HomeMy WebLinkAboutRes 1861 - Financial Reserve Policy (Repealed by Res 1919)
Cover page to Resolution 1861
The full text of the resolution follows this cover page.
Resolution 1861 was amended or repealed by the
following resolutions.
REPEALED
Section(s) Repealed Repealed by Res #
1919
City of Tukwila
Washington
Resolution No. 1861
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, REVISING THE PREVIOUSLY
ADOPTED FINANCIAL RESERVE POLICY TO INCREASE
THE GENERAL FUND RESERVE LEVEL, ADD A ONE -TIME
REVENUE RESERVE, AND CONFORM THE HEALTH CARE
FUND RESERVE POLICY TO CURRENT PRACTICES; AND
REPEALING RESOLUTION NO. 1774.
WHEREAS, for the well -being and sustainability of the community, its residents,
and businesses, it is important that the City of Tukwila be prepared to respond to any and
all situations that could result in a risk and /or crisis to the City's finances including, but not
limited to, revenue shortfalls and unanticipated expenditures; and
WHEREAS, it is the responsibility of the City Council of the City of Tukwila to provide
policy direction for the City's biennial budget through the passage of motions and
ordinances, adoption of resolutions, and final approval of said budget; and
WHEREAS, a financial reserve policy establishes, attains, and restores minimum
fund balances, including self- insured health care reserve funds, and specifies review and
reporting of such; and
WHEREAS, the Best Practices promulgated by the Government Finance Officers
Association recommends that the unrestricted fund balance in the General Fund equal
no less than two months of regular General Fund operating revenues, or 16.67 %; and
WHEREAS, credit rating agencies consider combined General Fund and
Contingency Reserve Fund balances of at least 30% of operating revenues to be a
good indication of credit worthiness; and
WHEREAS, in prior years the financial health of the City was negatively impacted
by recession and changes in state law; and
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WHEREAS, it is financially prudent to save a portion of revenue windfalls derived
from one -time or periodic events, such as the sale of real property or sales tax collected
on construction activity, as a means of offsetting the effects of recessions or other
events that could force the City to reduce service levels;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Section 1. Minimum Fund Balances.
A. At the close of each fiscal year, the General Fund unassigned balance shall
equal or exceed 18% and the Contingency Fund reserve balance shall equal or
exceed 10% of the previous year General Fund revenue, exclusive of significant non -
operating, non - recurring revenues such as real estate sales or transfers in from other
funds.
B. At the close of each fiscal year, the unrestricted balances of the Enterprise
Funds shall equal or exceed 20% of the previous year revenue, exclusive of
significant non - operating, non - recurring revenues such as real estate sales, transfers
in from other funds or debt proceeds.
C. Use or draw down of minimum balances shall occur only upon
recommendation of City Administration and approval by City Council through a
resolution. Should use or draw down occur, the City Administration shall establish a
plan, no later than the end of the fiscal year following the year of decline, to restore
the fund balance to the prescribed minimum level. The plan shall be presented to
and approved by the City Council.
Section 2. One -time Revenue Reserve. A One -time Revenue Reserve shall be
established and maintained in the Contingency Fund. The One -time Revenue
Reserve shall be credited annually with 10% of the prior year one -time revenues to
the extent General Fund surplus for the year is sufficient to cover the reserve funding.
Use of the reserve shall occur only upon recommendation by City Administration and
approval by City Council through a resolution.
Section 3. Self- insured Health Care Funds. The City shall maintain a reserve in
each of its self- insured health care funds in an amount equal to 1.5 times, or 150 %, of
the actuarially determined IBNR (incurred but not reported) balance. Use of the
reserve shall occur only upon recommendation by City Administration and approval by
City Council through a resolution.
Section 4. A report showing compliance with the Financial Reserve Policy shall
be provided to the City Council on an annual basis, no later than July 1 of each year.
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Section 5. Repealer. Resolution No. 1774 is hereby repealed.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
at a Regular Meeting thereof this day of �r�` 12015.
ATTEST /AUTHENTICATED:
Christy O'Fla erty, MMC, City Cle
APPROVED AS TO FORM BY:
Rachel B. Turpin, City Attorney
)V k'a A L.. v. e.:i�,�-�.
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Filed with the City Clerk: 9 —aC1 -/5
Passed by the City Council:
Resolution Number:
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