HomeMy Public PortalAbout20.15 Reserve PolicyRESOLUTION: 2020-15
A RESOLUTION OF THE CITY OF CRESTVIEW, FLORIDA,
ESTABLISHING A RESERVE POLICY AND PROVIDING FOR AN
EFFECTIVE DATE.
WHEREAS, The City Council of the City of Crestview has determined that it is in the best interest of the City to esti
Policy; and
WHEREAS, on July 30, 2020 the City Council approved the establishment of said policy; and
WHEREAS, on July 30, 2020 the City Council established -the timeline for the reserve policy to be fully implementec
NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Crestview of Okaloosa County, Florida 1
SECTION 1: The Policy FN20-001 as attached will be hereby established by the City of Crestview as the Budget Re
SECTION 2: This resolution shall take effect immediately
upon its adoption.
PASSED AND ADOPTED IN REGULAR SESSION THIS 10- OF
2020
CITY OF CRESTVIEW, FLORIDA
Whitten, Mayor
Elizab th M. Roy, City Clerk
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CITY OF CRESTVIEW
ADMINISTRATIVE POLICY MANUAL
P.O. DRAWER 1209, CRESTVIEW, FLORIDA 32536
(850) 682-1560
Date: August 5, 2020
Policy #: FN-20-001
Purpose: Departmental Policy/Procedure
Subject: Reserve Policy
Department Head Approval:
City Manager Approval:
1. PURPOSE/INTENT:
The purpose of this policy is to establish guidelines that allow the City to maintain sufficient levels
of undesignated reserves in the,general funds, utility fund and the building fund to mitigate current
and future risks such as revenue shortfalls, unanticipated expenditures, natural disasters or other
unforeseen circumstances.
2. BACKGROUND:
Although the City has historically maintained contingency monies in its annual budget, a formal
policy has not been established.
3. DEFINITIONS: N/A
4. POLICY:
The Government Finance Officers Association (GFOA) recommends, at a minimum, that general-
purpose governments, regardless of size, maintain undesignated reserves of no less than two
months of regular operating revenues or regular operating expenditures. The GFOA also provides
that the adequacy of undesignated reserves should take into account each government's own
unique circumstances.
Therefore, it is the policy of the City of Crestview that undesignated reserves will be budgeted at
a level necessary to maintain the funds as follows:
1. General Fund -Unrestricted net reserves will be maintained at 25% of operating
expenses to include labor costs, debt service and general operating expenses.
2. Utility Fund- Unrestricted net reserves will be maintained at 25% of operating
expenses to include labor costs, debt service and general operating expenses.
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3. Building Fund- Unrestricted net reserves will be maintained at 100% of operating
expenses to include labor costs, debt service and general operating expenses.
4. The Utility Fund will also maintain a renewal, replacement and improvements
reserve of 10%.
The policy hereby establishes a timeline of three years to fully fund the reserve policies. At the
time of adoption it is anticipated this will be achieved by the adoption of the 2023 budget.
The policy will be reviewed and adjusted as needed during the annual budget process at which
time the Finance director, will provide an update on the financial health of the city.
Under certain circumstances, there may be a temporary need to use undesignated reserves to meet
a need(s) that requires utilization of reserves resulting in noncompliance with minimum funding
levels identified in this policy. Examples of these circumstances may include, but are not limited
to the following:
• Unanticipated revenuesljortfallstdue to unforeseen circumstances including a significant
and prolonged downward trend in an economic cycle
• A natural disaster of significance
• New Federal and state mandates/legislation
• Immediate capital needs
If such a need is addressed as part of the City's annual budget process, the City Manager will
communicate the need to the Council at a special or regular meeting to receive approval prior to
use of the funds.
Upon use of reserve funds, the City Manager will, at the next budget workshop or public hearing,
present a plan and timeline to replenish fiord balance to levels consistent with the policy. The plan
may include one-time or recurring expenditure reductions, budget surpluses, transfers from other
funding sources, etc. The plan of replenishment should not extend beyond a three-year planning
horizon as recommended by GFOA.
5. PROCEDURE: N/A
6. FORMS & ATTACHMENTS: N/A
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