Page 339 - FY 2025 Adopted Operating Budget and Business Plan

Appendices Return to Table of Contents

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 FY 2024, the City’s reserves total 20.0% of recurring General Fund expenditures,
which is $15.76 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 FY 2024, Operating Reserves in the Water Utility Fund, Street Maintenance Fund
and Storm Water Utility Fund will represent 60 days of expenses in those funds excluding debt
and one-time expenses.

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 FY 2024, the Rate Stabilization Fund balance will be 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: Unassigned ending balance was not appropriated in the FY24 budget.

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

In Compliance: Yes Comments: All funds reported positive cash balances as of 9/30/23.

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 6.8% of expenditures in FY 2023. Current forecast is that the FY24
(FY23) / No (FY24) may not meet the 4% policy, but the policy will be back in compliance in FY25.

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 FY 2023 debt service. Water has 3.19x coverage in
net revenues / debt service. Stormwater has 3.65x coverage in total revenues / debt service.

FY 2025 Adopted Budget and Business Plan 330 City of Arlington, Texas