CITY OF MENIFEE
SUBJECT: Fund Balance Policy for the General Fund, Policy No. CC-07, Amendment
MEETING DATE: May 12, 2026
TO: Finance Committee
PREPARED BY: Margarita Cornejo, Director of Strategic Programs and Initiatives
REVIEWED BY: Travis Hickey, Chief Financial Officer
APPROVED BY: Armando G. Villa, City Manager
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RECOMMENDED ACTION
1. Receive staff report on existing Fund Balance Policy for General Fund and provide input for policy update as part of Fiscal Year 2026/27 Mid-Cycle Budget Adoption.
DISCUSSION
Policy No. CC-07, Fund Balance Policy for the General Fund, as initially adopted June 21, 2011 and most recently updated in June 2024, provides a formal policy outlining the City’s minimum levels of unrestricted fund balance to address protection from unexpected situations that require financial resources. As part of the City’s overall financial management and long-term planning efforts, reviewing the existing fund balance policy periodically provides an opportunity to assess if the existing structure and thresholds provide the agency with adequate reserves to support municipal operations.
Maintaining adequate reserves benefits the City in several ways, including, but not limited to:
increased credit quality, provides the city with a stronger long-term financial health to address downturns in the economy and impacts of the negative events, as well as support needed funding for continued maintenance of property, replenishment of vehicles and equipment, and larger and more volatile on-going expenses, such insurance premiums/claims, and pension liability relates costs. At the same time, the City must balance retaining adequate reserves with funding service and current expenditures. With increasing costs often outpacing the growth of revenues, the City must weigh the opportunity cost of directing funding directed towards building reserves versus funding other items.
City of Menifee Staff Report
Fund Balance Policy for the General Fund (Policy No. CC-07) Updates May 12, 2026
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Proposed Updates
Updates included for consideration include expanding the categories of Surplus Fund Balance Assigned and/or Committed categories, to allow for more dedicated reserves to support operating and capital priorities.
FISCAL IMPACT
There is no fiscal impacts associated with the recommended action. A proposed policy will be presented for City Council consideration at the June 3, 2026 meeting. Recommended modifications to the policy as presented such as incorporating new committed or assigned fund balances would result in a fiscal impact of available unassigned fund balance.
ATTACHMENTS
1. Proposed Policy No. CC-07, Fund Balance Policy for the General Fund (redline)
2. Proposed Policy No. CC-07, Fund Balance Policy for the General Fund (clean)