HomeMy Public PortalAbout2006-110 (06-20-06)RESOLUTION NO. X006. ii n
A RESOLUTION OF THE LYNWOOD CITY COUNCIL
ADOPTING A POLICY ON RESERVES AND CONTINGENCIES
WHEREAS, the ability to maintain reasonable reserve funds is one of the
key financial standards used by rating agencies to evaluate the financial
condition of the City of Lynwood (the "City"); and
- WHEREAS, the lack of established reserve funds maintained by the City
may have negative implications in the credit markets; and
WHEREAS, once a fiscal year has begun, the City has limited ability to
significantly increase revenue or decrease expenditures in order to fund
unanticipated expenditures during such fiscal year; and
WHEREAS, the City must maintain resources for its fleet replacement and
repair; and
WHEREAS, the City must have sufficient funding to ensure capital
improvements to its water and sewer infrastructure; and
WHEREAS, the Government Finance Officers Association (GFOA)
recommends that governments establish a formal policy on the level of
unreserved fund balance that should be maintained in the general fund. GFOA
recommends, at a minimum, that general-purpose governments, regardless of
size, maintain unreserved fund balance in their general fund of no less than one
to two months (eight to sixteen percent) of regular general fund operating
r-• expenditures; and
WHEREAS, the City Council desires to set policies, and establish
reserves for the City's General, Garage and Water Enterprises funds; and
WHEREAS, the City Council further wishes to establish a contingency set
aside within the General Fund, for unanticipated and unavailable expenses
during the fiscal year;
NOW, THEREFORE, THE COUNCIL OF THE CITY OF LYNWOOD
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. The City Council finds and determines the foregoing recitals
to be true and correct and hereby adopts and incorporates them into this
Resolution.
SECTION 2. General Fund Reserve Policy
1. The City Council hereby declares that it shall be the policy of the City of
Lynwood to provide for each fiscal year an undesignated reserve equal to ten
percent (10.0%) of the General Fund budget.
I 2. At the conclusion of each fiscal year and the availability of a financial
audit, the City Manager shall report to the City Council whether the General Fund
Reserve Policy has been met.
3. The amounts identified as the undesignated General Fund Reserve may
be appropriated by the City Council only to fund unusual, unanticipated and
seemingly insurmountable events of hardship of the City.
SECTION 3. Garage Fund Reserve Policv
1. The City Council hereby declares that it be the policy of the City of
Lynwood to maintain a Garage Fund reserve sufficient for the replacement of
vehicles planned for the next five years, as reflected in the Vehicle Depreciation
and Replacement Schedule.
2. The Public Works Department shall maintain and update regularly _
the citywide Vehicle Depreciation and Replacement Schedule, and provide the
Garage Fund Reserve calculation to the City Manager and the Finance and
Administration Department during the Proposed Budget development.
3. At the conclusion of each fiscal year and upon the availability of a
financial audit, the City Manager shall report to the City Council whether the
Garage Fund Reserve Policy requirements have been met.
SECTION 4. Water Enterprise Reserve Policv
1. The City Council hereby declares that it be the policy of the City of
Lynwood to maintain a Contingency Account at a rate of no less than two months
(16%) of total actual operating expenses for the fiscal year most recently audited.
2. At the conclusion of each fiscal year and upon the availability of a
financial audit, the City Manager shall report to the City Council whether the
Water Enterprise Fund Replacement Account Policy requirements have been
met.
SECTION 5. Continaency Set Aside
1. On an annual basis commencing with fiscal year 2006-2007, the
City Council shall appropriate $500,000.00 into the Contingency Set Aside Fund
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2. The purpose of this Set-Aside is to serve as a contingency to
address financial volatility, and differs from the General Fund Reserve.
3. The Contingency Set Aside may be appropriated by the City
Council only to fund unanticipated emergency expenditures, or to compensate for
sudden and severe decreases in locally collected revenues or inter governmental
funds.
4. The Contingency Set-Aside should not be set at an amount lower
than $500,000.00 in the beginning of the fiscal year and may be established at a
higher level. Should the City Council appropriate a portion or all of the
Contingency Set-Aside during the fiscal year, the total Set-Aside amount must be
increased to $500,000.00 or higher in the following year,
SECTION 6. The City Manager shall annually as part of the budget
process prepare and submit to the City Council a report detailing the activity and
status of accounts established pursuant to this Resolution. .
SECTION 7. This Resolution shall become effective immediately upon
adoption.
PASSED, APPROVED AND ADOPTED this 20`h day of June, 2006.
CIA VASQUEZ, MA OR
ATTEST: ~~ ~ ~ , ~ ~
Andrea L. Hooper
City Clerk
APPROVED AS TO FORM:
C~~~ ~Q-~
City Attorney
A V S TO TENT:
. Enriqu artinez, City ager
STATE OF CALIFORNIA )
SS.
COUNTY OF LOS ANGELES )
4, the undersigned, City Clerk of the City of Lynwood, do hereby certify that the
foregoing Resolution was passed and adopted by the City Council of the City of
Lynwood at a regular meeting held on the 20th day of JUNE , 2006
AYES: COUNCILMEMBERS, BYRD; JOHNSON, PEDROZA, SANTILLAN, AND VASQUEZ
NOES: NONE
ABSENT: NONE
ABSTAIN: NONE
CSC ~, ' fc~i"``~"`~`-'
Andrea L Hooper, City Clerk
STATE OF CALIFORNIA )
SS.
COUNTY OF LOS ANGELES )
I, the undersigned, City Clerk of the City of Lynwood, and the Clerk of the City
Council of said City, do hereby certify that the above foregoing is a full, true and correct
copy of Resolution No. 2006.110 on file in my office and that said Resolution was
adopted on the date and by the vote therein stated.
Dated this 20th day of
JUNE , 2006.
Andrea L. Hooper, City Clerk