Title
Review of General Fund Reserve Policy
Staffreport
SUMMARY
Review proposed changes to the currently adopted General Fund reserve policy to align with organizational needs and industry best practices.
RECOMMENDATIONS
Staff recommends that the Committee receive the presentation on the proposed changes to the General Fund reserve policy and provide feedback and direction on the recommended changes.
BACKGROUND
The City's current reserve policy was last updated in June 2021. The policy was presented at a City Council work session on May 24, 2021, and adopted by City Council on June 28, 2021.
Analysis
The establishment and adherence of a reserve policy is a critical component of attaining long-term fiscal sustainability. The City routinely reviews its reserve policy to ensure that the policy meets the current needs of the City, while also ensuring adequate risk protection, as well as ensuring the policy meets or exceeds best practices.
Fund Balance
When considering establishing a reserve policy, a city must understand fund balance. Fund balance represents the difference between the City's totals assets and current/future liabilities. Simply put, fund balance shows the net available resources in a specific fund at a given point in time.
Fund balance consists of five (5) distinct categories:
* Non-spendable - Resources that cannot be spent.
* Restricted - Resources with external restrictions (i.e. grants).
* Committed - Set aside for specific purposes by formal government action.
* Assigned - Intended for specific purposes but not legally restricted (i.e. encumbrances).
* Unassigned - Available for any purpose.
Assigned and unassigned fund balances are the categories in which a reserve policy establishes guidelines for unrestricted balances.
Current Reserve Policy
The reserve policy of the City of San Leandro establishes the foundation for designating funds to reserves that support the City Council's goal of ensuring fiscal stability and the s...
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