[HISTORY: Adopted by the Town Board of the Town of Clinton 3-9-2021 by L.L. No. 3-2021, effective 3-12-2021. Amendments noted where applicable.]
A.
The Town Board recognizes that the maintenance of a fund balance
is essential to the preservation of the financial integrity of the
Town and is fiscally advantageous for both the Town and the taxpayer.
This policy will ensure that the Town maintains adequate fund balances
and reserves in order to:
(1)
Ensure sufficient cash flow for daily financial requirements.
(2)
Eliminate the need for short-term borrowing to handle cash flow between
the start of the fiscal year and receipt of revenue from taxes.
(3)
Guard against economic fluctuations.
(4)
Serve as a contingency fund that enables the Town to respond to unanticipated
emergencies or opportunities.
(5)
Maintain investment-grade bond ratings.
(6)
Provide a framework to help guide budgetary decisions.
B.
The Town Board is responsible for the appropriate accounting of public
funds, the sound management of municipal finances, and the adequate
funding of services desired by the public. This fund balance policy
is meant to help the Town maintain a prudent level of financial resources
to provide essential services, maintain sufficient cash flow, and
manage unanticipated occurrences, while at the same time avoiding
overtaxation with an excessively large fund balance.
As used in this chapter, the following terms shall have the
meanings indicated:
The report required by § 30 of the General Municipal
Law (GML) in which the Town reports its financial condition to the
New York State Comptroller.
A fund or funds established for financial resources to be
used for the acquisition or construction of capital facilities such
as buildings, facilities, or infrastructure and/or equipment. An individual
capital projects fund should be established for each authorized project.
The Town's principal operating fund from which Town
expenses are customarily paid. This fund includes all revenues and
expenditures not required to be recorded in a separate fund.
A fund established pursuant to Highway Law § 141
which accounts for revenues and expenditures for highway purposes,
including but not limited to repairs and improvements on bridges,
machinery, and roads.
A fund or funds established by the Town as an agent for individuals,
private organizations or other governments.
A.
The Town shall comply with the reporting requirements of Article
3 of General Municipal Law of the State of New York and the Governmental
Accounting Standards Board (GASB) Statement Number 54, Fund Balance
Reporting and Governmental Fund Types Definitions, as amended.
B.
GASB Statement 54 distinguishes fund balance classified based on
the relative strength of the constraints that control the purposes
for which specified amounts can be spent. Beginning with the most
restrictive constraints, fund balance amounts will be reported in
the following categories:
(1)
Nonspendable fund balance: contractually required to be maintained
intact (e.g., permanent fund principal). Amounts that cannot be spent
because they are:
(a)
Not in spendable form, such as inventory, prepaid items, long-term
portions of notes receivables.
(b)
Legally or contractually required to be maintained intact, including
prepaid items, inventories, long-term portions of loans receivable,
financial assets held for resale, and principal of endowments.
(2)
Restricted fund balance: amounts that can be spent only for the specific
purposes stipulated by external parties either constitutionally or
through enabling legislation. This may include amounts constrained
to specific purposes by their providers, such as grantors, bondholders,
and higher levels of government, through constitutional provisions,
or by enabling legislation.
(3)
Assigned fund balance: Assigned fund balances consist of amounts
that are subject to a purpose constraint that represents an intended
use established by the government's highest level of decision-making
authority, or by its designated body or official. The Town Board authorized
the Supervisor to make a determination of the assigned amounts of
fund balance. Assigned funds represent amounts intended to be used
for a specific purpose. Assigned fund balances require the same level
of authority to remove the constraint.
(4)
Unassigned fund balance: includes all amounts not contained in other
classifications and is the residual classification of the general
fund only. Unassigned amounts are available for any legal purpose.
In other governmental funds, if expenditures incurred exceeded the
amounts restricted, committed or assigned, it may be necessary to
report a negative unassigned fund balance.
A.
This policy shall only apply to the Town's general fund and
highway fund.
B.
The Town Board is the decision-making authority that can commit fund
balance pursuant to a duly adopted Town Board resolution. The action
to commit or allocate fund balance must occur prior to the fiscal
year-end in order to report such commitments in the financial statements
of the respective period. The commitment may only be modified by a
resolution adopted by the Town Board.
C.
The Town Supervisor has the authority to assign unrestricted fund
balance amounts where the Town's intent is for those amounts
to be used for specific purposes. This delegation of authority is
for the sole purpose of reporting these amounts in the annual financial
statements.
D.
Unexpended surplus funds.
(1)
For the purpose of this policy, unexpended surplus funds consist
solely of unassigned fund balance.
(2)
The Town shall strive to maintain unexpended surplus funds of not
less than 25% and not more than 45% of general fund and highway funds
adopted budget appropriations, excluding interfund transfers for fringe
benefits such as health insurance, pension and other benefit payments
made on behalf of Town employees.
(3)
The Town Supervisor shall report the amount and percentage of applicable
fund unexpended surplus funds to the Town Board upon completion of
the Annual Update Document (AUD) each year.
(4)
In the event that unexpended surplus funds exceed 45% of adopted
budget appropriations, the excess may be utilized for any lawful purpose
approved by the Town Board. In order to minimize the long-term effect
of such use, the excess should be appropriated to fund one-time expenditures,
a reduction in taxes, and/or be used to establish or increase reserves.
(5)
In the event that unexpended surplus funds fall below 25% of adopted
budget appropriations, the Town Board shall develop a restoration
plan to achieve and maintain the minimum fund balance over a period
not to exceed three years.
