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6.1. B. - Page 84 NOTE 1O - NET ASSETS AND FUND BALANCES �CONTINUED) As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June 30, 2011, fund balances for governmental funds are made up of the following: Nonspendable Fund Balance — includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The "not in spendable form" criterion includes items that are not expected to be converted to cash, for example: inventories, prepaid amounts, and long-term loans receivable. Restricted Fund Balance — includes amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers. Committed Fund Balance — includes amounts that can only be used for the specific purposes determined by a formal action of the City's highest level of decision-mal<ing authority, the City Council. Commitments may be changed or lifted only by the City taking the same formal action that imposed the constraint originally. Assi�ned Fund Balance — comprises amounts intended to be used by the City for specific purposes that are neither restricted nor committed. Intent is expressed by the City Council or City Manager, to which the City Council has delegated the authority, to assign amounts to be used for specific purposes. Unassi�ned Fund Balance — is the residual classification for the general fund and includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. In other governmental funds, if expenditures exceed amounts restricted, committed, or assigned, the negative amount is reflected as negative unassigned fund balance. Within the unassigned fund balance of the General Fund, The City Council has established a minimum balance representing a level not less than 15%, nor more than 20% of estimated General Fund revenues. In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned. C. Deficit Fund Equity/Net Assets The Redevelopment Agency fund had a deficit fund balance of $797,568 due to the required but unplanned payment to the State of California as the State experienced budget difficulties, and relied on local agencies to provide financial assistance. NOTE 11- FUNDS WITH EXPENDITURES EXCEEDING APPROPRIATIONS The budgetary expenditures exceeded appropriations in the General Fund due to the elimination of employee positions in the FY 2010/11 budget for the Police, Parks, Recreation and Community Services and Library Departments for the entire fiscal year, but the employees were not terminated until after the beginning of the fiscal year. Additionally, many of these employees received payouts of accumulated leave hours which were not budgeted. The budgetary expenditures of the Fire 58