can be spent only for the
specific purpose stipulated by external resource providers either contractually,
constitutionally or through enabling legislation. (Examples include grants and child
safety fees.)
6-2-3 Committed fund balance - includes amounts that can be used only for the
specific purposes determined by a formal action of the government's highest level of
decision-making authority. Commitments may be modified or rescinded only by the
government taking the same formal action that imposed the constraint originally.
6-2-4 Assigned fund balance - comprises amounts intended to be used by the
government for specific purposes. Intent can be expressed by the governing body or by
an official or body to which the governing body delegates the authority. In
governmental funds other than the general fund, assigned fund balance represents the
amount that is not restricted or committed. This indicates that resources in other
governmental funds are, at a minimum, intended to be used for the purpose of that fund.
6-2-5 Unassigned fund balance - is the residual classification of the General Fund and
includes all amounts not contained in the above mentioned classifications. Unassigned
fund balance is available for any valid governmental purpose and may include negative
balances for any governmental fund in which expenditures exceed the amounts
restricted, committed, or assigned for its specific purpose.
6-3 Policy by category
6-3-1 Committed fund balance
The City Council is the City's highest level of decision-making authority and the formal
action that is required to be taken to establish, modify, or rescind a fund balance
commitment is a resolution approved by the Council at a City Council meeting, The
EXHIBIT A
City of University Park, Texas
Financial Management Policies
June 1, 2010/Amended September 6, 2011
resolution must be approved, modified or rescinded, as applicable, prior to the last day
of the fiscal year for which the commitment is made. The amount subject to the
commitment may be determined in the subsequent period.
6-3-2 Assigned fund balance
The City Council has authorized both the City Manager and the Finance Director to
assign fund balance to a specific purpose.
6-3-3 Unassigned fund balance
The City recognizes that unassigned fund balance is an important measure of economic
stability. It is the goal of the City to achieve and maintain an unassigned fund balance
in the General Fund equal to at least 30 days of expenditures to mitigate financial risk
that can occur from unforeseen revenue fluctuations, significant unanticipated
expenditures and natural disasters. The City considers a balance of less than 30 days to
be cause for concern, barring unusual or deliberate circumstances. Should unassigned
fund balance fall below the above minimum, the City shall refrain from making
additional appropriations from fund balance.
6-4 Order of fund expenditure
When multiple categories of fund balance are available for expenditure (for example, a
construction project being funded partly by a grant, funds set aside by the City Council, and
unassigned fund balance), the City will first spend the most restricted category of funds before
spending the next most restricted category with available funds. Normally, this will result in
the use of committed, then assigned, and lastly, unassigned fund balance when expenditures are
made, with the exception of the emergency reserve established by the City Council. Under
normal circumstances, the City would first elect to utilize unassigned fund balance before
considering use of its emergency funds.
6-5 Fund balance appropriations
Fund balances in excess of the minimum level established above may be appropriated for non-
recurring capital projects or programs. The City of University Park will exercise diligence in
avoiding the appropriation of fund balance for recurring operating expenditures. In the event
fund balance is appropriated for recurring operating expenditures to meet the needs of the
community, the budget (or other authorizing) document shall include an explanation of the
circumstances requiring the appropriation and the methods to be used to arrest its future use.
6-6 Non-governmental fund balances
Insofar as the above definitions, policies and fund balance categories do not apply to
proprietary funds, the City recognizes the need to apply a different minimum balance policy to
the Utility Fund, in order to ensure continued operation in the event of a natural disaster or
significant shortfall in revenues. Therefore, the City shall maintain a minimum ending working
capital balance (current assets minus current liabilities) of at least 90 days of budgeted
EXHIBIT A
City of University Park, Texas
Financial Management Policies
June 1, 2010/Amended September 6, 2011
expenditures. Should working capital fall below the desired minimum, the City shall refrain
from making additional appropriations from fund net assets.