HomeMy WebLinkAboutRes 43-99 09/07/1999 RESOLUTION NO. 43-99
A RESOLUTION ESTABLISHING A FUND BALANCE/RESERVE POLICY
FOR THE VILLAGE OF MOUNT PROSPECT
WHEREAS, the Village of Mount Prospect endorses sound financial policies and practices to
ensure the continuation of necessary public services; and
WHEREAS, it is essential that the Village maintain adequate fund balances and reserves in its
various operating funds to provide the capacity to: (1) offset significant economic downtums or
revenue shortfalls, (2) provide sufficient cash flow for daily financial needs, (3) maintain or
improve the Village's bond rating, and (4) provide funds for unforeseen expenditures related to
emergencies; and
WItEREAS, it has been determined that the previous fund balance/reserve policy no longer
meets the Village's needs.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND BOARD OF
TRUSTEES OF THE VILLAGE OF MOUNT PROSPECT, COOK COUNTY, ILLINOIS:
SECTION ONE: That the Mayor and Board of Trustees of the Village of Mount Prospect,
Cook County, Illinois, have reviewed the attached fund balance/reserve policy for the Village of
Mount Prospect and have determined that such policy be established to govern the existence and
use of fund balance/reserves.
SECTION TWO: That this Resolution shall be in full force and effect from and after its
passage and approval in the manner provided by law.
AYES: Corcoran, Hoefert, Lohrstorfer, Nocchi, Skowron, Wilks
NAYES: Farley
ABSENT: None
PASSED and APPROVED this 7th day of September, 1999·
GM,fl}dr L. Varle~
ATTEST:
Village Clerk
VILLAGE OF MOUNT PROSPECT
FISCAL POLICY
POLICY SUBJECT:
Fund Balance and Fund Reserve Levels
POLICY EFFECTIVE DATE:
This policy is in effect as of the 7~ day of September, 1999.
POLICY APPLICABLE TO: All Operating Funds
GENERAL POLICY:
1.0 Purpose of Reserve Policy
1.1 This policy is established to ensure that the Village has adequate reserves and resources
within its various operating funds to provide the capacity to: (1) offset significant economic
downtums or revenue shortfalls, (2) provide sufficient cash flow for daily financial needs,
(3) maintain or improve the Village's bond rating, and (4) provide funds for unforeseen
expanditures related to emergencies.
2.0 Establishing and Maintaining Desired Fund Balance/Reserve Levels
2.1 Ifa fund's actual fund balance/reserve level is below the desired level set forth in this policy
the Village will retain any future annual operating surpluses until such time as the desired
reserve level is achieved. In the case of the General Fund, the first $400,000 of any future
annual operating surpluses will be retained, with any operating surplus exceeding $400,000
being transferred to the Capital Improvements Fund.
2.2 Once the desired fund balance/reserves level has been attained, any excess reserves or future
annual operating surpluses will be used to reduce property taxes or user charges, whichever is
appropriate for that fund. In the case of the General Fund, any future annual operating
surplus will be transferred to the Capital Improvements Fund.
3.0 Desired Fund Balance/Reserve Levels
3.1 For the General Fund, the Village will use its best efforts to maintain a total fund balance
level equal to twenty-five percent (25%) of the current year's budget (excluding any one-time
equity transfers).
3.2 For the Refuse and Motor Fuel Tax Funds, the Village will use its best efforts to maintain a
total fund balance level equal to twenty-five percent (25%) of the current year's budget
(excluding any one-time equity transfers).
3.3 For those Debt Service Funds funded through the property tax, the Village will use its best
efforts to maintain a total fund balance level equal to the amount of the next semi-annual
interest payment. For those Debt Service Funds funded through alternative revenues (tax
increment revenues, and home-rule sales) the Village will use its best efforts to maintain a
total fund balance level equal to fifty percent (50%) of the next year's principal and interest
expense.
3.4 For the Enterprise Funds, the Village will attempt to maintain a cash and investment balance
equal to four months (one-third) of the current year's operating and capital expenditures plus
any reserve for capital improvements.
3.5 For the Vehicle Replacement and Computer Replacement Internal Service Funds, the Village
will attempt to maintain fund equity at a level which represents a fully funded replacement
program given the age and estimated replacement cost of the various assets. For the Risk
Management Internal Service Fund, the Village will attempt to maintain fund equity at a
level equal to twenty-five percent (25%) of the current year's operating budget plus twice the
maximum self-insured retention amount for workers compensation and liability claims. For
the Vehicle Maintenance Fund, the Village will attempt to maintain fund equity at 25% of the
current year's budget.
3.6 For its two Pension Trust Funds, the Village will attempt to attain a fund equity level that
represents a fully funded pension plan as determined by an enrolled actuary. When the plans
become under-funded or over-funded, the Village's contribution levels will be adjusted in
accordance with current State law and sound actuarial calculations.
4.0 Use of Fund Balance/Reserves
4.1 Fund balance and reserves are to be used or depleted in the following situations:
(1) Revenue shon~alls result in an operating deficit.
(2) Unforeseen material expenditures arise which cannot be avoided or delayed. Any
expenditure o£ fund balance or reserves must be approved by the Village Board.
(3) Excess fund balance/reserves exist and the Village intentionally draws down on the
balance to come into compliance with this policy.
Adopted by the Board of Trustees by Resolution No. 43-99 on September 7, 1999.