RESERVE POLICIES
Adequate reserves shall be maintained for all known liabilities, including payable employee pension costs, post-employment benefits, leave balances, workers' compensation, and self-insured retention limits.
Adequate reserves shall be maintained for all lease purchases. For each lease purchase, the City will make a down payment equal to one annual payment from current revenues. The balance of the lease purchase obligation shall be fully reserved.
The City will endeavor to maintain an operating reserve equal to eight percent of the General Fund, Measure V, and Measure G Operating Budget to cover cash flow requirements and normal variances in revenue and expenditure estimates.
The City will endeavor to maintain a reserve equal to twenty-five percent of the future City financed Capital Projects scheduled in the four out-years of the Six-Year Capital Improvement Program to cover variances in project revenue and expenditures The City will endeavor to maintain reserves in the Enterprise Funds equal to twenty-five percent of the budgets.
The City will endeavor to maintain a reserve in the Sewer Enterprise Fund equal to the larger of twenty-five percent of debt service on the 1998 Sewer System Revenue Bonds or twenty-five percent of the sewer operating budget. This reserve will be in addition to the debt service reserve required in the bond documents.
Airport Enterprise Fund Reserves
The Airport will endeavor to maintain an Operating Reserve equal to 25% of its operating expenditures.
The Airport will endeavor to maintain a Capital Reserve equal to the proceeds from the sale of surplus airport property to a real estate developer, Cabot, Cabot & Forbes (CC&F). It is imperative that the Airport maintains this Working Capital Fund because FAA grants operate on a reimbursement basis. In addition, this fund should only be designated for unbudgeted, unplanned and unforeseen capital improvement related contingencies.
The City will endeavor to maintain reserves in the Maintenance Districts equal to fifty percent of the budgets.
The City will endeavor to make the recommended contributions to fund post-employment benefits and pension plans as established in the annual actuarial reports.
Reserve requirements will be reviewed annually and may be increased or decreased, or adjusted by an amount necessary to meet future identified, one-time, and specific expenditures requiring the accumulation of funds over a given period.
General Fund Year-end carryover balances shall be allocated to reserves in the following priority order until all desirable reserve levels are achieved. The Council may decide, on an exception basis, to use the carry over balances to offset revenue shortfalls that result from State and County budgetary actions.
Insurance reserves
Operating Budget reserve
Capital Improvement Program reserve
Funding of Pension Obligations
Funding of Post-employment benefit obligations
OPERATING BUDGET POLICIES
Appropriations
In evaluating the level of appropriations for program enhancements, or reductions, the City will apply the following principles in the priority order given:
Essential services, which provide for the health and safety of residents, including but not limited to police, fire, street maintenance, and sewer and storm drainage will be funded to maintain current dollar levels.
The budget will provide for adequate ongoing maintenance of facilities and equipment.
Appropriations for program enhancements or reductions will be evaluated on a case-by-case basis rather than across the board.
When reductions in personnel are necessary to reduce expenditures, they shall be consistent with the City Council's established service level priorities and, when possible, shall be accomplished through normal attrition.
Programs, which are self-supported by special revenues or fees, shall be separately evaluated.
Prior to the City Council making any supplemental appropriation, the City Manager or Finance Director shall certify that funds in excess of those estimated in the budget are available for appropriation. Any such supplemental appropriations shall be made for the fiscal year by Council action up to the amount of any excess.
Appropriations may be reduced any time during the fiscal year by the City Council upon recommendation of the City Manager. When appropriation reductions are recommended, the City Manager shall provide specific recommendations to the Council, indicating the estimated amount of the reduction, any remedial actions taken, and recommendations as to any other steps to be taken.
The City Manager may transfer appropriations between departments and Department Directors may transfer appropriations between programs and accounts within their individual departments and divisions, but only the Council by minute-order may appropriate funds from reserves or fund balances.
Only the City Manager may authorize the use of departmental salary budget savings.
All appropriations, except for Capital Improvement Program appropriations, shall lapse at the end of the fiscal year to the extent that they have not been expended or encumbered. An appropriation in the Capital Improvement Program shall continue in force until expended, revised, or cancelled.
The City will endeavor to budget an appropriated contingency account in the Non-Departmental operating budget equal to one percent of the total General Fund Operating Budget to meet changing operational requirements during the fiscal year. City Manager can authorize transfers from contingency account subject to purchasing limits.
CITY OF SALINAS Exhibit A
FINANCIAL POLICIES