CCP 06-26-2012 - Laserfiche WebLink

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V. GENERAL FUND STABILIZATION ARRANGEMENTS This section of the policy includes the formal arrangements used by the City to maintain amounts for budget or revenue stabilization, working capital needs, and/or emergencies. Stabilization arrangements refer to economic stabilization,revenue stabilization,budgetary stabilization and other similarly intended (including "rainy-day") arrangements and/or budget contingencies. The unassigned fund balance of the General Fund will fluctuate from year to year depending upon the overall cumulative results of operations compared to the budget. Budgets may vary from one year to the next as well. As a result, the unassigned amount of the fund balance may be more than adequate one year but deficient in the next. Reacting to each year's variance should be thoughtful and deliberate. A. In order to achieve its purpose, this policy has the following objectives for targeted and minimum levels of unassigned fund balance in the General Fund: 1. Provide for adequate and effective cash-flows,reducing/eliminating the need for short-term internal borrowing. Both the revenue and expenditure streams should be considered while determining the appropriate amounts of fund balance. A number of the City's anticipated operating revenues are not evenly received throughout the year. The City will need sufficient beginning fund balance to pay for its expenditures until these revenues are received. For example, the City's General Fund relies very heavily upon property tax revenues. They are received about 6 months into the fiscal year and again at the end of the year. Sufficient financial resources must be maintained until the next property tax revenue collection cycle. 2. Provide for unanticipated expenditures, such as emergencies, natural disasters and unexpected increases in service delivery costs. 3. Provide for temporary revenue shortfalls, such as reductions in State Aid revenues and reimbursements. 4. Provide financial stability and a positive trend of fund balance levels which will be a pos ti factor in our bond rating analysis. ^' 5. Generate investment earnings which will provide a revenue source to the General Fund and in turn reduce pressure on the general operating tax levy. B. Targeted balance 1. The fund balance of the General Fund shall include an amount for cash flows for the subsequent year's operating budget. The targeted amount shall be equal to 50% of the subsequent year's General Fund property tax levy, less any debt service Page 3 of 6