2021/09/14 City Council Resolution 2021-101 RESOLUTION NO. 2021-101
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROHNERT PARK
APPROVING AND ADOPTING THE AMENDED FINANCIAL RESERVES POLICY
WHEREAS,the City Council of the City of Rohnert Park has determined it is in the public
interest to establish policies regarding guiding use of Reserve accounts and apply any significant
operational (General Fund) surpluses to operations and contingency reserve fund accounts; and
WHEREAS,adequate financial reserves are necessary for continued stability such as cash
flow variations, economic downturns, and loss of revenues, and is one of the major components
that bond rating agencies study in determining the creditworthiness of the City government;
WHEREAS, on June 28, 2011, the council adopted a `Restricted Reserves Fund' policy
through Resolution 2011-56; and
WHEREAS, the City's existing reserve policy warrants revisions to clearly define the
various reserves, clarify their use, and assignment of general fund surplus; and
WHEREAS, the revised policy helps define the City's various assigned general fund
reserves in use; revises minimum target levels of operating reserve; provides clearer guidelines on
their creation and appropriation, and revises assignment of general fund surplus, supporting long
term planning and enhancing transparency;
WHEREAS, on August 24, 2021, the council held a public hearing, discussing and
approving recommendations to the proposed reserves policy; and
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of Rohnert Park
that the amended Reserves Policy, is hereby approved and adopted as set forth in Exhibit A; and
DULY AND REGULARLY ADOPTED this 14th d. Sep -mber 2021.
CITY 1 ' 1 H RT P 4 RK
4240
G rard CIRITice .yor
ATTEST:
Elizabeth Machado, Acting City Clerk
Attachment: Exhibit A: Reserve Policy and Use of General Fund Surplus
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CITY OF ROHNERT PARK
CITY COUNCIL POLICY
EXHIBIT A
SUBJECT/TITLE: POLICY NO: APPROVED BY: APPROVAL DATE:
FISCAL POLICY:
RESERVE POLICY AND THE USE OF
GENERAL FUND SURPLUS
☐RESO NO:_________________
☐MINUTE ORDER
TABLE OF CONTENTS
TABLE OF CONTENTS ............................................................................................................................... 1
PURPOSE ......................................................................................................................................... 1
BACKGROUND ................................................................................................................................. 1
PROVISIONS ..................................................................................................................................... 3
APPENDIX ........................................................................................................................................ 4
1.PURPOSE
The City of Rohnert Park established a number of assigned reserves enabling carryover of funds from
year-to-year to help meet long-term financial goals. The below policy updates the established criteria
for use and allocation of these reserves to ensure consistency in fund allocation and longtime financial
sustainability.
The City at times realizes an operating General Fund surplus at fiscal year-end, due to cost-cutting
measures, revenue in excess of projections, and operational modifications. This policy updates the
assignment of these surplus funds for additional clarity and use.
2.BACKGROUND
The City has General Fund assigned reserves and Internal Service Funds that share similar naming
conventions, but are created for different purposes. The City’s Internal Service Funds account for
activities that provide services to other City departments, generally on a cost-reimbursement basis.
These include the Information Technology (IT) Fund, Technology Replacement Fund, Vehicle
Replacement, Fleet Management Fund, Fleet Capital & Maintenance Reserve Fund, and the
Infrastructure Fund. Besides these funds, the City also maintains assigned reserves in the General
Fund for Contingency, Operations, City Facilities, IT, Fleet, and Infrastructure. Unlike the Internal
Services Funds, the assigned reserves act as set-aside reserves in the General Fund to accumulate
resources for unforeseen operating conditions or ongoing and future capital expenditures. These
include deferred maintenance, streets and landscaping, vehicles, and complex facility projects, which
are not part of the City's recurring operations and expenditures. The City maintains the following
assigned reserves:
1.General Fund Operating Reserve: Set-aside reserve to support city operations during reduction
in expected or budgeted revenues and unexpected cash shortages, expense or losses. The City’s
CITY OF ROHNERT PARK
CITY COUNCIL POLICY
EXHIBIT A
SUBJECT/TITLE: POLICY NO: APPROVED BY: APPROVAL DATE:
FISCAL POLICY:
RESERVE POLICY AND THE USE OF
GENERAL FUND SURPLUS
☐ RESO NO:_________________
☐ MINUTE ORDER
minimum target level for the General Fund (GF) operating reserve is set at 17%1 of annual original
adopted General Fund budget for the fiscal year when General Fund reserves are assigned. For
example, General Fund reserve assignments made in FY21-22 for year-ending FY20-21 will be 17%
of the adopted General Fund budget for FY21-22. Operating reserves in excess of the minimum
target level may be used for any general fund purpose including capital projects.
2. Contingency Reserve: Set-aside reserve to provide capital in the event of a local disaster or
unanticipated fiscal crisis. The City’s minimum target level for the Contingency reserve is 5% of
annual original adopted General Fund budget for the fiscal year when General Fund reserves are
assigned. Refer to above example for assignment of contingency reserves.
3. City Facilities: Set-aside reserve for capital and maintenance needs of existing or new City
facilities.
4. Vehicle Replacement Reserve: Reserve for replacement costs of vehicles and equipment in
service.
5. Self-Insured Losses Reserve: Reserve to cover insurance losses not covered by the annual
premiums or those that are within self-insured retention limits. The City’s current minimum target
level for the Self-Insured Losses reserve is 50% of the total annual insurance premiums for liability,
property, employment practices, and auto insurance programs.
6. Infrastructure Reserve: Reserve to accumulate resources for ongoing or future capital
expenditures including capital projects, purchase of new vehicles, and technology projects that
follow the City’s asset policy.
7. Retirement Reserve: Set-aside reserve to contribute towards the advance payment of the City’s
unfunded accrued pension liability or to contribute to the City’s Section 115 Trust.
Assigned reserves may be accessed for purposes other than those for which they were established
only under extraordinary circumstances, which include:
- Costs related to natural or human-made disasters;
- Costs associated with major and extended economic downturns;
- Needs resulting from significant reductions in State budget allocations; and
- Significant unexpected and unbudgeted operational costs that cannot be met with current
General Fund allocations.
Current policy dictates that City Manager or designee will first evaluate the City's financial condition and
circumstances indicating a possible need to access assigned reserves for purposes other than those
established, and make a recommendation to City Council. A four-fifths affirmative vote by City Council is
then required prior to use of an assigned reserve for any purpose other than those for which they were
established.
1 Government Finance Officers Association recommends, at a minimum, that general-purpose governments, regardless of size,
maintain unrestricted budgetary fund balance in their general fund of no less than two months (16.67%) of regular general fund
operating revenues or regular general fund operating expenditure.
CITY OF ROHNERT PARK
CITY COUNCIL POLICY
EXHIBIT A
SUBJECT/TITLE: POLICY NO: APPROVED BY: APPROVAL DATE:
FISCAL POLICY:
RESERVE POLICY AND THE USE OF
GENERAL FUND SURPLUS
☐ RESO NO:_________________
☐ MINUTE ORDER
3. PROVISIONS
This section outlines provisions for the creation, use, appropriation, investment, and assignment of
general fund assigned reserves.
1. Creation of reserves: Assigned reserve accounts may be established for either governmental or
enterprise capital purposes; however, the purpose must be stated when the reserve is created.
New restricted reserves accounts must originate through a City Council-adopted resolution or
ordinance.
2. Appropriation and Use of reserves: General Fund assigned reserves may either be appropriated
for expenditures in the General Fund, or transferred to Internal Service Funds (ISFs) through an
approving Council resolution. If no appropriations or transfers have been made to assigned
reserves in a fiscal year, the reserves will be carried over to the next fiscal year.
Portions of assigned reserves, other than those for Operations and Contingency, shall be generally
transferred to the respective ISFs such as those for IT, Technology Replacement, Vehicle
replacement, Fleet Capital & Maintenance Reserve, and Infrastructure Funds , to be appropriated
and spent in future years. ISFs may also be funded through appropriations from any other fund,
when consistent with limitations imposed by this and other applicable governmental fiscal policies
and procedures, and the City's Municipal Code.
3. Investment of reserves: The cash balance in assigned reserves will be deposited or invested as
consistent with the City's Municipal Code, Investment Policy, and other applicable governmental
fiscal policies and procedures.
4. Assignment of reserves: General Fund surplus at the close of any fiscal year shall be assigned as
follows:
a. During the preparation of the Comprehensive Annual Financial Statements after fiscal year-
end close, preliminary General Fund balance that is not non-spendable, restricted, committed
or already assigned will be assigned to the reserves described in the following order:
a. First, to the Operating Reserve to bring it to the minimum target level.
b. Second, any remaining surplus shall be assigned to the contingency reserve to bring it
to the minimum target level.
c. Third, any remaining surplus arising from gains from the sale of city property shall be
assigned to City Facilities Reserve, unless the City Council directs otherwise.
d. Fourth, any remaining surplus shal l be assigned as indicated below:
i. 50% to Retirement Reserve
CITY OF ROHNERT PARK
CITY COUNCIL POLICY
EXHIBIT A
SUBJECT/TITLE: POLICY NO: APPROVED BY: APPROVAL DATE:
FISCAL POLICY:
RESERVE POLICY AND THE USE OF
GENERAL FUND SURPLUS
☐ RESO NO:_________________
☐ MINUTE ORDER
ii. 50% to Infrastructure Reserve
Notwithstanding the provisions of part 4a:
i. The City shall periodically review minimum target reserve levels and percentages
of General Fund surplus to be assigned in light of changing conditions.
ii. During budget preparation, staff shall determine and propose budgets for prudent
levels of assigned reserve transfers to Internal Service Funds, including but not
limited to Infrastructure, Vehicle Replacement, Technology Replacement, and City
Facilities.
APPENDIX
None
REVISION HISTORY:
FISCAL POLICY: USE OF RESTRICTED RESERVES – RESO 2011-56 … EFFECTIVE 6.21.2011