Section 4 Finance
Policy 4-2 ESTABLISHMENT AND MAINTENANCE OF A GRANT/DISASTER AND GENERAL FUND RESERVE
COUNCIL POLICY 4 - 2
DISTRIBUTION: Mayor and City Council
SUBJECT: Establishment and Maintenance of a Grant/Disaster
PURPOSE: Establish and maintain an operating reserve fund that will equal
of general fund expenditures by July 1, 2006. A portion of the Reserve fund will be dedicated
for the express purpose to be used for grant matching funds and unexpected Disasters. In
addition, any funds set aside in the Reserve Fund, from sources other than the fifty cents ($.50)
collected from refuse fees, may be utilized for non-recurring type expenditures at the discretion
of the City Council.
BACKGROUND: The City, currently, does not have a Reserve Fund
policy. It would be
beneficial for the City Council to adopt a formal Reserve policy and begin budgeting for
reserve each year in its budget process, The City should have a goal to have five percent (5%) of
General Fund expenditures by the fiscal year 2006.
During the FY 02 03 budget discussions Council approved a $1.50 increase in refuse disposal
fees. It was the intention of Council that fifty cents ($.50) of this increase be placed in a
fund, specifically to be dedicated for grant matching funds and unexpected Disasters. It is
estimated that the fifty cents ($.50) will generate approximately $138,000 in FY 2002 2003.
In addition, it will be necessary that additional funds from general fund revenue be placed in the
Reserve Fund to meet the goal of a 5% reserve fund balance of general fund expenditures by July
1, 2006. Funds, other than the refuse fee funds, may be utilized for, unexpected, non-recurring
type of expenditures at the discretion of City Council.
Each year the City Manager will budget, a minimum of fifty cents ($.50) from
the refuse fees
in the Reserve Fund (dedicated for Grant Matching Funds/Disaster s). In addition, the City
Manager, will budget additional funds from general fund revenue, as necessary, to meet the goal
of 5% Reserve Fund balance by July 1, 2006.
The combination of Grant Matching Funds & General Fund Reserve should equal
5% by July
PROCEDURES: 1. It is the policy
of the City and intent of the City Council to maintain
a fiscally responsible reserve. By the beginning of FY 2006 the amount of reserve will be at a
minimum five percent (5%) of the General Fund expenditures. The reserve will remain at that
amount, as a minimum, each year thereafter. This percentage is a combination of both grant
matching funds/Disaster and general fund reserve balance.
2. Financial Services Division will transfer, monthly, fifty cents ($.50) collected from refuse
fees into the Reserve Fund and dedicated specifically for grant matching and Disasters. This
amount will be shown separately from other funds in the Reserve Fund.
3. The monthly financial statements will show the balances of both General Fund Reserve and
Grant Matching Fund/Disaster Reserve Fund, separately.
4. Each year the City Manager will budget, a minimum of fifty cents ($.50), from refuse fees
into the Reserve Fund (dedicated for Grant Matching Funds/Disaster s), plus other funds as
necessary to reach the five percent (5%) by July 1, 2006.
5. Any expenditure from the Reserve Fund, which includes both
Reserve and General Fund Reserve, must be approved by six (6) affirmative votes of the City
EFFECTIVE DATE: March 11, 2003
RESPONSIBLE DEPARTMENT: Finance
CECIL E. POWELL
(4-2, Added, 03/17/2003)