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Reserves
<br />The City must maintain an appropriate reserve balance to ensure the day-to-day operation will continue
<br />during emergencies and guarantee the future stability of the system. The City's financial goal is to build
<br />an appropriate level of cash reserves for each reserve fund included in the financial plan of this Study.
<br />The reserve target for the sewer utility is described below:
<br />• Operating Reserve Funds: three months of operating expenses
<br />• Capital Reserve: 50% of ten year average of capital expenditures
<br />• Emergency Reserve: $4.0 million
<br />The reserve target at the end of the study period reaches $9.1 million. Table 79 shows the City's reserve
<br />targets for FY 2026 through FY 2031 based on the current reserve policy. Figure 10 displays the resulting
<br />cash balances versus the reserve target under the current rates. Reserve targets based on reserve policy
<br />shown in Table 17 and operating and capital totals shown in Tables 75 and 76, respectively.
<br />Table 79. Sewer Reserve Target, FY 2026 to FY 2031
<br />Operating Reserve
<br />$2,189,860
<br />$2,283,219
<br />$2,379,432
<br />$2,473,724
<br />$2,571,956
<br />$2,667,992
<br />Capital Reserve
<br />$2,459,601
<br />$2,459,601
<br />$2,459,601
<br />$2,459,601
<br />$2,459,601
<br />$2,459,601
<br />Emergency Reserve
<br />$4,000,000
<br />$4,000,000
<br />$4,000,000
<br />$4,000,000
<br />$4,000,000
<br />$4,000,000
<br />Total Reserve Target
<br />$8,649,461
<br />$8,742,820
<br />$8,839,033
<br />$8,933,326
<br />$9,031,557
<br />$9,127,594
<br />City of Santa Ana - 2026 Water and Sewer Rate Study 51
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