Page 356 - Microsoft Word - FY 2022 Adopted Budget Document

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FINANCIAL POLICIES (CONTINUED)
Fund Balance and Reserves

1. The City will maintain general fund reserves equivalent to 15% of recurring annual general fund expenditures. Reserves
will be calculated and presented as combined, with the source footnoted.

In Compliance: Yes Comments: For FY21, the City’s reserves total 20.7% of recurring General Fund expenditures,
which is $13.94 million in excess of the 15% requirement.

2. The Business Continuity Reserve for budget stabilization shall be maintained to provide financial stability for the General
Fund during an economic downturn, separate from General Fund reserves.

In Compliance: Yes Comments: The current balance Business Continuity Reserve is $4,062,075.

3. The City will maintain reserves in the Water Utilities Fund, Storm Water Utility Fund and Street Maintenance Fund equal to
a minimum of 60 days of operating and maintenance expenses (excluding debt).

In Compliance: Yes Comments: For FY21, the Water Utilities Fund’s reserves total 61.5 days of operating and
maintenance expenses (excluding debt), which is $0.48 million in excess of the minimum of 60
days. This is a new criterion for Storm Water and Street Maintenance funds, but currently 15.7%
and 9.9% of expenditures are set aside, respectively. Working capital reserves will be adjusted at
year-end to the equivalent of 60 days of expenses excluding debt.

4. The City will maintain a Rate Stabilization Fund to assist in offsetting temporary increases to the budget and increases from
mid-year settle-ups from Trinity River Authority (TRA) and Tarrant Regional Water District (TRWD). The fund shall not
exceed 5% of the total Water Utilities expenditure budget. Use of this Fund will be authorized as part of the annual operating
budget.

In Compliance: Yes Comments: For FY21, Rate Stabilization Fund balance is currently 5% of the total Water Utilities
expenditure budget.

5. The City’s general fund unassigned ending balance may only be used for one-time purchases like capital equipment.

In Compliance: Yes Comments: Prior year balance in the amount of $4.48M was used in the FY21 budget for one-
time purchases.

6. All governmental and proprietary funds will have positive cash balances.

In Compliance: Yes Comments: All funds reported positive cash balances as of 9/30/20.

7. The fund balance in the debt service fund shall be maintained at a minimum level of 4.0% of annual debt service
expenditures and a maximum level of 10%.

In Compliance: Yes Comments: Fund balance was 7.2% of expenditures in FY20

8. The fund balance in the Water Utility Interest and Sinking Fund and Storm Water Interest and Sinking Fund shall be
maintained to ensure debt service payments.

In Compliance: Yes Comments: Both Funds had cash above the FY21 debt service. Water has 3.99x coverage in
revenues / debt service and 1.48x in funds / debt service. Stormwater has 3.98x coverage in
revenues / debt service.

FY 2022 Adopted Budget and Business Plan 345 City of Arlington, Texas