Page 28 - TownofWestlakeFY25BudgetOrd1005

FUND BALANCE

Fund balance is used to describe the net position of governmental funds calculated in accordance with generally
accepted accounting principles (GAAP). Fund balance is defined as the excess of an entity’s assets over its liabilities
in a fund. In other words, it is the balance that remains once the fund’s expenditures have been deducted from its
revenues.

There are four primary reasons to maintain an adequate fund balance:
Cash Flow – It is essential for the Council to have enough cash on hand for payroll and other obligations to
be made timely. In addition, most state and federal grants require the payment prior to the grant
reimbursement request.
Unforeseen Events – Reserves often act as a contingency to meet unbudgeted and unexpected needs,
thus allowing time to make permanent changes to the budget and preventing fiscal problems from
needlessly worsening.
Financial Security – A fund reserve demonstrates a sign of financial strength and security to banking and
financial institutions allowing the Town of Westlake to borrow funds and sell bonds when additional
facilities need to be built or renovated at more favorable rates, thus saving the taxpayers money.
Interest Earning – Having a fund

In the Town of Westlake, the amount of fund balance for each fund is dictated by different parameters. Please
note that each fund summary ends with a line named “ ending fund balance.”

Revenues
Beginning Expenditures Net Change to Ending Fund Percent
FUND Other
Fund Balance Other Uses Fund Balance Balance of Total
Sources

General Fund 23,716,226 16,548,710 15,000,777 1,547,933 23,716,226 54%

Enterprise Funds 1,414,908) 6,352,500 5,696,935 655,565 759,343) 2%

Internal Service Funds 4,298,817 1,943,000 1,891,500 51,500) 4,350,317 10%
Special Revenue
Funds 2,597,609 3,740,200 2,747,659 992,541 3,590,150 8%

Debt Service Funds 72,105 4,250,597 4,250,597 0 72,105 0%

Capital Projects Funds 11,100,583 300,000 0 300,000 11,400,583 26%

Municipal Total 39,733,287 33,180,304 29,627,568 4,618,214 44,351,501 100%

Fund Balance will only be used with Council approval and can be only be used for the following:
Emergencies, as defined by the Council- approved financial policy.
Non-recurring expenditures such as technology, furniture, fixtures and equipment, or major capital
purchases that cannot be accommodated through current year savings.
Should such use reduce the balance below the appropriate level set as the objective for that fund,
recommendations will be made on how to restore it.

Council shall approve all commitments by formal action. The action to commit funds must occur prior to fiscal
year-end, to report such commitments in the balance sheet of the respective period, even though the amount
may be determined subsequent to fiscal year-end. A commitment can only be modified or removed by the same
formal action.

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