Agenda Information Sheet
DEPARTMENT: Finance
ACM: Bryan Langley
Date: September 20, 2016
SUBJECT
Title
Consider adoption of an ordinance of the City Council of the City of Denton, Texas, amending the City's Fund Balance Policy; and providing an effective date.
Body
BACKGROUND
The City adopted a formal fund balance policy in order to meet the requirements of Governmental Accounting Standards Board (GASB) Statement No. 54 - "Fund Balance Reporting and Governmental Fund Type Definitions" on September 20, 2011. This policy was necessary to meet the new requirements of GASB Statement No. 54 and additionally set fund balance targets for the City's General Fund as well as working capital and rate reserve targets for the City's utility funds. The policy was amended on September 15, 2015, to establish rate reserve ranges for the Solid Waste Fund. The following table displays the current utility fund reserve policies and the proposed changes for the Water, Wastewater, and Solid Waste Funds.
The proposed ordinance would change the attached Fund Balance Policy (exhibit 2) to the proposed operating reserve levels and maintain the working capital level. These changes were approved by the Public Utilities Board at their meeting of June 27, 2016.
In additional to the utility fund changes, the attached amendment would also change the minimum unassigned fund balance language for the General Fund. The current policy calls for a minimum fund balance of 20%. The revised policy maintains the 20% minimum unassigned fund balance and allows for an additional 5% resiliency reserve to be maintained to safeguard against unusual financial circumstances or economic downturns.
These proposed changes to the Fund Balance Policy were presented to the City Council during the budget work session on August 4, 2016 with direction to return the revised policy for approval during the budget adoption process.
RECOMMENDATION
Staff recommends that the City Council approve the ...
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