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NOTE 6 – FUND BALANCE POLICY AND CLASSIFICATION (CONTINUED) B. Fund Balance Policy When actual revenues exceed actual expenditures in a given year, the excess shall be allocated as follows: a) Any excess shall be first allocated to "unassigned" fund balance to bring that portion of fund balance to an amount equal to fifty percent (50%) of the next years adopted operating budget plus prior-year encumbrances (if any) plus compensated absences. b) Any excess after complying with fund balance requirements in step “a” shall be allocated to equipment replacement, park trust, public facilities construction, and public improvement revolving funds in the following manner: Ten percent (10%) to Fund #234 - Equipment Revolving Fund Ten percent (10%) to Fund #810 – Park Maintenance Fund (reported in General Fund) Forty percent (40%) to Fund #412 – Public Facilities Construction Fund Forty percent (40%) to Fund #400 - Public Improvement Revolving Fund When actual expenditures exceed actual revenues in a given year, the deficit shall be treated as follows: a) "Unassigned" fund balance shall first be adjusted to an amount equal to fifty percent (50%) of the next years adopted operating budget plus prior year encumbrances (if any) plus compensated absences. b) If shortage after complying with fund balance requirement in step “a” shall draw funds in the following manner: Ten percent (10%) to Fund #234 - Equipment Revolving Fund Ten percent (10%) to Fund #810 – Park Maintenance Fund (reported in General Fund) Forty percent (40%) to Fund #412 – Public Facilities Construction Fund Forty percent (40%) to Fund #400 - Public Improvement Revolving Fund At December 31, 2013, the city fund has met its general fund balance policy. 80