65C - REVISED BUDGET POLICY - Laserfiche WebLink

Home Browse Search

Page 4 INTERNAL SERVICE FUNDS Background Internal Service Funds are established to administer and account for various activities whose purpose is to provide for goods and services to support other departments for their ongoing operational and programming needs. The delivery of these services is recovered on a cost recovery basis. Purpose It is the intent of the Internal Service Fund Reserve Policy to establish general guidelines as to the establishment of a proper recovery rate structure and define an appropriate level of reserves for each Internal Service Fund. It will also establish criteria for the use of reserves and establish a process by which to replenish reserves if utilized. Although this policy only addresses the Risk Management Funds (i.e. Liability and Property Insurance and Workers Compensation Fund), it is the intent to build upon and include all internal service funds within this policy. Operating Reserves Reserves for these accounts will be funded at target level approximating 80% of the claims payable (long -term liability) as defined in the actuarial study. In addition, one to two months of operational reserves will be included to address any variations related to revenues and /or expenditures (internal cost /cross charges). In the event a positive operating balance is generated, amounts defined in these accounts from general agencies shall be available for transferto the General Fund until such time that the General Fund reserve meets the minimum requirement of 15% or to establish the reserve for Economic Uncertainty. Transfers shall be submitted to Council for approval. Thereafter, any additional positive operating balances generated may be utilized to fund any deficits identified within other Internal Service Funds, as well as other unfunded capital and deferred related maintenance. Risk Management The Risk Management programs are established to protect the City's assets through the administration of a properly funded liability claim and insurance program and by minimizing the cost and effect of work - related injuries. Rates for these programs are established on a biennial actuarial basis. Deferred Maintenance Capital or deferred maintenance related funds should also maintain a one to two month operating reserve in order to minimize the impact of revenue and /or expenditures fluctuations year over year. In addition, Internal Service Funds, with the responsibility to maintain, replace, and /or repair facilities and /or equipment should develop a rate structure which supports capital replacement within the said funds. Reporting for the fund(s) capital replacement should be reported in a separate fund and /or accounting unit. The use of these funds for expenditures that do not include capital replacement requires two - thirds (2/3) vote from the City Council. Budget and Financial Polices 65C -6