City of Camarillo
CITY COUNCIL POLICY
Section: Finance Date Adopted: May 27, 1992
Last Amended: January 12, 2022
Subject: Reserve Level
Number: 3.05 Page 1 of 4
PURPOSE
The City will maintain unappropriated fund or working capital balances in the General Fund, certain Enterprise Funds, certain Special Revenue Funds, Debt Service Funds and Internal Service Funds, and the Capital Improvement Fund. This policy is developed to consider the targeted levels necessary to maintain the City's credit worthiness and to adequately provide for:
Economic uncertainties and other financial hardships or downturns in the local or national economy.
Local disasters or catastrophic events.
Debt or capital obligations.
Cash flow requirements.
Legal requirements.
Reserves above the targeted levels stated in this Policy may be appropriated with City Council authorization.
POLICY
A. General Fund
1. The City will maintain a minimum reserve level of 50% of the operating budget. The budget will include appropriations for operating expenditures plus transfers to other funds for operations, excluding transfers for capital projects.
2. The City will establish and maintain a designated fund balance in the General Fund equal to the discretionary contribution for the future capital improvements outlined in the Five-Year Capital Improvement Program.
Discretionary Funding is allocated to projects when funds from other sources (i.e. grants, impacts fees) are not available.
B. Special Revenue Funds
Adopted 3.5, 5/27/1992 Policy 3.05
Amended 5/23/2001 Page 2 of 4
Amended 3.05, 5/9/2007; 6/13/2018, 1/12/2022
For all Maintenance District Funds, except those that operate on a citywide basis, the City will target a reserve level of 20% of the operating budgets for cash flow purposes. The budgets will include appropriations for operating expenditures.
Fund Name
Zone 1 - Mission Oaks MD1A
Zone 2 - Wittenberg
Zone 3 - Armitos Storm Basin
Zone 4 - Mission Oaks Industrial
Zone 5 - Presley
Zone 6 - Spanish Hills
Zone 7 - Sares/Regis
Zone 8 - Vista Las Posas
Zone 9 - Adolfo Glen III
Zone 10 - Adolfo Glen II
C. Debt Service Funds
Reserve levels for Debt Service Funds will be established and maintained as prescribed by the bond covenants adopted at the time of the issuance of debt.
D. Internal Service Funds
1. Risk Management Fund. A Risk Management Reserve will be established and maintained equal to the sum of the following elements:
three times the self-insured retention for liability claims, plus 100% of the greatest deductible for any single property damage coverage, plus
25% of the annual appropriation for workers’ compensation.
2. Information Services Fund. A Computer Replacement Reserve will be established and maintained to ensure the timely replacement of computer equipment and software. The reserve level will be the greater of 100% of the accumulated depreciation or a schedule defined by the City Council adopted Information Systems Master or Strategic Plan.
3. Vehicle & Equipment Fund. A Vehicle & Equipment Replacement Reserve will be established and maintained equal to 120% of the accumulated depreciation.
4. City Facility Funds. A Capital Outlay Reserve will be established and maintained, based on 100% of a reserve study capital replacement plan, to fund cash flow and the rehabilitation or replacement costs of existing City facility components.
Adopted 3.5, 5/27/1992 Policy 3.05
Amended 5/23/2001 Page 3 of 4
Amended 3.05, 5/9/2007; 6/13/2018, 1/12/2022
E. Enterprise Funds
1. Solid Waste Operating Fund
The City will establish and maintain a targeted reserve level of 5% of operating budget.
2. Water Utility Operating Fund
The City will establish and maintain a targeted reserve level based on the following schedule:
Operations 3Up to 6 Months but not less than 4 Months O&M , plus one year of debt service
Capital Annual Depreciation (Replacement Costs)
100% of subsequent fiscal year’s pay-go capital
expenditures
Rate Stabilization 5% of Commodity Sales
Debt Service 1 Year of Debt Service
Restricted/Emergency 1% of Asset at Replacement Costs
3. Sanitary District Operating Fund
The City will establish and maintain a targeted reserve level based on the following schedule:
Operations 3 Up to 6 Months but not less than 4 Months O&M , plus one year of debt service
Capital Annual Depreciation (Replacement Costs)
100% of subsequent fiscal year’s pay-go capital
expenditures
Debt Service 1 Year of Debt Service
Restricted/Emergency 1% of Asset at Replacement Costs
4. Rate Stabilization Funds
The City Water and CSD Wastewater Enterprises will establish and maintain Rate Stabilization Funds (RSF’s) to help defray excessive annual rate increases resulting from unexpected operational changes and to manage unforeseen cash flow changes year over year.
The targeted reserve levels are 15% to 30% of annual operating expenses.
Deposits to the RSF may be made from any source of funds. Withdrawals from the RSF may be used: for emergencies or unplanned events to prevent rate spikes, for investments in initiatives that could reduce operating expenditures, to apply to revenues to reduce rate Adopted 3.5, 5/27/1992 Policy 3.05
Amended 5/23/2001 Page 4 of 4
Amended 3.05, 5/9/2007; 6/13/2018, 1/12/2022
increases, or to help meet required debt coverage ratios. When transferring from Water and Wastewater Funds into the RSF, the revenues earned during that fiscal year will not count towards the debt service coverage factor.
F. PROCEDURE
The Finance Department will perform a reserve analysis to be submitted to the City Council upon the occurrence of the following events:
City Council deliberation of the annual budget,
presentation of the annual financial report,
midyear budget review, and
when a major change in conditions threatens the reserve levels established within this policy.
If the analysis indicates projected or actual reserve levels that fall either 10% below or 10% above the levels outlined in this policy, at least one of the following actions will be included with the analysis:
an explanation of why the reserve levels are not at the targeted level, or an identified course of action to bring reserve levels to the target prescribed.