Draft
Fiscal Resiliency Policy
Agenda
Introduction
Policy objective and Scope
Existing Tools
Fiscal Health Analysis
Strategies
Introduction
Policy’s Purpose
- Maintaining Financial Stability with
the use of Regular Fiscal Health Checks
- Steps to Address Fiscal Uncertainty
and Budget Shortfalls
• Note: No other like policy was identified.
• Generated from other best practice documents.
Policy Objective and Scope
• Continuous financial evaluation
• Adaptability to Fiscal Emergencies
• Coverage of major City funds (General, Water, Sewer)
Existing Tools – Best Practice
Fund Balance Policy:
Minimum fund balance requirements
Strategies for maintaining required balances
• General Fund = 25% of Operating Expense
• Water and Sewer Funds = 33% of Operating Expense
New Tools = Fiscal Health Analysis
Frequent Consistent Assessment
General Fund
• Minimum Cash Coverage of 25%
• Liquidity Ratio > 1.0
• Revenues to Budget and PY < 10% Change
• Significant Revenues Not Declined >10%
• Op. Expenditure Not Increased > 10%
• No Significant & Detrimental Community
Event
• Op. Rev/Op Exp. 1.1 or greater
Water and Sewer Funds
• Minimum Cash Coverage of 30%
• Liquidity Ratio > 1.0
• Revenues to Budget and PY < 15% Change
• Significant Revenues Not Declined >10%
• Op. Expenditure Not Increased > 10%
• No Significant Change from Water Agency or
WastewaterTreatment Agency
• Op. Rev/Op Exp 1.1 or greater
New Tools = Fiscal Health Analysis
Frequent Consistent Assessment (cont.)
Community Fiscal Health Analysis
• Population Trends
• Total Property Valuation
• Business Formation and Closure Rates
• US, State, Regional Economic Factors as Available
• Personal Savings Rate
• Unemployment Rates
Strategies for Addressing Shortfalls
Primary Indicators
• Target fund reserve level
• Closure of top 10 business (sales tax)
• Greater than 10% variation on revenue/expenditures
Action
• Freeze new non-essential contracts and provide recommendations to the City Council within 30 days.
Strategies for Addressing Shortfalls
Secondary Indicators
• 2 or more of any other indicators
Action
• Initiate an assessment of the complete financial condition • Identify the projected magnitude and duration of the financial impact. • Present issue and recommendations at the next quarterly City Council financial update
Potential Cost Saving Measures:
• Freeze/postpone capital expenditures, as applicable
• Pause new contracts, freeze or reduce existing contract services • Evaluate assets for potential liquidity (Short term cash flow) • Implement staffing & training freeze and evaluate union negotiations • Debt management
Explore potential new revenue sources
Monitoring and Adjustments
• Response calibrated and phased to the evolving severity of the issue Documentation and Reporting
Questions…
Final Policy back to Council
Incorporated into City’s
Consolidated Financial Policies