RESOLUTION NO. 23-23
Resolution Of The City Council Of The City Of Emeryville Amending The City’s Reserve Policies
WHEREAS, the existing reserve policy, which was approved by the City Council in conjunction with the development of the Fiscal Year 2016-17 Budget, addresses only the Economic Uncertainty Reserve and the Undesignated General Fund Reserve; and WHEREAS, the existing reserve policy has not been reviewed or updated since 2016; and
WHEREAS, the title of the existing policy document should be revised from “Reserve Policies” to “Expenditure and Reserve Policies”; and
WHEREAS, the Mid-Year budget adjustment will include a request to transfer $969,115 from the Unassigned fund balance to the Economic Uncertainty reserve to reach the 50 percent target level; and
WHEREAS, the purpose and balance of the Disaster Reserve be formalized and incorporated into the Expenditure and Reserve Policies; and WHEREAS, Emeryville voters approved Measure F on March 3, 2020, and it is recommended that a policy prioritizing the eligible uses of Measure F funds and establishing a target reserve balance of $4 million be incorporated into the Expenditure and Reserve Policies; and
WHEREAS, Emeryville voters approved Measure O on November 8, 2022, and it is recommended that an expenditure policy identifying prioritized uses for Measure O funds and establishing a target balance of $1 million be incorporated into the Expenditure and Reserve Policies; and
WHEREAS, the proposed Expenditure and Reserve Policies were reviewed by the Budget and Governance Committee on February 7, 2023; now, therefore, be it RESOLVED, that the City Council of the City of Emeryville hereby adopts the Amended Reserve Policies.
Resolution No. 23-23
Adoption of Financial Reserve Policy Amendments
City Council Meeting | February 21, 2023
ADOPTED, by the City Council of the City of Emeryville at a regular meeting held Tuesday, February 21, 2023, by the following vote:
AYES: 5
Mayor Bauters, Vice Mayor Welch and Council Members Kaur, Mourra and Priforce
NOES: 0
ABSTAIN: 0
ABSENT: 0
MAYOR
ATTEST:
APPROVED AS TO FORM:
CITY CLERK CITY ATTORNEY
1 CITY OF EMERYVILLE
EXPENDITURE AND RESERVE POLICIES
GENERAL FUND
Economic Uncertainty Fund
The purpose of the Economic Uncertainty fund is to provide the fiscal capacity to absorb one‐Ɵme problems without disrupƟng day‐to‐day operaƟons and services and for more systemic and ongoing problems, to take Ɵme needed to fully idenƟfy the impacts and develop and implement a thoughƞul longer‐term strategy.
The City shall maintain a target reserve of 50% of the General Fund annual operaƟng budget.
AppropriaƟons are to be reserved for emergency situaƟons and limited to one‐Ɵme or short‐term (one or two fiscal years) use. Examples of such emergencies include, but are not limited to:
Unplanned, major event such as a catastrophic disaster requiring expenditures over 5% of the General Fund adopted budget.
Economic uncertainƟes, local disasters and other hardships or downturns in the local economy. Budgeted revenue taken by another government enƟty.
Drop in projected/actual revenue of more than 5% of the General Fund adopted revenue budget.
Should the Economic Uncertainty fund be used and its level falls below the target amount of 50%, the goal is to replenish the fund within three fiscal years.
Disaster Reserve Fund
The purpose of the Disaster Reserve Fund is to provide funding in response to a disaster or other imminent or emergency event for which a declaraƟon of a state of emergency has or could be declared.
The City shall maintain a target reserve of $5 million in the Disaster Reserve Fund.
In adopƟng this policy, it is the intent of the City Council that these funds remain uncommiƩed to permit the City Manager access to them without prior council approval in the event of a disaster or similar emergency.
Unassigned Undesignated General Fund
This reserve is considered primarily a working capital requirement, bridging the gap between the Ɵme expenses are paid and the Ɵme revenues are collected. Undesignated reserve balances will fluctuate from Ɵme to Ɵme and reflect annual operaƟng results. This fund has no minimum threshold although sufficient balances are maintained to provide conƟngencies for unseen operaƟng or capital needs and cash flow requirements.
2 EMERYVILLE MEASURE F FUNDS
In March 2020, Emeryville voters approved Measure F, a one quarter‐cent sales tax levy which has permissible uses that are codified by the measure in Emeryville Municipal Code, SecƟon 3‐3.354.
Pursuant to these authorizaƟons and limitaƟons, the City Council has adopted the following policies for the expenditure and reserve of Measure F funds.
Expenditure Policy
In each budget year, Measure F funds shall be expended in the following order of priority:
(1) Provision of funding for one Code Enforcement Officer posiƟon; (2) Provision of funding for one Engineer posiƟon in the Public Works Department; (3) Funding to cover the costs of the Emeryville Child Development Center (ECDC), including maintenance of the Measure F Reserve Fund at the Reserve Policy funding level; (4) Funding to support the permissible public safety investments approved by voters, with posiƟon designaƟons to be determined by the City Council; and
(5) Any funds not expended in a given budget year for the above prioriƟes shall be allocated to the Measure F Reserve Fund
Reserve Policy/Measure F Reserve Fund
The City shall create and maintain a Measure F Reserve Fund. The primary purpose of this fund is to provide funds to secure the long‐term stability of the Emeryville Child Development Center (ECDC) in the event of economic uncertainty.
The City shall maintain a minimum balance of $4 million in the Measure F Reserve Fund. This $4 million is reserved exclusively for the use of supporƟng the Emeryville Child Development Center. Any funds deposited in the Measure F Reserve Fund in excess of the $4 million minimum balance may be expended in support and furtherance of any of the other permissible uses of Measure F funds, as approved by the voters.
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3 EMERYVILLE MEASURE O FUNDS
In November 2022, Emeryville voters approved Measure O, an equitable adjustment to the City’s Real Property Transfer Tax (RPTT), which is codified in Emeryville Municipal Code, SecƟon 3‐3.702. The City Council has adopted the following policies for expenditure and reserve of Measure O funds.
Expenditure Policy
For each budget year, Measure O funds shall be expended in the following order of priority:
(1) To the extent that funds are available, contribuƟon shall be made in the amount necessary to replenish the CriƟcal Needs Fund to a minimum balance of $1 million at the start of each fiscal year;
(2) Of the Measure O funds that remain aŌer the contribuƟon to the CriƟcal Needs Fund, contribuƟon of fiŌy percent (50%) of the remaining balance toward the City’s Capital Improvement Program (CIP) for use and expenditure in accordance with City Council direcƟon and exisƟng authority and prioriƟes regarding the CIP; and (3) Of the Measure O funds that remain aŌer the contribuƟon to the CriƟcal Needs Fund, contribuƟon of fiŌy percent (50%) of the remaining balance toward the City’s unfunded liabiliƟes, including pension liability and OPEB, which may include investment in the City’s SecƟon 115 Pension Trust. AllocaƟon of these funds shall be determined by the City Council, upon recommendaƟon of the Budget and Governance and Budget Advisory CommiƩees.
CriƟcal Needs Fund
The City shall create and maintain a Measure O CriƟcal Needs Fund for the purpose of providing the City with funds to address one‐Ɵme criƟcal maintenance or criƟcal service needs for which the costs are not part of the City’s regular budget and which are not reasonably anƟcipated to be an ongoing cost that should be budgeted as part of the biannual budget process. The City Manager shall have discreƟon in authorizing the release of these funds for materials, labor and contracts necessary to complete or repair a City facility or support an urgent service need up to the City Manager’s approval authority. Priority shall be given to infrastructure maintenance, environmental projects and programs, housing and homelessness services, and public safety services or programs. The CriƟcal Needs Fund shall be replenished annually to a maximum of $1 million, which shall be funded by revenues from Emeryville Measure O.
February 2023