Which of the following is NEVER properly classified as reserved fund balance?

The classification of fund balances in governmental accounting typically hinges on whether the reserves serve to support specific future expenditures or are simply holding value without a corresponding obligation.

In this case, a reserve classified as "reserved for increase in fair value of investments" does not meet the criteria for a reserved fund balance. This classification relates to fluctuations in investment value rather than a specific commitment or purpose that necessitates the restriction of fund resources.

On the other hand, reservations for long-term loans and advances, for equity in joint ventures, and for encumbrances are all tied to specific obligations or anticipated expenditures. They reflect a clear intention to set aside resources for defined future uses, such as loan repayments, joint venture commitments, or obligations related to encumbered resources, which aligns precisely with the principles of fund balance reservations. Thus, the correct interpretation highlights that only the increase in fair value of investments does not constitute a proper reserved fund balance, distinguishing it from the others that are directly linked to anticipated expenditures or obligations.