Recommended FY 2022-2024 Operating Budget and CIP

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. Budgetary Designations A. A portion of General Fund Balance will be designated for economic uncertainties and not be reflected in available fund balance for budget purposes. This is to avoid the need for service level reductions in the event an economic downturn causes revenues to come in lower than budget. B. Reserves for Encumbrances and Continuing Appropriations are established at the end of every fiscal year to reserve fund balance in the amount equal to the City’s unpaid obligations and unfinished projects at year-end. C. Other reserves, such as for cash flow needs Fiscal Policies (continued)

or anticipated costs for service enhancements, will be established each fiscal year as needed. 3. CASH MANAGEMENT A. City investments and cash management will be the responsibility of the City Treasurer. B. In accordance with Section 53646 of the Government Code, the City Council will review and update periodically, a specific investment policy. The primary purpose of this policy is to set forth the City’s investment philosophy and objectives. The City’s investment objectives are, in order of priority: 1) safety, 2) liquidity, and 3) yield. The policy also specifically outlines authorized investments, the acceptable percentages and maximum maturities allowed for each investment instrument and the criteria used to determine qualified depositories/dealers. C. The City invests all idle cash as determined by analysis of anticipated cash flow needs. Specific emphasis will be placed on future cash requirements when selecting maturity dates to avoid forced liquidations and the potential corresponding loss of investment earnings. D. In order to maximize yields from the overall portfolio, the City will consolidate cash balances from all funds for investment purposes, and will allocate investment earnings to each fund in accordance with generally accepted accounting principles. E. The City Treasurer will generate a monthly report to the City Council in conformance with all State laws and City investment

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