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City of San Leandro <br />Notes to Basic Financial Statements <br />For the year ended June 30, 2013 <br />NOTE 10 — NET POSITION AND FUND BALANCES (Continued) <br />C. Encumbrances <br />The City uses an encumbrance system as an extension of normal budgetary accounting for governmental <br />funds. Under this system, purchase orders, contracts, and other commitments for the expenditure of <br />monies are recorded in order to reserve that portion of applicable appropriations. Encumbrances <br />outstanding at year-end are recorded as restricted, committed or assigned fund balance, depending on the <br />classification of the resources to be used to liquidate the encumbrance, since they do not constitute <br />expenditures or liabilities. Outstanding encumbrances at year-end are automatically reappropriated for <br />the following year. Unencumbered and unexpended appropriations lapse at year-end. <br />Encumbrances outstanding as of June 30, 2013 were as listed below: <br />General Fund <br />$264,275 <br />Non -major funds <br />7,343,806 <br />Total <br />$7,608,081 <br />D. Contingency Arrangements <br />The City's annual budget requires the City to implement and maintain fund balance to handle any <br />unforeseen contingencies in the future, rather than continued reliance on the City's operating General <br />Fund reserves. These unforeseen contingencies include Economic Uncertainty, major Emergencies and <br />Contingencies. As of June 30, 2013, the following are reported within the unassigned fund balance of the <br />General Fund: <br />Major Emergencies $5,000,000 <br />Economic Uncertainty 4,946,571 <br />Other 4,423,439 <br />Compensated Absences 466,834 <br />Total $14,836,844 <br />70 <br />