Title
Resolution to Adopt The DDA Fund Balance Policy
Memorandum
The Government Finance Officers’ Association (GFOA) recommends that all government units adopt a fund balance policy for the management of fund balance in their various funds.
The DDA’s current fund balance policy was adopted in 2009 and revisions are needed to bring that policy more fully into compliance with Government Accounting Standards Association (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and into better alignment with industry best practices.
In drafting the proposed policy, staff referenced the GFOA’s most recent recommendations, the City’s fund balance policy, and fund balance policies of other government units that were offered by the GFOA as examples of excellence.
Before being brought to the Board for consideration, a review of the GFOA’s updated recommendations was provided at the Board’s June work session. The members present reviewed the recommended target levels by fund and the reasoning and calculations that informed them. The fund balance target levels recommended at the work session are included in the policy as they were presented, but some have been modified to point to revenues as a base for the funds in which revenue is considered to be a more reliable and consistent base than expenditures, as was mentioned at the work session.
Attached for the Board’s consideration is the new fund balance policy and a resolution for its adoption.
Prepared by: Sara McCallum, Deputy Director/Accounting Director
Body
Resolution to Adopt the DDA Fund Balance Policy
Whereas, The DDA wishes to establish fund balance and reserve guidelines that offer the organization a buffer against the risk of unforeseen revenue shortfalls and unplanned one-time expenditures;
Whereas, The DDA also acknowledges the benefit of putting as many public dollars to work for the benefit of the community as possible;
Whereas, the DDA has established four funds which each have unique purposes and are exposed to unique risks;
Whereas, The Government Accounting Standards Board (GASB) has issued Statement No. 54 which establishes specific requirements for the reporting of fund balance in government funds and the DDA wishes to formalize its commitment to complying with this GASB standard;
Whereas, at its June work session the DDA Board did review updated fund balance guidelines provided by the Government Finance Officers’ Association and did discuss those guidelines in relationship to each of the DDA’s funds as well as the DDA’s risk profile related to each and did conclude that the target levels presented by staff and included in the proposed Fund Balance Policy are appropriate;
RESOLVED, The Ann Arbor Downtown Development Authority Board adopts the Ann Arbor Downtown Development Fund Balance Policy, effective July 10, 2024.