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RES 1510 08/25/2015 v r=0111 IS) o 'IZy�%ilyl/IIICNf IllAjjjll'11`\\ x Ate' "City of Choice" RESOLUTION NO. 1510 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CIBOLO, TEXAS APPROVING AN AMENDED FUND BALANCE POLICY OF THE CITY OF CIBOLO; PROVIDING FOR A REPEALING CLAUSE; PROVIDING FOR A SEVERABILITY CLAUSE; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the Cibolo City Council adopted a fund balance policy in fiscal year 2011 to implement GASB 54 requirements for fund balance reporting and establish conservative guidelines for minimum levels of unassigned fund balance; WHEREAS, the Cibolo City Council elects to amend the guidelines established for minimum levels of unassigned fund balance to ensure fiscal stability of the City while balancing fiscal accountability to the taxpayer; NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Cibolo, Texas hereby amends the attached Fund Balance Policy, effective August 25, 2015 with the following changes noted: It is the goal of the City to achieve and maintain an unassigned fund balance in the general fund equal to 35% of expenditures (changed from 409,6). The City considers a balance of less than 25% (changed from 30%) to be cause for concern, barring unusual or deliberate circumstances. Should unassigned fund balance of the General Fund exceed the 35% range (changed from 4091o), the District will consider such fund balance surpluses for one-time expenditures that are nonrecurring in nature and which will not require additional future expense outlays for maintenance, additional staffing or other recurring expenditures. SECTION 1. That this Resolution and the Fund Balance Policy attached hereto as Exhibit "A" is hereby amended and supersedes all prior resolutions and Fund Balance Policies in conflict with the provisions hereof. SECTION 2. It is hereby officially found and determined that the meeting at which this Policy was approved was open to the public, and public notice of the time, place and purpose of the meeting was given, all as required by the Texas Open Meetings Act. SECTION 3. If any section, paragraph, clause or provision of this Resolution shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section, paragraph, clause or provision shall not affect any of the remaining provisions of this Resolution. SECTION 4. All orders, resolutions and ordinances, or parts thereof, inconsistent herewith are hereby repealed to the extent of such inconsistency. SECTION 5. This Resolution shall become effective immediately upon its passage. APPROVED AND ADOPTED ON THIS 25th DAY OF AUGUST, 2015. Lisa M. Jackson, Mayor ATTEST: Peggy Cimics, City Secretary , r EXHIBIT A Fund Balance Policy Purpose The purpose of this policy is to establish a key element of the financial stability of the City by setting guidelines for fund balance. Unassigned fund balance is an important measure of economic stability. It is essential that the City maintain adequate levels of unassigned fiend balance to mitigate financial risk that can occur from unforeseen revenue fluctuations, unanticipated expenditures, and similar circumstances. The fund balance also provides cash flow liquidity for the City's general operations. Definitions Fund Equity—A fund's equity is generally the difference between its assets and its liabilities. Fund Balance—An accounting distinction is made between the portions of fund equity that spendable and nonspendable. These are broken up into five categories: 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. 2) Restricted fund balance — includes amounts that can be spent only for the specific purposes stipulated by external resource providers either constitutionally or through enabling legislation. Examples include grants and child safety fees. 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 changed or lifted only by the government taking the same formal action that imposed the constraint originally. 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 finds 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. 5) Unassigned fund balance — is the residual classification of the general fund and includes all amounts not contained in other classifications. Unassigned amounts are technically available for any purpose. Policy 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 the City's Council meeting. The resolution must either be approved or rescinded, as applicable, prior to the last day of the fiscal year for which the commitment is made. The amount subject to the constraint may be determined in the subsequent period. Assigned Fund Balance - The City Council has authorized the City Manager as the official authorized to assign fund balance to a specific purpose as approved by this fund balance policy. Minimum Unassigned Fund Balance It is the,goal of the City to achieve and maintain an unassigned fund balance in the general fund equal to 35% of recurring operating expenditures. The City considers a balance of less than 25% to be cause for concern, barring unusual or deliberate circumstances. If unassigned fund balance falls below the goal or has a deficiency,the City will implement the following budget strategies until fund balance has been replenished to an acceptable level: • Reduction of expenditures to minimum levels including,but not limited to: o reduction in discretionary spending such as travel and training, o implementation of a hiring freeze for non-essential positions. • Increase revenues or pursue other funding sources • Or some combination of the two. Should unassigned fund balance of the General Fund exceed the 35% range, the City will consider such fund balance surpluses for one-time expenditures that are nonrecurring in nature and which will not require additional future expense outlays for maintenance, additional staffing or other recurring expenditures. Order of Expenditure of Funds When multiple categories of fiend balance are available for expenditure (for example, a construction project is being funded partly by a grant, funds set aside by the City Council, and unassigned fund balance), the City will start with the most restricted category and spend those funds first before moving down to the next category with available funds.