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Home My WebLink About2010-05-05 Packet - Budget WorkshopCITY OF UKIAH CITY COUNCIL Special Meeting CIVIC CENTER COUNCIL CHAMBERS 300 Seminary Avenue Ukiah, CA 95482 May 5, 2010 5:00 P.M. BUDGET WORKSHOP 1. ROLL CALL 2. BUDGET WORKSHOP SESSION a. Discussion Of Proposal To Establish A Strategic General Fund Reserve For Fiscal Year 2010-2011 And Give Direction To City Manager And Finance Director On The Further Preparation Of The Reserve And Presentation In The FY 2010-2011 Budget Document 3. PUBLIC COMMENT 4. ADJOURNMENT Please be advised that the City needs to be notified 24 hours in advance of a meeting if any specific accommodations or interpreter services are needed in order for you to attend. The City complies with ADA requirements and will attempt to reasonably accommodate individuals with disabilities upon request. Materials related to an item on this Agenda submitted to the City Council after distribution of the agenda packet are available for public inspection at the front counter at the Ukiah Civic Center, 300 Seminary Avenue, Ukiah, CA 95482, during normal business hours, Monday through Friday, 7:30 am to 5:00 pm I hereby certify under penalty of perjury under the laws of the State of California that the foregoing agenda was posted on the bulletin board at the main entrance of the City of Ukiah City Hall, located at 300 Seminary Avenue, Ukiah, California, not less than 24 hours prior to the meeting set forth on this agenda. Dated this 30th day of April, 2010. JoAnne M. Currie, City Clerk 2a May 5, 2010 SUBJECT: DISCUSSION OF PROPOSAL TO ESTABLISH A STRATEGIC GENERAL FUND RESERVE FOR FISCAL YEAR 2010-2011 AND GIVE DIRECTION TO CITY MANAGER AND FINANCE DIRECTOR ON THE FURTHER PREPARATION OF THE RESERVE AND PRESENTATION IN THE FY 2010-2011 BUDGET DOCUMENT Background: At the City Council Work Session of April 7, 2010, the City Manager and Finance Director presented the concept of establishing a Strategic Reserve Fund. This fund would be separated from the current presentation of the General Fund Reserve that is now shown on the Combined Public Safety and General Fund Summary exhibit in the budget document. An Operating Fund Balance would be shown in the exhibit, and the Strategic Reserve Fund would be shown separately as the Strategic General Fund Reserve #110. One purpose of establishing such a fund would be to help assure adequate cash reserves are available to cash flow the City's expenditures and operations. As the City has had to draw down its General Fund reserves, planning for cash flow for operations has become an issue. Also, establishment of the Strategic Reserve Fund will provide a more accurate picture of the General Fund's operating fund balance in terms of funds actually available to meet annual expenditures, rather than including funds which have been set-aside to meet at least the minimum 10% General Fund balance policy adopted by the City Council. Discussion: The City Council had previously established Funds #110 and #115, in addition to Funds #100 and #105 in the General Fund. Fund #115 was established in 1989, to be used only for extreme emergencies upon approval by a 4/5 vote of the Council. The goals to be achieved by a Strategic Reserve Fund are: ® Establish a reserve to meet cash flow requirements created by timing differences between expenditures and the receipt of reimbursements ® Establish a reserve to fund emergency expenditures not included in an adopted spending plan _ Continued on Page 2 Recommended Action(s): Discuss the proposal to establish a Strategic General Fund Reserve and give direction to the City Manager and Finance Director on the further preparation of the reserve and presentation in the FY 2010-2011 budget document Alternative Council Option(s): Citizens advised: Requested by: Prepared by: Gordon Elton, Finance Director Coordinated with: Jane Chambers, City Manager Attachments: Strategic General Fund Reserve #110 Approved: - Jane Chambers, City Manager • Establish a reserve which serves to mitigate the year to year volatility in revenues and provide for an orderly planning process to adjust spending plans • Establish a reserve as the source of funding for major one-time expenditures Proposed Actions Needed to Establish the Strategic General Fund Reserve: The City Manager and Finance Director recommend that the following actions be taken to establish the Strategic General Fund Reserve. These actions will establish the Strategic General Fund Reserve for the FY 2010/2011 year, and will allow for an Operating Fund Balance in Fund 100 & 105. Although the budget for Funds 100 & 105 is not yet fully completed for presentation to the City Council, enough work has been done to allow the Finance Director to estimate what will be necessary in order to fund an operating fund balance in keeping with the current estimates of revenues and expenditures in the General Fund for FY 2010/2011. • Redefine the Current Special General Fund #110 as the Strategic Reserve Fund • Determine if a 4/5 vote will continue to be required for use of this fund • Transfer the balance from Fund #115 - General Fund Reserve- to the Strategic Reserve Fund and eliminate the fund from the City's accounts (requires 4/5 vote per Resolution 90-7) • Transfer the $40,000 from the Equipment Replacement Fund #698 to the Strategic Reserve Fund instead of to Fund #100 as planned in the FY 2009/2010 budget. • Transfer the $315,000 from the Special Projects Fund #699 to the Strategic Reserve Fund instead of to Fund #100 as planned in the FY 2009/2010 budget. • Establish $500,000 as the contingency balance to be maintained in Fund #100 after transfers to or from this Strategic Reserve • Authorize staff to automatically make transfers between the Strategic Reserve Fund and the General Fund to meet the fund balance goal in Fund #100 • Establish that the Strategic Reserve Fund is the source of cash to meet cash flow needs of Fund #100 • Establish the policy that interest income generated from the cash balance in this fund shall be income of General Fund #100 • Establish the policy that anticipated reimbursements will not be included in the budget planning until they are actually received • Establish a minimum Fund Balance target of two months General Fund #100/105 expenses • Establish a target Fund Balance target of three months General Fund #100/105 expenses • Establish an alternate minimum Fund Balance target of 10% of General Fund #100/105 expenditures during temporary economic downturns • Authorize the transfer of the remaining balance of $257,613.10 from the firehouse sale proceeds account to the Strategic Reserve Staff anticipates presenting council with the appropriate action items concurrently with the budget adoption process. 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