2023-067 - Approving Commitments of Fund Balance Under GASB 54RESOLUTION 2023-067
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, 2023 in the Nonspendable Reserve;
and
WHEREAS, there exists a balance of $44,338 as of June 30, 2023 Land held for resale for Below
Market Housing Program property in the Restricted Reserve; and
WHEREAS, there exists a balance of $1,400,163 as of June 30, 2023 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) 2023/24 general fund budgeted operating expenditures
of $6,129,774 as specified in the Town Council General Fund Reserve Policy. This would increase
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both Budget Stabilization and Catastrophic Reserves from $6,129,775 by $138,208 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
CaIPERS/OPEB Reserve from available year-end savings; and
WHEREAS, there exists a balance of $300,000 as of June 30, 2023 in the committed
CaIPERS/OPEB Reserve; and
WHEREAS, there exists a committed 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, 2023 and
should be used for operating expenses in FY 2023/24; 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, 2023 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, 2023 in the assigned
Sustainability Reserve; and
WHEREAS, there exists an assigned Market Fluctuation Reserve that represents 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
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Resolution 2023-067 December 19, 2023
WHEREAS, there is no current balance as of June 30, 2023 in the assigned Market Fluctuation
Reserve reflecting Tess than $10,000 investment earnings as of June 30, 2023; 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 $37,698; and
WHEREAS, with the adoption of the Fiscal Year 2023/24 Budget, the Council established an
assigned Council Priorities — Economic Recovery Reserve to track General Fund revenues freed up
from recognizing all American Rescue Plan Act (ARPA) "replacement" revenues to the General Fund
for essential government services, for economic recovery and business support, enhanced senior
services, capital program augmentations, and other one-time uses; and
WHEREAS, there exists an excess balance of $1,556,614 as of June 30, 2023 in the assigned
Council Priorities — Economic Recovery Reserve; and
WHEREAS, the Council has established an assigned Educational Revenue Augmentation Fund
(ERAF) Risk Reserve, reserving the 30% of the anticipated ERAF proceeds from FY 2022/23 until a
lawsuit between the State and the School Districts concludes; and
WHEREAS, there exists an excess balance of $689,608 as of June 30, 2023 in the assigned ERAF
Risk 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 $1,580,623; 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 in 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
$10,359,577.
NOW, THEREFORE, THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES HEREBY RESOLVE
that the following fund balances as of June 30, 2023, as restricted, assigned, or formally committed
as follows:
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Resolution 2023-067 December 19, 2023
General Fund
Other
Nonmajor Total
Appropriated Governmental Governmental
Reserves Funds Funds
Fund Balance
Nonspendable $ 159,000 $ - $ $ 159,000
Loans Receivable - 5,690 - 5,690
Leases Receivable - 50,287 50,287
Restricted for:
Library - 530,174 530,174
Capital Projects - 8,328,572 8,328,572
Land Held for Resale 44,338 - 44,338
Repairs and Maintenance - 176,966 176,966
Pension 1,400,163 - 1,400,163
VTA 494,826 - 494,826
Committed to:
Budget Stabilization 6,129,774 - 6,129,774
Catastrophic 6,129,775 - 6,129,775
Pension/OPEB 300,000 - 300,000
Measure G 2018 District Sales Tax 590,581 1,769,057 - 2,359,638
Special Revenue Fund 821,200 821,200
Assigned to:
Open Space 410,000 152,000 - 562,000
Parking 100,000 - 100,000
Sustainability 140,553 - 140,553
Capital/Special Projects 10,359,577 19,178,452 29,538,029
Carryover Encumbrances 37,698 37,698
Comcast PEG 50,000 50,000
ERAF Risk 689,608 689,608
Economic Recovery 1,556,614 1,556,614
Compensated Absences 1,580,623 - 1,580,623
Total Fund Balances $ 29,528,304 $ 21,750,025 $ 9,907,199 $ 61,185,528
PASSED AND ADOPTED at a regular meeting of the Town Council held on the 19th day of
December, 2023, by the following vote:
COUNCIL MEMBERS:
AYES: Maria Ristow, Rob Rennie, Rob Moore, Matthew Hudes, Mayor Mary Badame
NAYS: None
ABSENT: None
ABSTAIN: None
SIGNED:
MA HE TOWN OF LOS GATOS
ATTEST:
TOWN CLE2RK OF THE TOWN OF LOS GATOS
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Resolution 2023-067
December 19, 2023