HomeMy WebLinkAboutFund BalanceSouthold Town Board - Letter Board Meeting of February 24, 2009
RESOLUTION 2009-193
ADOPTED
Item # 4.38
DOC ID: 4807
THIS IS TO CERTIFY THAT THE FOLLOWING RESOLUTION NO. 2009-193 WAS
ADOPTED AT THE REGULARMEETING OF THE SOUTHOLD TOWN BOARD ON
FEBRUARY 24, 2009:
RESOLVED that the Town Board of the Town of Southold hereby adopts the following policy
entitled:
TOWN OF SOUTHOLD, NEW YORK
FUND BALANCE POLICY
Year-end surpluses and fund balances ~re moneys that can provide a cushion or buffer
that may be needed from time to time to operate without interruption or reduction in services.
They provide a degree of stability and the resources to weather fluctuations in revenues and
expenditures without severely impacting real propertytax rates. Fund balances and adequate
reserves should be managed and reviewed on a regular basis.
In its evaluations of credit ratings, a formal fund balance policy is cited by all major
rating agencies (Moody's, Standard & Poor's and Fitch) as a best management practice
commonly used by better rated communities. Municipalities that adhere to a fund balance policy
are viewed as being more pro-active and this reflects well on management, which in turn results
in higher credit ratings and lower borrowing costs. A formal policy is an effective operating tool
because it minimizes political concerns and keeps the Town more focused on achieving
structural balance.
Auditors and financial advisors often note that fund balances are not replaceable through
the budget process because of the legal requirement to develop balanced budgets for the general
fund and the special reve,nue funds. The Town does face significant pressure on the revenue and
expenditure sides of its budget, and therefore on its reserves. If surplus is depleted at the end of
a fiscal year, it cannot be replaced unless during the ensuing fiscal year expenditures are less
than amounts budgeted or non-tax revenues are higher than projected (or both).
In recognition of sound fiscal policy and in order to stabilize and possibly enhance the
current credit rating of the Town, the Town Board desires to maintain an unreserved and
unappropriated fund balance in its General Fund at the end of each fiscal year equal to at least
10% of its total operating budget, not withstanding the Town's past practice to appropriate 50%
of the estimated fund balance in the ensuing year's budget. Such unreserved/unappropriated
fund balance will be exclusive of any reserve funds maintained by the Town. The Town believes
that at least 10% of its total operating budget is a reasonable amount of
unreserved/unappropriated fund balance to achieve at the end of each fiscal year as unanticipated
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Southold TownBoard - Letter Board Meeting of February 24, 2009
events during the course of a year can have negative effects on non-tax revenues or expenditures.
If an emergency or a need were to occur that necessitated the appropriation of funds'that
would rosult in reducing the unreserved/unappropriated fund balance in the General Fund below
10% of operating expenditures, a resolution of the Town Board is required to approve such
appropriation consistent with current practices. In addition, subsequent to such appropriation,
the Town would begin the process of reducing expenditures or raising revenues during the
current or ensmng fiscal year in order to restore the unreserved/unappropriated fund balance in
the General Fund to at least 10% of operating expenditures.
Unreserved/unappropriated fund balance in the General Fund above 10% may be
appropriated by the Town Board for the following purposes:
To reduce the ensuing year's property taxes.
For one-time capital expenditures.
For emergencies caused by unforeseen occurrences.
This policy will remain in effect until the Town of Southold, by resolution, amends
or revises it.
Elizabeth A. Neville
Southold Town Clerk
RESULT: ADOPTED [UNANZHOUS]
HOVER: William Ruland, Councilman
SECONDER: Thomas H. Wickham. Councilman
AYES: Rulanrt, Orlando, Kru pski .Ir., Wickham, Evans, Russell
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