Finance Highlights 2011 1021 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: October 21, 2011 TO: Finance Committee FROM: Lianne Marshall, Interim City Manager BY: Jim O'Leary, Interim Finance Director SUBJECT: City Council Reserve Policy and General Fund Reserves as of June 30, 2011 RECOMMENDATION Staff recommends that the Finance Committee review and approve transfers from the General Fund fund balance and include these transfers in the mid -year budget amendment resolution to be approved by the City Council. The transfer to the Self Insurance Fund was approved by the City Manager to facilitate the preparation of the City's 2010 -11 financial statements. This transfer should be confirmed by the City Council. An additional transfer to the Economic Uncertainty reserve from General Fund fund balance is recommended by staff. BACKGROUND The Finance Committee reviewed the 2010 -11 Budget Review and Budget Amendment at its meeting on September 9, 2011. The report confirmed that the 2010 -11 year -end forecast for the General Fund reflected a significant improvement over the adopted budget, largely due to an increase in projected revenues. Revised projections reflected an operating (revenue over expenditures) increase of $2,356,200. The adopted budget had shown an operating deficit of ($3,079,000). As a result of this improvement in the revenue and expenditure balance, the General Fund fund balance was similarly improved to about $4,000,000. The attached worksheet shows reserve funds totaling $12,723,000 for General Fund reserve designations and $308,000 for Self Insurance reserves. The Major Emergencies reserve totals $5,000,000, a consistent amount since 2007 -08. The Economic Uncertainty reserve amounted to $10,033,000 in 2007 -08 and has declined over the past three years to the current amount of $3,796,500. The Major Emergencies and the Economic Uncertainty reserves are currently 13% of the General Fund operating expenditures. The City Council initially established a philosophy for financial reserve funds over twenty years ago. In 1989 -90, the City Council adopted a series of financial values that were utilized to develop the budget. The Financial Goals Statement identifies and formalizes the financial principles by which the organization is guided. The Statement provides direction for preparing annual budget strategies and budgets and for conducting the day -to -day and long -term municipal affairs.