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HomeMy WebLinkAbout12-Finance CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION Irom: Barbara Pachon Director of Finance Subject: Resolution of the Mayor and Council of the City of San Bernardino to Designate Authority to the Director of Finance to classify a portion of Fund Balance as assigned; and commit the revenues of the Animal Control, Baseball Stadium, and Soccer Field Funds for the purposes of those Funds Dept: Finance Date: May 4, 2011 Council Date: June 6. 2011 Synopsis of Previous Council action: No previous Council action taken on GASB No. 54 ~ecommended motion: Adopt Resolution L,u!=* }lP Contact person: Barbara Pachon. Director of Finance Phone: ext. 5242 Supporting data attached: Yes Ward: FUNDING REQUIREMENTS: Amount: Source: (Acct. No.) Finance: Council Notes: Agenda Item No. 1;;)- Cx.rOl.R - CJt){ I CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION STAFF REPORT SUBJECT Resolution of the Mayor and Common Council of the City of San Bernardino classifying the various components of Fund Balance as defined in Governmental Accounting Standards Board Statement No. 54. BACKGROUND In February 2009, the Governmental Accounting Standards Board issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54), which is now the new standard used to classifY the various components of fund balance for governmental funds. This new standard does not change the total amount of a given fund balance, but it substantially alters the categories and terminology used to describe the components that constitute a fund balance. The new categories and terminology reflect an approach that focuses not on financial resources available for appropriation within a fund, but on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the fund can be spent. This staff report is being presented to provide information to the Mayor and Council on the new reporting standard. The term fund balance is used to describe the difference between assets (what is owned) and liabilities (what is owed) reported within a fund. In the past, fund balances have been classified into three separate components: reserved, designated, and undesignated. There are almost always important limitations on the purpose for which all or a portion of the resources of a fund can be used. The force of these limitations can vary significantly, depending on their source. The various components of the new fund balance reporting standard are designed to indicate the extent to which the City is bound by the limitations placed upon these resources. GASB 54 defines five new components of fund balance that will replace the current existing three components. The five new components are: Nonsoendable Fund Balance. That portion of a fund balance includes amounts that cannot be spent because they are either (a) not in a spendable form, such as prepaid items, inventories of supplies, or loans receivable; or (b) legally or contractually required to be maintained intact, such as the principal portion of an endowment. This category was traditionally reported as a "reserved" fund balance under the old standard. Restricted Fund Balance. That portion of a fund balance that reflects constraints placed on the use of resources (other than nonspendable items) that are either (a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutional provisions or enabling legislation. This category was traditionally reported as a "reserved" fund balance under the old standard. Committed Fund Balance. That portion of a fund balance that includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision making authority, and remain binding unless removed in the same manner. This category was traditionally reported as a "reserved" fund balance under the old standard. Assigned Fund Balance. That portion of a fund balance that includes amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed. Such intent needs to be established at either the highest level of decision making, or by an official designated for that purpose. For all governmental funds, except the General Fund, this category includes all amounts (except deficits) not accounted for as nonspendable, restricted, or committed. This category was traditionally reported as a "designated" fund balance under the old standard. Unassigned Fund Balance. The residual portion of the fund balance of the General Fund that does not fall into one of the above four categories. This category was traditionally reported as an "undesignated" fund balance under the old standard. In addition to altering the categories and terminology used to describe the components that constitute a fund balance, GASB 54 also clarifies the definitions of the Special Revenue, Capital Projects, and Debt Service fund types. It defines Special Revenue funds as those used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specific purposes other than capital projects or debt service. By this definition, any fund now classified as a Special Revenue fund that either does not have a substantial specific revenue source (such as a fund whose primary funding source is a transfer from the General Fund), or one whose specific revenue source is not restricted or committed must be included in the General fund. The City currently defines the following as Special Revenue Funds: Economic Development Agency, Library, Cemetery, Asset Seizure (including gang and drug asset forfeiture), Alternative Transportation, Federal and State Grants (including SBETA, CDBG, and FEMA reimbursement), Animal Control, Traffic Congestion, Special Gas Tax, Traffic Safety, Sewerline Maintenance, Sales and Road, Baseball Stadium, Soccer Field, and Fire Station. (See Attachment 1 for a description of each of these funds.) The revenue sources of the Animal Control, Baseball, and Soccer Field funds are currently not restricted or committed. Therefore, in order to continue to classify these funds as Special Revenue funds, the Mayor and Common Council must take action by June 30, 2011 to commit these special revenues. If this action is not approved, these funds will be included in the General Fund for financial statement presentation purposes. FINANCIAL IMPACT There is no direct fiscal impact of implementing this aspect of GASB 54. The amounts reported as the total fund balance in any given fund are not altered. Only the reporting of the individual components that make up total fund balance is changed. These new classifications are required to be used on external formal financial reporting documents, such as the Comprehensive Annual Financial Report (CAFR). RECOMMENDATION Adopt Resolution. 2 A TT ACHMENT 1 Special Revenue Funds The City reports in its CAFR the following Special Revenue Funds for the purposes indicated: Economic Development Agency Low and Moderate Income Housing. This fund is used to account for low and moderate income housing activities city-wide. Funding for these activities consists of a 20% transfer in from the Agency's tax increment revenue from the Agency's project areas and Inland Valley Development Agency's redevelopment project area. Other financing sources may include 20% of proceeds from long-term debt issues for which housing tax increment revenue was pledged. Library For the cost of operating the City's Library system from related revenues and ongoing General Fund contributions. Funding is provided pursuant to City Charter Article XII, Section 207, and disbursements are authorized pursuant to City Charter Article VIII, Section 148. Cemetery For the cost of operating the City owned Cemetery from related revenues. Funding is provided and disbursements are authorized pursuant to City Municipal Code Title 3, Chapter 3.36.020. Asset Seizure For the investigation, detection and prosecution of criminal activities. Funding is provided by criminal assets seized under existing state and federal statutes. Alternative Transportation For receipt and disbursement of funds received per Transportation Development Act Article 3 (SB 821) of the Bikeway & Pedestrian Program and the State and Local Fiscal Assistance Act of 1972. Federal and State Grants For various grants awarded to the City by the Federal, State and local governments not otherwise accounted for in the General Fund or Capital Projects Funds. Animal Control For control, care and housing of stray animals, licensing of animals and public education from related revenues including licensing and ongoing General Fund contributions. Traffic Congestion For the receipt and disbursement of funds received under AB 2928 to be used for traffic congestion relief projects. Special Gas Tax For the receipt of gasoline tax revenue paid to the City as a subvention from the state of California. These funds are transferred to the General Fund to partially support maintenance activities and to finance street construction projects as provided by State law. Traffic Safety For the recording of the City's share of California Vehicle Code fines collected by San Bernardino County. 3 Special Revenue Funds (Continued) Sewerline Maintenance For the cost of maintaining Sewer lines as paid for from a portion of Sewer revenues. Funding is provided and disbursements are authorized pursuant to City Charter Article VIII, Sections 134 and 149, respectively. Sales and Road For local street improvements as provided for by San Bernardino County Measure I Sales Tax. Baseball Stadium For the maintenance ofthe minor league baseball stadium constructed by the City. Soccer Field For the operation of the San Bernardino Soccer Complex formerly operated by a non-profit foundation. Fire Station For the operation and maintenance of the Verdemont Fire Station pursuant to CFD 1033. 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE DIRECTOR OF FINANCE TO CLASSIFY A PORTION OF FUND BALANCE AS ASSIGNED; AND COMMIT THE REVENUES OF THE ANIMAL CONTROL, BASEBALL STADIUM, AND SOCCER FIELD FUNDS FOR THE PURPOSES OF THOSE FUNDS. WHEREAS, the Governmental Accounting Standards Board has issued Statement No. 54 entitled Fund Balance Reporting and Governmental Fund Type Definitions (GASB 54). WHEREAS, the City of San Bernardino Mayor and Common Council desires to designate authority to the Finance Director to classify a portion of fund balance as assigned; and, WHEREAS, the City of San Bernardino Mayor and Common Council desires to commit the revenue sources of the Animal Control, Baseball Stadium, and Soccer Field funds to the purposes of those funds. NOW, THEREFORE, BE IT RESOLVED, DETERMINED, AND ORDERED BY THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS FOLLOWS: SECTION I. The Mayor and Common Council delegate authority to the Director of Finance to classify, if necessary, as "assigned" any fund balance in excess of that classified by definition as "nonspendable," or classified by action of the Mayor and Common Council as "committed," SECTION 2. The Mayor and Common Council classify as "committed" any fund balance in excess of that defined as "nonspendable" for the Animal Control, Baseball Stadium, and Soccer Field funds. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, TO DESIGNATE AUTHORITY TO THE DIRECTOR OF FINANCE TO CLASSIFY A PORTION OF FUND BALANCE AS ASSIGNED; AND COMMIT THE REVENUES OF THE ANIMAL CONTROL, BASEBALL STADIUM, AND SOCCER FIELD FUNDS FOR THE PURPOSES OF THOSE FUNDS. I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at an meeting thereof, held on the day of , 20 II, by the following vote, to wit: Council Members: AYES NAYS ABSTAIN ABSENT MARQUEZ VACANT BRINKER SHORETT KELLEY JOHNSON MCCAMMACK Rachel G. Clark, City Clerk 2011. The foregoing resolution is hereby approved this day of Approved as to Form Patrick J. Morris, Mayor City of San Bernardino JAMES F. PENMAN, City Attorney B~~'-(~'~