Policy 4-2 ESTABLISHMENT AND MAINTENANCE OF A GRANT/DISASTER AND GENERAL FUND RESERVE

PURPOSE: Establish and maintain an operating reserve fund that will equal five-percent (5%) 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 this 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 reserve 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.

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 Grant Matching/Disaster Reserve and General Fund Reserve, must be approved by six (6) affirmative votes of the City Council.