Monterey County Municipal Code Ch. 5.06 General Fund Strategic Reserve and Appropriation for Contingencies

A. During the Fiscal Year 2003-04 budget cycle, the County depleted most of its capital and reserve resources to address significant unanticipated expenses and needs to establish a strategy to replenish these reserves.

B. The County needs to position itself to address unanticipated expenses due to natural disasters such as earthquakes and floods, settlement of legal judgments against the County, and short-term revenue reductions due to economic downturns and realignment of services.

C. Credit rating agencies carefully monitor the level of reserves in the General Fund to evaluate the County's continued credit-worthiness.

D. The County's financial planning will be facilitated whenever there are changes in administration and elected policymakers.

E. The County does not have a formal policy regarding the amount of monies to be set aside as reserves for economic uncertainties, natural disasters, legal settlements, and annual contingencies.

F. The Government Finance Officers Association recommends that governments establish formal policies regarding the level of unreserved fund balances or reserves that should be maintained in the General Fund, that such policies provide both a temporal framework and specific plans for increasing or decreasing the level of reserves if inconsistent with those policies, and that local governments maintain reserves in their General Funds between five and fifteen (15) percent of regular General Fund operating revenues, or no less than one or two months of regular General Fund operating expenditures.

(Ord. 4260 § 1 (part), 2005)

A. Designation. The General Fund Strategic Reserve shall be a designation of a portion of the unreserved General Fund balance for the purposes and use set forth herein. The Natividad Medical Center (NMC) Strategic Reserve designation shall be established as a sub-designation of the General Fund Strategic Reserve and shall be deemed the reserve of the Natividad Medical Center.

B. Amount. The amount of the General Fund Strategic Reserve shall be equal to ten (10) percent of the total General Fund Final Budget estimated revenues and the goal shall be to fund over a period of eight (8) years beginning with Fiscal Year 2005-06.

C. Purposes and Use. The General Fund Strategic Reserve shall be used to fund settlement of legal judgments against the County in excess of reserves normally designated for litigation, for short-term revenue reductions due to economic downturns, for natural disasters as determined by the County Administrative Officer or Board of Supervisors, and for one-time only State budget reductions that could not be addressed through the annual appropriations for contingencies in the General Fund. The Natividad Medical Center Strategic Reserve shall be used only for purposes of the Natividad Medical Center. Use of the Natividad Medical Center Strategic Reserve shall be determined by the Board of Supervisors. Prior to use of the Natividad Medical Center Strategic Reserve, the Board of Supervisors will seek the recommendation of the NMC Board of Trustees.

D. Source. The General Fund Strategic Reserve shall be financed with one-time only revenues and year-end fund balance in the General Fund. The Natividad Medical Center Strategic Reserve shall be financed with unreserved NMC fund balance. Interest earned on the funds within the NMC Strategic Reserve shall accrue to the NMC Strategic Reserve.

E. Replenishment. Whenever some or all of the monies in the General Fund Strategic Reserve are used and the amount of the General Fund Strategic Reserve is reduced below that required by this Section, the goal shall be to replenish the Strategic Reserve within five (5) years of such use.

F. Annual Report. The County Administrative Officer shall report annually in the Recommended Budget to the Board of Supervisors on the status of complying with the requirements of this Section and recommendations for use of the balance of the General Fund Strategic Reserve in excess of the amount needed to comply with this Section.

(Ord. No. 5174, § 1, 4-12-2011; Ord. 4260 § 1 (part), 2005)

A. Definition. The General Fund Appropriation for Contingencies is a budgetary provision representing that portion of the financing requirements of the General Fund set aside to meet unforeseen expenditure requirements.

B. Amount. The amount of the General Fund Appropriation for Contingencies shall be equal to one percent of the total General Fund Final Budget estimated revenues.

C. Purposes and Use. The General Fund Appropriation for Contingencies shall be used to fund unanticipated expenditures and to offset revenue shortfalls during the fiscal year and shall be utilized only after all other budget sources have been examined for available funds.

D. Annual Report. The County Administrative Officer shall report annually in the Recommended Budget on the status of complying with the requirements of this Section.

(Ord. 4260 § 1 (part), 2005)