2011-43RESOLUTION NO. 2011 -43
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF
AVENTURA, FLORIDA, ESTABLISHING THE FUND BALANCE
POLICY FOR THE GENERAL FUND OF THE CITY OF
AVENTURA; AUTHORIZING THE CITY MANAGER TO DO ALL
THINGS NECESSARY TO CARRY OUT THE AIMS OF THIS
RESOLUTION; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City Commission desires to establish a Fund Balance Policy for
the General Fund consistent with the Governmental Accounting Standards Board
Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions;
and
WHEREAS, the City Commission believes that it is necessary, appropriate and in
the public interest to commit these fund balance reserve funds in the General Fund; and
WHEREAS, such a policy has been prepared and a copy thereof is attached
hereto.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE
CITY OF AVENTURA, FLORIDA THAT:
Section 1. The "City of Aventura Fund Balance Policy for the General Fund ",
attached hereto as "Exhibit A ", is hereby adopted.
Section 2. The City Manager is authorized to do all things necessary to
implement this policy and carry out the aims of this resolution.
Section 3. This Resolution shall become effective immediately upon its
adoption.
The foregoing resolution was offered by Commissioner Joel, who moved its
adoption. The motion was seconded by Vice Mayor Auerbach, and upon being put to a
vote, the vote was as follows:
Commissioner Bob Diamond
yes
Commissioner Teri Holzberg
yes
Commissioner Billy Joel
yes
Commissioner Michael Stern
yes
Commissioner Luz Urbaez Weinberg
yes
Vice Mayor Zev Auerbach
yes
Mayor Susan Gottlieb
yes
Resolution No. 2011 -
Page 2
PASSED AND ADOPTED this 12th day of July, 2011.
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1"146,001911
APPROVED AS TO LEGAL SUFFICIENCY
CITY ATTORNEY
CITY OF AVENTURA
GENERAL FUND — FUND BALANCE POLICY
Exhibit A
A. Fund Balance Policy4MkV
The City hereby establishes and will classify reservations of General Fund, Fund
Balance, as defined herein, in accordance with Governmental Accounting and
Financial Standards Board Statement No. 54 Fund Balance Reporting and
Governmental Fund Type Definitions. This policy shall primarily apply to the
City's General Fund. Fund Balance shall be composed of nonspendable,
restricted, committed, assigned and unassigned amounts.
Fund Balance information is primarily used to identify the available resources to
repay long -term debt, fund capital improvements, stabilize property tax rates, or
enhance the City's financial position, in accordance with policies established by
the City Commission.
B. Fund Balance Definitions and Classifications
Fund Balance — refers to the difference between assets and liabilities reported in
a governmental fund. Listed below are the various Fund Balance categories (in
order from most to least restrictive).
Fund Balance — Nonspendable
Includes amounts that are not in a spendable form (e.g., inventory) or are
required, either legally or contractually, to be maintained intact (e.g., principal of
an endowment fund). Examples include:
• Inventory
• Prepaid Expenditures
• Long -Term Portion of Receivables*
( *unless the proceeds from the collection of receivables are restricted,
committed or assigned when eventually collected).
• Corpus of a Permanent Fund
The City hereby establishes the following Nonspendable Fund Balance Reserves
in the General Fund:
a) Inventory Reserve
The Inventory Fund Balance Reserve is established to indicate those
amounts relating to inventories that are not in a spendable form.
b) Prepaid Expenditures
The Prepaid Expenditures Fund Balance Reserve is established to
indicate those amounts relating to prepaid expenditures that are not in a
spendable form.
Fund Balance — Restricted
Includes amounts that can be spent only for the specific purposes stipulated by
external resource providers (e.g., creditors, grant providers, contributors or laws
or regulations of other governmental entities), constitutionally or through enabling
legislation (that is, legislation that creates a new revenue source and restricts its
use). Effectively, restrictions may be only changed or lifted, with the consent of
resource providers and when they are legally enforceable.
Fund Balance — Committed
Includes amounts that can be used only for the specific purposes as established
by the adoption of this policy and the annual budget ordinance by the City
Commission. Commitments can only be removed or changed by taking the
same action that originally established the commitment (e.g., resolution and /or
ordinance).
Committed Fund Balance remains binding unless removed in the same manner
in which it was established. The action to impose the limitation on resources
needs to occur prior to the close of the fiscal year, although the exact amount
may be determined subsequently.
Contractual obligations should be incorporated to the extent that existing
resources in the fund have been specifically committed for use in satisfying those
contractual obligations. Encumbrances may be reported as committed.
The City hereby establishes the following Committed Fund Balance Reserves in
the General Fund:
a) Capital Reserve
The Capital Fund Balance Reserve is committed by the City Commission
as set forth in the annual budget ordinance (and any amendments thereto)
to be utilized in future years to fund various capital needs.
b) Hurricane /Emergency and Disaster Recovery Operating Reserve
The Hurricane /Emergency and Disaster Recovery Operating Fund
Balance Reserve is to be maintained by the City Manager at a minimum
level of $5,000,000 for the purposes of responding to and providing relief
and recovery efforts to ensure the maintenance of services to the public
during hurricane /emergency /disaster situations. Such emergencies
include, but are not limited to hurricanes, tropical storms, flooding, terrorist
activity and other natural or man -made disasters. Additional funds may be
appropriated when necessary via a budget amendment ordinance. This
Reserve may not necessarily be established in the annual budget. In the
event these funds are utilized, they should be replenished in order to
prepare for possible future events. The City will make every effort to
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replenish this reserve over a five -year period beginning with the
completion of recovery from the event for which the reserve funds were
used.
Fund Balance — Assigned
Includes amounts that the City intends to use for specific purposes or projects,
that are neither restricted nor committed, as authorized by the City Manager.
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. An appropriation of existing fund balance to
eliminate a projected budgetary deficit in the subsequent year's budget in an
amount no greater than the projected excess of expected expenditures over
expected revenues satisfies the criteria to be classified as an assignment of fund
balance. Encumbrances resulting from issuing purchase orders as a result of
normal purchasing activities approved by appropriate officials may be reported as
assigned.
Fund Balance — Unassigned
Unassigned fund balance for the General Fund includes all amounts not
contained in the other classifications. Unassigned amounts are the portion of
fund balance which is not obligated or specifically designated and are generally
available for any purpose. If another governmental fund has a fund balance
deficit, then it will be reported as a negative amount in the unassigned
classification in that fund. Positive unassigned amounts will be reported only in
the General Fund. The Minimum Unassigned Fund Balance of the General
Fund, at the beginning of each fiscal year, shall not be less than 10% of the
annual General Fund revenue. In any fiscal year where the City is unable to
maintain this 10% minimum reservation of fund balance as required in this
section, the City shall not budget any amounts of unassigned fund balance for
the purpose of balancing the budget. In addition, the City Manager will make
every effort to reestablish the minimum Unassigned Fund Balance in a 24 — 36
month period beginning with the year from which the reserve funds fell below the
10% threshold.
C. Spending Order of Fund Balance
The City uses restricted amounts to be spent first when both restricted and
unrestricted fund balance is available unless there are legal documents /contracts
that prohibit doing this, such as in grant agreements requiring dollar for dollar
spending. Additionally, the City would first use committed fund balance, followed
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by assigned fund balance and then unassigned fund balance when expenditures
are incurred for purposes for which amounts in any of the unrestricted fund
balance classifications could be used.
Open encumbrances at the end of the fiscal year may only be classified as
committed or assigned, depending on at what level of authorization originally
established them.
D. Annual Review and Determination of Fund Balance Reserve Amounts
The City Manager shall issue a report on an annual basis to the City Commission
outlining compliance with the fund balance policy.
E. Effective Date
This Policy shall take effect immediately upon adoption and will be applied
beginning with the preparation of the City's September 30, 2011 Comprehensive
Annual Financial Report and adoption of the City's Fiscal Year 2011 -12 Budget.
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