CITY OF PLEASANT HILL
GENERAL FUND RESERVE POLICY
EFFECTIVE APRIL 2022
INTRODUCTION
This General Fund Reserve Policy (" Policy" or "Reserve Policy") of the City of Pleasant Hill has been designed in accordance with guidelines of the Government Finance Officers Association (GFOA) and all applicable laws.
PURPOSE
The purpose of the General Fund Reserve Policy is to ensure that the City maintains adequate financial resources to continue to provide basic municipal services in the event of a significant revenue shortfall or unanticipated expenditure.
DEFINITION
The City shall establish a separate account in the financial system to reserve funds intended to meet the purpose above. This account and the funds contained therein shall be referred to as the General Fund reserve.
RESERVE LEVELS AND INITIAL FUNDING
The City's General Fund reserve shall contain a Reserve for Working Capital, Budget Stabilization Reserve and a Pension Rate Stabilization Reserve. This policy establishes that the City shall endeavor to hold $5 million in the Reserve for Working Capital, $4 million in the Budget Stabilization Reserve, and a Pension Rate Stabilization Reserve with an initial deposit of $1 million. Upon approval of this Policy, the City shall maintain a General Fund reserve of $5 million for the Reserve for Working Capital and $4 million for the Budget Stabilization Reserve. The Reserves for Working Capital and Budget Stabilization are considered assigned fund balances, and the Pension Rate Stabilization Reserve is considered restricted fund balance for the purpose of financial reporting per the standards of Generally Accepted Accounting Principles (GAAP).
AUTHORITY OVER AND USE OF RESERVES
Funds held in the Budget Stabilization Reserve can only be appropriated by a majority vote of the Council to address exceptional circumstances specifically related to a significant revenue shortfall, unanticipated expenditure, or other budget stabilization issue. Funds in the Reserve for Working Capital may not be appropriated for expenditure, as the specific purpose of these funds is to be retained to ensure adequate liquidity for the City's normal financial transactions. Funds for the Pension Rate Stabilization Reserve can only be appropriated for pension related costs. Please refer to the Pension Rate Stabilization Program Funding and Withdrawal Policy for additional information.
REPLENISHMENT OF RESERVES
If the reserve funds are appropriated and expended, the City Council will endeavor to replenish them to the full amounts noted above as part of the adoption of the subsequent biennial budget, if not sooner.
POLICY REVIEW
This Policy shall be reviewed by the City Council periodically to ensure its consistency with current law and the City's current needs.