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Attachment 2 - Fund Balance Resolution Establishing June 30, 2022 Fund Balances 1 of 5 Resolution 2022-x Council Meeting Date ATTACHMENT 2 DRAFT RESOLUTION 2022- RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS APPROVING COMMITMENTS OF FUND BALANCE UNDER GASB 54 WHEREAS, the Governmental Accounting Standards Board (GASB) has issued its Statement No. 54, Fund Balance and Governmental Fund Type Definitions with the intent of improving financial reporting by providing fund balance categories that will be more easily understood and to improve the comparability of governmental fund financial statements; and WHEREAS, GASB 54 provides that the Town Council of the Town of Los Gatos classify governmental fund balances as restricted, assigned, or committed fund balances; and WHEREAS GASB 54 provides that restricted reserves are funds that are restricted for externally imposed constraints such as legal contracts or state law, assigned amounts are constrained by the Town’s intent to use them for specific purposes, and committed amounts are dedicated for specific purposes under constraints and formal action taken by the Town Council and these committed amounts cannot be used for any other purposes unless the Town Council of the Town of Los Gatos removes or changes the specific use through the same formal action to establish the commitment; and WHEREAS, there exists a Nonspendable Reserve that is not readily available for expenditure as it represents the outstanding balance of long term notes receivable; and WHEREAS, there exists a balance of $159,000 as of June 30, 2022 in the Nonspendable Reserve; and WHEREAS, there exists a balance of $690,000 as of June 30, 2022 in the Restricted Pension Trust Reserve; and WHEREAS, the Town Council of the Town of Los Gatos has established a General Fund Reserve Policy providing for minimum fund balance dollar target amounts for Budget Stabilization and Catastrophic fund balances and outlines policies and procedures for use and restoration of these balances; and WHEREAS, the Budget Stabilization and Catastrophic Reserve should be maintained at the required minimum 12.5% of Fiscal Year (FY) 2022/23 general fund budgeted operating expenditures of $5,991,566 as specified in the Town Council General Fund Reserve Policy. This 2 of 5 Resolution 2022-x Council Meeting Date ATTACHMENT 2 would increase both Budget Stabilization and Catastrophic Reserves from $5,460,566 by $531,081 from available Capital/Special Projects Reserve; and WHEREAS, in June 2016, the Town Council established the committed Pension/ Other Post-Employment Benefits (OPEB) Reserve to provide additional funding toward pension and OPEB unfunded obligations by placing discretionary amounts to the reserve with formal Council action and transferring available year-end surpluses based on the General Fund Reserve Policy; and WHEREAS, per Town Council General Fund Reserve Policy, $300,000 will be placed to the CalPERS/OPEB Reserve from available year-end savings; and WHEREAS, there exists a balance of $300,000 as of June 30, 2022 in the committed CalPERS/OPEB Reserve; and WHEREAS, the Town Council established the assigned Open Space reserve in the FY 1998/99 to be used for the preservation of open space, connection of open space trails, the definition of the southern boundary of the Town with passive open space, and protection of unique natural features; and WHEREAS, there exists an excess balance of $410,000 as of June 30, 2022 in the assigned Open Space Reserve; and WHEREAS, the Town Council established the assigned Sustainability Reserve in FY 2008/09 by closing the Solid Waste Management fund and placing the initial residual balance dedicated for conservation, recycling, and sustainability; and WHEREAS, there exists an excess balance of $140,553 as of June 30, 2022 in the assigned Sustainability Reserve; and WHEREAS, there exists an assigned General Fund Compensated Absences Reserve allocated to fund 50% of all vested hours of sick leave, compensation, and vacation time with the actual reserve amount of $1,519,147; and WHEREAS, there exists an assigned Market Fluctuation Reserve that represent fund balance amounts for unrealized investment gains that have been recorded as investment income in the financial statements in accordance with the requirements of GASB 31; and WHEREAS, there is a current balance of $0 as of June 30, 2022 in the assigned Market Fluctuation Reserve reflecting negative investment earnings as of June 30, 2022; and 3 of 5 Resolution 2022-x Council Meeting Date ATTACHMENT 2 WHEREAS, there exists an assigned Measure G 2018 District Sales Tax Reserve to track receipt and use of the 1/8 cent district tax funds collected by the Town; and WHEREAS, the Town Council has determined the use of Measure G accumulated and future proceeds to be allocated 50% for operating expenditures and 50% for capital purposes; and WHEREAS, 50% of the current Measure G proceeds dedicated for Capital Purposes was receipted in the General Fund Appropriated Reserve for capital purposes; and WHEREAS, there is anticipated to be an excess balance of $590,581 as of June 30, 2022 in the assigned Measure G District Sales Tax Reserve -Operating Reserve that the Council previously dedicated to balance the FY 2022/23 Budget; and WHEREAS, there exists an assigned Carryover Encumbrances Reserve for material and services on purchase orders and contract which are unperformed in the amount of $33,145; and WHEREAS, there exists an assigned Capital/Special Projects Reserve to fund Council priorities, and key infrastructure and capital/special projects as identified in the Town’s five-year Capital Improvement Plan; and WHEREAS, the remainder of the available year-end savings will be placed to the Capital/Special Project Reserve according to the Town Council Reserve Policy; and WHEREAS, there exists an assigned Capital/Special Project Reserve in the amount of $11,071,231; and NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES HEREBY RESOLVE that the following fund balances as of June 30, 2022 as restricted, assigned, or formally committed as follows: 4 of 5 Resolution 2022-x Council Meeting Date ATTACHMENT 2 PASSED AND ADOPTED at a regular meeting of the Town Council held on the 20th day of December 2022 by the following vote: COUNCIL MEMBERS: AYES: NAYS: ABSENT: ABSTAIN: SIGNED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: Other Nonmajor Total Appropriated Governmental Governmental General Fund Reserves Funds Funds Fund Balance Nonspendable 159,000$ -$ -$ 159,000$ Restricted for: Library - - 555,253 555,253 Capital Projects - - 8,357,393 8,357,393 Repairs and Maintenance - - 174,239 174,239 Pension 690,000 690,000 VTA - 296,598 - 296,598 Committed to: Budget Stabilization 5,991,566 - - 5,991,566 Catastrophic 5,991,566 - - 5,991,566 CalPERS/OPEB 300,000 - - 300,000 Special Revenue Fund 637,711 637,711 Assigned to: Open Space 410,000 152,000 - 562,000 Parking - 100,000 - 100,000 Sustainability 140,553 - - 140,553 Capital/Special Projects 11,071,231 13,642,155 - 24,713,386 Comcast PEG - 50,000 - 50,000 Carryover Encumbrances 33,145 - - 33,145 Compensated Absences 1,519,147 - - 1,519,147 Measure G 2018 District Sales Tax 590,581 - - 590,581 Total Fund Balances 26,896,789$ 14,240,753$ 9,724,596$ 50,862,138$ 5 of 5 Resolution 2022-x Council Meeting Date ATTACHMENT 2 CLERK ADMINISTRATOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA