FINANCIAL RESERVES POLICY - Laserfiche WebLink

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The attached Reserve Policy provides for six distinct reserve funds: 1. The Operating Reserve is committed for unexpected operating expenses and contingencies. 2. The Claims and Liability Reserve is committed for workers' compensation expenses, claims and liabilities. 3. The OPEBIPart time Pension Reserve is restricted for stipends and medical premiums for qualifying retirees from the District and for the pension plan for part time employees hired prior to January, 2013. 4. The Equipment Replacement Reserve is committed for vehicle and equipment replacement. 5. The Vested Leave Reserve is assigned for accrued leave (vacation/sick) payouts. 6. The Pension Stabilization Fund is restricted for pension and OPEB obligations. Restricted fund balancesireserves are generally restricted by external legal obligations. Committed reserves cannot be used for anything but their intended purpose unless otherwise directed by the Board of Directors. Per the attached policy, these reserves and balances therein will be considered at least annually as part of the annual audit presented to the Board. Should circumstances require, the Board may consider potential utilization or adjustments to reserves at any time. Funds remaining "Unassigned" could be utilized for a variety of purposes, such as reducing District long- term liabilities and providing funds for capital projects. In June, 2018 the Board authorized a transfer of $4.0 million from this OPEBIPT Pension reserve to a section 401(a) pension trust for the stipend and part time pension liabilities. In November, 2018, the Board authorized a transfer of $4.5 million to a section 115 Post -Employment Benefit Trust for the retiree medical premium liability. Actuary reports reflecting the change from in-house money to the trusts have been requested. The balance of this reserve, $2.51 million, was transferred to the Pension Stabilization Reserve (discussed below). The Finance and Audit Committee met on February 26, 2019 to review the reserve policy and amounts assigned to each of the reserve funds. After consultation with staff, and considering the District's mission, present financial conditions and strategic objectives, the Committee recommends changes to the current reserve balances as follows (Exhibit 3). Operating Reserve - leave at $6 million, reducing coverage from 3.5 to 3.3 months of expenses; Claims and Liability Reserve - transfer $0.08 to unrestricted to get the balance to target amount of $2.5 million; OPEBIPT pension reserve — delete, as the funds have been allocated to trusts and the Pension Stabilization Fund; Equipment Replacement Reserve - leave as is (slightly overfunded); HILLCREST CENTER 403 WEST HILLCREST DRIVE, THOUSAND OAKS, CALIFORNIA 91360-4223 (805) 495-6471 FAX: (805) 497-3199 E-MAIL:parks@crpd.org