PURPOSE
This City General Fund Reserve Funding Goals Policy establishes the methodology for the funding goals for each of the City General Fund reserves, including the replacement of vehicles, equipment, and computer equipment/technology. This policy does not apply to reserves determined to be nonspendable in accordance with the City's Fund Balance Policy, nor does it apply to reserves that pertain to outstanding encumbrances (i.e., purchase orders) or unrealized gain on investments (GASB31) as of fiscal year end. Upon the completion of the City's annual audit, this policy directs the Finance Director to prepare a schedule summarizing the funding status of each reserve as of the audit date. This schedule will serve as a tool for budgetary planning for the funding of each reserve.
GENERAL POLICY
Following is a detailed description of the methodology for the funding goals for each of the City General Fund reserves referred to above.
Self-Insurance
The funding goal for this reserve is established at nine times the Self-Insured Retention (SIR) in each program (Workers' Compensation, General Liability, and Employment Practices Liability) to allow for nine full-limit claims in any one year. The SIR is essentially the City's deductible in each program. Those numbers are calculated as follows: Workers' Compensation ($250,000 SIR) is $2,250,000; General Liability ($500,000 SIR) is $4,500,000; and Employment Practices ($250,000 SIR) is $2,250,000. The total proposed reserve is $9,000,000. This level of reserves protects the City's assets by ensuring adequate funding in the event of multiple large claims against the City.
Employee Leave Payouts
The funding goal for this reserve is established at the total payout value of vacation, sick leave, and comp time payouts per the respective City MOUs.
CITY OF RANCHO CUCAMONGA
CITY GENERAL FUND
RESERVE FUNDING GOALS POLICY
POLICY NO.: ___-__
EFFECTIVE: June 13, 2013
REVISED: June 27, 2024
APPROVED:
ATTACHMENT 1
CITY GENERAL FUND
RESERVE FUNDING GOALS POLICY
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PERS Rate Stabilization
The funding goal is established at a level equal to the value of projected future employer contributions identified in the respective annual CalPERS actuarial valuation for five fiscal years after the year of financial reporting. The related reserve is restricted as the funds have been placed in the PARS Post-Employment Benefits Trust, which is a restricted asset on the City's balance sheet.
Facilities Capital Replacement (City)
The funding goal for the City’s facilities capital replacement is established at a minimum of 50% of the capital assets' value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than buildings for governmental activities.
Changes in Economic Circumstances
The funding goal for changes in economic circumstances is established at a nine-month reserve, or 75%, of the City General Fund adopted expenditure budget for operations in the upcoming fiscal year.
Law Enforcement
The funding goal for this reserve is the equivalent of 100% of the most recently approved Schedule A from the San Bernardino County Sheriff's Department.
Economic and Community Development Special Services
The funding goal for this reserve is $5,000,000 to pay for contracts, special services, or projects associated with Economic and Community Development special projects or initiatives; City Council goals, such as contract services for Economic and Community Development code development; or an amount for operating costs for Planning, Building and Safety, and Engineering Departments, excluding capital and project management costs. Funding for this reserve would be provided by unspent revenue from Planning, Building and Safety, and Engineering (not including capital and project management) on an annual basis.
Habitat Mitigation and Sphere of Influence Issues
This reserve provides for ancillary costs related to annexations within the City’s sphere of influence area, including mitigation issues and legal challenges, and for the creation of a multi- species habitat conservation plan, including the acquisition of habitat conservation land. The overall funding goal will be increased each fiscal year based on the increase in the City's assessed valuation for the upcoming fiscal year per the City's property tax consultant. The funding goal for this reserve is established at $8,281,600.
Working Capital
The minimum funding goal for the City's General Fund working capital reserve is of 5% of the City's General Fund adopted expenditure budget for operations in the upcoming fiscal year.
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RESERVE FUNDING GOALS POLICY
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Animal Center Facility Replacement
This reserve is established to fund the future replacement of the Animal Center facility. The funding goal is equivalent to the estimated construction cost of the future Center.
General Plan Update
The funding goal is equal to the cost of updating the City's General Plan based on the most recent contract awarded, which increased annually for the CPI as of December 31 for the Riverside- Ontario-San Bernardino Area preceding the fiscal year end. The funding source for this reserve is a 10% General Plan Maintenance Fee collected on all applicable Building and Safety Services Department and Planning Department services. The funding goal for this reserve is $3,703,580.
City Infrastructure Replacement
The funding goal for City infrastructure is established at a minimum of 50% of the value of infrastructure assets comprised of a road system (excluding right of way), monuments, storm drain system, and off-road trails system for governmental activities.
Dispatch System and 800 MHz Radio Reserve (City and Fire District) For the City, this reserve is established to fund the future acquisition or replacement of the City's 800 MHz radios, as well as the City's proportionate share of the Countywide radio infrastructure.
Additionally, for the Fire District, the reserve is established to fund the District's share of major capital facilities, IT systems, new dispatch enhancements or programs, and radio infrastructure and equipment for CONFIRE and the 800 MHz backbone system. For the City, the funding goal is established at 100% of the replacement cost of the radios and 100% of the proportionate cost of the Countywide radio infrastructure. For the Fire District, the funding goal is established at 100% of the District's share of the CONFIRE and the 800 MHz backbone system features noted above.
Mobile Home Park Program
The Building and Safety Department is responsible for enforcing the State mobile home laws and has adopted the State's related fee schedule. The City retains part of the fees collected to cover the cost of mandatory inspections performed by the Building and Safety Department in accordance with Title 25. The fee also covers the cost of educational materials and related printing services. The funding goal for this reserve is equal to the cost of a contract inspector for the mobile home park inspections for eight parks within the City.
City Vehicle and Equipment Replacement
The funding goal is established at 105% of the value of capital assets comprised of vehicles and equipment for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. The reserve is accounted for in the City's Equipment and Vehicle Replacement Internal Service Fund (Fund 712).
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RESERVE FUNDING GOALS POLICY
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City Computer Equipment/Technology Replacement
The funding goal is established at 105% of the value of capital assets comprised of computer equipment/technology for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. The reserve is accounted for in the City's Computer Equipment and Technology Replacement Internal Service Fund (Fund 714).
Community Development Information Technology
The funding goal of this reserve is equal to the implementation costs to replace and upgrade the City's land management software (Accela) combined with three years' worth of the City's Cost Allocation Plan (CAP) allocations to support the annual costs associated with Department of Innovation and Technology staff time, maintenance contracts, and general administrative allocations for the City's land management software. The funding source for this reserve is a Technology Fee collected on all applicable Building and Safety Services Department, Engineering Department, and Planning Department services. The reserve is accounted for in the City Technology Fee Fund (Fund 020).
Economic Development Strategic Reserve
This reserve is established to fund the acquisition and development of critical properties to promote economic development that will benefit the City as a whole and potentially generate revenue for the City on an ongoing basis whenever feasible through negotiated agreements with third parties (including but not limited to public-private partnerships and land leases). The funding goal is established at $10,000,000, which is the equivalent of the current value of a 10-acre commercial parcel in the City. The funding goal will be adjusted annually based on the current value as of January 1 of each year. After initial funding, the reserve balance may fluctuate when properties are sold or acquired.
Seasonal Weather Emergency Reserve
This reserve is established to provide a dedicated funding source for unanticipated costs incurred due to damage resulting from severe weather emergencies such as wind, flood, fire, extreme heat, extreme cold, and other forces of nature. The funding goal is 75% of the highest-costing severe weather event in the three most recent fiscal years.
Community Benefit Projects
This reserve is established to provide a dedicated funding source for addressing specific industrial projects' expected impacts on affordable housing demand, future greenhouse gas emissions, fire protection services, environmental justice, and related effects typically associated with large warehouse development. The funding goal is equivalent to the total Community Benefit Fee commitments identified in qualifying development agreements entered into between the City and developers of large industrial warehouse developments.