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Home My Public Portal AboutOrdinance 12-9531 1 ORDINANCE NO. 12 -953 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY, CALIFORNIA, ADDING A NEW CHAPTER 10 "BUDGET RESERVE FUND BALANCE REQUIREMENTS" TO TITLE 2 "ADMINISTRATION" OF THE TEMPLE CITY MUNICIPAL CODE. WHEREAS, to ensure adequate fiscal resources and stable delivery of City services during emergencies, fiscal emergencies , annual revenue fluctuation, liquidity shortages, or severe economic downturns, the City desires to establish a General Fund reserve requirements, and; WHEREAS, to ensure fiscal prudence and responsibility the City desires to also establish criteria for use of General Fund reserves; and WHEREAS, the City desires to adopt these requirements and criteria by Ordinance and codify its provisions in the City of Temple City Municipal Code. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TEMPLE CITY HEREBY ORDAINS AS FOLLOWS: SECTION 1. Addition of Chapter 10 to Title 2 of the Temple City Municipal Code. The City Council hereby adds a new Chapter 10 " Budget Reserve Fund Balance Requirements ) to Title 2 "Administration" of the Temple City Municipal Code, which shall read as follows: Chapter 10 BUDGET RESERVE FUND BALANCE REQUIREMENTS 2550: PURPOSE 2560: DEFINITIONS 2570: BUDGET RESERVE FUND BALANCE TARGETS 2550: PURPOSE The primary purpose of this Chapter is to ensure adequate fiscal resources and stable delivery of City services during emergencies, fiscal emergencies, annual revenue fluctuations, liquidity shortages, or severe economic downturns so that in the event of these occurrences the City is able to continue providing essential city services and satisfying expenditure obligation. The secondary purpose of this Chapter is to enable realistic long -term planning, assist in development of annual budgets, require the prudent use of resources, and to implement. of sound fiscal management practices. To achieve these purposes, this Chapter requires the City to: 1. Establish adequate reserves. 2. Establish sound fiscal reserve requirements. 3. Ensure the City satisfies its short -term and Tong -term financial obligations. 4. Establish a periodic review of the City's fund balances and reserves. 5. Enhance the City's credit rating. To achieve the purposes of this Chapter it is contemplated that the City will establish various Budget Reserve Fund Balance accounts facilitating funding of emergencies, contingencies, liabilities and planned major capital projects. . 1 2560: DEFINITIONS For the purposes of this Chapter 10, the following terms shall have the following meanings: (a) "Emergency" shall mean, in accordance with Section 2701, the actual or threatened existence of conditions of disaster or of extreme peril to the safety of persons and property within the city caused by such conditions as air pollution, fire, flood, storm, epidemic, riot or earthquake, or other conditions, including conditions resulting from a labor controversy, which conditions are or are likely to be beyond the control of the services, personnel, equipment and facilities of the city, requiring the combined forces of other political subdivisions to combat. (b) "Fiscal Emergency" shall mean the occurrence of any one or more of the following: (1) the existence of a default on a debt obligation for more than thirty days, or the reasonable probability that the City will default on a debt obligation, or that the City will not be able to cure a default on a debt obligation within thirty days; (2) the existence of a failure for lack of funds to make payment of all payroll to officials, officers, or employees of the municipal corporation for more than one payment cycled ; (3) the existence of a condition in which accounts due and payable at the end of the preceding fiscal year, less the year -end balance, exceeded one - twelfth of the available revenues during the preceding fiscal year; (4) the existence of a condition in which the aggregate of deficit amounts of all deficit funds at the end of the preceding fiscal year, less the year -end balance, exceeded one - twelfth of the total of the general fund budget for that year and the receipts to those deficit funds other than from transfers from the general fund; (5) the existence of a condition in which, at the end of the preceding fiscal year, moneys and marketable investments in or held for the unsegregated treasury of the municipal corporation, minus outstanding checks and warrants, were less than the aggregate of the positive balances of the general fund and those special funds whose purposes the unsegregated treasury meets, and such deficiency exceeded one - twelfth of the total amount received into the unsegregated treasury during the preceding fiscal year. (c) "Economic Stabilization Reserve" shall mean, as provided in GASB 54 (Governmental Accounting Standards Board), an identified fund for which the specified purpose is stabilizing the delivery of city services during periods of operational deficits resulting from deferral of federal, state, or county remittance and which may also be used as a short-term bridge from unexpected and drastic downturns in the economy. Pursuant to GASB 54 stabilization is regarded as a specified purpose only if the circumstances or conditions that signal the need for stabilization (a) are identified in sufficient detail and (b) are not expected to occur routinely. 2570: MINIMUM BUDGET RESERVE FUND BALANCE The City will maintain combined General Fund reserves as follows: 2 1 1 1 1 (a) Emergency /Disaster Reserve - $1,000,000. (1) Use of these funds is allowable only when the following conditions have been met: (i) The City Council has declared the existence of either an "Emergency" or "Fiscal Emergency "; and (ii) The use of the reserve has been approved by 415th vote of the membership of the City Council. (2) Within 6 months after the Council's determination in paragraph (1) above the City Manager shall present a plan to the City Council to replenish this fund . (3) If all or a portion of the Reserve is utilized, the Reserve will be restored to the original level as adopted within the next five years or whenever reasonably possible. (b) Liquidity Reserve - $2,000,000. (1) Funds are to be set -aside to provide cash flow for timing of revenues and expenditures. For example, while payroll costs are bi- weekly and fairly predictable, state and county tax payments can vary. The City may also from time to time have major projects that are grant funded on a reimbursement basis that require large cash outlays. A "Liquidity Reserve" is established to provide the cash -on -hand needed in between large revenue payments and grant reimbursements and will alleviate the need for short-term borrowing. (2) If all or a portion of the Reserve is utilized, the Reserve will be restored to the original level as adopted within the next five years or whenever reasonably possible. (c) Local Economic Uncertainty Reserve - $500,000 (1) Funds are to be set aside for the purpose of stabilizing the delivery of City services during periods of operational budget deficits resulting from the conditions as described in the definition above "Economic Stabilization Reserve. (2) Use of the funds are allowable only when the City Council, upon the 415th vote of its membership, has approved the use of the fund. (3) If all or a portion of the Reserve is utilized, the Reserve will be restored to the original level as adopted within the next five years or whenever reasonably possible (d) Other Reserve Designations. The City Council may at any time designate specific fund balance levels for future development of projects which it has determined to be in the best Tong -term interests of the City. (e) The City Manager must include a recommendation for the amounts to be appointed to these reserves during the annual budget process. SECTION 2. Severability. The City Council hereby declares that, should any provision, section, subsection, paragraph, sentence, clause, phrase, or word of this Ordinance or any part thereof, be rendered or declared invalid or unconstitutional by any final court action in a court of competent jurisdiction or by 3 reason of any preemptive legislation, such decision or action shall not affect the validity of the remaining section or portions of the Ordinance or part thereof. The City Council hereby declares that it would have independently adopted the remaining provisions, sections, subsections, paragraphs, sentences, clauses, phrases, or words of this Ordinance irrespective of the fact that any one or more provisions, sections, subsections, paragraphs, sentences, clauses, phrases, or words may be declared invalid or unconstitutional. SECTION 3. Publication. The City Clerk shall certify to the passage and adoption of this Ordinance and to its approval by the Mayor and shall cause the same to be published according to law. PASSED, APPROVED, AND ADOPTED this 5th day of June, 2012. ATT T: 1/116b1 11 Deputy C MA OR PRO TEM I, Peggy Kuo, Deputy City Clerk of the City of Temple City, hereby certify that the foregoing Ordinance No. 12 -953 was introduced at the regular meeting of the City Council of the City of Temple City held on the 15th day of May, 2012 and was duly passed, approved and adopted by said Council at the regular meeting held on 5th of June, 2012 by the following vote: AYES: Councilmember -Blum, Chavez, Vizcarra, Sternquist NOES: Councilmember- None ABSENT: Councilmember -Yu 1 Deputy City Cler 4 1 1