Should We Rethink Reserves?

[...]fund balance could include prepaid inventories or receivables for delinquent taxes, neither of which is available for current spending.âeuro™ This paper is focused on the budget and policy role of reserves. 1 The Governmental Accounting Standards Board (GASB) provides guidance on how to classify fund balances to differentiate between amounts that are more constrained or less constrained in their potential use. GFOA's Fund Balance Guidelines for the General Fund best practice recommends that-at a minimum-general-purpose governments, regardless of size, maintain unrestricted budgetary fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. Another common purpose is as a sinking fund, or "piggy bank," for a large, nonrecurring, planned future, like purchasing a capital asset. September 29,2020, Pew Research Center. 3 GFOA's Fund Balance Guidelines for the General Fund best practice recommends that-at a minimumgeneral-purpose governments, regardless of size, maintain unrestricted budgetary fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures.