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HomeMy WebLinkAbout2022-052 - Res. Amending Res. 2021-034 Establishing Financial Reserve and Contingency Policy RESOLUTION NO. 2022-052 AMENDING RESOLUTION 2021-034 IN THE MATTER OF ESTABLISHING A FINANCIAL RESERVE AND CONTINGENCY POLICY FOR MASON COUNTY, WASHINGTON WHEREAS, the Mason County Board of County Commissioners, as the county legislative authority and the Mason County Finance Committee deem it to be fiscally responsible to maintain cash flow reserves in the County Funds and to provide sufficient reserve funds as required by law to cover bond covenants, the smooth running of the County and pay current obligations; NOW THEREFORE BE IT RESOLVED by the Mason County Board of County Commissioners that the Financial Reserve and Contingency Policy be adopted as part of the County Budget process to achieve the goals outlined. A. General Policy The County shall maintain reserves required by law, ordinance and/or bond covenants. All expenditures drawn from reserve accounts shall require prior Board approval unless previously authorized by the Board for expenditure within the County's annual budget. The County Finance Committee will review annually the required reserve levels necessary to meet the reserves established herein. If it is determined that the reserves should be adjusted, the County Finance Committee shall propose an amendment to these policies. If reserves and/or fund balances fall below required levels as set by this policy,the County shall include within its annual budget a plan to restore reserves and/or fund balance to the required levels. The County's annual general fund budget will be adopted in the positive with expenditures not exceeding revenues, excluding beginning and ending fund balances unless any of the following conditions exist: the Mason County Board of County Commissioners develop a plan to restore the shortfall to the reserve balances within one calendar year; the offset of expenditures over revenue is due to "one-time" expenditures, or; the offset is due to conservative budgeting and the net revenue over expenditures for the previous calendar year is at least equal to the amount of the excess in expenditures over revenues in the current budget year. The County will allocate any funds from unanticipated excess revenues and/or unexpended budget authority in the year following the actual recognition of these funds first to funding reserves as set out in this policy then to other unanticipated expenditures. All reserves will be presented in the County's annual budget. B. General Fund Operating Reserves The County will maintain a General Fund Operating Reserve to provide for adequate cash flow, budget contingencies, and insurance reserves. Under this policy, General Operating Reserves will be budgeted in the range of 15% - 25%of the prior year's actual expenditures, excluding beginning and ending fund balances. C. General Fund Contingency Reserve 1 The County will maintain a Contingency Fund and shall maintain a reserve equal to $1,000,000 to provide a financial cushion to cover revenue shortfalls resulting from unexpected economic changes or recessionary periods or to provide funds in the event of major unplanned expenditures the County could face. D. General Fund Technology Replacement Reserves The County will maintain a Technology Replacement Reserve for replacement of costs entity wide to cover computer hardware, software, or telephone equipment identified in the County's Technology Replacement listing. The required level of reserve will equal each year's scheduled costs. For example, if the 2019 equipment costs are budgeted at $100,000 the fund reserve balance must equal or exceed $100,000. Contributions will be made through assessments to the using funds and departments and maintained on a per asset basis. E. General Fund Equipment and Vehicle Replacement Reserves The County will maintain a General Fund reserve for the replacement of vehicles and equipment identified on the County's equipment replacement listing. The required level of reserves will equal each year's scheduled replacement costs. For example, if the 2019 equipment replacement costs are budgeted at $100,000, the fund reserve balance must equal or exceed $100,000. Contributions will be made through assessments to the using funds and departments and maintained on a per asset basis. F. General Fund Accrued Leave Reserve The County will maintain an Accrued Leave Reserve to cover the cost of the liability in its Accrued Leave Account. The reserve will be at least sufficient to cover one years estimated accrued leave payout as well as any accrued leave payouts known and required to be paid out in future years. G. General Fund Capital Facilities Reserve The County will maintain a Capital Facilities Reserve equal to $5,000,000, or other amount set by the Board and adopted during the annual budget process. The purpose of the reserve is to pay for capital costs or future debt payments included in the Capital Facilities Plan. H. Sales and Use Tax Fund Reserve The County will maintain a Sales and Use Tax Fund Reserve equal to 15% to 25%of the prior year's actual expenditures, excluding beginning and ending fund balances. I. County Road Fund Operating Reserves The County will maintain a County Road Fund Operating Reserve to provide for adequate cash flow. Under this policy, General Operating Reserves will be budgeted in the range of 15%- 25%of the prior year's actual expenditures, excluding beginning and ending fund balances. J. County Road New Road Projects Fund Reserve The County will maintain a County Road New Road Projects Fund Reserve equal to $4,000,000, or other amount set by the Board and adopted during the annual budget process. K. REET 2 Fund Reserve The County will maintain a REET 2 Fund Reserve to provide for future debt payments within the Belfair Wastewater& Water Reclamation Fund. The reserve will increase each year, economic conditions permitting, by up to one-half of the scheduled transfer amount from the REET 2 Fund 2 into the Belfair Sewer Fund until the reserve is equal to $3,000,000, or other amount set by the Board and adopted during the annual budget process. L. Equipment Rental & Revolving Fund Reserve The County will maintain an Equipment Rental & Revolving Fund Balance Reserve equal to 15% - 25%of the prior year's actual expenditures, excluding beginning and ending fund balances. Approved this L{Iay of QQj& , 2022. Mason County Board of Commissioners Kevin Shu y, Chair Sharon Tr sk, Commissioner 1'�7f Z�A Rand eatherlin, Commissioner Approved this .Tuay of , 2022. Mason County Finance Committee Li alliazier, a n County Treasurer, Chair Paddy McGuire, Mason County Auditor, Secretary 0--2W Kevin S utty, ason County Commissioner Attest: n McKenzie S ith Clerk of the Board Approved as to form: im Whi ead Chief Deputy Prosecuting Attorney 3