Section
Liquid Assets Management
34.01 Reserve objectives
34.02 Funds withdrawal authorization
34.03 Reserved
34.04 Road improvement reserve
34.05 Capital Equipment reserve
34.06 Natural resources donation reserve
Investment Policy
34.20 Introduction
34.21 Governing authority
34.22 Scope
34.23 General objectives
34.24 Prudence
34.25 Delegation of authority and responsibilities; Investment Board
34.26 Authorized financial institutions, depositories and brokers/dealers
34.27 Safekeeping and custody
34.28 Suitable and authorized investments
34.29 Investment parameters
34.30 Performance standards/evaluation
34.31 Reporting/disclosure
34.32 Policy considerations
34.33 Miscellaneous
34.34 Glossary
Cross-reference:
General Provisions, see Chapter 30
Officials and Employees, see Chapter 32
Town Organizations, see Chapter 33
LIQUID ASSETS MANAGEMENT
This chapter establishes a series of town General Fund reserves that are well defined, and dictates their management processes for authorized uses for specific and general purposes by the town in the normal course of business.
(A) Definitions. For the purpose of this subchapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
ASSIGNED (SET BY BUDGET). This classification includes amounts that are constrained by the town’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the Town Council or Town Administrator. No other governing body or officials have this authority delegated to them. This classification also includes the remaining positive fund balance for all governmental funds except for the General Fund.
COMMITTED (ESTABLISHED BY ORDINANCE). This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Town Council. These amounts cannot be used for any purpose unless the Town Council removes or changes the specified use by taking the same type of action (ordinance or resolution) that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements.
FUND BALANCES (RESERVES). The cumulative difference of all revenues and expenditures since the government’s creation. Thus, a current fund balance results from the cumulative financial decisions made by the governing body since the government’s formation. Positive fund balances are also called reserves. However, not all of these funds are available for spending
RESTRICTED (REQUIRED BY OTHERS, SET BY ORDINANCE). This classification includes amounts for which constraints have been placed on the use of resources either:
(a) Externally imposed by creditors (such as through a debt covenant), grantors, contributors or laws or regulations of other governments; or
(b) Imposed by law through constitutional provisions or enabling legislation.
UNASSIGNED. This classification includes the residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by the offsetting of assigned fund balance amounts.
(B) Changes to reserves. Reserves are established to accumulate funds for specific uses. Unless otherwise provided for in a specific reserve, a reserve may be changed, altered, retired, eliminated or abandoned by standard ordinance procedures.
(Prior Code, § 3.A06.010) (Ord. 2018-14, passed 10-24-2018)
Funds may be withdrawn and used for the sole purposes, as defined in the specific reserve’s section, exclusively under the following conditions:
(A) Authorization for planned use of Reserve Funds.
(1) Budgeted projects. The project is part of and specifically identified in General Fund’s annual budgets: appropriations for current fiscal year (see Ord. 2019-02).
(2) Procedure. The town will follow the standard procedure for Project Contracting when withdrawal of funds from any Reserve, except the Capital Equipment and Natural Resources-Donations Reserves, for a budgeted project, following these general steps:
(a) Public notification of a specific project;
(b) Initiate contract action; and
(c) Council meeting:
1. Project plan - details;
2. Intent to finance the project with funds from a specific reserve; and
3. Resolution.
(B) Authorization for Emergency Use of Reserve Funds. This subchapter gives the Mayor (or Mayor Pro Tem) the authority to declare an “emergency” for the specific purpose of using funds from a specific reserve to pay for the emergency.
(1) Emergency.
(a) An emergency exists which significantly threatens the health, safety and public welfare of the citizens or the normal operation of the town; and
(b) There is insufficient time to authorize the use of reserve fund in order to effectively address the emergency situation.
(2) Procedure. Prior to the actual withdrawal of funds from a reserve for an emergency, steps in divisions (a) and (b) below ((a) Documentation; and (b) Notification), shall be completed;
(a) Documentation.
1. Declaration shall be within 48 hours of the detection of the condition.
2. A document shall be presented to the Town Clerk for verification of the action.
a. Description of the condition.
b. Estimate of time and cost to repair.
c. Authorization of Town Clerk to transfer funds from the specific reserve as needed to meet payment requirements.
d. Signed by Mayor (or Mayor Pro Tem) and one additional Council member.
(b) Notification. Town Clerk will immediately upon receipt of the documentation inform the following individuals of the “emergency” with a copy of the declaration:
1. Town Council;
2. Town administration staff;
3. Public Works Director; and
4. Public notification.
(c) Hold an emergency Town Council meeting within ten days of declaration. Pass an emergency ordinance General Fund budget amendment for immediate use of funds needed.
(d) At the next regularly scheduled Town Council meeting, continue to follow up the emergency ordinance process with a first reading of a budget amendment ordinance.
(Prior Code, § 3.A06.020) (Ord. 2018-14, passed 10-24-2018)
(A) This section authorizes the creation and use of a road improvement reserve for the sole purpose for collecting sufficient funds for the current and future costs associated with the improvement and major maintenance of town roads.
(B) This reserve is classified as a committed reserve.
(1) Objective. Set aside sufficient funds to improvement or to perform major repairs of town roads.
(2) Source of funds.
(a) Town Council by resolution or ordinance may deposit additional funds into this reserve.
(b) All earnings from investments of this reserve shall be redeposited back into this reserve.
(3) Authorized uses. Funds shall be used solely for the current and future costs associated with the improvement and major maintenance of town roads.
(4) Administration. This section authorizes the Town Clerk to deposit, withdraw and pay obligations that are in full compliance with this chapter.
(Prior Code, § 3.A06.033) (Ord. 2018-14, passed 10-24-2018)
(A) This section authorizes the creation and use of a Capital Equipment Reserve as a depository to accumulate funds for future acquisitions of public works equipment.
(B) This reserve is classified as an assigned reserve.
(1) Objective. Provide the town a mechanism to allocate and accumulate funds in one or more fiscal budget years for planned equipment acquisitions in future years, thus avoiding financing charges for time payments, while spreading the costs across multiple fiscal years.
(2) Source of funds.
(a) Town Council by resolution or ordinance may deposit additional funds into this reserve.
(b) Funds budgeted from the annual revenues.
(3) Authorized uses.
(a) Funds are for exclusive use to meet the town’s anticipated acquisition of equipment as planned and designated in previous and current capital budgets.
(b) This reserve may be used to accumulate an end-of-lease purchase option.
(c) Based on the needs of the Public Works Department, the Town Council may reprioritize by resolution, the designated equipment to a more critical piece of equipment.
(d) Any excess funds as deemed by a Town Council resolution may be transferred back to the General Fund’s “unencumbered funds - cash” account.
(4) Administration. This section authorizes the Town Clerk to deposit, withdraw and pay obligations that are in full compliance with this chapter.
(Prior Code, § 3.A06.036) (Ord. 2018-14, passed 10-24-2018)
(A) This section authorizes the creation and use of a Natural Resources Donations Reserve as a depository to accumulate funds for costs associated with specific projects of the Natural Resources Board (NRB).
(B) This reserve is classified as an assigned reserve.
(1) Objective. Provide the town’s NRB a mechanism to account for donation funds in one or more fiscal budget years for costs associated with specific projects of the NRB.
(2) Source of funds.
(a) Donated and grant funds from various sources.
(b) All earnings from investments of this reserve shall be redeposited back into this reserve.
(3) Authorized uses. Those costs associated with specific projects recommended by the NRB and approved through the town’s standard expenditure approval process.
(4) Administration. This section authorizes the Town Clerk to deposit, withdraw and pay obligations that are in full compliance with this chapter.
(Prior Code, § 3.A06.039) (Ord. 2018-14, passed 10-24-2018)
INVESTMENT POLICY
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