[HISTORY: Adopted by the Board of Commissioners of the Township of Radnor as indicated in article histories. Amendments noted where applicable.]
GENERAL REFERENCES
Assessments — See Ch. 9.
Code of Ethics — See Ch. 39
Pensions and annuities — See Ch. 62.
Taxation — See Ch. 260.
ATTACHMENTS
044a Appendix A
[Adopted 7-21-2003 by Ord. No. 2003-11[1]; amended in its entirety 4-8-2013 by Ord. No. 2012-17]
[1]
Editor's Note: This ordinance repealed former Ch. 44, Financial Policies, Art. I, Deposits, adopted 2-22-1988 by Res. No. 88-07.
For purposes of this article, the following terms shall have the noted meanings:
BOND PROCEEDS
Financial proceeds derived from the sale of general obligation bonds or notes or other types of tax-exempt securities.
CASH
Certificates of deposit, bank checking and savings accounts, money market/mutual funds, and other short-term instruments, generally maturing in 90 days or less.
COLLATERALIZATION
Process by which a bank or other financial institution pledges securities, property, or other deposits to secure funds invested by the Township. For example, Pennsylvania banks that accept funds from Radnor Township in excess of amounts covered by federal deposit insurance (generally, $250,000) are required to pledge 120% of the excess amount in United States Treasury bills as collateral in the event of that bank's default.
COMMERCIAL PAPER
An unsecured short-term promissory note issued by corporations, with maturities ranging from two to 270 days.
CREDIT RISK
The risk of financial loss due to the failure of the security issuer or backer.
DERIVATIVE
A type of financial investment, whose value is derived from, or depends on, the value of one or more other types of investment (examples include interest rate swaps, reverse repurchase agreements, etc.).
DIVERSIFICATION
The process of investing financial assets among a range of securities by type of investment, sector, maturity, and quality rating.
EQUITY
Common or preferred stock, which shall be restricted to high-quality, readily marketable securities of corporations that are actively traded on all major exchanges.
FIDUCIARY RESPONSIBILITY
The obligation of an official to provide fiscal stewardship towards financial assets under his/her control.
FIXED INCOME
High-quality, marketable securities with assets invested in obligations guaranteed by the United States Treasury or other federal agencies or investment grade corporate bonds and notes, including convertibles with a rating of A or higher.
GENERAL OPERATING FUNDS
Generally, governmental-type, internal service, and proprietary funds whose assets finance the day-to-day operations of the Township, such as the general fund, General Debt Service Fund, Sewer Fund, Stormwater Management Fund, Liquid Fuels Fund, Capital Improvement Fund, Police Investigation Fund, Police Equitable Sharing Fund, Commemorative Shade Tree Fund, Parks Improvement and Open Space Fund, Educational Service Agency Fund, and Willows Fund.
INTEREST RATE RISK
The risk associated with declines or rises in interest rates, which cause an investment in a fixed-income security to increase or decrease in value.
MARKET RISK
The risk that the value of a security will rise or decline as a result of changes in market conditions.
MARKET VALUE
Current market price of a security.
MARK-TO-MARKET
The process whereby the book value or collateral value of a security is adjusted to reflect its current market value as of any given date.
MATURITY
The date on which payment of a financial obligation is due.
OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLAN
Financial assets of the Township deposited into the Post-Employment Benefits Obligation Trust Fund to be held for the payment of accrued but unused leave time, post-retirement healthcare, and any other post-retirement benefit that falls within the OPEB category.
PENSION PLANS
Financial assets of the Township's Police Pension Trust Fund and the Civilian Employee Pension Trust Fund, which are held for the payment of benefits to retired employees.
PRINCIPAL
The face, or par, value of an investment instrument.
PRUDENT INVESTMENT PRINCIPLES
A standard that generally limits investment activities to those that a prudent, or reasonable, investor would engage in.
REPURCHASE AGREEMENT
An agreement of one party to sell securities at a specified price to a second party and a simultaneous agreement of the first party to repurchase the securities at a specified price or at a specified later date.
SWAP
An investment instrument whereby one asset is traded for another.
TREASURY BILLS
Short-term United States government debt securities with maturities of no longer than one year and issued in minimum denominations of $ 10,000.
TREASURY BONDS
Long-term United States government debt securities with maturities of 10 to 30 years and issued in minimum denominations of $1,000.
TREASURY NOTES
Intermediate United States government debt securities with maturities of one to 10 years and issued in denominations ranging from $1,000 to $1,000,000 or more.
A. 
The purpose of this article shall be to provide guidance to Radnor Township ("Township") officials in discharging their fiduciary responsibility to prudently invest Township funds by identifying objectives, assigning responsibilities, and addressing certain risk factors to enhance investment performance.
B. 
Scope. This article shall apply to all financial assets of the Township, including general operating funds, bond proceeds, and pension fund assets, and any of its component units, except as otherwise noted.
C. 
Objectives. The primary objectives of this article shall be as follows:
(1) 
Safety. Investments generally shall be made foremost with the preservation of principal in mind and by minimizing the effects of the following types of risk:
(a) 
Credit risk. The Township shall minimize credit risk by:
[1] 
Limiting the investment of funds to the safest types of securities.
[2] 
Prequalifying the financial institutions, broker/dealers, intermediaries, and advisors with which the Township will conduct business.
[3] 
Diversifying investments so that potential losses on individual securities will be minimized.
(b) 
Interest rate risk. The Township shall minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates by:
[1] 
Structuring investments so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity;
[2] 
Investing funds primarily in shorter-term securities, money market mutual funds, or similar investment pools where appropriate.
(c) 
Market risk. Investment decisions generally shall not be made to anticipate possible changes in equity, fixed income, or other market conditions.
(2) 
Liquidity. Investments shall be structured to ensure that adequate funds are on hand to pay reasonably anticipated Township obligations (such as payroll, scheduled debt payments, other operating expenses, and pension benefits) in a timely manner. Because all possible cash demands cannot be anticipated, the portfolio should consist of investments with active or resale markets.
(3) 
Return.
(a) 
Investment earnings are of secondary importance compared to safety and liquidity objectives. Except as otherwise indicated, investments generally shall be structured to attain a market average rate of return based on performance benchmarks established herein. These benchmarks shall be periodically reviewed by the Finance Director and may be adjusted with the approval of the Township Manager to reflect changes in the economic performance of the selected investment instruments.
(b) 
Investments as a rule shall be structured to exceed those benchmarks only when consistent with prudent investment principles and only if safety and liquidity objectives can be met.
(4) 
Securities generally shall not be sold before they mature except as follows:
(a) 
A security that assumes an unforeseen underlying risk may be sold early to minimize loss of principal.
(b) 
Liquidity needs of the Township require the security be sold.
(c) 
Based on financial management recommendation with proper qualitative analysis.
D. 
Public trust and ethics.
(1) 
Township officials in the investment process shall act as responsible custodians of the public interest and shall avoid any transaction that may impair public confidence in the governance of the Township.
(2) 
Officials involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of Township investments or that could impair their ability to make impartial decisions.
(3) 
Officials involved in the investment process shall be governed by the Code of Ethics of the Township, and they also shall abide by the Code of Ethics of the Government Finance Officers Association (see Appendix A), incorporated as a part hereof.[1]
[1]
Editor's Note: Appendix A, Code of Ethics of the Government Finance Officers Association, is included at the end of this chapter.
A. 
Township general operating funds and bond proceeds may be invested in cash, fixed income, and equity instruments and shall be in accordance with federal, state, and other applicable laws and regulations, as follows:
(1) 
General operating funds. These shall be invested pursuant to Pennsylvania Act 72 of 1971, as amended (53 P.S. § 56705.1). Types of investment instruments permissible include, United States Treasury bills, obligations backed by the full faith and credit of the United States government or its agencies, shares of money market or mutual funds of companies that invest solely in authorized investments, funds pooled by other municipalities and governmental entities, including the Pennsylvania Local Government Investment Trust, certificates of deposit, guaranteed investment contracts, repurchase agreements, and commercial paper to the extent they are collateralized according to law.
(a) 
Investment credit quality restrictions.
[1] 
An "approved institution" is any financial institution with total assets in excess of $2,000,000,000 and which carries a short-term debt rating of A1 or better by Standard & Poor's or Moody's Rating Services. All United States banks must be members of the Federal Deposit Insurance Corporation.
[2] 
Commercial paper must be rated A1 or better by Standard & Poor's or Moody's Rating Services. A split rating is acceptable so long as one of the ratings is A1 or better.
[3] 
Money market funds must have over $1,000,000,000 in assets, must be managed by major bank trust department portfolio managers, and must be regulated by United States Government under Investment Company Act rule 2a-7 and/or 3c7. The funds will seek to maintain a one-dollar-per-share net asset value.
[4] 
All investments in municipal bonds or agencies must be rated AA or better by Standard & Poor's or Moody's Rating Services.
(2) 
Bond proceeds. These shall be invested in any instruments authorized for general operating funds and in other types of investments permitted by the Pennsylvania Local Unit Debt Act (53 Pa.C.S.A., Chapters 80 through 82); these latter generally include any type of securities in which the Commonwealth of Pennsylvania is authorized to invest.
(3) 
Prohibited investments. Only those investments identified in Subsection A of this section are permissible. Neither the Township Administration nor outside investment managers are permitted to invest in any investment outside of what is permissible in Subsection A of this section. Such prohibited investments include, but are not limited to, hedge, derivative or asset-backed investments or other nonpermissible investments that jeopardize the objectives of this investment policy as set forth in § 44-2 of this article.
B. 
Safekeeping and custody. As a rule, all Township investments shall be stored in safekeeping by an unrelated third party not underwriting a particular investment.
(1) 
Authorized financial dealers and institutions. The Finance Director shall maintain a list of financial institutions authorized to provide investment services and of approved security brokers/dealers.
(2) 
Financial dealers/brokers who desire to offer investment transactions to the Township shall supply the following, as requested by the Finance Director:
(a) 
Proof of Financial Industry Regulatory Authority (FINRA) certification.
(b) 
Proof of state registration.
(c) 
Certification of having read and understood and agreeing to comply with this article.
(d) 
Certification that the financial institution in which the investment is being purchased from has a rating of Al or better from either Standard & Poor's or Moody's Rating Services;
(3) 
The Finance Director shall conduct, at least annually, a review of the performance and qualifications of the financial condition and registration status of qualified financial brokers/dealers, as well as financial institutions holding Township investments.
C. 
Performance measures. The performance of Township investments shall be measured annually by the following criteria:
(1) 
Safety. The extent to which any investments lost principal during a calendar year.
(2) 
Liquidity. The extent to which any investment had to be liquidated before its maturity to meet an expense.
(3) 
Return. The extent to which the average return of all investments met their objectives. To measure whether investments of general operating funds and bond proceeds meet their return objectives, the Finance Director shall use the following or other appropriate indexes as benchmarks: ninety-one-day Treasury bill yield; six-month certificate of deposit rate (CD); and twelve-month CD rate. The performance of pension plan assets shall be measured in accordance with § 44-4B.
D. 
Reporting. An annual report shall be provided to the Board of Commissioners that includes, at a minimum, the following information for invested general operating funds, bond proceeds, and pension plan assets:
(1) 
Listing of individual investments held at the end of the year.
(2) 
Realized and unrealized gains or losses resulting from appreciation or depreciation by listing the cost and market value of securities over one-year duration that are not intended to be held until maturity.
(3) 
Dollar-weighted yield to maturity of portfolio on investments as compared to applicable benchmarks, as described in § 44-3C.
(4) 
Listing of investments by maturity dates.
(5) 
Percentage of the total portfolio that each type of investment represents.
(6) 
Analysis of credit risk and other appropriate factors.
E. 
Investment procedures. The Finance Director may establish appropriate staff procedures that govern the investment of Township funds pursuant to this article under the direction of the Township Manager.
A. 
Objectives. The objectives of the police and civilian employee pension plans ("plans") and Other Post-Employment Benefit Fund shall be to:
(1) 
Pension plans: provide full funding for retirement benefits for each plan's respective participants and beneficiaries.
(2) 
Other Post-Employment Benefit Obligation Plan: provide full funding for retirement-related obligations, including accrued but unused leave time, retiree healthcare and any other benefit the Township is obligated to provide to both uniformed and civilian retirees
(3) 
Maximize return within reasonable and prudent levels of risk.
(4) 
Ensure that the plans' assets will be invested in accordance with all relevant legislation and regulations in a manner consistent with fiduciary standards.
B. 
Investment guidelines.
(1) 
Time horizon. The plans' objectives are based on a five-year investment horizon so that interim fluctuations should be viewed with appropriate perspective; that is, with the view that the chances and duration of investment losses are carefully weighed against the long-term potential for appreciation of assets.
(2) 
Diversification. Investments shall be diversified with the intent to minimize the risk of investment loss. Consequently, the total portfolio of each plan will be constructed and maintained to provide prudent diversification of the concentration of holdings in individual issues, issuers, countries, governments or industries.
(a) 
Not more than 5% of the total stock portfolio valued at market may be invested in common stock of any one corporation.
(b) 
Not more than 25% of stock valued at market may be held in any one industry category.
(c) 
Fixed income securities of any one issuer shall not exceed 5% of the total fixed income portfolio at the time of purchase (this shall not apply to issues of the United States Treasury or other federal agencies).
(d) 
Derivatives shall not be purchased for the purpose of portfolio leveraging.
(3) 
Asset allocation.
(a) 
To achieve the greatest likelihood of meeting the plans' objectives and the best balance between risk and return for optimal diversification, the plans' assets shall be allocated in accordance with the ranges for each asset class as follows:
[1] 
Police pension plan.
Asset Class
Allocation
(percentage)
Equities, domestic
27.5% to 37.5%
Equities, international
13.0% to 23.0%
Fixed income
36.5% to 46.5%
Real estate
0.0% to 8.0%
Cash equivalents
0.0 to 10.0%
[2] 
Civilian pension plan.
Asset Class
Allocation
(percentage)
Equities, domestic
27.5% to 37.5%
Equities, international
13.0% to 23.0%
Fixed income
36.5% to 46.5%
Real estate amity
0.0% to 8.0%
Cash equivalents
0.0% to 10.0%
(b) 
The pension boards, with approval of the Township Manager, are authorized to adjust the allocation targets from time to time as circumstances warrant.
(4) 
Rebalancing procedures. The asset allocation ranges established under § 44-4B(3) represent a long-term perspective. As such, rapid, unanticipated market shifts or changes in economic conditions may cause the asset mix to fall outside the policy range. These divergences should be of a short-term nature, and the respective plans' pension boards, under the direction of the Township Manager, shall be responsible for rebalancing the assets and ensuring that money managers selected by the pension boards keep divergences as brief as possible. Money managers shall have discretion to temporarily invest a portion of the assets in cash reserves when they deem it appropriate. However, the managers shall be evaluated against their peers on the performance of the total funds under their direct management.
(5) 
Risk tolerances. The objectives of these plans cannot be achieved without incurring a certain amount of principal volatility. Therefore, the plans shall be managed in a style that seeks to minimize principal fluctuations over the established time horizon and that is consistent with the plans' stated objectives.
(6) 
Performance expectations.
(a) 
The investment objectives for these plans shall be to achieve an average total annual rate of return equal to or greater than the plan's stated actuarial return assumptions. Performance will be measured against specific benchmarking of the pension assets against the biggest possible index in each of the asset classes (see § 44-4D(2)(b) for examples of possible benchmarks). The actual returns may vary significantly from these targets on a year-to-year basis.
(b) 
The pension boards, with approval of the Township Manager, are authorized to adjust these performance targets from time to time as circumstances warrant.
C. 
Guidelines for portfolio holdings.
(1) 
Equities. Equity holdings shall be restricted to high-quality, readily marketable securities of corporations that are actively traded on all major exchanges.
(2) 
Fixed income.
(a) 
Fixed investments shall be high-quality, marketable securities with a preponderance of the investments in United States Treasury, federal agencies, and United States Government-guaranteed obligations, and investment-grade corporate issues, including convertibles.
(b) 
The overall Moody's or Standard & Poors' rating of the fixed-income assets shall be at least A. In cases where the yield spread adequately compensates for additional risk, securities of below-investment-grade ratings can be purchased up to a maximum of 15% of total market value of fixed-income securities.
(c) 
Active bond management is hereby encouraged and may require transactions that will temporarily lower the investment return or change the maturity of the plans' portfolios in anticipation of market changes. Holdings of individual securities shall be large enough for liquidation.
(3) 
Cash. Cash and short-term instruments maturing in 90 days or less shall be registered to a maximum of 10% of total assets at all times. Cash equivalent reserves shall consist of cash instruments having a quality rating of A-2, P-2 or higher.
(4) 
Safekeeping. A custodian appointed by the pension boards for safekeeping shall hold all securities. The custodian shall produce statements at least monthly listing the name and value of all assets held.
D. 
Control procedures.
(1) 
Review of investment objectives. An investment advisor, selected by the pension boards, shall regularly review the appropriateness of this portion of the Township investment policy for achieving the plans' stated objectives.
(2) 
Review of investment performance.
(a) 
The investment advisor shall report quarterly to the pension boards to review the plans' investment performance. In addition, the investment consultant will be responsible for keeping the pension boards advised of any material change in all money managers' personnel, investment strategy, and other pertinent information potentially affecting the performance of all investments.
(b) 
The investment advisor shall compare the investment results on a quarterly basis to appropriate benchmarks, as well as market index returns in both equity and debt markets. Examples of benchmarks and indexes that will be used are the S&P 500 Index for large companies; Russell 2000 Index for small companies; MSCI Europe, Australia and Far East Index (EAFE) for international equities; Barclays Capital Index for fixed-income securities; and the United States 91-Day Treasury Bill Index for cash equivalents.
(3) 
The Township Manager or the pension boards from time to time may engage the services of an additional consultant to review the performance of the investment advisor, money managers, and this policy.
[Adopted 8-18-2008 by Ord. No. 2008-5]
[Amended 6-9-2014 by Ord. No. 2014-05]
A. 
Title. This article shall be known as the "Radnor Township Governmental Accounting Standards Board Statement No. 54 Fund Balance Policy."
B. 
Definitions. The following words and phrases when used in this article shall have the meanings given to them in this section unless the context clearly indicates otherwise:
ASSIGNED FUND BALANCE
Includes spendable fund balance amounts established by management of the Township that are intended to be used for specific purposes that are neither considered restricted nor committed.
COMMITTED FUND BALANCE
Amounts that can be used only for the specific purposes determined by a formal action (ordinance or resolution) of the Radnor Township Commissioners (the level of decision-making authority in the Township). Commitments may be changed or lifted only by the Radnor Township taking the same formal action (ordinance or resolution) that imposed the constraint originally. Resources accumulated pursuant to stabilization arrangements sometimes are reported in this category.
FUND BALANCE
As defined by the Governmental Accounting, Auditing and Financial Reporting of the Government Finance Officers Association (GFOA), "fund balance is the difference between assets and liabilities reported in a governmental fund."
NONSPENDABLE FUND BALANCE
(1) 
Amounts that are:
(a) 
Not in spendable form; or
(b) 
Legally or contractually required to be maintained intact.
(2) 
Not in spendable form includes items that are not expected to be converted to cash (such as inventories and prepaid amounts) and items such as long-term amount of loans and notes receivable, as well as property acquired for resale. The corpus (or principal) of a permanent fund is an example of an amount that is legally or contractually required to be maintained intact.
RESERVATIONS OF FUND BALANCE
Reserves established by the Township Commissioners (committed fund balance) or Township management (assigned fund balance).
RESTRICTED FUND BALANCE
Amounts that can be spent only for specific purposes:
(1) 
Stipulated by external resource providers such as creditors (by debt covenants), grantors, contributors or laws or regulations of other governments; or
(2) 
Imposed by law through constitutional provisions or enabling legislation.
UNASSIGNED FUND BALANCE
Unassigned fund balance is the residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes.
UNRESTRICTED FUND BALANCE
The total of committed fund balance, assigned fund balance and unassigned fund balance.
C. 
Purpose.
(1) 
The Township hereby establishes and will maintain fund balance, as defined herein, in accordance with Governmental Accounting and Financial Standards Board Statement No. 54, fund balance Reporting and Governmental Fund Type Definitions. Fund balance shall be composed of nonspendable, restricted, committed, assigned and unassigned amounts.
(2) 
A fund balance policy is adopted in order to secure and maintain investment-grade credit ratings, meet seasonal shortfalls in cash flow, and reduce susceptibility to emergency or unanticipated expenditures and/or revenue shortfalls. Fund balance information is used to identify the available resources to repay long-term debt, reduce property taxes, add new governmental programs, expand existing ones, or enhance the financial position of the Township, in accordance with policies established by the Township Commissioners.
(3) 
This fund balance policy establishes:
(a) 
Fund balance policy for the general fund;
(b) 
Reservations of fund balance for the general fund;
(c) 
The method of budgeting the amount of estimated unrestricted fund balance available for appropriation during the annual budget adoption process (prior to the actual, audited fund balance being known) and what actions may need to be taken if the actual fund balance is significantly different than the budgetary fund balance; and
(d) 
Establish the spending order of operating revenues and fund balances.
D. 
Fund balance policy (general fund).
(1) 
Restricted fund balance. There is no restricted fund balance in the general fund or amounts that can be spent only for specific purposes:
(a) 
Stipulated by external resource providers such as creditors (by debt covenants), grantors, contributors, or laws or regulations of other governments; or
(b) 
Imposed by law through constitutional provisions or enabling legislation will be budgeted and reported in special revenue funds, capital project funds or debt service funds.
(2) 
Committed fund balance.
(a) 
Commitment of fund balance may be made for such purposes, including, but not limited to:
[1] 
Major maintenance and repair projects;
[2] 
Meeting future obligations resulting from a natural disaster;
[3] 
Accumulating resources pursuant to stabilization arrangements;
[4] 
Establishing reserves for disasters; and/or
[5] 
For setting aside amounts for specific projects.
(b) 
Commitment of fund balance may be made from time to time by ordinance or resolution of the Township Commissioners. Commitments may be changed or lifted only by the Township Commissioners taking the same formal action that imposed the constraint originally (ordinance or resolution). The use (appropriation) of committed fund balances will be considered in conjunction with the annual budget adoption process or by budget amendment approved by ordinance or resolution of the Township Commissioners during the fiscal year.
(3) 
Assigned fund balance.
(a) 
Assignment of fund balance may be:
[1] 
Made for a specific purpose that is narrower than the general purposes of the government itself; and/or
[2] 
Used to reflect the appropriation of a portion of existing unassigned fund balance to eliminate a projected deficit in the subsequent year's budget in an amount no greater than the projected excess of expected expenditures over expected revenues.
(b) 
Assigned fund balance shall reflect management's intended use of resources as set forth in the annual budget (and any amendments thereto). Assigned fund balance may or may not be appropriated for expenditure in the subsequent year depending on the timing of the project/reserve for which it was assigned.
(4) 
Nonspendable fund balance. Nonspendable fund balance is established to report items that are not expected to be converted to cash such as inventory and prepaid items; items not currently in cash form such as the long-term amount of loans and notes receivable as well as property acquired for resale; and items legally or contractually required to be maintained intact such as the corpus (or principal) of a permanent fund.
(5) 
Minimum level of unassigned fund balance.
(a) 
Unassigned fund balance is the residual classification for the general fund and represents fund balance that has not been restricted, committed or assigned to specific purposes within the general fund.
(b) 
If, after the annual audit, prior committed or assigned fund balance causes the unassigned fund balance to fall below 12% of general fund budgeted operating expenditures, the Finance Director will so advise Township Commissioners in order for the necessary action to be taken to restore the unassigned fund balance to 15% of general fund budgeted operating expenditures.
(c) 
The Township Manager will prepare and submit a plan for committed and/or assigned fund balance reduction, expenditure reductions and/or revenue increases to the Township Commissioners. The Township shall take action necessary to restore the unassigned fund balance to acceptable levels within two years.
E. 
Reservations of fund balance (general fund).
(1) 
Committed fund balance. Radnor Township hereby establishes the following committed fund balance reserves in the general fund.
(a) 
Financial stabilization.
[1] 
The financial stabilization fund balance is committed by Radnor Township at two months of the average regular monthly budgeted operating expenditures as recommended by the GFOA which sets forth, at a minimum, that general purpose governments, regardless of size, maintain no less than one or two months of regular general fund budgeted operating expenditures. The calculation of the average regular monthly budgeted operating expenditures will be the full year budgeted operating expenditures divided by 12, and the financial stabilization fund balance will be twice the amount calculated.
[2] 
To the extent that Act 511 revenues grow to exceed 30% of the total general fund revenues in any given year, the Township will commit up to an additional 10% of general fund expenditures over the target fund balance required in Subsection D(5)(b). The purpose for the additional 10% is to further mitigate against sudden, unexpected and large decreases in the Act 511 revenues, which have shown to be sensitive to economic shifts. Please see § 44-11, Nonrecurring revenues, for additional guidance on the potential source of funds for the additional 10% required by this section of the fund balance policy.
[3] 
It will be the responsibility of the Township's Finance Director to report the current committed fund balances in the Township's annual audited financial statements.
(2) 
Assigned fund balance.
(a) 
The Radnor Township Commissioners hereby establish the following assigned fund balance reserves in the general fund:
[1] 
Assignment to subsequent year's budget. The subsequent year's budgetary fund balance reserve is assigned by Township management as set forth in the annual budget (and any amendments thereto) to appropriate a portion of existing unassigned fund balance to eliminate a projected deficit in the subsequent year's budget in an amount no greater than the projected excess of expected expenditures over expected revenues.
[2] 
Assignment to encumbrances. The Radnor Township Home Rule Charter provides for capital expenditure appropriations to continue in force until the purpose for which it was made has been accomplished or abandoned, within a two-year period from inception.
(b) 
It will be the responsibility of Township Finance Director to report the current assigned fund balances in the Township's annual audited financial statements.
F. 
Budgeting.
(1) 
Appropriation of unrestricted fund balance. The actual amount of unrestricted fund balance (total of committed fund balance, assigned fund balance and unassigned fund balance) is not known until the completion of the annual audit which takes place approximately four months after the end of the fiscal year being audited. However, an estimate of unrestricted fund balance must be made during the annual budget adoption process (generally, September through December) which is prior to the end of the fiscal year, December 31.
(2) 
Estimated beginning fund balance. In order to achieve the most accurate estimate possible, the Township Manager or designee shall project both sources of funds (revenues, prior years' unrestricted fund balances carried forward and other financing sources) and uses of funds (operating and nonoperating expenditures), including accruals, for each department in each governmental fund through December 31 of the then-current fiscal year. These projections will be shown in a separate column for each fund in the proposed and final budget documents. The difference between the estimated actual sources of funds and estimated actual uses of funds is the calculated estimated beginning fund balance for the subsequent fiscal year. If planned for use in the subsequent fiscal year, committed and assigned fund balance may be included in the estimated beginning fund balance.
(3) 
Estimated ending fund balance.
(a) 
For the year being budgeted, a calculation of estimated ending fund balance shall also be made. This calculation shall be the difference between the budgeted sources of funds and the budgeted uses of funds as described above.
(b) 
Since the uses of funds are restricted, committed or assigned in all other governmental fund types, there is no policy to the amount of ending fund balance unless the project is completed and the fund should be closed. In this situation, a residual equity transfer will be made to zero-out any remaining fund balance.
(c) 
If, after the annual audit, the actual general fund unassigned fund balance is greater than 18% of budgeted operating expenditures in the general fund, the excess may be used in one or a combination of the following ways:
[1] 
Left in the general fund to earn interest and roll forward into the subsequent year's beginning fund balance;
[2] 
Appropriated by ordinance or resolution of the Township Commissioners for a one-time expenditure or opportunity that does not increase recurring operating costs;
[3] 
Committed to increase a formal stabilization arrangement or reserve (including but not limited to economic stabilization, contingency reserves or disaster reserves); or
[4] 
Appropriated for start-up expenditures of new programs undertaken at mid-year, provided that such action is considered in the context of Commissioners-approved multiyear projections of revenues and expenditures.
G. 
Spending order of operating revenues and fund balances. The Township will first use federal, then state, and lastly Township revenues to meet its financial obligations. The Township uses restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as in grant agreements requiring dollar-for-dollar spending. Additionally, the Township would first use committed fund balance, followed by assigned fund balance and then unassigned fund balance when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used.
H. 
Annual review and determination of fund balance policy. Compliance with the provisions of this policy shall be reviewed as a part of the annual budget adoption process, and the amounts of restricted, committed, assigned, nonspendable and the minimum level of unassigned fund balance shall be determined during this process.
I. 
Additional information, requirements and responsibilities. It will be the responsibility of the Township Finance Director to keep this policy current.
[Amended 6-9-2014 by Ord. No. 2014-05]
A. 
It is the policy of Radnor Township that one-time or limited-term financial resources shall not be used for current or future ongoing operating expenses.
B. 
Definitions. For purposes of this article, "nonrecurring revenues" shall consist of, but not be limited to, proceeds from asset sales, debt refinancing, one-time grants, legal settlements, large unbudgeted/unplanned revenues, and similar nonrecurring resources.
C. 
Appropriate uses of nonrecurring revenues shall include:
(1) 
Maintaining the targeted fund balances in the General Fund;
(2) 
Building the additional 10% General Fund budget stabilization set forth in § 44-10, Fund balance, Subsection E(1)(a);
(3) 
The early retirement of debt or funding of other long-term liabilities of the Township (examples include the funding of any underfunded pension obligations and/or underfunded OPEB obligations);
(4) 
Funding capital improvements or building fund balances in the Capital Improvement Fund; and
(5) 
Other nonrecurring expenditures.
D. 
Depending on the nature, timing, and source of the nonrecurring revenue, the Board may pass special legislation specifically detailing the use of the nonrecurring revenues. However, absent any special legislation that specifically allocates how nonrecurring revenue is to be allocated, the priority of allocation shall be in the order of § 44-11C, above.
A. 
It is the goal of Radnor Township to fund all assets with expected useful lives of less than 10 years, including vehicles, equipment, and minor improvements to buildings and grounds (those less than $25,000 in costs), whenever possible with cash on hand as opposed to utilizing borrowed funds.
B. 
It is the policy of the Township to achieve this goal through the following means:
(1) 
Annual fund transfer from the general fund, which began in 2008 with a transfer of $150,000 and shall be budgeted to increase each year by a minimum of $25,000;
(2) 
All proceeds from the sale of fixed assets shall be dedicated to the Capital Improvement Fund for this purpose;
(3) 
Five percent of all revenues received through Notices of Assessment as a result of the audits of delinquent Act 511 accounts shall be dedicated to the Capital Improvement Fund for this purpose;
(4) 
The Board, at its sole discretion, may levy a tax millage rate on real property that is dedicated to the Capital Improvement Fund for this purpose.