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IV. RESERVE POLICIES <br /> A. PURPOSE <br /> The purpose of the city's reserve funds are to provide 1) a stable funding <br /> source for expenditures that fluctuate significantly each year, for example <br /> equipment acquisitions and replacement, 2) working capital to maintain a <br /> sufficient cash flow and 3) a stable or improved credit rating. <br /> B. POLICY <br /> The city's goal is to maintain a General Fund fund balance reserve of 45 <br /> percent of the general funds operating budget for working capital to <br /> provide cash flow between its two semi annual state aid and tax payments <br /> (July and December). <br /> At year end, if the General Fund fund balance has a reserve for working <br /> capital at a minimum balance of 45% of the next year's operating budget, <br /> the remaining reserves will be transferred to the capital improvement funds <br /> on a projected needs basis as determined by the five year capital <br /> improvement plan by city council approval. <br /> The Infrastructure Fund will receive any fund balances remaining in any <br /> debt service fund once the debt is retired. <br /> The city will maintain capital improvement fund accounts for the timely <br /> purchase and replacement of equipment in excess of $500 or that will last <br /> for three or more years as identified in the five year capital improvement <br /> program. <br /> C. IMPLEMENTATION <br /> The following graph shows the city's General Fund Reserves against budgeted <br /> expenditures. In 1988 thru 1991 reserves were transferred to the city's <br /> Capital Improvement Funds. <br /> Source: City budget and annual report documents. <br />