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HomeMy WebLinkAbout2021-052 - Resolution RESOLUTION NO. 2021-052 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, COMMITTING TO THE LEVEL OF FISCAL RESERVES FOR THE CITY OF RANCHO CUCAMONGA WHEREAS, the Rancho Cucamonga City Council desires to protect existing services; and WHEREAS, the Rancho Cucamonga City Council desires to be prepared for emergencies; and WHEREAS, the Rancho Cucamonga City Council desires to maintain good fiscal management and fiscal structure to operate a municipal corporation; and WHEREAS, the Rancho Cucamonga City Council desires to maintain the financial strength required to obtain beneficial bond ratings for the City. NOW, THEREFORE, the City Council of the City of Rancho Cucamonga, California does hereby resolve on this 28th day of June 2021 that the level of fiscal reserves maintained by the City of Rancho Cucamonga as of fiscal year end are committed to the goals as outlined in the City's Fund Balance Policy, attached to this resolution as Exhibit A. Resolution No. 2021-052 - Page 1 of 2 PASSED, APPROVED and ADOPTED this 28m day of June, 2021. Z4• D-,�e� ennis Michael, Mayor ATTEST: 4V'e anice C. Reynolds, City Clerk STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) ss CITY OF RANCHO CUCAMONGA ) I, Jarflce C. Reynolds, City Clerk of the City of Rancho Cucamonga, do hereby certify that the foregoing Resolution was duly passed, approved, and adopted by the City Council of the City of Rancho Cucamonga, at a Special Meeting of said Council held on the 28th day of June 2021 AYES: Hutchison, Kennedy, Michael, Scott, Spagnolo NOES: None ABSENT: None ABSTAINED: None Executed this 29th day of June, 2021, at Rancho Cucamonga, California. c- ' aura- nice C. Reynolds, Clerk Resolution No. 2021-052 - Page 2 of 2 CITY OF • CUCAMONGA I-A CITY OF RANCHO CUCAMONGA RANCHO CUCAMONGA FIRE PROTECTION DISTRICT FUND BALANCE POLICY POLICY NO.: EFFECTIVE: June 15, 2011 REVISED: June 28, 2021 APPROVED: PURPOSE This Fund Balance Policy establishes the procedures for the reporting of unrestricted fund balance in the City General Fund and Fire District financial statements. Certain commitments and assignments of fund balance will help ensure that there will be adequate financial resources to protect the City against unforeseen circumstances and events such as revenue shortfalls and unanticipated expenditures. The policy also authorizes and directs the Finance Director to prepare financial reports which accurately categorize fund balance as per Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GENERAL POLICY Fund balance is essentially the difference between the assets and liabilities reported in a governmental fund. There are five separate components of fund balance, each of which identifies the extent to which the City/Fire District is bound to honor constraints on the specific purposes for which amounts can be spent. • Nonspendable fund balance (inherently nonspendable) • Restricted fund balance (externally enforceable limitations on use) • Committed fund balance (self-imposed limitations on use) • Assigned fund balance (limitation resulting from intended use) • Unassigned fund balance (residual net resources) The first two components listed above are not addressed in this policy due to the nature of their restrictions. An example of nonspendable fund balance is inventory. Restricted fund balance is either imposed by law or constrained by grantors, contributors, or laws or regulations of other governments. This policy is focused on financial reporting of unrestricted fund balance, or the last three components listed above. These three components are further defined below. Committed Fund Balance The City Council (which also acts as the Board of Directors for the Rancho Cucamonga Fire Protection District), as the City's highest level of decision-making authority, may commit fund ATTACHMENT 1 FUND BALANCE POLICY PAGE 2OF5 balance for specific purposes pursuant to constraints imposed by formal actions taken, such as an ordinance or resolution. These committed amounts cannot be used for any other purpose unless the City Council/Fire Board removes or changes the specified use through the same type of formal action taken to establish the commitment. City Council/Fire Board action to commit fund balance needs to occur within the fiscal reporting period; however, the amount can be determined subsequently. • Changes in Economic Circumstances The City's General Fund balance committed for changes in economic circumstances is established at a goal of a nine month reserve, or 75% of the City General Fund operating budget for the upcoming fiscal year. The Fire District's fund balance committed for changes in economic circumstances is established at a goal of a nine month reserve, or 75% of the Fire District's operating budget for the upcoming fiscal year. The specific uses of this commitment include: 1)the declaration of a state or federal state of emergency or a local emergency as defined in Rancho Cucamonga Municipal Code Section 2.36.020; or 2) a change in economic circumstances in a given fiscal year that results in revenues to the City/Fire District being insufficient to cover expenditures for one or more fiscal years. The City Council/Fire Board may, by the affirming vote of four members, change the amount of this commitment and/or the specific uses of these monies. • Cit;� Facilities Capital Repair Thj) City's General Fund balance committed for City facilities capital repair and property acquisition is established at a minimum goal of 50% of capital assets value comprised of construction in progress (excluding infrastructure), building improvements, and improvements other than building for governmental activities, excluding assets owned by the Rancho Cucamonga Fire Protection District. • Firs; District Facilities Capital Repair The Fire District's fund balance committed for the Fire District facilities capital repair is hereby committed to a minimum goal of 50% of capital assets value comprised of co struction in progress (excluding infrastructure), building improvements, and im rovements other than building for public safety-fire activities. • Warking Capital The City's General Fund balance committed for Working Capital is established at a goal of a minimum of 5% of the City's General Fund operating budget for the upcoming fiscal year. The Fire District's fund balance committed for Working Capital is established at a goal of a minimum of 50% of the District's operating budget for the upcoming fiscal year. • Self-Insurance The City's General Fund balance and the Fire District's fund balance committed for payment of Workers' Compensation, General Liability, and Employment Practices Liability claims is established at a minimum goal of eight times the City's and the District's total yearly SIRs for all types of insurance coverage. FUND BALANCE POLICY PAGE 3 OF 5 • PASIS Workers' Compensation Tail Claims The Fire District's fund balance committed for payment of outstanding Workers' Compensation claims remaining after the District's withdrawal from PASIS is established at a goal equal to the most recent fiscal year end Claims Cost Detail Report from the District's third-party administrator plus 15%. • Employee Leave Payouts The City's General Fund balance and the Fire District's fund balance committed for employee leave payouts as valued in accordance with the City's labor contracts as of the last day of the fiscal year. • Vehicle and Equipment Replacement The Fire District's fund balance committed for the replacement of fire safety vehicles and equipment as determined based on the District's replacement criteria is established at a minimum goal of 50% of District vehicle and equipment replacement value. • Law Enforcement The City's General Fund balance committed for public safety purposes, including operations, equipment, capital outlay, capital facilities, personnel, and booking fees. The funding goal for this reserve is the equivalent of 100% of the most recently approved Schedule A from the San Bernardino County Sheriffs Department. • Economic Development Strategic Reserve The City's General Fund balance committed for the acquisition and development of key properties to promote economic development that will benefit the City as a whole and, potentially, generate ongoing revenues to the City whenever feasible through negotiated agreements with third parties (including but not limited to land leases or public-private partnerships). Establishment of this reserve is a City Council goal, established in the spring of 2021. The funding goal for this reserve is the equivalent of the current value of a 10-acre mixed-use site on Foothill Boulevard as of January 1 of each year. • Seasonal Weather Emergency Reserve The City's General Fund balance committed for unanticipated costs incurred due to damage resulting from severe weather emergencies such as wind, flood, fire, extreme heat, extreme cold, and other forces of nature. The reserve will provide funding for these costs without impacting the City's operating budget and will be appropriated by the City Council on an as needed basis when extreme seasonal weather emergencies occur. Assigned Fund Balance Amounts that are constrained by the City/Fire District's intent to be used for specific purposes, but are neither restricted nor committed, should be reported as assigned fund balance. This policy hereby delegates the authority to assign amounts to be used for specific purposes to the City FUND BALANCE POLICY PAGE 4 OF 5 Manager and/or Finance Director for the purpose of reporting these amounts in the annual financial statements. The following are a few non-exclusive examples of assigned fund balance. • Economic and Community Development Special Services The City's General Fund balance assigned for contracts, special services, or projects associated with Economic and Community Development (ECD) special projects or ECD initiatives/Council goals (such as economic strategy and Development Code contract services) as well as a one-year value of staffing costs for Planning, Building and Safety, and Engineering (not including capital and project management). • Habitat Mitigation and Sphere of Influence Issues This reserve provides for ancillary costs related to annexation of the sphere area, including mitigation issues and legal challenges. Another area covered by this reserve is the creation of a multi-species habitat conservation plan as well as acquisition of habitat conservation land. • Community Services Programs-Recreation Th� City's General Fund balance assigned for non-recurring costs to support community services programs, including a wide variety of classes, special events, and recreational activities sponsored by the Community Services Department. The initial funding of this reserve resulted from the combining of the Department's recreational and community activities that were accounted for in a separate Special Fund into the General Fund effective with the Fiscal Year 2020/21 Budget. The fund balance remaining in the Recreation Services Fund as of June 30, 2020 was closed out to the City's General Fund. • Community gommunity Services Programs-Cultural Arts The! City's ;General Fund balance assigned for non-recurring costs to support community services programs, including a wide variety of classes, theatrical performances, and cultural activities sponsored by the Community Services Department. The initial funding of this reserve resulted from the combining of the Department's cultural and theatrical activities that were accounted for in a separate Special Fund into the General Fund effective with the Fiscal Year 2020/21 Budget. The fund balance remaining in the Victoria Gardens Cultural Center Fund as of June 30, 2020 was closed out to the City's General Fund. Unassigned Fund Balance These are esidual positive net resources of the General Fund and Fire District funds in excess of what properly be classified in one of the other four categories. Fund Balance Classification The accounting policies of the City/Fire District consider restricted fund balance to have been spent first when an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available. Similarly, when an expenditure is incurred for purposes for which FUND BALANCE POLICY PAGE 5 OF 5 amounts in any of the unrestricted classifications of fund balance could be used, the City/Fire District considers committed amounts to be reduced first, followed by assigned amounts and then unassigned amounts. This policy is in place to provide a measure of protection for the City/Fire District against unforeseen circumstances and to comply with GASB Statement No. 54. No other policy or procedure supersedes the authority and provisions of this policy.