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City of Mansfield Annual Budget and Service Program Fiscal Year 2025-2026 Table of Contents

Fund Balance Policy

The annual budget shall be presented to Council with each major fund reflecting an ending fund balance that is no less
than 25% of that fund’s annual operating expenditures. To satisfy the particular needs of individual funds, ending fund
balances may be established that exceed the 25% minimum. Fund balance that exceeds the minimum level established
for each fund may be appropriated for non-recurring capital projects or programs.

Fund Transfer Policy

With the exceptions noted below, there will be no operating transfers between funds. Any costs incurred by one fund to
support the operations of another shall be charged directly to the fund. (For example, actual hours worked by General
Fund employees for Water & Sewer Fund events).

Fund transfers may occur when surplus fund balances are used to support non-recurring capital expenses or when
needed to satisfy debt service obligations.

Debt Expenditures

The City will issue debt only to fund capital projects that cannot be supported by current, annual revenues. To minimize
interest payments on issued debt, the City will maintain a regular debt retirement policy by issuing debt with maximum
maturities not exceeding twenty (20) years. Retirement of debt principal will be structured to ensure constant annual debt
payment. Post issuance compliance policy was implemented in 2012. The City will attempt to maintain base bond ratings
of Aa1 (Moody’s Investors Service), AAA (Standard & Poor’s) and AA+ (Fitch, IBCA), on its general obligation debt (see Debt
Policy). Annual financial reviews are conducted by Fitch, Moody’s, and Standard & Poor’s.

Capital Projects Expenditure Policy

The City will develop a multi-year plan for capital projects, which identifies all projects likely to be constructed within a ten-
year horizon. The multi-year plan will reflect for each project the likely source of funding and attempt to quantify the
project’s impact to future operating expenditures. Capital projects will be constructed to protect or improve the
community’s quality of life, protect, or enhance the community’s economic vitality, and support and service new
development. To minimize the issuance of debt, the City will attempt to support capital projects with appropriations from
operating revenues or excess fund balances, i.e., “pay-as-you-go.”

Utility Capital Expenditures

The City will design utility rates sufficient to meet the annual coverage requirement that will accumulate resources to
replace or rehabilitate aging infrastructure that no longer can be serviced by regular maintenance. Attempts should be
made to fund the reserve at a level approximate to the annual average coverage requirement as reported in the City’s
Annual Comprehensive Financial Report.

Long-Term Financial Policy

The City will adopt every annual budget in context of a long-term financial plan for the General Fund and Water & Sewer
Fund. Financial plans for other funds may be developed as needed. The General Fund and Water & Sewer Fund long term
plans will establish assumptions for revenues, expenditures, and changes to fund balance over a ten-year horizon. The
assumptions will be evaluated each year as part of the budget development process.

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