FY 2021 2122 ADOPTED OPERATING AND FY 2021 2526 CIP BUDGETS

Fiscal Policies (continued)

policy action must be taken no later than the next budget year such that structural budget balance is projected to be regained within three years of the 25% floor being pierced. Once structural budget balance is regained, steady progress toward the 25% long-term goal for reserves must continue. 5. At other times, i.e., when reserves are 25% or greater and projected to remain so, achieving structural balance may be postponed to the last year of the five-year financial forecast. 6. Spending cuts prompted by the need to achieve structural budget balance and/or rebuild General Fund reserves will consist of service-level reductions, mitigated as much as possible by changes to employee work schedules. Service- level reductions almost certainly will require layoffs and/or renegotiation of current labor costs. 7. With its bargaining units the City will normally enter into new labor contracts of no more than 12 months’ duration, unless General Fund reserves are back up to the long term goal of 25%, and projected to remain there for the subsequent five years. 8. To reduce the rate of increase in labor costs, the City will engage in good-faith negotiations with bargaining units to make cost- saving changes in retirement plans and to reduce the City-paid share of

health benefits.

B. Water and Sewer Operating Funds – The City shall make every effort to keep a minimum reserve level of 25% of the appropriated operating budget for the Sewer operating fund and the Water operating fund. C. Water and Sewer Rate Stabilization Funds – The City shall make every effort to keep a minimum reserve level equal to 20% of the annual estimated utility usage revenue accounted for in the Sewer operating budget and 20% of the annual estimated utility usage revenue accounted for in the Water operating budget. D. Water and Sewer System Replacement Funds — The January 2016 Rate Study approved by the City Council establishes Capital System Replacement Reserve target of a minimum of 3% of net depreciable capital assets, which equates to a 33-year replacement cycle for capital assets. This target serves as a starting point for addressing long-term capital system needs. E. Unemployment – The City shall make every effort to maintain a minimum reserve level in the Unemployment Fund equal to 100% of the appropriation for unemployment claims. F. Workers’ Compensation – The City shall make every effort to maintain a minimum reserve level for Workers’ Compensation equal to the sum of twice the self insured amount for a single claim. G. General Liability – The City shall make every effort to maintain a minimum reserve level equal to four times the self insured retention for general liability claims.

GENERAL INFORMATION 39