Page 475 - Bedford-FY22-23 Budget

ASSIGNED FUND BALANCE AUTHORITY:
The City Council authorizes the City Manager or his/her designee as the official
authorized person to assign fund balance to a specific purpose approved by this policy.
The specific purpose of an assigned fund balance can include, but is not limited to, an
appropriation of existing fund balance to eliminate a projected deficit in the subsequent
year’s budget in an amount not to exceed the projected excess of expenditures over
revenues. Additionally, the assigned fund balance will include remaining amounts that
are reported in the governmental funds (aside from the General Fund), except negative
amounts. Assignments in the General Fund are amounts that are intended to be used for a
specific purpose that is narrower than the general purpose of the government itself. And,
governments cannot assign an amount to a specific purpose if it would cause a deficit in
the unassigned fund balance.

MINIMUM UNASSIGNED FUND BALANCE:
It is the goal of the City of Bedford to achieve and maintain an unassigned fund balance
in the general fund equal to 20% of budgeted expenditures for unanticipated expenditures,
unforeseen revenue fluctuations, or other adverse circumstances. The fund balance level,
however, may be reduced to the equivalent of 15% of budgeted expenditures in unusual financial
circumstances, as determined by the City Council.

Moreover, if such a situation occurs, the City will implement necessary corrective action,
in which the City Manager will submit a plan to restore the unassigned fund balance to the
equivalent of 20% of budgeted expenditures as soon as economic conditions allow. These steps
include, but are not limited to, identifying, nonrecurring, or alternative sources of revenue,
increasing existing revenues, charges and/or fees: use of year-end surpluses; enacting cost saving
measures such as holding capital purchases, reducing departmental operating budgets, freezing
vacant positions, and/or reducing the workforce. The time period to replenish the fund balance
shall be defined within the City Manager’s plan submittal.

Moreover, in accordance with GASB 54 standards, all special revenue funds will have an
assigned fund balance; however, the Tourism Fund will maintain its goal based on the greater of
20% of operating expenditures less capital outlays or an average annual debt service
requirement. In addition, the funds that flow into the City of Bedford Street Improvement
Economic Development Corporation consist primarily of sales tax. And a significant portion of
this revenue has been obligated on an annual basis for debt service payments. Therefore, in
order to ensure that the City is able to meet future debt service requirements, the Corporation
should maintain an assigned fund balance equivalent to one year of the average annual debt
service requirement, including related expenses.

NON-GOVERNMENTAL FUND BALANCE:

The fund balance categories discussed above do not apply to proprietary funds according to
GASB 54. Although it is not required by GASB, the City of Bedford recognizes the need for a
minimum working capital policy for the proprietary funds maintained by the City, such as the
Water and Sewer Fund and Stormwater Fund. Therefore, the Water and Sewer Fund shall
maintain its goal of a working capital amount equivalent to 90 days of operational expenses