HomeMy WebLinkAboutAdopt Resolution No. 2015-14 authorizing Implementation of G Dept.ID FN15-005 Page 1 of 1
Meeting Date:3/16/2015
,1 CITY OF HUNTINGTON BEACH
REQUEST FOR. CITY COUNCIL ACTION
MEETING DATE: 3/16/2015
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Lori Ann Farrell, Director of Finance
SUBJECT: Adopt Resolution No. 2015-14 authorizing Implementation of Governmental
Accounting Standards Board (GASB) Statement No. 54; and, adopt revised City
of Huntington Beach Fund Balance Policy
Statement of Issue:
Governmental Accounting Standards Board (GASB) Statement No. 54 requires the adoption of a
Resolution by a local government's governing body to formally approve the City's Fund Balance
Policy.
Financial Impact:
There is no fiscal impact to the City's Fiscal Year 2014/2015 All Funds Adopted Budget. The intent
of GASB No. 54 is to segregate and identify different categories of the City's Fund Balances so that
they are easily compared to other cities and local jurisdictions nationally.
Recommended Action:
A) Adopt Resolution Number 2015-14, "A Resolution of the City Council of the City of Huntington
Beach Approving the Commitment of Fund Balances in Accordance With Governmental Accounting
Standards Board Statement No. 54"; and,
B) Adopt a revised City of Huntington Beach Fund Balance Policy.
Alternative Action(s): Do not approve the recommended action and direct staff accordingly.
Analysis:
The Governmental Accounting Standards Board issued Statement No. 54, Fund Balance Reporting
and Governmental Fund Type Definitions, to create uniform guidelines related to how fund balance
was being reported in governmental financial statements. The intent of the Statement is to bring
greater transparency and consistency to fund balance reporting in the governmental sector
nationwide. The City is required to approve the attached resolution to comply with GASB Statement
No. 54.
Environmental Status: Not applicable.
Strategic Plan Goal: Strengthen Economic and Financial Sustainability.
Attachment(s):
1. Resolution No. 2015-14, "A Resolution of the City Council of the City of Huntington Beach
Approving the Commitment of Fund Balances in Accordance With Governmental Accounting
Standards Board Statement No. 54"
2. Revised Fund Balance Policy
3. City of Huntington Beach Draft Unaudited Rnlnnre Sheet September 30, 2014.
14B -53- Item 7. - I
ATTACHMENT # 1
RESOLUTION NO. 2015- 14
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH APPROVING THE COMMITMENT OF FUND
BALANCES IN ACCORDANCE WITH GOVERNMENTAL
ACCOUNTING STANDARDS BOARD STATEMENT NO. 54
WHEREAS, the Governmental Accounting Standards Board (GASB) has issued Statement No.
54 — Fund Balance Reporting and Governmental Fund Type Definitions, which changes the terminology
used for fund balance reporting on balance sheets of Governmental Funds; and
For financial statement reporting purposes, the GASB Statement defines Nonspendable fund
balance as amounts that are not in spendable form and typically includes inventories, prepaid items, and
other items that, by definition cannot be appropriated; and
For financial statement reporting purposes, the GASB Statement defines Restricted fund balance
as amounts that can be spent only for the specific purposes stipulated by constitution, external resource
providers, or through enabling legislation; and
For financial statement reporting purposes, the GASB Statement defines Committed fund balance
as amounts that can be used only for the specific purposes determined by a formal action of the City
Council. The City Council has authority to establish, modify, or rescind a fund balance commitment by
formal action; and
For financial statement reporting purposes, the GASB Statement defines Assigned fund balance
as amounts that are intended to be used by the City for specific purposes but do not meet the criteria to be
classified as restricted or committed; and
For financial statement reporting purposes, the GASB Statement defines Unassigned fund balance
as the residual classification for the City's funds and includes all spendable amounts not contained in the
other classifications; and
When expenditures are incurred for purposes for which both restricted and unrestricted
(committed, assigned, or unassigned) fund balances are available, the City's policy is to first apply
restricted fund balance. When expenditures are incurred for purposes for which committed, assigned, or
unassigned fund balances are available, the City's policy is to first apply committed fund balance, then
assigned fund balance, and finally unassigned fund balance; and
This policy delegates to the City Manager or designee the authority to assign unrestricted fund
balance amounts where the City's intent is for those amounts to be used for specific purposes. This
delegation of authority is for the sole purpose of reporting these amounts in the annual financial
statements,
NOW, THEREFORE, the City Council of the City of Huntington Beach does hereby resolve as
follows:
The City Council of Huntington Beach hereby approves the attached Fund Balance Policy for
compliance with Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting
and Governmental Fund Type definitions.
15-4583/118116.docx
Resoi.ution No . LU15-14
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular
meeting thereof held on the 16 t hday of March , 2015.
Mayo
APPROVED A FO
ty Attorney M V- 3-LI
REVIE ND APPROVED: INITIATED AND APPROV D:
dam'
City ger Finance Director
15-4583/118116.docx
Res. No. 2015-14
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, JOAN L. FLYNN the duly elected, qualified City Clerk of the City of
Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby
certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a Regular meeting thereof held on March 16, 2015 by the following vote:
AYES: Posey, O'Connell, Katapodis, Hardy, Sullivan, Delgleize, Peterson
NOES: None
ABSENT: None
ABSTAIN: None
Q00RAW lw4s#k),
City 6ferk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
ATTACHMERIT #2
City of Huntington Beach
Fund Balance Policy
GENERAL FUND BALANCE
❑ There is an established Economic Uncertainties Reserve commitment in the General
Fund. The monetary goal of this commitment is equal to the value of two months of the
General Fund expenditure adopted budget amount.
❑ Appropriations from the Economic Uncertainties Reserve commitment can only be made
by formal City Council action. Generally, appropriations and access to these funds will
be reserved for emergency situations. Examples of such emergencies include, but are
not limited to:
■ An unplanned, major event such as a catastrophic disaster requiring
expenditures over 5% of the General Fund adopted budget
® Budgeted revenue in excess of$1 million taken by another government entity
■ Drop in projected/actual revenue of more than 5% of the General Fund adopted
revenue budget
❑ Should the Economic Uncertainties Reserve commitment be used and its level falls
below the minimum amount of two months of General Fund expenditures adopted
budget, the goal is to replenish the fund within three fiscal years.
❑ In addition to the Economic Uncertainties Reserve, there are three permanent reserves
established generally for the purposes described below. Appropriations from these
reserves can only be made by formal City Council action. These permanent reserves
are:
■ Equipment Replacement Reserve for the acquisition of rolling stock, other
movable assets, pumps, engines, and any equipment needed to sustain city
infrastructure. Planned appropriations from this fund are identified during the
annual budget process. The replenishment of this Reserve is outlined below.
■ Capital Improvement Reserve for the construction or improvement of city
infrastructure. Planned appropriations from this fund are identified during the
annual budget process in concert with the Capital Improvement Plan or during
the fiscal year as needed.The replenishment of this Reserve is outlined below.
® Litigation Reserve for unforeseen litigation losses exceeding the amount
budgeted in the current year. The monetary goal for this Reserve is generally set
at the city's self-insured limit. This fund will be replenished each year through the
annual budget process or during the fiscal year as needed.
❑ The initial allocation of audited available unassigned fund balance will go towards
reducing the City's unfunded liabilities and long-term debt obligations and improving City
infrastructure. The allocation of the remaining audited General Fund unassigned fund
balance, if any, (or increases in the Economic Uncertainties Reserve) will be done as
follows if, and until, the Economic Uncertainties Reserve commitment is fully funded (i.e.,
two months of General Fund expenditures):
■ 50% to Economic Uncertainties Reserve commitment
25% for Infrastructure Fund
■ 25% to Capital Improvement Reserve (CIR) commitment
❑ Once the Economic Uncertainties Reserve commitment attains full funding, unassigned
fund balance will be divided as follows:
® 50% for Infrastructure Fund
i 25% to Capital Improvement Reserve (CIR) commitment
■ 25% to Equipment Replacement commitment -
❑ Any unassigned revenues received during the fiscal year will be added to the fund
balance of the General Fund.
Item 7. - 4 H -56-
FUND BALANCE CLASSIFICATION
❑ The City's fund balance is made up of the following components:
® Nonspendable fund balance includes amounts that are not in spendable form
and typically includes inventories, prepaid items, and other items that, by
definition cannot be appropriated.
® The restricted fund balance category includes amounts that can be spent only for
the specific purposes stipulated by constitution, external resource providers, or
through enabling legislation.
• The committed fund balance classification includes amounts that can be used
only for the specific purposes determined by a formal action of the City Council.
The City Council has authority to establish, modify, or rescind a fund balance
commitment by formal action.
■ Amounts in the assigned fund balance classification are intended to be used by
the City for specific purposes but do not meet the criteria to be classified as
restricted or committed. The City Manager or designee has the authority to
establish, modify, or rescind a fund balance assignment.
• Unassigned fund balance is the residual classification for the City's funds and
includes all spendable amounts not contained in the other classifications.
❑ When expenditures are incurred for purposes for which both restricted and unrestricted
(committed, assigned or unassigned) fund balances are available, the City's policy is to
first apply restricted fund balance. When expenditures are incurred for purposes for
which committed, assigned, or unassigned fund balances are available, the City's policy
is to first apply committed fund balance, then assigned fund balance, and finally
unassigned fund balance.
1413 -57- Item 7. - 5
ATTACH IVT #3
�
DRAFT/ UNAUDITED
CITY OF HUNTINGTON BEACH
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30,2014
(In Thousands)
Grants Other
Special LMIHAF Capital Governmental
ASSETS General Fund Revenue Projects Funds Total
Cash and ln%estments $ 58,209 $ 1,406 $ 362 $ 32,982 $ 92,959
Cash and ln%estments with Fiscal Agent - - - 4,125 4,125
Taxes Receivable 29,499 - - 240 29,739
Other Receivables, Net 6,054 3,953 9,895 83 19,985
Advances to Successor Agency - - 5,290 - 5,290
Other Assets - - 2,411 2,411
Prepaids 4,378 - - 4,378
TOTAL ASSETS $ 98,140 $ 6,369 $ 16,647 $ 39,841 $ 1689887
LIABILITES,DEFERRED INFLOWS OF RESOURCES
AND FUND BALANCES
Liabilities:
Accounts Payable $ 6,202 $ 435 $ $ 1,099 $ 7,736
Accrued Payroll 6,063 9 12 6,084
Deposits Payable 1,289 - 2,411 3,700
Claims Payable 2,558 - 2,558
Total Liabilities 16,112 444 - 3,522 20,078
Deferred Inflows of Resources:
Unavailable Revenue 20,897 3,388 9,894 - 34,179
Total Deferred Inflows of Resources 209897 39388 9,894 - 34,179
Fund.Balaeces .:
'3Nonspendable ,
Prepaid Insurance 4,378 - 4,378
Restricted. --
Underground Utilities 364 364
Restitution 269 - 269
Pollution Remediation - 324 324
Debt Service - 4,137 4,137
Highways,Streets and Transportation - 10,817 10,817
Low income Housing 5,653 603 6,256
Air Quality - 773 773
Parks - 3,330 3,330
Other Capital Projects - - - 2,103 2,103
Other Purposes 1,437 1,527 - 1,039 4,003
Committed
Economic Uncertainties 25,011 - - 25,011
Other Capital.Projects - 13,117 13,117
Assigned,`
Litigation Reserves 900 900
Capital Projects Reserve 7,136 13 7,149
Equipment Replacement 8,295 - 8,295
Redevelopment Dissolution 1,323 1,323
General Plan Maintenance 720 720
Senior Center Debt Service Resenje 2,000 2,000
CalPERS One Equals Five Plan 1,500 1,500
CalPERS Rate Increase 1,364 - 1,364
City%iew Replacement 695 - 695
Other Purposes 5,739 - 63 5,802
TOTAL FUND BALANCES 61,131 1,527 6,663 36,319 104,630
TOTAL LIABILITES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES $ 989140 $ 6,369 $ 15,547 $ 39,841 $ 158,887
See Notes to Financial Statements
ATTACHMENT 3