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HomeMy WebLinkAboutCC RESO 2016-81RESOLUTION NO. 2016 — 81 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE AMENDMENT OF CITY COUNCIL POLICY NO. 201, "MAINTENANCE OF RESERVE FUNDS", TO ESTABLISH A GENERAL FUND FACILITIES MAINTENANCE RESERVE, AND TO DESIGNATE RESERVES AS COMMITTED FUND BALANCES WITHIN THEIR RESPECTIVE FUNDS BE IT RESOLVED by the City Council of the City of National City that Council Policy No. 201, entitled "Maintenance of Reserve Funds" is amended as attached hereto as Attachment "1". PASSED and ADOPTED this 7th day of June, 2016. ATTEST: // Mich. el R. Dalla, Ci Clerk ROVED ' TO FORM: udia Gacit. - Silva ,' City Attor ey Morrison, Mayor TITLE: Maintenance of Reserve Funds POLICY #201 ADOPTED: June 26,1985 AMENDED: June 7, 2016 Purpose The City will establish reserves to strengthen its ability to withstand unexpected financial emergencies such as those that may result from national disasters, revenue shortfalls, or unanticipated expenditures of a non -recurring nature and to accumulate funds for large- scale purchases. Policy The City Manager is charged with the responsibility of accumulating and maintaining the City's reserves at the following target levels: • GENERAL FUND CONTINGENCY RESERVE: an amount equal to between twenty-five percent (25%) and fifty percent (50%) of a single year's budgeted General Fund operating expenditures. "Operating expenditures" shall be defined as all expenditures, except those of a capital nature, plus operating subsidies provided to the Library Fund, Parks Fund, Nutrition Fund, and Personnel Compensation Fund. • GENERAL FUND FACILITIES MAINTENANCE RESERVE: an amount equal to between ten percent (10%) and fifteen percent (15%) of the total acquisition cost of the City's building assets. "Building assets" shall be defined as all permanent or nonpermanent structures constructed or installed to provide a workplace for City employees or house City assets and/or operations. • GAS TAXES FUND CONTINGENCY RESERVE: an amount equal to a minimum of five percent (5%) of the estimated annual revenue of the Gas Taxes Fund. • SEWER SERVICE FUND CONTINGENCY RESERVE: an amount equal to a minimum of five percent (5%) of the estimated annual revenue of the Sewer Service Fund. • LIABILITY INSURANCE RESERVE: an amount sufficient to ensure liability insurance claim assets of the Liability Insurance Fund equal to the eighty percent (80%) Confidence Level of Adequacy applicable to estimated liability insurance claims, as established biennially by the City's actuary. • WORKERS' COMPENSATION RESERVE: an amount sufficient to ensure Workers' Compensation claim assets of the Liability Insurance Fund equal to the eighty Page 1 of 3 percent (80%) Confidence Level of Adequacy applicable to estimated Workers' Compensation claims, as established biennially by the City's actuary. • DEBT SERVICE RESERVES: in each fund from which debt service is paid, an amount equal to the total required by applicable indenture(s) and/or other agreement(s), but in no case less than one year's debt service requirement of all long-term City obligations, excluding inter -fund loans. • VEHICLE REPLACEMENT RESERVE: an amount equal to between the accumulated depreciation and estimated replacement value of the motor vehicle assets of the Vehicle Replacement Fund. For the purposes of this policy, "motor vehicle" shall be defined as a self-propelled, wheeled vehicle with propulsion provided by an engine or motor which must be operated by one or more persons to perform the functions) for which it is designed. The actual amount of each reserve shall be determined each year by the City Manager as part of the budgeting process and shall be annually reported to the City Council as part of or in conjunction with the Comprehensive Annual Financial Report (CAFR); however, nothing in this policy shall prevent determining or reporting on the level of any reserves at other times during the year. The above requirements may be suspended only upon approval of Council. Replenishment of Reserves If its balance falls below the minimum required level, the City shall strive to restore it to the minimum required balance by any feasible means, including, but not limited to, adopting a budgetary surplus; applying any cost savings, over -realized revenues, and/or surpluses realized within the applicable fund; or transferring a portion of the General Fund Contingency Reserve. Unless otherwise noted, the following guidelines will be used to restore a reserve fund: • If a reserve is drawn down to 75-99% of its minimum required balance, it shall be restored to 100% over a 1 to 3 year period. • If a reserve is drawn down to 50-74% of its minimum required balance, it shall be restored to 100% over a 3 to 5 year period. • If a reserve is drawn down below 50% of its minimum required balance, it shall be restored to 100% over a 5 to 7 year period. These guidelines may be suspended, in whole or part, if financial or economic circumstances prevent meeting any or all of the timelines. Once established or increased, a reserve balance shall become committed fund balance, as defined by Governmental Accounting Standards Board Statement Number 54, within the applicable fund and, as such, shall require Council approval for all transfers and expenditures therefrom. Page 2 of 3 Related Policy References None Prior Policy Amendments March 12, 2002 December 10, 2013 October 7, 2014 Page 3 of 3 Passed and adopted by the Council of the City of National City, California, on June 7, 2016 by the following vote, to -wit: Ayes: Councilmembers Cano, Mendivil, Morrison, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Mayor of the City of National City, California / ,,,4i,e City lerk of the City ofational City, California By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2016-81 of the City of National City, California, passed and adopted by the Council of said City on June 7, 2016. City Clerk of the City of National City, California By: Deputy