(A) The City Council finds it to be necessary to amend regulations regarding appropriate level of unrestricted reserves for certain funds of the city. Suggested guidelines in the literature related to government finance, from the Government Finance Officers Association (GFOA), the National Advisory Council on State and Local Budgeting Practice (NACSLBP), Governmental Accounting Standards Board (GASB), and other sources, were originally reviewed. Equally important review included past experience in spending and fund balances for the city, since each municipality has a unique pattern of services, revenues, and expenditures.
(B) The literature on the topic recommends a policy related to unrestricted fund balance in any given fund should consider many factors, including, but not limited to:
(1) Predictability of revenue sources and the volatility of expenditures. Unpredictable fluctuations in revenues or operating expenses tends to require larger unrestricted fund balance to deal with the high degree of variability.
(2) Perceived exposure to significant one-time outlays such as disasters, immediate capital needs, reduction in revenues due to change in legislation or volatility of the political environment, or the chance to take advantage of one-time opportunities.
(3) Potential drain upon the General Fund by availability of resources in other funds of the city, along with existing fund balances in other funds which may be dependent in some fashion on the General Fund for revenue.
(4) Liquidity of financial resources and timing of receipt of revenue.
(5) Commitments and assignments of existing portions of the unrestricted balance in the General Fund.
(6) Ability to stabilize tax rates, to address temporary revenue shortfalls, to maintain service levels, and in broad terms provide financial stabilization.
(C) Fund operating ranges. All three funds listed below shall be operated above a minimum unreserved fund balance range. In the event any of the unreserved fund balances are less than the minimum balance indicated, the City Council shall take actions in no less than three months from said event of shortfall to either reduce fund expenditures, increase fund revenue, or some combination thereof, to bring the unreserved fund balance back above the minimum balance. Said time period to raise the balance back to the minimum level shall be as practical as reasonably possible.
(D) Table of funds.
FUND
|
MINIMUM
|
General Fund | 30% of the audited operating expenditures for the General Fund, as averaged over the prior three fiscal years. |
Water Fund | 25% of the audited operating expenditures for the Water Fund, as averaged over the prior three fiscal years. |
Sewer Fund | 25% of the audited operating expenditures for the Sewer Fund, as averaged over the prior three fiscal years. |
(‘71 Code, § 1-34-1) (Ord. 1708, passed 11-22-71; Am. Ord. 3641, passed 6-14-10; Am. Ord. 4064, passed 7-26-21)