R-12-09RESOLUTION NO. R -12 -09
A RESOLUTION ADOPTING A FUND BALANCE POLICY
WHEREAS, the Government Accounting Standards Board (GASB) has issued Statement #54
which requires governmental entities to identify and classify fund balances in their comprehensive
annual financial reports; and
WHEREAS, that Statement requires that the Village of Deerfield should begin to comply with
their comprehensive annual financial report for the fiscal year ending April 30, 2012, and
WHEREAS, Village staff has prepared a fund balance policy that incorporates the
classification and minimum levels necessary to comply with Statement #54; and
WHEREAS, The Village of Deerfield has determined that the Fund Balance Policy, attached,
is in the best interest of the Village and its citizens.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND BOARD OF TRUSTEES OF THE VILLAGE OF
DEERFIELD, LAKE AND COOK COUNTIES, ILLINOIS, in the exercise of its home rule powers, that the
Village of Deerfield Fund Balance Policy, attached, is hereby approved; and
This Resolution shall be in full force and effect upon its passage and approval in the manner
provided by law.
ADOPTED this 16th day of April , 2012.
AYES: Benton, Farkas, Jester, Oppenheim, Seiden, Struthers (6)
NAYS: None
ABSENT: None
ABSTAIN: None
APPROVED this 16th day of April 2012.
t"". 6iz-�a-
Mayor
ATTEST:
oql-
Vill6ge Clerk
Village of Deerfield
Fund Balance Policy
The purpose of this policy is to establish guidelines by which the Village will classify fund balance in
its Comprehensive Annual Financial Report in order to comply with Government Accounting
Standards Board Statement No. 54.
Fund balance shall be reported in accordance with governmental accounting standards as
promulgated by the Government Accounting Standards Board (GASB), and shall be defined as the
gross difference between governmental fund assets and liabilities reflected on the balance sheet.
The governmental funds include the General Fund, Special Revenue Funds, Debt Service Funds and
Capital Projects Fund.
Fund balance shall be reported in up to five (5) ways, as described in GASB Statement No. 54. The
five (5) classifications are defined as follows:
1. Non - Spendable Fund Balance: That portion of a governmental fund's fund balance
that cannot be spent or is legally or contractually required to remain intact. Examples
include inventories and prepaid items.
2. Restricted Fund Balance: That portion of a governmental fund's fund balance that is
constrained to a specific purpose by external parties, such as grantors, bond holders
and higher levels of government through enabling legislation. Examples include Motor
Fuel Tax funds that per State Statute must be spent on maintenance of roadways,
Enhanced 911 funds restricted for public safety purposes, Debt Service funds restricted
for debt service expenditures, and Capital Projects funds restricted for capital projects.
3. Committed Fund Balance: That portion of a governmental fund's fund balance that is
constrained to a specific purpose by the Village Board itself, using its highest level of
decision making authority. Committed fund balance cannot be used for any other
purpose, unless the Village Board itself removes the constraint. Examples include funds
committed by ordinance for construction.
4. Assigned Fund Balance: That portion of a governmental fund's fund balance that is
spendable or available for appropriation and not subject to the above classifications 1 -4
in any fund other than the General Fund, or has been tentatively earmarked for some
specific purpose by the Finance Director. An example is the funds held by the Illinois
Personnel Benefit Cooperative (IPBC) for health insurance benefit purposes.
5. Unassigned Fund Balance: That portion of a governmental fund's fund balance that is
available for any legal purpose in the General Fund. The unassigned fund balance shall
be defined as the difference between the total fund balance, and the total of the non -
spendable fund balance, restricted fund balance, committed fund balance and assigned
fund balance. Positive unassigned fund balance can only occur in the General Fund.
It shall be the Village's policy to spend the most restricted dollars before less restricted dollars in
the following order:
1. Non - spendable (if funds become spendable)
2. Restricted
3. Committed
4. Assigned
5. Unassigned.
The Finance Director shall have the authority to assign fund balance as he or she deems
appropriate.
Fund Balance Reserve Policy
As a home rule municipality, the Village has substantial flexibility in the movement of assets
between funds. Other than funds with certain legal restrictions, for instance, the Motor Fuel Tax
Fund, Deposit Fund, and Police Pension Fund, the Village Board may approve transfers of funds
between any of the operating or capital project funds of the Village. In addition, the Village has
varied sources of revenue that, except for property tax, are generated monthly and therefore are
not subject to irregular receipt during the year.
Adequate levels of fund balance can help ensure stable tax rates, minimize the risk of cash flow
shortages and generate investment income. The following minimums are necessary to accomplish
these objectives.
The combined fund balance /net assets in the operating funds (General, Water, Sewer and Garage)
should equal at least 40% of their annual budgeted recurring expenditures. The minimum
combined balance of unassigned fund balance in the General Fund and unrestricted net assets in
the proprietary funds shall not fall below 30% of their annual budgeted recurring expenditures.
The Enhanced 911 Fund's restricted fund balance shall equal at least 25% of the Fund's annual
operating expenditures.
The Refuse Fund's unrestricted net assets shall equal at least 25% of the Fund's annual operating
expenses.
The Parking Lot Fund's unrestricted net assets shall equal at least 25% of the Fund's annual
operating expenses. The balance may be higher than 25% to pay for anticipated capital expenses
in the Fund.
The remaining funds shall maintain a sufficient balance to achieve the budget on a yearly basis.