Explanation
BACKGROUND: This ordinance authorizes a transfer of funds from the economic stabilization fund to the general fund and also transfers surplus funds in the insurance trust fund to the general fund and other operating funds.
The actual transfer amount from the economic stabilization fund will be determined by the City Auditor, in consultation with the Finance Director. The economic stabilization fund was established to provide a source of funding for basic city services during times of economic recession or unexpected revenue loss. As a result of economic recession, projected 2008 revenues to the general fund place in jeopardy the ability of the city to fund basic services, such as police and fire protection, and it is therefore appropriate to use a portion of the economic stabilization fund to assure the continuance of basic city services until such time as economic conditions improve.
The city's financial policies dictate operating reserves for various funds. Per these policies, the annual reserve balance in the insurance trust fund should be equal to, at a minimum, the sum of one and one half months worth of health, dental and vision claims cost and one month worth of prescription, disability and life insurance claims. In calculating the monthly claims costs for purposes of determining the appropriate reserve amount, a rolling average of claims experience for the previous 12 consecutive months is used. The current cash balance in the employee benefits trust fund is in excess of the reserve level dictated by the policy by $5 million. As a result, these funds should appropriately be returned to the operating funds which contributed to that surplus.
FISCAL IMPACT: The transfer from the economic stabiliation fund reduces the amount available in that fund for future use. The transfer from the insuruance trust fund reduces excess cash in the fund. Actual reimbursement levels for each operating subfund are based upon each fund's relative contribution to the employee benefits fund in 2007. The anticipated reimbursement rates for the various primary funds are detailed on the attached spreadsheet.
This ordinance is submitted as an emergency so as to allow the financial transaction to be posted in the city's accounting system as soon as possible. Up to date financial processing promotes accurate accounting and financial management.
Title
To authorize the appropriation of up to $10,000,000 within the Economic Stabilization Fund, to authorize and direct the City Auditor, in consultation with the Finance Director, to transfer the appropriate portion of this amount to the general fund, to authorize the appropriation of $5,000,000 within the employee benefits fund, and to authorize and direct the City Auditor to transfer up to $5,000,000 from the employee benefits fund to various operating funds as a reimbursement of excess insurance premiums contributed to the employee benefits fund in 2007; and to declare an emergency. ($15,000,000).
Body
WHEREAS, the Economic Stabilization Fund was established to provide a source of funding for basic City services supported by the general fund during times of economic recession or unexpected revenue loss by the City; and
WHEREAS, as a result of economic recession, the revenues to the general fund place in jeopardy the ability of the City to fund basic services, such as police and fire protection; and,
WHEREAS, it is therefore appropriate to use a portion of the Economic Stabilization Fund to assure the continuance of basic city services until such time as economic conditions improve; and,
WHEREAS, various operating funds contributed to the employee benefits fund in 2007 in accordance with the number and bargaining units of city-insured personnel funded by each operating fund; and,
WHEREAS, it is now necessary to appropriate $5,000,000 within the employee benefits fund and to transfer that sum back to the various operating funds in amounts related to the contribution each operating fund made to the employee benefits fund; and,
WHEREAS, an emergency exists in the City of Columbus in that it is immediately necessary to appropriate and transfer said funds, thereby preserving the public health, peace, property, safety, and welfare, Now, Therefore,
BE IT ORDAINED BY THE COUNCIL OF THE CITY OF COLUMBUS:
SECTION 1. That from the unappropriated balance of the Economic Stabilization Fund, and from all revenues estimated to come into said fund from any and all sources and unappropriated for any other purpose during the fiscal year ending December 31, 2008, $10,000,000 is hereby appropriated to the Department of Finance, Department 45, Object 10.
SECTION 2. That the City Auditor, in consultation with the Finance Director, be and is hereby authorized and directed to transfer up to $10,000,000 from the Economic Stabilization Fund, Fund 011, Object 10, Department of Finance, Department 45, to the unappropriated balance of the General Fund.
SECTION 3. That from the unappropriated balance of the employee benefits fund, and from all revenues estimated to come into said fund from any and all sources and unappropriated for any other purpose during the fiscal year ending December 31, 2008, the sum of $5,000,000 is hereby appropriated to the Department of Human Resources, Department 46-01, Fund 502, Subfund 208, OCA 460004, OL1 10, OL3 5501.
SECTION 4. That the City Auditor be and is hereby authorized and directed to transfer a total of up to $5,000,000 from the Department of Human Resources, Department 46-01, Fund 502, Subfund 208, OCA 460004, OL1 10, OL3 5501 to the unappropriated balances of various operating funds in accordance with each operating fund's relative contribution to the employee benefits fund.
Refer to Attachment 1383-2008 spreadsheet.xls.
SECTION 5. That for the reasons stated in the preamble hereto, which is hereby made a part hereof, this ordinance is hereby declared to be an emergency measure and shall take effect and be in force from and after its passage and approval by the Mayor, or ten days after passage if the Mayor neither approves nor vetoes the same.