(A) Establishing a minimum General Fund balance is a mechanism that governments can implement to help insure adequate levels of fund balance are available to help mitigate current and future risks. A minimum fund balance policy is generally considered a prudent and conservative fiscal policy to deal with unforeseen situations.
(B) The Government Finance Officers Association (GFOA), is an organization whose mission is to enhance and promote the professional management of governmental financial resources for the public benefit. The GFOA recommends governments establish a formal policy that maintains a minimum unreserved fund balance in the General Fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. The choice of revenues or expenditures as a basis of comparison may be dictated by what is more predictable in a government's particular circumstances.
(C) In addition to the benefits of having a formal policy that provides a level of reserve that mitigates current and future risks, credit rating agencies carefully monitor levels of fund balance and unreserved fund balance in a government's General Fund to evaluate a government's continued creditworthiness.
(Ord. 32-16, passed 9-12-16)