06-12-19 Personnel and Finance - Laserfiche WebLink

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CITY OF SOUTH BEND OFFICE OF THE CLERK we don't set a cash reserve requirement for that because if you look at a capital fund,usually what you are expecting is that that capital fund will be spent down to zero (0) on the capital project it is intended for. So, usually we don't have a cash reserve requirement for capital projects funds, and you'll see that when we get to the actual numbers here in a second. Enterprise funds actually have a lower cash reserve requirement. They don't always have the twenty-five percent(25%)of annual expenditures requirement.The reason why is because there is a reciprocal relationship in enterprise funds. There is a reciprocal relationship between the revenues and expenditures. So, revenues increase when expenditures increase and when expenditures decrease, revenues decrease. They tend to move together in a way that is not always true in the governmental funds, where revenues and expenditures are sort of independent. Federal funds, and this is just a note, federal funds such as Bowman Cemetery,actually do have a specific dollar threshold that we do require. And the way we've determined that dollar threshold is a threshold that allows those funds to operate in perpetuity. So, for Bowman Cemetery, there's very little ongoing annual maintenance. So, what we said is if we keep a certain dollar threshold in that fund,the interest that we receive in that fund will actually fund all ongoing maintenance required for Bowman Cemetery. So, we don't have to put additional money into that fund. That's how we develop our cash reserve requirements and how we determine how it's going to go, the minimum amount of money we need to have on hand from a parliamentary perspective. He continued, This (referencing a slide in the presentation) is a summary, so I wanted to put this up here, this is a summary of a report that the Finance Department puts together monthly and it is sent out to the Council Members, as well as the Mayor's Office. It is online for the public, as well. So, our cash reserves, this shows cash available, compared to the reserve requirement and sort of the variance between the two (2). There are a couple things to note here. Cash available, this column here, is the total cash on hand minus outstanding encumbrances. So, we encumber funds for obligations that we have. That number represents outstanding obligations that we have. So, at the beginning of the year, for example, we encumber all of our debt service obligations for the entire year. Basically, we set that aside to say this cash is already spoken for, we can't use it on anything else because we have to pay our debt service with that cash. So, the cash available takes into account things we have already encumbered and set aside. The reserve requirement takes into account what I just talked about, referring to the different funds, and then the variance shows the difference between the two (2). You'll notice a couple of them on here, particularly from a trust fund perspective, are below the reserve requirement. That is due to, the trust funds especially, the Police Pension Fund and the Fire Pension Fund. The pension relief payments are received from the State in June and September, so we will be replenishing those funds as soon as we receive those pension agreements. He went on, Staying with the General Fund, again, the cash available verses the variance verses the reserve requirement is fairly close. We will be receiving a property tax payment in June that will replenish the General Fund to make sure we have a healthy difference between the cash available and the reserve requirement. A couple of other things to note on here, you'll note that we do meet the reserve requirements in most of the funds. The reserve requirements that we set are sort of the minimum. We want to be at a healthy level above that reserve requirement. We don't necessarily want to spend all the way down to that reserve requirement. We want to make sure that we have enough money in there to very comfortably meet that reserve requirement. Councilmember Sharon L. McBride asked, Could you talk a little bit more about the difference between the reserves for the capital and the internal services? EXCELLENCE ACCOUNTABILITY INNOVATION INCLUSION EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.9173 TrD574.235.5567 vvww.southbendin.gov 6