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1 d"?6 Exhibit A <br /> 1 d"?7 <br /> 1 d"?8 Fund Balance (Operating Fund Reserve) Policy <br /> 1d?9 <br /> '130 Pup2ose <br /> 131 <br /> 1 3d`! ❑ To provide a cushion against unexpected revenue and income interruptions <br /> '133 <br /> '134 ❑ To provide working capital by ensuring sufficient cash flow to meet the City's needs throughout <br /> '135 the year <br /> '136 <br /> 13"7 Policy <br /> '138 <br /> '139 ❑ The City will maintain a general fund reserve of 35-45% of the general fund's total annual <br /> '140 operating budget. This ensures that the City has adequate funds on hand to provide for operations <br /> 141 between bi-annual property tax collection periods.Any surplus beyond the required general fund <br /> 1 4d`,,,! reserve may be transferred to another reserve fund with a funding shortfall <br /> '143 <br /> '144 ❑ The City will strive to create a reserve in the Recreation Fund to equal 25% of the annual <br /> '45 recreation budget. This reserve will provide a cash flow cushion and reduce the inter-fund <br /> '146 borrowing expense to the Recreation Fund. Because of more frequent cash inflows,a 25%reserve <br /> 147 will be adequate to support the daily cash needs of the fund <br /> '148 <br /> '149 ❑ The Community Development Fund is supported solely by building permit fees and charges. <br /> '150 Because the economic environment has a major effect on this Fund,a fund balance of 25-50%of <br /> 151 the annual budget is a reasonable target. It is expected that as economic downturns take place,this <br /> 1 5d`,,,! reserve will provide for a transition period during which the Council will be able to assess and to <br /> '153 better match operations with the economic need <br /> '154 <br /> '155 ❑ City enterprise funds shall have operating cash reserves sufficient to provide for monthly cash <br /> '156 flow, and for a reasonable level of equipment and infrastructure replacement. Major <br /> 15"7 reconstruction or system upgrades,may need to be funded from enterprise revenue bonds. Annual <br /> '158 utility rate reviews will be made in regard to projected operating expenses and capital <br /> '159 improvements. The Council will, on an annual basis, establish rates in accordance to operating <br /> '160 cost recovery and the projected capital improvements <br /> 161 <br /> 1 6d! ❑ All other operational funds e.g. License Center, Information Technology, etc are expected to <br /> '163 operate with positive reserve balances of 10-25% of the annual operating budget. Each <br /> '164 operational fund shall be reviewed on an annual basis to assure the fund balance is in line with the <br /> '165 fund's objectives <br /> '166 <br /> 16"7 ❑ In the event the minimum fund balance drops below prescribed levels,the City shall dedicate new <br /> '168 incoming property tax or program revenues (where applicable) in an amount sufficient to bring <br /> '169 fund balance levels back into compliance within three fiscal years <br /> 1"7 0 <br /> 171 ❑ Unless otherwise directed by the City Council,monies held in individual Funds shall be expended <br /> 1��7 first from restricted fund balances,second from committed fund balances,then from assigned fund <br /> 1"73 balances, before usin unassiumed fund balance <br /> Page 6 of 7 <br />