Agenda - 01-22-2015 - 7b - Laserfiche WebLink

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3 Attachment1 ORANGE COUNTY BOARD OF COMMISSIONERS FUND BALANCE MANAGEMENT POLICY The Fund Balance Management Policy is intended to address the needs of Orange County (County), in the event of unanticipated and unavoidable occurrences which could adversely affect the financial condition of the Countyand therebyjeopardize the continuation of necessary public services. This policy will ensure the Countymaintains adequate fund Governmental Funds balance and reserves in the County’s to provide the capacity to: 1.Providesufficient cash flow for daily financial needs, 2.Secure and maintain investment grade bond ratings, 3.Offset significant economic downturns or revenue shortfalls,and 4.Provide funds for unforeseen expenditures related to emergencies. Governmental Funds Fund Balance for the County’s 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. 3.Committed – amounts used for a specific purpose pursuant to constraints imposed by formal action of the government’shighest level of decision-making authority. a.Amounts set aside based on self-imposed limitations established and set in place prior to year-end, but can be calculated after year end. b.Limitation imposed at highest level and requires same action to remove or modify c. Ordinances that lapse at year-end 4.Assigned - amounts that are constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed. 5. Unassigned – amounts that are not reportedin any other classification. The General Fund will be the only fund that will have anunassigned fund balance.The Special Revenue Funds and Capital Project funds will consist of only nonspendable, restricted, committed and assigned categories of fund balance. Unassigned Fund Balance – General Fund Orange County has adopted a fiscal policy that provides for capital projects to be financed with debt and pay-as-you-go funding. In order to obtain the best possible financing, the Countyhas adopted policies designed to maintain bond ratings at or better than AAA (Fitch), Aa2 (Moody’s Investor Services) and AA+ (Standard & Poor’s). Part of the County’sfiscal health is maintaining a fund balance position that rating agencies feel is adequate to meet the County’s needs and challenges.