Government Finance Officers Association
MISSION STATEMENT
The purpose of the Government Finance Officers Association is to enhance and promote the professional management of governments for the public benefit by identifying and developing financial policies and best practices and promoting their use through education, training, facilitation of member networking, and leadership.
Distinguished Budget Presentation Award Program
The purpose of the Government Finance Officers Association is to enhance and promote the professional management of governments for the public benefit by identifying and developing financial policies and best practices and promoting their use through education, training, facilitation of member networking, and leadership.
Distinguished Budget Presentation Award Program
Most Recent Results
Budget Years Beginning Fiscal Year 1/1/2012 12/1/2012
STATE/ PROVINCE FIRST/
NAM LAST/ NAME TITLE COMPANY CITY REVIEWER START DATE
CA Jason
Stilwell City Administrator City of Carmel-by-the-Sea Carmel Jul-02
"Managing reserves, however, can be a challenge. The main question is how much money to maintain in reserve – how much is enough, and when does it become too much? This can be a sensitive question, since money held in reserve is money taken from constituents, and it can be argued that excessive reserves should be returned to citizens in the form of lower taxes."
Executive Summary
May 2013
Budgetary Uncertainty Reserve
Approximately 12.5 percent of general fund revenues as budgetary uncertainty reserve
A Risk-Based
Analysis of General Fund Reserve Requirements
Government Finance Officers AssociationMay 2013
Budgetary Uncertainty Reserve
Approximately 12.5 percent of general fund revenues as budgetary uncertainty reserve
Emergency Reserve
Approximately 12.5 percent of general fund revenues as an emergency reserve
Combining the components gives us a target of approximately 25 percent of general fund revenues, which is in line with the range of reserves actually maintained by other cities that are comparable to Colorado Springs. It is also greater than the 16 percent the GFOA considers a minimum baseline level.5
5 See the GFOA best practice, Appropriate Level of Unrestricted Fund Balance in the General Fund, available at www.gfoa.org. According to this best practice document, governments should establish a formal policy of maintaining reserves equal to about 16 percent of revenues or expenditures, and the actual target should be based on an analysis of the salient risks the government faces – which in many cases calls for a reserve level of more than 16 percent.
City of Colorado Springs, CO.
Budgetary Uncertainty Reserve $27 million
$27 million, or approximately 12.5 percent of general fund revenues as budgetary uncertainty reserve
Emergency Reserve $27 million
$27 million, or approximately 12.5 percent of general fund revenues as an emergency reserve
Based on the 2012 budget estimate of approximately $220 million in general fund revenue.
City of Carmel-by-the-Sea, CA.
FUND BALANCE
Estimated 6/30/2014 Balance $10,259,848
Total All Funds/Net Assets $8,638,275
Approximately 12.5 percent of general fund revenues as an emergency reserve
Combining the components gives us a target of approximately 25 percent of general fund revenues, which is in line with the range of reserves actually maintained by other cities that are comparable to Colorado Springs. It is also greater than the 16 percent the GFOA considers a minimum baseline level.5
5 See the GFOA best practice, Appropriate Level of Unrestricted Fund Balance in the General Fund, available at www.gfoa.org. According to this best practice document, governments should establish a formal policy of maintaining reserves equal to about 16 percent of revenues or expenditures, and the actual target should be based on an analysis of the salient risks the government faces – which in many cases calls for a reserve level of more than 16 percent.
Budgetary Uncertainty Reserve $27 million
$27 million, or approximately 12.5 percent of general fund revenues as budgetary uncertainty reserve
Emergency Reserve $27 million
$27 million, or approximately 12.5 percent of general fund revenues as an emergency reserve
Based on the 2012 budget estimate of approximately $220 million in general fund revenue.
City of Carmel-by-the-Sea, CA.
FUND BALANCE
Estimated 6/30/2014 Balance $10,259,848
Total All Funds/Net Assets $8,638,275
Based on adopted budget of $18.2 million
Source: City of Carmel-by-the-Sea, California
Fiscal Year 2013-2014 Proposed Operating Plan & Budget
Note: Approximately 25 percent of general fund revenues, $4.55 million
FUND BALANCE POLICY
The Fund Balance Policy is designed to develop standards for setting reserve levels for various, significant City funds. Adequate fund balance and reserve levels are a necessary component of the City’s overall financial management strategy and a key factor in external agencies’ measurement of the City’s financial strength. The City shall maintain reserves at a prudent level, and shall use reserves appropriately with a focus on contributing to the reserves in good times and drawing on the reserves in times of difficult budget periods to maintain a consistent level of service and quality operations. Use of reserves are to supplement the annual budget.
Guidelines:
1. General Fund and Hostelry Fund reserves shall be maintained at no less than ten percent (10%) of their annual projected revenues.
2. The City shall maintain prudent reserves for identified liabilities
a. A Vehicle Replacement reserve will be maintained sufficient to replace vehicles and heavy equipment at the end of their useful lives, with the target being 10% of the total City fleet replacement value.
b. Technology equipment replacement reserves will be maintained sufficient to repair covered equipment and for replacement at the end of its useful life.
3. The City will maintain a long-term budget stability reserve consisting of any unassigned General Fund balance. When available, the year-end General Fund operating surplus will be dedicated to the long-term budget stability reserve.
4. A general capital reserve fund will be maintained with a targeted balance of 20% of the estimated total five-year capital improvement plan project expenditure. Net proceeds from the sale of City owned property will be dedicated to the general capital reserve. Funds in the general capital reserve will be allocated through the budget process for capital projects.
5. Reserves shall be used only for established purposes.
6. Depleted reserves shall be restored as soon as possible.
7. A minimum level for each of the reserve funds shall be established (see chart below).
8. The City shall maintain reserves required by law, ordinance and/or bond covenants.
Source: City of Carmel-by-the-Sea, California
Fiscal Year 2013-2014 Proposed Operating Plan & Budget
Source: City of Carmel-by-the-Sea, California
Fiscal Year 2013-2014 Proposed Operating Plan & Budget
Note: Approximately 25 percent of general fund revenues, $4.55 million
The Fund Balance Policy is designed to develop standards for setting reserve levels for various, significant City funds. Adequate fund balance and reserve levels are a necessary component of the City’s overall financial management strategy and a key factor in external agencies’ measurement of the City’s financial strength. The City shall maintain reserves at a prudent level, and shall use reserves appropriately with a focus on contributing to the reserves in good times and drawing on the reserves in times of difficult budget periods to maintain a consistent level of service and quality operations. Use of reserves are to supplement the annual budget.
Guidelines:
1. General Fund and Hostelry Fund reserves shall be maintained at no less than ten percent (10%) of their annual projected revenues.
2. The City shall maintain prudent reserves for identified liabilities
a. A Vehicle Replacement reserve will be maintained sufficient to replace vehicles and heavy equipment at the end of their useful lives, with the target being 10% of the total City fleet replacement value.
b. Technology equipment replacement reserves will be maintained sufficient to repair covered equipment and for replacement at the end of its useful life.
3. The City will maintain a long-term budget stability reserve consisting of any unassigned General Fund balance. When available, the year-end General Fund operating surplus will be dedicated to the long-term budget stability reserve.
4. A general capital reserve fund will be maintained with a targeted balance of 20% of the estimated total five-year capital improvement plan project expenditure. Net proceeds from the sale of City owned property will be dedicated to the general capital reserve. Funds in the general capital reserve will be allocated through the budget process for capital projects.
5. Reserves shall be used only for established purposes.
6. Depleted reserves shall be restored as soon as possible.
7. A minimum level for each of the reserve funds shall be established (see chart below).
8. The City shall maintain reserves required by law, ordinance and/or bond covenants.
Source: City of Carmel-by-the-Sea, California
Fiscal Year 2013-2014 Proposed Operating Plan & Budget
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