FINANCIAL ADVISORY BOARD AGENDA ITEM
ACTION REQUESTED:
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Receive a Report on City Reserve Level Policies
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DEPARTMENT: Finance Department
SUBMITTED BY: Franco Bottalico, Budget Analyst
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
The City of Naperville's current Emergency Reserve Policy was adopted by the City Council on December 20, 2011. The policy stipulates that the City maintain a minimum of a 20% reserve. The purpose of the reserve is to ensure the city's ability to fund the provision of critical services to the public during, or immediately after, an emergency event. The intention is to mitigate current and future risks from events which result in either:
* sudden and significant decreases in locally collected revenue or intergovernmental aid;
* or unanticipated expenditures related to relief efforts in response to an extreme event;
* or the immediate cash requirement for unexpected major capital maintenance expenditures.
In addition to the Emergency Reserve Policy and Ends Policy for the General Fund, the City also has a resolution regarding the reserves for both Utility Enterprise Funds (Electric and Water/Wastewater). The reserve policy for the Utility Enterprise Funds was adopted on April 15, 2003, instructing the City to maintain a 30-day working capital reserve for each fund.
In 2015, the Naperville City Council and City staff developed four ends policies to help guide the City's priorities in the coming years. One of these policies is that Naperville will be financially stable and maintain a AAA bond rating. One of the performance management goals to meet this ends policy is to provide services that ensure a high quality of life for our residents through fiscal management and financial stability, the City will actively seek to increase its reserves to 25% and reduce its debt by 25% in the next eight years.
The City has successfully maintained the 20% reserve for the General Fund and has pursued a 30-day reserve for each of the...
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