Page 290 - GFOA Draft 2

CITY OF SAGINAW, TEXAS
FINANCIAL MANAGEMENT POLICIES

XII. Fund Balance Policies
A. Fund Balances
Sufficient fund balances will be maintained to protect the City' s financial position

during emergencies or economic fluctuations, avoid cash flow interruptions,
generate interest income, reduce the need for short-term borrowing, and assist in
maintaining an investment grade bond rating.
1. Minimum Fund Balance General Fund
The City will maintain a fund balance of 25% of the operating expenditure budget
excludes capital expenditures).
2. Minimum Fund Balance Enterprise Fund
The City will maintain a fund balance of 25% ( 90 days) of the operating
expenditure budget (excludes capital expenses).
B. Use of Fund Balance
Fund balance will only be used for emergencies, non- recurring
expenditures/ expenses, or major capital purchases. If such use reduces the fund
balance below the level that is established as the minimum, the request to use
fund balance will include a plan to replenish the fund balance to the minimum
required level.
C. Fund Balance Components
In accordance with GASB Statement 54 the following components of fund balance
are defined.

1. Non- spendable
Resources that are not in spendable form, such as inventories, pre- paids, long
term receivables, non- financial assets held for sale, or resources required to be
maintained intact such as an endowment.

2. Restricted
Resources that are subject to externally enforceable legal restrictions. The
restriction could be externally imposed by creditors, grantors, contributors, or laws
and regulations of other governments; or the restriction could be imposed by law
through constitutional provisions or enabling legislation.
3. Committed
Resources that are constrained to specific purposes by a formal action of the City
Council such as an ordinance or resolution. The constraints remain binding unless
removed in the same formal manner by the City Council.
4. Assigned
Resources that are constrained by the City' s intent to be used for specific
purposes, but are not restricted or committed.
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