12-M-02 Adoption of GASB 54 FundORDINANCE NO. 12-M-02
AN ORDINANCE AUTHORIZING THE ADOPTION OF GASB 54 FUND
POLICY STANDARDS AND APPLICATIONS; AND RELATED
MATTERS IN CONNECTION THEREWITH
WHEREAS, the Governmental Accounting Standards Board ("GASB") is the
independent organization that establishes and improves standards of accounting and financial
reporting for state and local governments and is recognized by governments, the accounting
industry, and capital markets as the official source of generally accepted accounting principles
(GAAP) far state and local governments;
WHEREAS, the Govet7unental Accounting Standards Board ("GASB") has adopted
Statement 54, a new standard for governmental fund balance reporting and governmental fund
type definitions that became effective in governmental fiscal year starting after June 15, 2010;
WHEREAS, the City Council {the "Council"} of the City of Schertz, Texas (the "City")
authorizes the implementation of GASB 54 requirements, and directs that such requirements be
applied to its financial statements beginning with the October 1, 2010 to September 30, 2011
fiscal year; and
WHEREAS, the City hereby finds and detei7nines that the adoption of this Ordinance is
in the best interests of the citizens of the City; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
THAT:
Section 1. The Council hereby approves the adoption of the GASB 54 Standards
Fund Balance Policy as attached in Exhibit A.
Section 2. The Council delegates to the City Manager the responsibility to assign
money in funds when authorized fund balance is available.
Section 3. The Council hereby approves the definitions and procedures in Exhibit A.
Section 4. The Council hereby approves the minimum General Fund Balance of a
three-month reserve. If the reserve amount is less than the three-month reserve, the Council
authorizes the City Manager to recommend a plan to build up the General Fund Balance to the
minimum three-month reserve as soon as financially viable, which shall be within afive-year
period.
Section 5. All ordinances and resolutions, or parts thereof, which are in conflict or
inconsistent with any provision of this Ordinance are hereby repealed to the extent of such
conflict, and the provisions of this Ordinance shall be and remain conholling as to the matters
resolved herein.
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Section 6. This Ordinance shall be construed and enforced in accordance with the
laws of the State of Texas and the United States of America.
Section 7. If any provision of this Ordinance or the application thereof to any person
or circumstance shall be held to be invalid, the remainder of this Ordinance and the application
of such provision to other persons and circumstances shall nevertheless be valid, and the Council
hereby declares that this Ordinance would have been enacted without such invalid provision.
Section 8. It is officially found, determined, and declared that the meeting at which
this Ordinance is adopted was open to the public and public notice of the time, place, and subject
matter of the public business to be considered at such meeting, including this Ordinance, was
given, all as required by Chapter 551, as amended, Texas Government Code.
Section 9. This Ordinance shall be in force and effect from and after its final passage,
and it is so ordered.
PASSED ON FIRST READING on the 3Td day of January, 20x2.
PASSED AND ADOPTED on second and final reading on the 10~" day of January, 2012.
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ATTEST:
City Secretary
(SEAL OF THE CITY)
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EXHIBIT A
GASB 54 FUND BALANCE POLICY
(see Attached)
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FUND BALANCE POLICY
The Fund Balance shall mean the gross difference between governmental fund assets and
liabilities reflected on the balance sheet. The General Fund Balance shall maintain a
minimum balance of three-month reserve. If the General Fund Balance is less than the three-
month reserve, the City Manager will recommend a plan to build up the General Fund
Balance up to the minimum three-month reserve as soon as financially viable and must be
within a fve-year period.
The City shall report governmental fund balances per GASB 54 definitions in the balance
sheet as follows:
• General Fund-to account for alI financial resources not accounted for and not reported
in another fund.
• Nonspendable-cannot be spent because they are either not in a spendable form or
legally or contractually required to maintain intact such as inventory, prepaids and
pe>'rnanent funds.
• Restricted-has constraints that are either externally imposed by creditors, grantors,
conhibutors, and laws or imposed by constitutional provisions.
• Committed -formally designated by formal council action. Action should occur prior
to the end of the year, but the amount may be dete>7nined later. Can only be
changed/removed by the same formal process.
• Assigned-Designations of amounts intended for specific purposes. Set by the council
or an of#icial entity to which the council has formally delegated the authority to assign
amounts. Special revenue, capital projects and permanent funds are assigned (except
that any deficits are unassigned). An assignment cannot create a deficit unassigned
balance.
• Unassigned-residual amount in general fund only (except for deficits in any other
governmental fund}.
• Special Revenue Fund-to account for the proceeds of specific revenue sources that are
restricted or committed to expenditure for special purposes other than debt service and
capital projects.
• Debt Service-to account for all financial resources that are restricted, cornrnitted, or
assigned to expenditure for principal and interest. Financial resources that are being
accumulated for principal and interest maturing in future years should be reported in
debt service funds.
• Capital Projects Fund-to account for all financial resources that are restricted,
committed, or assigned to expenditure for capital outlays.
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Pei7nanent Funds-to account for resources that are restricted to the extent that only
earnings, and not principal, may be used for purposes that support the reporting
government's programs -that is, for the benefit of the government or its citizens.
The City Council shall approve all commitments by formal action though ordinance. The action
to commit funds must occur prior to fiscal year-end, to report such commitments in the balance
sheet of the respective period, even though the amount may be determined subsequent to fiscal
year-end. A commitment can only be modified ox removed by the same formal action.
The City Council delegates the responsibility to assign funds to the City Manager. Assignments
may occur subsequent to year-end. The City Council will utilize funds in the fallowing spending
order:
• Restricted
• Committed
• Assigned
• Unassigned
• Nonspendable
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