[HISTORY: Adopted by the Board of Trustees of the Village
of Bloomfield 8-27-2014 (Ch. 14
of the 2016 Code). Amendments noted where applicable.]
The purpose of a fund balance policy is to have a written fund
balance policy to formally acknowledge the fund balance practices
utilized in developing the annual budgets, such that there will be
adequate liquid resources to serve as a financial cushion.
Village finances will be managed so as to maintain balances
of the various funds at levels sufficient to mitigate current and
future risks, such as revenue shortfalls and unanticipated expenditures,
ensure stable tax rates and user fees, and protect the Village's creditworthiness.
To assure the appropriate level in the general, water and sewer funds,
the Village will maintain a minimum unrestricted fund balance of 25%
to 30% of these total funds' appropriations which is approximately
three months to four months of expenditures.
Should the general, water, or sewer fund balance fall below
the target level, the Budget Officer will prepare a plan for restoration
of the balance to the target level and achieve the target level as
soon as practicable within the next fiscal year. The plan will be
presented to the Village Board of Trustees for review and approval
for implementation.
As used in this chapter, the following terms shall have the
meanings indicated:
The sum of cash and investment of an accounting fund.
The difference between the assets and liabilities reported
in a governmental fund. "Fund balance" is not the cash balance of
the Village; the fund balance consists of other assets, such as money
due from the state and federal government, taxes receivable, and accounts
receivable. Fund balances are classified into various components,
depending on the limitations placed on the use of the funds. The hierarchy
indicates the extent to which a government is bound to observe spending
constraints that govern how it can use amounts reported in the governmental
funds balance sheet. GASB 54 established the following classifications
depicting how specific amounts can be spent:
Nonspendable fund balance includes amounts that are not in a
spendable form or are required to be maintained intact.
Restricted fund balance includes amounts that can be spent only
for specific purpose stipulated by external resources providers (for
example, grant providers), constitutionally, or through laws or regulation
of other governments.
Committed fund balance includes amounts that can be used only
for the specific purpose determined by a formal action of the Village
Board (self-imposed limitations set in place prior to the end of the
period). Commitments may be changed or lifted only by the Village
Board taking the same formal action that imposed the constraint originally.
Assigned fund balance compromises amounts intended to be used
by the government for specific purposes. Intent can be expressed by
the Village Board, or the Budget Officer. Encumbrances that are carried
forward to the subsequent year are classified in the assigned fund
balance. It is the assigned fund balance that is used to reflect the
appropriation of a portion of the existing fund balance to eliminate
a projected deficit in the subsequent year's budget.
Unassigned fund balance is the residual classification for the
general fund only and includes all amounts not contained in the other
classifications. (i.e., surplus). Unassigned amounts are technically
available for any purpose.
The total of the committed, assigned and unassigned fund
balance.
