TO: Mayor and City Council
THROUGH: Keith Stahley, City Manager
FROM: Josh Eggleston, Chief Financial Officer
SUBJECT:
title
Resolution adopting updates to City Council Policy C-14 - Utility Fund Financial Policy
Ward(s): All Wards
Councilor(s): All Councilors
Neighborhood(s): All Neighborhoods
Result Area(s): Good Governance; Natural Environment Stewardship; Safe and Healthy Community; Safe, Reliable and Efficient Infrastructure; Strong and Diverse Economy; Welcoming and Livable Community.
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SUMMARY:
summary
At the November 18, 2024, Finance Committee meeting, the committee reviewed and forwarded updates to the Utility Fund Financial Policy to City Council for approval. The recommended change to the policy addresses maintaining sufficient unrestricted cash balance in financial models to support a financially resilient operation. This need was identified during the 2024 Utility rate setting process.
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ISSUE:
Shall City Council adopt Resolution No. 2024-49 updating Council Policy C-14 - Utility Fund Financial Policy?
RECOMMENDATION:
recommendation
Adopt Resolution No. 2024-49 updating Council Policy C-14 - Utility Fund Financial Policy.
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FACTS AND FINDINGS:
A fund financial policy helps ensure financial stability by guiding the maintenance of reserves to accommodate fluctuations in expenses and revenues, establishing clear rules for use of operating reserves, and promotes fiscal discipline. It is also a Government Finance Officers Association best practice.
An update to Council Policy C-14 was adopted by City Council in July 2024. Subsequently during the 2024 rate setting process, additional policy language addressing unrestricted cash was identified as necessary to sustain financial operations in the Utility Fund. Bond rating agencies use various metrics to evaluate financial health including total days of cash or unrestricted days of cash. This measure was used in both the 2022 and 2024 utility rate setting cycles to evaluate the financial forecast. This recommended change to Council Policy C-14 codifies current practice to ensure financial modeling includes sufficient unrestricted cash balance to support ongoing operations.
The update to Council Policy C-14 was reviewed by the Finance Committee and forwarded to City Council for approval on November 18, 2024.
BACKGROUND:
City Council Policy C-14 was established in 2014 and was revised in July 2024.
Kali Leinenbach
Budget Manager
Attachments:
1. Resolution No. 2024-49
2. Resolution No. 2024-49, Exhibit A - Revised Council Policy C-14 - Utility Fund Financial Policy
3. Resolution No. 2024-49, Exhibit B - Redline Council Policy C-14 - Utility Fund Financial Policy