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