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316 <br />317 <br />318 <br />319 <br />320 <br />321 <br />322 <br />323 <br />324 <br />325 <br />326 <br />327 <br />328 <br />329 <br />330 <br />331 <br />332 <br />333 <br />334 <br />335 <br />336 <br />337 <br />338 <br />339 <br />340 <br />341 <br />342 <br />343 <br />344 <br />345 <br />346 <br />347 <br />348 <br />349 <br />350 <br />351 <br />352 <br />353 <br />354 <br />355 <br />356 <br />357 <br />358 <br />359 <br />360 <br />361 <br />362 <br />Operating Fund Reserve Policy <br />Purpose <br />❑ To provide a cushion against unexpected revenue and income interruptions <br />❑ To provide working capital by ensuring sufficient cash flow to meet the City's needs throughout <br />the year <br />Policy <br />❑ The City will maintain a general fund reserve of 50% of the general fund's total annual operating <br />budget. This ensures that the City has adequate funds on hand to provide for operations between <br />bi- annual property tax collection periods. Any surplus beyond the required general fund reserve <br />may be transferred to another reserve fund with a funding shortfall <br />❑ The City will strive to create a reserve in the Recreation Fund to equal 25% of the annual <br />recreation budget. This reserve will provide a cash flow cushion and reduce the inter -fund <br />borrowing expense to the Recreation Fund. Because of more frequent cash inflows, a 25% reserve <br />will be adequate to support the daily cash needs of the fund <br />❑ The Community Development Fund is supported solely by building permit fees and charges. <br />Because the economic environment has a major effect on this Fund, a fund balance of 25 -50 % of <br />the annual budget is a reasonable target. It is expected that as economic downturns take place, this <br />reserve will provide for a transition period during which the Council will be able to assess and to <br />better match operations with the economic need <br />❑ City enterprise funds shall have operating cash reserves sufficient to provide for monthly cash <br />flow, and for a reasonable level of equipment and infrastructure replacement. Major <br />reconstruction or system upgrades, may need to be funded from enterprise revenue bonds. Annual <br />utility rate reviews will be made in regard to projected operating expenses and capital <br />improvements. The Council will, on an annual basis, establish rates in accordance to operating <br />cost recovery and the projected capital improvements <br />❑ All other operational funds e.g. License Center, Information Technology, etc are expected to <br />operate with positive reserve balances of 10 -25% of the annual operating budget. Each <br />operational fund shall be reviewed on an annual basis to assure the fund balance is in line with the <br />fund's objectives <br />Implementation <br />All fund reserves shall be reviewed each year at the time of the annual budget preparation for the purpose <br />of complying with this policy. Budgets shall be prepared on an "All Resources" basis, so that the City <br />Council and Community can readily discern the current and projected management of all reserves. <br />Page 11 of 13 <br />