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 r...
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