HomeMy WebLinkAboutFS 2010-05-18 Item 2B - Discussion - Minimum Government Fund BalanceTO:
BACKGROUND
DISCUSSION
City of Tukwila
INFORMATIONAL MEMORANDUM
Mayor Haggerton
Finance and Safety Committee
Jim Haggerton, Mayor
FROM: Peggy McCarthy, Deputy Finance Director
DATE: May 11, 2010
SUBJECT: Minimum Governmental Fund Balances
ISSUE
At what minimum level should governmental fund balances be maintained to ensure funds are
available to meet the City's annual cash flow needs?
The best practices of the Government Finance Officer Association (GFOA) recommends a
minimum fund balance equivalent to no less than two months, or 16.7 of regular general fund
operating revenues or regular general fund operating expenditures. For the City in 2009, two
months of regular operating revenues totals $7,213,857; two months of regular operating
expenses totals $7,674,314 (these amounts exclude transfers -in and transfers -out).
The City's reserve policy adopted in 2009 sets a target minimum reserve balance of 8% of
annual general fund revenues for the Contingency reserve, 8% of annual general fund revenues
for the Risk Management reserve and 1% of annual general fund revenues for the Revenue
Stabilization reserve or a total of 17% of annual general fund revenues. For 2009, 17% of
general fund revenues, excluding transfers -in, totals $7,358,135.
As of December 31, 2009 and 2008 respectively, the unaudited general fund balance was
$7,389,729 and the audited general fund balance was $7,705,315.
With regard to the government funds included in the CIP Attachment A, (general, capital
improvement, debt service and special revenue), two months, or 16.7 of annual revenue over
the six year period from 2010 through 2015 ranges from a low of $9,080 thousand in 2010 to a
high of $9,607 thousand in 2015. Two months, or 16.7 of annual expenditures over the same
period ranges from $9,207 thousand in 2010 to $10,786 thousand in 2015. See the annotated
CIP Attachment A included with this memorandum for calculations of minimum fund balance
requirements based on projected revenues and projected expenditures for each of the six years
from 2010 through 2015.
Based on the GFOA recommendation and the City's reserve policy, the minimum fund balance
of the general fund and the reserve funds combined should not be less than approximately
$7,300,000 to meet the cash flow needs of the City under regular and contingent circumstances.
A conservative threshold for the combined fund balances of funds included in the CIP
Attachment A could be based on projected expenditures rather than projected revenues as this
INFORMATIONAL MEMO
Page 2
sets a higher minimum fund balance. Under this scenario, the minimum combined fund balance
of the funds included in the CIP should not be less than $9,207 thousand in 2010, $9,395
thousand in 2011, $9,209 thousand in 2012, $9,967 thousand in 2013, $10,457 thousand in
2014 and $10,786 in 2015.
RECOMMENDATION
No recommendation, for Committee information only.
ATTACHMENTS
CIP Attachment A annotated with recommended fund balance calculations based on
16.7% of projected annual revenues and 16.7% of projected annual expenditures.
W:IFIN Projects\Council Agenda ItemsllnfoMemo Min Govt Fund Bals 5 -18 -10 F &S.docx
ATTACHMENT A
CITY OF TUKWILA
TOTAL REVENUES EXPENDITURES
2010 2015 Analysis in 000's
2010 2011 2012 2013 2014 2015 Totals
REVENUES (see A -1)
General Revenues
Sales Tax 15,502 15,967 16,446 16,940 17,448 17,971 100,274
Property Taxes 12,400 12,710 13,028 13,353 13,687 14,029 79,207
Utility Taxes 4,747 4,889 5,036 5,187 5,343 5,503 30,705
New Revenue /Exp Reduction 3,000 3,075 3,152 3,231 3,311 3,394 19,163
Interfund Utility Taxes 2,600 900 900 0 (2,200) (2,200)
Gambling Taxes 2,099 2,162 2,227 2,294 2,362 2,433 13,577
Contract Agreement SCL 1,976 2,035 2,096 2,159 2,224 2,291 12,781
Charges /Fees for Services 5,273 5,431 5,594 5,762 5,935 6,113 34,108
Transfers In Other Funds 2,493 2,568 2,645 2,724 2,806 2,890 16,126
Intergovernmental Revenue 922 950 978 1,007 1,038 1,069 5,964
Other Taxes /Miscellaneous 1,640 1,689 1,740 1,792 1,846 1,901 10,608
Subtotal 52,652 52,376 53,842 54,449 53,800 55,394 322,513
Dedicated Revenues (Capital)
Real Estate Taxes 500 515 530 546 563 580 3,234
Motor Vehicle Taxes 455 469 483 497 512 527 2,943
Investment Interest/Misc. 500 515 530 546 563 580 3,234
Property Taxes 130 130 130 130 130 130 780
Parking Taxes 140 140 140 140 140 140 840
Transfers from Golf Course 0 0 150 150 175 175 650
Subtotal 1,725 1,769 1,963 2,009 2,083 2,132 11,681
TOTAL REVENUE AVAILABLE 54,377 54,145 55,805 56,458 55,883 57,526 334,194
EXPENDITURES 'Recornment4ed x /6 at 7% K16,7% x 1x,713 x 7
!G.?'a $6.7% x $6.7
Film, Actlnare. -1. cf ,n 93 tcl ct,4J8 `r,3. L. ci, r0 `l
Operations Maintenance: 45,376 49,654 51,680 54,220 56,900 59,174 317,004
(See Attachment B)
Howard Hanson Dam Response 2,500 2,500 300 300 300 300 6,200
Debt Service 2,466 2,464 2,460 2,467 2,457 1,974 14,288
Admin /Engineering Overhead 300 309 318 328 338 348 1,941
Subtotal Available 3,735 (782) 1,047 (857) (4,112) (4,270) (5,239)
Capital Attachment C
Residential Streets 0 0 0 0 150 300 450
Bridges 313 145 205 205 270 270 1,408
Arterial Streets 3,435 2,423 1,580 1,355 1,355 1,365 11,513
Parks Trails 662 459 284 390 237 274 2,306
General Government
Facilities 108 (2,177) (2,178) 0 110 140 (3,997)
General Improvements 200 535 500 500 500 500 2,735
Fire Improvements (50) (50) 0 0 0 (55) (155)
Subtotal Capital 4,668 1,335 391 2,450 2,622 2,794 14,260
Balance by Year
Carryover from 2009
(933) (2,117) 656 (3,307) (6,734) (7,064) (19,499)
22,639 0 0 0 0 0 22,639
Accumulated Totals 21,706 19,589 20,245 16,938 10,204 3,140
TOT P E XV E ND rrok.vz s S 13o €4a s s, S`), G 8 =i 6a, (pi 7 (o'
x [(o•7% x 1(q X 1(2,7 a /0 X U,.7% 1 6 I(p;
Recornmervrerl rued 3a.tctnce q,a07 cy.,0, Ra09 q,c) 67 10,4'7 10,"7 0
2010 2015 Financial Planning Model VII 01/09/2010