HomeMy WebLinkAbout(0011) 03 Capital Projects Fund Reserve Policy-removed.PDFFORTWORTH.
Capital Projects Fund Reserve Policy
I. Authori :
The Fort Worth City Council is responsible for legislation, policy formulation, and overall
direction setting of the government. This includes the approval of financial policies which
establish and direct the operations of the City of Fort Worth. The City Manager and Assistant
City Managers are responsible for carrying out the policy directives of the City Council and
managing the day-to-day operations of the executive departments, including the Department of
Financial Management Services. This policy shall be administered on behalf of the City
Manager and the Assistant City Managersby the Chief Financial Officer/Director of Finance.
Il. Purpose:
The City desires to maintain a prudent level of financial resources to guard its stakeholders
against service disruption in the event of unexpected temporary revenue shortfalls or
unpredicted one-time expenditures/expenses. In addition, this policy is intended to
document the appropriate Reserve level to protect the City's credit worthiness and provide
adequate cash flow based upon the traditional operating cycle. Capital Project Fund Reserves
are accumulated and maintained to provide stability and flexibility to respond to unexpected
adversity and/or opportunities and to minimize the costs associated with short-term cash
borrowing.
This policy establishes the amounts the City will strive to maintain in its Capital Projects
Fund Reserve, how the Reserve will be funded, and the conditions under which the Reserve
may be used.
IIl. Applicability and Scope:
This policy shall apply to the Capital Projects Funds under the budgetary and fiscal control of
the City Manager and the City Council. This policy applies to governmental and proprietary
fund types.
IV. Glossary - See definitions related to this policy provided in the appendix
V. Related Documents and References:
A. Operating and Capital Budget Policy
B. Long -Term Financial Planning Policy
C. Capital Asset Investment and Management Policy
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Capital Projects Fund Reserve Policy
VI. Policy:
Reserve Levels — The City will maintain reserves in Capital Projects Funds that will not
exceed the amount needed to fully fund the approved projects set forth in the five- year Capital
ImprovementPlan.
VII. Monitoring Performance
A. The City will measure its compliance with this policy on an annual basis as of September
30th each year or as soon as practical after final fiscal year-end financial information
becomes available. During the course of the fiscal year the Department of Financial
Management Services and the Performance and Budget Office shall closely monitor the
City's revenues and expenditures/expenses to ensure Reserves are not used beyond any
planned usage.
B. If, based on staff s analysis and forecasting, the target level of Reserves is not met at fiscal
year-end or is not likely to be met at any point within a five-year time horizon, then
during the annual budget process a plan to replenish the Reserve levels will be developed
by collaboration among affected departments and the Department of Financial
Management Services and the Performance and Budget Office based on the requirements
outlined in this policy.
C. Funding the Reserve — Funding of Reserve targets will generally come from excess
revenues over expenditures/expenses or one-time revenues.
D. Periodic Review of the Targets — At a minimum, during the annual financial
planningibudget process staff shall review the current and five-year projected Reserves to
ensure that they are appropriate given the economic and financial risk factors the City is
subject to.
VIII. Pooled Cash
Cash Balance — In order to provide liquidity adequate to meet the needs and demands of
providing government services including unanticipated reductions in revenues or unplanned
increases in expenditures/expenses, Cash Balances will be maintained and managed through
the Pooled Cash method in such a way as to minimize short- term borrowing. This reduces
overall cost to taxpayers by minimizing interest expense. The Reserve is intended to support
this effort and counterbalance the tax and major revenues collection cycle.
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Capital Projects Fund Reserve Policy
IX. Conditions for Use of Reserves
It is the intent of the City to limit the use of Capital Project Fund Reserves to address non -
routine and one-time expenditures.
X. Excess of Reserves
In the event Reserves exceed the minimum balance requirements, at the end of each fiscal
year, any excess Reserves may be used in the following ways:
1. Appropriated to lower the amount of bonds or increase the pay-as-you-go contributions
needed to fund capital projects in the City's Capital Improvement Plan;
2. To pay for non -routine and one-time expenditures such as land and building purchases,
construction and maintenance projects with at least a 10-year life, feasibility, design, and
engineering studies related to such projects, capital equipment and vehicles with at least a
10-year life, and technology improvements with at least a 5-year life.
XI. Authority over Reserves
The City Council may authorize the use of Reserves. The Department of Financial
Management Services and the Performance and Budget Department will regularly report both
current and projected Reserve levels to the City Manager and City Council.
XII. Ouality Control and Ouality Assurance:
It is the responsibility of the Chief Financial Officer/Director of Finance to ensure the
presence of procedures that provides sufficient guidance to affected City personnel to fulfill
the intent of this policy.
These policies will be reviewed at least annually and updated on an as -needed basis.
XIII. Metrics:
To be developed and managed accordingly.
XIV. Records:
There are no records associated with this policy.
XV. Process Flow Map:
Not applicable.
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Capital Projects Fund Reserve Policy
XVI. Forms:
Not Applicable
XVII. Appendices:
Not applicable.
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