Fund Balance Policy

The purpose of this policy is to create new fund balance classifications to allow for more useful fund balance reporting and for compliance with the reporting guidelines specified in Statement No. 54 of the Governmental Accounting Standards Board (GASB)

The policy for Maine Prairie Township is to comply with GASB Statement No. 54.  To the extent a specific conflict occurs between this policy and the provisions of GASB Statement No. 54, the GASB Statement shall prevail.

“Assigned” fund balance amounts are comprised of unrestricted funds constrained by the township’s intent that they be used for specific purposes, but they do not meet the criteria to be classified as restricted or committed.  In funds other than the general fund, the assigned fund balance represents the remaining amount that is not restricted or committed.  The assigned fund balance category will cover the portion of a fund balance that reflects the township’s intended use of those resources.  The action to assign a fund balance may be taken after the end of the fiscal year.  An assigned fund balance cannot be a negative number.
“Committed” fund balance amounts are comprised of unrestricted funds used for specific purposes pursuant to constraints imposed by formal action of the Maine Prairie board and that remain binding unless removed by the Maine Prairie Town Board by formal action.  The formal action to commit a fund balance must occur prior to the fiscal year end; however, the specific amounts are actually committed can be determined in the subsequent fiscal year.  A committed fund balance cannot be a negative number.
“Enabling legislation” means legislation that authorizes a township board assess, levy, charge, or otherwise mandate payment of resources from external providers and includes a legally enforceable requirement that those resources be used only for the specific purposes listed in the legislation.
“Fund Balance” means the arithmetic difference between the assets and liabilities reported in the township fund.
“Nonspendable” fund balance amounts are comprised of funds that cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact.  They include items that are inherently unspendable, such as, but not limited to, inventories, prepaid items, long-term receivables, non-financial assets held for resale, or the permanent principal of endowment funds.
“Restricted” fund balance amounts are comprised of funds that have legally enforceable constraints placed on their use that either are externally imposed by resource providers or creditors (such as through debt covenants), grantors, contributors, voters, or laws or regulations of other governments, or are imposed by law through constitutional provisions or enabling legislation.
“Unassigned” fund balance amounts are the residual amounts in the general fund not reported in any other classification.  Unassigned amounts in the general fund are technically available for expenditure for any purpose.  The general fund is the only fund that can report a positive unassigned fund balance.  Other funds would report a negative unassigned fund balance should the total of nonspendable, restricted, and committed fund balances exceed the total net resources of that fund.
“Unrestricted” fund balance is the amount of fund balance left after determining both nonspendable and restricted net resources.  This amount can be determined by adding the committed, assigned, and unassigned fund balances. 
The township shall classify its fund balances in its various funds in one or more of the following five classifications: nonspendable, restricted, committed, assigned, and unassigned.

The township will strive to maintain a minimum unassigned general fund balance of 10% of the annual budget.

If resources from more than one fund balance classification could be spent, the township will strive to spend resources from fun balance classifications in the following order (first to last): restricted, committed, assigned and unassigned.

A majority vote of the township board is required to commit a fund balance to a specific purpose and subsequently to remove or change any constraint so adopted by the board.

The township board, by majority vote, may assign fund balances to be used for specific purposes when appropriate.  Assignments so made shall be reported to the residents of the township on a yearly basis.

The township board will conduct an annual review of the sufficiency of the minimum unassigned general fund balance level.
Adopted on this 24 day of January, 2012
__________________________________                Attested by__________________________
Vice Chair, Ronald Kuechle                                                    Clerk, Terre Harff