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2020_0511_CCPacket
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2020_0511_CCPacket
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Roseville City Council
Document Type
Council Agenda/Packets
Meeting Date
5/11/2020
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Attachment A <br /> Operating Fund Reserve Policy <br /> Revised April 27, 2020 <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 />To provide funds to address unexpected or unplanned events <br />Policy <br />The City will maintain a general fund reserve of 35-45% of the general fund's total annual <br />operating budget. This ensures that the City has adequate funds on hand to provide for <br />operations between bi-annual property tax collection periods. Any surplus beyond the required <br />general fund reserve may be transferred to another reserve fund with a funding <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 % <br />of the annual budget is a reasonable target. It is expected that as economic downturns take place, <br />this reserve will provide for a transition period during which the Council will be able to assess <br />and to 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. <br />Annual 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 />The Communications Fund has greater cash flow variability than in prior years and therefore <br />warrants a higher reserve level than previously established. It is expected to operate with <br />balances of 10-30% of the annual operating budget. <br />The License Center and Information Technology funds have consistently demonstrated strong <br />cash flows which allows for a lower overall reserve level and are expected to operate with <br />balances of 10-15% of the annual operating budget. <br />All other operational funds are expected to operate with positive reserve balances of 10- 25% of <br />the annual operating budget. Each operational fund shall be reviewed on an annual basis to <br />assure the fund balance is in line with the fund's objectives. <br /> <br />Page 1 of 2 <br /> <br />
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