129.14 MINIMUM FUND BALANCE POLICY.

   (a)   Purpose. The purpose of this policy is to take a proactive approach to financial management in the City of Bedford Heights. A minimum fund balance policy assists the City in maintaining the security of major operating funds and contributes to the financial stability of the City of Bedford Heights by maintaining adequate financial reserves. Also, a minimum fund balance policy will allow the Administration and Council to recognize warning indicators of financial stress at an early date.

   (b)   Policy. At the time of budget preparation/amendments, annual appropriations shall be adjusted to ensure that the Anticipated Fund Balance is greater than or equal to the Minimum Fund Balance as described in the scope of this policy.

   (c)   Definitions.

      (1)   “Projected Beginning Fund Balance” means the projected unencumbered fund balance for the beginning of the fiscal year. The projected beginning fund balance is calculated at the time the budget is prepared.

      (2)   “Operating Appropriation” means the total appropriations including transfers for Bond Retirement, Pension, Trust, and Infrastructure Reserve Funds while excluding all other transfer and capital appropriations.

      (3)   “Anticipated Revenue” means the amount of revenue the City expects to receive in the upcoming fiscal year to fund annual appropriations.

      (4)   “Anticipated Fund Balance” means an amount equal to the Projected Beginning Fund Balance less operating Appropriations plus Anticipated Revenue. The anticipated fund balance is calculated at the time the budget is prepared.

   (d)   Scope. This Policy applies to all Major Funds used by the City. Major funds are as follows:

      (1)   General Fund - $500,000 Minimum anticipated fund balance.

      (2)   Sewage Treatment Fund - Minimum anticipated fund balance of $150,000.

   This policy will be applied to the proposed annual operating budget on the funds listed above of the City prior to presenting the budgets to Council. Any changes in the budgets made by Council must also comply with the restrictions established in this policy prior to the adoption of the annual appropriation ordinance and/or amendments.

   (e)   Monitoring. Fund Balances will be monitored on a month to month basis and a projected balance will be calculated. Monitoring projections will be based upon trend data from the past three years. The fund balance may fall below the minimum level due to current operations or emergencies. However, corrective action will be taken in the current and/or next annual budget to either reduce appropriations or increase revenue to return the fund balance to compliance with this policy.

   (f)   Compliance. If during appropriation discussions or throughout the year, the Administration and/or Council determines the City cannot meet the requirements of this policy, then they will include in the annual appropriations ordinance or budget amendments, a concise statement explaining the decision to waive the policy. The statement should include the present financial status of the City, a specified timetable for returning to the policy, and reason(s) given for overriding the policy.

(Ord. 2004-178. Passed 12-7-04; Ord. 2011-051. Passed 3-15-11.)