FINANCIAL RESERVES POLICY - Laserfiche WebLink

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These funds have been saved over the years to fulfill a particular need or to serve a particular purpose. The attached current Policy for Financial Reserves (aka "Reserve Policy") is intended to provide clear, concise and well -articulated reasons and guidance for the accumulation and management of the District's reserve funds. 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 Equipment Replacement Reserve is committed for vehicle and equipment replacement. 4. The Vested Leave Reserve is assigned for accrued leave (vacation/sick) payouts. 5. The Pension Stabilization Fund is restricted for pension and OPEB obligations. 6. The Capital Facilities and Property Acquisition Fund is assigned for costs associated with adding and replacing capital facilities. 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. The Finance and Audit Committee met on November 17, 2021 to review the reserve policy and reserve fund balances. The Committee reviewed the investment performance of funds at PARS and heard a presentation regarding a Shuster 115 Trust for comparison. Collectively, the District's Pension and Post -Retirement Benefit Liabilities (Exhibit 3) are currently 99% funded considering all assets at PERS, PARS and in the District's Pension Stabilization fund. As these liabilities are almost fully funded, the proposed changes to the Reserve Policy include guidelines for the Board's annual consideration regarding future funding of the Pension Stabilization Fund and potential use of these funds for the annual normal cost to CALPERs or additional discretionary payments. With most of the reserve funds and liabilities near fully funded, the Committee reviewed proposed changes to the Capital Facilities Reserve. These changes include adding "Property Acquisition" to the purpose of the fund and establishing a target amount for the fund based on the Capital Improvement Plan as well as the current and predicted acreage needed to ensure the District can meet it's parks -per - person goals. After consultation with staff, and considering the District's mission, present financial conditions and strategic objectives, the Committee recommends changes to the current reserve policy as follows (Attachment 2).