FINANCIAL RESERVES POLICY - Laserfiche WebLink

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Mr_,-MM=Z• "UM Last Reviewed: January 16, 2020 PURPOSE This policy statement is intended to provide a framework and guidance for the Board of Directors in establishing, maintaining and utilizing the District's financial reserves. The Conejo Recreation and Park District reserve policy is an effort to provide clear and well -articulated reasons and guidance for the accumulation and management of the District's reserve funds. Financial reserves are intended to help the District remain financially stable and can serve as a buffer against present and future uncertainties. Financial reserves are a critical ingredient of financial planning and assist the District in achieving its short and long-term plans. Reserve categories and balances are identified on the District's audited financial statements (Balance Sheet) under "Fund Balance." The adequacy of the target reserve balances will be reviewed annually during the annual audit and may be revised as necessary. The following District reserve fund categories are hereby established: Operating Reserve Purpose: The Operating Reserve is committed for unexpected operating expenses and contingencies. Use of Funds: The Operating Reserve is set aside for operating expense shortfalls due to unexpected expenses or revenue shortfalls. This fund may also be used for emergency cash-flow needs. Funding: An ideal target reserve balance is between 3 - 6 months of operating expenses. The Operating Reserve Fund Balance as of January 16, 2020 is $6.4 million, which represents 3.4 months of expenses. Claims & Liability Reserve Purpose: The Claims and Liability Reserve is committed for workers' compensation expenses, claims and liabilities. Use of Funds: The Claims and Liability Reserve is for property, liability and workers' compensation claims. The District recently purchased excess insurance coverage for workers' compensation claims. The District obtains insurance through a joint powors authority, 1�