Financial Policy Handbook 2017

D. Cash reserves should not be used to finance capital projects, unless those reserves were specifically earmarked for that purpose. E. Revenues will equal or exceed expenditures for each budget year unless there are funds available in excess of the cash reserve requirement policy. Excess cash reserves may be used to balance revenues and expenditures as long as the minimum cash reserve requirements of this policy are met. F. Short-term borrowing, such as tax anticipation notes, in order to meet the requirements in a) through e) of this section is strictly prohibited. G. The City’s annual budget is considered balanced if the cash reserve requirements, the working capital requirements and the revenue and expenditure requirements of this policy have been met (Sections 2-4). Working Capital A. The City will assemble sufficient cash reserves in operating funds for working capital so that short term cash flow financing is not required. The cash reserve will be no less than 25% of the next year’s operating budget, the same level as required for the general fund. Operating funds are defined as the general fund, employee benefits and enterprise funds. B. Short-term borrowing, such as tax anticipation notes, in order to meet the preceding working capital requirements is strictly prohibited. Equipment Replacement Reserve Fund The City will establish and maintain an equipment replacement reserve fund for each operating department to provide for the scheduled purchase of vehicles and equipments, and will annually appropriate funds to it to provide for the timely upgrading and replacement of vehicles and equipment. It is the City’s intent that the reserve funds replaces the City’s need to borrow, through capital lease purchase agreements, for vehicles and equipment acquisitions and other improvements. GASB 54 GASB 54 establishes the following five fund balance classification: Nonspendable, Restricted, Committed, Assigned, and Unassigned. Fund Balance classification assigned, unassigned and committed are considered “unrestricted” fund balances. The order of spending will be as follows: restricted, committed, assigned and unassigned. Restricted funds shall be spent