Finance Committee Agenda and Packet 2021 10 18

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LL �t�'.`'f FINANCE COMMITTEE Loll sville COMMUNICATION COLORADO • SINCE 1878 SUBJECT: RESERVE POLICIES DATE: OCTOBER 18, 2021 PRESENTED BY: DENNIS MALONEY, MAYOR PRO TEM KEVIN WATSON, FINANCE DIRECTOR SUMMARY Based on the discussions at the September Finance Committee Meeting, the Mayor Pro Tern and staff have drafted some alternative amendments to the City's Reserve Policies. A statement has been added under Section 2.1 that states the City Council will annually consider one-time transfers of excess General Fund reserves to other funds for one-time uses. The fourth paragraph of Section 2.2 has been replaced by a statement that transfers into the Open Space & Parks Fund for property acquisition shall be "committed" for that specific purpose. These amendments have been drafted with the following intentions: • To recognize and record specific City Council decisions/designations of excess General Fund reserves. These decisions will be recorded as transfers out of the General Fund to other funds, which will result in restrictions by the receiving fund's definition. • To provide flexibility for future City Council decisions on future designations of excess General Fund reserves. By annually removing funds from the General Fund based on annual City Council decisions, future City Councils will not have to manage around prior commitments or restrictions of General Fund balance. Other proposed amendments include: Increasing the targeted General Fund balance to 30% of current operating expenditures. Operating expenditures are currently defined as all expenditures less any interfund transfers to other funds, regardless of whether the transfer are considered recurring or non -recurring. The amended definition of operating expenditures is all expenditures less only one-time, non -recurring transfers. This will include the annual support transfers to the Open Space & Parks Fund, the Cemetery Fund, and the Recreation Fund as "operating expenditures". Removing the statement of City Council intent in Section 2.5, Recreation Fund Reserves. Sales/use taxes and user fee revenue generated by the FINANCE COMMITTEE COMMUNICATION 0