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CITY OF NEW BRIGHTON <br />FUND BAjANCE POLICY <br />Adopted: <br />POLICY <br />The City of New Brighton has a fiduciary responsibility to its citizens and taxpayers to <br />carefully account for public funds, to manage municipal finances prudently and to <br />adequately plan the financing of City services including the provision and maintenance of <br />public facilities. The City is also responsible for its short-term and long-term financial <br />stability. The City must insure that it is, and will continue to be, capable of adequately <br />funding and providing local government services needed by the community. <br />Fund balance is a term used to describe the net assets (difference between assets and <br />liabilities) of governmental funds calculated in accordance with generally accepted <br />accounting principles. Fund balance is one method used to measure the availability of <br />financial resources in a governmental fund. <br />It is essential that the City maintain adequate levels of fund balance to mitigate current <br />and future risks, such as revenue shortfalls and unanticipated expenditures, and to ensure <br />stable tax rates and service levels. Fund balance levels are a crucial consideration in <br />long-term financial planning. <br />I. SCOPE <br />This fiscal policy provides the framework for the overall fiscal management of the fund <br />balance for the following City funds, including reservations and designations: General, <br />Closed Bond, and Environmental Restoration. <br />II. OBJECTIVES <br />In order to achieve its purpose, this policy has the following objectives for targeted levels <br />of fund balance: <br />A. Avoid cash-flow interruptions, reduce the need for short-term borrowing and <br />generate investment earnings. <br />B. Provide for unanticipated expenditures, such as emergencies, natural disasters and <br />unexpected increases in service delivery costs. <br />C. Provide for temporary revenue shortfalls, such as reductions in State Aid <br />revenues. <br />Page 1 of 4 <br />