Minutes 11-09-2010 - Laserfiche WebLink

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CAPITAL RESERVE FUNDS GASB Statement 54 does not prohibit the use of capital reserve funds; the General Statutes authorize the use of these funds. Statement 54 only provides guidance on how to classify and report these funds according to fund type. Under previous guidance they were reported as special revenue fund types; under new guidance they will be reported as capital projects, as part of the capital projects fund or as a debt service fund, depending on how the moneys in the capital reserve fund are used. WHAT TO DO •Communicate the fund balance changes to the BOCC, Manager and others so the changes are reflected in the FY 2011-12 Budget. •Establish a fund balance policy that implements GASB 54. •Change the Fund Definitions and consolidate funds to comply with the new standard. Commissioner Gordon made reference to pages 16-17 and the statement, "all capital reserve funds must now be combined with the Capital Projects Fund." She asked how funds could be reserved for certain things. Clarence Grier said that the funds could still be kept separate, but for reporting purposes, they would be collapsed into one fund. Clarence Grier made reference to Attachment 2, draft Fund Balance Policy, which is shown below: ORANGE COUNTY BOARD OF COMMISSIONERS DRAFT FUND BALANCE MANAGEMENT POLICY The purpose of this policy is to establish a fund balance policy to address the needs of Orange County (County) and establish adequate reserves to ensure against unanticipated events that will not adversely affect the financial condition of the County and not jeopardize the continuation of necessary public services. This policy will ensure the County maintains adequate fund balance and reserves in the County's Governmental Funds to provide the capacity to: 1. Provide sufficient cash flow for daily financial needs, 2. Secure and maintain investment grade bond ratings, 3. To provide adequate reserves to offset significant economic downturns or revenue shortfalls, and 4. Provide adequate reserves for unforeseen expenditures related to emergencies. Fund Balance for the County's Governmental Funds will be comprised of the following categories: 1. Nonspendable — amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. 2. Restricted — amounts externally imposed by creditors (debt covenants), grantors, contributors, laws, or regulations of other governments.