CC Resolution 11298RESOLUTION NO.: 11298
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CAMPBELL APPROVING REVISIONS TO THE COUNCIL FINANCIAL
POLICIES, SECTION V. RESERVE POLICIES
WHEREAS, the City Council has previously approved Financial Policies,
Section V. which define the categories and criteria for presenting General Fund
Reserves in the Comprehensive Annual Financial Report (CAFR); and
WHEREAS, the Governmental Accounting Standards Board (GASB) has
issued GASB Statement 54 "Fund Balance Reporting and Governmental Fund Type
Definitions" effective for the fiscal year ending June 30, 2011 which
establishes/redefines fund balance classifications for purposes of financial statement
presentation; and
WHEREAS, it is prudent to maintain reserve policies that are fiscally sound
and conservative; and
WHEREAS, staff has made recommendations for revisions to the current
Reserve policies that will allow them to be categorized at a level of constraint
consistent with Council's intent with respect to the current policies; and
WHEREAS, the recommended Reserve Policy revisions have been discussed
with the Finance Sub-Committee who concurred with the revisions;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Campbell that the changes to the Financial Policies, Section V. Reserves are
approved as submitted.
PASSED AND ADOPTED the 21st day of June, 2011 by the following roll call
vote:
AYES: Councilmembers Waterman, Low, Cristina, Kotowski, Baker
NOES: Councilmembers None
ABSENT: Councilmembers None
APPROVED:
~. ~
(~
J on T. Baker, N ayor
ATTE
Anne Bybee, City Clerk
~~°F•~AMp~~Y CITY OF CAMPBELL
0 0
y~ ~-~ Council Financial Policies
~RCHAK~
V. Reserve Policies
A) The General Fund Emergency Reserve shall be maintained at a
level of 10% of the General Fund revenue. This reserve will only be
used in the case of dire need as a result of physical or financial
emergency as determined by the City Council. Emergencies
include but are not li_m_ited to: natural disasters such as
earthquakes, fire, flooding or severe weather-related damage
resulting in significant loss of infrastructue or damage to City
property requiring material expenditures for repair or replacement
of essential City equipment or structures. e.q. police or other
emergency vehicles, computer systems infrastructure City Hall
Community Center, service center buildings and equipment
required to deliver essential City services. Emergencies of a
financial nature would include but not be limited to: material one-
time statutory reductions in revenue or unexpected/unbudgeted
losses due to judgments or liability claims in excess of the liability
claims reserve balance.
B) The General Fund Operating Reserve shall be maintained at a
level of $1 million. This reserve may be used to meet necessary,
but unbudgeted, expenditures during the fiscal year, including mid-
year budget adjustments and one-time operating budget
expenditures not considered capital expenditures-and/or to cover
minor unanticipated revenue shortfalls. Funds drawn from this
reserve during the year shall be replenished with the adoption of
the ensuing fiscal year budget.
C) An Economic Fluctuations Reserve shall be maintained, with a
target of $6 million, to provide budget stabilization during an
economic downturn that could otherwise result in significant
reductions in service levels and/or organizational staffing.
Economic conditions that could require the use of this reserve
include, but are not limited to: material decreases in property or
sales tax revenues due to economic downturns lasting at least six
months; loss of businesses generating signifcant proportions of
sales/use tax; reductions in revenue due to actions by state
federal, or other overnmental agencies or legislation. This
Reserve shall not be less than $2 million. However, if the reserve
balance falls below $4 million, or the City's five-year financial
projections indicate the reserve will fall below this minimum
requirement at any time during this period, City staff shall present
~J~~'cAM~~~< CITY OF CAMPBELL
a o
s~ ~,~ Council Financial Policies
~RCHAR~
to Council, by the following year's budget adoption, a plan to return
to the target amount within five years.
D) A Capital Improvement Program Reserve shall be maintained at a
level to cover unbudgeted capital improvement costs, to fund future
capital and infrastructure improvements, and to fund anticipated
one-time capital expenditures in the operating budget. This reserve
shall be targeted at $5 million, including an annual funding target of
$1.5 million specifically for infrastructure needs. Any
unappropriated General Fund surplus, not needed to fund other
reserves at fiscal year-end, shall be applied to this reserve.
E) A reserve shall be maintained sufficient to cover 50% of
outstanding compensated absences.
F) Reserves for the replacement of Motor Pool and Information
Technology Pool assets shall be evaluated annually and
maintained at sufficient levels to provide for the replacement of
approximately 50% of the equipment based on accumulated
depreciation and estimated replacement costs.
G) The Workers' Compensation Self-Insurance Reserve will be
maintained at a level deemed adequate to meet projected liabilities
as determined by an actuarial evaluation to be conducted at least
once every two years.
H) The General Liability Insurance Reserve will be maintained at a
level deemed adequate to meet projected liabilities. This level may
be determined by an actuarial evaluation or derived from estimates
provided by the City's third party risk pool provider, subject to a
minimum level equal to 100% of the self-insured retention (SIR).
I) Other reserves required by law, contractual obligation or Generally
Accepted Accounting Principles (GAAP) shall be provided for.
J) The City Manager may, at his/her discretion, establish additional
reserves and/or recommend annual reserve fund replenishments,
deemed necessary and prudent to ensure the fiscal health of the
City, subject to City Council approval.