[HISTORY: Adopted by the Village Council of the Village of New Haven 9-14-2021 by Ord. No. 389. Amendments noted where applicable.]
A. 
The Village of New Haven believes that sound financial management principles require that sufficient funds be retained by the Village to provide a stable financial base at all times. To retain this stable financial base, the Village needs to maintain a fund balance in the general fund that is sufficient to fund all cash flows of the organization, to provide financial reserves for unanticipated expenditures and/or revenue shortfalls of an emergency nature, and to provide funds for all existing encumbrances.
B. 
The purpose of this chapter is to establish a key element of the financial stability of the Village of New Haven by setting guidelines for fund balance. Fund balance is an important measure of economic stability. It is essential that the Village maintain adequate levels of fund balance to mitigate financial risk that can occur from unforeseen revenue fluctuations, unanticipated expenditures, and similar circumstances. The fund balance also provides cash flow liquidity for the general operations of the Village.
C. 
In addition, this chapter addresses the Village of New Haven's requirements under GASB 54 surrounding the composition of fund balance, including the establishment and use of the various components of fund balance.
As used in this chapter, the following terms shall have the meanings indicated:
FUND BALANCE
A governmental fund's fund balance is the difference between its assets, deferred outflows and its liabilities and deferred inflows.
FUND BALANCE COMPONENTS
An accounting distinction is made between the portions of fund equity that are spendable and nonspendable. Under GASB 54, these are broken up into five categories:
A. 
NONSPENDABLE FUND BALANCEAmounts 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).
B. 
RESTRICTED FUND BALANCEAmounts that can be spent only for the specific purposes stipulated by external resource providers either constitutionally or through enabling legislation. Examples include grants and dedicated millage.
C. 
COMMITTED FUND BALANCEAmounts are 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 constraint.
D. 
ASSIGNED FUND BALANCEAmounts intended to be used by the government for specific purposes. Intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. In governmental funds other than the general fund, assigned fund balance represents the amount that is not restricted or committed. This indicates that resources in other governmental funds are, at a minimum, intended to be used for the purpose of that fund.
E. 
UNASSIGNED FUND BALANCEThe residual classification of the general fund and includes all amounts not contained in other classifications. Unassigned amounts are technically available for any purpose.
MINIMUM UNRESTRICTED FUND BALANCE
General fund.
UNRESTRICTED FUND BALANCE
Unrestricted fund balance includes committed, assigned and unassigned fund balance categories. Governments may deem it appropriate to exclude from consideration resources that have been committed or assigned to some other purpose and focus on unassigned fund balance rather than on unrestricted fund balance.
A. 
The fund balance of the Village of New Haven's general fund has been accumulated to provide stability and flexibility to respond to unexpected adversity and/or opportunities. The Village's basic goal is to limit expenditures to anticipated revenue in order to maintain a balanced budget.
B. 
It is the goal of the Village of New Haven is to achieve and maintain an unrestricted fund balance in the general fund equal to 25% to 30% of expenditures. The use of fund balance is appropriate to maintain adequate levels of fund balance to mitigate current and future risks (e.g., revenue shortfalls and unanticipated expenditures) and to ensure stable tax rates.
C. 
If unassigned fund balance falls below the goal or has a deficiency, the Village may replenish a fund balance deficiency from multiple resources, including nonrecurring revenues, budget surpluses, year-end surpluses, and excess resources in other funds (if legally permissible) upon approval of Village Council. The Village of New Haven will replenish the fund balances within one to three years of use.
D. 
Committed fund balance.
(1) 
The Village Council is the Village of New Haven's highest level of decision-making authority and the formal action that is required to be taken to establish, modify, or rescind a fund balance commitment is a resolution approved by the Village Council at a council meeting. The resolution must either be approved or rescinded, as applicable, prior to the last day of the fiscal year for which the commitment is made. The amount subject to the constraint may be determined in the subsequent period.
E. 
Assigned fund balance.
(1) 
The Village Council has authorized the Village President as the official authorized to assign fund balance to a specific purpose as approved by this fund balance chapter.
F. 
Order of expenditure of funds (spending prioritization).
(1) 
When multiple components of fund balance are available for the same expenditure (for example, a project has both restricted and unrestricted funds available for it), spending will occur in this order - restricted, committed, assigned, and unassigned.
The various sections and provisions of this chapter shall be deemed to be severable, and should any section or provision of this chapter be declared by any court of competent jurisdiction to be unconstitutional or invalid the same shall not affect the validity of this chapter as a whole or any section or provision of this chapter, other than the section or provision so declared to be unconstitutional or invalid.
All existing ordinances are repealed to the extent they conflict with this chapter.
This chapter shall not take effect before the twentieth day after its passage or before the date of its publication, whichever occurs first, pursuant to MCL § 66.1.