(A) Fund balance measures the net financial resources available to finance expenditures of future periods.
(B) Currently fund balance is classified as “reserved” or “unreserved”. GASB 54 changes how fund balance is reported. The hierarchy of five possible GASB 54 classifications is as follows:
(1) Non-spendable fund balance includes amounts not in spendable form, such as inventory, or amounts required to be maintained intact legally or contractually;
(2) Restricted fund balance includes amounts constrained for a specific purpose by external parties, Constitution provision or enabling legislation;
(3) Committed fund balance includes amounts constrained for a specific purpose pursuant to constraints imposed by formal action of Town Council. It would require action by the same group to remove or change the constraints placed on the resources;
(4) Assigned fund balance includes General Fund amounts constrained by the town intended to be used for specific purposed; but are neither restricted nor committed; and
(5) Unassigned fund balance is the residual classification for the General Fund.
(C) In circumstances where an expenditure is to be made for a purpose for which amounts are available in multiple fund balance classifications, the order in which resources will be expended is as follows: restricted fund balance; followed by committed fund balance; assigned fund balance; and lastly unassigned fund balance.
(Res. passed 3-21-2012)