Page 56 - City of Bedford FY21 Budget

FUND BALANCE POLICY. The primary purpose of this policy is to establish guidelines for
fund balance levels with the City of Bedford’s governmental and proprietary funds. It is
essential for the City to maintain adequate levels of fund balance to mitigate financial risk that
can occur from unforeseen revenue shortfalls, unanticipated expenditures, or any other adverse
circumstances. In addition, it also designed to provide the appropriate amount of working capital
for the City’s general operations.

DEFINITIONS:
Fund Balance. The difference between a governmental fund’s assets and
liabilities, divided into 5 categories: 1) Nonspendable, 2) Restricted, 3)
Committed, 4) Assigned, 5) Unassigned

Nonspendable. That portion of the fund balance that is legally or contractually
required to be maintained intact. In addition, nonspendable also means that
portion is not expected to be converted to cash, i.e. inventories, prepaids, long-
term receivables.

Restricted. That portion of the fund balance that is constrained for a specific
purpose by external resource providers (such as grantors, bondholders, and higher
levels of government) through constitutional provisions, or by enabling
legislation.

Committed. That portion of the fund balance that is constrained by a formal
action of the government’s highest level of decision making authority, the City
Council. These constraints can only be removed or changed by taking the same
type of action employed to commit these amounts.

Assigned. That portion of the fund balance not ‘restricted’ or ‘committed’ that
has a specific purpose expressed by the governing body or a body/official to
which the governing body delegates authority. Only resources in other
governmental funds can be assigned. The General Fund cannot assign its fund
balance.

Unassigned. A residual amount for the General Fund that is not classified in any
of the other 4 categories and is available for any purpose. Negative residual
amounts for all other governmental funds are reported in this classification.
Enabling Legislation. Authorizes the government to assess, levy, charge, or
otherwise mandate payment of resources and includes a legally enforceable
requirement that those resources be used only for the specific purpose.

General Fund. A fund that accounts for all financial resources not accounted for
and reported in another fund.

Special Revenue Fund. A fund whose revenue source(s) is restricted or
committed to a specific purpose other than capital projects or debt service.
Usually has one or more revenue resources that is not a transfer from another

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