BUDGET AND FISCAL POLICY (REVISED) - 4-2017

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Page 3 GENERAL FUND (continued) Economic Uncertainty Account (continued) Upon determination by the Finance Department and report submission to the City Council that a structural deficit exists in the budgeted forecast of the upcoming fiscal year, the City Council may authorize use of the Economic Uncertainty Reserve to balance the budget by two thirds vote of the Council. However, authorization to utilize the Economic Uncertainty Reserve beyond two consecutive years is strictly prohibited unless a corresponding plan to balance the budget is submitted for approval to the Mayor and City Council. o Funding of the Eco no mic Uncertainty account wi I I beach ieved via a I location of excess fund balance, as determined /calculated at fiscal year -end (June 30). Specifically, funding will occur only if the Operating Reserve requirement has been met first, for an amount up to $500,000 annually. Unallocated Amount The Unallocated amount is defined as the General Fund's excess fund balance beyond the Operating Reserve (two months operating revenues and /or expenditures) and Economic Uncertainty goals ($500,000 available) funding /objectives are met. Amounts denoted in the unallocated account are to be used as additional funds to ensure that the City's minimum operating reserve requirement are met for future fiscal years. Additionally, this amount will be determined at year -end upon conclusion of the City's audit cycle. However, if at any point in time the City is determined to have excess balances resulting from project close -out or savings, encumbrance liquidations and or other savings, the amount should remained within the Unallocated amount available for assignment into the above - referenced fund balance categories. Ending Operating Balance The City's fiscal year -end (June 30) position otherwise known as Ending Operating Balance is calculated as follows: Operating Revenues (Total Revenues) Plus Other Financing Sources (Transfersln) Less: < Operating Expenditures> >( Total Expenditures)> Less: < Other Financing Sources> <( Transfers Out)> Ending Operating Balance Specifically if the operating balance is Positive, Operating Revenues and Transfers In is greater than Operating Expenditures and Transfers Out, fund balance is generated to fund either the Operating Reserve, Economic Uncertainty or Unallocated accounts. Conversely, if the Ending Operating Balance is negative, Operating Revenues and Transfers In is lower than Operating Expenditures and Transfers Out, no additional fund balance is generated to fund the above - referenced accounts. In addition the Unassigned Fund balance is reduced by the shortfall (negative amount). Upon meeting the above - referenced reserve requirements, any excess operating balances shall be provided to City Council for consideration, with a minimum of fifty percent (50 %) allocated for deferred maintenance, ensuring maintenance of pension stability, with the remaining balance to be utilized for non - recurring expenditures. Any General Fund ending operating balance, as determined at year -end, may be available to be assigned to the above - referenced Unassigned Fund Balance accounts. Any internal service fund that has funds in excess of the identified minimum reserve requirement as outlined in this policy, can be utilized as a means to meet the minimum General Fund Reserve requirements. Budget and Financial Polices 65C -5