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May 16, 2017 <br />ORANGE COUNTY BOARD OF COMMISSIONERS <br />FUND BALANCE MANAGEMENT POLICY <br />The Fund Balance Management Policy is intended to address the needs of Orange County <br />(County), in the event of unanticipated and unavoidable occurrences which could adversely <br />affect the financial condition of the County and thereby jeopardize the continuation of <br />necessary public services. This policy will ensure the County maintains adequate fund <br />balance and reserves in the County’s Governmental Funds to provide the capacity to: <br />1. Provide sufficient cash flow for daily financial needs, <br />2. Secure and maintain investment grade bond ratings, <br />3. Offset significant economic downturns or revenue shortfalls, and <br />4. Provide funds for unforeseen expenditures related to emergencies. <br />Fund Balance for the County’s Governmental Funds will be comprised of the following <br />categories: <br />1. Nonspendable - amounts that cannot be spent because they are either (a) not in <br />spendable form or (b) legally or contractually required to be maintained intact. <br />2. Restricted – amounts externally imposed by creditors (debt covenants), grantors, <br />contributors, laws, or regulations of other governments. <br />3. Committed – amounts used for a specific purpose pursuant to constraints imposed by <br />formal action of the government’s highest level of decision-making authority. <br />a. Amounts set aside based on self-imposed limitations established and set in place <br />prior to year-end, but can be calculated after year end. <br />b. Limitation imposed at highest level and requires same action to remove or modify <br />c. Ordinances that lapse at year-end <br />4. Assigned - amounts that are constrained by the government’s intent to be used for <br />specific purposes, but are neither restricted nor committed. <br />5.Unassigned – amounts that are not reported in any other classification. <br />The General Fund will be the only fund that will have an unassigned fund balance. The Special <br />Revenue Funds and Capital Project funds will consist of only nonspendable, restricted, <br />committed and assigned categories of fund balance. <br />Unassigned Fund Balance – General Fund <br />Orange County has adopted a fiscal policy that provides for capital projects to be financed with <br />debt and pay-as-you-go funding. In order to obtain the best possible financing, the County has <br />adopted policies designed to maintain bond ratings at or better than AAA (Fitch), Aaa (Moody’s <br />Investor Services) and AAA (Standard & Poor’s). Part of the County’s fiscal health is <br />maintaining a fund balance position that rating agencies feel is adequate to meet the County’s <br />needs and challenges. <br />212