2C, Lake Johanna Fire Department Discussion

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0 LAKE JOHANNA FIRE DEPARTMENT POLICY- # 330 Section: Department Organization Subject: Operating Budget Fund Balance & Capital Reserve Fund - I. PURPOSE To establish a policy which will provide a reasonable operating reserve for variances in fire call compensation and unanticipated operating budget expenditures. The Policy will also establish a separate capital reserve fund that will be used primarily for fire-related capital expenditures that will benefit the Lake Johanna Fire Department and cities of Arden Hills,North Oaks,and Shoreview. II. POLICY The Cities of Arden Hills, North Oaks, and Shoreview contract with the Lake Johanna Fire Department for the provision of fire protection services. Since the operating budget and a majority of capital expenditures of the Department are funded by these cities through property taxes, it is important that a policy be in place establishing an operating budget fund balance and capital reserve fund. A fund balance is an important element for a fiscally sound organization. It provides a funding source for emergency or unanticipated expenditures or special projects. It also can prevent an overburdening of the operating budget for certain capital expenditures. Based on these factors, the Joint Fire Board has established the following Fund Balance Policy for the Lake Johanna Fire Department. 1. Operating Reserve Fund — an operating reserve fund is established at a level that is equal to 10% of the total operating budget for the Lake Johanna Fire Department. This reserve will be used for any variances in fire call compensation during the year and for unanticipated expenditures of the Department. The Department is authorized to use up to $10,000 of this fund for unanticipated operating fund expenditures. Expenditures above this amount should be reviewed and approved by the Fire Board. 2. Capital Reserve Fund — any monies above the operating fund reserve will be placed in a capital reserve fund. This fund would generally be used for capital expenditures such as equipment, fire apparatus, and station repairs/improvements. This fund could also be used to phase in major operating budget changes that have a significant impact on local tax levies. Expenditures from this fund for capital items or to phase in major operating budget changes need to be included in either the Lake Johanna Fire Department approved operating budget or capital improvements program. If expenditures are proposed from this fund and are not in either the operating budget or capital improvements program,they need to be reviewed and approved by the Joint Fire Board. Approved by: 03-15-2000 Fire Chief and Chairman of the Board of Directors Date