HomeMy WebLinkAbout12 GENERAL FUND RESERVE POLICY & SPECIAL FUND ACCOUNTAGENDA REPORT
Agenda Item
Reviewed:
City Manager
Finance Director
12
MEETING DATE:
TO:
FROM:
SUBJECT:
NOVEMBER 6, 2012
HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
JEFFREY C. PARKER, CITY MANAGER
ESTABLISHMENT OF A GENERAL FUND RESERVE POLICY AND
SPECIAL FUND ACCOUNT
SUMMARY:
In January 2012, Mayor Nielsen established as one of his goals the development of a
comprehensive fund balance reserve policy to ensure appropriate reserves are
maintained and that the City of Tustin follows a financial plan that creates fiscal
sustainability for the future. At the October 16, 2012, meeting the City Council discussed
the proposed policy and supported it with minor modifications to the land proceeds fund
language. Staff has incorporated those changes in both this staff report and the
resolution.
RECOMMENDATION:
It is recommended that the City Council approve Resolution 12 -106 which establishes
the following policy regarding General Fund reserves and Special Fund accounts.
FISCAL IMPACT:
Implementing these policies will strengthen the City of Tustin's financial sustainability for
the future.
BACKGROUND:
Staff is recommending the following policy be established for the General Fund reserve
and the establishment of 3 new Special Fund accounts:
1. Maintain a 20% General Fund reserve policy with a provision that only with the
City Council declaring a financial emergency shall the reserves be lowered to
fewer than 15 %. The Government Finance Officers Association which
Agenda Report — Establishment of a General Fund Reserve Policy and Special Fund Account
October 16, 2012
Page 2
establishes national standards for local govemment finance recommends that cities
maintain a minimum of 10 % -12% General Fund reserves. This policy would ensure
that our standards in Tustin are significantly higher than recommended by the
National organization.
Our current General Fund reserve balance is $9,845,000.00 which is at the 20%
recommended level under our policy.
2. Establish the following Special Fund accounts:
a. Emergency Fund - Recommended $1 million
For use in a City Council declared emergency such as earthquake, flood, and
fire. This fund would augment City operational cost until the city would seek
reimbursement from either the state or federal government.
b. Land Proceeds Fund
These funds would be derived from land sales primarily in the Tustin Legacy
Project; however, these funds could be from any City owned property. The
funds would be allocated to insure the infrastructure needs are met in the
overall development of the Tustin Legacy Plan and to support the
implementation of key elements of the City and Legacy project such as
economic development opportunities and development of parks and
recreational facilities throughout the City. Land proceeds from the Tustin
Legacy Project area will be held in a separate account within this fund. Those
funds will be dedicated for use only in the Legacy area. All other monies in
this fund can be used throughout the City of Tustin.
c. Special Capital Project Fund
The money allocated to this fund would provide for the financing of needed
infrastructure where there is currently no dedicated funding source such as
water funds or transportation funds. These would be General Fund
expenditures that would include: technology upgrades, building
construction /upgrades and park enhancements. It is recommended that 25%
of any fiscal year General Fund surplus be dedicated to this fund.
By establishing the Special Funds accounts along with the conservative 20% General
Fund reserve level, the City of Tustin will have created a financially sustainable
accounting program for the future.
Je 'ror7C. 'arker
C' y Ij n.;ger
RESOLUTION NO. 12 -106
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUSTIN, CALIFORNIA, ESTABLISHING OF A GENERAL
FUND RESERVE POLICY AND SPECIAL FUND
ACCOUNTS
THE CITY COUNCIL OF THE CITY OF TUSTIN FINDS THAT:
WHEREAS, the City Council of the City of Tustin, California is charged with the
oversight of City funds; and
WHEREAS, it is the intention of the City Council of the City of Tustin, California,
to establish a General Fund Reserve Policy and Special Fund Accounts; and
WHEREAS, implementation of these policies will strengthen the City of Tustin's
financial sustainability for the future; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF TUSTIN THAT: the City Council of the City of Tustin does hereby approve the
establishment of a General Fund Reserve Policy and 3 new Special Fund Accounts
(summarized below) be adopted:
1. Maintain a 20% General Fund reserve policy with a provision that only with the City
Council declaring a financial emergency shall the reserves be lowered to fewer than
15 %.
2. Establish the following Special Fund accounts:
a. Emergency Fund — Minimum $1 million
For use in a City Council declared emergency such as earthquake, flood and fire.
This fund would augment City operational cost until the City would seek
reimbursement from either the state or federal government.
b. Land Proceeds Fund
Funds are derived from land sales primarily in Tustin Legacy or any City owned
property. Funds would be allocated to insure infrastructure needs are met in the
development of the Tustin Legacy Plan and to support the implementation of key
elements of the City and Legacy project and other development throughout the
City. Land proceeds from the Tustin Legacy Project area will be held in a
separate account within this fund. Those funds will be dedicated for use only in
the Legacy area. All other monies in this fund can be used throughout the City of
Tustin.
c. Special Capital Project Fund
The fund would provide for the financing of needed infrastructure where there is
currently no dedicated funding source such as water funds or transportation
funds. These General Fund expenditures would include: technology upgrades,
building construction /upgrades and park enhancements. It is recommended that
25% of any fiscal year General Fund surplus be dedicated to this fund.
Resolution 12 -106
Page 1 of 2
PASSED AND ADOPTED by the City Council of the City of Tustin at a regular
meeting on the 6th day of November, 2012.
JOHN NIELSEN,
Mayor
ATTEST:
PAMELA STOKER,
City Clerk
APPROVED AS TO FORM:
DAVID KENDIG,
City Attorney
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF TUSTIN )
I, Pamela Stoker, City Clerk and ex- officio Clerk of the City Council of the City of Tustin,
California, do hereby certify that the whole number of the members of the City Council
of the City of Tustin is five; that the above and foregoing Resolution No. 12 -106 was
duly passed and adopted at a regular meeting of the Tustin City Council, held on the 6th
day of November, 2012, by the following vote:
COUNCILMEMBERS AYES:
COUNCILMEMBERS NOES:
COUNCILMEMBERS ABSTAINED:
COUNCILMEMBERS ABSENT:
PAMELA STOKER,
City Clerk
Resolution 12 -106
Page2of2