HomeMy WebLinkAboutBudget Study SessionAgenda Budget Study Session
April 17, 2017
1. 6:00 pm Meeting Outline / Orientation
2. 6:05 pm
3. 6:45 pm
Attachment A:
Attachment B:
General Fund Net Operations
Revenue overview
Property Tax
Development Revenues
Use of Fund Balance (Hillside Reserve Repayment)
Expenditure Overview
Salary & Benefits
UAL Payment
Notable expenditure increases
Fixed Assets
Internal Service Funds
CIP Reserve Transfers Out
Net Operations
Council Initiatives
4. 7:00 pm Attachment C: Total Fund Activity
Schedule orientation
General Fund / Source (Use) of Fund Balance Reserves
Internal Services Funds
Debt Service Fund
Capital Project Funds
5. 7:45 pm Attachment D: Reserve Policies
Year End and CIP Allocations
Reserve Philosophy
6. 7:15 pm
Attachment E:
Attachment F:
Attachment G:
Capital Improvement Projects
CIP Allocation - Council Retreat Recap
Unfunded Capital Project List
CIP Funding Updates
7. 7:55 pm Wrap Up
8. 8:00 pm Adjournment
FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2016/17 FY 2017/18 % of
General Fund Revenues Actuals Actuals Actuals Adjusted Estimated Proposed Budget
Property Tax 9,526,189$ 10,436,621$ 11,301,176$ 11,331,350$ 12,249,350$ 12,161,350$ 56.0%
Sales Tax 941,350 1,224,427 1,189,398 1,125,000 1,200,000 1,200,000 5.6%
Transient Occupancy Tax 257,010 309,618 319,109 315,000 315,000 315,000 1.6%
Business & Other Taxes 565,261 556,654 578,652 605,000 530,000 530,000 3.0%
Franchise Fee Tax 2,112,596 2,234,068 2,235,514 2,242,113 2,359,748 2,354,429 11.1%
Intergovernmental 466,424 586,596 547,075 437,000 450,060 372,000 2.2%
Fees, Licenses & Permits 1,524,041 1,409,199 1,544,844 1,486,280 1,369,346 2,033,400 7.3%
Charge for Services 1,942,388 1,789,649 2,079,939 1,849,127 1,620,660 1,598,215 9.1%
Interest 40,003 45,229 79,341 55,000 105,340 130,000 0.3%
Rental Income 440,287 474,750 527,596 497,714 455,458 463,802 2.5%
Other Sources 452,817 452,734 379,952 280,307 293,218 287,877 1.4%
Total General Fund Revenues 18,268,366$ 19,519,545$ 20,782,596$ 20,223,891$ 20,948,179$ 21,446,073$ 100%
Fund Transfers In 167,050 - 267,918 - 30,000 -
Total Revenues & Transfers 18,435,416$ 19,519,545$ 21,050,514$ 20,223,891$ 20,978,179$ 21,446,073$
Use of (Addition to) Fund Balance Reserves
Carryforward Reserve 73,101 118,788 176,560 - - -
Development Reserve - - 60,000 - - -
Environmental Pgm Reserve 50,000 50,000 50,000 50,000 50,000 50,000
CIP Reserve 280,880 1,633,345 1,777,896 1,410,648 1,410,648 1,530,000
CY CIP Reserve - 500,000 - - - -
Hillside Reserve (216,721) - - 210,000 - *-
Compensated Absences - - - - - -
Fiscal Stabilization Loan - 1,000,000 - - - -
Fiscal Stabilization Repayment - (500,000) (250,000) (250,000) (250,000) -
Working Capital Reserve - 930,184 - - - -
Total Operating Sources 18,622,676 23,251,862 22,864,970 21,644,539 22,188,827 23,026,073
FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY 2016/17 FY 2017/18 % of
General Fund Expenditures Actuals Actuals Actuals Adjusted Estimated Proposed Budget
Salary & Benefits 6,408,421$ 6,484,653$ 6,814,803 7,592,718 7,214,589 7,778,496 38.1%
UAL Payment - 3,294,619 500,000 500,000 500,000 750,000 2.5%
Materials & Supplies 236,925 195,949 207,649 323,820 221,900 338,090 1.6%
Fees & Charges 759,799 732,387 835,636 971,238 933,845 854,675 4.9%
Consultant & Contract Services 2,054,371 1,966,367 2,115,325 2,246,345 2,010,316 2,405,095 11.3%
Sheriff Services 4,225,024 4,611,024 4,973,080 5,374,750 5,370,750 5,517,918 27.0%
Meetings, Events & Training 80,468 73,668 59,431 140,525 90,891 150,000 0.7%
Community Grants & Events 169,725 162,516 202,525 243,381 210,400 222,368 1.2%
Operating Grant Expenditures - - 34,762 - - - 0.0%
Fixed Assets - 35,343 - 10,000 10,000 20,000 0.1%
Internal Services Charges 2,202,844 2,325,823 2,455,758 2,535,472 2,535,472 2,626,497 12.7%
Total Expenditures 16,137,576$ 19,882,349$ 18,198,969$ 19,938,250$ 19,098,163$ 20,663,139$ 100%
Streets CIP 150,000 662,753 1,099,000 1,305,000 1,305,000 1,034,000
Park & Trails CIP 45,880 443,445 295,000 75,000 75,000 530,000
Facilities CIP - 339,900 233,896 190,648 190,648 -
Administrative & Technology CIP 85,000 120,000 265,000 50,000 50,000 76,000
CIP Reserve Transfers 280,880$ 1,566,098$ 1,892,896$ 1,620,648$ 1,620,648$ 1,640,000$
Development Reserve Transfer - - 60,000 - - -
General Fund Transfers
Annual Facilities CIP 100,000 100,000 - - - -
Transfer to Street Resurfacing - - 64,760 - - -
Total General Fund Transfers 100,000$ 100,000$ 64,760$ -$ -$ -$
Total Transfers Out 380,880 1,666,098 2,017,656 1,620,648 1,620,648 1,640,000
Total Expenditures & Transfers 16,518,456$ 21,548,447$ 20,216,625$ 21,558,898$ 20,718,811$ 22,303,139$
Net Operations 2,104,220$ 1,703,415 2,648,344$ 85,641$ 1,470,016$ 722,934$
TOTAL OPERATING USES
TOTAL OPERATING SOURCES
GENERAL FUND SUMMARY
4/14/2017 GF R&E by Category GF rev v exps actuals
Attachment A
Attachment B
Council Initiatives
1. Neighborhood Watch
2. Public Safety Task Force
3. Senior Transportation
4. Public Art
5. State of the City
6. America In Bloom
7. Communication Enhancements
8. Community Grants
9. Blaney Plaza Wi-Fi
10. EV Charging Stations
Revenues Expenditures Source (Use)Estimated
Fund Balance && of Fund Balance
Fund Category July 1, 2017 Transfers In Transfers Out Fund Balance June 30, 2018
Operating Funds
General Fund Reserves
Environmental Services 263,182$ -$ -$ (50,000)$ 213,182$
Hillside Stability 1,000,000 - - - 1,000,000
Capital Projects 1,539,205 - - (561,898) 977,307
Facility Reserve 1,700,000 - - 500,000 2,200,000
Working Capital 1,000,000 - - - 1,000,000
Fiscal Stabilization 2,500,000 - - - 2,500,000
Development Services 719,562 - - - 719,562
Compensated Absences 209,937 - - - 209,937
Other Unassigned 1,968,102 21,446,073 (22,303,139) 111,898 1,222,934
Total General Fund Reserves 10,899,988 21,446,073 (22,303,139) - 10,042,922
Special Revenue Funds
Landscape & Lighting Districts 915,878 752,700 (843,560) - 825,017
Total Special Revenue Reserves 915,878 752,700 (843,560) - 825,017
Internal Service Funds
Liability/Risk Management 429,058 410,450 (468,316) - 371,192
Workers Compensation 295,704 185,000 (217,765) - 262,939
Office Support Services 89,297 62,000 (58,750) - 92,547
IT Services 277,823 580,600 (599,227) - 259,196
Vehicle & Equipment Maintenance 171,581 275,000 (257,506) - 189,075
Facility Maintenance 484,227 925,000 (859,384) - 549,843
Vehicle & Equipment Replacement 569,226 150,000 (250,800) - 468,426
IT Equipment Replacement 306,771 150,000 (91,100) - 365,671
Facility FFE Replacement 461,209 200,000 (461,100) - 200,109
Total Internal Service Fund Reserves 3,084,896 2,938,050 (3,263,948) - 2,758,998
Total Operating Funds 14,900,762$ 25,136,823$ (26,410,647)$ -$ 13,626,938$
Debt Service
2001 Series GO Bonds 977,667 752,700 (843,560) - 886,807
Total Debt Service Funds 977,667 752,700 (843,560) - 886,807
Total Operating Funds 15,878,429$ 25,889,523$ (27,254,207)$ -$ 14,513,745$
Capital Funds
Street Projects 2,757,745 8,745,315 (11,503,061) - -
Park & Trail Projects 1,034,308 877,265 (1,903,207) - 8,366
Facility Projects 227,937 312,706 (505,642) - 35,000
Administrative Projects 667,283 180,000 (847,282) - -
Total Capital Funds 4,687,273 10,115,286 (14,759,193) - 43,366
Total All Funds 20,565,702$ 36,004,809$ (42,013,399) -$ 14,557,111$
Total Fund Activity Summary
FY 2017/18
Attachment C
CITY OF SARATOGA
FUND BALANCE RESERVE POLICY
Prudent financial management dictates that the City reserve a portion of its funds for future use to: maintain fiscal
stability; ensure the continued orderly operation of government and provision of services to residents; and to
mitigate current and future risks.
As a general budget precept, the City Council decides when and whether to appropriate available funds to and from
a reserve account. Use of reserve funds must be authorized by either specific direction in the annual budget, or by
a separate City Council action – unless specifically directed by policy. Responsible fiscal stewardship also requires
adequate reserves be maintained for all known liabilities and established City Council and community directed
initiatives.
In the following Fund Balance/Reserve Policy overviews, the descriptions include identification of the fund type
and classification, the purpose of the reserve, minimum and maximum funding goals if appropriate, guidelines on
utilization of the reserve and by what authority, and the procedure for funding the reserve initially; on an ongoing
basis, or after utilization.
Fund Balance and Net Position
In 2009, Governmental Accounting Standards Board (“GASB”) Statement No. 54 revised fund balance
classifications for “Governmental Funds” into five specific classifications of fund balance with the intent to identify
the extent to which a specific fund balance reserve is available for appropriation and therefore spendable, or whether
the fund balance reserve is constrained by special restrictions. Government Funds for which these new rules apply
include: the General Fund, Special Revenue Funds, Capital Project Funds, and Debt Service Funds.
For “Non-Governmental Funds”, equity classifications are classified as “Net Position” with sub -classifications of
Restricted or Unrestricted Net Position. A third component of a Non-Governmental Fund’s equity is “Net
Investment in Capital Assets,” which for Saratoga refers to the non-monetary portion of equity such as vehicles and
equipment, net of depreciation. Non-Governmental Fund types include Proprietary Funds (Enterprise and Internal
Service Funds) and Fiduciary Funds (Trust Funds). Currently, the City’s non-governmental fund types are limited
to Internal Service Funds.
Governmental Fund Type Reserve Classifications
The Governmental Reserve classifications are defined as follows, which includes the applicable reserves that fall
into the classification:
Non-Spendable Fund Balance
Represents resources that are inherently non-spendable from the vantage point of the current period. The City
does not presently hold Non-Spendable Reserve funds.
Restricted Fund Balance
Represents fund balance that is subject to external enforceable legal restrictions. The City maintains the
following restricted fund balances under this designation:
General Fund: Environmental Services Fund Balance Reserve
Special Revenue Funds: Landscape & Lighting Assessment Districts Fund Balance
Debt Service Fund: Library General Obligation Bond Debt Service Fund
Capital Project Funds: a) Park In Lieu Fund:
b) Highway User Tax Allocation Fund (Gas Tax):
c) Capital Project Grant Funds
Attachment D
CITY OF SARATOGA
Committed Fund Balance
Represents fund balance constrained by limitations the government imposes upon itself at its highest level of
decision making and remains binding unless removed in the same manner. The City maintains the following
fund balances under this designation:
General Fund: Hillside Stability Reserve
General Fund: Facility Replacement Reserve
Capital Improvement Plan Funds: Capital Improvement Project Fund Balance Reserve
Assigned Fund Balance
Represents fund balance identified by Council for an intended use; however as no legal obligations exist, the
funds may be re-designated and utilized for another purpose if Council chooses. The City maintains the
following General Fund reserves under this designation:
General Fund: Future Capital & Efficiency Project Reserve
General Fund: Carryforward Reserve
Unassigned Fund Balance
Represents funding which may be held for specific types of uses or operational funding/stabilization purposes,
but is not yet directed to a specific purpose. Only General Fund reserves can be designated under the
“Unassigned” fund balance classification. Other fund types are by nature structured for specific purposes,
hence the fund balances are therefore considered “assigned” for that purpose.
General Fund: Working Capital Reserve
General Fund: Fiscal Stabilization Reserve
General Fund: Development Services Reserve
General Fund: Other Unassigned Fund Balance Reserve
Fund Balance Ratios
To ensure the City maintains available working cash flow and emergency funding at all times, the collective
total of the General Fund’s Assigned and Unassigned Reserves shall be sustained at a minimum of 20% of
General Fund expenditure appropriations, net of transfers out.
General Fund Year-End Allocations
After the City’s financial records are finalized and audited, with legal obligations and liability reserves funded,
revenues in excess of expenditures are closed out to the Other Unassigned Fund Bal ance Reserve. A base amount
of funding, as set by budget policy, is to remain in the Other Unassigned Fund Balance Reserve, with the remainder
distributed in the following order:
1. Repayment of Fund Balance Reserve loans - back to established levels (e.g. borrowing from/usage of the
Fiscal Stabilization or Hillside Stability Reserves).
a. For the Hillside Stability Reserve, loan repayment shall be made in annual contributions of
$100,000 until reserve balance reaches the $1 million reserve goal.
b. Fiscal Stabilization loan repayments shall be made as directed by Council.
2. Annual contribution of $500,000 to Facilities Replacement Reserve.
3. Remaining funds are allocated to the Future Capital Improvement and Cost Efficiency Projects Reserve.
a. $200,000 for Annual Infrastructure Maintenance and Repairs
b. $200,000 for Annual Retaining Wall Maintenance and Repairs
c. $100,000 for Annual Parks, Trails, Grounds, and Medians Maintenance and Repairs
d. $50,000 for Roadway Safety and Traffic Calming Projects
a.e. $50,000 for Risk Management and Mitigation Projects
Attachment D
CITY OF SARATOGA
GENERAL FUND – FUND BALANCE RESERVE POLICIES
Environmental Services Reserve
Under the Restricted Fund Balance classification, the Environmental Services Reserve represents revenues
collected under a prior funding structure for environmental purposes, and is therefore restricted for use in funding
environmental program costs such as clean water programs, street sweeping, and storm drain cleaning services. Per
policy, the Environmental Service Reserve is being utilized through annual budget appropriations of $50,000.
The Environmental Services Reserve originated from a one -time funding structural change and therefore will not
be replenished when depleted.
Hillside Stability Reserve
Under the Committed Fund Balance classification, a Hillside Stability Reserve of $1 million is set aside to provide
funding for unanticipated or unforeseen emergency or extraordinary costs related to hillside degradation, inclusive
of slide prevention and mitigation, slide repair, and associated drainage and roadwork.
Use of the reserve requires an analysis be prepared and presented to Council f or approval, or in the event of a
landslide requiring immediate emergency work, the Public Works Director may direct use of up to 10% of the
reserve to make emergency repairs and mitigate further damage until Council takes action. Reserve funding is to
be used for emergency work which exceeds operational funding provided for in the Operations Budget. Upon use,
refunding of the reserve shall be provided from year-end net operations in the amount of $100,000 each fiscal year
until the $1,000,000 reserve cap is reached.
Facility Replacement Reserve
The Facility Replacement Reserve is established to accrue funding for the major rehabilitation or replacement of
City Facilities (buildings/structures). Eligible uses of this reserve include both direct funding of public facility
improvements, and the servicing of related debt. Small facility building replacements, major facility renovations,
and down payment contributions toward a large facility replacement in conjunction with bond measure funding are
examples of intended Facility Replacement Reserve use s.
An initial contribution of $300,000 was established in FY 2012/13 with Council’s recommendation to continue
funding at this level, as a priority use of year-end net operations funding. Effective FY 2016/17, Council’s direction
is to increase the annual year-end contribution amount to $500,000, as funding is available. Council has set a goal
to fund the Facility Replacement Reserve to a level equal to 1/3 of the City’s insured value over the next 20 years
(by FY 2036/37) as a fiscally responsible pra ctice to maintain city infrastructure In principle, Saratoga does not
pursue bond money to fund capital improvements, however, replacing high cost facility infrastructure requires a
long-term funding plan that may or may not be attainable through annual contributions. Therefore, the Facility
Replacement Reserve demonstrates both the City’s good faith funding effort and financial stewardship for future
bond measures if needed, as well as accumulating funding for a down payment on replacement infrastructur e to
minimize bond funding needs.
A facility’s insured value represents the initial cost of the facility decreased each year over the facility’s estimated
lifespan. Therefore, insured value represents the remaining life of the facility’s purchase cost – it does not represent
the current cost to replace a facility. The City recognizes insured value is not sufficient to fund facility
replacements, therefore annual contributions will continue as an ongoing funding obligation even after the 1/3
reserve goal is met.
Changes in annual contributions and the reserve goal amount shall be determined by Council during the budget
process, in line with changes in the City’s economic situation. Utilization of the reserve shall be brought to Council
for discussion and consideration as needed.
Future Capital & Efficiency Projects Reserve
Under the Assigned Fund Balance classification, the Reserve for Future Capital Improvement & Efficiency Projects
shall reserve funding for as yet undefined capital and efficiency improvement projects. Reserve funding is derived
from General Fund accumulated net operations (as available) and is therefore considered a “one -time funding
Attachment D
CITY OF SARATOGA
source”. Funds are held in this reserve until Council reviews funding requests and approves a use or transfer to a
capital project fund.
Use of the reserve funding is at the Council’s discretion, but typically occurs in conjunction with the annual budget
adoption after Council conducts a comprehensive review of capital and efficiency improvement needs. Reserve
replenishment is dependent upon net operational savings in subsequent fiscal years.
Carryforward Reserve
Under the Assigned Fund Balance classification, the Reserve for Carryforwards represents funding held at the end
of each fiscal year for critical unexpended operating budget a ppropriations to be purchased in the following fiscal
year, and any remaining Council Contingency funding. The reserve is reconciled at the end of each fiscal year to
both release prior year carryforward funding and reserve current year carryforward fundi ng into the following
budget year.
Staff determines the year-end reserve amount after all fiscal year payments are finalized; the reserve amount is
conceptually appropriated by Council each year in the budget adoption resolution.
Working Capital Reserves
In accordance with the City’s cautious and conservative fiscal philosophy, the City’s general prevailing financial
policy holds that the City should fund daily operations with current resources in order to avoid use of short -term
borrowing for cash flow management.
To support this policy a Working Capital Reserve is maintained that meets cash flow requirements, and in turn,
ensures the continuance of services to the public while also preserving the City’s credit worthiness. To provide
adequate working capital in the case of extreme circumstances, the City shall maintain, in combination with the
Fiscal Stabilization Reserve, a minimum operational reserve of 60 days of the following year’s General Fund
budgeted expenditures (net of internal service char ges and transfers out), up to a maximum operational reserve
amount equal to 90 days of the following year's General Fund budgeted expenditures (again, net of internal service
charges and transfers out). This reserve falls under the Unassigned Fund Balance classification.
Beginning with the FY 2016/17 budget, the Working Capital Reserve is maintained at $1 million (reduced from $2
million), and the Fiscal Stabilization Reserve in maintained at $2.5 million (increased from $1.5 million). At this
time a Working Capital Reserve of $1 million is sufficient for cash flow needs, however, the funding level will be
assessed on an annual basis to ensure $1 million is sufficient for cash flow needs. The $1 million funding shift to
the Fiscal Stabilization Reserve reflects a more realistic reserve usage structure – the Working Capital Reserve’s
purpose is to ensure sufficient operating cash; the reserve has no defined fund uses, repayment terms, or
authorization requirements. On the other hand, the Fiscal Stabilization Reserve’s purpose is defined and may be
called upon for critical uses in the future. The overall 60 day General Fund operational reserve minimum
requirements shall continue to be met.
Fiscal Stabilization Reserve
Under the Unassigned Fund Balance classification, the Fiscal Stabilization Reserve represents a funding set -aside
to provide temporary financing for budget stabilization caused by fiscal downturns, unanticipated extraordinary
expenditures related to a natural disaster or calamity, or from an unexpected liability or funding decrease created
by a legislative action. Effective July 1, 2016, the Fiscal Stabilization Reserve funding level increased by a $1
million transfer from the Working Capital Reserve, up to $2.5 million. This funding shift provides a more accurate
reserve funding purpose and utilization structure.
Fiscal stabilization uses are defined and restricted to: 1) revenue declines lasting more than one year and equal to
more than 5% of either property tax, the combined total of other taxes, or General Fund revenues in total; 2) an
unanticipated extraordinary operational increases of more than 5% such as from a natural disaster; or 3) an
unexpected Federal, State, County or CalPERS funding change.
Council may utilize funding at budget adoption, by adoption of a budget adjustment resolution during the course
of the year, or after a Federal, State, or locally declared emergency. In the event a locally declared emergency takes
place, the City Manager has the authority to spend funds until such time as the City Council takes action. Reserve
Attachment D
CITY OF SARATOGA
appropriations are to be replenished from year-end net operations, as available, on a priority basis. The $2.5 million
Fiscal Stabilization Reserve funding level will be assessed on an annual basis to ensure this funding level is
sufficient in light of operational reserves and utilization needs.
Development Services Reserve
Under the Unassigned Fund Balance classification, the Development Services Reserve provides fiscal stability and
funding accountability for the Community Development Department’s planning and building programs.
Development projects are often multi-year activities in which revenues may be collected in one year, while project
expenditures may extend over several years.
In total, this reserve represents accumulated excess planning and building net operation funds from years when
development revenues exceeded development expenditures. The reserve funds are utilized in years when planning
and building program expenditures exceed revenues, thereby acting as an overall funding stabilizer for multi -year
development activities.
Use of reserve funding for operational support is restricted to 1/3 or the reserve balance in any given fiscal year,
with Council approval. Budgeted use of the Development Reserve is to be rescinded if and to the point where
development revenues are sufficient to cover General Fund net operations at year -end. In addition, the Council
may direct reserves be utilized for specific development related uses, such as for development software upgrades
or special projects.
Compensated Absences Reserve
Under the Unassigned Fund Balance classification, the Compensated Absences Reserve is established to smooth
expenditure fluctuations resulting from the payout of accrued leave to employees at service separation and
distribution payouts. Reserve funding equal to one -third of the compensated absences liability is established at
year-end. Reserve funding in excess of one-third of the liability is to be returned to the General Fund’s Other
Unassigned Reserve.
Use of the reserve occurs when total annual compensated absences payouts exceed budgeted salary funds. Large
payouts decrease the compensated absences liability at year-end, thereby supporting the practice of utilizing the
reserve as needed. Year-end reconciling allocations to and from the reserve are approved though Council’s budget
resolution adoption each fiscal year, with the liability and resulting reserve amounts determined as part of the year -
end close process.
Council Discretionary Reserve
Under the Unassigned Fund Balance classification, the Council Discretionary Reserve represents unspent funds
from the Council’s annual appropriation. The reserve provides a mechanism to roll forward rem aining Council
Discretionary Funds as reserve funds are immediately re -appropriated into the following fiscal year. This allows
Council the flexibility to take advantage of unforeseen opportunities or needs without the restriction of fiscal year
boundaries. Use of the reserve funding requires Council majority approval. The reserve exists at year -end only
when there are remaining unspent Council Discretionary funds at the end of the fiscal year.
Other Unassigned Reserve
The ‘Other Unassigned Reserve’ represents accumulated net operations not yet allocated to other fund balance
reserves, and by definition, fall into the Unassigned Fund Balance classification.
Other fund’s accumulated net operations are typically accou nted for in an undefined reserve account in the fund –
and typically titled ‘Fund Balance Reserve’. As other funds are structured for specific uses or commitments, the
fund balance, by its distinctiveness, already has a directed purpose, whereas the Gener al Fund is used for multiple
and general operational purposes thereby requiring a distinction of purpose for each reserve.
Council may utilize reserve funding at budget adoption or by adoption of a budget adjustment resolution during the
course of the year. Reserve funding is replenished from year-end net operations, as available.
Attachment D
CITY OF SARATOGA
SPECIAL REVENUE FUND – FUND BALANCE RESERVE POLICIES
Landscape & Lighting Assessment District Funds
Assessment District Funds are Special Revenue Funds, which is a type of governmental fund. As a governmental
fund, the Landscape and Lighting Assessment District Funds comply with GASB 54 fund balance classifications,
and by nature of the fund’s purpose, fund balance reserves are classified as restricted reserves.
Special Revenue Funds account for and report the proceeds of specific revenue sources that are restricted or
committed to specified purposes (other than for debt service or capital projects.) For the City, Landscape &
Lighting Assessment District Special Revenue Funds were established to account for each individual assessment
district; thereby each fund has its own separate fund balance reserve.
Each district’s fund balance reserve should be sufficient to provide working capital to cover operational expenses
through the first half of assessment receipts in January, therefore equitable to approximately one-half of a district’s
annual expenditure budget. The second half of receipts are received in June. Some districts may include capital
improvement projects in addition to ongoing regular maintenance resulting in fund balance increasing over the
years to accumulate sufficient resources for the improvement projects. As each district’s situ ation is different, a
district’s maximum fund balance shall be determined by the Public Works Director.
Requests for use of the reserve are approved by Council through budget adoption or by a Council approved budget
adjustment resolution throughout the year. The reserve is replenished from the Fund’s net operations in subsequent
years.
DEBT SERVICE FUND – FUND BALANCE RESERVE POLICIES
Library General Obligation (GO) Bond Debt Fund
The Library General Obligation (GO) Bond Debt Fund is a Debt Service Fund established to account for the
financial resources accumulated for principal, interest, and cost of issuance expenditures associated with the Library
Bond Debt. As Debt Service Funds are a governmental fund type, the fund reserves fall under the GASB 54 fund
balance classifications. Debt Service Fund reserves are classified as a Restricted Reserve with the funding only
spent for specific purposes as stipulated by the bond covenants.
The Library GO Bond Debt Fund ensures receipts are tracked separately, and that funding is available for the GO
Bond debt service requirements. At a minimum, the year -end fund balance reserve shall be sufficient to provide
working capital to cover the semi-annual principal and interest debt payment due on August 1st as the GO Bond tax
receipts are received after the 1st debt payment is due. December receipts provide for the February payment. In
addition, as bond assessments are collected as a percentage of property values, reserves should provide sufficient
funding to compensate for tax fluctuations. The fund’s reserve maximum is set at no more than one -year of
budgeted annual expenditures.
The reserve balance is increased (or reduced) through establishing assessment rates at more (or less) than the semi-
annual payments and bond services require. Therefore, use or replenishment of the reserve is approved by Council
through budget adoption, and implemented through an increased or reduced assessment rate as a result of the fund’s
net operations.
CAPITAL IMPROVEMENT PROJECT FUNDS – FUND BALANCE RESERVE POLICIES
Overview
Capital Improvement Project (CIP) Funds account for the acquisition and maintenance of major capital assets other
than those financed through special assessments or enterprise funds. Capital Project Funds are a type of
governmental fund and therefore comply with GASB 54 fund balance classifications. Because Council has directed
the fund’s appropriated funding be spent on specific capital improvement projects, the Capital Project Fund Balance
Reserve is classified as Committed Fund Balance.
Attachment D
CITY OF SARATOGA
Budgeted capital improvement project funding is determined by the scope of work approved by Council, and
remains assigned for that use until completed or reassigned by Council. Fund Balance amounts represent the total
remaining funds in the individual projects at year-end. As Fund Balance amounts are determined by the amount of
project completion at year-end, they cannot be standardized for minimum or maximum amounts. Fund Balance is
re-appropriated to the capital projects in the following fiscal year for the work to be completed.
Street Improvement Projects Funds
Street Improvement Project Funds provide for a safe and functional roadway and pedestrian street system. Each
Street Improvement Fund (CIP Street Fund, CIP Grant Fund, and Gas Tax Fund) has multiple projects which roll
up into the overall fund balances, but remain designated for use by project.
The CIP Street Fund receives annual funding from designated fees, reimbursements, contributions, and transfers
from other funds. The CIP Grant Fund receives federal, state, and local grants which vary in source and amount
from year-to-year. On occasion, a private grant may be received. Typically, CIP Grant Funds have a negative fund
balance as project work is conducted before reimbursement is received. Gas Tax Funds represent annual Highway
User Tax and Transportation Congestion Relief revenue allocations that are to be accounted for separately and are
subject to State audits.
Year end fund balance represents the remaining unexpended project funds (net o f any negative CIP Grant Fund
Balance) which are subsequently re-appropriated by Council into the following budget year through budget
adoption.
Park & Trail Improvement Project Funds
Park & Trail Improvement Project Funds provide for capital improvements to the City’s neighborhood and city
parks and plaza, the sport fields, bike and pedestrian trails, and open space areas throughout the City. Each of the
Park & Trail Improvement Funds (CIP Park & Trail Fund, CIP Tree Fund, and the CIP Park & Trail Grant Fund)
have multiple projects which roll up into the overall fund balances, but remain designated for use by project.
The CIP Park & Trail Fund receives annual funding from Park-In-Lieu fees, occasional subventions,
reimbursements and contributions, and transfers in from other funds. The Tree Fund receives revenue from tree
fines and transfers from other funds upon Council direction. The CIP Grant Fund receives federal, state, local and
occasional private grants which vary in source and amount from year-to-year. Typically, CIP Grant Funds have a
negative fund balance as project work is conducted beforehand and then reimbursed from expenditure invoices.
Year end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund
Balance) which are subsequently re-appropriated by Council into the following budget year through budget
adoption.
Facility Improvement Project Funds
Facility Improvement Project Funds provide for capital maintenance and improvements of the City -owned
buildings and structures throughout the City. Each of the Facility Improvement Funds (CIP Facilities Fund and the
Facility Grant Fund) have multiple projects which roll up into the overall fund balances, but remain designated for
use by project.
The CIP Facilities Fund receives annual funding from a General Fund transfer, from Theater Ticket Surcharge Fees,
and from reimbursements and contributions. The Facility Grant Fund receives revenue from grants that vary in
amount from year-to-year. Typically, CIP Grant Funds have a negative fund balance as project work is conducted
beforehand and then reimbursed from expenditure invoices.
Year end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund
Balance) which are subsequently re-appropriated by Council into the following budget year through budget
adoption.
Administrative & Technology Improvement Funds
Administrative & Technology Improvement Project Funds provide for major capital expenditures to improve or
enhance administrative, operational, or technology based systems, processes, or functions. Each of the
Attachment D
CITY OF SARATOGA
Administrative & Technology Improvement Funds (CIP Admin & Tech Improvement Fund and the Admin & Tech
Grant Fund) have multiple projects which roll up into the overall fund balances, but remain designated for use by
individual project.
The CIP Administrative & Technology Improvement Fund typically receives funding from a General Fund transfer
as administrative and technology improvement focused grants are limited. If grants are received, projects typically
have a negative fund balance as project work is conducted beforehand and then reimbursed from expenditure
invoices.
Year end fund balance represents the remaining unexpended project funds (net of any negative CIP Grant Fund
Balance) which are subsequently re-appropriated by Council into the following budget year through budget
adoption.
INTERNAL SERVICE FUNDS – FUND BALANCE RESERVE POLICIES
Overview
Internal Service Funds are established to provide centralized cost centers for shared expenses and services in order
to efficiently track costs and manage resources. Costs are then allocated back to the operational programs based
on usage to more accurately determine cost of services.
The City’s Internal Service Funds include the two Insurance funds: Risk Management and Workers Compensation,
four Service/Support funds: Office Support, IT Services, Vehicle & Equipment Maintenance, and Building
Maintenance Funds, and three Equipment Replacement funds: the Vehicle & Equipment Replacement Fund, the
Office Technology Equipment Replacement Fund, and the Building FF&E (Furniture, Fixture, & Equipment)
Replacement Fund.
As each fund is accounted for as a separate entity, operational reve nues less expenditures result in either a positive
or negative fund balance at any given point in time – Internal Service Funds are similar to the separate checking
and saving accounts a person may use for different purposes. At year end, each fund’s net balance is represented
as the “Fund Balance Reserve”. The intent of the Internal Service Funds Reserves is to hold appropriate levels of
reserves to support cash flow needs and minimize interfund loans, not to accumulate funds in excess of expected
ongoing operational costs. Reserve levels are determined by the specific operational needs of the program, but
typically will fall within 25 – 50% of annual budgeted expenditures.
Internal Service Funds are a type of Proprietary Fund; therefore GASB 54 fund b alance classification (for
Governmental Fund types) does not apply. Instead, Internal Service Fund’s financial statement reports are
presented similar to private-sector businesses and use “Restricted” and “Unrestricted Net Position” to define net
operational balances (equity/fund balance reserves).
Unrestricted Net Position allows reserve funding to be used (with Council approval) within the general scope of
the fund’s purpose. Restricted Net Position reserves are limited to a specific use, narrower th an the stated purpose
of the fund. For example, grant funding provided for a defined use, as in remaining funds from a Risk Management
Training Grant within the Liability/Risk Management Fund, must be used for qualified training purposes. Most
Internal Service Funds reserves are held in the Unrestricted Net Position category.
Liability /Risk Management Reserve Fund
The Liability/Risk Management Fund’s Unrestricted Net Position reserve supports cash flow needs and minimizes
interfund loans. Appropriate levels are maintained through service chargebacks to the programs, based on
operational risk factors. Most claims are covered under the insurance risk pool JPA. The City is self-insured for
up to $25,000 per General Liability and City Vehicle Auto Liability occurrence and up to $5,000 for Property
Damage and 3rd Party Auto Liability. Non-covered claims are paid fully by the City.
The Liability/Risk Management program receives funding from allocations charged to covered departments, from
grant funding, and from claim reimbursements. At year end, unspent funding flows into Unrestricted Net Position
Attachment D
CITY OF SARATOGA
or Restricted Net Position for specific purposes. Requests for use of reserve balance are approved by Council
through budget adoption or by a Council approved budget adjustment resolution during the year. The reserve is
replenished from the Fund’s net operations in subsequent years.
Workers Compensation Fund
The Workers Compensation Fund’s Unrestricted Net Position reserve supports cash flow needs and minimizes
interfund loans. Appropriate levels are maintained through service chargebacks to the programs, based on
operational risk factors. The purpose of the Workers' Compensation program is to provide insurance benefit
coverage for employee work-related illness and/or injuries through its membership in a shared risk pool. The risk
pool provides coverage up to $250,000, and excess insurance provides coverage over this amount up to $10 million.
The Workers Compensation program receives funding from allocations charged to covered departments, from grant
funding, and from claim reimbursements. At year end, unsp ent funding flows into Unrestricted Net Position, or
Restricted Net Position for grant funding. Requests for use of the reserve balance are approved by Council through
budget adoption or by a Council approved budget adjustment resolution during the year. The reserve is replenished
from the Fund’s net operations in subsequent years.
Office Support Fund
The Office Support program provides a centralized cost center for administrative office support expenses, including
photocopy machine leases, postage machines, shared office machines, and the associated maintenance and repair
services, postage, paper, and copier supplies. For efficiency, office support costs are managed collectively and
charged back to departmental programs on a use-basis allocation. Accumulated net operations are held in the Office
Support Fund for working capital cash flow.
The reserve is funded from the allocations charged to covered departments. At year end, unspent funding flows
into Unrestricted Net Position. Requests for use of excess reserve balance are approved by Council through budget
adoption or by a Council approved budget adjustment resolution during the year. The reserve is replenished from
the Fund’s net operations in subsequent years.
Information Technology Services Fund
Information Technology Services provide for the delivery of technology based servic es throughout the City’s
operations, including maintenance of the City’s information systems and infrastructure, program implementation,
streaming video, internet, landline, and wireless communications systems, cloud based technology, and support of
all existing information technology as well as new technology initiatives. For technology oversight, security, and
efficiency, information technology costs are managed collectively and charged back to departmental programs on
a service-based allocation to fund the program.
Funding for the program comes from these allocations charged to covered departments. At year end, unspent
funding flows into Unrestricted Net Position. Accumulated net operations are held in the Information Technology
Services Fund for working capital cash flow. Requests for use of the reserve are approved by Council through
budget adoption or by a Council approved budget adjustment resolution during the year. The reserve is replenished
from the Fund’s net operations in subsequent years.
Vehicle & Equipment Maintenance Fund
The Vehicle & Equipment Maintenance program provides for the fuel, maintenance, and servicing of the City’s
fleet and major equipment to ensure all vehicles and equipment comply with manufacturer’s recommendations and
safety requirements.
To fund the program, vehicle & equipment replacement costs are charged back to the departmental programs based
on assigned usage. Accumulated net operations are held in the Vehicle & Equipment Maintenance Fund for
working capital cash flow. At year end, unspent funding flows into Unrestricted Net Position. Requests for use of
the reserve are approved by Council through budget adoption or by a Council approved budget adjustment
resolution during the year. The reserve is replenished from the Fund’s net operations in subsequent years.
Attachment D
CITY OF SARATOGA
Building Maintenance Fund
The Building Maintenance program provides for the custodial, maintenance, and non -major repairs and building
improvement services for all facilities at the Civic Center, Prospect Center, and Museum Park. Additionally, the
program supports the maintenance and repair needs for the tenants of City leased buildings as defined in the lease
agreements. To fund the program, total costs are allocated back to departmental programs primarily based on
building space usage. General and public use is allocated to the Non-Departmental program.
Accumulated net operations are held in the Building Maintenance Fund for working capital cash flow. Funding
comes from the allocations charged to covered departments. At year end, unspent funding flows into Unrestricted
Net Position. Requests for use of the reserve are approved by Council through budget adoption or by establishing
chargeback funding levels higher or lower than budgeted expenditures. The reserve is replenished from the Fund’s
net operations in subsequent years.
Vehicle & Equipment Replacement Reserve
The Vehicle and Equipment Replacement Fund Balance Reserve accounts for accumulated funding over an asset’s
lifespan, to be used for the replacement of the vehicle or equipment at the end of its useful life. Initial purchases
are paid for through a department’s operational budget. If the purchased item is for ongoing use, the Vehicle &
Equipment Replacement program appropriates an annual allocation for the replacement of the vehicles and
equipment based on the asset’s cost and years of life. Final determination for replacement of the asset is determined
through an analysis of whether the cost of maintenance equals or exceeds the cost of replacing the asset.
The reserve is funded from allocations charged to covered departments and represents accumulated funding, less
amounts expended for asset replacement. At year end, unspent funding is held in Unrestricted Net Pos ition. The
reserve is to be maintained at a level sufficient to provide replacement funding of vehicles and equipment in
accordance with replacement schedules.
Requests for use of the reserve are approved by Council through budget adoption or by a Council approved budget
adjustment resolution throughout the year. The reserve is replenished from the Fund’s net operations in subsequent
years.
Office Technology Equipment Replacement Fund
The Office Technology Equipment Replacement Fund accounts for accumulated funding over an asset’s lifespan
to be used for the replacement of office technology based equipment such as desktop computers and monitors,
laptops and tablets, network infrastructure, and various other related equipment. Replacement costs are c harged
back to the departments based on assigned equipment costs. Initial purchases are paid for through a department’s
operational budget. If the purchased item is for ongoing use, the Office Equipment Replacement program
appropriates an annual allocation for the replacement of the equipment based on the asset’s cost and years of life.
The reserve represents accumulated funding, less amounts expended for replacements. The reserve shall be funded
to provide replacement funding in accordance with repla cement schedules. Funding for the reserve comes from
the allocations charged to covered departments. Requests for use of the reserve are approved by Council through
budget adoption or by a Council approved budget adjustment resolution during the year. T he reserve is replenished
from the Fund’s net operations in subsequent years.
Facility Furniture, Fixtures & Equipment (FFE) Replacement Fund
The Facility FF&E Fund accumulates funding over an asset’s lifespan to be used for the replacement of furniture –
such as tables, chairs, and cubicle partitions; for fixtures - such as kitchen appliances, sound equipment, lighting,
for equipment - such as HVAC units, boilers, and generators; and for facility infrastructure – such as roof, door,
window, and floor/carpeting replacement.
Initial purchases for new assets may be paid for through the Operating Budget or through the Capital Budget.
Annual replacement charges are charged-back to the supported department programs with full replacement funding
to be accumulated over the asset’s estimated lifetime. Final determination for replacement of the asset is determined
through an analysis of whether the cost of maintenance equals or exceeds the cost of replacing the asset. The
reserve is intended to be maintained at a level sufficient to provide replacement funding in accordance with
replacement schedules.
Attachment D
CITY OF SARATOGA
Requests for use of the accumulated reserve funding are approved by Council through budget adoption, or if an
unplanned situation occurs, by a Council approved budget adjustment resolution during the fiscal year. The reserve
is replenished by replacement charge allocations in subsequent years.
Attachment D
CIP Funding Allocation Schedule
FY 2017/18
ATTACHMENT-E
FY 2017/18 CIP Funding Amount CIP - Reserve Park In-lieu
Total Remaining Discretionary CIP Funding 1,500,000 117,000
Less: Annual CIP Priority Projects
Annual Street Infrastructure Repairs 200,000 -
Annual Retaining Wall NEW 200,000
Annual Parks, Trails, Grounds and Medians NEW 100,000
Annual Roadway Safety & Traffic Calming 50,000 -
Annual Risk Management 50,000 -
Discretionary CIP Funding 900,000 117,000
Plus: Recommended Changes:
Beaumont Avenue Traffic Circle 30,000 -
Total:30,000 -
Less: Recommended Changes:
- -
Total:- -
Remaining Discretionary CIP Funding 930,000 117,000
Less: Discretionary Funding Requests
Annual Roadway Improvements 295,000 295,000
Saratoga to the Sea Trail - Design NEW 250,000 250,000
El Camino Grande Storm Drain 145,000 145,000 -
Hakone Gardens Koi Pond Improvements 110,000 - 110,000
Big Basin Way Turn Around 50,000 50,000
Village to Quarry Park Walk Way NEW 50,000 50,000
Quito Road Sidewalk Improvements NEW 50,000 50,000
Village Crosswalk & Sidewalk Rehabilitation NEW 44,000 44,000 -
City-wide LLD Initiation Match Program 26,000 26,000 -
City-wide Tree Replanting Program 20,000 20,000 -
Total:1,040,000 930,000 110,000
Reduced Discretionary CIP Funding 1,040,000 - 7,000
Unfunded Capital Project List
FY 2017/18
ATTACHMENT-F
Project
Title
Project
Descriptions
Project
Cost
1 Big Basin Way Turn Around This project would fund the design and construction of a turn around on Big Basin
Way to improve traffic circulation through Saratoga Village.
500,000
2 Quito Road Sidewalk Improvements This project would fund sidewalk improvements along Quito Road between Highway
85 and Allendale Avenue.
350,000
3 State Route 85/Saratoga Avenue Beautification This project would fund the beautification of the entry and exit to State Route 85 at
Saratoga Avenue
250,000
4 Saratoga/Herriman Avenues Traffic Signal This project would fund the installation of a three-way traffic signal at the intersection
of Saratoga Avenue and Herriman Avenue
250,000
5 Beaumont Avenue Traffic Circle This project would fund the installation of a traffic circle on Beaumont Avenue 30,000
850,000$
6 Saratoga Village to Quarry Park Trail This project would fund the design and construction of a trail along Big Basin Way
from Saratoga Village to Quarry Park through Hakone Gardens.
3,000,000
7 Saratoga Village Creek Trail - Construction This project would fund the construction of a trail connecting Saratoga Village to
Quarry Park along Saratoga Creek.
3,000,000
8 Saratoga-to-the-Sea Trail This project would fund the design, environmental review, and construction of a trail
connecting Quarry Park to Santa Clara County's Sanborn Park
2,500,000
9 Norton/Villa Montalvo Emergency Route This project would fund the design and construction of an emergency access road
connecting the Montalvo Arts Center parking lot with Norton Road.
2,000,000
10 Joe's Trail at Saratoga de Anza - Phase II This project would fund the design and construction of a trail from Saratoga-Sunnyvale
Rd. to Arroyo de Arguello.
750,000
11 Quarry Park Trail Improvements This project would fund the design, environmental review, and construction of
additional trail improvements in Quarry Park
250,000
12 Congress Springs Park North Side Entrance This project would fund the design and construction of a trail connecting the
residential neighborhood around Cox Avenue east of Highway 85 to the northside of
Congress Springs Park.
200,000
13 ADA All-inclusive Playground This project would fund costs related to an all-inclusive playground at a city park. 200,000
14 Quarry Park Pond Improvements This project would fund the design, environmental review, and construction of
improvements to the pond in Quarry Park
150,000
15 Via Regina Trail This project would fund the construction of a pedestrian-equestrian trail connecting
Via Regina and Villa Oaks Lane.
100,000
12,150,000$
16 Theater Improvements This project would fund the design and construction of improvements identified in the
Civic Theater Master Plan.
12,000,000
17 Community Development Lobby Remodel This project would fund the remodel of the lobby in the Community Development
department.
150,000
18 Village Clock This project would fund the installation of a clock in Saratoga Village. 150,000
19 City Hall Courtyard Renovation This project would fund improvements to the courtyard area of City Hall. 100,000
19 Renovate Existing Stage at Community Center This project would fund ADA accessibility and storage and safety improvements to
the Community Center Multi-Purpose Room Stage.
80,000
20 Bocce Ball Court This project would fund the installation of a bocce ball court at City Hall 50,000
12,530,000$
25,530,000$
STREET IMPROVEMENT PROJECTS
PARK & TRAIL IMPROVEMENT PROJECTS
FACILITY IMPROVEMENT PROJECTS
TOTALS
TOTAL STREETS UNFUNDED PROJECTS
TOTAL PARKS AND TRAILS UNFUNDED PROJECTS
TOTAL FACILITY UNFUNDED PROJECTS
CIP Funding Update Schedule
FY 2017/18
ATTACHMENT-G
FY 2017/18 CIP Funding Study Session Additional Revised
CIP Projects
Annual Roadway Improvements 1,751,713 208,841 1,960,554
Senior Center Restroom ADA Upgrades 153,279 150,627 303,906
Total:1,904,992 359,468 2,264,460
Revised CIP Funding 1,904,992 359,468 2,264,460