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City of Pleasanton Operating Budget • FY 2023/24 - FY 2024/25C - 36 Reserve Policy (Draft) PURPOSE The purpose of this policy is to establish a target level of reserve for the General Fund as well as specified Enterprise Funds and Internal Service Funds. Designating funds to reserves supports the City Council’s goal of ensuring fiscal stability. For the purpose of this policy, the General Fund does not include any sub-funds of the General Fund such as the Rainy Day Fund. This reserve policy meets the following objectives of the City: 1. Ensure financial stability; 2. Maintain operations in the event of economic uncertainty or emergency; and 3. Make necessary repairs and replacements in the event of one-time, large-scale capital breakdown. Reserve Levels and Establishment 1. General Fund Reserves Unassigned Fund Balance: The City shall maintain an unassigned fund balance of between 16.7% to 25.0% of annual General Fund operating expenditures excluding transfers to other funds and significant one-time expenditures. The target level for the reserve is 20.0%. The reserve shall be calculated using next fiscal year’s budget or the current fiscal year budget if next fiscal year’s budget is not available. Should the Unassigned Fund Balance fall below 16.7%, one-time revenues/contributions should be evaluated for the reserve. For example, it may be necessary to make a one-time contribution from the Rainy Day Fund. Restricted Fund Balance: PARS 115 Pension Trust: The City Council has implemented proactive measures to pay down the City’s unfunded pension obligation. A pension trust has been established and funds in the trust account can only be used for pension contributions. Funds can be withdrawn during challenging times in accordance with the PARS Trust Withdrawal Policy adopted by the City Council in February 2020. Commited and Assigned Fund Balance: Program reserves such as Crisis Response approved by the City Council or City Manager shall not be counted toward the General Fund reserve level stated above. 2. Enterprise Fund Reserves: The following enterprise funds shall maintain a reserve of between 30.0% and 40.0% of the operating expenditures for each fund: Water and Sewer. The target level for these reserves is 35.0%.