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12-008CITY OF SHOREWOOD RESOLUTION NO. 12 -008 ADOPTING GASB 54 REQUIREMENTS WHEREAS, the Governmental Accounting Standards Board ( "GASB ") has adopted Statement 54 ( "GASB 54 "), a new standard for governmental fund balance reporting and governmental fund type definitions that became effective in governmental fiscal years starting after June 15, 2010, and WHEREAS, the GASB 54 definition of special revenue funds states that special revenue funds are used to account for the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects; and WHEREAS, the term "proceeds of specific revenue sources" established that one or more specific restricted or committed revenues should be the foundation for a special revenue fund and comprise a substantial portion of the fund's revenues; and WHEREAS, investment earnings and transfers from other finds do not meet the definition of a specific revenue source; and WHEREAS, Council action is required to formalize the commitment of the specific revenue sources to specified purposes; and WHEREAS, the City of Shorewood elects to implement GASB 54 requirements, and to apply such requirements to its financial statements beginning with the current fiscal year ending December 31, 2011; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHOREWOOD, That the GASB 54 Policy is hereby adopted as presented. ADOPTED BY THE CITY COUNCIL OF THE CITY OF SHOREWOOD this 9th day of January, 2012. ATTEST a 6 4 � � L Christine Lizee, Mayor Administrator /Clerk City of Shorewood GASB 54 POLICY I. PURPOSE The purpose of this policy is to create new fund balance classifications to allow for more useful fund balance reporting and for compliance with the reporting guidelines specified in Statement No. 54 of the Governmental Accounting Standards Board (GASB). II. GENERAL STATEMENT OF POLICY The policy of this city is to comply with GASB Statement No. 54. To the extent a specific conflict occurs between this policy and the provisions of GASB Statement No. 54, the GASB Statement shall prevail. III. DEFINITIONS A. "Assigned" fund balance amounts are comprised of unrestricted funds constrained by the city's intent that they be used for specific purposes, but that do not meet the criteria to be classified as restricted or committed. In funds other than the general fund, the assigned fund balance represents the remaining amount that is not restricted or committed. The assigned fund balance category will cover the portion of a fund balance that reflects the city's intended use of those resources. The action to assign a fund balance may be taken after the end of the fiscal year. An assigned fund balance cannot be a negative number. B. "Committed" fund balance amounts are comprised of unrestricted funds used for specific purposes pursuant to constraints imposed by formal action of the council and that remain binding unless removed by the council by subsequent formal action. The formal action to commit a fund balance must occur prior to fiscal year end; however, the specific amounts actually committed can be determined in the subsequent fiscal year. A committed fund balance cannot be a negative number. C. "Enabling legislation" means legislation that authorizes a city to assess, levy, charge, or otherwise mandate payment of resources from external providers and includes a legally enforceable requirement that those resources be used only for the specific purposes listed in the legislation. D. "Fund balance" means the arithmetic difference between the assets and liabilities reported in a city fund. E. "Non- spendable" fund balance amounts are comprised of funds that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact. They include items that are inherently un- spendable, such as, but not limited to, inventories, prepaid items, long -term receivables, non - financial assets held for resale, or the permanent principal of endowment funds. F. "Restricted" fund balance amounts are comprised of funds that have legally enforceable constraints placed on their use that either are externally imposed by resource providers or creditors (such as through debt covenants), grantors, contributors, voters, or laws or regulations of other governments, or are imposed by law through constitutional provisions or enabling legislation. G. "Unassigned" fund balance amounts are the residual amounts in the general fund not reported in any other classification. Unassigned amounts in the general find are technically available for expenditure for any purpose. The general fund is the only fund that can report a positive unassigned find balance. Other funds would report a negative unassigned fund balance should the total of non- spendable, restricted, committed and assigned fund balances exceed the total net resources of that fund. H. "Unrestricted" fund balance is the amount of fund balance left after determining both non - spendable and restricted net resources. This amount can be determined by adding the committed, assigned, and unassigned fund balances. IV. CLASSIFICATION OF FUND BALANCES The city shall classify its fund balances in its various funds in one or more of the following five classifications: non - spendable, restricted, committed, assigned, and unassigned. V. ORDER OF RESOURCE USE If resources from more than one fund balance classification could be spent, the city will strive to spend resources from fund balance classifications in the following order (first to last): restricted, committed, assigned, and unassigned. VI. COMMITTING FUND BALANCE A majority vote of the city council is required to commit a fund balance to a specific purpose and subsequently to remove or change any constraint so adopted by the council. VII. ASSIGNING FUND BALANCE The City Council delegates the power to assign fund balances to the City Administrator or his designee. Assignments shall be reported to the city council on a annual basis. VIII. REVIEW The city council will conduct an annual review of the sufficiency of the fund balance levels.