Final answer:
Rainy day funds are classified as 'committed' under GASB standards when created by a resolution or ordinance specifying the conditions for their use, demonstrating the formal action by a government to allocate funds for a specific purpose.
Step-by-step explanation:
GASB standards indicate that rainy-day funds may only be classified as committed if they are created by a resolution or ordinance that states the specific circumstances under which the resources can be used. This means that the governing body has taken formal action to set aside these funds for a specific purpose, and this action is documented through an official legislative decision.
Rainy day funds are a form of governmental fund balance that allows governments to save money in anticipation of future budget shortfalls or emergencies. When these funds are classified as committed, they cannot be used for any other purposes without a similar formal action being taken to remove or change the restrictions.