08-22-11 Fiscal Affairs Committee Meeting

Browse Search

RESOLUTION NO. A RESOLUTION OF THE CITY OF LA PORTE, TEXAS, ESTABLISING FUND BALANCE POLICIES AS REQUIRED BY GASB 54; FINDING COMPLIANCE WITH THE OPEN MEETINGS LAW; AND SETTING AN EFFECTIVE DATE THEREOF WHEREAS, the Governmental Accounting Standards Board (GASB) has adopted Statement Number 54 (GASB 54), Fund Balance Reporting and Govemmental Fund Type Definitions, that is effective in fiscal year 2010 -2011, and WHEREAS, the City of La Porte wishes to comply with GASB 54 as required beginning with the current October 1, 2010 to September 30, 2011 fiscal year; NOW THEREFORE BE IT RESOLVED that the City Council hereby adopts the following policy: FUND BALANCE POLICY Fund balance measures the net financial resources available to finance expenditures of future periods. The City of La Porte's Unassigned General Fund Balance will be maintained to provide the City with sufficient working capital and a margin of safety to address local emergencies without borrowing. The Unassigned General Fund Balance may only be appropriated by resolution of the City Council. Fund Balance of the City may be committed for a specific source by formal action of the City Council. Amendments or modification to the committed fund balance must also be approved by formal action of the City Council. Committed fund balance does not lapse at year -end. The formal action required to commit fund balance shall be by resolution or majority vote. The City Council delegates authority to assign fund balance for a specific purpose to the City Manager of the City of La Porte. For purposes of fund balance classification, expenditures are to be spent from restricted fund balance first and then unrestricted. Expenditures incurred in the unrestricted fund balances shall be reduced first from the committed fund balance, then from the assigned fund balance and lastly, the unassigned fund balance. The City Council recognizes that good fiscal management comprises the foundational support of the entire City. To make that support as effective as possible, the City Council intends to maintain a minimum fund balance of 25 % of the City's general fund annual operating expenditures. If a fund balance drops below 25 %, it shall be recovered at a rate of 1% minimally, each year. This policy should be revisited each year for review.