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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
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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;;)-
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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.
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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.
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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.
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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.
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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
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