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City of Buffalo, New York Fund Balance and Replenishment Policy


The following denotes the City of Buffalo’s policy for classifying fund balance in accordance with
Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions. The City of Buffalo, New York (the “City”) has enacted this
policy in an effort to ensure financial security through the maintenance of a healthy reserve fund that
guides the creation, maintenance, and use of resources for financial stabilization purposes. The City’s
primary objective is to maintain a prudent level of financial resources to protect against reducing service
levels or raising taxes and fees due to temporary revenue shortfalls or unpredicted one-time expenditures.
The City also seeks to maintain the highest possible credit ratings which are dependent, in part, on the
City’s maintenance of a healthy fund balance.


Fund balance – The excess of assets and deferred outflows over liabilities and deferred inflows in a
governmental fund.

Nonspendable fund balance – Amounts that are not in a spendable form (such as inventory) or are
required to be maintained intact (such as the corpus of an endowment fund).

Restricted fund balance – Amounts constrained to specific purposes by their providers (such as grantors,
bondholders, and higher levels of government) through constitutional provisions or by enabling
legislation. This is the portion of fund balance that is either non-spendable or restricted for a particular

Unrestricted fund balance – the portion of the fund balance that is not restricted. This includes
committed fund balance, assigned fund balance and unassigned fund balance.

Committed fund balance – Amounts constrained to specific purposes by a government itself using its
highest level of decision-making authority; to be reported as committed, amounts cannot be used for any
other purpose unless the government takes the same highest-level action to remove or change the

Assigned fund balance – Amounts a government intends to use for a specific purpose; intent can be
expressed by the governing body or by an official or body to which the governing body delegates the

Unassigned fund balance – Amounts that are available for any purpose; these amounts are reported only
in the General Fund.

Extraordinary operating or capital needs – An expenditure that could not be anticipated as part of the
normal four-year financial planning or budgeting processes. It must be non-recurring in nature.

Non-recurring expenditure – An expenditure that does not span more than one fiscal year.

Fund Balance

The fund balance of the City’s General Fund accumulates to provide stability and flexibility to respond to
unexpected adversity and/or opportunities.

Unrestricted Fund Balance

The City’s target is to maintain an unrestricted fund balance (comprised of Committed Fund Balance,
Assigned Fund Balance and Unassigned Fund Balance) of not less than 60 days of annual operating
expenditures for the fiscal year. The City’s goal is to maintain annual expenditure increases at a growth
rate equal to anticipated revenue growth in order to maintain a balanced budget. The decision to retain an
unrestricted fund balance of not less than 60 days of operating expenditures stems from the following:

 This amount should provide adequate funding to cover approximately two (2) months of
operating expenses.

 This amount should provide the liquidity necessary to accommodate the City’s uneven cash flow,
which is inherent in its periodic tax collection schedule.

 This amount should provide liquidity to respond to contingent liabilities.

 The Government Finance Officers Association recommends utilizing a minimum General Fund
unrestricted balance at two (2) months of regular operating expenditures.

Replenishment of Unrestricted Fund Balance

If at the completion of any fiscal year, the audited amount of unrestricted fund balance falls below the
required levels of 60 days of annual operating expenditures for the fiscal year, in conjunction with the
next fiscal year’s proposed budget, the Mayor shall prepare and submit a plan for the expenditure
reductions and/or revenue increases necessary to restore the amount of fund balance to the minimum
requirements within two (2) fiscal years. For example, if the audited financial statements for 2018-2019
show that the City has fallen below the required 60 day level within its unrestricted fund balance, then the
budget submission for 2020-2021, and the four-year plan, must include a budget line for fund balance
replenishment that meets the requirements of this policy.

Assigned Fund Balance

The Comptroller will set aside assigned fund balance to cover the amount of outstanding purchase orders
or encumbrances that have been authorized by the Common Council through the budget process, as well
as funds budgeted but not needed for self- insurance, the amount for probable claims as determined by
Corporation Counsel, and any fund balance appropriated in the following year’s budget.
Committed Fund Balance - Emergency Stabilization Fund Balance

Per the City Charter the balance of the “Emergency Stabilization Fund” (previously known as the Rainy
Day Fund) shall be 30 days of the total General Fund expenditures according to the audited financial
statements. The Emergency Stabilization Fund is accounted for within Committed Fund balance. Such
calculation will be performed by the Comptroller. The updated balance of the Emergency Stabilization
Fund is recorded in the most recently completed fiscal year’s audited financial statements.

Per the City Charter (Article 20 Section 17.1) the Emergency Stabilization Fund Balance shall only be
used for extraordinary operating or capital needs that could not be anticipated and cannot be funded with
current budget resources. Examples of appropriate uses include, but are not limited to, expenditures
related to weather emergencies, natural disasters, terrorist attacks, unanticipated mid-year reductions in
state aid, or emergency repairs or demolitions of city facilities or infrastructure due to fire, flooding or
other catastrophes. Inappropriate uses include, but are not limited to, utilizing funds to balance the City
budget, for recurring operating expenses, or for routine maintenance and repair. Consistent with GASB
Statement number 54, to expend funds from the Emergency Stabilization Fund, the amount and the
purpose of the expenditures must be approved by the Common Council, the Mayor, and the Comptroller
by resolution.

Restricted Fund Balance

The Comptroller will determine the amount to be restricted for capital outlay as well as for emergency
medical services in accordance with applicable regulations and legislation.

Unassigned Fund Balance

Unassigned fund balance shall be any of the remaining amounts.

Order of Utilization of Fund Balance

The City will spend the most restricted dollars first, if it meets the qualifications of the restriction, before
spending less restricted dollars, in the following order:

1. Nonspendable (if funds become spendable)

2. Restricted
3. Committed
4. Assigned
5. Unassigned

This policy may be amended by the Common Council.