Staff Report
PREPARED BY: STEPHEN CONWAY
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
TOWN COUNCIL REPORT
MEETING DATE: 05/15/2018
ITEM NO: 5
ITEM NO: 11
DATE: MAY 8, 2018
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: ADOPT AN UPDATE TO THE TOWN’S GENERAL FUND RESERVE POLICY AS
RECOMMENDED BY THE COUNCIL FINANCE COMMITTEE AND APPROVED
BY COUNCIL
RECOMMENDATION:
Adopt an update to the Town’s General Fund Reserve Policy as recommended by the Council
Finance Committee and approved by Council.
REMARKS:
The Town demonstrates sound fiscal administration by regularly reviewing and updating its
financial policies regarding budgeting, revenues, expenditures, fund balance reserves, capital
improvements, long term debt, and investments. The policies regarding budgeting, revenues,
expenditures, capital improvements, and long term debt were first incorporated into the Fiscal
Year (FY) 2004/05 budget document and have been updated as necessary at the time of the
annual budget adoption. The Town’s General Fund Reserve Policy was last updated in February
2017 (Attachment 1). All of the Town’s financial policies follow Government Financial Officers
Association recommendations and meet Government Financial Officers Association standards.
In addition, staff receives input on evolving best practices from the Town’s independent
auditor.
Revisions are recommended to the General Fund Balance Policy as shown in Attachment 2.
These revisions further define and specify the different categories and allowable uses and
approval mechanisms for the Town’s available fund balances. The Policy renames the
CalPERS/OPEB Reserve to Pension/OPEB Reserve to describe the reserve name more precisely.
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SUBJECT: GENERAL FUND RESERVE POLICY
MAY 15, 2018
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REMARKS (cont’d):
In addition, this Policy lays out the procedures for the Town to set aside additional annual
discretionary payments (ADPs) to reduce the effective amortization period of the Town’s
pension unfunded actuarial liabilities from approximately 30 years to 20 years. Instead of
paying the ADPs directly to CalPERS, the Finance Committee and Council determined that any
ADPs be deposited into the IRS 115 PensionTrust Fund.
At its April 3, 2017 meeting, the Council Finance Committee reviewed and discussed the ADP
strategy and proposed update to the Town’s General Fund Reserve Policy. The Committee
referred the recommendations forward to the Town Council for consideration at their April 17,
2018 meeting. Upon approval of the ADP strategy staff recommended that the requisite
updates to the Reserve Policy be brought forward to the May 15, 2018 Town Council meeting
as part of the annual Budget and Policy review process.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
FISCAL IMPACT:
There is no fiscal impact from approving the recommended changes.
Attachments:
1. Existing General Fund Reserve Policy 4-03
2. Proposed General Fund Reserve Policy (red lined)