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CITY OF SAN LEANDRO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />For The Year Ended June 30, 2021 <br />NOTE 9 – 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 />As of June 30, 2021, the General Fund had outstanding encumbrances of $1,787,750. <br />D. Contingency Arrangements <br />The City’s annual budget requires the City to implement and maintain fund balance to handle any <br />unforeseen contingencies in the future, rather than continued reliance on the City’s operating General <br />Fund reserves. These unforeseen contingencies include Economic Uncertainty, major Emergencies and <br />Contingencies. As of June 30, 2021, the following are reported within the unassigned fund balance of the <br />General Fund: <br />Compensated Absences 869,569$ <br />Major Emergencies 5,000,000 <br />Economic Uncertainty 24,640,460 <br />Other Remaining Unassigned 36,026,190 <br />Total 66,536,219$ <br />73334