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HomeMy WebLinkAbout21-22 Adoption of Working Reserve Policy 02-10-2021RESOLUTION NO. 21-22 A RESOLUTION OF THE BOARD OF TRUSTEES OF THE TOWN OF FIRESTONE, COLORADO, ADOPTING THE TOWN OF FIRESTONES WORKING RESERVE POLICY WHEREAS, the Town of Firestone ("Town") previously adopted a Working Reserve Policy ("Policy"); and WHEREAS, the Board of Trustees finds that the Policy should be updated with the goal of promoting and supporting the efficient, beneficial and effective use of the Town's resources; and WHEREAS, the Town Manager, Director of Finance and the Finance Committee collaborated to develop an updated policy, which has been presented to the Board of Trustees; and WHEREAS, the Board of Trustees finds that the proposed policy meets the goals it established and also supports the Town's fiscal responsibilities. NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE TOWN OF FIRESTONE, COLORADO: Section 1. The Board of Trustees hereby approves and adopts the Town of Firestone Working Reserve Policy, in substantially the same form as the copy which is attached hereto and made a part of this resolution. Section 2. All prior Working Reserve Policies or amendments thereof adopted by the Town are repealed in their entirety. PASSED AND ADOPTED this 10�' day of February 2021. I1 J T: 1 ,T AUNTY, G9 TOWN OF FIRESTONE, COLORADO 1 APPROVED AS TO FORM: 2 TOWN OF FIRESTONE WORKING RESERVE POLICY INTENT The Town of Firestone (Town) Board of Trustees (Board) has determined it to be prudent financial practice to maintain adequate levels of working reserve in the Town's General Fund in order to mitigate current and future risks such as revenue shortfalls and unanticipated expenditures as well as to buffer the Town from downturns in the economy and to provide an additional source of accumulated funding For major capital improvement projects. The Town believes that establishing and maintaining adequate working reserve levels will assist the Town in taking greater advantage of the "pay as you go" philosophy and is a critical consideration to the Town's long-term financial planning. POLICY The Town has established the following fiscal policy related to its working reserve. Minimum, Maximum and Target Levels The Town will maintain a minimum working reserve of at least 25% of the current year's General Fund operating appropriations. The Town's maximum working reserve shall not exceed 100% of the General Fund budgeted operating appropriations. In the event the Town has excess funds of over the 100% maximum amount, the Town will reserve such excess fiends for fatu•e capital projects or for such other purposes as designated by the Board. The working reserve levels will be determined by the Board annually during the budget process. Use of Funds The Town understands that circumstances may arise that may warrant the Town using its working reserve temporarily. The Town has determined the following circumstances to be permissible instances where it may elect to use its working reserve: • An economic downturn in which revenues are significantly/materially under budget • Unexpected and unappropriated price increases to service and maintain essential Town operations • Non -budgeted and unexpected emergencies , natural disaster costs, or litigation • Early retirement of Town debt or loans • Grant matching and public/private partnership matching • Provide coverage to other fiends due to a shortfall in budgeted revenues • Capital asset acquisition, construction and improvement projects The use of the working reserve in a given budget year will require approval by a simple majority vote by the entire Board. Page 2 of2 Terms for Replenishment In the event the Town elects to use its working reserve for the aforementioned purposes, the Town will concurrently establish a formal plan to replenish its working reserve to the minimum working reserve level. It will be the policy of the Town to replenish the working reserve to its minimum level as follows: • As soon as revenues are reasonably available, and • With priority given to replenishment over any future budgeted, new discretionary spending by the Board (either capital or operational in nature), and • With replenishment complete no later than 5 years subsequent to the utilization of such funds. Policy Review The Finance Director will be responsible for reviewing the Working Reserve Policy annually in connection with the Town's annual budgeting process to ensure that the Town is maintaining adequate levels of working reserve funds as set forth in this policy. Furthermore, the Finance Committee and Finance Director will be responsible for reviewing the Working Reserve Policy every two years and will make recommendations for revisions to the policy as deemed appropriate. Adoption and modifications to this policy will require the approval of a simple majority vote by the entire Town Board. ow°"mot iy( bi Sinde r, Mayor <p cov 00 I_ N� essica Koenig, CZMC, 'l�n Clerk Page 2 of2