M E M O R A N D U M
To: Honorable Mayor and Town Council
From: Rafael G. Casals, Town Manager
Date: October 21, 2015
Re: Fund Balance Policy - Amendment of Ordinance 13-06 (Second Reading)
REQUEST
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AN ORDINANCE OF THE MAYOR AND TOWN COUNCIL OF THE TOWN OF CUTLER BAY, FLORIDA, REGARDING BUDGETING AND RESERVES; AMENDING ORDINANCE 13-06 TO INCREASE THE MINIMUM RESERVE PERCENTAGE FOR THE RESERVE FUND BALANCE OF THE TOWN'S ANNUAL GENERAL FUND BUDGET; PROVIDING FOR SEVERABILITY; PROVIDING FOR INCLUSION IN THE CODE; REPEALING CONFLICTING ORDINANCES; AND PROVIDING FOR AN EFFECTIVE DATE.
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BACKGROUND AND ANALYSIS
During our fiscal year 2012-13 Budget Hearings, the subject regarding the creation of a "contingency reserve" account was discussed by both the Town Council and members of the public. The Town Council adopted Ordinance 13-06 to enact such a fund balance policy. The establishment of the fund balance policy insures against unanticipated events that would adversely affect the financial condition of the Town and jeopardize the continuation of necessary public services. This policy insures the Town maintains adequate fund(s) balance and reserve(s) in the Town's General Fund, its primary "operating fund", to provide the capacity to: (1) provide sufficient cash flow for daily financial needs, (2) secure and maintain investment grade bond ratings, (3) offset significant economic downturns and revenue shortfalls, and (4) provide funds for unforeseen expenditures related to emergencies.
Ordinance 13-06, among other things, requires the Town to maintain a reservation of fund balance in the General Fund, set aside in "unassigned fund balance" for contingencies and emergencies, equal to a minimum of ten percent (10%) of the next fiscal year's General Fund operating expenditure budget (as defined). Since enacting Ordinance 13-06, the Town has grown, both from a financial standpoint as well as from a population standpoint.
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