HomeMy WebLinkAboutItem 3C - PresentationCity of Palm Springs
ESTABLISHING A CITY COUNCIL POLICY SETTING AFUND BALANCE MINIMUM RESERVE IN THE GENERAL FUND
JUNE 29, 2023
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City of Palm Springs
General Fund Balance Reserve Policy
•A positive Fund Balance is an accumulation of historical General Fund surpluses.
•Establishing a minimum reserve policy for the General Fund is a best practice
under “Adopting Financial Policies” cited by the Government Finance Officers
Association (GFOA).
•Adopting sound financial policies will support a good bond rating which
ultimately lowers borrowing cost.
•Staff, working closely with the City’s Financial Advisor, is recommending 20% of
operating expenditures as a minimum reserve. This would be approximately $31 -
$32 million of the current Fiscal Year 2023-24 and 2024-25 operating
expenditures.
•The City’s external Audit team, The PUN Group, also reviewed the policy.
•20% was settled upon due the City’s potential volatility in the City’s main source
of tax revenue, Transient Occupancy Tax (TOT).
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City of Palm Springs
General Fund Balance Reserve Policy
•This policy also establishes rules to follow if fund balance falls below the
minimum threshold:
•5-year replenishment period
•Methods to get back to the minimum reserve include, but are not limited to:
•Future General Fund surpluses
•Transfer from Internal Service Funds
•Removal of Assigned Fund Balance
•City Council removal of a Committed Fund Balance
•Excess over the minimum Fund Balance may be used in the following manner:
•Debt reduction
•Capital Improvements
•Set-Asides for City Council priorities
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