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LL C�tyof Louisville <br />COLORADO - SINCE 1878 <br />Reserve Policies <br />FINANCIAL POLICIES <br />Policy Section: 2 <br />Adopted by: Council Action <br />Effective Date: December 21, 2021 <br />Purpose and Scope <br />The City of Louisville desires to maintain an appropriate level of financial resources to guard its <br />citizens against service disruption in the event of unexpected revenue shortfalls or unanticipated <br />one-time expenditures. This policy is also intended to document the appropriate reserve levels <br />to protect the City's credit worthiness and maintain its good standing with bond rating agencies. <br />Reserves are accumulated and maintained to provide stability and flexibility to respond to <br />unexpected adversity and/or opportunities. This policy establishes the reserve amounts the City <br />will strive to maintain in its General Fund and its other major operating funds. This policy also <br />stipulates the conditions under which those reserves may be used and how the reserves will be <br />replenished if they fall below established reserve amounts. <br />The City will measure its compliance with this policy as of December 31st of each year, as soon <br />as practical after final year-end information is audited and becomes available. <br />Policies <br />2.1 General Fund Reserves. The minimum unrestricted fund balance of the General Fund shall <br />be maintained at or above 15% of current operating expenditures. For purpose of this policy, <br />operating expenditures are defined as all expenditures less any one-time, non -recurring <br />transfers to other funds. Annual, recurring support transfers to other funds will be included in <br />the definition of current operating expenditures. <br />While the minimum unrestricted fund balance is set at 15% of current operating expenditures, <br />the targeted unrestricted fund balance will be at or above 25% of current operating <br />expenditures. This higher target is in recognition of: <br />• the General Fund's reliance on revenue sources that are subject to fluctuations (sales and <br />use taxes); <br />• the General Fund's exposure to unexpected and significant one-time expenditure outlays <br />(transfers to the Capital Projects Fund, mid -year changes to operations, disasters, etc.); <br />and <br />• the potential drain on General Fund resources from other funds (recurring support <br />transfers to the Open Space & Parks Fund, the Cemetery Fund, and the Recreation Fund). <br />16 <br />