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CITY OF SAN LEANDRO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />For The Year Ended June 30, 2018 <br />I NOTE 9 -NET POSITION AND FUND BALANCES (Continued) I <br />Restricted fund balances have external restrictions imposed by creditors, granters, contributors, laws, <br />regulations, or enabling legislation which requires the resources to be used only for a specific purpose. <br />Encumbrances and nonspendable amounts subject to restrictions are included along with spendable <br />resources. <br />Committed fund balances have constraints imposed by formal action of the City's highest level decision- <br />making authority. The City Council is the highest level of decision-making authority for the City that can, <br />by adoption of a resolution prior to end if the fiscal year, commit fund balance. Once adopted, the <br />limitation imposed by the resolution remains in place until a similar action is taken to remove or revise <br />the limitation. Encumbrances and nonspendable amounts subject to council commitments are included <br />along with spendable resources. As of June 30, 2018, the City does not have committed fund balance. <br />Assigned fund balances are amounts constrained by the City's intent to be used for a specific purpose, but <br />are neither restricted nor committed. Intent is expressed through City Council resolution and/or budget <br />document or its designee (City Manager) and may be changed at the discretion of the City Council or its <br />designee. This category includes encumbrances; Nonspendable, when it is the City's intent to use <br />proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, <br />Capital Projects and Debt Service Funds which have not been restricted or committed. <br />Unassigned fund balance represents residual amounts that have not been restricted, committed, or <br />assigned. This includes the residual general fund balance and residual fund deficits, if any, of other <br />governmental funds. <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 />As of June 30, 2018, the General Fund had outstanding encumbrances of $1,223,907. <br />D. Contingency Arrangements <br />The City's annual budget requires the City to implement and maintain fund balance to handle any <br />unforeseen contingencies in the future, rather than continued reliance on the City's operating General <br />Fund reserves. These unforeseen contingencies include Economic Uncertainty, major Emergencies and <br />Contingencies. As of June 30, 2018, the following are reported within the unassigned fund balance of the <br />General Fund: <br />Compensated Absences <br />Major Emergencies <br />F.conomic Uncertainty <br />Other <br />Total <br />70 <br />$ <br />$ <br />624,135 <br />5,000,000 <br />2,828,721 <br />28,099,828 <br />36,552,684 <br />535