HomeMy Public PortalAboutTBP 2015-10-21Town of Fraser
PO Box 370, Fraser, CO 80442 office 970-726-5491 fax 970-726-5518
www.frasercolorado.com
Town Board Briefing
October 15, 2015
Please note that members of the Town Board will have dinner together starting at
5:30pm.
The Board will begin the meeting at 6pm with an executive session regarding pending
litigation that is anticipated to conclude by 7pm.
The Board has two public hearing scheduled for October 21st.
First, pursuant to recent amendments to our retail marijuana licensing regulations,
Growhouse Fraser has requested an amendment to their license to allow operation until
9pm. Staff recommends approval of this request.
Second, Rendezvous has requested an amendment to the annexation agreement to
amend the deadline for dedication of the open space planning area 4E. In 2010, the
Town Board extended the deadline to October 31, 2015 and Rendezvous is now
requesting another extension to 2020. The primary issue related to this is ongoing
maintenance. Rendezvous believes that ongoing active maintenance of the open space
is important to their marketing and seeks to maintain control for another five years. Of
course, should the property be dedicated to the Town in 2010, we will incur additional
expenditures.
Resolution 2015-10-02 is included per direction during the last meeting.
Please review the supplemental information regarding Finance Policies and the 2016
Budget.
As always, feel free to contact me if you have any questions or need any additional
information.
Jeff Durbin
Town of Fraser
PO Box 370, Fraser, CO 80442 office 970-726-5491 fax 970-726-5518
www.frasercolorado.com
Town Manager Newsletter
October 15, 2015
Community Matters
Please note that Coffee with the Mayor is scheduled for October 20th at 9:00am at Town
Hall. This is an opportunity for informal conversations with community members and staff
regarding any matters of interest and/or concern.
I’m pleased to note that Headwater Trails Alliance is coordinating with the Towns of Fraser
and Winter Park to continue the winter trail grooming program initiated last season. We
are all working together to identify how the program can be improved and sustained.
Administration
We have scheduled the first Pond Operating Committee pursuant to the terms of the
Mary’s Pond Grant of Easement and Augmentation Pond Joint Operations Agreement
as recently approved by the Town Board,
I regret to note that we have received a summons and complaint asking the court to
reverse the Town Board’s decision which denied the application for a use by special
review for the Byers Wastewater Treatment Facility which is proposed to be located
behind the Fraser Valley Center. This may affect staff work plans in the near future.
Water and Wastewater Committee
The Water and Wastewater Committee met on October 13th and had good discussion on
a variety of topics. The next meeting will be on November 10th and the agenda is
anticipated to focus on the 2016 enterprise fund budgets and rates.
2
Finance
Fraser’s August 2015 Sales Tax Report:
Town of Fraser Sales Tax Report - Actual Collections
2012 2013 $ Amt +/- % +/- 2013 2014 $ Amt +/- % +/- 2014 2015 $ Amt +/- % +/-
Jan $135,024 $154,698 19,674 12.72 $154,698 $166,660 11,962 7.18 $166,660 $158,549 -8,111 -5.12
Feb $144,032 $148,979 4,946 3.32 $148,979 $146,266 -2,713 -1.85 $146,266 $172,330 26,064 15.12
March $150,273 $171,102 20,829 12.17 $171,102 $177,000 5,898 3.33 $177,000 $199,083 22,084 11.09
April $118,196 $109,023 -9,173 -8.41 $109,023 $114,311 5,287 4.63 $114,311 $115,086 776 0.67
May $84,564 $87,347 2,783 3.19 $87,347 $81,854 -5,493 -6.71 $81,854 $89,840 7,985 8.89
June $131,359 $119,942 -11,417 -9.52 $119,942 $121,906 1,964 1.61 $121,906 $127,481 5,575 4.37
July $209,054 $220,039 10,985 4.99 $220,039 $228,451 8,412 3.68 $228,451 $155,238 -73,213 -47.16
Aug $128,839 $121,671 -7,168 -5.89 $121,671 $134,432 12,761 9.49 $134,432 $145,602 11,170 7.67
Sept $115,404 $119,707 4,302 3.59 $119,707 $120,712 1,005 0.83 $120,712 $0 -120,712 #DIV/0!
Oct $88,338 $96,456 8,118 8.42 $96,456 $96,058 -397 -0.41 $96,058 $0 -96,058 #DIV/0!
Nov $106,965 $117,709 10,744 9.13 $117,709 $110,314 -7,395 -6.70 $110,314 $0 -110,314 #DIV/0!
Dec $178,196 $188,083 9,887 5.26 $188,083 $240,384 52,301 21.76 $240,384 $0 -240,384 #DIV/0!
Total $1,590,245 $1,654,756 64,511 4.06 $1,654,756 $1,738,348 83,592 5.05 $1,738,348 $1,163,209 -575,139 -33.09
Budget $1,550,000 $1,600,000 50,000 3.13 $1,600,000 $1,650,000 50,000 3.03 $1,650,000 $1,595,000 -55,000 -3.45
Amt +/- $40,245 $54,756 $54,756 $88,348 $88,348 -$431,791
% +/- 2.60 3.42 3.42 5.35 5.35 -27.07
YTD - Compared to Previous Year 1,163,209 -0.7% Percent Change
Town of Fraser Sales Tax Report - Adjusted Collections
2012 2013 $ Amt +/- % +/- 2013 2014 $ Amt +/- % +/- 2014 2015 $ Amt +/- % +/-
Prev Yr $21,722 $10,012 -11,710 -116.96 $10,012 $10,364 352 3.40 $10,364 $13,403 3,039 22.67
Jan $137,782 $154,926 17,144 11.07 $154,926 $162,516 7,590 4.67 $162,516 $165,870 3,354 2.02
Feb $141,872 $146,589 4,717 3.22 $146,589 $152,456 5,867 3.85 $152,456 $165,391 12,935 7.82
March $164,692 $173,553 8,861 5.11 $173,553 $172,377 -1,176 -0.68 $172,377 $184,061 11,684 6.35
April $101,628 $108,934 7,306 6.71 $108,934 $110,774 1,840 1.66 $110,774 $108,097 -2,677 -2.48
May $82,457 $85,539 3,082 3.60 $85,539 $84,621 -918 -1.08 $84,621 $89,194 4,573 5.13
June $124,870 $122,603 -2,267 -1.85 $122,603 $124,151 1,548 1.25 $124,151 $126,402 2,251 1.78
July $142,786 $148,427 5,641 3.80 $148,427 $155,474 7,047 4.53 $155,474 $161,718 6,244 3.86
Aug $190,176 $202,817 12,641 6.23 $202,817 $147,235 -55,582 -37.75 $147,235 $149,073 1,838 1.23
Sept $114,569 $115,474 905 0.78 $115,474 $131,700 16,226 12.32 $131,700 $0 -131,700 #DIV/0!
Oct $85,853 $99,529 13,676 13.74 $99,529 $143,416 43,887 30.60 $143,416 $0 -143,416 #DIV/0!
Nov $107,022 $112,116 5,094 4.54 $112,116 $120,919 8,803 7.28 $120,919 $0 -120,919 #DIV/0!
Dec $174,816 $174,237 -579 -0.33 $174,237 $222,345 48,108 21.64 $222,345 $0 -222,345 #DIV/0!
Total $1,590,245 $1,654,756 64,511 4.06 $1,654,756 $1,738,348 83,592 5.05 $1,738,348 $1,163,209 -575,139 -33.09
Budget $1,550,000 $1,600,000 50,000 3.13 $1,600,000 $1,650,000 50,000 3.03 $1,650,000 $1,595,000 -55,000 -3.45
Amt +/- $40,245 $54,756 $54,756 $88,348 $88,348 -$431,791
% +/- 2.60 3.42 3.42 5.35 5.35 -27.07
YTD - Compared to Previous Year 1,163,209 3.7% Percent Change
3
Planning Commission
The Planning Commission is in receipt of a subdivision exemption plat for Grand Park
Drive. The applicant, Grand Park Development LLC., is requesting approval of an
exemption plat in order to convey two parcels to the West Mountain Metropolitan District.
The two parcels identified as parcel 1 and parcel 2 represent the road right-of-way
corridor and construction area associated with the Union Pacific Railroad Underpass
(UPRR) project. The Planning Commission will review the exemption plat at a public
hearing scheduled for October 28, 2015.
Planning
The newest amenities at Goranson Station are going in soon. Look for the spool table
and the tractor seats! Special thanks to Public Works Staff!
Above is what this site looked like before the Town of Fraser received a $2000 grant
from the Colorado Tree Coalition for “Foliage for Fraser” back in February 2013. We
have been successful in transforming what was an unfortunate-looking property and
making it a focal point and wonderful pocket park by planting some trees and adding
other site improvements. We created life and beauty in an otherwise vacant lot. We
have come a long way! See below for Fraser’s newest pocket park!
We continue to seek grant opportunities to make Fraser a more vibrant community!
4
Community news: On September 12, Cozens Ranch Museum held a successful
fundraiser at Byers Peak Ranch just
outside Fraser. The museum raised over
$25,000 in support of operations at Cozens
Ranch Museum and Grand County
Historical Association. Over 180
patrons attended the 4th annual Taste of
History Champagne Brunch, this year
hosted by Gail Delaney and Family. John
Work, longtime ranch manager, and Steve
Sumrall, former Fraser Town Trustee gave
tours of Byers Peak Ranch, focusing on
the Eisenhower period.
Mayor Peggy Smith was in attendance as well as Town Planner
Catherine Trotter and Public Works Director Allen Nordin. Over 25
volunteers from the Fraser Valley managed the event. Primary
Sponsors included Devil’s Thumb Ranch, Rendezvous Foundation
and Winter Park Resort. Restaurant sponsors who donated yummy
food were: Caffe Giocondo, Casa Mexico, DaVinci’s, Deno’s
Mountain Bistro, Devil’s Thumb Ranch, Drive By Pies, Fontenot’s
Seafood and Grill, Hernando’s Pizza Pub, Rise and Shine
Bakery, Rudi’s Deli, Smokehouse BBQ, Smokin’ Moes, Strip and
Tail, Volario’s and Wild Horse Catering.
Also, October is national community planning month and Murdoch’s
will be opening in November!
Police
In September, the Fraser/Winter Park Police Department responded
to a total of 184 calls for service, which is a significant decrease from
earlier this year. The Department’s most serious call in September
was the shooting investigation in Tabernash. Both Chief of Police Glen Trainor and Sgt.
Matt Harmon are members of the 14th Judicial District Critical Incident Team that was
tasked with investigating this incident. As a result, our department has devoted
approximately 200 man-hours towards the event.
The Department also issued a total of 24 traffic citations, of which 8 were in Fraser, and
16 in Winter Park. Not only have we seen a large increase in the amount of traffic this
year, we have also seen an increase in vehicles that are travelling at excessive speeds.
In September, we issued six citations for speeding in excess of 20 miles an hour over
the speed limit. Additionally, we issued one summons for speeding 95 mph in a 50 mph
zone, and a second for speeding 102 mph in a 55 mph zone!
We also remained busy on the community policing front this last month. Our staff
provided a booth at Fraser Valley Elementary School during the “Back to School Night”.
We also partnered with the Grand County Sheriff’s Office on September 26th for the
“National Drug Take Back Day” at Safeway. County-wide, we collected nearly 60
pounds of unused medications for proper disposal.
At The Taste of History, Fraser
resident Judy Stanfil, AKA Dale
Evans, accompanies Roy
Rogers.
A beautiful day at Byers Peak Ranch for the Taste
of History.
5
Public Works
WATER:
Public Works staff continues with water and sewer service line installation inspections in
both Grand Park and Rendezvous. These activities are anticipated to continue
throughout the fall and into the early winter.
SANITARY SEWER:
The North Sewer System Rehabilitation and Replacement
project is progressing well now that the contractor (Conroy
Excavating) has tackled two difficult areas. Currently the
contractor is working on the main sewer line between Carriage
and Norgren on the west side of town.
The staff has been busy preparing and distributing public
information communications to property owners affected by our
construction activities.
STREETS:
CR 804 Phase 3 – Update (10-13-2015): Asphalt paving from Highway 40 to the
Safeway intersection is expected to
be completed by Friday, October 16.
Some damage was caused to the
Town owned signal loops and
cabinet at the Safeway intersection
and will be repaired on Thursday
when the loops for the Highway 40
signal are inlaid prior to final lift of
asphalt being placed. Storm sewer
crossing and inlet placement is also
underway further up 804, as well as
concrete drain pan construction
continuing along the lower portion of
804, close to the town boundary.
Once the concrete pans have a
period of cure time, asphalt can begin
to be placed through the upper portion of 804. The great news is that the Fraser
segment of roadway will be complete with new asphalt by the weekend!
Repairs to the failed section of roadway on the Safeway frontage road is in design stage.
This work will be bid out in early 2016 with work commencing in 2016 construction
season.
GARDENS:
Bulbs are being planted now for that burst of color coming early spring. Our gardeners
are making final push to putting the planters, beds and equipment to bed for a long
winters nap.
6
Plans are in the works for improvements to the landscape strip along the Clayton Trailer
Court along Highway 40 across from Goranson Station Park, and for replacement of the
southern entry monument that was removed for the highway project.
GENERAL:
Pedestrian Bridge over the Fraser River Project update: The diamond piers were
installed last week (10/5). The cross members and joists
are being installed this week (10/12) with hopes that the
decking materials will be installed the week of 10/19. At-
grade trail construction will begin following the decking
install, likely the week of 10/26. A dedication ceremony is
planned following the completion of the trail as staff begins
closeout of the project.
A preconstruction meeting was held last week for the Elk Creek @ Grand Park
subdivision. Work for installing the deep utilities is slated to begin the week of 10/19 and
is anticipated to last 5-7 weeks. This is for Filing 1 only.
For Further Information
Please feel free to contact me
Jeff Durbin
970-726-5491x202
jdurbin@town.fraser.co.us
FRASER BOARD OF TRUSTEES
MINUTES
DATE: Wednesday, October 7, 2015
MEETING: Board of Trustees Regular Meeting
PLACE: Fraser Town Hall Board Room
PRESENT
Board: Mayor Peggy Smith; Mayor Pro-Tem Philip Vandernail; Trustees; Eileen
Waldow, Katie Soles, Cody Clayton Taylor, Andy Miller and Jane Mather
Staff: Town Manager Jeff Durbin; Town Clerk, Lu Berger; Finance Manager Nat
Havens; Public Works Director Allen Nordin; Town Planner, Catherine
Trotter; Police Chief, Glen Trainor,
Others: See attached list
1. Workshop:
Mayor Smith called the meeting to order at 7:00 p.m.
2. Regular Meeting: Roll Call
3. Approval of Agenda:
Move 7c before 7b
Trustee Soles moved, and Trustee Waldow seconded the motion to approve the
Agenda as amended. Motion carried: 7-0.
4. Consent Agenda:
a) Minutes – September 16, 2015
Trustee Taylor moved, and Trustee Vandernail seconded the motion to approve the
consent agenda. Motion carried: 7-0.
5. Open Forum:
a) CASTA Transit Award
b) Wapiti Meadows potential rent increase
6. Public Hearings:
a) Bottle Pass Liquors Modification of Premise Application Request
Page 2 of 3
The Board of Trustees, sitting as the Fraser Local Liquor Licensing Authority, conducted
the following proceedings concerning the application of Bottle Pass Liquors for a
Modification of Premise Application Request.
Trustee Taylor moved, and Trustee Soles seconded the motion to open the public
hearing on Bottle Pass Liquors Modification of Premise Application Request. Motion
carried: 7-0.
Mayor Smith recused herself from the meeting due to the fact she signed the petition by
the applicant, thus stating a bias.
TA McGowan briefed the Board on the liquor license public hearing procedure and
exhibits were entered into the record.
Trustee Soles moved and Trustee Waldow seconded the motion to accept the exhibits
into the record. Motion carried: 6-0.
In October 2012 the Local Licensing Authority approved a Change of Location request,
allowing Bottle Pass Liquors to move into their current location of Unit 110, Fraser
Market Place, 45 County Road 804, Fraser, Colorado. Unit 100 of the Fraser Market
Place has become available and Bottle Pass Liquors would like to expand their current
business into unit 100. A diagram of the proposed expansion is included with the
application along with a petition submitted by the applicant to meet the requirement of
demonstrating needs and desires of the neighborhood.
Staff is recommending approval of Resolution 2015-10-01 Approving Bottle Pass Liquors
Modification of Premise Application
Richard Bennett, owner of Bottle Pass Liquors addressed the Authority regarding the
Modification of Premise Application.
Trustee Taylor moved, and Trustee Soles seconded the motion to close the public
hearing on Bottle Pass Liquors Modification of Premise Application Request. Motion
carried: 6-0.
7. Discussion and Possible Action Regarding:
a) Resolution 2015-10-01 Approving Bottle Pass Liquors Modification of Premise
Application.
Trustee Mather moved, and Trustee Soles seconded the motion to approve Resolution
2015-03-01 Approving the Bottle Pass Liquors Modification of Premise Application
Request. Motion carried: 6-0.
TA McGowan was excused from the meeting.
b) Economic Development
Clark Lipscomb addressed the Board regarding the proposal he supplied the Board.
Public Comment was taken from:
Sam Brewer
Page 3 of 3
Steve Sumrall
Pat Rupert
TM Durbin briefed the audience on the need to keep a vibrant business district to ensure
general funds dollars used to provide needed services within the town of Fraser. A
Resolution drafted to outline the Boards desire to make economic development a priority
was distributed and discussed. The Resolution will be brought back to the next meeting.
c) Resolution 2015-09-07 Approving the Development Permit/Final Plan North
Retail at Grand Park
The Planning Commission recommended approval of the Development Permit/Final
Plan – North Retail at Grand Park at the 8/26/2015 Planning Commission meeting.
Many of the conditions have carried over into the Town Board Resolution.
TM Durbin outlined the changes made to the Resolution regarding issues surrounding
John’s Drive.
Trustee Vandernail moved, and Trustee Taylor seconded the motion to approve
Resolution 2015-09-07 Approving the Development Permit/Final Plan North Retail at
Grand Park. Motion carried: 5-2.
8. Other Business:
Trustee Mather moved and Trustee Waldow seconded the motion to authorize
expenditures for up to $5000.00 for consulting services to develop a form for the
Cornerstone Attainable Housing Audit. Motion failed: 2-5.
Trustee Vandernail moved, and Trustee Soles seconded the motion to adjourn. Motion
carried: 7-0. Meeting adjourned at 8:50 p.m.
Lu Berger, Town Clerk
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TOWN BOARD REGULAR MEETING
REGISTRATION SHEET
October 7, 2015
The Public Forum is an opportunity for the public to present their concerns and recommendations regarding Town Government issues to
the Town Board.Those wishing to address the Town Board will be allowed a five-minute presentation.A maximum of six(6) people will
be allowed to address the Town Board at each Public Forum. If a topic that you wish to discuss has been scheduled for a formal Town
Board Meeting,we would ask that you reserve your remarks for that specific date and time.Topics that are in litigation with the Town will
not be heard during this forum. All presenters are urged to: (1) state the concern; and (2) list possible solutions. Please keep the
following guidelines in mind:
Remarks that discriminate against anyone or adversely reflect upon the race, color,ancestry, religious creed, national origin, political
affiliation, disability, sex, or marital status of any person are out of order and may end the speaker's privilege to address the Board.
Defamatory or abusive remarks or profanity are out of order and will not be tolerated.
Anyone attending Town Board meetings must sign in to ensure accurate records and minutes. Sign your name, address, and topic of
discussion on the sign in sheet. Thank you for your cooperation.
NAME PHYSICAL ADDRESS Email address ONLY if you wish to receive the
c Board Agenda when posted
PLEASE PRINT LEGIBLY
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TOWN OF FRASER
RESOLUTION NO. 2015-10-03
A RESOLUTION OF THE FRASER BOARD OF TRUSTEES, ACTING AS THE LOCAL
MARIJUANA LICENSING AUTHORITY FOR THE TOWN OF FRASER, APPROVING THE
REQUEST OF GROWHOUSE FRASER LLC, DBA GROWHOUSE FRASER, FOR A
MODIFICATION OF HOURS FOR THE PREMISES AT 535 ZEREX STREET, SUITE B-203,
FRASER, COLORADO.
WHEREAS, Growhouse Fraser LLC, (the "Applicant") filed a request with the Town of Fraser
for a Modification of hours for the premises located at 535 Zerex Street, Suite B-203, Fraser,
Colorado.; and
WHEREAS, a public hearing on said application was held on October 21, 2015, following
due and proper notice; and
WHEREAS, the Board of Trustees, as the Local Marijuana Licensing Authority, has
carefully considered said request and the evidence presented at the hearing, and hereby enters
the following decision regarding the application.
NOW THEREFORE BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE TOWN OF
FRASER, COLORADO THAT THE LOCAL LICENSING AUTHORITY, HEREBY ORDERS that
the application of Growhouse Fraser LLC, Dba Growhouse Fraser, for a Modification of hours for
the premises 535 Zerex Street, Suite B-203, Fraser, Colorado.; and is hereby Approved.
DULY MOVED, SECONDED, AND ADOPTED THIS 21st DAY OF OCTOBER, 2015.
TOWN OF FRASER BOARD OF TRUSTEES
AND MARIJUANA LICENSING AUTHORITY
BY:
Peggy Smith, Mayor
ATTEST:
Lu Berger, Town Clerk
CERTIFICATE OF SERVICE
I hereby certify that I served the above and foregoing Resolution and decision of the
Local Licensing Authority upon the Applicant named therein by mailing the same by certified
mail, postage prepaid, this ______ day of ___________ , 2015, addressed as follows:
Growhouse Fraser, LLC
Attn: Craig Clark
111000 W 8th Avenue Ste 100
Lakewood, CO 80215
Lu Berger, Town Clerk and Secretary to the Local
Liquor Licensing Authority
gints GROWHOUSE
35 Zerex St.STE B-203,Fraser,CO,80442
Dear Town of Fraser,
Growhouse Fraser formally requests that our hours of operation be extended to 9pm from 7pm
based off of ordinance 428. For support of our request, we have attached a petition signed by many
supporters of extending the hours at Growhouse Fraser.
Thanks,
Bobby Gibson
Manager
Growhouse Fraser, LLC
970.726.2055
p1.4(ii ,! wlt
11 Iiinnwilm'iii
We petition the Town of Fraser to allow licensed recreational marijuana dispensaries which are not located
adjacent to a person's residence to Stay open until 9:00 PM.
Allowing recreational marijuana dispensaries that are not close to the homes of town residents to stay open
until 9:oo PM will not negatively affect the Town. On the contrary,it will allow dispensaries to collect more
tax revenue and better service the public. We believe that being open until 9:oo PM will allow more locals,
as well as tourists,to patron the store, and shop the same as they would a liquor store.
Date Name Town Signature
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Ad Name: 11590893A NOTICE OF PUBLIC HEARING
Customer: TOWN OF F R AS E R Notice is hereby given that a Public Hearing will be
held before the Fraser Town Board at a meeting
Your account number is: 1095750 scheduled for Wednesday,October 21,2015 at
7:00 p.m.,in the Town Board Room of the Fraser
Town Hall,located at 153 Fraser Avenue,Fraser,
M I DDLE PARKlifiiTit
MES Colorado to consider a Third Amendment to the
AnnexationAgreement for Rendezvous East
Mo
fountain,for the purpose off consideringan an exten-
sion to the Open Space Parcel 4E dedication.
The proposed Third Amendment to the Annexation
Agreement is on file with the Town Planning De-
PROOF OF PUBLICATION partment.
MIDDLE PARK TIMES Legal description:
A parcel of land located in the south one-half of the
south one-half(S1/2S1/2)of Section 20,the south
4)
I, Matt Sandberg, do solemnly swear that I am the one-half ofn the southwestSctionone-quarter,aSectiono29 al in
of Section 21,Section 28,and 29 all in
Township 1 South,Range 75 West of the Sixth
publisher of the Middle Park Times,that the same is a weeklyPrincipal Meridian,Town of Fraser,County of
Grand,State of Colorado,and all lying northerly
newspaper printed, in whole or in-part, andpublished in and easterly of U.S.Highway 40 right of way,more
particularly described as follows:
the County of Grand, State of Colorado, and has a general The south one-half of the southeast one-quarter
circulation therein; that said newspaper has been published WITH:SEI/4)of said Section 20;TOGETHER
The south one-half of the southwest one-quarter
continuously and interruptedly in said County of Grand (S1/2SW1/4)of Section 21;TOGETHER WITH:
The northeast one-quarter(NE1/4)of said Section
for a period of more than fifty-two consecutive weeks next TOGETHER WITH:
prior to the firstpublication of the annexed legal notice or The north one-half if,the southeast one-quarter
P, (N1/2SE1/4)of said Section 28;TOGETHER
advertisement, that said newspaper has been admitted to the ThWIeTHn:orthwest one-quarter(NW 1/4)of said Sec-
United States mail as second-class matter under the provisionsTOGETHER WITH:
The northeast one-quarter(NE1/4)of said Section
of the act of March 3, 1879, or any amendment thereof, and 29;
that said newspaper is a weeklynewspaper qualified EXCEPT the right of way for Highway No.40;
duly EXCEPT the tract of land conveyed by401•4
Regis•
for publishinglegal notices and advertisements within the Astrid e,Inc.to the East Grand Fire Protection
g District by Instrument recorded November 8,1982,
In Book 318 at Pae 649 in the Office of the Grand
meaning of the laws of the State of Colorado. County Clerk and Recorder,
EXCEPT the tract of land conveyed by Regis-
Maryvale,Inc.to the Grand County Water and
Sanitation District No.1 by instrument recorded
That the annexed legal notice or advertisement was published July 26,1983,in Book 332 at Page 677;
EXCEPT the tract of land conveyed by Regis-
in the regular and entire issue of every number of said daily peed recordedto thembw 5,1987,er Book 427
newspaper for the period of 1 consecutive insertions; and Page 601;EXCEPT that five(5)acre tract of land
conveyed by Maryvale,LLC to the Church record-
ed June 29,1998 at Reception No.98006951;
that the first publication of said notice was in the issue of said EXCEPT that tract of land known as'Maryvale
Planning Area No.6"a Subdivision Exemption;
newspaper dated 10/8/2015 and that the last publication of said
Containing 443.324 acres more or less.
notice was dated 10/8/2015 in the issue of said newspaper. Said parcel being subject to any and all ease-
ments,rights of way,variances and or agreements
as of record may appear.
Please print one time in the Middle Park Times on
In witness whereof, I have here unto set my hand this day, Thursday,October 8,2015. (11590893)
10/13/2015.
Matt Sandberg
Publisher
Subscribed and sworn to before me,a notary public in and for
the County of Eagle, State of Colorado this day 10/13/2015.
c;?ftri,glifi,... ..Sh--41talt
Pamela J. Schultz, otary Public
My Commission expires:November 1,2015
1- O.
/PAMELAJ.C
SCHULTZ
,4
8C(r-
My Commission Expires 1312015
TOWN OF FRASER
RESOLUTION NO. 2015-10-04
A RESOLUTION APPROVING A MINOR AMENDMENT TO THE RENDEZVOUS ANNEXATION
AGREEMENT AMENDMENT REGARDING THE DEADLINE FOR DEDICATION OF 4E OPEN
SPACE AND AUTHORIZING EXECUTION OF THE AGREEMENT
BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE TOWN OF FRASER,
COLORADO THAT:
1. The Town Board of Fraser, Colorado hereby approves the Minor Amendment to the
attached Annexation Agreement Amendment for Rendezvous and authorizes the Mayor
to execute the agreement.
2. All documents must be executed within ninety (90) days of the date of this Resolution or
this approval shall no longer be effective.
DULY MOVED, SECONDED AND ADOPTED THIS 21st DAY OF OCTOBER, 2015.
Votes in favor: ___ BOARD TRUSTEES OF THE
Votes opposed: ___ TOWN OF FRASER, COLORADO
Absent: ___
Abstained: ___ BY:
Mayor
ATTEST:
(S E A L)
Town Clerk
{00328629 / 1 }
THIRD AMENDMENT TO ANNEXATION AGREEMENT FOR
RENDEZVOUS EAST MOUNTAIN
THIS THIRD AMENDMENT TO ANNEXATION AGREEMENT FOR
RENDEZVOUS EAST MOUNTAIN (this "Amendment is made as of October , 2015, by and
between RENDEZVOUS COLORADO, LLC, a Colorado limited liability company
"Rendezvous and the TOWN OF FRASER, a municipal corporation of the State of Colorado
"Fraser
RECITALS:
This Amendment is made with reference to the following facts:
A. Rendezvous and Fraser are parties to that certain Amended and Restated
Annexation Agreement dated as of June 4, 2003, and recorded in the Grand County, Colorado,
real property records on December 30, 2003, at Reception No. 2003 016733; as amended by
the First Amendment to Annexation Agreement dated as of November 2, 2005, and recorded
November 8, 2005, at Reception No. 2005- 012708; as further amended by Amendment to
Annexation Agreement for Rendezvous East Mountain (Amendment 2006 -RZ1) dated as of
January 1, 2006, and recorded November 1, 2006, at Reception No. 2006 011630, and as
further amended by Second Amendment to Annexation Agreement for Rendezvous East
Mountain dated as of October 6, 2010, and recorded , 2010, at Reception
No. (collectively, the "Annexation Agreement”). Capitalized terms used in
this Amendment have the meanings ascribed to them in the Annexation Agreement.
B. Rendezvous is the Developer of the real property referred to as Rendezvous
East Mountain, as more particularly described in Exhibit A attached hereto and incorporated
herein by this reference.
C. Section 17.9 of the Annexation Agreement, as amended, provides that
modifications to the Annexation Agreement that directly and specifically affect only Rendezvous
East Mountain may be agreed to in writing and signed by Fraser and Rendezvous or its
designated successor Developer.
D. Pursuant to Section 10.10 of the Annexation Agreement, the Developer agreed
to dedicate or convey to Fraser the open space parcel designated as Planning Area 4E on the
2003 PDD, which is located within Rendezvous East Mountain, with such dedication or
conveyance to be completed upon the occurrence of certain events and in any case by October
31, 2010. A portion of said Planning Area 4E, described as Tracts 4E -1, 4E -2, 4E -3, 4E -4, 4E
-5, 4E -6, 4E -7, 4E-8, 4E -9, 4E -10 and 4E -11, East Mountain Filing 1 (the "4E- Conveyed
Property has been previously conveyed to Fraser; but the remainder of said Planning Area 4E
(the "4E- Remainder Property has not yet been dedicated or conveyed.
E. Rendezvous, as the owner of the property encompassed by said 4E- Remainder
Property, has requested an extension of the timeline for dedicating or conveying said property to
Fraser and has also requested an extension of the timeline for constructing an emergency
access to the development; and Fraser is willing to agree to such an extensions upon the terms
and conditions provided in this Amendment.
{00328629 / 1 }
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements of Fraser and Rendezvous, as more particularly set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Fraser and Rendezvous covenant and agree as follows:
1. Dedication Extension. With respect to Rendezvous East Mountain only, Section
10.10 of the Annexation Agreement is modified by extending the ultimate deadline for the dedi-
cation or conveyance of Planning Area 4E to Fraser, from October 31, 2015 to October 31,
2020, subject to all of the conditions to the previous extension of the ultimate deadline for the
dedication or conveyance of the same set forth in the Second Amendment to Rendezvous East
Mountain (the “Second Amendment”), except that the Extension Fee described in Paragraph 2
of the Second Amendment payable on or before July 15 of each year shall continue through and
including 2020. All other provisions of said Section 10.10 shall remain unchanged.
2. Effect of Amendment. Except as expressly modified by this Amendment, the
Annexation Agreement is unmodified, and is hereby ratified and affirmed, and will remain in full
force and effect in accordance with its terms.
3. Governing Law. This Amendment will be governed by and construed in
accordance with the laws of the State of Colorado.
4. Counterparts. This Amendment may be executed in one or more counterparts,
each of which will be deemed to be an original, and all such counterparts taken together will
constitute one and the same instrument.
[Signatures appear on following pages]
{00328629 / 1 }
IN WITNESS WHEREOF, Fraser and Rendezvous have executed this Amendment as of
the day and year first set forth above.
DEVELOPER:
RENDEZVOUS COLORADO, LLC, a Colorado
limited liability company (as to Rendezvous East
Mountain)
By: KOELBEL AND COMPANY, a
Colorado Corporation,
Manager
By
Walter A. Koelbel, Jr., President
STATE OF COLORADO )
) ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
2015, by Walter A. Koelbel, Jr. as President of Koelbel and Company, a Colorado corporation,
Manager of Rendezvous Colorado LLC, a Colorado limited liability company.
Witness my hand and official seal.
My Commission expires:
Notary Public
{00328629 / 1 }
FRASER:
TOWN OF FRASER, a municipal corporation of the
State of Colorado
By:
Name
Title
STATE OF COLORADO )
) ss:
COUNTY OF )
The foregoing instrument was acknowledged before me this day of
2015, by as of the Town of Fraser, a
municipal corporation of the State of Colorado.
Witness my hand and official seal.
My Commission expires:
Notary Public
M E M O R A N D U M
P.O. Box 149 77795 US Hwy 40 Winter Park CO 80482
Voice: 970 726 4500 Sales: 970 726 5177 Fax: 970 726 7160
TO: Jeff Durbin
FROM: Terry Stanford
DATE: 10/5/2015
SUBJECT: 4E Open Space
Rendezvous is requesting a 5 year extension for the dedication of 4E Open
Space to the Town of Fraser. If this request is granted, the dedication of the open
space would therefore be extended to October 31, 2020.
Rendezvous will continue to maintain the open space, including tree removal,
noxious weed control, and trails maintenance.
Please contact me with any questions or concerns.
SECONDAMENDMENTTOANNEXATIONAGREEMENTFOR
RENDEZVOUSEASTMOUNTAIN
THIS SECOND AMENDMENT TO ANNEXATION AGREEMENT FOR
RENDEZVOUS EASTMOUNTAIN (this "Amendment ismadeasof .kj2010,
byandbetweenRENDEZVOUS COLORADO, LLC, aColoradolimitedliability company
Rendezvous andtheTOWNOFFRASER, amunicipalcorporation oftheStateofColorado
Fraser
RECITALS:
ThisAmendment ismadewithreferencetothefollowingfacts:
A. Rendezvous andFraserarepartiestothatcertainAmended andRestatedAnnexa-
tionAgreementdatedasofJune4, 2003, andrecordedintheGrandCounty, Colorado, real
property recordsonDecember30, 2003, atReception No. 2003016733; asamendedbytheFirst
AmendmenttoAnnexation Agreement datedasofNovember2, 2005, andrecordedNovem-
ber8, 2005, atReception No. 2005- 012708; andasfurtheramendedbyAmendmenttoAnnexa-
tionAgreement forRendezvousEastMountain (Amendment2006 -RZ1) dated asofJanuary1,
2006, andrecorded November 1, 2006, atReception No. 2006011630 (collectively, the "An-
nexationAgreement Capitalized termsusedinthisAmendmenthavethemeaningsascribedto
themintheAnnexationAgreement.
B. RendezvousistheDeveloperoftherealpropertyreferredto asRendezvousEast
Mountain, asmoreparticularly described inExhibitAattached heretoandincorporatedherein
bythisreference.
C. Section17.9oftheAnnexationAgreement, asamended, providesthatmodifica-
tionstotheAnnexationAgreementthatdirectlyandspecifically affectonlyRendezvousEast
MountainmaybeagreedtoinwritingandsignedbyFraserandRendezvous oritsdesignated
successorDeveloper.
D. PursuanttoSection10.10oftheAnnexation Agreement, theDeveloperagreedto
dedicateorconveytoFrasertheopenspaceparceldesignated asPlanningArea4E onthe2003
PDD, whichislocatedwithinRendezvousEastMountain, withsuchdedication orconveyanceto
becompletedupontheoccurrenceofcertaineventsandinanycasebyOctober31, 2010. A por-
tionofsaidPlanningArea4E, describedasTracts4E -1, 4E -2, 4E -3, 4E -4, 4E -5, 4E -6, 4E -7, 4E-
8, 4E -9, 4E -10and4E -11, EastMountainFiling1 (the "4E- ConveyedProperty hasbeenpre-
viouslyconveyedtoFraser; buttheremainderofsaidPlanningArea4E (the "4E- Remainder
Property hasnotyetbeendedicatedorconveyed.
E. Rendezvous, astheownerofthepropertyencompassedbysaid4E- Remainder
Property, hasrequested anextensionofthetimelinefordedicating orconveyingsaidpropertyto
Fraserandhasalsorequestedanextensionofthetimelineforconstructingan emergencyaccess
tothedevelopment; andFraseriswillingtoagreetosuchanextensionsuponthetermsand con-
ditionsprovidedinthisAmendment.
AGREEMENT
NOW, THEREFORE, inconsiderationofthepremisesandthemutualcovenantsand
agreementsofFraserandRendezvous, asmoreparticularly setforthherein, andforothergood
andvaluable consideration, thereceiptandsufficiencyofwhichareherebyacknowledged, Fras-
erandRendezvouscovenantandagreeasfollows:
1. AccessExtension. WithrespecttoRendezvousEastMountainonly, Section9.2
oftheAnnexationAgreementismodifiedbyextendingtheultimatedeadlineforconstructionof
theemergency -onlyaccess, asreferencedinsubsection 3), fromOctober31, 2010toOctober31,
2015. Allotherprovisions ofsaidSection9.2shallremainunchanged.
2. Dedication Extension. WithrespecttoRendezvousEastMountainonly, Section
10.10oftheAnnexationAgreementismodifiedbyextendingtheultimatedeadlineforthededi-
cationorconveyanceofPlanningArea4EtoFraser, fromOctober31, 2010toOctober31, 2015,
subjecttotheconditionssetforthhereinbelow. AllotherprovisionsofsaidSection10.10shall
remainunchanged.
3. Maintenance. Inconsiderationofsuchextensions, Rendezvous agreesthat, until
suchtimeasallofPlanningArea4EisdedicatedorconveyedtoFraserpursuanttotheAnnexa-
tionAgreement, Rendezvous shallmaintainsaidproperty, includingthe4E- RemainderProperty
andthe4E- ConveyedProperties, atRendezvous' expense, inaccordance withtheexistingap-
provedforestagriculturalplanapplicabletoRendezvousEastMountainandanysubsequent
amendments thereto. Allsuchmaintenanceshallbeperformed inagoodandworkmanlikeman-
ner. FrasergrantspermissiontoRendezvoustoenteruponthe4E- ConveyedPropertyforpur-
posesofperformingsuchmaintenance.
4. ExtensionFee. InfurtherconsiderationoftheextensiongrantedpursuanttoPara-
graph2ofthisAmendment, RendezvousagreestopaytoFraserafee (the "ExtensionFee pay-
ableonorbeforeJuly15ofeachyearthrough2015. Theamountofeachsubsequentpayment
shallbeagreeduponinwritingpriortotheduedateofsuchpayment.
5. TerminationofDedication Extension. Ifthepartiesfailtoreachagreementre-
gardingtheamountofanyExtensionFeepayment, orifRendezvous failstomakeanypayment
whendue, theneitherpartymayelecttoterminate theextensiongrantedpursuanttoParagraph2
hereofbygivingwrittennoticeofsuchterminationtotheother. Ifsuchextensionisterminated,
Rendezvousshallthereuponcomplete thededicationorconveyanceofthe4E- Remainder Prop-
ertytoFraserinaccordancewiththeprovisionsoftheAnnexationAgreement, withinsixty (60)
daysaftersuchnoticeisgiven. Theterminationoftheextension andcompletionofthededica-
tionorconveyanceofPlanningArea4Einaccordancewiththisparagraphshalloperatetore-
leaseRendezvous fromanyfurthermaintenance obligationsunderParagraph3andfromanyfur-
therExtensionFeespursuanttothisparagraphorParagraph4above, butitshallnotrelieve
Rendezvousfromanyobligationsorliabilitiesincurredpriortothedateofsuchterminationand
thetransferofsuchproperty, includingwithoutlimitation, anypreviously agreeduponExtension
Fees.
2
6. EffectofAmendment. ExceptasexpresslymodifiedbythisAmendment, theAn-
nexationAgreementisunmodified, andisherebyratifiedandaffirmed, andwillremaininfull
forceandeffectinaccordancewithitsterms.
7. GoverningLaw. ThisAmendmentwillbegovernedbyandconstruedinaccor-
dancewiththelawsoftheStateofColorado.
8. Counterparts. ThisAmendmentmaybeexecutedinoneormorecounterparts,
eachofwhichwillbedeemedtobeanoriginal, andallsuchcounterpartstakentogetherwill
constituteoneandthesameinstrument.
INWITNESSWHEREOF, FraserandRendezvoushaveexecutedthisAmendmentasof
thedayandyearfirstsetforthabove.
Witnessmyhandandofficialseal.
MyCommissionexpires:
SUZANNEKHOBBS
NotaryPublic
StateofColorado
DEVELOPER:
RENDEZVOUSCOLORADO, LLC, aColorado
limitedliabilitycompany (astoRendezvousEast
Mountain)
By: KOELBELANDCOMPANY, a
Coloradocorporation,
Manager
3
WalterA. IKoelbel, Jr., President
STATEOFCOLORADO
ss:
COUNTYOF
Theforegoinginstrumentwasacknowledgedbeforemethis7+ dayof r
2010, byWalterA. Koelbel, Jr. asPresidentofKoelbelandCompany, aColora-
docorporation, ManagerofRendezvousColoradoLLC, aColoradolimitedliabilitycompany.
FRASER:
TOWNOFFRASER, amunicipal corporation of
theStateofColorado
By
Name: 'bra,,, CboK
Title:
STATEOFCOLORADO
ss:
COUNTYOFGRAND
Theforegoinginstrumentwasacknowledgedbefor i this 714 'day of
2010, by CeyDK as Inreu c> r oftheTownofFraser,
amunicipalcorporationoftheStateofColorado.
pj
Witnessmyhandandofficialseal.
MyCommissionexpires: 5 pa.
UL- Q-A,
NotaryPublic 0
TOWN OF FRASER
RESOLUTION NO. 2015-10-02
A RESOLUTION REGARDING ECONOMIC DEVELOPMENT
WHEREAS, economic development can be defined as the sustained, comprehensive and
concerted actions of policy makers and communities that promote a higher standard of
living, a higher quality of life and economic health of a community; and
WHEREAS, a strong local economy is an important component of a sustainable community
(defined as including social, fiscal, and environmental sustainability); and
WHEREAS, the Town of Fraser’s General Fund relies on local business success for sales
and property tax revenues (roughly 70% of all General Fund revenues) in order to fund
expenditures necessary to provide services to the community, and
WHEREAS, The Town of Fraser’s 2015 Budget appropriates funds for economic
development purposes, including business enhancement grants and economic development
strategic planning, and
NOW THEREFORE BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE TOWN OF
FRASER, COLORADO THAT:
1. The Fraser Town Board supports the following:
a. Retention and expansion of existing businesses in Fraser and measures to help
existing businesses thrive and grow.
b. Strategic recruitment of new businesses to Fraser, especially businesses that
generate sales tax revenues.
c. Establishment of programs and initiatives targeted to enhance the local economy.
2. The Fraser Town Board directs staff to appropriate resources toward the following:
a. A study of costs and fees related to business operation and development. This
study should evaluate the purpose and need of such fees and the impact of those
fees on business opportunities.
b. Implementation of strategic goals and initiatives as may be adopted in the pending
Economic Development Strategic Plan.
c. Development of programs and strategies to assist existing local businesses and
attract new businesses.
d. Identify regional and statewide resources for business enhancement and
development and strategies to utilize those programs locally.
e. Provide models that demonstrate how any incentive programs would work
including revenue and cost projections.
f. Provision of infrastructure and amenities that improve the quality of life and support
effective business operations.
3. The Fraser Town Board will continue its efforts to collaborate with the Chamber of
Commerce and the Town of Winter Park where such collaboration can provide positive
economic development benefits to the Town of Fraser.
4. The Fraser Town Board will seek to continue these efforts and initiatives in 2016 and will
appropriate funding in the 2016 Budget accordingly.
5. This resolution should not be relied upon as commitment of funding or otherwise by any
business interest. Further, the Town Board will consider fairness, cost effectiveness, fiscal
constraints, financial policies, and Comprehensive Plan goals in any action to implement
proposed programs.
DULY MOVED, SECONDED, AND ADOPTED THIS 7th DAY OF OCTOBER, 2015.
TOWN OF FRASER BOARD OF TRUSTEES BY:
Peggy Smith, Mayor
ATTEST:
Lu Berger, Town Clerk
Town of Fraser
PO Box 370, Fraser, CO 80442 office 970-726-5491 fax 970-726-5518
www.frasercolorado.com
MEMO TO: Mayor Smith and the Board of Trustees
FROM: Nathaniel Q. Havens, Finance Manager
DATE: October 15, 2015
SUBJECT: Town of Fraser Finance Policies and 2016 Budget
MATTER BEFORE THE BOARD:
Town of Fraser Finance Policies and 2016 Budget.
ACTION REQUESTED:
Approval of the new Finance Policies is suggested by staff. Budget hearings and
discussions are recommended with the utmost diligence and understanding required by
the Board. Budget Hearings will be held on November 4th and 18th along with a hearing
and concurrent adoption on December 2nd, 2015.
EXECUTIVE SUMMARY:
Every five years the Finance Manager provides additions and improvements to the
Town’s Financial Policies. This term’s policy enhancements include a re-vamp of the
initial policies developed and previously adopted in 2010.
Concurrently the Board has been presented with an initial 2016 budget spreadsheet – in
our typical 10 year planning tool model. Currently there are many financial challenges
facing the Town of Fraser, eerily similar to the past week’s newspaper articles in regards
to Grand County.
BACKGROUND:
The fiscal year budget is the most important document considered by the Board each
year. The Budget is the means by which the Town Board establishes its vision for the
community in terms of an annual work plan, capital projects, and overall service delivery.
The budget appropriates resources that allow the organization to achieve the goals and
visions as promulgated by the Board. In contrast, the budget document in the private
sector is utilized as a guidance vehicle while in the public sector the budget document is
the law.
Town of Fraser
PO Box 370, Fraser, CO 80442 office 970-726-5491 fax 970-726-5518
www.frasercolorado.com
As alluded to above, the Town is facing significant financial challenges. The past nine
years the Town has adopted budgets with expenditures exceeding revenue projections.
Seven of these years we did use unassigned fund balance to gap the difference
between revenues and expenses. Fortunately, previous to 2009 the Town had been
allocating revenues in excess of expenditures and one time revenues to the General
Fund’s (GF) committed reserve and also to increasing the unassigned fund balance.
In 2009, as we identified the anticipated effects of the coming financial calamity gripping
our country the Board, Town Manager and Finance Manager set a path for the upcoming
nine yearly budgets to follow. This course of action included a philosophy of not
reducing services provided by the town to its constituents (we have actually increased
services over this time period). The plan allowed for the town to budget the use of
$250,000 per year of unreserved fund balance over revenue projections – which would
allow the town to reach the fiscal year 2017 with enough resources to pay off its bonded
indebtedness and not experience any reduction in services.
With the initial projections for fiscal year-end 2015 and a budget for 2016 including only
base line services (the initial 2016 budget document provided to the Board on July 29th)
you can see that in fiscal year (FY) 2018 we will need to spend nearly $1.2m dollars of
General Fund reserves (of which the Town has $1.m currently). Hopefully by year end
2015 and 2016 this picture will improve – the economic future for Fraser is improving
with the likes of the Holiday Inn Express and Murdock’s opening. If demand for new
homes and new vacation homes continues to improve, increases in one-time revenues
will improve over budgeted projections – so maybe our use of GF reserves can be
moved out to 2019 or 2020. It is my hope that the Board concurs with my concerns
regarding the seriousness of our financial situation.
This spring I was in attendance at the inaugural Budget 201 seminar presented by The
State of Colorado and specifically the Department of Local Affairs (DOLA). DOLA has
adopted the budgetary focus as suggested by the Government Finance Officers
Association (GFOA), the Governmental Accounting Standards Board (GASB) and based
upon Generally Accepted Accounting Principles (GAAP) of the United States. In a
nutshell the State is encouraging its Cities and Towns to follow the following model of
budgeting by adopting and encouraging communities to do the following as presented in
the following discussion from the GFOA:
Of all of the functional areas of finance, the one most in need of guidance is
government budgeting. The release by the National Advisory Council on State and
Local Budgeting of this set of recommended practices represents a milestone in
budgeting----in one document governments now have a comprehensive set of
processes and procedures that define an accepted budget process. The practices
advocate a goal-driven approach to budgeting that spans the planning, development,
adoption, and execution phases of the budget.
The practices put forward by the Council take a major step forward in promoting the
linkage of the budget process with other activities of the government. Their scope is
intentionally broad, recognizing that budgeting has many dimensions----political,
managerial, planning, and communications, as well as financial. Practices encourage
the development of organizational goals, establishment of policies and plans to achieve
these goals, and allocation of resources through the budget process that are consistent
with goals, policies, and plans. There is also a focus on measuring performance to
determine what has been accomplished with scarce government resources.
Town of Fraser
PO Box 370, Fraser, CO 80442 office 970-726-5491 fax 970-726-5518
www.frasercolorado.com
The Council’s work is important in emphasizing that budgeting should have a long-
range perspective, and not be simply an exercise in balancing revenues and
expenditures one year at a time. This focus on long-term financial planning comes at a
critical time. Recommended budget practices encourage governments to consider the
longer-term consequences of such actions to ensure that the impacts of budget
decisions are understood over a multi-year planning horizon and to assess whether
program and service levels can be sustained.
What is significant about the practices is that they represent an unprecedented
cooperative effort by several organizations with diverse interests to examine and agree
on key aspects of good budgeting. The Council was founded by eight organizations
representing elected officials, government administrators, and finance professionals at
both the state and local government level. Council membership also includes
representatives of the public finance industry, public employees’ unions, and
academia. The consensus achieved by this widely representative body will
facilitate implementation of the practices in state and local governments, since there will
be a common understanding among all participants in the budget process of what is to
be achieved.
The release of the Councils guidelines will not solve all of the problems encountered in
budgeting----a complex process that involves politics, compromise, and competing
visions of the role of government in serving the citizenry. What the practices can do is
enhance the quality of decision making by encouraging practices that illuminate the key
issues and choices facing a community.
The recommended practices have set a new standard of excellence in state and local
government budgeting. As with any reform effort, widespread acceptance of changes in
budgetary practice will take time, but the benefits promise to be profound and far-
reaching.
The proposed revised Finance Policies reflect the State and Federal guidance regarding
budgeting and reflect Town Board discussion during the 2015 Budget Hearings. The
State is very clear on its desires for municipal governments finance policies in regards to
budgeting; balanced budgets, pay-as-you-go behavior, adequate reserves along with the
increasing of an entities unassigned fund balance, a practice of underestimating
revenues and overestimating expenses, a long range budgeting tool of five to ten years
and program based budgeting. The State understands that the costs associated with
program based budgeting is outside the realm of most smaller communities, and is
working hard to be able to pass along solutions derived from our larger sister
communities.
There is no single line item on any local government’s financials or budget that attracts
more attention and discussion (especially from rating agencies, investors, lenders, and
all other outside observers) than reserves and unassigned fund balance. The accounting
term “unassigned fund balance” reports the difference between a governments assets
and its liabilities, and serves as a key measure of financial strength of an organization.
Positive fund balance suggests that an agency has resources to apply to the various
contingencies that challenge every local government. A growing unassigned fund
balance means that a local government is earning more than it spends, and as such is
better preparing itself for the next rainy day.
While unassigned fund balance amounts found in the annual audit is the measure most
heavily relied upon by third-party readers of one’s financial statements such as rating
agencies and lenders, most public entities manage their resources – accumulated and
Town of Fraser
PO Box 370, Fraser, CO 80442 office 970-726-5491 fax 970-726-5518
www.frasercolorado.com
projected revenues – through the budget process not the annual financial report. Local
governments often maintain several different reserve accounts within their budget, both
within and outside of the General Fund. Understanding and reconciling both the audit
and the budget reserves are important elements in evaluating an entity’s reserves and
reserve policies. Maintaining an adequate fund balance is more important than having a
well-articulated policy, but a formal policy serves as the first step in establishing financial
discipline – establishing the practice as part of the Town’s financial culture, surviving the
generations of management and elected officials.
Reserve policies generally measure reserves as a percentage, although there are many
approaches, variances exist between entities as to whether this is a percentage of
revenues or expenditures, or some other metric. As an example Moody’s analyzes
reserves as a percentage of revenues while Standard & Poor’s and Fitch analyze
utilizing the expenditure model.
What is the right level of reserves? Given the differences between communities and
their challenges, there is no one answer as to the appropriate amount of reserves that
should be held. There is guidance from the GFOA on the subject, but more importantly
since the “one-size” doctrine does not work for all governments, an emphasis on
examining one’s own circumstances generally lead to better reserve targets. Identifying
individual risks and potential future needs and the amounts that should be reserved to
manage those risks and needs. Specific to Fraser, concerns would include the flexibility
and volatility in revenues and expenditures, potential capital access in an emergency
and long term capital and infrastructure requirements. While there is arguably a
minimum level of reserves any entity should maintain, the “optimal” will reflect a
collective evaluation of the entity’s specific risk profile, and assessment of available
resources and the weighing of trade-offs between long-term stability/resiliency and short-
term needs.
Reserve funds are generally looked upon as resources to ward off the unexpected
financial challenges faced by a government. However I take a stand that reserves are
also available for a communities opportunities as well - as long as the reserve policies
outline approved uses and re-payment procedures. Reserve funds, in addition to
providing financial stability by reducing reliance on indebtedness to finance capital
projects and unanticipated emergencies, should also be viewed as a practice for saving
for future projects, acquisitions, future infrastructure, equipment and other governmental
needs.
In uncertain economic times, reserves can also provide officials the budgetary option
that can help mitigate the need to cut services or to raise taxes. This practice exemplifies
Fraser’s long history of building reserves and increasing the amount of our unassigned
fund balance within the General Fund – this alone has allowed the Town to weather the
reduction of revenues over the past nine years while increasing service levels to the
community. However, I believe Fraser must get back to this practice promptly in the
General Fund and to also carry this directive to its operation of its Water and
Wastewater funds.
ALTERNATIVES:
The Town of Fraser is not required to adopt Finance Policies. However, it is my
recommendation that the policies as adopted in 2010 be updated.
Town of Fraser
PO Box 370, Fraser, CO 80442 office 970-726-5491 fax 970-726-5518
www.frasercolorado.com
RECOMMENDATION:
I understand that people have varying levels of expertise and/or interest in financial
policies and the above discussion and proposed policies may seem intimidating.
Likewise, while I believe the annual budget adoption to be one of the most important
actions of the Town Board, public interest in this process is typically low.
During the course of drafting the proposed policies and preliminary 2016 Budget, it
occurs to me that rather than debating line items and reserve amounts it may be more
practical to begin with a discussion of threats and opportunities within each fund.
Accordingly, I would suggest the following discussion outline as a starting point that may
be more understandable to our community. Of course, this is only a starting point and I
hope that you will have additional suggestions.
What are we concerned about and what opportunities to we hope to capitalize on in
each of our funds? (Threats are listed with the dark dot and Opportunities with the open
dots below)
General Fund
Recession and resulting revenue downturn
Natural disaster (flood/fire)
Train Derailment
Small retail sales tax base/diversification/competition
Litigation
Tourism based economy
o Economic development
o Community planning and quality of life enhancement
o Increase delivery and levels of service
o Property acquisition
o
Water Fund
Groundwater under the influence of surface water and resulting required upgrades to our
treatment facilities
Ongoing increases in requirement treatment standards
Well or Well Field failure
System failures (aging system)
o Reduce service fees
o
Wastewater Fund
System failures (aging system)
Inflow and Infiltration
Increases in Joint Facility costs
o Reduce service fees
o
Town of Fraser
PO Box 370, Fraser, CO 80442 office 970-726-5491 fax 970-726-5518
www.frasercolorado.com
Joint Facilities Fund
Copper compliance
Nutrient removal/2017 permit conditions
Ongoing increases in requirement treatment standards
Inflow and Infiltration
o
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Town of Fraser, Colorado
Financial Policies
The Town of Fraser, a statutory Colorado community operating under a Mayor-Manager form of
government, has adopted the following financial policies that allow the governing body to view
its present approach to financial management from an overall, long-range vantage point.
Under the Mayor-Manager form of government the elected governing body is responsible for the
legislative function of the municipality; such as establishing policy, passing local ordinances and
resolutions, approving appropriations, and developing an overall community vision. These
financial policies help to frame resource allocation decisions and establish objectives,
standards, and internal controls for the Funds of the Town.
Financial policies help; provide for the continuity of service delivery, help to improve the Town’s
fiscal stability, and prepare the Town for any potential financial emergencies. Many authorities
provide direction in regards to the Town’s financial policies including, the Federal Government,
the State of Colorado and it’s Constitution and the Fraser Town’s Code. All these authorities
provide for the basic legal requirements and timelines for these policies.
Section 1 - Financial Management Overview
The following financial policies adopted by the Fraser Town Board on ________________, 2015
establish the framework for the Town’s overall fiscal planning and management. It is the intent
of the Town that these policies demonstrate to residents, the credit rating industry, municipal
bond investors, auditors, and the State that the Town is committed to sound financial
management and fiscal integrity. The goals of the Town’s financial policies are:
To support sustainable municipal services.
To have a capital improvement program that adequately maintains and enhances the
public’s assets over their useful life.
To provide cost effective services to citizens and visitors.
To provide financial and other service information to enable citizens to assess the costs
and efficiency of Town services.
To follow prudent and professional financial management practices to assure residents
of the Town of Fraser and the financial community that our Town government is well
managed and in sound fiscal condition.
Section 2 - General Financial Policy
I. Fund Accounting
The Town uses Fund accounting protocols and procedures as outlined by the Generally
Accepted Accounting Principles (GAAP) and following the pronouncements of the
Governmental Accounting Standards Board (GASB).
A fund is a separate, self-balancing set of accounts used to account for resources that are
segregated for specific purposes in accordance with special regulations, restrictions or
limitations. The separation of the Town’s activities into funds allows the Town to maintain the
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appropriate (required) controls over expenditures for each activity and to report on specific
activities to interested citizens.
Fund Types: All funds are classified into six (6) fund types. These fund types, and the purpose
of each are:
a. General Fund - To account for the required administrative functions of municipal
governance, police protection, public works, parks-open space and trails, community
development, street infrastructure, other capital asset operations and preservation, and snow
management functions of the Town.
Principal sources of revenue for the Town’s General Fund (GF) consists of: property taxes,
sales, use and excise taxes. Secondary revenues are derived from franchise fees, licenses and
permits, grants, charges for services, intergovernmental revenue, interest earnings, and
operating transfers from other funds.
Major expenditures within the Town’s General Fund are for personnel costs, materials and
supplies, purchased services, capital outlay and transfers to other funds.
b. Special Revenue Funds - To account for and report the proceeds of specific revenue
sources that are restricted or committed to expenditures for specified purposes other than debt
service or capital projects.
The Town at this time operates four Special Revenue Funds:
The Conservation Trust Fund (CTF) is funded by the State’s net lottery proceeds and interest
earnings. Fund balance within the CTF is generally leveraged with grant dollars and donations
for new park, open space and trail investments. CTF funds are highly regulated and no
expenditures are allowed for ongoing maintenance costs related to any project.
The Capital Equipment Replacement Fund (CERF) is funded by State Highway User Trust Fund
proceeds along with interest earnings and GF transfers. The CERF is utilized to track
expenditures for our public safety fleet, and our public work’s heavy equipment, regular
equipment and fleet purchases.
The Fraser River Enhancement Fund (FREP) has been used in the past to track inter-
governmental projects along the Fraser River corridor from the base of Berthoud Pass to the
Joint Facility.
The Joint Facilities Fund (JFF) is utilized to operate the Upper Fraser Valley Wastewater
Treatment Plant and the facilities capital projects. Operation and maintenance expenditures are
refunded to the Fund based upon the current member utilization of treatment capacity. Capital
projects at the facility are funded at the member plant ownership percentages.
c. Capital Project Funds - To account for and report financial resources that are restricted,
committed, or assigned to expenditures for capital outlays, including the acquisition or
construction and preservation of capital facilities and other capital assets.
The Capital Asset Fund (CAF) is used to provide resources for current and future General Fund
capital assets, i.e. streets, bridges, buildings, trails, parks and open space. Currently the CAF is
funded by inter-fund transfers, grants and partnerships on a project specific basis. On-going
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operating revenues need to be identified and dedicated along with reserve accumulations for
current and future assets.
d. Debt Service Fund (DSF) - To account for and report financial resources that are restricted,
committed, or assigned to expenditures for principal and interest on any bonded indebtedness.
The Town’s DSF tracks and allocates resources for the payments of its long term bonded
indebtedness. The Fund has both Restricted Reserves and Committed Reserves.
e. Enterprise Funds (also called Business or Proprietary Funds) - To account for operations
that are financed and operated in a manner similar to private business enterprises. The intent of
the governing body is that the costs (expenses including depreciation) of providing goods or
services to the general public on a continuing basis be financed or recovered primarily through
user fees covering all expenses incurred, and/or net income as appropriate for capital
maintenance, public policy, management control, accountability, or other purposes.
The Town’s Water Fund (WF) accounts for the water production and distribution systems and its
Wastewater Fund (WWF) accounts for the wastewater collections system. Capital projects are
budgeted for both enterprises within each fund.
f. Fiduciary Funds - To account for resources received and held by the Town in a fiduciary
capacity (Trust). Disbursements from these funds are made in accordance with the Trust or
other agreements or conditions of the Trust for the particular source of funds. The Town
currently has no fiduciary funds in operation.
II. Accounting and Auditing Policies
The Town maintains a system for financial monitoring, control and reporting for all operations,
funds and agencies in order to provide effective means to ensure that overall Town goals and
objectives are met and to instill confidence in the Town’s partners and investors that the Town is
well-managed and fiscally sound.
The Town maintains its accounting records and reports on its financial condition and results of
operations in accordance with Federal and State laws, regulations and Generally Accepted
Accounting Principles (GAAP), which are set by the Governmental Accounting Standards Board
(GASB) and the Financial Accounting Standards Board (FASB).
Annually, an independent firm of certified public accountants performs a financial and
compliance audit of the Town’s financial statements.
III. Basis of Accounting and Reporting Focus
The term “basis of accounting” refers to when revenues, expenditures - and the related assets
and liabilities – are recognized in the accounts and reported in the financial statements.
Specifically, it relates to the timing of the measurements made. The following are the basis of
accounting available for use by the Town:
a. Cash Basis – Transactions are recognized only when cash is received or disbursed.
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b. Accrual Basis – Transactions are recognized when the economic event occurs, regardless
of whether or not cash is received or paid. Proprietary funds (Water and Wastewater Funds),
use the accrual basis of accounting. These funds have an income measurement/capital
maintenance focus. The accrual basis of accounting is used by private enterprises as well.
c. Modified Accrual Basis – Expenditure transactions are recognized when incurred.
Revenues are recognized when they are both measurable and available to finance the
expenditures of the current period. Governmental funds, including general, special revenue,
debt service, and capital projects, use the modified accrual basis of accounting. For a revenue
to be recognized in a governmental fund, it must be “measurable” (the amount must be known
or be reasonably estimated), and it must be “available” to finance the expenditures of the same
fiscal period for which the revenue is recorded. “Available,” in this case, means collectible in the
current period or soon enough thereafter to be used to pay liabilities of the current period. For
purposes of consistency, that time-frame shall be sixty (60) days which was set for purposes of
Property Tax revenues.
Reporting Focus (Budget vs. GAAP) - This concept is used to refer to the way transactions are
recorded and reported for compliance with Colorado Budget Law as opposed to financial
statement presentation in conformance with GAAP.
1. Budget Basis - The Town’s monthly statement of revenues and expenditures are
reported during the fiscal year on what is informally called a “budget basis.” The Town’s
transactions are recorded throughout the year in accordance with the financial statement
requirements as set forth within the Colorado Revised Statutes. By recording the
transactions in general compliance with this law, the revenues and expenditures can be
more easily monitored on a monthly basis to ensure compliance with the legal
requirements as set forth within the Colorado Revised Statutes.
2. GAAP - At the end of the fiscal year, adjustments are made to present the financial
information in a format that is comparable to that used by other local government units
around the country. The standards for this reporting are referred to as GAAP. The
adjustments to convert the Town’s financial records from “budget basis” to “GAAP basis”
are made to ensure that the Town’s financial statements are fairly and consistently
presented in conformance with GAAP.
IV. Internal Control Structure
The Town maintains an internal control structure consisting of the following three elements:
a. Control Environment – an overall attitude and awareness of actions as they influence the
Town.
b. Accounting System – an effective accounting system which results in identification and
recording of all valid transactions, description on a timely basis of the type of transaction in
sufficient detail to permit proper classification of the transaction for reporting purposes,
recording of the transaction in the correct time period and proper presentation of all transactions
and related disclosures in the financial statements.
c. Control Procedures – proper authorization of transactions and activities, adequate
segregation of duties, adequate documentation and records, adequate safeguards regarding
access and use of assets and records, and independent checks on performance. Funds are
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categorized by standard GAAP functional classifications; and the development of new funds,
departments, programs and accounts shall be approved by the Finance Department. Each fund
in the Town’s budget will have an introductory statement of purpose which shall consist of the
intent of the fund; sources of revenue and restricted revenues, if any; required reserves and
justification for such reserves.
V. Financial Monitoring
The Town Manager is charged with the primary responsibility for monitoring the fiscal
implementation of the approved budget. In addition, the Town Manager and Finance Manager
will work closely with other departments to apprise them of their financial status and of any
potential issues that may affect their budgets. The Town Manager and the Finance Manager will
review fiscal issues affecting any part of the Town’s organization. This activity supports the
monitoring role and focuses on the protection of Town assets and the legal, efficient, and
effective use of Town resources. Together, the Town Manager and the Finance Manager will
provide the Town Board with regular reports on the Town’s finances including a financial report
containing budget versus actual revenue and expenditures information. Individual departments
are responsible for monitoring and managing their resources to ensure that the legal and
administrative appropriation to the department is not overspent and that all expenditures and
uses of Town resources are in conformity with Town, State, and Federal ordinances, statutes,
policies, and regulations.
1. Legal Appropriation - Each department is responsible for ensuring that expenditures
do not exceed the legal appropriation level for their department within each fund
(operating and capital expenditures combined).
2. Revenues - Each department is responsible for monitoring revenues that are collected
as a result of programs administered.
VI. Audit
Colorado statutes, along with Federal laws and regulations will be followed wherever they apply
to the financial activities of the Town.
The source of historical financial information will be located in the central accounting system as
operated and maintained by the Finance Department. The source of all current and future
budget information, including spending plans, revenues, and expenditures, is the annual budget
document.
a. Internal Audit - The Town’s Finance Department and Independent Auditors evaluate the
adequacy of financial controls, systems, records and organizational operations. They provide
the Town Board with management and employees objective analysis, appraisals and
recommendations for improving systems and activities.
b. External Audit - In accordance with Federal law and State statutes, an annual external audit
will be performed by an independent public accounting firm with the subsequent issuance of a
financial report and opinion.
c. Single Audit - Per the Federal Office of Management and Budget (OMB) Circular A-133, all
non-federal entities that expend $500,000 or more in a year with Federal awards, either as the
grantee or the sub-grantee, shall have a single or program-specific audit conducted for that year
in accordance with the provisions of the circular guidance. The single audit encompasses both
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the entity’s financial statements and the federal awards received by the entity; whereas a
program-specific audit will audit one federal program and can only be used when the grantee
receives grant awards only from one federal program.
Section 3 - Budget Policy
I. Overview
The annual budget is an operational tool which provides the Town Board and Manager with the
financial information necessary to guide resource allocation to accomplish the goals and
objectives of the Town.
The budget, along with the annual appropriation including supplemental appropriations, provide
the basis for the control of expenditures and set the Town’s financial guidelines. Basic legal
requirements and budget processes are defined by the State and Town Code.
II. Budget Philosophy
The Town is committed to developing a sound financial plan for the operations and capital
improvements that meet the Town’s Comprehensive Plan goals. The Town provides a wide
variety of services to residents and visitors. It is the responsibility of the Town Board to adopt a
budget that provides resources to best meet the service needs for the overall good of the
community. To achieve this, the Town:
a. Utilizes conservative growth and revenue forecasts;
b. Prepares plans for operations and capital improvements;
c. Allows staff to manage the operating and capital budgets, with the Town Board approving the
allocations for both;
d. Adopts financial policies;
e. Establishes budgets for all funds based on adopted policies;
f. Appropriates the budget in accordance with the Town Code and State law;
g. Develops a budget that minimizes adverse impacts to the community and plans for the
uncertain and unpredictable by establishing and funding adequate reserves in each major fund.
III. Budget Preparation Process
The Town identifies important community outcomes and develops a financial and service
delivery plan to achieve those outcomes. The Town Board allocates funding based on current
priorities and results.
Each year, the Town Manager prepares a forecast for the following year’s budget. In July, the
Town Manager prepares a ten year budget projection with the Town Board’s budget objectives
and guidelines for developing the following year’s budget.
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In July and August, departments develop revenue and expense projections for the following
year and submit them to the Town Manager. Not later than October 15th the Town Manager
submits a preliminary budget to the Town Board for review. In November, the citizens of Fraser
provide their feedback on the proposed budget when the Town Board holds its Budget Hearings
on the proposed budget.
By the first meeting in December, or earlier when possible, the Town Board adopts the budget
and commits appropriations by ordinance. By State statute December 31st the Town Board must
adopt the following year’s budget and no later than December 15th property taxes must be
levied to the County for collection. Any revisions to the current year’s budget must be adopted
with the next year’s budget, if not earlier. Revisions shall be adopted on a per line item basis
versus any wholesale revised budget protocol, this allows for transparency to the community at
large.
IV. State Statutory Requirements
The State Statute indicates that no later than October 15 of each year, the budget shall be
submitted to the governing body. As a result, the Town Manager and Finance Manager present
the recommended budget for the ensuing fiscal year to Town Board no later than October 15th
of each year.
V. Town of Fraser’s Code Requirements
Budget Fiscal Year – Fraser Town Code Section; “The fiscal year of the Town shall commence
on the first day of January and end on the last day of December of each year.”
Section 4 - Debt Policy
I. Overview
The Town recognizes the primary purpose of “facilities” is to support the provision of services to
its residents. The Town must balance debt financing and "pay-as-you-go" methods to meet the
capital needs of the community. The Town realizes failure to meet the demands of growth may
inhibit its continued economic viability but also realizes too much debt has detrimental effects.
Historically, the Town’s total bonded indebtedness has been limited.
The Town uses lease purchase financing for several purposes including the acquisition of real
property and the replacement of equipment and vehicles. Lease purchases decrease the impact
of the cost to a department by spreading the costs over several years, and are subject to annual
appropriation by the Town Board.
II. Town of Fraser Code Requirements Debt Limitations
a. No bonds or other evidences of indebtedness, payable in whole or in part from the proceeds
of ad valorem property taxes or to which the full faith and credit of the Town are pledged in
writing or otherwise shall be issued, except in pursuance of an ordinance authorizing the same,
and unless the question of the issuance of the bonds shall at any special or general municipal
election be submitted to a vote of the qualified electors of the Town and approved by a majority
8 | Page
of those voting on the question. However, the Town Board pursuant to Town Code and without
election may:
Issue local improvement district bonds;
Borrow money or issue bonds for the purpose of acquiring, constructing, extending or
improving water, electric, gas, sewer, or other public utilities or income-producing
projects provided, further, that said borrowing shall be repaid and said bonds shall be
made payable solely out of the net revenue derived from the operation of the utility,
utilities, or other income-producing projects, or any or all thereof. Net revenue shall
mean gross revenue less all operation and maintenance expenses of the project for
which the money has been borrowed or bonds issued.
b. The Town shall not become indebted for any purpose or in any manner to an amount which,
including existing indebtedness, shall exceed 3% of the assessed valuation of the taxable
property within the Town as shown by the last preceding assessment for Town purposes
provided; however, that in determining the amount of indebtedness, there shall not be included
within the computation of indebtedness local improvement district bonds, revenue bonds, or
general obligation bonds or other evidences of indebtedness issued for the acquisition,
construction, extension, or improvement of water or wastewater facilities or supplies, or both.
III. Security and Exchange Commission (SEC) Rule 15c2-12 “Municipal
Securities Disclosure” Requirements
As a means reasonably designed to prevent fraudulent, deceptive, or manipulative acts or
practices, it shall be unlawful for any participating underwriter (broker, dealer, or municipal
securities dealer) to act as an underwriter in a primary offering of municipal securities with an
aggregate principal amount of $1 million or more unless the participating underwriter complies
with SEC Rule 15c2-12 requirements or is exempted from the provisions of the Rule.
The Town is committed to providing timely and consistent dissemination of financial information
with SEC regulatory requirements. It is imperative that disclosure be accomplished in a timely
fashion in accordance with SEC required SEC Rule 15c2-12 compliance and the Town’s
Disclosure Dissemination Agent Agreement (DDAA). This disclosure policy confirms the Town’s
commitment to fair disclosure. Its goal is to develop and maintain guidelines for presenting
related financial reports and events to interested third parties, financial institutions and the
general public. This policy covers all Town employees and elected officials of the Town of
Fraser. It covers disclosure documents filed with the SEC, statements made in the Town’s
Audited Financial Statements, and any unaudited interim reports.
Section 5 – Cash Management Policy
I. Scope
The Town recognizes that effective cash management is an integral component of sound
financial management.
II. Cash Deposits and Receipts
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a. Departments collecting cash receipts, whether in cash or other forms of payment, must turn in
such receipts to the Finance Department on a daily basis together with records required to verify
accuracy of such collections.
b. Departments authorized to make deposits will promptly submit bank deposit receipts and
daily cash reports to the Finance Department to verify the accuracy of collections.
c. The Finance Department will set forth general cash handling procedures to be followed for all
Town departments. Departments may have more restrictive policies but will not have less
restrictive policies as set forth from the Finance Department.
Section 6 – Investments
I. Investment Policy
Existing State Statutes provide standards for cash and investment management operations. The
Town will invest in securities in a manner authorized by Colorado statutes.
The purpose of the Towns Investment Policy is to establish the investment scope, objectives,
delegation of authority, standards of prudence, reporting requirements, internal controls, eligible
investments and transactions, diversification requirements, risk tolerance, and safekeeping and
custodial procedures for the investment of the funds of the Town of Fraser.
Section 7 – Fund Balance Policy
I. Overview
The Town’s Fund Balance is the accumulated difference between assets and liabilities within
governmental funds. A sufficient fund balance allows the Town to meet its contractual
obligations, provide funds for new and existing programs established by the Town Board,
mitigate negative revenue implications of federal or state budget actions, mitigate local
economic downturns, fund disaster or emergency costs, provide funds for cash flow timing
discrepancies and fund non-recurring expenses identified as necessary by the Town Board.
II. Governmental Fund Balance Type Definitions
The Governmental Accounting Standards Board (GASB) issued Statement Number 54, “Fund
Balance Reporting and Governmental Fund Type Definitions” effective for periods after June 15,
2010. The objective of this Statement was to enhance the usefulness of fund balance
information by providing clearer fund balance classifications that can be more consistently
applied and by clarifying the existing governmental fund type definitions. This Statement
establishes limitations on the purposes for which Fund Balance can be used.
a. Non-spendable Fund Balance – Some assets reported in governmental funds may be
inherently non-spendable from the vantage point of the current period.
- Assets that will never convert to cash such as; prepaid items or inventories,
- Assets that will not convert to cash soon enough to affect the current period such as;
non-financial assets held for resale,
10 | Page
- Resources that must be maintained intact pursuant to legal or contractual requirements
such as; capital of a revolving loan fund
b. Restricted Fund Balance – This represents the portion of fund balance that is subject to
externally enforceable legal restrictions. Such restrictions are typically imposed by parties
altogether outside the Town such as creditors, grantors, contributors or other governments.
Restrictions can also arise when the authorization to raise revenues is conditioned upon the
revenue being used for a particular purpose.
c. Committed Fund Balance – This represents the portion of fund balance whose use is
constrained by limitations that the Town imposes on itself by the Town Board (highest decision
making level) and remains binding unless removed in the same manner. The Town does not
use committed funds in its normal course of business.
- Requires action by the Town Board to commit fund balance
- Formal Town Board action is necessary to impose, remove or modify a constraint
reflected in the committed fund balance
d. Assigned Fund Balance – This describes the portion of fund balance that reflects the
Town’s intended use of resources. Representing the current years funded and approved budget
and or amended budget.
e. Unassigned Fund Balance – The residual portion of fund balance.
III. General Fund Unassigned Fund Balance
A priority goal of the Finance Manager is to improve the long-term fiscal health of the Town.
Revenue projections are conservative and authorized expenditures are closely monitored and
projected. In stable economic times, the combination of these two strategies leads to revenue
collections higher than actual expenditures.
Net revenue (actual revenue collections less actual expenditures) is available to first fund the
required restricted reserves the Town is legally obligated to meet, and then to the committed
reserves.
Year-end balances in the unassigned reserves may be used as a funding source in the next
budget year. The Town’s policy is to accumulate adequate committed reserves to protect the
Town during economic downturns or large scale emergencies. The Town will achieve a
committed General Fund balance of one million dollars, or an amount equal to 3% of assessed
value of the Town. The Town also maintains reserves that are required by law or contract and
that serve a specific purpose. These types of reserves are considered committed and are not
available for other uses. Within specific funds, additional reserves may be maintained according
to adopted policies.
The Government Finance Officers Association (GFOA) is a professional association of state and
local finance officers in the US and Canada whose members are dedicated to the sound
management of government financial resources. GFOA recommends that “governments
establish a formal policy on the level of unrestricted fund balance that should be maintained in
11 | Page
the General Fund.” The GFOA recommended, at a minimum, that general-purpose
governments, regardless of size, incorporate in its financial policies an unassigned fund balance
in their General Fund be no less than three months of regular general fund operating revenues
or regular General Fund operating expenditures.
The Town will maintain an unassigned fund balance (the balance of funds after all restrictions
and reserves have been assigned) equal or greater than four months of budgeted expenditures.
In addition the Town will maintain a committed fund balance equal to one quarter of the
projected sales tax collections for the year for General Fund emergencies. Additionally a
committed fund balance equal to or greater than twenty-five percent (25%) of the insured value
of capital assets owned by the General Fund, these funds can be reduced once adequate
reserves are collected within the CAF, and the CERF.
IV. Other Funds
a. Enterprise and some Special Revenue Funds - Reserves within the Water and Waste-
water Enterprise Funds provide for unexpected revenue losses or unanticipated expenditures
during the year, capital projects and future system enhancements and requirements. A portion
of these reserves may be appropriated as part of the annual budget and may be utilized at the
end of the fiscal year if necessary.
In addition the Water and Wastewater Funds will have a committed fund balance for operational
emergencies of five hundred thousand dollars ($500,000.00) each. Both Enterprise Funds will
maintain a committed fund balance of five hundred thousand dollars plus twenty-five percent
(25%) of the value of the depreciated system value for capital projects. This committed fund
balance will also increase as the Fund will attempt to operate on a “pay-as-you-go” manner
based upon a five year capital investment project schedule as maintained by the system
operator.
In addition the Water and Wastewater Funds will have an unassigned fund balance equal to or
greater than four months of operational expenditures of the budget year.
When unexpected repairs/enhancements or unfunded mandates require expenditures in either
enterprise exceeding the committed fund balance by 50% the fund will be authorized to issue
debt if this is in the long range best interest of the fund. In addition, the Wastewater Fund will
maintain a committed fund balance of at least one million dollars, designated for the Joint
Facilities Fund Capital Replacement Reserve and Capital Investment Plan projects.
b. Internal Services Funds - Internal Services Funds are expressly designed to function on a
cost reimbursement basis and should not accumulate a significant reserve. A small reserve is
appropriate to allow for differences in timing of revenues and expenditures. Currently the Town
does not utilize Internal Services Funds (ISF) – although our Joint Departments with the Town
of Winter Park could be assumed to be ISFs.
c. Self-Insured Fund Reserves - As required by the State of Colorado Self Insurer’s Reserve
Trust Agreement, the Town would maintain a fund balance reserve for Liability and Workers
Compensation. Currently the Town of Fraser does not self-fund its insurance liabilities.
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IV. Debt Reserves
Debt reserves are established to protect bond holders from payment defaults. Adequate debt
reserves are essential in maintaining good bond ratings and the marketability of bonds. The
amount of restricted fund balance is established by bond ordinance for each fund in association
with each bond issuance. At times, it may be desirable to use bond insurance rather than debt
reserves. This is usually based on the recommendation from our Financial Advisor.
V. Use of Fund Balances
Available fund balances shall not be used for ongoing operating expenditures.
Section 8 - Capital Improvement Program Policy
I. Overview
The Town has a significant investment in its streets, facilities, parks, natural areas and other
capital improvements. In past years, the Town Board and the residents of Fraser through their
actions have demonstrated a firm commitment to and investment in Town capital projects.
II. Five Year Capital Improvement Plan (CIP)
The Town will maintain government wide capital project plans encompassing a five year
planning window. These strategic plans will include projects outlined in the Town’s
Comprehensive Plan along with the Enterprise Fund’s municipal needs.
III. Funding Sources and Requirements
All Town capital improvements will be constructed and expenditures incurred for the purpose as
approved by the Town Board, with funds rolling over from year to year until a project is deemed
complete, otherwise remaining budgeted funds will return to the appropriate funds unassigned
or committed fund balance.
The Town will use a variety of different sources to fund capital projects, with an emphasis on the
“pay-as-you-go” philosophy.
Funding for future operating and maintenance costs for approved capital projects must be
identified at the time projects are approved. Future revenues should be identified for the
associated operation and maintenance charges for the approved projects/investments in the
Town’s ten year budget worksheet.
Section 9 - Revenue Policy
The Town shall strive to maintain a balanced and diversified revenue structure to protect the
Town from fluctuations in any one source due to changes in local economic conditions which
adversely impact that source.
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Revenue estimates will be conservative and based upon trend analysis, economic conditions
and other factors. Estimates will be established by the Finance Manager and reviewed by the
Town Manager.
Non-recurring (one-time) revenues and other financing sources will not be used to finance
ongoing operations.
Federal aid, state aid, gifts, and grants will be accepted only after an assessment is made of
potential cost implications.
The Town will review its fees and other charges for services annually to ensure that revenues
are meeting intended program goals and are keeping pace with inflation, other cost increases
and any applicable competitive rate. The Town will evaluate cost recovery and align fees with
cost recovery goals. Enterprise and Internal Service operations will be self-supporting.
Section 10 - Expenditure Policy
The Town will pursue goals of efficiency and effectiveness by balancing short-term and long-
term community needs. Current operating expenditures will be funded with current operating
revenues, approved grants, or the use of unassigned fund balance in accordance with fund
balance policies.
The Town Manager and Finance Manager will monitor revenues and expenditures during the
year to provide an opportunity for actions to be taken to bring expenditures in line with revenues
received.
The Town will undertake periodic reviews of Town programs for both efficiency and
effectiveness. Programs that are determined to be inefficient and/or ineffective shall be reduced
in scope and eliminated.
Privatization and contracting with other governmental agencies will be evaluated as alternatives
to service delivery.
Section 11 - Grants Policy
Grants will follow all regulations included in the grant contract. Town Departments and staff that
occupy positions of responsibility with respect to grant activity have specific roles and
responsibilities that they shall perform and uphold both ethically and in the best interests of the
Town.
a. Grants will be spent for the purposes intended and will not be relied on for basic General
Fund services.
b. The Town will review grants for operating programs on an individual basis to determine
suitability of accepting the grants from a sustainable long-term financial perspective.
c. The Town will vigorously pursue grants for capital projects that fit long-range community
improvement goals.
14 | Page
d. All potential grants will be carefully examined for matching requirements; both dollar and
level-of effort matches.
Section 12 - Identify Theft Prevention Policy
In 2008, Congress directed the Federal Trade Commission (FTC) and other agencies to
develop regulations requiring “creditors” and “financial institutions” to address the risk of identity
theft. The resulting Red Flag Rules requires all such entities that have “covered accounts” to
develop and implement written identify theft prevention programs.
The FTC defined “creditors” as businesses or organizations that regularly defer payment for
goods or services and bill customers later. This includes nearly any organization extending
credit, whether by granting loans, making credit decisions, etc.
Pursuant to the FTC enforcement policy of the Identify Theft Red Flags Rule, the Town of
Fraser will evaluate risk factors to develop and implement a policy designed to help identify,
detect, and respond to patterns, practices, or specific activities – known as “red flags” – that
could indicate identify theft. Specifically the Town of Fraser has identified that access to account
information in its water and wastewater utility system and its accounts receivable customer
information as proprietary data and is not released unless and as requested by law enforcement
or additional court orders.
12/31/2015
10/15/2015 2014 2015 2015 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
GENERAL FUND
REVENUE
TAXES
10-31-100 General Fund Property Tax 196,488 197,265 196,785 197,265 200,000 205,000 207,000 208,000 209,000 210,000 220,000 225,000 230,000 235,000 235,000
10-31-200 Specific Ownership Tax 10,682 10,000 9,071 10,500 10,200 10,500 10,500 11,000 11,000 11,500 11,500 11,500 12,000 12,000 12,000
10-31-300 Motor Vehicle Tax 4,420 4,200 2,609 4,200 4,200 4,250 4,250 4,500 4,500 5,000 5,000 5,000 5,000 5,000 5,000
10-31-400 Town Sales Tax 1,738,348 1,595,000 1,017,608 1,825,000 1,800,000 1,805,000 1,810,000 1,815,000 1,820,000 1,820,000 1,820,000 1,820,000 1,825,000 1,850,000 1,850,000
10-31-410 Use Tax - Building Materials 165,397 65,000 230,804 235,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000 85,000
10-31-420 Use Tax - Motor Vehicle Sales 66,954 55,000 48,588 65,000 60,000 65,000 65,000 65,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000
10-31-430 State Cigarette Tax 4,277 4,000 2,274 4,000 4,000 3,850 3,800 3,750 3,700 3,650 3,650 3,650 3,650 3,650 3,650
10-31-800 Franchise Fees 55,006 50,000 31,545 52,000 52,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000
Sub-Total 2,241,572 1,980,465 1,539,282 2,392,965 2,215,400 2,233,600 2,240,550 2,247,250 2,258,200 2,260,150 2,270,150 2,275,150 2,285,650 2,315,650 2,315,650
LICENSES & PERMITS
10-32-100 Business License Fees 13,663 12,750 12,580 12,660 13,000 13,100 13,200 13,350 13,500 13,500 13,750 13,750 13,750 13,750 13,750
10-32-110 Regulated Industry Fees/Taxes 28,806 25,000 72,257 105,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Sub-Total 42,468 37,750 84,837 117,660 63,000 63,100 63,200 63,350 63,500 63,500 63,750 63,750 63,750 63,750 63,750
INTERGOVERNMENTAL
10-33-100 Grants 10,000 166,000 10,000 156,000 20,000 0 0 0 0 0 0 0 0 0 0
Sub-Total 10,000 166,000 10,000 156,000 20,000 0 0 0 0 0 0 0 0 0 0
CHARGES FOR SERVICES
10-34-100 Annexation Fees 0 1,000 275 275 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
10-34-110 Zoning Fees 2,500 1,500 8,925 8,925 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
10-34-120 Subdivision Fees 15,400 1,500 29,550 29,550 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500
10-34-130 Miscellaneous Planning Fees 1,905 1,000 2,040 2,040 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
10-34-150 Affordable Housing Impact Fee 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-34-740 Fees in Lieu of Park Land 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-34-750 WTHP Revenue 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 19,805 5,000 40,790 40,790 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
FINES & FORFEITURES
10-35-100 Court Fines 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-35-200 Police Dept. Sur-Charge 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
MISCELLANEOUS REVENUE
10-36-100 Interest Earnings 3,156 3,250 2,836 3,500 3,500 3,650 3,750 4,000 4,500 4,500 4,500 5,000 5,000 5,000 5,000
10-36-300 Rental Income 11,420 9,500 12,975 14,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500
10-36-500 Sale of General Fixed Assets 6,163 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-36-600 Reimbursable - Mustang 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-36-610 Reimbursable - Prof Services 178,944 100,000 82,833 100,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
10-36-620 Reimbursable - Night Shuttle 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-36-900 Miscellaneous Revenue 34,660 30,000 32,945 33,000 30,000 30,000 30,000 30,500 31,000 31,500 32,000 32,500 33,000 33,500 34,000
Sub-Total 234,343 142,750 131,589 151,000 96,000 96,150 96,250 97,000 98,000 98,500 99,000 100,000 100,500 101,000 101,500
SPECIAL ASSESSMENTS
10-37-100 Byers Vista SID 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
OTHER SOURCES AND TRANSFERS
10-39-100 Bond Proceeds 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-39-900 Transfers in from Other Funds 0 10,000 0 10,000 0 0 0 0 0 0 0 0 0 0 0
10-39-999 Unassigned Fund Balance 2,009,110 2,003,613 2,116,145 2,116,145 1,649,403 868,159 99,689 (1,206,062)(2,339,921)(3,008,072)(2,634,549)(3,076,995)(2,842,418)(3,116,491)(3,032,173)
Sub-Total 2,009,110 2,013,613 2,116,145 2,126,145 1,649,403 868,159 99,689 (1,206,062)(2,339,921)(3,008,072)(2,634,549)(3,076,995)(2,842,418)(3,116,491)(3,032,173)
GENERAL FUND "NEW" REVENUES 2,548,189 2,341,965 1,806,499 2,858,415 2,399,400 2,397,850 2,405,000 2,412,600 2,424,700 2,427,150 2,437,900 2,443,900 2,454,900 2,485,400 2,485,900
GENERAL FUND TOTAL REVENUE 4,557,299 4,345,578 3,922,643 4,984,560 4,048,803 3,266,009 2,504,689 1,206,538 84,779 (580,922)(196,649)(633,095)(387,518)(631,091)(546,273)
Page 1 of 12
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
EXPENDITURES
TOWN BOARD
10-41-110 Salaries 16,460 26,000 15,360 23,000 30,000 30,000 31,000 31,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000
10-41-220 FICA Tax 1,259 1,989 1,175 1,800 2,295 2,295 2,372 2,372 2,448 2,448 2,448 2,448 2,448 2,448 2,448
10-41-280 Training Programs 7,448 6,000 3,152 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000
10-41-290 Travel, Meals and Lodging 4,555 5,000 1,648 5,000 5,000 5,000 5,500 5,500 6,000 6,000 6,000 6,000 6,500 6,500 6,500
10-41-295 Meals and Entertainment 7,802 8,000 3,563 8,000 8,000 8,500 8,500 9,000 9,000 9,000 9,500 9,500 9,500 10,000 10,000
10-41-690 Miscellaneous Expense 2,552 8,000 (14,379)8,000 3,000 3,000 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500
10-41-860 Grants and Aid to Agencies 1,000 0 4,155 4,155 0 0 0 0 0 0 0 0 0 0 0
10-41-861 Intergovernmental Agreements 9,000 9,000 4,500 9,000 9,000 9,450 10,500 11,025 11,576 12,155 12,763 13,401 14,071 14,775 15,513
10-41-862 Fraser/Winter Park Police Dept 406,188 432,000 338,350 406,020 450,000 472,500 496,125 520,931 546,978 574,327 603,043 633,195 664,855 698,098 733,003
10-41-863 Street Lighting and Signals 16,667 15,250 13,043 15,250 17,200 17,450 17,700 17,950 18,200 18,450 18,700 18,950 19,200 19,450 19,700
10-41-864 Special Events 10,000 10,000 12,500 12,500 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
10-41-865 Grand County Dispatch 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-41-866 Wood Stove Rebates 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-41-867 Chamber of Commerce - IGA 72,764 68,114 28,717 75,775 74,940 75,107 75,273 75,440 75,606 75,606 75,606 75,606 75,773 76,605 76,605
10-41-868 Winter Shuttle - IGA 52,000 80,000 56,000 56,000 60,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000
10-41-869 Summer Shuttle - IGA 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-41-870 Business Dist StreetScape 3,961 100,000 3,200 10,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
10-41-871 Business Enhancement Programs 3,200 105,000 39,756 60,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000
10-41-872 Improvement Awards-Business 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 614,857 874,353 510,740 700,500 735,435 764,302 791,470 817,717 846,308 874,486 904,560 935,600 968,846 1,004,375 1,040,269
ADMINISTRATION
10-45-110 Salaries 203,554 250,000 194,745 250,000 250,000 255,000 260,100 267,903 273,261 278,726 287,088 292,830 298,686 307,647 313,800
10-45-210 Health Insurance 33,918 35,000 35,070 42,100 47,152 52,810 59,147 66,245 74,195 83,098 93,070 104,238 116,747 130,756 146,447
10-45-220 FICA Tax 14,654 19,125 12,547 19,125 19,125 19,508 19,898 20,495 20,904 21,323 21,962 22,401 22,850 23,535 24,006
10-45-230 Retirement 7,789 10,000 6,630 7,700 10,000 10,200 10,404 10,716 10,930 11,149 11,484 11,713 11,947 12,306 12,552
10-45-250 Unemployment Tax 611 750 589 750 750 765 780 804 820 836 861 878 896 923 941
10-45-260 Workers Comp Claims 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-45-280 Training Programs 2,856 4,000 3,308 4,000 4,000 4,000 4,000 4,000 4,500 4,500 4,500 5,000 5,000 5,000 5,000
10-45-290 Travel, Meals and Lodging 10,097 5,000 6,125 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,500
10-45-295 Meals and Entertainment 1,447 3,500 482 3,500 3,500 3,500 4,000 4,000 4,000 4,000 4,500 4,500 4,500 4,500 4,500
10-45-305 Municipal Court Judge 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-45-310 Legal Fees 65,809 65,000 34,213 50,000 100,000 105,000 105,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000
10-45-320 Audit Fees 11,595 22,672 12,221 12,225 22,672 15,000 15,600 16,224 16,873 17,548 18,250 18,980 19,739 20,529 21,350
10-45-330 Engineering Fees 1,924 10,000 3,519 6,000 10,000 10,000 10,500 10,500 10,500 11,000 11,000 11,000 11,500 11,500 11,500
10-45-360 Computers-Networks and Support 25,750 65,000 29,114 65,000 55,000 55,000 55,000 55,000 55,000 60,000 60,000 65,000 75,000 75,000 75,000
10-45-370 Other Professional Services 57,411 90,000 18,884 90,000 60,000 60,000 50,000 50,000 50,000 50,000 55,000 55,000 55,000 55,000 60,000
10-45-375 Reimbursable Prof Services 172,331 100,000 76,962 100,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
10-45-380 Janitorial Services 8,769 15,300 6,241 10,000 15,000 15,300 15,606 15,918 16,236 16,561 16,892 17,230 17,575 17,926 18,285
10-45-385 Treasurer's Fees 3,930 5,918 3,936 5,918 6,000 6,150 6,210 6,240 6,270 6,300 6,600 6,750 6,900 7,050 7,050
10-45-390 Abatement Fees 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-45-395 Recording Fees 500 1,000 500 500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
10-45-410 Bank Charges 640 1,000 484 800 1,000 1,000 1,200 1,200 1,200 1,200 1,500 1,500 1,500 1,500 1,500
10-45-420 Elections 919 5,000 0 5,000 10,000 10,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
10-45-430 Insurance - All Departments 37,317 42,000 17,545 42,000 42,000 44,000 47,000 51,000 51,000 51,000 51,000 51,000 51,000 51,000 51,000
10-45-440 Advertising 713 2,500 98 500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
10-45-490 Professional Memberships 6,214 7,000 6,868 7,000 7,500 8,000 8,000 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500
10-45-500 Operating Supplies 12,005 12,000 7,140 12,000 12,500 13,125 13,781 14,470 15,194 15,954 16,751 17,589 18,468 19,392 20,361
10-45-510 Equipment Purchase and Repair 11,476 15,750 3,304 15,750 15,750 16,538 17,364 18,233 19,144 20,101 21,107 22,162 23,270 24,433 25,655
10-45-550 Postage 988 2,000 1,126 1,600 2,000 2,000 2,500 2,500 2,500 2,500 3,000 3,000 3,000 3,000 3,000
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
10-45-560 Utilities -Telephone 5,810 6,500 5,286 7,000 7,500 7,575 7,651 7,727 7,805 7,883 7,961 8,041 8,121 8,203 8,285
10-45-561 Utilities - Natural Gas 4,068 6,000 2,452 5,500 6,000 6,200 6,400 6,600 6,800 7,000 7,200 7,400 7,600 7,800 8,000
10-45-562 Utilities - Electricity 5,234 7,000 3,472 6,500 6,500 6,700 6,900 7,100 7,100 7,100 7,100 7,100 7,100 7,100 7,100
10-45-569 Utilities - Trash Removal 1,164 2,500 984 1,200 2,500 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
10-45-670 Prop Mgmt - 107 Eisenhower Dr 11,035 29,000 10,539 15,000 40,000 16,000 16,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000 18,000
10-45-671 Prop Mgmt - 105 Fraser Ave 147 500 2,326 2,500 500 500 500 500 500 500 500 500 500 500 500
10-45-672 Prop Mgmt - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-45-673 Prop Mgmt - 153 Fraser Ave 24,558 20,000 3,744 10,000 20,000 50,000 22,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000
10-45-674 Prop Mgmt - 200 Eisenhower Dr 1,208 1,000 29 150 500 500 500 500 500 500 500 500 500 500 500
10-45-675 Prop Mgmt - 216 Eisenhower Dr 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-45-676 Prop Mgmt - 400 Doc Susie Ave 882 500 111 500 500 500 500 500 500 500 500 500 500 500 500
10-45-690 Miscellaneous Expense 9,636 8,000 1,000 4,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000 8,000
10-45-695 Bad Debt Write-Off 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-45-730 Capital Projects 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-45-740 Capital Purchases 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-45-810 Lease/Purchase - Principal 19,252 20,207 20,207 20,207 21,210 22,262 22,626 24,525 25,741 27,018 28,358 29,765 31,241 32,790 34,416
10-45-820 Lease/Purchase - Interest 19,122 18,167 18,167 18,167 17,165 16,113 15,009 13,850 12,633 11,357 10,017 8,610 7,134 5,585 3,358
Sub-Total 795,333 908,889 549,967 849,192 884,824 904,745 880,677 858,750 876,106 899,654 928,701 955,188 988,274 1,015,975 1,047,106
PUBLIC WORKS
10-60-110 Salaries 357,480 410,296 307,228 385,000 420,000 428,400 436,968 445,707 459,079 468,260 477,625 491,954 501,793 511,829 527,184
10-60-210 Health Insurance 69,655 75,000 63,490 75,700 85,000 95,200 106,624 119,419 133,749 149,799 167,775 187,908 210,457 235,712 263,997
10-60-220 FICA Tax 25,379 31,388 22,256 28,000 32,130 32,773 33,428 34,097 35,120 35,822 36,538 37,634 38,387 39,155 40,330
10-60-230 Retirement 10,666 16,412 9,394 11,500 16,800 17,136 17,479 17,828 18,363 18,730 19,105 19,678 20,072 20,473 21,087
10-60-250 Unemployment Tax 1,072 1,231 929 1,155 1,260 1,285 1,311 1,337 1,377 1,405 1,433 1,476 1,505 1,535 1,582
10-60-260 Workers Comp Claims 190 0 371 500 0 0 0 0 0 0 0 0 0 0 0
10-60-280 Training Programs 990 2,000 804 2,000 2,000 2,000 2,500 2,500 3,000 3,000 3,000 3,000 3,000 3,000 3,000
10-60-290 Travel, Meals and Lodging 175 2,000 697 2,000 2,000 2,000 2,500 2,500 3,000 3,000 3,000 3,000 3,000 3,000 3,000
10-60-295 Meals and Entertainment 717 750 287 750 1,000 1,000 1,500 1,500 1,500 1,500 2,000 2,000 2,000 2,000 2,000
10-60-330 Engineering Fees 19,889 45,000 5,304 12,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
10-60-360 Computer Network Support 0 2,000 1,420 2,000 2,000 2,500 2,500 3,000 3,000 3,000 3,500 3,500 3,500 4,000 4,000
10-60-370 Other Professional Services 2,686 2,500 3,678 5,000 3,000 3,000 4,000 4,000 4,000 5,000 5,000 5,000 6,000 6,000 6,000
10-60-380 Janitorial Services 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-470 Contract Grounds Maintenance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-475 Contract Snow Removal 440 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-480 Equipment Rental 370 2,500 0 500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
10-60-490 Professional Memberships 850 750 441 750 750 750 900 900 900 900 1,000 1,000 1,000 1,000 1,000
10-60-500 Operating Supplies 77,360 75,000 46,782 75,000 80,000 85,000 88,000 90,000 87,000 87,000 90,000 90,000 95,000 95,000 100,000
10-60-506 Plants/Planter Supplies 9,722 12,000 9,457 12,000 15,000 15,000 15,000 20,000 20,000 20,000 22,000 22,000 22,000 25,000 25,000
10-60-510 Equipment Purchase and Repair 36,294 35,000 42,435 50,000 50,000 50,000 55,000 55,000 55,000 55,000 55,000 60,000 60,000 60,000 65,000
10-60-560 Utilities - Telephone 1,905 2,700 2,897 3,600 4,200 4,284 4,370 4,457 4,546 4,637 4,730 4,824 4,921 5,019 5,120
10-60-561 Utilities - Natural Gas 4,881 6,000 3,531 5,500 6,000 6,500 7,000 7,500 8,000 8,500 9,000 9,500 10,000 10,500 11,000
10-60-562 Utilities - Electricity 1,898 3,000 1,218 2,500 3,000 3,000 3,250 3,500 3,750 4,000 4,250 4,500 4,750 5,000 5,250
10-60-569 Utilities - Trash Removal 1,499 2,100 1,635 2,100 2,500 2,550 2,601 2,653 2,706 2,760 2,815 2,872 2,929 2,988 3,047
10-60-670 Prop Mgmt - 125 Fraser Ave 3,068 5,000 462 8,000 5,000 5,000 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500
10-60-671 Prop Mgmt - Clayton Ct Parcel 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-672 Prop Mgmt - Elk Crk Wetlands 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-673 Prop Mgmt - Fraser River Trail 1,607 13,000 9,758 13,000 20,000 23,000 23,000 23,000 23,690 24,401 25,133 25,887 26,663 27,463 28,287
10-60-674 Prop Mgmt - Hwy 40 Pedestrian 131 18,000 0 0 25,000 5,000 5,000 5,000 20,000 7,000 7,000 50,000 8,000 8,000 20,000
10-60-675 Prop Mgmt - Koppers Park 0 0 1,477 2,000 0 0 0 0 0 0 0 0 0 0 0
10-60-676 Prop Mgmt - Old SchlHouse Pk 3,370 5,000 895 2,500 5,000 1,000 1,000 1,000 5,000 1,500 1,500 1,500 10,000 2,000 2,000
10-60-677 Prop Mgmt - Planning Area 28 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-678 Prop Mgmt - OutdoorActivityCtr 0 0 51 100 0 0 0 0 0 0 0 0 0 0 0
10-60-679 Prop Mgmt - School Bus Garage 4,657 7,000 3,047 7,000 7,000 7,500 7,500 8,000 8,000 8,500 8,500 8,500 9,000 9,000 9,000
10-60-680 Prop Mgmt - Gardner Shed 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
10-60-681 Prop Mgmt - Cozens Ranch Park 27,871 230,000 141,345 230,000 12,000 15,000 15,300 15,606 15,918 16,236 16,561 16,892 17,230 17,575 17,926
10-60-682 Prop Mgmt - Amtrak Station 288 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-683 Prop Mgmt - Ptarmigan OS 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-684 Prop Mgmt - FRODO 0 5,000 0 0 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
10-60-685 Prop Mgmt - Mtn Man Park 0 500 700 1,000 500 500 5,000 500 500 500 500 5,000 500 500 500
10-60-686 Goranson Station 33,096 1,500 1,248 1,500 500 2,000 500 500 500 750 750 750 1,000 1,000 1,000
10-60-690 Miscellaneous Expense 2,448 1,500 1,411 2,000 3,000 3,200 3,400 3,600 3,800 4,000 4,200 4,400 4,600 4,800 5,000
10-60-695 Fraser Mustang 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-60-725 Street Improvements 36,369 285,000 17,350 285,000 325,000 331,500 338,130 344,893 351,790 358,826 366,003 373,323 380,789 388,405 396,173
10-60-730 Capital Projects 0 10,000 0 0 0 0 500,000 500,000 0 0 0 0 0 0 0
10-60-740 Capital Purchases 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 737,024 1,309,127 701,998 1,229,655 1,152,140 1,173,578 1,716,760 1,750,997 1,306,288 1,327,027 1,370,919 1,469,099 1,481,097 1,522,955 1,600,483
Outdoor Activity Center
10-65-110 Salaries 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-210 Health Insurance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-220 FICA Tax 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-230 Retirement 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-250 Unemployment Tax 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-260 Workers Comp Claims 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-280 Training Programs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-290 Travel, Meals and Lodging 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-295 Meals and Entertainment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-370 Other Professional Services 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-380 Janitorial Services 5,275 5,610 3,900 5,610 6,000 6,120 6,242 6,367 6,495 6,624 6,757 6,892 7,030 7,171 7,314
10-65-490 Professional Memberships 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-500 Operating Supplies 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-510 Equipment Purchase and Repair 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-560 Utilities - Telephone 458 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-561 Utilities - Natural Gas 1,120 1,515 723 1,250 1,530 1,545 1,561 1,577 1,592 1,608 1,624 1,641 1,657 1,674 1,690
10-65-562 Utilities - Electricity 867 1,010 537 900 1,020 1,030 1,041 1,051 1,062 1,072 1,083 1,094 1,105 1,116 1,127
10-65-665 WTHP Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-670 Prop Mgmt - 120 Zerex 8,767 5,000 207 1,500 5,000 10,000 5,000 10,000 5,000 5,000 10,000 6,000 6,000 10,000 7,000
10-65-690 Miscellaneous Expense 81 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-730 Capital Projects 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-65-740 Capital Purchases 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 16,567 13,135 5,367 9,260 13,550 18,696 13,844 18,995 14,148 14,305 19,464 15,626 15,792 19,960 17,131
TRANSFERS
10-90-920 Transfer to CERF - Police Dept 0 0 0 0 50,000 0 50,000 50,000 0 50,000 0 50,000 0 50,000 50,000
10-90-930 Transfer to CERF - PublicWorks 0 0 0 0 60,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
10-90-935 Transfer to CAF 0 50,000 50,000 50,000 0 0 0 0 0 0 0 0 0 0 0
10-90-940 Transfer to Debt Service Fund 247,373 246,550 246,550 246,550 284,695 255,000 208,000 0 0 0 0 0 0 0 0
10-90-950 Transfer to Water Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-90-960 Transfer to FREP 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-90-970 Transfer to Committed Reserves 0 0 0 250,000 0 0 0 0 0 0 0 0 0 0 0
10-90-980 Transfer to Petersen Trust 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-90-995 Salaries Clearing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-90-996 FICA Tax Clearing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-90-997 Unemployment Tax Clearing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 247,373 296,550 296,550 546,550 394,695 305,000 308,000 100,000 50,000 100,000 50,000 100,000 50,000 100,000 100,000
FISCAL AGENT
10-95-110 Salaries 0 0 6,609 0 0 0 0 0 0 0 0 0 0 0 0
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
10-95-210 Health Insurance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
10-95-220 FICA Tax 0 0 492 0 0 0 0 0 0 0 0 0 0 0 0
10-95-230 Retirement 0 0 196 0 0 0 0 0 0 0 0 0 0 0 0
10-95-250 Unemployment Tax 0 0 20 0 0 0 0 0 0 0 0 0 0 0 0
10-95-260 Workers Comp Claims 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 0 0 7,318 0 0 0 0 0 0 0 0 0 0 0 0
GENERAL FUND EXPENDITURE TOTALS 2,411,154 3,402,053 2,071,940 3,335,157 3,180,644 3,166,320 3,710,751 3,546,459 3,092,851 3,215,471 3,273,644 3,475,513 3,504,010 3,663,264 3,804,989
GENERAL FUND REVENUE TOTALS 4,557,299 4,345,578 3,922,643 4,984,560 4,048,803 3,266,009 2,504,689 1,206,538 84,779 580,922 196,649 633,095 387,518 631,091 546,273
GENERAL FUND NEW REVENUE TOTALS 2,548,189 2,341,965 1,806,499 2,858,415 2,399,400 2,397,850 2,405,000 2,412,600 2,424,700 2,427,150 2,437,900 2,443,900 2,454,900 2,485,400 2,485,900
GENERAL FUND EXPENDITURE TOTALS 2,411,154 3,402,053 2,071,940 3,335,157 3,180,644 3,166,320 3,710,751 3,546,459 3,092,851 3,215,471 3,273,644 3,475,513 3,504,010 3,663,264 3,804,989
GENERAL FUND REVENUE OVER EXPENDITURES 2,146,145 943,525 1,850,703 1,649,403 868,159 99,689 (1,206,062)(2,339,921)(3,008,072)(2,634,549)(3,076,995)(2,842,418)(3,116,491)(3,032,173)(3,258,716)
GENERAL FUND EXPENDITURE OVER NEW REVENUES 137,035 (1,060,088)(265,442)(476,742)(781,244)(768,470)(1,305,751)(1,133,859)(668,151)(788,321)(835,744)(1,031,613)(1,049,110)(1,177,864)(1,319,089)
GF Restricted Reserves - Tabor Emergency Reserve 110,000 110,000
GF Restricted Reserves - Affordable Housing Reserve 135,426 135,426
GF Restricted Reserves - Fees in Lieu of P&OS Reserve 6,379 6,379
GF Committed Emergency Reserve 750,000 1,000,000
GF Unassigned Fund Balance 1,649,403 868,159 99,689 (1,206,062)(2,339,921)(3,008,072)(2,634,549)(3,076,995)(2,842,418)(3,116,491)(3,032,173)(3,258,716)
Page 5 of 12
10/15/2015 2014 2015 2015 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
CONSERVATION TRUST FUND
REVENUE
20-30-100 Cons Trust (Lottery) Proceeds 15,595 6,500 2,900 6,500 6,500 6,600 6,700 6,800 6,900 7,000 7,100 7,200 7,300 7,400 7,400
20-30-800 Interest Earnings 7 15 10 15 15 20 25 30 30 30 30 30 30 30 30
20-30-999 Unassigned Fund Balance 893 6,899 16,495 16,495 13,010 19,525 26,145 32,870 39,700 46,630 53,660 60,790 68,020 75,350 82,780
Sub-Total 16,495 13,414 19,406 23,010 19,525 26,145 32,870 39,700 46,630 53,660 60,790 68,020 75,350 82,780 90,210
EXPENDITURES
20-40-410 Bank Charges 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
20-40-650 Cons Trust Program Expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
20-40-910 Transfer to General Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
20-40-920 Transfer to Other Funds 0 10,000 0 10,000 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 0 10,000 0 10,000 0 0 0 0 0 0 0 0 0 0 0
CTF REVENUES OVER EXPENDITURES 16,495 3,414 19,406 13,010 19,525 26,145 32,870 39,700 46,630 53,660 60,790 68,020 75,350 82,780 90,210
CAPITAL EQUIP REPLACEMENT FUND
REVENUES
30-30-100 Hwy Use Tax Proceeds 44,896 45,039 25,930 45,039 45,039 45,490 45,945 46,404 46,868 47,337 47,810 48,288 48,771 49,259 49,752
30-30-500 Sale of CERF Assets 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
30-30-800 Interest Earnings 549 300 381 485 350 300 250 200 (1,531)(2,169)(3,068)(3,720)(3,647)(3,921)(3,944)
30-30-900 Transfer from G/F - PoliceDept 0 0 0 0 50,000 0 50,000 50,000 0 50,000 0 50,000 0 50,000 50,000
30-30-910 Transfer from G/F - PublicWork 0 0 0 0 60,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
30-30-920 Transfer from Utility Funds 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
30-30-999 Unassigned Fund Balance 470,586 464,835 465,578 465,578 410,684 370,656 106,028 37,222 (306,174)(433,836)(613,668)(743,926)(729,358)(784,233)(788,895)
Sub-Total 536,031 530,174 511,889 531,102 586,074 486,446 272,222 203,826 (190,836)(268,668)(498,926)(579,358)(614,233)(618,895)(623,088)
EXPENDITURES
30-40-745 Public Safety Fleet Purchase 0 48,000 8,313 65,000 60,000 0 45,000 50,000 48,000 50,000 50,000 50,000 50,000 50,000 50,000
30-40-750 Regular Fleet Purchase 25,035 90,000 9,039 10,000 90,000 90,000 85,000 55,000 0 95,000 0 50,000 50,000 50,000 50,000
30-40-755 Heavy Equipment Purchase 0 20,000 0 0 20,000 245,000 105,000 405,000 195,000 200,000 195,000 50,000 70,000 70,000 70,000
30-40-810 Lease/Purchase - Principal 40,938 42,015 42,015 42,015 43,120 44,254 0 0 0 0 0 0 0 0 0
30-40-820 Lease/Purchase - Interest 4,480 3,403 3,403 3,403 2,298 1,164 0 0 0 0 0 0 0 0 0
30-40-910 Transfer to General Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 70,453 203,418 62,770 120,418 215,418 380,418 235,000 510,000 243,000 345,000 245,000 150,000 170,000 170,000 170,000
CERF REVENUES OVER EXPENDITURES 465,578 326,756 449,119 410,684 370,656 106,028 37,222 (306,174)(433,836)(613,668)(743,926)(729,358)(784,233)(788,895)(793,088)
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
CAPITAL ASSET FUND
REVENUE
32-30-100 Reserved for Future Use 837,338 1,420,000 1,117,805 1,420,000 0 0 0 0 0 0 0 0 0 0 0
32-30-500 Sale of Capital Assets 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-30-800 Interest Earnings 511 250 779 850 0 0 0 0 0 0 0 0 0 0 0
32-30-910 Transfer in from General Fund 0 50,000 50,000 50,000 0 0 0 0 0 0 0 0 0 0 0
32-30-940 Transfer in from DSF 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-30-950 Transfer in from Water Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-30-999 Unassigned Fund Balance 6,218 667,788 671,471 671,471 200 200 200 200 200 200 200 200 200 200 200
Sub-Total 844,067 2,138,038 1,840,054 2,142,321 200 200 200 200 200 200 200 200 200 200 200
EXPENDITURES
32-40-810 Capital Proj- Streets Existing 6,218 0 0 4,083 0 0 0 0 0 0 0 0 0 0 0
32-40-815 Capital Proj - Streets New 166,378 2,138,038 1,982,616 2,138,038 0 0 0 0 0 0 0 0 0 0 0
32-40-820 Capital Proj - Buildings Exist 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-40-825 Capital Proj - Buildings New 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-40-830 Capital Proj - Parks/OS Exist 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-40-835 Capital Proj - Parks/OS New 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-40-900 Transfer to General Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-40-910 Transfer to CAF Res - Streets 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-40-920 Transfer to CAF Res - Bldgs 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
32-40-930 Transfer to CAF Res - Parks/OS 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 172,596 2,138,038 1,982,616 2,142,121 0 0 0 0 0 0 0 0 0 0 0
CAF REVENUES OVER EXPENDITURES 671,471 0 (142,561)200 200 200 200 200 200 200 200 200 200 200 200
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
DEBT SERVICE FUND
REVENUE
40-30-100 Property Tax 80,243 80,000 79,737 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000
40-30-200 Specific Ownership Tax 4,327 3,000 3,485 4,000 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500
40-30-500 Bond Proceeds 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
40-30-800 Interest Earnings 592 250 551 600 250 250 250 250 250 250 250 250 250 250 250
40-30-910 Transfer in from General Fund 247,373 246,550 246,550 246,550 284,695 128,348 0 0 0 0 0 0 0 0 0
40-30-990 Transfer in from DSF Reserves 0 0 0 0 0 300,000 0 0 0 0 0 0 0 0 0
40-30-999 Carryover Balance 0 0 0 0 0 500 0 83,750 167,500 251,250 335,000 418,750 502,500 586,250 670,000
Sub-Total 332,535 329,800 330,323 331,150 368,445 512,598 83,750 167,500 251,250 335,000 418,750 502,500 586,250 670,000 753,750
EXPENDITURES
40-40-385 Treasurer's Fees GO Bond 1,605 2,000 1,595 2,000 2,000 2,000 0 0 0 0 0 0 0 0 0
40-40-390 Abatements - GO Bond 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
40-40-500 Cost of Issuance 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
40-40-550 Underwriters Discount 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
40-40-810 Bond Principal - 02 S&U Issue 25,000 25,000 25,000 25,000 30,000 60,000 0 0 0 0 0 0 0 0 0
40-40-811 Bond Principal - 98 GO Issue 40,000 45,000 0 45,000 45,000 50,000 0 0 0 0 0 0 0 0 0
40-40-812 Bond Principal - 98 S&U Issue 170,000 180,000 180,000 180,000 195,000 380,000 0 0 0 0 0 0 0 0 0
40-40-820 Bond Interest - 02 S&U Issue 7,013 5,638 3,163 5,638 4,125 1,650 0 0 0 0 0 0 0 0 0
40-40-821 Bond Interest - 98 GO Issue 9,675 7,526 3,763 7,526 5,106 2,688 0 0 0 0 0 0 0 0 0
40-40-822 Bond Interest - 98 S&U Issue 45,360 35,910 20,385 35,910 25,785 10,260 0 0 0 0 0 0 0 0 0
40-40-850 Bond Agent Fees 2,340 3,000 750 3,000 4,000 5,000 0 0 0 0 0 0 0 0 0
40-40-910 Transfer to DSF Reserves 0 25,726 0 27,076 56,929 0 0 0 0 0 0 0 0 0 0
40-40-920 Transfer to Other Funds 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 300,992 329,800 234,655 331,150 367,945 511,598 0 0 0 0 0 0 0 0 0
DEBT SERVICE REVENUES 332,535 329,800 330,323 331,150 368,445 512,598 83,750 167,500 251,250 335,000 418,750 502,500 586,250 670,000 753,750
DEBT SERVICE EXPENDITURES 300,992 329,800 234,655 331,150 367,945 511,598 0 0 0 0 0 0 0 0 0
DEBT SERVICE REVENUES OVER EXPENDITURES 31,543 0 95,668 0 500 1,000 83,750 167,500 251,250 335,000 418,750 502,500 586,250 670,000 753,750
Debt Service Fund Restricted Reserves 300,000 300,000 0
Debt Service Fund Committed Reserves 245,941 273,017 144,669 83,750 167,500 251,250 335,000 418,750 502,500 586,250 670,000 753,750
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
WATER FUND
REVENUES
TAXES
50-31-100 Property Tax 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-31-200 Fraser Firming Revenue 50,387 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 50,387 0 0 0 0 0 0 0 0 0 0 0 0 0 0
LICENSES & PERMITS
50-32-100 Excavation Permit Fees 275 275 275 275 275 275 275 275 275 275 275 275 275 275 275
Sub-Total 275 275 275 275 275 275 275 275 275 275 275 275 275 275 275
CHARGES FOR SERVICES
50-34-100 Customer Service Charges 720,687 760,040 587,142 778,500 780,000 788,300 796,683 805,150 829,804 855,198 881,354 908,295 936,044 964,625 994,064
50-34-150 Penalties & Interest 2,352 1,000 2,218 2,500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
50-34-200 Plant Investment Fees 0 15,400 15,400 15,400 7,700 7,700 15,400 7,700 7,700 15,400 15,400 7,700 7,700 15,400 15,400
50-34-300 Water Meter Sales 14,890 2,000 34,169 38,000 5,000 5,000 2,000 1,000 1,000 2,000 2,000 1,000 1,000 2,000 2,000
Sub-Total 737,930 778,440 638,928 834,400 793,700 802,000 815,083 814,850 839,504 873,598 899,754 917,995 945,744 983,025 1,012,464
MISCELLANEOUS REVENUE
50-36-100 Interest Earnings 1,153 800 1,143 1,500 800 150 300 600 900 1,500 1,500 1,500 1,500 1,500 1,500
50-36-900 Miscellaneous Revenue 4,289 2,500 3,041 3,100 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
Sub-Total 5,442 3,300 4,184 4,600 3,300 2,650 2,800 3,100 3,400 4,000 4,000 4,000 4,000 4,000 4,000
OTHER SOURCES & TRANSFERS
50-39-100 Debt Service Proceeds 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-39-200 Grants and Aid from Agencies 0 25,000 50,000 50,000 0 0 0 0 0 0 0 0 0 0 0
50-39-910 Transfers In 0 50,000 0 0 0 0 0 0 0 0 0 0 0 0 0
50-39-999 Unassigned Fund Balance 573,820 720,401 766,652 766,652 1,011,389 144,412 (3,263,141)(3,592,603)(4,034,935)(4,198,879)(4,223,169)(4,251,920)(4,306,486)(4,360,922)(4,403,393)
Sub-Total 573,820 795,401 816,652 816,652 1,011,389 144,412 (3,263,141)(3,592,603)(4,034,935)(4,198,879)(4,223,169)(4,251,920)(4,306,486)(4,360,922)(4,403,393)
New Revenues 794,034 857,015 643,388 889,275 797,275 804,925 818,158 818,225 843,179 877,873 904,029 922,270 950,019 987,300 1,016,739
Total Revenue with Carryover 1,367,854 1,577,416 1,460,040 1,655,927 1,808,664 949,337 (2,444,983)(2,774,378)(3,191,755)(3,321,005)(3,319,140)(3,329,650)(3,356,467)(3,373,621)(3,386,654)
EXPENTITURES
50-40-110 Salaries 148,454 185,000 146,554 185,000 195,000 204,750 214,988 225,737 237,024 248,875 261,319 274,385 288,104 302,509 317,634
50-40-210 Health Insurance 22,117 26,000 21,323 26,000 29,250 32,760 36,691 41,094 46,025 51,548 57,734 64,662 72,422 81,113 90,846
50-40-220 FICA Tax 10,801 14,153 10,853 14,153 14,918 15,663 16,447 17,269 18,132 19,039 19,991 20,990 22,040 23,142 24,299
50-40-230 Retirement 4,252 6,500 4,837 6,500 6,500 8,190 8,600 9,029 9,481 9,955 10,453 10,975 11,524 12,100 12,705
50-40-250 Unemployment Tax 438 555 441 555 585 614 645 677 711 747 784 823 864 908 953
50-40-260 Workers Comp Claims 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-280 Training Programs 400 3,000 359 1,000 3,000 3,000 3,000 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500
50-40-290 Travel, Meals and Lodging 58 3,000 100 1,000 3,000 3,000 3,000 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500
50-40-295 Meals and Entertainment 1,121 2,000 81 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
50-40-300 Administrative Reimbursement 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-310 Legal Fees 64,876 75,000 46,608 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000 65,000
50-40-330 Engineering Fees 16,781 10,000 13,856 18,000 60,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
50-40-360 Computers-Networks and Support 8,409 6,000 4,993 6,000 6,000 6,500 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000
50-40-370 Other Professional Services 22,351 5,000 422 5,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000
50-40-385 Treasurer's Fees 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-390 Abatements 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-410 Bank Charges 28 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-430 Insurance 14,584 20,000 17,084 17,100 20,000 25,000 25,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000
Page 9 of 12
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
50-40-440 Advertising 46 500 241 250 500 500 500 500 500 500 500 500 500 500 500
50-40-460 System Repair and Maint - Prod 9,051 75,000 4,747 10,000 79,000 40,000 30,000 30,000 136,000 65,000 70,000 75,000 75,000 75,000 75,000
50-40-465 System Repair and Maint - Dist 16,984 70,000 7,419 55,000 25,000 22,000 28,000 25,000 40,000 50,000 55,000 60,000 60,000 60,000 60,000
50-40-490 Professional Memberships 9,070 8,000 8,420 9,500 9,500 9,500 9,500 9,500 9,500 9,500 9,500 10,000 10,000 10,000 10,000
50-40-500 Operating Supplies-Production 14,042 35,000 7,781 12,000 35,000 35,000 40,000 40,000 45,000 45,000 45,000 50,000 50,000 50,000 50,000
50-40-505 Operating Supplies-Distrib 17,974 25,000 32,476 40,000 40,000 35,000 35,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000
50-40-510 Equipment Purchase and Repair 2,006 10,000 30,997 40,000 30,000 25,000 25,000 25,000 30,000 30,000 30,000 35,000 35,000 35,000 35,000
50-40-520 Testing 3,225 10,000 968 1,500 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
50-40-550 Postage & Billing Supplies 1,527 2,500 750 2,500 2,500 2,500 2,500 3,000 3,000 3,000 3,500 3,500 3,500 4,000 4,000
50-40-560 Utilities - Telephone 2,889 3,500 3,616 3,980 4,500 4,500 4,750 4,750 4,750 5,000 5,000 5,000 5,500 5,500 5,500
50-40-562 Utilities - Electricity 32,675 55,000 21,823 32,500 50,000 50,000 50,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000
50-40-670 Prop Mgmt - Fraser WTP 43 3,000 1,033 2,000 3,000 10,000 4,000 10,000 5,000 5,000 5,000 6,000 8,000 8,000 8,000
50-40-680 Prop Mgmt - Maryvale WTP 45 3,000 427 1,000 3,000 5,000 4,000 8,000 5,000 5,000 5,000 6,000 8,000 8,000 8,000
50-40-685 Prop Mgmt - St. Louis Headgate 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-690 Miscellaneous Expense 548 2,000 9 1,000 2,000 2,000 2,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
50-40-695 Bad Debt Write Off 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-715 Water Rights - Diversion & Dev 7,266 15,000 6,482 15,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000
50-40-730 Capital Projects 17,262 204,000 33,658 45,000 250,000 465,000 440,000 512,000 113,000 50,000 50,000 50,000 50,000 50,000 50,000
50-40-740 Capital Purchases 0 0 0 0 0 3,000,000 0 0 0 0 0 0 0 0 0
50-40-760 Fraser Firming - CapProj 41,872 680,000 15,856 16,000 650,000 50,000 0 0 0 0 0 0 0 0 0
50-40-770 PIF - Capital Purchases 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-780 Capitalized Assets - Audit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-790 Depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-810 Debt Service - Principal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-820 Debt Service - Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-850 Debt Service - Agent Fees 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-910 Transfer to General Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-930 Transfer to CERF 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
50-40-970 Transfer to Reserves 100,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-980 Transfer to Metro Districts 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
50-40-990 Transfer to Wastewater Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 601,195 1,567,708 454,216 644,538 1,664,253 4,212,478 1,147,620 1,260,557 1,007,123 902,164 932,781 976,836 1,004,454 1,029,771 1,056,438
WATER FUND REVENUES 1,367,854 1,577,416 1,460,040 1,655,927 1,808,664 949,337 (2,444,983)(2,774,378)(3,191,755)(3,321,005)(3,319,140)(3,329,650)(3,356,467)(3,373,621)(3,386,654)
WATER FUND EXPENDITURES 601,195 1,567,708 454,216 644,538 1,664,253 4,212,478 1,147,620 1,260,557 1,007,123 902,164 932,781 976,836 1,004,454 1,029,771 1,056,438
WATER FUND REVENUES OVER EXPENDITURES 766,660 9,709 1,005,824 1,011,389 144,412 (3,263,141)(3,592,603)(4,034,935)(4,198,879)(4,223,169)(4,251,920)(4,306,486)(4,360,922)(4,403,393)(4,443,092)
Water Fund Committed Reserve 460,000 460,000 460,000
Water Fund Unassigned Reserve 852,389 144,412 (3,263,141)(3,592,603)(4,034,935)(4,198,879)(4,223,169)(4,251,920)(4,306,486)(4,360,922)(4,403,393)(4,443,092)
Page 10 of 12
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
WASTEWATER FUND
REVENUES
TAXES 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Property Tax
Specific Ownership Tax
Sub-Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
LICENSES & PERMITS
55-32-100 Excavation Permit Fees 325 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 325 0 0 0 0 0 0 0 0 0 0 0 0 0 0
CHARGES FOR SERVICES
55-34-100 Customer Service Charges 678,763 637,184 479,324 638,000 637,184 638,184 639,184 640,184 640,184 640,184 640,184 640,184 640,184 640,184 640,184
55-34-150 Penalties & Interest 2,136 1,000 2,068 2,500 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
55-34-200 Plant Investment Fees 120,000 15,000 255,000 292,500 100,000 75,000 82,000 82,000 82,000 82,000 82,000 82,000 82,000 82,000 82,000
55-34-999 Contributed Assets 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 800,899 653,184 736,391 933,000 738,184 714,184 722,184 723,184 723,184 723,184 723,184 723,184 723,184 723,184 723,184
MISCELLANEOUS REVENUE
55-36-100 Interest Earnings 8,922 3,000 2,875 3,830 3,200 3,700 3,700 3,700 3,700 3,700 3,700 3,700 3,700 3,700 3,700
55-36-500 JFF Management Fee 29,000 29,000 21,750 29,000 29,000 29,000 29,000 29,000 29,000 29,000 29,000 29,000 29,000 29,000 29,000
55-36-900 Miscellaneous Revenue 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 37,922 32,000 24,625 32,830 32,200 32,700 32,700 32,700 32,700 32,700 32,700 32,700 32,700 32,700 32,700
OTHER SOURCES & TRANSFERS
55-39-100 Debt Service Proceeds 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-39-200 Grants and Aid from Agencies 0 0 0 57,500 57,500 0 0 0 0 0 0 0 0 0 0
55-39-910 Transfer in from General Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-39-999 Unassigned Fund Balance 2,699,802 2,968,217 3,011,956 3,011,956 3,339,978 3,287,619 2,115,924 2,044,082 2,053,498 2,065,488 2,052,771 1,753,959 1,432,545 1,236,894 1,115,227
Sub-Total 2,699,802 2,968,217 3,011,956 3,069,456 3,397,478 3,287,619 2,115,924 2,044,082 2,053,498 2,065,488 2,052,771 1,753,959 1,432,545 1,236,894 1,115,227
new revenues 839,146 685,184 761,016 965,830 770,384 746,884 754,884 755,884 755,884 755,884 755,884 755,884 755,884 755,884 755,884
total revenues with carryover 3,538,948 3,653,401 3,772,972 4,035,286 4,167,862 4,034,503 2,870,808 2,799,966 2,809,382 2,821,372 2,808,655 2,509,843 2,188,429 1,992,778 1,871,111
EXPENDITURES
55-40-110 Salaries 178,509 195,000 149,772 195,000 205,000 215,250 226,013 237,313 249,179 261,638 274,720 288,456 302,878 318,022 333,923
55-40-210 Health Insurance 26,244 28,000 21,688 27,000 30,500 34,160 38,259 42,850 47,992 53,751 60,202 67,426 75,517 84,579 94,728
55-40-220 FICA Tax 13,290 14,918 11,094 14,918 15,683 16,467 17,290 18,154 19,062 20,015 21,016 22,067 23,170 24,329 25,545
55-40-230 Retirement 5,600 7,000 4,974 6,500 7,000 8,610 9,041 9,493 9,967 10,466 10,989 11,538 12,115 12,721 13,357
55-40-250 Unemployment Tax 534 585 451 585 615 646 678 712 748 785 824 865 909 954 1,002
55-40-260 Workers Comp Claims 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-280 Training Programs 0 2,500 200 1,000 2,500 2,500 2,500 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
55-40-290 Travel, Meals and Lodging 0 2,500 20 1,000 2,500 2,500 2,500 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
55-40-295 Meals and Entertainment 1,103 1,000 68 1,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
55-40-310 Legal Fees 22,814 15,000 693 1,500 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
55-40-330 Engineering Fees 2,703 10,000 3,889 6,000 5,000 5,000 5,000 5,000 5,000 5,000 20,000 20,000 20,000 20,000 20,000
55-40-360 Computers-Networks and Support 6,839 6,000 3,905 6,000 6,000 6,500 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000
55-40-370 Other Professional Services 21,037 10,000 376 1,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Page 11 of 12
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Actuals Budget Year to Date YEE Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget
55-40-410 Bank Charges 0 100 0 0 100 100 100 100 100 100 100 100 100 100 100
55-40-430 Insurance 5,860 6,500 4,405 4,405 6,500 6,500 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000 7,000
55-40-440 Advertising 0 500 93 150 500 500 500 500 500 500 500 500 500 500 500
55-40-460 System Repair and Maint-Collec 50,694 130,000 74,564 85,000 118,000 35,000 80,000 75,000 60,000 65,000 65,000 65,000 65,000 65,000 65,000
55-40-490 Professional Memberships 1,602 6,000 55 250 2,000 2,000 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
55-40-500 Operating Supplies-Collections 580 5,000 247 1,000 5,000 5,000 5,000 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500
55-40-510 Equipment Purchase and Repair 618 5,000 280 5,000 5,000 5,000 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500
55-40-520 Testing 0 1,000 0 0 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
55-40-550 Postage & Billing Supplies 1,497 3,000 750 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000
55-40-560 Utilities - Telephone 254 500 1,415 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000
55-40-650 WW Treatment Charges/JFOC 154,032 209,833 113,017 190,000 185,846 195,846 200,846 200,846 200,846 200,846 200,846 200,846 200,846 200,846 200,846
55-40-660 JFF CapRepl Reserve 13,206 0 0 0 0 1,300,000 150,000 0 0 0 250,000 250,000 100,000 0 0
55-40-670 JFF O&M Reserve 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-690 Miscellaneous Expense 188 3,000 0 3,000 3,000 3,000 3,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000
55-40-695 Bad Debt Write Off 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-730 Capital Projects 0 370,000 2,826 130,000 246,500 41,000 31,000 86,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000
55-40-740 Capital Purchases 17,187 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-760 PIF - Capital Projects 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-770 PIF - Capital Purchases 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-780 Capitalized Assets - Audit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-790 Depreciation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-810 Debt Service - Principal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-820 Debt Service - Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-850 Debt Service - Agent Fees 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-910 Transfer to General Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-930 Transfer to CERF 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
55-40-970 Transfer to Reserves 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
55-40-990 Transfer to Water Fund 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Sub-Total 534,392 1,042,936 404,783 695,308 880,244 1,918,578 826,726 746,468 743,894 768,601 1,054,696 1,077,298 951,535 877,551 905,502
WASTEWATER FUND REVENUES 3,538,948 3,653,401 3,772,972 4,035,286 4,167,862 4,034,503 2,870,808 2,799,966 2,809,382 2,821,372 2,808,655 2,509,843 2,188,429 1,992,778 1,871,111
WASTEWATER FUND EXPENDITURES 534,392 1,042,936 404,783 695,308 880,244 1,918,578 826,726 746,468 743,894 768,601 1,054,696 1,077,298 951,535 877,551 905,502
WASTEWATER FUND REVENUES OVER EXPENDITURES 3,004,556 2,610,466 3,368,190 3,339,978 3,287,619 2,115,924 2,044,082 2,053,498 2,065,488 2,052,771 1,753,959 1,432,545 1,236,894 1,115,227 965,609
Wastewater Fund Committed Fund Balance 2,000,000 2,000,000 2,000,000
Wastewater Fund Unassigned Fund Balance 1,260,260 1,260,260 62,466
Page 12 of 12
BY SHAYNE KAVANAGH AND KARA SKINNER
Sizing Your reServe S | A risk-Based Approach
October 2013 | Government Finance Review 11
C ity officials in Colorado Springs, Colorado, had been
holding an on going conversation about the right level
of reserves. The city’s primary revenue source, at more
than half of general fund revenues, is the sales tax, while the
property tax constitutes less than 10 percent of revenues. This
means that the city’s revenue is subject to a greater degree
of volatility than would perhaps befall a municipality with
greater reliance on the property tax. Further, legislative tax
and expenditure limits prevent the city from freely making
changes to tax rates in response to changing financial condi-
tions. On top of these fiscal limitations, the city is at risk for dif-
ferent types of natural disasters (wild fires, floods, blizzards),
any of which would require a quick and decisive public
safety response from the city government. Finally, the city has
an aging capital infrastructure, particularly its bridges and
storm sewers, and a significant failure in any of these assets
could place an unexpected and large
burden on the city’s finances. These
risks called for a financial hedging
strategy — in other words, a deliberate
and strategic amount of general fund
financial reserves.
To help local governments deter-
mine the optimal level of reserves,
the Government Finance Officers
Association has been developing a
risk-based approach to sizing reserves. A number of local
governments have used the general framework (which has
been described in the GFOA publication, Financial Policies)
to make a determination as to the optimal reserve size for
their circumstances.1 In summer 2012, the GFOA was able to
work with the City of Colorado Springs to apply the risk-based
model. This article describes that process, including back-
ground on the project, the “triple-A” framework for analyzing
risks, the application of the triple-A approach to Colorado
Springs’ risk factors, and, finally, what happened in Colorado
Springs as a result of the analysis.
ANALYZING UNCERTAINTY:
THE TRIPLE-A APPROACH
Municipal governments are subject to a number of risks,
often of highly uncertain probability and magnitude, that
require them to maintain reserves. Since these risks are
impossible to predict, the best that anyone can do is to be
prepared. The accomplished forecasting scientist, Spyros
Makridakis, has suggested a “triple-A” approach for dealing
with this kind of uncertainty.2
1. Accept. We have to accept that we are subject to uncer-
tainty, including events that we haven’t even imagined. For
example, Colorado Springs experienced a severe down-
turn in sales tax revenues as a result of the 2001 dot-com
bust and the 2007 Great Recession. Sales taxes are subject
to severe downturns due to rare and unpredictable events.
Further, because it is relatively easy to imagine scenarios
that could cause the economy to suffer (e.g., European
financial crisis, federal debt crisis, etc.), the economy is
subject to other potentially dangerous unknowns that we
cannot imagine.
2. Assess. Next, we must assess the potential impact of
the uncertainty. History can provide a baseline refer-
ence. Looking at the sales tax declines
Colorado Springs experienced after
the dot-com bust and Great Recession,
we see that a downward trend has
persisted for as long as 25 months,
and the greatest severity has been a
0.53 percent average monthly decline
over the life of the downturn (during
the Great Recession that started in
December 2007).
3. Augment. The range of uncertainty that we really face
is almost always going to be greater than we assess it to
be, so we should augment that range. Many economists
believe that the effects of the Great Recession — the base-
line for Colorado Springs’ worst-case monthly decline —
would have been much worse without the interventions
of the federal government (although the long-term impact
of those actions is, of course, still unknown). What if con-
tinued gridlock in the federal political system (or other,
unimagined, circumstances) were to prevent an effective
mitigating response to the next crisis? As a rule of thumb,
Makridakis suggests doubling your range of uncertainty if
you have little historical data to rely on, or multiplying it
by 1.5 if you have more.
The GFOA used the triple-A approach to analyze each of
Colorado Springs’ major risk factors — sales tax volatility,
bridges and storm sewers, and natural disasters — and sug-
gested reserve amounts based on that analysis. The city was
subject to other risks, as well, but these were deemed to be of
Municipal governments are
subject to a number of risks,
often of highly uncertain
probability and magnitude.
12 Government Finance Review | October 2013
secondary importance and were there-
fore analyzed less rigorously.3
SALES TAX VOLATILITY
Initially, the GFOA analyzed monthly
sales tax revenues going back to 1996
to determine the degree and, critically,
the type of volatility the sales tax is sub-
ject to: economic, seasonal, or random variation. The GFOA’s
analysis showed that more than 90 percent of the variation
in Colorado Springs’ sales tax revenue could be explained
by fundamental economic trends and business cycles.4 This
meant that risk due to economic downturns should be the
focus of the analysis.
An unexpected economic shift could have serious rami-
fications for city revenues. Exhibit 1 shows a “trend-cycle”
line for sales tax (which factors out seasonal volatility)5 over-
laid on monthly sales tax revenues.
The red arrows show the beginning
and endpoints of significant down-
trends. The first one started in April
2001 and lasted until May 2003, when
the trend cycle declined 6.6 percent
over 25 months, or about 0.25 per-
cent per month. The second started
in July 2007 and lasted until April 2009, when the trend
cycle declined 11.2 percent, or a bit more than 0.5 percent
per month.
Once the level of risk is assessed, it must be augmented.
The GFOA and the city had a good deal of data, making
a 1.5 multiplier appropriate. The result was a 0.8 percent
monthly decline as the probable worst-case scenario, which
translates to a potential 20 percent decline in sales taxes over
25 months. However, the city would presumably reduce its
Exhibit 1: Sales Tax Monthly Revenue and Trend Cycle
An unexpected economic
shift could have serious
ramifications for city revenues.
Monthly Sales Revenues
14
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n Monthly Revenue n Trend-Cycle
October 2013 | Government Finance Review 13
spending in the event of such a severe
downturn, so a reserve large enough
to cover the entire amount of the rev-
enue decline wouldn’t be necessary.
The Colorado Springs budget office
estimated that the budget could be
reduced by a little less than $10 mil-
lion without creating a major disrup-
tion to services, which meant that the city should maintain
a reserve of at least $13 million to fill the remaining revenue
gap and to help it make a “soft landing” in the case of a major
revenue decline.
BRIDGES AND STORM SEWERS
General fund reserves may be needed to repair or replace
an asset that fails unexpectedly. In Colorado Springs, two
asset classes were deemed to be at the greatest risk for fail-
ure, due to the condition of the city’s asset stock: bridges and
storm sewers. Risk is defined as the product of probability
of failure and the consequences of failure. In this case, the
probability of failure was based on a bridge sufficiency index
provided by city staff. A lower index score indicates a bridge
that is in worse condition and ultimately a higher risk (prob-
ability) to fail. (See Exhibit 2.) Consequence is based on cost
— the higher the replacement cost of an asset, the higher
the consequence to the city if that asset were to fail.6 As
Exhibit 2 shows, 13 bridge structures
were identified as having a high risk
rating (those in the red area, which
have a total score of 8-10, adding the
scores from each axis). These bridges
have an estimated replacement cost
of $22,752,672, which averages out
to about $1.75 million per bridge. A
reserve that covers one or two bridges should be adequate,
but using the triple-A rule of doubling our expectation for
uncertainty, it would be prudent to prepare for the premature
failure of three of these bridges. This would require reserves
of $5.25 million.
The city also manages 406 miles of storm lines. No installa-
tion dates or condition assessments were available for any of
them, but the estimated replacement cost for all storm sewers
is a bit more than $588 million. Since the information needed
to assess risk of failure is not available, the best that can be
done is to make an assumption. About 10 percent of the total
dollar value of the city’s bridge inventory is in the higher risk
category, so that was chosen as a reasonable number for
the storm sewer estimate; this would translate to $58 million.
Approximately 20 percent of the high-risk category was rec-
ommended as a reserve amount for the bridges, which would
equate to $11.6 million for the storm sewers.
General fund reserves may be
needed to repair or replace an
asset that fails unexpectedly.
Exhibit 2: Risk Profile for Bridges and Culverts
34 Assets
$97,543,123.50
7 Assets
$6,959,355.00
4 Assets
$1,345,308.00
1 Asset
$741,195.00
77 Assets
$1,090,359.00
39 Assets
$25,177,155.00
5 Assets
$3,852,240.00
7 Assets
$711,121.50
9 Assets
$889,242.00
6 Assets
$14,341,650.00
No Assets
N/A
2 Assets
$412,344.00
3 Assets
$1,353,675.00
No Assets
N/A
No Assets
N/A
8 Assets
$17,801,817.00
2 Assets
$1,772,910.00
1 Assets
$1,544,010.00
48 Assets
$18,897,532.50
64 Assets
$13,759,009.50
104 Assets
$20,381,443.50
14 Assets
$5,716,803.00
13 Assets
$2,933,257.50
35 Assets
$8,967,537.00
Possibility of Failure
5
4
3
2
1
0 1 2 3 4 5 High
Co
n
s
e
q
u
e
n
c
e
o
f
F
a
i
l
u
r
e
2 Assets
$1,633,935.00
Low
High
14 Government Finance Review | October 2013
NATURAL DISASTERS
Colorado Springs is subject to natu-
ral disasters that pose a significant
threat to life and property, especial-
ly wildfires and floods. Wildfires are
the most important risk — in fact,
the 2012 Colorado wildfire occurred
when this analysis was originally being
conducted and was, at the time, the
largest wildfire in Colorado history. It
affected approximately 12,000 acres
and burned 347 homes. A response
to large wildfires can be expensive, requiring police and
fire personnel to suppress the fire and evacuate people.
Reimbursement from the Federal Emergency Management
Agency is not immediate and does not typically cover all the
costs of responding. Further, a fire is likely to interrupt the
city’s sales tax revenue.
The city estimated costs for the 2012 fire at $3.75 mil-
lion in personnel time, mutual aid costs, and other direct
expenses. This estimate covers the actual firefighting within
the city limits and the emergency protective measures taken
(e.g., evacuation, security, activation of the emergency opera-
tions center, etc.). The expenses eligible for a 75 percent
FEMA reimbursement are estimated at $2.15 million. The
FEMA-ineligible expenses combined with the 25 percent of
unreimbursed expenses comes to $2.14 million — although
at least some of this amount is expenses that the city
would have incurred regardless of the fire, such as on-duty
firefighters.
Floods are also a concern because they damage infrastruc-
ture, require a city emergency response, and require debris
removal afterward. Colorado Springs’ most severe floods
were in 1935 and 1965; otherwise, smaller floods occur about
6 or 7 times in a 10-year period. The last flood that qualified
as a FEMA disaster was in 1999. The city’s cost for dealing
with the flood of 1999 was $2,670,158. The federal share of
the project was 75 percent, or approximately $2 million; the
state share was 12.5 percent, or $333,770; and the city’s share
was the remaining 12.5 percent, or $333,770. In 2012 dollars,
this would equate to about $3.67 million in total costs and
$460,000 for the city’s final share.
Although Colorado Springs faces risks from several
types of extreme events that have the potential to cause loss
of life and property and to disrupt
business, these extreme events do not
appear to constitute a catastrophic
risk to the city’s financial position.
For example, a reserve of $4 million
(compared to the city’s $220 million
in annual revenues) would be more
than adequate to cover the cost of
either the 2012 fire or a flood of simi-
lar severity to the 1999 flood, before
FEMA reimbursement.
However, the triple-A approach
warns that the city would do well to augment the level of
risk it was preparing for, and given the very limited number
of data points to inform the analysis, a higher multiplier was
appropriate. To illustrate: Multiplying the city’s total cost
for the 2012 fire — $3.75 million — by 2 totals $7.5 million.
Much of the cost for an extreme event would be reimbursed
by other parties, however, and some of this figure would
represent costs the city would incur, regardless (e.g., regular
salaries for public safety personnel). Therefore, a $7.5 million
reserve might be excessive. Analysis indicated that about a
third of the costs for the most recent fire would have been
incurred as the normal cost of doing business, and about
half of the reimbursement from FEMA can be expected to be
received within six months of the expenditure. Therefore, a
reserve of $3.3 million might represent the minimum prudent
reserve amount; it accounts for some of the costs the city
would have to bear in responding to an extreme event that
would be part of its regular budget, and for the significant por-
tion of the costs that would be reimbursed quickly by FEMA.
A reserve of $5 million might be a middle ground because it
does not account for FEMA reimbursement (which is outside
of the city’s control), but considering the need for a hedge
against floods (and blizzards), a reserve up to $7.5 million
would be prudent.
PUTTING IT ALL TOGETHER
INTO A RESERVE TARGET
To summarize the amounts of reserve our analysis
suggested would be prudent for the city to maintain, based
on an analysis of the risk factors (including the results
for analyses that were not described in this article, due to
the space limits):
Leading municipalities often
find it helpful to segment
their reserves into different
categories, making the
purpose of the reserve more
transparent.
October 2013 | Government Finance Review 15
n $13 million for the effect of uncertain economic condi-
tions on sales tax, as described in this article.
n $7.5 million for the effect of uncertain economic condi-
tions on other revenues. This accounted for uncertainty
around building permit revenues and other minor
revenue sources.
n $6.25 million for uncertainty regarding pension payments.
This related to state policy affecting the state-run pension
system the city participates in.
n $5.25 million for critical bridge failure and $11.6 million
for critical storm sewer replacement, for a total of $16.85
million.
n $5 million to $7.5 million for extreme events, as described
in this article.
n $2 million to $4 million for expenditure spikes from law-
suits. This was based on the exposure to actual lawsuits the
city was subject to at the time, and an estimate of the poten-
tial damages and probability of incurring those damages.
Many cities express their reserve policy target as a single
number (e.g., 16 percent of revenues). However, the GFOA
has found that leading municipalities often find it helpful
to segment their reserves into different categories, making
the purpose of the reserve more transparent. For example,
a reserve for “emergencies” and a reserve for “economic
uncertainty” would provide more clarity about the purpose
of the reserves than one all-encompassing reserve. The first
three bullets above could comprise the budgetary uncer-
tainty reserve, while the last three would form the emergency
reserve, leading to the targets shown in Exhibit 3.7
This provided a total target of about 25 percent of general
fund revenues.8 This was acceptable to the mayor and council
because it was based on a transparent assessment of the risks
the city faced, and it provided a known, prudent level of extra
“cushion” that took into account the impact of issues that
were of pressing concern to the community (e.g., wildfire).
A comparative analysis of the target with comparable cities
showed that the target level of reserves was similar to the
level of reserves actually maintained by other cities (it was
slightly less).
HOW THE ANALYSIS PLAYED OUT
Further events in Colorado Springs proved the value of
the triple-A approach. The city worked hard to build its 2012
Exhibit 3: Categories of Reserves
Budgetary Uncertainty Reserve
$13 million for sales tax economic uncertainty +
$7.5 million for economic uncertainty in other revenues +
$6.25 million for pension payment uncertainty =
$27 million, or approximately 12.5% of general fund revenues*
as budgetary uncertainty reserve
Emergency Reserve
$5.25 million for critical bridge failure and $11.6 million critical
storm sewer replacement, for a total of $16.85 million +
$5 million to $7.5 million for extreme events +
$2 million to $4 million for expenditure spikes from lawsuits =
$27 million, or approximately 12.5% of general fund revenues
as an emergency reserve
* Based on about $220 million general fund revenue, per 2012 budget estimates
About the City
The City of Colorado Springs is a community of 416,427
people, located about 70 miles south of Denver. At an
elevation over 6,000 feet, Colorado Springs sits at the base
of Pikes Peak, one of the most famous American mountains,
and boasts of 300 days of blue skies each year. It is home
to Garden of the Gods, the Air Force Academy, the U.S.
Olympic Committee Headquarters and Training Center, and
the world-famous Broadmoor Hotel.
16 Government Finance Review | October 2013
end-of-year unrestricted fund balance to 23.3 percent of the
2013 expenditure budget, nearly reaching its goal of 25 per-
cent. However, a series of events changed that.
n Transit litigation settlement reduced the reserve to 19.2
percent of the 2013 amended expenditure budget (the
reader will note there was an allowance for settlements in
Exhibit 3).
n The burn scar left by the 2012 Waldo Canyon Fire placed
the city at increased risk for flooding, so the mayor
requested, and the City Council approved, a supplemental
appropriation of $8.8 million from the reserves for emer-
gency storm water capital projects to address the most
critical flood risks. The City Council understood that a
portion of the city’s reserves are held to fund projects that
will reduce a risk (in this case, massive flooding) that, if
it occurred, would have to be remediated later, at even
greater expense.
n The city was affected by the Black Forest fire, in an unin-
corporated populated area that borders the city. This fire
was 50 percent more destructive than the 2012 Waldo
Canyon fire, which had been the worst in Colorado his-
tory up to that point, measured by the number of homes
destroyed. Fortunately, the city was prepared to handle
the immediate response cost with its remaining reserves.
Ultimately, the city’s reserves were reduced to 14.4 percent
of the 2013 amended expenditure budget, still providing a
hedge against the other risks it faces. The mayor and City
Council understand, however, the importance of the reserves
for responding to all of the city’s risks and are working with
staff to replenish the reserve as soon as is practical. y
Notes
1. The GFOA best practice, Appropriate Level of Unrestricted Fund Balance
in the General Fund, recommends that general purpose governments
maintain an unrestricted general fund balance of no less than two
months of regular general fund operating revenues or regular general
fund operating expenditures. However, the document emphasizes that
this recommendation is just a baseline and that governments must deter-
mine the optimal level of general fund reserves for their own particular
circumstances.
2. See: Spyros Makridakis, Robin Hogarth, and Anil Gaba, Dance with
Chance: Making Luck Work for You (Oxford: Oneworld Publications)
2009.
3. For details on how all risk factors were analyzed, see the full report
about this project, “A Risk-Based Analysis of General Fund Reserve
Requirements: A Case Study of the City of Colorado Springs,” available at
www.gfoa.org/research.
4. The GFOA used a method of data “de-seasonalization” known as multipli-
cative decomposition to arrive at this conclusion.
5. The trend-cycle line is calculated by taking a 12-month centered moving
average of actual monthly sales tax revenue. For example, the moving
average for January 2005 would be an average of August 2004 through
July 2005. February 2005 would be an average of September 2004 through
August 2005, and so on. A 12-month moving average smooths out sea-
sonal variation, leaving only the trend cycle.
6. Further analysis could be conducted with city staff to refine asset replace-
ment costs and review the risk rating to incorporate more factors (i.e.,
traffic count, location, major structures).
7. Targets were rounded to nearest whole numbers for ease of use in policy
making.
8. While some of the risks are clearly independent, some are not. If the
risks are independent (i.e., the occurrence of one has no bearing on the
occurrence of another), an argument could be made for holding less
in reserve than the sum of the subcomponents. But because the level
of independence was very complex to estimate, it was decided not to
assume any level of independence. Hence, the target is probably larger
than the city would need at any one time.
SHAYNE KAVANAGH is senior manager of research in the GFOA’s
Research and Consulting Center in Chicago. He can be reached at
skavanagh@gfoa.org. KARA SKINNER is chief financial officer for the
City of Colorado Springs, and during her tenure with the city, she
has served in a number of positions in the Budget Office and the
Finance Department. Skinner has taught economics as an adjunct
instructor at University of North Florida, Jacksonville University, and
the University of Hawaii. Just prior to serving the City of Colorado
Springs, she was the economist for the Hawaii State Public Utilities
Commission. She holds a bachelor’s degree in economics from the
University of Colorado and a master’s degree in economics from
Duke University.
BY PHIL BERTOLINI, ANDREW SCOTT, AND LAURIE VAN PELT
Planning F
o
R
a
Financial cRisis
April 2015 | Government Finance Review 27
S ome governments are able to respond nimbly when
changes are needed, while others struggle in the face
of adversity, sinking deeper into financial distress with
each successive crisis. Leaders who are dealing with financial
stress sometimes make decisions that are less than optimal.
They fail to consider a broad array of potential solutions
because of immediate emotional pressures. Being resilient
under conditions of financial stress requires making smart
decisions that address short-term needs without making the
long-term situation worse.
Most governments have faced financial stresses in the
past and will do so again in the future. Before the next finan-
cial crisis hits, governments should consider developing a
financial crisis policy, including a library of strategies that
could be employed to deal with a
financial crisis.
DEVELOPING A POLICY
Governments usually have evacu-
ation or sheltering plans in place for
emergencies such as fires, tornadoes,
and earthquakes. These plans provide
clear advance direction such as where
to go and what to do, depending on
the nature of the emergency. The plans
might designate certain people as area
leaders during an emergency, giving
them special authority and responsi-
bility for a limited time. There are periodic drills to practice
for an automatic, predictable, and organized response.
Why not use a similar approach in the event of a financial
emergency? Having a financial crisis policy in place before
the actual crisis can achieve benefits similar to those of a
disaster policy. The basics for a sound financial emergency
policy are outlined below.
Define “Financial Emergency.” Governments often fail
to take action when confronted with a financial emergency
because the leaders are unaware of the magnitude of the
situation or are slow to accept the facts. A pre-determined
definition of financial emergency, combined with routine
self-assessments of financial health,1 can save valuable time
during a crisis — time that can then be used to better cope
with the financial emergency.
Deciding what constitutes a financial emergency in advance
will provide clarity as to when a financial emergency policy
should be invoked. Indications of crisis might include:
n Recurring operating deficits.
n A dependence on one-time sources of revenues to
balance ongoing operations (such as selling assets).
n Fund balance or cash levels that fall below a pre-defined
threshold.
n The inability to make timely payments to creditors.
In defining a financial emergency, governments should
refer to any extant financial policies for guidance. For
example, a reserve policy might define the minimum accept-
able levels of fund balance. In states
that legally define when a financial
emergency exists for local units of
government, localities should design
their policies to recognize and resolve
the emergency before a potential state
intervention.
Delineate Procedural Steps.
Governments should outline the pro-
cedures they will use for addressing
the emergency. Note that additional
steps may be needed to meet the
needs of the governing body.
1. Formally declare a financial emergency. An official, formal
declaration should be made when the definition of finan-
cial emergency has been met.
2. Designate responsibility for managing the emergency.
Someone should be assigned to manage the emergency,
and that person should appoint a core team consisting
of subject matter experts in the areas of finance, human
resources, operations/programs, and communications.
The governing body may also delegate certain authorities
to facilitate a rapid response.
3. Deploy a financial emergency management plan A flexible
plan that has been pre-approved by the governing body
should be in place to provide strategies the government
can use to handle the crisis. The emergency team can
create a plan for each individual emergency by outlin-
BY PHIL BERTOLINI, ANDREW SCOTT, AND LAURIE VAN PELT
Leaders who are dealing with
financial stress sometimes
make decisions that are less
than optimal. They fail to
consider a broad array of
potential solutions because
of immediate emotional
pressures.
28 Government Finance Review | April 2015
ing the details of the situation and
choosing the pre-approved strate-
gies that will best mitigate these
specific problems.
4. Identify and declare an end to the
emergency. The policy should
include predefined criteria for
determining the end of a financial
emergency. At that point, an offi-
cial declaration that the financial
emergency has ended should be
issued. Any additional directives
needed after the financial emer-
gency, for monitoring or transi-
tional purposes, should be included in the declaration
announcement.
DEVELOPING A PLAN
When a government is confronted with a financial
emergency, it probably cannot afford to spend a signifi-
cant amount of time researching solutions. Instead, it
makes sense for the jurisdiction to
consider what other entities have
done to resolve their financial crises
and determine whether those solu-
tions are applicable to the current
situation.
The government’s financial emer-
gency management plan should
be contain two parts: 1) a library
of strategies the governing body
has already approved for use in
any situation that seems plausible
(an economic recession is likely to
occur at some point, but it proba-
bly isn’t necessary to plan in detail for, say, a collapse
of the currency); and 2) a customized plan, or playlist,
that the emergency team will create to address a specific
financial emergency, once it has been declared.
Build a Library of Solutions. Once you’ve identified all
the potential financial emergency scenarios, it’s time to build
a solutions library. Identify different options — acceptable
short-term solutions and long-term strategies the government
might use to cope with the crisis and regain financial sus-
tainability. You can draw from the library of retrenchment
tactics the governing body has already approved for dealing
with likely potential financial crises policy as needed. These
options might include a freeze on hiring, purchasing, and
travel, for example.
The solutions library should include tools the financial
emergency team can use to closely monitor and report on rev-
enues and expenditures on at least a monthly basis — in this
way, the team can know how the techniques are performing
when they are implemented. It should also include systems
of accountability for staff members who manage budgets and
for achieving service objectives during the emergency.
Create a Playlist. The second, episode-specific part of
the plan goes into effect after an emergency is declared.
This is where the emergency team outlines the cause(s)
of financial distress and chooses which of the pre-approved
near-term and long-term strategies should be used to resolve
the emergency.
“Self Help” for Financial Crisis Planning
To plan effectively for a financial crisis, governments need
to remember three things:
n know What You Have. Many governments do not have
a basic understanding of the assets at their disposal. Assets
such as financial, physical, and human resources must be
clearly identified in order to determine the organization’s
baseline.
n know What You Need. After a baseline is determined,
governments must start identifying what needs to be done
to either halt the financial crisis or recover from the crisis.
Both short-term and long-term tactics are paramount to
success.
n know How to Get Help. Governments cannot stick
their heads in the sand when a financial crisis presents
itself. Knowing who to rely on and where to get assistance
is a must.
Governments usually have
evacuation or sheltering
plans in place for emergencies
such as fires, tornadoes,
and earthquakes. Why not
use a similar approach
in the event of a financial
emergency?
April 2015 | Government Finance Review 29
Note that your government can also
put pre-approved options together in
advance. That way, it will be able to
respond even more quickly and effec-
tively to any given scenario — a severe
economic recession, for instance.
CONCLUSIONS
Once a government has taken the
steps outlined above — defined a finan-
cial emergency, adopted a financial
policy, and outlined a plan — the plan
can be tested through simulation drills.
As with traditional emergency manage-
ment, practice makes it easier to take swift action when a real
crisis occurs.
This article provides the necessary foundation for building a
solid financial crisis response plan, including a pre-approved
tactical and strategic responses to finan-
cial distress. Keep in mind that the most
successful disaster plans are those that
are practiced over and over again, and
a financial crisis plan is no different. y
Note
1. Regular financial checkups help prevent
financial crisis. Governments should conduct
a periodic financial health self-diagnosis and
report the results to the chief elected official
and governing body. Elected officials and
staff can then take steps to remediate any
financial weaknesses.
PHIL BERTOLINI is deputy county executive/chief information officer
for Oakland County, Michigan. ANDREW SCOTT is budget director
for the City of Portland, Oregon. LAURIE VAN PELT is director of
management and budget for Oakland County.
A pre-determined definition
of financial emergency,
combined with routine self-
assessments of financial health,
can save valuable time during
a crisis — time that can then
be used to better cope with
the financial emergency.
Government Finance Officers Association
May 2013
A Risk-Based Analysis
ofGeneral Fund Reserve
Requirements
A Case Study of the City of Colorado Springs
Copyright 2013 by theGovernment Finance Officers Association203 N. LaSalle Street, Suite 2700Chicago, Illinois 60601www.gfoa.org
By Shayne C. Kavanagh, Senior Manager of Research, GFOA
Reviewers: Marc D. Joffe, Principal Consultant, Public Sector Credit Solutions, and Bill Statler, Consultant andTrainer; retired Director of Finance & Information Technology, City of San Luis Obispo, California.
The GFOA would like to thank the City of Colorado Springs for allowing us to share this information, and PublicSector Digest for their assistance.
The Research and Consulting Center is the management analysis and consulting arm of the GovernmentFinance Officers Association and is nationally recognized for its comprehensive analytical and advisory serv-ices, and specialized research on state and local government finance. Since beginning operations in 1977, theGFOA Research and Consulting Center has provided advisory services to hundreds of local, county, and stategovernments; public utilities; elementary and secondary education systems; and transit authorities.
The GFOA’s Research and Consulting Center encourages enquires about this study or about repeating theanalysis for other governments — please contact Shayne Kavanagh at 312-977-9700 or skavanagh@gfoa.org.
Executive Summary............................................................................................................4
1. Introduction ....................................................................................................................7
2. Primary Risk Factor Analysis ........................................................................................9
Revenue Source Stability ......................................................................................9
Infrastructure........................................................................................................14
Vulnerability to Extreme Events and Public Safety Concerns............................15
3. Secondary Risk Factor Analysis..................................................................................17
Leverage................................................................................................................17
Expenditure Volatility............................................................................................19
Growth of the Community....................................................................................20
Liquidity ................................................................................................................20
4. Recommendations ......................................................................................................22
Recommended Reserve Target for Colorado Springs........................................22
Other Ideas to Support the General Fund Reserve Strategy ............................26
Appendix 1. Sales Tax Revenues in Boulder, Colorado ................................................31
Endnotes ..........................................................................................................................32
The Case of the City of Colorado Springs
4
Executive Summary
Reserves are the cornerstone of financial flexibility. Reserves provide a government with options for
responding to unexpected issues and a buffer against shocks and other forms of risk. Managing re-
serves, however, can be a challenge. The main question is how much money to maintain in reserve –
how much is enough, and when does it become too much? This can be a sensitive question, since
money held in reserve is money taken from constituents, and it can be argued that excessive reserves
should be returned to citizens in the form of lower taxes.
The City of Colorado Springs, Colorado, has been considering this question, especially in light of its
volatile revenue portfolio and the fact that it cannot easily increase taxes to compensate for other
changes in its financial condition; for example, the Taxpayer Bill of Rights – a statewide provision re-
stricting all governments in the state from raising tax rates without voter approval – limits the City’s
ability to increase taxes. The City engaged the Government Finance Officers Association to help pro-
duce an answer. The GFOA is a non-profit association of approximately 17,500 state and local govern-
ment finance professionals and elected officials from across North America, and a key part of its
mission is to promote best practices and good public finance, including reserve policies.
The GFOA worked with Colorado Springs to analyze the risks (based on the model originally de-
scribed in the GFOA publication, Financial Policies) that influence the level of reserves the City needs
as a hedge against uncertainty and loss. Three primary risks were identified: volatility of sales tax rev-
enue; the potential for the City’s storm sewer and bridge infrastructure to fail; and the City’s vulnera-
bility to extreme events such as wildfires, floods, and, to a lesser extent, snowstorms. Secondary risk
factors were also examined, including cash flow and the potential for unexpected spikes in expendi-
tures. In addition, a benchmarking survey of the reserves held by comparable cities provided context.
CALCULATING THE RESERVE
The GFOA reviewed three primary risk factors in order to assess the potential magnitude of the
City's exposure. The "Triple-A” approach to accounting for uncertainties was an important part of
GFOA's analysis.
Accounting for Uncertainty – The “Triple-A” Approach
Sizing a reserve requires estimating highly uncertain events, like natural disasters and economic downturns. To
develop an adequate response, the GFOA used the “Triple-A” approach:1
•Accept. First, we must accept that we are subject to uncertainty, including events that we haven’t even
imagined.
•Assess. Next, we must assess the potential impact of the uncertainty. Historical reference cases are a
useful baseline.
•Augment. The range of uncertainty we really face will almost always be greater than we assess it to be, so
we should augment that range. Historical reference cases provide a baseline, but that baseline may not be
adequate to account for all future possibilities.
5
Revenue Volatility. The City’s primary concern was the volatility of sales tax income, and its most im-
portant vulnerability in this area would be an economic downturn. The GFOA reviewed sales tax
volatility back to 1996 in order to observe monthly variations and longer-term trends. Past experi-
ences suggested that Colorado Springs should prepare for a 20 percent decline in sales tax revenues
over 25 months as a plausible worst-case scenario; this would equal about $23 million in reserves.
However, since the City would presumably reduce its spending in the event of such a severe down-
turn, the reserve fund wouldn’t have to cover the entire decline in revenue. The City budget office es-
timated that the budget could be reduced by almost $10 million without creating a major disruption
to services (although there would of course be some degree of negative impact on service quality).
Thus, Colorado Springs should maintain a reserve of at least $13 million to cover the remaining por-
tion of the worst-case revenue gap and to help the City make a “soft landing” under those circum-
stances. An additional $7.5 million is required to cover the other revenues that make up the general
fund; these were found to be considerably less volatile than the sales tax.
Infrastructure Risks. A government might need general fund reserves to repair or replace an asset that
fails unexpectedly. In Colorado Springs, the two major asset classes deemed to have the greatest as-
sociated risk were bridges and storm sewers. Thirteen bridge structures had a high risk rating, with
an estimated replacement value of almost $23 million – an average of roughly $1.75 million per
bridge. A reserve that covers one or two bridges should be adequate, but covering three might be
more prudent, for a $5.25 million reserve. No installation dates or condition assessments were avail-
able for the 406 miles of storm lines the City manages, but the estimated replacement cost for all
storm sewers was a little more than $588 million.2 Since this lack of information made it impossible
to assess the risk of failure, the best that could be done was to make an assumption. The GFOA did
know that about 10 percent of the total dollar value of the City’s bridge inventory is in the higher-risk
category, so it started with that number for storm sewers, which translates to $58 million. The rec-
ommended reserve amount is about 20 percent of the high-risk bridges, which equates to $11.6 mil-
lion for storm sewers.
Extreme Events. Finally, the City is subject to extreme events that pose significant threat to life and
property, particularly wildfires and floods. Historically, however, the financial impact of these events
has been manageable. For example, the 2012 wildfire was the worst in Colorado history, but the total
cost to the City was only $3.75 million – out of an annual budget of approximately $220 million. Of
course, the scale of future events is uncertain, as is the timing of FEMA reimbursement and the por-
tion of event response costs that would likely already be covered by existing budgeted resources. Tak-
ing this into account, a reserve of $5 million to $7.5 million for extreme events appears reasonable.
Adding It Up. The analysis above, along with the analysis of the secondary risk factors (particularly
uncertainty regarding future payments for pension liabilities and expenditures for unfavorable law-
suit judgments) led to the following reserve components. The GFOA further recommended that the
reserve amounts be categorized by component, making the purpose of the reserve more transparent.
For example, having a reserve for emergencies and a reserve for economic uncertainty would make
their purpose more clear than one all-encompassing reserve.4
6
Budgetary Uncertainty Reserve
$13 million for sales tax economic uncertainty +
$7.5 million for economic uncertainty in other revenues +
$6.25 million for pension payment uncertainty =
$27 million, or approximately 12.5 percent of general fund revenues3 as budgetary
uncertainty reserve
Emergency Reserve
$5.25 million for critical bridge failure +
$11.6 million for critical storm sewer replacement +
$5 million to $7.5 million for extreme events +
$2 million to $4 million for expenditure spikes from lawsuits =
$27 million, or approximately 12.5 percent of general fund revenues as an emergency
reserve
Combining the components gives us a target of approximately 25 percent of general fund rev-
enues, which is in line with the range of reserves actually maintained by other cities that are compa-
rable to Colorado Springs. It is also greater than the 16 percent the GFOA considers a minimum
baseline level.5
7
1. Introduction
Reserves are the cornerstone of financial flexibility. Reserves provide a government with options to
respond to unexpected issues and afford a buffer against shocks and other forms of risk. Managing
reserves, though, can be a challenge. Foremost is the question of how much money to maintain in
reserve. How much is enough and when does a reserve become too much? This can be a sensitive
question because money held in reserve is money taken from constituents and the argument could
be made that excessive reserves should be returned to citizens in the form of lower taxes.
The City of Colorado Springs (the “City”) has been considering this question recently, especially in
light of the volatility of its revenue portfolio and the fact that the City cannot easily increase its taxes
to compensate for other changes in its financial condition.6 The City engaged the Government Fi-
nance Officers Association (GFOA) to help produce an answer. The GFOA is a nonprofit association
of over 17,000 state and local government finance professionals and elected officials from across
North America. A key part of GFOA’s mission is to promote best practices in good public finance, in-
cluding reserve policies.
The GFOA’s approach to reserves does not suppose “one-size-fits-all.” GFOA’s Best Practice on gen-
eral fund reserves recommends, at a minimum, that general-purpose governments, regardless of
size, maintain unrestricted fund balance in their general fund of no less than two months of regular
general fund operating revenues or regular general fund operating expenditures (i.e., reserves equal
to about 16 percent of revenues).7 However, this 16 percent is only intended as a baseline, and it
needs to be adjusted according to local conditions. To make the adjustment, the GFOA worked with
the City to conduct an analysis of the risks that influence the need for reserves as a hedge against un-
certainty and loss.
A risk is defined as the probability and magnitude of a loss, disaster, or other undesirable event.8 The
GFOA’s framework of risk assessment is based on the risk management cycle: identify risks; assess
risks; identify risk mitigation approaches; assess expected risk reduction; and select and implement
mitigation method. The framework focuses primarily on risk retention, or using reserves, to manage
risk. However, the framework also encourages the City to think about how other risk management
methods might alleviate the need to retain risk. For example, perhaps a risk could be transferred by
The Origin of this Report
This report was originally developed as a consulting product for the City of Colorado Springs. The City graciously
gave the GFOA its permission to use the report for more general education and information sharing about risk-
based assessment of reserve requirements.
8
purchasing insurance or relying on another organization or accounting fund to manage the risk. It
might also be possible to avoid a risk by discontinuing activities that are creating a risk for the gen-
eral fund. Hence, a thorough examination of the risk factors should not only help lead to customized
reserve target size, but also should improve the City’s understanding of the risks it faces and its over-
all financial risk profile.
As a first step in this project, the GFOA conducted a basic review of the risk factors that generally in-
fluence the amount of reserves a municipal government should hold.9 This review enabled the City
and the GFOA to classify factors as either primary risks or as secondary risks. Exhibit 1.1 lists how the
risk factors were classified.
The next section presents an overview of the primary risk factors and the City’s level of exposure.
The third section reviews secondary risk factors that have less weighty implications for the City’s
general fund reserve strategy, but which still should be considered. The fourth and final section of
the report presents the findings of the analysis, including a customized target reserve level for the
City’s general fund and other ideas to improve the financial health of the City.
Exhibit 1.1
Categorization of Risk Factors that Influence Reserve Levels for Colorado Springs
Primary Risk Factors
Revenue (Sales Tax) Volatility
Infrastructure Upkeep
Vulnerability to Extreme Events and Public Safety Concerns
Secondary Risk Factors
Leverage
Expenditure Volatility
Liquidity/Cash Flow
Growth of the Community
9
2. Primary Risk Factor Analysis
This section presents the three most important risk factors examined by the GFOA and the City’s ex-
posure: the volatility of the City’s revenue portfolio, maintenance/replacement of the City’s infra-
structure (focusing on bridges and storm sewers), and vulnerability to extreme events and public
safety concerns.
REVENUE SOURCE STABILITY
Volatile revenue sources call for a higher reserve level in order to avoid the need for sudden service
cutbacks should revenues drop unexpectedly. Some revenues are inherently volatile. The sales tax is
usually considered to be a volatile revenue source because it is much more sensitive to swings in the
economy than a revenue source like the property tax, for instance. This is an important consideration
for Colorado Springs, considering that sales taxes (and the closely associated use tax) account for
over half of the general fund’s revenues.10 No other revenue source comprises more than a fifth of
general fund revenue (the next largest is transfers from other funds, at about 17 percent); the prop-
erty tax, normally a large revenue source for municipal governments, accounts for less than 10 per-
cent.
This section will first analyze the volatility of the sales tax, as well as two closely associated revenues
– the use tax and sales tax audit revenue. Following that, the stability of the general fund’s other im-
portant revenue sources will be examined.
Sales and Use Tax
A first step is to understand the level and nature of volatility in the sales tax. The sales tax appears to
follow fairly predictable seasonal patterns. Exhibit 2.1 shows annual sales tax revenues for 2007
through 2011 and Exhibit 2.2 shows monthly sales tax revenue since 2006.11 In Exhibit 2.1, use tax and
revenues from sales tax audits are removed. These revenues add “noise” to the pure sales tax data,
making it more difficult to analyze. They are also much smaller revenue sources – use tax is 7 percent
the size of sales tax and audit revenues are 3 percent of all sales tax revenue. These revenues will be
discussed later in the report.
Exhibit 2.1
Five-Year Trends for Sales Tax
2011 2010 2009 2008 2007
Revenue $111,735,533 $108,212,533 $101,247,887 $107,356,298 $113,211,788
Annual Change 3.3% 6.9% -5.7% -5.2% 1.7%
10
The red circles in Exhibit 2.2 denote January revenues, which are always the highest of the year due
to holiday shopping. The green circles show revenues from July, October, and April, which all see rev-
enue spikes (due to quarterly sales tax filings for smaller vendors). This pattern and even the relative
magnitude of the spikes are quite consistent from year to year, even as far back as 1996. In fact, a sta-
tistical analysis shows that only a 2 percent change in sales tax revenue is attributable to random
variation. About 91 percent is due to fundamental economic trends/business cycles (also known sim-
ply as “trend-cycle”), and 7 percent is explained by seasonal variation.12
This means that random fluctuations in the sales tax should not concern the City. However, it also
means that the influence of economic cycles is very strong. An unexpected shift in the economy
could have serious ramifications for City revenues, as the City has experienced in the wake of the
2001 recession and the more recent Great Recession. Exhibit 2.3 (on the following page) shows the
trend-cycle line for sales tax13 overlaid on monthly sales tax revenues. The red arrows show the begin-
ning and end-points of significant downtrends. The first one started in April 2001 and lasted until
May 2003. The trend-cycle declined 6.6 percent over 25 months, or about a quarter percent per
month. The second started in July 2007 and lasted until April 2009. The trend-cycle declined 11.2
percent, or just over half a percent per month.
Obviously, the decline associated with the Great Recession was much sharper than the 2001 reces-
sion, both in terms of overall decline and speed of the decline. In fact, so severe was some of the fi-
nancial fallout from the Great Recession that some have dubbed it what acclaimed financial thinker
Nasim Talib has termed a “Black Swan” event – a rare and unpredictable event that has an extreme
impact.14 Black Swans are, by definition, impossible to predict, so the best that anyone can do is to
be prepared. The accomplished forecasting scientist Spyros Makridakis has suggested a “Triple-A”
approach (described on the next page) for dealing with this kind of uncertainty.15
Exhibit 2.2
Seasonal Peaks in City Sales Tax Revenue
There are four consistent spikes in sales tax revenue during the year, with January being the most important. The other
spikes occur in July, October, and April.
11
1. Accept. First we must accept that we are subject to uncertainty. Even though the sales tax is
subject to relatively little random variation, it is clearly subject to Black Swans. Because it is
relatively easy to imagine scenarios that could cause the Colorado Springs economy to suffer
(e.g., European financial crisis, federal debt crisis, a significant reduction in military spending
due to federal budget shortfalls, etc.), we must also accept that the economy is subject to addi-
tional potentially dangerous unknowns that we cannot imagine.
2. Assess. Next we must assess the potential impact of the uncertainty. Past history can provide a
useful reference point. We saw earlier that a downturn in the trend-cycle has lasted as long as
25 months and has been as severe as a 0.53 percent monthly decline. The rate of decline is
more relevant to the discussion of general fund reserves because a more protracted decline
should be dealt with by restructuring the budget, not necessarily with continuous use of fund
balance. Even so, it is important to consider both.
3. Augment. The range of uncertainty we really face will almost always be greater than we assess it
to be, so we should augment that range. For example, we used the experience of the Great Re-
cession as a reference point for our worst-case monthly decline (0.53 percent). However, many
economists believe that the effects of the Great Recession would have been much worse had
the federal government not taken the actions that it did.16 Who is to say that continued grid-
lock in the federal political system (or other circumstances) won’t prevent an effective mitigat-
ing response to the next crisis? As a rule of thumb, Makridakis suggests doubling your range
of uncertainty if you have little historical data to rely on or multiplying it by 1.5 if you have
more. We have a good deal of data, so a 1.5 multiplier seems appropriate, giving us a 0.8 per-
cent monthly decline. That translates to a potential 20 percent decline over 25 months. This
does not necessarily mean that the City should reserve this entire amount, though, because
Exhibit 2.3
Sales Tax Monthly Revenue and Trend-Cycle
The City has experienced two major downturns in the sales tax trend-cycle. The first one started in April 2001 and lasted until
May 2003. The trend-cycle declined 6.6 percent over 25 months. The second started in July 2007 and lasted until April 2009.
The trend-cycle declined 11.2 percent.
12
presumably, in the event of a financial Black Swan, the City would take action to reduce
spending – not just continue to spend as it had before. The implications of the sales tax analy-
sis, along with the other analyses performed by the GFOA, for the City’s reserve strategy will
be addressed in the fourth section of this report.
As mentioned earlier, audit revenues were removed from the sales tax data for purposes of this analy-
sis. As Exhibit 2.4 shows, from 2007 through 2011, audit revenues ranged between $3.3 million and
$2.2 million. It has experienced some fairly significant swings in this time as well. However, a $1 mil-
lion potential for variation is probably not material in the entire City revenue portfolio. The City ex-
pects sales tax audit revenues to continue into the future within the same general range that they
have occurred in the past.
Use taxes were also removed from the sales tax data. Exhibit 2.5 (on the following page) shows the
five-year trend analysis for use taxes. Use taxes are not quite as volatile as audit revenues, but are still
rather volatile. In fact, GFOA’s statistical analysis showed that almost 15 percent of the variation in
use tax is attributable to simple randomness (compared to 2 percent for sales tax). However, more
importantly, the use tax has experienced a notable decline since 2008. Examination of the long-term
history shows that the revenue experienced a rapid increase in 2005, coinciding with the construc-
tion boom and use taxes from commercial construction and manufacturing equipment. Revenue
stayed at about this level until 2008, when tax revenue declined considerably as these industries ex-
perienced a slowdown in their growth. Hence, the change we see in Exhibit 2.5 is less a product of
random variation and more a product of a fundamental change in the tax base. Hence, use taxes have
likely settled in at a new, lower level of yield that is reflective of reduced economic activity in com-
mercial construction and manufacturing equipment (in fact, the lowest level since 1996). As such,
there is probably little risk of another significant downside move.17 In fact, an analysis of the sources
of the use tax shows that income from construction-related trades has fallen substantially in recent
years. For example, revenue from building general contractors in 2011 was 12 percent of what it was in
2007, and revenue from subcontractors was 27 percent of 2007 levels. Also, total vacancy rates for
commercial properties have hovered around 10 percent for the last two years, up from 7.7 percent in
2008. This indicates that there may be excess capacity in Colorado Springs, such that a significant
uptick in building is not likely in the near term.
Sales Tax Point of Comparison
Appendix 1 provides a similar analysis of monthly sales tax data from the City of Boulder, Colorado, in order to
provide a sense of context for how volatile sales tax revenue is in another jurisdiction.
Exhibit 2.4
Five-Year Trends for Sales Tax Audit Revenue
2011 2010 2009 2008 2007
Revenue $3,284,390 $2,369,723 $3,250,245 $2,189,116 $2,210,099
Annual Change 32.8% -27.1% 48.5% -0.9% 51.3%
13
While sales tax is clearly the most important revenue, an analysis of reserve requirements should
take account of other revenues as well, given that other revenues comprise half of the City’s budget.
Below is a summary of other major sources of revenue and their associated volatility risk.
Property Taxes. Property taxes comprise only about 9 to 10 percent of the City’s budget. The City has
experienced a steady decline in property tax revenues in recent years, with a primary cause being a
reassessment and lower property values owing to the decline in the housing market. Nationally, the
housing market seems to have stabilized, at least to the point where another major decline is un-
likely.18 An examination of Colorado Springs’ housing prices shows that Colorado Springs seems to
essentially follow national trends.19
Charges for Service. Charges for service are about 6 to 7 percent of the general fund budget. Revenues
from charges for service have fallen substantially in recent years, now budgeted at 70 percent of the
2009 actual revenues. This is mostly due to a sharp decline in charges for services for
construction/development regulation. Hence, the user fees do have some vulnerability to economic
cycles. A reserve could be useful, but the City might also consider other policies to mitigate risk. For
example, a policy that sets cost recovery goals for fees would prompt a discussion of how to reduce
costs if revenues were not up to expectations. Regardless, it may be helpful to have a small reserve in
order to allow gradual adjustments to drop-offs in revenues. In recent history, the total charges for
service revenues have dropped $3 million in one year. At this point, fees that are more sensitive to
economic conditions (e.g., construction-related fees) have probably reached or are approaching a
bottom. Accordingly, a $3 million reserve should probably be more than adequate.
Intergovernmental Revenue. Intergovernmental revenue is about 9 to 10 percent of the general fund
budget. By far, the most important component of this is the highway users tax, at about 90 percent of
the total. The highway users tax is intended to support traffic safety and road maintenance programs.
There has been political pressure at the state level to reduce the resources that support the tax, but,
so far, this has not happened. However, if one of these efforts were successful the City would find it-
self with reduced revenue. City staff believes that the Funding Advancements for Surface Trans-
portation and Economic Recovery (FASTER) portion of the highway users tax is the most vulnerable
to being eliminated (about $1.5 million), so reserve strategy could focus on replacing that amount for
one year (after which point the City would presumably have adapted).
The City also receives a number of grants for capital projects, and some for operations. These grants
are not accounted for in the general fund, but if the grants were to be lost there could be some pres-
sure on the general fund to continue the associated service. For capital projects, the City would likely
cancel or defer the project or find another source of funding, rather than using reserve to make up
the shortfall from a lost grant. Lost grants for operations may require some support from the general
fund in order to provide continuity in service (assuming the City cannot simply discontinue the serv-
ice). A reserve of $3 million appears to be adequate to cover this risk, based on the level of grants
used to support core operating programs currently.
Exhibit 2.5
Five-Year Trends for Use Tax
2011 2010 2009 2008 2007$
Revenue $6,024,785 $6,454,560 $5,668,451 $8,490,105 $9,264,952
Annual Change -6.7% 13.9% -33.2% -8.4% -12.4%
14
Transfers from Other Funds. The City receives about 17 percent of its revenue from transfers from
other funds (from City utilities). This transfer is a matter of City Council policy. There do not appear
to be any major threats to the continued economic viability of this policy, so any change would have a
political genesis. A decision to reduce the transfer should be made in the context of how it will im-
pact the budget, so a reserve should not be necessary.
INFRASTRUCTURE
Healthy infrastructure makes for an economically vital community. However, worn infrastructure
poses a potential risk of untimely failure. General fund reserves may be needed to repair or replace
an asset that fails unexpectedly. In Colorado Springs, the two asset classes that were deemed to be of
the greatest importance are bridges and storm sewers.
Exhibit 2.6 shows a risk profile for bridges and culverts. Risk is defined as the product of probability
of failure and the consequences of failure. Probability of failure is based on the bridge sufficiency
index (BSI) provided by the City staff. A lower BSI indicates a bridge that is in worse condition and
ultimately a higher risk (probability) to fail. Consequence is based on cost – the higher the replace-
ment cost of an asset, the higher the consequence to the City if that asset were to fail.20 As can be
seen in the exhibit, 13 bridge structures have been identified as having a high risk rating (those
bridges in the red area, which have a total score of between 8 and 10, when the scores from each axis
are added together). These bridges have an estimated replacement value of $22,752,672. This aver-
ages to about $1.75 million per bridge. A reserve that covers one or two bridges should be adequate,
Exhibit 2.6
Risk Profile for Bridges and Culverts
Grant Policy
The City auditors have pointed out that overreliance on grants is a potential risk for the City. A policy that limits
the City’s exposure to the risky elements of grants could be helpful. Section 4 of this report describes how grant
policies might be helpful.
15
but using the “Triple-A” rule (described earlier) of doubling our expectation for uncertainty, prepar-
ing for the premature failure of three of these bridges might be more prudent. This equates to a $5.25
million reserve.
In addition to the bridges and culverts, the City manages 406 miles of storm lines. However, neither
install dates nor condition assessments were available for any storm lines. The estimated replace-
ment cost for all storm sewers is $588,052,836.21 Since the information necessary to assess risk of fail-
ure is not available, the best that can be done is to make an assumption. We do know that about 10
percent of the total dollar value of the City’s bridge inventory is in the higher risk category, so it may
be reasonable to start with that number for storm sewers, which would translate to $58 million. We
also know that about 20 percent high risk category of bridges was recommended as a reserve
amount, which would equate to $11.6 million.
We will review how this analysis for bridges and storm sewers fits into an overall reserve strategy in
Section 4 of this report.
VULNERABILITY TO EXTREME EVENTS AND PUBLIC SAFETY CONCERNS
This factor concerns the extreme events (e.g., natural disasters) the City is vulnerable to, the public
safety programs that must be funded during the occurrence of an extreme event, and the federal or
state programs that would help and how long it would take to get assistance. For example, reim-
bursement from the Federal Emergency Management Agency (FEMA) does not always occur right
away, so it is important to have reserves to absorb the cost in the meantime, and FEMA does not nec-
essarily reimburse 100 percent of the cost of responding to an event.
Discussions with the City’s Emergency Operations Manager reveal that Colorado Springs is most at
risk for wildfires and floods. Wildfires are probably the most important risk, as the fires of 2012 un-
derlined. About 20-25 percent of homes in Colorado Springs are subject to wildfire risk, although
fires that damage homes are not that common. The most recent fire was the most destructive in Col-
orado history. It impacted around 12,000 acres and burned 347 homes. By comparison, the most re-
cent other fires of an extreme size were in 2005 and 2000 and impacted 35 and 800 acres,
respectively. No homes were burned in either of those fires – in fact, one must look back to around
1950 to find the last time before 2012 that homes in the City of Colorado Springs were burned by
wildfire.
Large wild fires can be expensive to respond to, requiring police and fire personnel for suppression of
the fire and evacuation of people. Many other city departments are involved in the recovery efforts.
FEMA reimbursement is not immediate and does not typically cover all the City’s costs of respond-
ing. Further, a fire is likely to interrupt the City’s sales tax revenue.
Currently, the City only has estimated costs for the most recent fire, which is $3.75 million in person-
nel time, mutual aid costs, and other direct expenses. The estimate pertains to the actual firefighting
within the City limits and the emergency protective measures taken (e.g., evacuation, security, acti-
vation of the emergency operations center, etc.). Of this, the expenses eligible for a 75 percent FEMA
reimbursement are estimated to be $2.15 million. Adding together the FEMA ineligible expenses,
plus the 25 percent unreimbursed expenses results in a figure of $2.14 million. At least some of this
represents expenses that the City would have incurred anyhow (e.g., firefighters on duty). The City
government did not incur any significant direct property damage as a result of the fire (probably
around $30,000), but there may be some indirect damage to storm sewers later on, as a result of in-
creased run-off, from the fire-damaged areas. The City engages in mitigation efforts, such as defor-
estation of areas that are at risk for wildfire, but it is still important for the City to retain a reserve to
be prepared for future wildfires.
16
Floods are also a concern because they damage infrastructure, require a City emergency response,
and require debris removal afterwards. The most severe floods were in 1935 and 1965. Otherwise,
smaller floods occur about 6 or 7 times in a 10-year period. The last flood that qualified as a FEMA
disaster occurred in 1999, though it wasn’t on the scale of the 1965 or 1935 floods. The cost to the City
to address the flood damage of 1999 was $2,670,158. The federal share of the project was 75 percent,
or $2,002,619; the state share was 12.5 percent, or $333,770; and the City share was the remaining 12.5
percent, or $333,770. This would equate to about $3.67 million in total costs and $460,000 for the
City’s final share in today’s dollars.
Blizzards represent a final, less severe risk. The magnitude of impact is not as great as for fires or
floods, but the City still incurs an unexpected cost. The last significant cost was in 2007, when the
City needed to appropriate an additional $400,000 to deal with snow storms.
In summary, Colorado Springs faces a risk from several types of extreme events that have the poten-
tial to cause loss of life and property and to disrupt business. The City has taken steps to protect the
health, safety, and welfare of the community in light of these risks. Fortunately, however, these ex-
treme events do not appear to constitute a large risk to the City’s financial position. For example, a
reserve of $4 million (compared to annual City revenues of about $220 million) would be more than
adequate to cover the cost of either the most recent fire or a flood of similar severity to the 1999
flood, before FEMA reimbursement.
However, using Makridakis’s “Triple-A” approach (described earlier), it may behoove the City to aug-
ment the level of risk it is preparing for. We have a very limited number of data points to inform us,
so a higher multiplier seems appropriate. If we multiplied $3.75 million by 2 we would get $7.5 mil-
lion. However, much of an extreme event’s cost would be reimbursed by other parties (e.g., a 75 per-
cent reimbursement from FEMA) and some of this figure would represent costs the City would incur
anyhow (e.g., regular salaries for public safety personnel), so a $7.5 million reserve might be exces-
sive. Discussions with City staff indicated that the City would have incurred about one third of the
most recent fire’s costs in the normal cost of doing business, and that about half of the reimburse-
ment from FEMA can be expected to be received within six months of the expenditure. Using this as
a reference point, a reserve of $3.3 million might represent the minimum prudent reserve amount
because it accounts for the fact that the City will have to bear some of the costs of responding to an
extreme event in its regular budget, and that another significant portion of the cost will be reim-
bursed quickly by FEMA. A reserve of $5 million might be a middle ground because it does not ac-
count for FEMA reimbursement (which is outside the control of the City).
Section 3 will consider the all the foregoing analyses together in order to present a final recom-
mended reserve target for the City.
17
3. Secondary Risk Factor Analysis
This section presents an overview of risk factors that are less complex or of lower magnitude than the
primary risk factors, but that also have implications for the City’s general fund reserve strategy.
LEVERAGE
A highly leveraged organization has less flexibility. Examples of leverage include long-term debt,
pension obligations, and obligations for post-employment health care. Reserves are a critical source
of financial flexibility, so high leverage may call for higher reserves. This section will address each of
the aforementioned sources of leverage.
Debt
The City has very little debt. Exhibit 3.1 demonstrates this by comparing the City’s level of indebted-
ness to other cities. Exhibit 3.1 includes a group of cities that Colorado Springs has identified as “Best
in Class” for the purpose of comparing the City’s business practices to those of other, similar cities.
Exhibit 3.1 also includes two “sales tax comparable” cities – Colorado cities that receive a large por-
tion of their revenue from sales taxes, but are not otherwise as similar to Colorado Springs. Finally,
the exhibit provides summary statistics of all these municipalities. Exhibit 3.1 compares debt along
Exhibit 3.1
Comparison of Colorado Springs’ Indebtedness with Other Cities
“Best in Class Cities”
Colorado Fort Collins Oklahoma Denver Indianapolis Charlotte
Springs City
Population 422,816 144,875 580,000 619,968 820,445 731,424
Debt per Capita 256 342 1,072 2,702 1,445 1,829
Debt Service as a
% of Expenditures 5.9% 3.5% 10.2% 10% 13.8% 15.2%
Sales Tax Comparables Summary Statistics
Colorado Lone Tree Centennial Average Median
Springs
Population 422,816 11.097 100,377 553,255 599,984
Debt per Capita 256 2,558 28 1,274 1,258
Debt Service as a
% of Expenditures 5.9% 10.4% 0.3% 9.8% 10.1%
The City has substantially lower debt levels than the average of the comparison group.
18
two commonly used measures of indebtedness. The first, debt per capita, measures the burden
placed on citizens by municipal indebtedness. The second measure is debt service (principal and in-
terest payments) as a percent of city expenditures. This figure measures the pressure placed on the
budget by debt payments. Colorado Springs is well below the average on both of these measures.
This means that Colorado Springs should not find its financial flexibility reduced by excess debt. In
fact, the City’s debt capacity could offer an alternative source of financial flexibility. For example, if
the City were found liable for an exceedingly large judgment that was due immediately, it might be
able to use debt instruments to pay the amount over time.
The reader should note that the GFOA did not use only the general fund financial information to cal-
culate these ratios, but rather used the broader categories of “governmental activities” and “govern-
mental funds,” which can be found in any comprehensive annual financial report. This is because all
the cities accounted for debt in different funds, so looking at just the general fund would provide a
partial, and inaccurate, impression. However, the aforementioned categories have fairly standard
meanings across government and they include most of the general government services one would
typically associate with a municipality, such as public safety and public works. Therefore, they ad-
dress debt of a general nature, which does have direct relevance to the financial flexibility of the gen-
eral fund.
These general government categories, though, exclude utilities and other more business-like activi-
ties. The business-like category of services was excluded for two main reasons. First, municipalities
do not provide these types of services as consistently as they do general government services. Second,
these services, particularly utilities, often carry large amounts of debt, and would therefore have had
a major impact on the indebtedness measures. However, this debt has a much more indirect rela-
tionship to the financial flexibility of the general fund.
Pensions
The City is involved in four different self-funded pension arrangements, all of which are closed to
new participants.
• The Old Hire Police Pension Fund has been closed and has 166 total members. The plan is 81
percent funded as of January 1, 2012. GFOA Best Practices call for 100 percent funding of pen-
sion liabilities.22 The plan has an unfunded liability of $16.1 million, which translates into an
annual actuarial required contribution (ARC) of $1.5 million for 2013, up from $1.4 million in
2012.
• The New Hire Pension Plan – Police Component has 650 members and a funded ratio of 80.2
percent. The plan has an unfunded liability of $48.8 million, which translates into an annual
ARC of $10.6 million for 2013, up from $9.6 million in 2012.
• The Old Hire Fire Pension Fund has 193 members and is 84.1 percent funded. The plan has an
unfunded liability of $15.5 million, which translates into an annual ARC of $1.5 million for 2013,
which is about the same as 2012.
• The New Hire Pension Plan – Fire Component has 286 members and is 79.2 percent funded.
The plan has an unfunded liability of $25.9 million, which translates into an annual ARC of $4.7
million for 2013, which is down from $ 5.2 million in 2012.
The City also participates in two statewide plans. The Colorado Public Employees Retirement Associ-
ation for is for civilian employees. As of December 31, 2011, the PERA Local Government Division’s
funded ratio was 69.3 percent, with an unfunded liability of $1.277 billion. Of course, this underfund-
ing could have some impact on the City in the form of increased contribution rates in the future. The
Fire and Police Pension Association of Colorado provides a defined benefit plan for sworn officers. It
is funded at over 100 percent as of January 1, 2011.
19
Another issue common to all pension funds is the assumed rate of return on pension fund assets.
Pension funds often assume return rates of around 7 to 8 percent annually. The recent performance
of investment markets has led some to question the return assumptions the Colorado Public Em-
ployees Retirement Association uses. If circumstances were to require the association to lower its re-
turn assumptions, then member governments would have to increase contributions to make up the
difference.23
Assuming that the City keeps up with its ARC payments, the unfunded accrued liabilities should, in
theory,24 be covered by the end of the amortization period (which can vary with the plan, but typi-
cally is between 20 and 30 years). Keeping up with the ARC payments is a matter of City budgetary
policy, and not really an issue that should be addressed through using reserves. However, given the
uncertainty around pension issues, it is difficult to say when increases would occur or how much
they might be. Accordingly, it would be prudent to hold some reserve to help make a more gradual
adjustment to any potential large increases in contribution rates. The City currently pays about $10.5
million in annual contributions to the Colorado Public Employees Retirement Association and about
$14.5 million to the other pensions, for total of about $25 million. A reserve of $6.25 million would
cover a 25 percent increase in pension costs. Of course, an increase in the City’s contribution would
be felt over many years, but the reserve will allow the City to make a gradual adjustment or to more
easily absorb a larger increase in contributions in one year.
The City has considered different actions to mitigate its pension liabilities, including increasing the
contributions required from employees and switching to a defined contribution pension plan. It has
also shifted away from a single-employer plan to the state plan for the most newly hired sworn offi-
cers, which should be less volatile and help mitigate risk.
Other Post-Employment Benefits (OPEB)
The City allows retired sworn police officers to stay on a City-sponsored medical plan. The cost of
this benefit is paid for by the City as it is incurred. The City’s annual required contribution for OPEB
is $2.2 million and there is a net obligation of $11.2 million. The City has taken steps to contain its
OPEB liability, such as eliminating the City-provided subsidy for retiree health care for new hires and
going to a flat (instead of variable) subsidy for existing employees. Hence, similar to pensions, the
City will likely not experience near-term, large expenditure spikes or a drastic decrease in the City’s
financial flexibility owing to OPEB liabilities. Also, like pensions, the financial pressure created by
OPEB liabilities is best addressed through the budget process, not general fund reserves.
EXPENDITURE VOLATILITY
This risk factor refers to potential spikes in expenditure, usually arising from a special, non-recurring
circumstance. Expenditures of a recurring nature should not be addressed through the use of re-
serves, since reserves do not represent a sustainable source of funding for recurring expenditures.
Rather, recurring expenditures should be accommodated in the operating budget.
In Colorado Springs, lawsuits appear to be the most important potential source of expenditure
spikes, especially because the City’s risk management funds do not carry a large amount of reserves
themselves, requiring the general fund to backstop them.
Discussions with the City’s attorney and risk management professional reveal the following:
• The City faces a number of litigation cases each year. The average potential liability tends to be
pretty consistent from year to year. The City normally budgets between $600,000 and $800,000
each year for claims, which generally has proven sufficient. In more recent years, the number of
litigation cases has risen somewhat, but this does not appear to be a significant trend.
20
• The City is a facing a couple of extraordinary special cases. Due to the sensitivity of the cases,
they will not be discussed in detail in this report, but there is a significant degree of uncer-
tainty around the amount the City could be liable for and if the City will be liable for anything
at all. Hypothetically, the liability could represent tens of millions of dollars, but the City At-
torney believes that an amount of between $2 million and $4 million is a more realistic esti-
mate of the City’s potential risk. Also, under certain circumstances the City could negotiate a
multi-year payment schedule for a large liability.
• In the State of Colorado, certain forms of cancer have been designated as work-related injuries
for firefighters. Hence, the City’s worker’s compensation fund will face an increased liability,
which will, in part, be covered by the general fund (since the general fund is one of the con-
tributing funds to the worker’s compensation fund). This would not create an expenditure
spike, but rather would manifest as an increased annual contribution (probably not to exceed
$1 million to $2 million per year). Accordingly, this change to the City’ recurring expenditure
structure should be handled through the City’s budget process.
In conclusion, it would seem prudent for the City to account for at least some of the risk associated
with the extraordinary lawsuits in its reserves. The final section of this report will address how this
risk fits in with the City’s total reserve goals.
GROWTH OF THE COMMUNITY
Rapid growth of the community could call for larger levels of reserves, lest service requirements ex-
pand beyond the City’s ability to continue services in the face of revenue interruption. For instance,
property tax revenues may not be received until a couple of years after development occurs, yet the
government will still need to provide for the public safety, health, and welfare of these members of
the community in the meantime. Colorado Springs is a moderate growth community in a higher
growth region. The City averages 1.5 percent growth in a region that grows 2 percent annually. The
City does not rely heavily on property taxes, so is not heavily impacted by a lag between when serv-
ices are required by a new development and when revenues are received. Also, the City requires de-
velopers to build much of the infrastructure associated with development (roads, parks, etc.), so it
does not have to cover that expense. In conclusion, the fact that Colorado Springs is only expecting
moderate growth in the next few years and that its development financing approach does not require
City resources for large capital outlays means that the implications of growth for the City’s reserves
are minimal.
LIQUIDITY
A larger amount of unreserved fund balance may be needed to avoid cash flow problems if the aver-
age maturity of receivables significantly exceeds the average maturity of payables. A common exam-
ple of this can be found in governments that are heavily reliant on property taxes. The bulk of taxes
may only be received at one or two times during the year, requiring reserves to bridge the months
with lower receipts. As stated, Colorado Springs is not very reliant on property taxes at all. In fact, its
revenue tends to come in fairly evenly over the year. Exhibit 3.2 (on the following page) shows the
projected monthly balances for 2012. As the chart shows, the City’s ending balance actually moves
steady upwards for almost the entire year, eventually dropping near the end (due to bond repay-
ments), but still ending up higher than it started. Hence, the City does not appear to have a liquidity
problem that requires reserves to cover the gap.
21
The City’s ending balances rise steadily throughout most of the year.
Exhibit 3.2
The City’s Projected Monthly Ending Balances for 2012
140,000,000
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
Ja
n
-
1
2
Fe
b
-
1
2
Ma
r
-
1
2
Ap
r
-
1
2
Ma
y
-
1
2
Ju
n
-
1
2
Ju
l
-
1
2
Au
g
-
1
2
Se
p
-
1
2
Oc
t
-
1
2
No
v
-
1
2
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c
-
1
2
22
4. Recommendations
This section provides GFOA’s recommendations to Colorado Springs, based on the analysis pre-
sented in this paper. The first sub-section addresses the primary purpose of this report: to recom-
mend a reserve target for Colorado Springs. The second sub-section provides other ideas related to
reserve management strategy that Colorado Springs might find helpful, based on GFOA’s experience
with best practices in public finance.
RECOMMENDED RESERVE TARGET FOR COLORADO SPRINGS
This section establishes the recommended reserve target for Colorado Springs. As a first step, the re-
port will review the essential findings of the analysis for each risk factor. Next, the report will provide
some helpful comparative information, such as the reserve levels maintained by other cities as well
as rating agency standards. Finally, all of this information will be synthesized to reach a reserve tar-
get.
Comparative Reserve Information
When considering a reserve target it is helpful to consult outside standards. Two widely cited stan-
dards are GFOA’s Best Practices and rating agency guidelines. The GFOA Best Practice recommends,
at a minimum, that general-purpose governments, regardless of size, maintain unrestricted fund
balance in their general fund of no less than two months (16 percent) of regular general fund operat-
ing revenues or regular general fund operating expenditures.25 Standard & Poor’s considers reserves
of between 1 percent and 4 percent of revenues to be “adequate,” while reserves above 15 percent are
“very strong.”26
It is also useful to consider the experiences of other governments. Exhibit 4.1 compares Colorado
Springs’ unrestricted fund balances as a percent of general fund revenues to the same cities that ap-
peared in the debt comparison (Exhibit 3.1). “Unrestricted fund balance” is usually used to describe
the portion of fund balance that is available to serve as a reserve for the types of risk mitigation pur-
poses that were described in this report (i.e., respond to extreme events, protect against revenue
downturns, etc.). This is because unrestricted fund balance is the portion of fund balance that does
not have restrictions placed on its use by outside authorities.
23
As Exhibit 4.1 shows, the typical unrestricted fund balance falls somewhere in between 20 percent
and 25 percent of general fund revenues. Most of the cities in the analysis were closer to 20 percent,
but two outliers (Indianapolis and Centennial) pulled up the average.
The average level of unrestricted fund balance (i.e., reserves) falls between 20 percent and 25 percent
for the comparable group. Colorado Springs falls within this range right now. The outliers in the
comparable group (Indianapolis and Centennial) have special circumstances.
Indianapolis had a very large amount of “committed” fund balance, which is a subcategory of “unre-
stricted” fund balance. “Committed” fund balance is considered to be the most constrained of three
subcategories of unrestricted fund balance because the City’s management has committed those re-
serves for a very specific purpose (the other two subcategories are “assigned” and “unassigned”).
While it is impossible to say from Indianapolis’s public reports, it could be that this unusually large
amount has been accumulated to pay for a special project of some kind or is otherwise not intended
as a hedge against risk. In fact, if this amount is removed, Indianapolis’s reserve drops to 22 percent –
much more consistent with the other cities. None of the other cities had nearly as large an amount,
by any measure, of committed reserves. For example, 61 percent of Indianapolis’s reserves are com-
mitted, while Colorado Springs only has about 3 percent in this category and Denver has about 8 per-
cent, making Denver’s fund balances the most highly committed after Indianapolis.
As for Centennial, about 75 percent of Centennial’s reserves are in the “unassigned” subcategory (the
least constrained of the three), which suggests that Centennial has simply accumulated a much
higher relative level of reserves than the other governments in Exhibit 4.1. Interestingly, Centennial
also has, by far, the lowest debt burden of any of the cities (see Exhibit 3.1). This high reserve, cou-
pled with an extremely low debt burden suggests that Centennial has a significantly different eco-
nomic base than the other cities. For example, the median household income in Centennial is
$85,500, compared to $51,000 in Colorado Springs and $55,400 in the State of Colorado. The median
home value in Centennial is $260,000, compared to $182,000 in Colorado Springs and $205,000 in the
State of Colorado.27 In 2010, the unemployment rate in Centennial was 4.8 percent, compared to 9.4
percent in Colorado Springs. Although neither municipality relies very heavily on property taxes, it is
interesting to note that the total assessed value of properties in Centennial is 34 percent greater on a
per person basis than in Colorado Springs. Finally, Centennial’s general fund revenues are, on a per
capita basis, 20 percent greater than those of Colorado Springs, even though Centennial appears to
Exhibit 4.1
Unrestricted Fund Balance Comparison
“Best in Class Cities”
Colorado Fort Collins Oklahoma Denver Indianapolis Charlotte
Springs City
Unrestricted Fund Balance
as a % of Revenues 22.6% 23.1% 12.7% 18.3% 56.9% 17.3%
Sales Tax Comparables Summary Statistics
Colorado Lone Tree Centennial Average Median
Springs
Unrestricted Fund Balance
as a% of Revenues 22.6% 29.6% 52.9% 25.2% 20.5%
The average level of unrestricted fund balance (i.e., reserves) falls between 20 percent and 25 percent for the comparable
group. Colorado Springs falls within this range right now. The outliers in the comparable group (Indianapolis and Centennial)
have special circumstances.
24
provide a more limited set of services to its citizens (for example, Centennial is served by a separate
fire protection district and recreation district, while Colorado Springs provides these service di-
rectly). These distinctive characteristics have likely made it more practical for Centennial to accumu-
late a sizable reserve.
Putting it All Together: The Reserve Recommendation
In order to reach the final recommendation for a reserve target for Colorado Springs, let’s first review
the individual analysis results from each of the risk factors.
Primary Risk Factor – Revenue (Sales Tax) Volatility. While the sales tax does show some volatility, this
is due almost entirely to economic cycles and seasonal effects (as opposed to random variation).
Therefore, the most important vulnerability the City has with respect to sales taxes is an economic
downturn. A review of past economic downturns leads us to believe that the City should prepare for
a potential 20 percent decline in sales tax revenues over 25 months as a plausible “worst case sce-
nario” (this amounts to about $23 million in reduced revenue). However, the City would presumably
reduce its spending in the event of such a severe downturn, such that a reserve to cover the entire
amount of the revenue decline would not be necessary. The City budget office estimates that the
budget could be reduced by just under $10 million without creating a major disruption to services
(though service quality would be negatively affected to some degree, of course). This means the City
should maintain a reserve of at least $13 million to fill the remaining portion of the revenue gap and
to help the City make a “soft landing” in the case of a major revenue decline.
The City’s other revenue sources are fairly stable as a group, but as a prudent measure the GFOA has
recommended establishing some reserves to account for volatility. These reserves added up to $7.3
million.
Primary Risk Factor – Infrastructure. General fund reserves may be needed to repair or replace an asset
that fails unexpectedly. In Colorado Springs, the two asset classes that were deemed to be of the
greatest importance are bridges and storm sewers.
Thirteen bridge structures have been identified as having a high risk rating. These bridges have an
estimated replacement value of $22,752,672, an average of about $1.75 million per bridge. A reserve
that covers one or two bridges should be adequate; it might be more prudent, however, to use the
“Triple-A” rule of doubling our expectation for uncertainty and prepare for the premature failure of
three of these bridges. This equates to a $5.25 million reserve.
The City manages 406 miles of storm lines. Installation dates and condition assessments were un-
available for any storm lines. The estimated replacement cost for all storm sewers is $588,052,836.28
Since the information necessary to assess risk of failure is not available, the best that can be done is
to make an assumption. We do know that about 10 percent of the total dollar value of the City’s
bridge inventory is in the higher risk category, so it may be reasonable to start with that number for
storm sewers, which would translate to $58 million. We also know that about 20 percent high risk
category of bridges was recommended as a reserve amount, which would equate to $11.6 million.
Primary Risk Factor – Vulnerability to Extreme Events. Although the City is subject to extreme events
that pose a significant threat to life and property, historical experience has demonstrated that the fi-
nancial impacts of these events have been manageable. For example, the most recent fire was the
worst in Colorado history, but the total cost to the City was only $3.75 million (the City’s annual
budget is about $220 million). Taking into account the uncertainty associated with the scale of future
extreme events as well, as well as the timing of FEMA reimbursement and the portion of event re-
sponse costs that are likely going to be already covered by existing budgeted resources a reserve for
extreme events of $5 million seems reasonable, but an argument for a reserve of up to $7.5 million
could also be made.
25
Secondary Risk Factor – Leverage. The City has very little debt, so the City’s reserve strategy does not
need to account for reduced financial flexibility from debt.
The City has some financial pressure from pension obligations. It participates in a number of plans,
none of which is 100 percent funded. The Colorado Public Employees Retirement Association is a
particular concern for City officials because it has a low funding ratio and its assumptions around the
return on plan assets have been publicly questioned for being too high. Both of these factors mean
that the Association may require significantly increased contributions from its member govern-
ments.
Assuming that the City keeps up with its annual pension payments, the unfunded accrued liabilities
should, in theory, be covered by the end of the amortization period (which can vary with the plan,
but typically is between 20 and 30 years). Keeping up with the ARC payments is a matter of City
budgetary policy, and not really an issue that should be addressed through using reserves. However,
given the uncertainty around pension issues, it is difficult to say when increases would occur or how
much they might be. Accordingly, it would be prudent to hold some reserve to help make a more
gradual adjustment to any potential large increases in contribution rates. The City currently pays
about $10.5 million in annual contributions to the Colorado Public Employees Retirement Associa-
tion and about $14.5 million to the other pensions, for total of about $25 million. A reserve of $6.25
million would cover a 25 percent increase in pension costs. Of course, an increase in the City’s contri-
bution will be felt over many years, but the reserve will allow the City to make a gradual adjustment
or to more easily absorb a larger increase in contributions in one year.
Secondary Risk Factor – Expenditure Volatility. The City is facing a few large lawsuits that could entail
significant settlement costs if judgment goes against the City. The City attorney believes that $2 mil-
lion to $4 million is a reasonable range to prepare for.
Secondary Risk Factor – Liquidity/Cash Flow. The City faces no important liquidity or cash flow prob-
lems that create a shortage of working capital.
Secondary Risk Factor – Growth of the Community. The fact that Colorado Springs is only expecting
moderate growth in the next few years and that its development financing approach does not require
City resources for large capital outlays means that the implications of growth for the City’s reserves
are minimal.
In summary, the components of a recommended reserve are:
• $13 million for sales tax economic uncertainty
• $7.5 million for economic uncertainty in other revenues
• $6.25 million for pension payment uncertainty
• $5.25 million for critical bridge failure and $11.6 million critical storm sewer replacement, for a
total of $16.85 million
• $5 million to $7.5 million for extreme events
• $2 million to $4 million for expenditure spikes from law suits
Many cities express their reserve policy target as single number (e.g., 16 percent of revenues). How-
ever, the GFOA has found that leading municipalities often find it helpful to segment their reserves
into different categories because this makes the purpose of the reserve more transparent. For exam-
ple, a reserve for “emergencies” and a reserve for “economic uncertainty” would provide more clarity
on the purpose of the reserves than one all-encompassing reserve. The first three bullets above could
comprise the budgetary uncertainty reserve, while the last three would form the emergency reserve,
26
leading to the following targets (which have been rounded to the nearest whole numbers for ease of
use in policymaking):29
Budgetary Uncertainty Reserve
$13 million for sales tax economic uncertainty +
$7.5 million for economic uncertainty in other revenues +
$6.25 million for pension payment uncertainty =
$27 million or about 12.5% of general fund revenues30 as budgetary uncertainty reserve
Emergency Reserve
$5.25 million for critical bridge failure and $11.6 million critical storm sewer replacement, for a
total of $16.85 million +
$5-7.5 million for extreme events +
$2-4 million for expenditure spikes from lawsuits =
$27 million or about 12.5% of general fund revenues as an emergency reserve
This provides a target of about 25 percent of general fund revenues, which is also in line with the
range of reserves maintained by cities comparable to Colorado Springs and is above what the GFOA
considers to be the minimum baseline level that a government should maintain (16 percent).31 These
reserves would be considered part of the “unrestricted” portion of the City’s fund balance.32
OTHER IDEAS TO SUPPORT THE GENERAL FUND RESERVE STRATEGY
This section presents other ideas that Colorado Springs may wish to consider, relative to its reserve
strategy. These ideas include: enhanced sales tax monitoring, a user fee cost recovery policy, a
volatile revenue policy, a short-term borrowing policy, and a grants policy.
Sales Tax Monitoring
Because a potential decline in sales tax revenue is the major driver for the City’s need to retain re-
serves, it might consider additional methods to monitor the potential direction of its sales tax rev-
enue. The City already employs some fairly sophisticated long-range forecasting methods. It should
continue to refine these practices, and continue looking for leading indicators of sales tax perform-
ance. However, the GFOA did not conduct an in-depth examination of the City’s long-range forecast-
ing methods, so this report will focus on how some of the techniques presented in this paper might
be helpful going forward.
First, the City might monitor a 12-month, centered moving average, updating it each month. As Ex-
hibit 2.3 demonstrated, the 12-month moving average reveals long-term trends that are not as readily
apparent from monthly data, especially when month-to-month fluctuations are so dramatic (even if
the fluctuations are rather predictable). If the moving average starts to turn down, it could indicate a
real trend. Of course, the problem with this approach is that a moving average will always be five to
six months behind, since the analysis must wait for the historical data to become available. A more
immediately useful technique would be to compare monthly fluctuations to the average. If a month
that is normally a high-yield month does not come in as strong as expected or if a month with nor-
mally low yield is particularly bad, it could portend trouble. Exhibit 4.2 (on the following page)
shows how the months of the year compare to both the 12-month moving average and to the month
before it (e.g., how January compared to December, etc.). The month-to-month numbers are often
larger because revenues sometimes go from peak to valley and vice versa very quickly. The month-to-
month numbers will also be easier to use, because they don’t rely on the availability of moving aver-
age data.
27
User Fee Cost Recovery Policy
User fees represent about 6 percent of all general fund revenue. User fees are an increasingly popular
way to fund municipal services because they assign the cost of the service directly to the customer, as
opposed to the general taxpayer. The City could strengthen its user fee base by adopting an official
policy on the extent to which it will seek to recover the costs of providing services through a user fee.
A user fee cost recovery policy could be very detailed – setting precise targets for the percent of cost
to recover for different types of services.33 However, most governments take an approach that allows
for more discretion, where the policy establishes full recovery as the goal for user fees, but recognizes
that there will be occasional exceptions. This policy from Minneapolis, Minnesota, illustrates:
The city shall establish user charges and fees at a level that reflects the service costs… Full cost
charges shall be imposed unless it is determined that policy, legal, or market factors require lower fees.
This policy approach will require that it be decided, on a case-by-case basis, where subsidization of a
service with general tax dollars is appropriate.
User fees can be a complex and, sometimes, controversial revenue source. It may be helpful to estab-
lish a policy that describes the fundamental goals of user fees and a mechanism for regular fee re-
view. The GFOA has made available considerable detailed information on fee policies.34
Volatile Revenue Policy
As we have seen, the sales tax can be strongly influenced by the state of the economy. Just as an eco-
nomic downturn can depress sales taxes, a buoyant economy can lead to a rapid increase. This pres-
ents a financial risk if these new revenues are used to fund recurring expenditures (e.g., new
on-going programs and their associated personnel) and if these new revenues stem from an unsus-
tainable level of consumer spending. A volatile revenue policy encourages a government to examine
its past revenue trends to determine when it may next experience an anomalously high level of rev-
enue income, and then to apply this revenue toward non-recurring uses, such as paying off debt,
building up a reserve, or special projects that will reduce future operating costs.
Exhibit 4.2
Average Monthly Variations in Sales Tax Revenue
Average % Difference Average % of the
from Previous Month 12-Month Moving Average
January 35.7% 125.0%
February -33.8% 82.5%
March 3.1% 84.4%
April 22.1% 103.1%
May -10.9% 91.4%
June 7.8% 98.5%
July 15.2% 113.0%
August -8.2% 102.5%
September -0.3% 102.2%
October 5.6% 107.4%
November -8.0% 95.4%
December -4.5% 92.4%
28
The policy for the City and County of Denver, Colorado, illustrates this type of policy:
It is not prudent to allocate sales tax revenue that exceeds the normal growth rate (defined as the aver‐
age annual growth rate over the last ten years) to ongoing programs. Therefore, sales tax revenues
that exceed the normal growth rate should be used for one‐time expenditures or to increase reserves
for the inevitable economic downturns.
Short-term Borrowing Policy
As Exhibit 3.1 showed, the City has a very low level of debt. Debt can be a source of financial flexibil-
ity, thereby mitigating the need to hold reserves. Short-term debt could be useful if the City finds it-
self with the need for a temporary cash infusion (to deal with an unexpected situation). However,
short-term borrowing from external sources is usually considered undesirable due to, among other
things, the administrative costs of arranging the deal. Accordingly, a policy usually places limits on
short-term external borrowing. For example, a policy might specify that short-term instruments be
used only if the transaction costs plus interest of the short-term debt are less than the cost of inter-
nal financing and if available cash is insufficient to meet working capital requirements. A policy
could also state that short-term debt issued for operating purposes will be limited to cases where
there is reasonable certainty that a known revenue source will be received in the current fiscal year
sufficient to repay the debt, or where there is a clear financial emergency.
For many governments, interfund borrowing is preferred to external borrowing. For example, the
City’s utility may make a loan to the general fund or vice versa. This is another way to increase finan-
cial flexibility, beyond that provided by reserves. A policy for interfund loans is useful because, if not
carefully managed, the loans can become a cross-fund subsidization, which could lead to one group
of taxpayers or ratepayers subsidizing another group. A policy can establish terms and guidelines to
help avoid overly burdensome loans. The following are suggested elements for an internal loan pol-
icy:
Definition of a Loan vs. a Transfer. A policy should differentiate a loan from a transfer since the impli-
cations of each are different. Essentially, the difference is that operating transfers move financial re-
sources from one fund to another, permanently, while interfund borrowings are usually made for
temporary cash flow reasons and are not intended to result in a transfer of financial resources by the
end of the fiscal year.
Criteria for Making Loans. Just as a private lender would apply criteria to a potential borrower, a policy
should describe the general conditions under which an internal loan is permissible. A policy should
describe these conditions and designate the appropriate authority responsible for authorizing the
loan. Here are some examples of such conditions:
• The lending fund has funds available.
• The borrowing will not adversely impact the lending fund’s long-term financial condition.
• A specific source of repayment has been identified in the borrowing fund.
• The loan can be repaid within a specified period of time.
• Any legal requirements/restrictions are satisfied.
Interest Rates and Terms. A policy should also provide guidelines on terms and interest rates. Typi-
cally, interest rates would match prevailing rates, with the exact rate set by the finance office. For
long-term loans, a repayment schedule must be set, but the loan should typically be fully amortized,
preferably on a level or accelerated repayment schedule.
29
Grants Policy
Grants are an attractive form of funding for many local governments because they offer the possibil-
ity to reduce reliance on taxes and fees drawn from the community. On the other hand, grants can
harm the government’s long-term financial position if they lead to implementation of an ongoing
program that later requires support from general tax dollars when the grant expires. Further, many
grants require matching funds and overhead costs that might end up diverting funds from higher-
priority services. A policy can encourage grant-seeking, but should also recognize the risks of overre-
liance on grants and direct the organization to manage those risks. The policy from the City of Long
Beach, California, instructs staff to analyze the long-term costs and benefits of a grant before accept-
ing it:
City staff will seek out, apply for, and effectively administer federal, state, and other grants that ad‐
dress the city’s priorities and policy objectives and provide a positive benefit to the city. Before any
grant above $50,000 is pursued, staff shall provide a detailed pro‐forma to the city manager that ad‐
dresses the immediate and long‐term costs and benefits to the city. A pro‐forma must be submitted to
the city manager for all grants prior to accepting the grant award.
A policy should direct that any grants pursued are consistent with the government’s mission and
strategic priorities. Spotsylvania County’s policy states that “before applying for and accepting inter-
governmental aid, the county will assess the merits of a particular program as if it were funded with
local tax dollars.”
After the grant has been accepted, a policy should address the possibility that the grant will end,
leaving the government to decide whether to continue the program. Spotsylvania County’s policy
reads that “local tax dollars will not be used to make up for losses of intergovernmental aid without
first reviewing the program and its merits as a budgetary increment.”
Infrastructure Maintenance/Replacement Schedule
Rather than reserving funds to guard against the failure of worn assets, the City should develop a
plan and schedule to maintain and replace assets, as needed. Exhibit 4.3 (on the following page)
shows what yearly capital expenditures would be to keep up with bridge and culvert replacements.
Obviously, the pattern is quite volatile. The City might consider translating this into a regular sched-
ule, with a set annual contribution to funding that schedule. The GFOA estimates that a $10.9 mil-
lion approximate annual contribution would be necessary to fund the schedule. Not only would this
reduce the amount the City would have to hold in reserve (since assets would not deteriorate to criti-
cal condition), but it would greatly reduce the actual risk the City faces.
30
For storm sewers, the average annual contribution for a regular maintenance/replacement schedule would be about
$36 million, though this is a less precise figure because the underlying information on asset condition is not as detailed.
Exhibit 4.3:
Estimate of Annual Bridge and Culvert Replacement Costs
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
2013 2015 2017 2019 2021 2023 2025 2027 2029 2031
2032 2034 2036 2038 2040 2042 2044 2046 2048 2050
2033 2035 2037 2039 2041 2043 2045 2047 2049
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
Failure Cost
31
Appendix 1. Sales Tax Revenues in Boulder, Colorado
In order to provide a little better comparative context for examining Colorado Springs’ sales tax, the
GFOA requested permission from the City of Boulder to use its monthly sales tax data in a similar
analysis to Colorado Springs.’ Exhibit A1.1 shows Boulder’s revenues since June 2004. Like Colorado
Springs, Boulder has four “spikes” during the year, with a holiday spike being the largest. Boulder’s
sales tax revenue is a little more volatile, with about 4 percent of the variation attributable to random
factors.
Boulder also experienced a protracted decline in its trend-cycle in the wake of the Great Recession –
a 10 percent drop over 21 months. This is just under half a percent per month, not too different from
Colorado Springs.
Exhibit A1
Monthly Sales Tax Revenue from the City of Boulder, Colorado
32
1 The Triple-A approach is adapted from: Spyros Makridakis, Robin Hogarth, and Anil
Gaba. Dance with Chance: Making Luck Work for You (Oneworld Publications: Oxford, Eng-
land, 2009).
2 Drainage basins, open drainage features, discharge points, and point features are not in-
cluded in the replacement cost. Adding these items would likely push it to more than $1 bil-
lion.
3 Targets have been rounded to nearest “whole” numbers for ease of use in policymaking.
Also, see the main body of the report for a discussion of the independence of the risk factors
and the implication for sizing the reserve.
4 Based on the 2012 budget estimate of approximately $220 million in general fund revenue.
5 See the GFOA best practice, Appropriate Level of Unrestricted Fund Balance in the Gen-
eral Fund, available at www.gfoa.org. According to this best practice document, governments
should establish a formal policy of maintaining reserves equal to about 16 percent of rev-
enues or expenditures, and the actual target should be based on an analysis of the salient
risks the government faces – which in many cases calls for a reserve level of more than 16
percent.
6 TABOR, for example, limits the City’s ability to increase taxes.
7 GFOA Best Practice, “Appropriate Level of Unrestricted Fund Balance in the General
Fund” (2009).
8 Definition of risk taken from Douglas W. Hubbard, The Failure of Risk Management: Why
It’s Broken and How to Fix It (Hoboken, New Jersey: John Wiley and Sons, Inc., 2009).
9 The risk factors and basic review method were developed and published in: Shayne C.
Kavanagh, Financial Policies (Chicago: Government Finance Officers Association, 2012).
10 The use tax is much smaller than the sales tax – comprising only around 5 percent of the
total of the two.
11 This is City general fund only and excludes other sales tax revenues, such as the 2002
public safety sales tax (which is accounted for outside of the general fund, in a special rev-
enue fund).
12 The GFOA used a method of data de-seasonalization known as multiplicative decomposi-
tion to arrive at this conclusion.
13 The trend-cycle line is calculated by taking a 12-month centered moving average of ac-
tual monthly sales tax revenue. For example, the moving average for January 2005 would be
Endnotes
33
an average of August 2004 through July 2005. February 2005 would be an average of Septem-
ber 2004 through August 2005, and so on. A 12-month moving average smooths out seasonal
variation, leaving only the trend-cycle.
14 The term “Black Swan” derives from a belief held in England before 1697 that all swans
were white – in fact, the term “Black Swan” was a common metaphor for an impossibility.
Black swans were discovered in Australia in 1697, demonstrating the limits of human knowl-
edge about the world.
15 See Makridakis, Hogarth, and Gaba, Dance with Chance, 2009.
16 Of course, the long-term impacts of those actions are still unknown.
17 According to the Case-Shiller Housing Index, home prices nationally since 2009 have var-
ied in a range consistent with housing values in 2003. As of this writing, values have experi-
enced increases for six consecutive months.
18 According to David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones In-
dices (which includes the Case-Shiller Housing Index), “the housing market seems to be stabi-
lizing, but we are definitely in a wait-and-see mode for the next few months.”
19 Based on sales prices from Zillow.com.
20 Note that further analysis could be conducted with City staff to refine asset replacement
costs, as well as reviewing the risk rating to incorporate more factors into the consequence
(i.e., traffic count, location, major structure, etc.).
21 Drainage basins, open drainage features, discharge points, and point features are not in-
cluded in the replacement cost, which would likely push it over $1 billion.
22 See GFOA Best Practice, “Sustainable Funding Practices of Defined Benefit Pension
Plans” (2009), www.gfoa.org. An 80 percent funded ratio is often cited as an acceptable fund-
ing benchmark, but this figure does not have a sound actuarial basis. See, for example, Gi-
rard Miller, “Pension Puffery,” www.governing.com. Miller does state that an 80 percent
funding ratio might be acceptable at the bottom of an investment market because the funded
ratio will presumably rise with the market. Conversely, though, the funded ratio should be
above 100 percent at the top of a market to protect against a fall.
23 On top of this, the City is leasing its hospital system, so the employees will no longer be
contributing to the Colorado Public Employees Retirement Association, which adds further un-
certainty to the City’s future pension position.
24 Even if all ARC payments are made, an employer could still end up with an unfunded lia-
bility at the end of the amortization period if the actuarial assumptions used to calculate the
ARC do not hold up (e.g., the rate of return on plan investments).
25 GFOA Best Practice, “Appropriate Level of Unrestricted Fund Balance in the General
Fund” (2009), www.gfoa.org.
26 David G. Hitchcock, Karl Jacob, and James Wiemken, Key General Obligation Ratio
Credit Ranges – Analysis vs. Reality (New York: Standard & Poor’s, 2008).
27 Based on values from Zillow.com.
28 Drainage basins, open drainage features, discharge points, and point features are not in-
cluded in the replacement cost, which would likely push it over $1 billion.
29 Note that many of the risks listed in the table can be considered “independent,” meaning
that the occurrence of one risk has little to do with the potential occurrence of another risk. For
example, the occurrence of an extreme event has little or nothing to do with whether the City
34
also experiences an increase in its pension payments. In these cases, there could be a justifi-
cation for holding less reserves than the total of the two numbers because it is rather unlikely
that the City will experience both of these problems at once. However, other risks are not in-
dependent. For example, an economic downturn that causes a reduction in sales tax revenue
would likely also impact other revenues, a natural disaster could make the City more likely to
experience a critical infrastructure failure, or a natural disaster could result in interruption to
sales tax revenue. Because the risk factors appear to have at least some level of significant
inter-dependency (a level which is difficult to know), the approach of adding the reserve com-
ponents together represents a conservative approach to sizing reserves for Colorado Springs.
This approach would leave the City without any exposure to risk arising from risk factor de-
pendency. Note that zero exposure to risk also means that the City will hold more reserves
that it will probably need at any one time.
30 Based on about $220 million general fund revenue, as per 2012 budget estimates.
31 See GFOA Best Practice, “Appropriate Level of Unrestricted Fund Balance in the General
Fund” (2009), www.gfoa.org. The Best Practice states that reserves equal to about 16 percent
of revenues or expenditures is the minimum a government should consider for its policy and
that the actual target that a government adopts should be based on an analysis of the salient
risks that a government faces (which in many cases may call for a higher reserve level than
16 percent).
32 Within the “unrestricted” portion of fund balance, the City could choose to locate the re-
serves within the “unassigned” or “committed” categories. Municipal governments typically
choose the unassigned category because the accounting requirements to place funds in the
committed category are more stringent (e.g., the commitment must be made by formal action
of the City Council and the language describing the conditions for using the reserves must
meet a high level of precision).
33 See for example, the policy of the City of San Luis Obispo, California, which is available
on the GFOA website at www.gfoa.org/finanicalpolicies.
34 See Kavanagh, Financial Policies, 2009.
BY KEVIN KNUTSON
Getting Past the Quick Fix
On the ROad tO Financial Resiliency
October 2012 | Government Finance Review 33
T he fiscal imbalance between revenues and commit-
ments is growing as the impact of falling property
values, high unemployment, and weak consumer con-
fidence erodes local taxes. In addition, pressure from fed-
eral and state budget-reduction strategies also affects local
revenues and expenditures. Projected decreases in revenue
for 2012 represent the sixth straight year-to-year decline.
Many organizations addressed this fundamental shift with
strategies designed to address short-term declines, but some
of the things agencies normally do to weather typical
downturns—deferring maintenance, reducing funding for
liabilities, and spending reserves—have made a recovery
even more difficult.
Deferring maintenance and investments in infrastructure
increases future costs while creating a higher risk for potential
failure of critical transportation and utility systems. According
to the Congressional Budget Office,
75 percent of U.S. infrastructure
spending comes from state and local
government.
And while the dire prediction of
massive municipal defaults was over-
stated, pledged revenues are failing
to cover some revenue bonds and
debt service is taking up an increasing
percentage of overall expenditures
for many local governments. Existing
debt loads will remain a major prob-
lem in balancing budgets, contributing to the need for
fundamental change.
Achieving financial sustainability will require organiza-
tions to go beyond short-term strategies, to begin rebuild-
ing capital programs, funding liabilities, and replenishing
reserves. Other external impediments, such as compliance,
collective bargaining, and the undercurrent of anti-tax and
anti-government sentiment will make it even more difficult to
solve these problems.
As William Eggers, Robert Campbell, and Joel Bellman
have pointed out in “Red Ink Rising: Navigating the Perils of
Public Debt,” addressing all these issues simultaneously “will
be a challenge to the entire democratic governance model,
requiring systemic, structural changes to bend the govern-
ment’s cost curve down as well as courage and persistence
on the part of political leaders and citizens.”1
FIRST, STABIlITY
Many organizations are still struggling to fix budgetary
structural imbalances, trying to establish affordable service
levels they can fund over the long term. (Tools such as
the GFOA’s Fiscal First Aid site, at www.gfoa.org, help by
identifying ways of addressing problems and stabilizing
finances.) Even so, almost all jurisdictions have made some
progress toward financial recovery — recognizing the scope
of the problem and taking immediate action, using generic
retrenchment strategies. As part of the initial diagnosis, most
governments now have a fairly good grasp on their financial
positions, liabilities, and debt. This is a good first step, but far
from a solution.
Unfortunately, many governments
have adopted “quick fixes” such as
across-the-board operating and wage
reductions, deferred maintenance,
decreased annual required contribu-
tions to pension plans, hiring freezes,
elimination of discretionary spending,
and use of fund balances to bridge
funding gaps. What many have failed
to do is to protect reserves and infra-
structure, which should be a top prior-
ity if the goal is achieving stability.
Some of the strategies available must be approached with
caution and analyzed carefully before use to ensure that
they don’t create unintended consequences. For example,
selling off unneeded real estate assets can replenish fund
balance reserves and return exempt property to tax rolls, but
on the other hand, using the sales proceeds to fund ongo-
ing operating expenditures is a short-term solution that can
leave a hole in future budgets. Similar approaches include
changing investment strategies, offering early retirement or
buy-outs, reducing work time, restructuring debt, or closing
facilities. Each has a place but needs to be used judiciously
and strategically.
And what about revenue increases? According to the
National League of Cities’ City Fiscal Conditions in 2011
report, 41 percent of city finance officers indicated that their
Deferring maintenance and
investments in infrastructure
increases future costs while creating
a higher risk for potential failure
of critical transportation and utility
systems.
34 Government Finance Review | October 2012
cities had increased fees in recent
years. In addition, 23 percent of cities
reported new fees, and 20 percent
increased their local property tax.
These increases might have provided
some relief, but they need to be part of
an overall cost-recovery strategy and
indexed to inflation to be a long-term
solution.
There are many fiscal first aid treat-
ments that should be considered during an initial response,
but governments need to develop a long-term view if they
are to fully understand the future implications of decisions
made today.
MOVING TOWARD SUSTAINIBIlITY
Taking a long-term view entails a holistic and strategic
approach to allocating resources. Organizations often have
to implement quick fixes in response to changing conditions,
but the most successful ones act quickly on fundamental
structural changes so they can adapt to the new realities. The
building blocks of long-term financial planning include:2
n Enhancing planning.
n Reforming the budget process.
n Addressing long-term liabilities.
n Increasing accountability.
n Becoming more innovative.
Planning. One of the first actions to
take is to adopt financial policies that
promote long-term stability and link
financial considerations to operation-
al decisions. Policies can help put lim-
its in place and encourage desired behaviors by determining
reserve goals for funds and limiting the level and types of debt
used. Using strategic planning to prioritize goals also allows
the organization to align its scarce resources with its intended
results. Strategic plans enhance day-to-day decision making
in the context of the organization’s overarching goals. They
also provide an opportunity for increasing accountability to
the community.
A good strategic plan can help the organization realign its
human capital, allowing it to focus on meeting the key needs
of the community, as reflected in the strategic priorities. For
example, the City of Coral Springs, Florida, uses its strategic
plan to identify activity, resources, and outcomes when mak-
ing organizational changes, whether it is adding services and
programs or reducing them.
Another important planning tool for financial sustainability
is a long-range financial forecast, which looks at all revenues
and expenditures for at least five years into the future.
Anticipating the future impact of cost increases, contracts,
revenue trends, service demand, and liabilities gives man-
agement the opportunity to address the issues before they
become overwhelming.
Reform. Organizations need to reform the budget pro-
cess, moving from an incremental budget to a policy-based
perspective such as zero-based budgeting or priority-based
budgeting. Cities as diverse as Boulder, Colorado; San Jose,
California; and Blue Ash, Ohio, have used priority-based
budgeting to make decisions about which services they
will continue to offer and at what level, using community
input about priorities and needs — a well-formed process
includes stakeholder input. If the jurisdiction has to make
Achieving financial sustainability will
require organizations to go beyond
short-term strategies, to begin
rebuilding capital programs, funding
liabilities, and replenishing reserves.
October 2012 | Government Finance Review 35
cuts, it’s best to include those who will be affected in the
decision-making process.
It pays to understand citizens’ service priorities even if the
organization isn’t ready to implement a full-scale priority-
based budgeting effort. In the City of Reno, Nevada, the city
council appointed a citizen board to review all city services
and rank them according to priority. The resulting report,
which was developed using a subjective, multiple criteria
scoring matrix, helped city officials target cuts in ways that
both protected critical services and helped align the remain-
ing resources with constituents’ wants and needs.
liabilities. To create an accurate and useful financial
forecast and a priority-based budget, jurisdictions must iden-
tify all of their long-term liabilities. Once the organization
understands the scale of its liabilities, however, it can use
those tools to model scenarios for benefit restructuring, in
both plan design and cost sharing. This provides an important
context for selecting and negotiating benefit changes that are
meaningful to employees. An atmosphere of transparency
and inclusion help management and labor work together to
find solutions.
Accountability. Many organizations use performance
management systems that keep managers and supervisors
constantly apprised of projected results and help reveal
opportunities for reducing waste and improving service.
Doing so promotes increased accountability as well as provid-
ing an “early warning system” for identifying potential issues.
To measure well — that is, to create useful measures the
organization can use to improve itself — staff needs to have a
good grasp on the expected results and on the processes the
organization uses to deliver services. Two ways of making this
practice explicit in the organization are assigning “owners” to
processes and using a team-based approach.
Innovation. The key to long-term
sustainability is finding a way to make
innovation a discipline throughout
the organization. Governments across
the country have used numerous
approaches to process improvement,
including Lean Process Improvement
and The Malcolm Baldrige National
Quality Award model, to include inno-
vation in their management systems.3 Recognizing the need for
reform, many organizations are trying new ways of providing
services, through public-private partnerships, shared services,
consolidation, community partnerships (with non-profits and
community groups), and volunteer programs. Making use of
the resources and assets other organizations offer can be a
powerful way to reduce cost and increase flexibility.
FROM SUSTAINABIlITY
TO RESIlIENCY
“Sustainability” suggests that all of the organization’s ser-
vices and liabilities have been identified and provided for.
The next step, resiliency, protects that
sustainability as conditions change.
According to the GFOA, “a financially
resilient government has recovered
its financial stability and gone on to
implement strategies, control mecha-
nisms, budgeting techniques, and
early warning systems to make sure it
can withstand future financial shocks.”4
As part of their initial fiscal diagnosis,
most governments now have a
fairly good grasp on their financial
positions, liabilities, and debt.
36 Government Finance Review | October 2012
Resiliency requires leadership, thoughtfulness, vigilance, and
the courage to bring up uncomfortable facts. To be resilient
is to be prepared. The tools that help make an organization
resilient include diversification, redundancy, decentraliza-
tion, transparency, collaboration, tolerance for failure, flex-
ibility, and foresight.
True resiliency balances service levels with available
resources; funds reserves, capital, and liabilities; and creates
a culture that promotes flexibility and responsiveness. It’s a
never-ending cycle of monitoring, analyzing, and adjusting.
Most importantly, it means that as the local economic condi-
tions improve and you can begin to rebuild, you don’t cre-
ate monolithic, inflexible structures. Instead, design plastic,
innovative, and nimble organizations that are prepared for
whatever comes next. y
Notes
1. William D. Eggers, Robert Campbell III, and Joel Bellman, “Red Ink
Rising: Navigating the Perils of Public Debt,” Deloitte Review, Issue 8,
2011.
2. For more strategies, see Shayne Kavanagh, “A 12-Step Process to
Financial Recovery: A Guide to the GFOA’s New Online Resource,”
Government Finance Review, April 2011, and GFOA’s “Recovery from
Financial Distress and Fiscal First Aid” website.
3. See Shayne Kavanagh, “Less Time, Lower Cost, and Greater Quality:
Making Government Work Better with Lean Process Improvement,” a
GFOA whitepaper, for more detail.
4. Shayne Kavanagh, “A 12-Step Process to Financial Recovery. Also see
Shayne Kavanagh, “Building a Financially Resilient Government through
Long-Term Financial Planning,” a GFOA whitepaper.
KEVIN KNUTSON is regional vice president for Management
Partners, a local government consulting firm. He is a former budget
director and assistant city manager, with 21 years of local govern-
ment experience.
“Sustainability” suggests that all of the
organization’s services and liabilities have
been identified and provided for. The next
step, resiliency, protects that sustainability as
conditions change.
Questions? E-mail
publications@gfoa.org
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What Every Government
Should Know About
Financial Planning
Order online at
www.gfoa.org
Making the Right Decision
the FiRst tiMe
By Dawn-Marie BucklanD
April 2015 | Government Finance Review 23
H ow often do you find yourself reflecting on a deci-
sion — your own or someone else’s — and wishing
it had gone differently? Who wouldn’t like to have a
way of ensuring that the decisions they make today are the
right decisions for tomorrow? Governments are constantly
faced with choices, and emotionally charged issues create
short-term pressures that don’t always lead to the best inter-
est of the community in the long term. A financially resilient
organization creates emotional distance from difficult issues
and balances short- and long-term perspectives in making its
decisions.
Here’s a common scenario. A city is debating the merits
of adding additional freeway access. An interchange would
provide business access to commercially zoned land in a
highly acclaimed economic development corridor. However,
residents nearby fear that it would increase traffic and noise,
jeopardizing their quality of life. The conversation quickly
becomes emotional on both sides. What is the right decision?
In another example, a celebrated development agreement
promises to bring high-wage jobs and critical street improve-
ments to the community. The project takes years to imple-
ment, and the city and the developer work hand-in-hand
to ensure its success. But the development changes hands
during an economic downturn. The city finds that the new
developer is in breach of contract, but there are no remedies
in place to address the lack of performance. How could the
city have approached the agreement differently in the begin-
ning to avoid this unintended consequence?
The public sector faces seemingly endless scenarios that
demand complex decisions. All too often we find ourselves
questioning the conclusions we reached in the past and
agonizing over the decisions before us. Many organizations
do make consistently sound decisions, however — decisions
that enhance their resiliency. We need to ask ourselves what
factors lead to such an outcome and how leaders can create
a successful and productive dialogue when difficult decisions
are on the horizon.
A STRATEGY FOR MAkING TOUGH DECISIONS
On the front end of a challenging decision, emotion can
be intense, while a logical course of action feels distant
and obscure. A 10/10/10 analysis counteracts this short-term
bias by creating distance in decision making.1 The analy-
sis asks decision makers to take a step back and consider
the short-, mid- and long-term implications of their decision
— how will they feel about it 10 minutes from now? Ten
months from now? Ten years from now? The 10/10/10 analy-
sis works because it explicitly identifies the short-term and
emotional reasons for a decision and compares them to long-
term considerations.
Going back to the freeway interchange example, nearby
residents and elected officials might feel a great deal of angst
10 minutes and even 10 months after the announcement of
a decision to move forward. At the same time, commercial
landowners and the business community might be very
excited by the idea. Ten years later, the interchange would
be an inherent part of the transportation system, providing
safe and easy access to neighborhoods and commercial
areas alike.
The beauty of the 10/10/10 approach is that it can be used
informally to simply and quickly think through impacts. The
method can also be explained to stakeholders, prompting
them to think through a decision more carefully.
WHEN TO USE 10/10/10 ANALYSIS
The 10/10/10 methodology is most likely to work well when
the decision you face meets the following characteristics:
n Significant Long-Term Implications. 10/10/10 analysis
provides the greatest value where the long-term stakes are
high. Providing healthcare at no cost for employees and
retirees, for example, has very different financial impacts
10 minutes and 10 months after the decision than the
cumulative effect after 10 years.
n High Public Profile. Building and maintaining public
trust is paramount. With high-profile issues such as a
freeway interchange, emotions often run high on both
sides of the argument. 10/10/10 helps provide the
Creditworthiness and 10/10/10
Credit ratings encompass a number of factors relating to
the long-term financial health of a government, and the credit
rating a government receives has a very high public profile.
Therefore, the potential of a given decision to affect credit
ratings can be a powerful way to engage others in forecasting
a decision’s impact 10 years down the road.
24 Government Finance Review | April 2015
perspective needed to make the right decision for the
long term.
n Not Easily Reversible. Some decisions cannot be easily
undone if the choice later proves to be unwise. In these
cases, 10/10/10 can add needed foresight. A 20-year devel-
opment agreement binds a community to its terms for the
duration. If the city in the second example had conducted
a 10/10/10 analysis, decision makers might have seen past
the initial euphoria of “getting the deal done” and real-
ized the need for stronger terms and conditions to protect
against the unintended consequences.
n Multiple Processes or Plans Affected. Organizations
can use 10/10/10 to assess the ultimate impact of a deci-
sion about integrating plans. A long-term staffing plan is a
great resource if thorough consideration is given to how it
will be integrated into the budgeting and long-term finan-
cial planning processes.
The analysis helps all stakeholders distance themselves
from the emotions provoked by the issue at hand, which posi-
tions leaders to make those courageous decisions that might
otherwise paralyze an organization.
CONCLUSIONS
Public service includes any number of issues that are rife
with passion and emotion. Short-term bias is a natural and
common response, whether because of emotions about
pending changes or limited terms in office. Since many deci-
sions cannot be undone without substantial costs or conse-
quences, 10/10/10 analysis helps all stakeholders distance
themselves from the emotions provoked by the issue at hand,
positioning them to make better decisions. It provides an
opportunity to question assumptions and identify options that
will ultimately lead to better long-term results. y
Note
1. Many people have written about 10/10/10 analysis for decision making.
Sources include: Suzy Welch, 10-10-10: A Life-Transforming Idea (New
York: Scribner, 2009); and Chip Heath and Dan Heath, Decisive: How to
Make Better Choices in Life and Work (New York: Crown Business, 2013).
DAWN-MARIE BUCKLAND is director of the Office of Management
and Budget in the Town of Gilbert, Arizona. Before that, she was
budget manager for the City of Chandler, Arizona. Buckland would
like to acknowledge Deputy Town Manager Marc Skocypec for his
contributions to this article.
Grand Enterprise Initiative
Summary Statistics
New New Jobs New Clients
Sales Capital Created Businesses
End of First Year (Jan. 30, 2013)
$87,000 $79,500 5 4 63
Second Year (Jan. 30, 2014)
$738,555 $241,500 22 5 44
Third Year (Jan. 30 2015)
$415,000 $70,000 24 8 54
To mid-Sept., 2015
$3,296,000 $89,000 28 12 42
Total
$5,320,000 $480,000 79 24 203
For the life of the project, Enterprise Facilitator Patrick Brower and his Grand
Enterprise Initiative Resource Team have worked with:
• 30 business expansions
• 13 diversifications
• 3 acquisitions(several pending)
• 32 minor tune-ups
A total of 10 projects or ideas have been abandoned and four have closed.
Grand Enterprise Initiative,P.O.Box 1135,Granby,Colorado 80446
Enterprise Facilitator,Patrick Brower,970-531-0632 patrickbrower(kapoks.org Grandei.org
Grand Enterprise Initiative
In Fraser
Total
Clients New Businesses Jobs Created
16 2 4
16 clients represents 8% of the total number of clients for the county wide initiative.
For the life of the project in Fraser, Enterprise Facilitator Patrick Brower
and his Grand Enterprise Initiative Resource Team have also worked with:
• 2 business expansions
• 8 minor tune-ups
• 3 pending new businesses
These tune-ups and expansions have helped to retain 14 jobs.
Dollars and Cents
Clients working with the Grand Enterprise Initiative have contributed the following to the
local economy:
New Capital New Sales
$30,000 $225,000
Grand Enterprise Initiative, P.O. Box 1135, Granby, Colorado 80446 Enterprise
Facilitator, Patrick Brower, 970-531-0632 patrickbrower@kapoks.org Grandei.org