HomeMy WebLinkAbout2019-08-27; Council Policy No. 87 - General Fund Surplus Policy
Council Policy Statement
Category: FINANCIAL MANAGEMENT POLICIES
Specific Subject: General Fund Surplus Policy
PURPOSE:
To establish a City Council policy for the appropriation of surplus funds resulting from General Fund
actual revenues exceeding total actual expenditures, plus any unspent and unencumbered
expenditure budget for a given fiscal year.
BACKGROUND:
Due to various factors including economic expansion, prudent operations, or changes to various
projects and programs, the City of Carlsbad (city) may end a fiscal year with a surplus of revenues over
expenditures, encumbrances and commitments. Surplus funds are those funds that result after
closing the city’s accounting records as defined by the results of the annual fiscal year audit.
It is the intent of the city to use all surplus funds generated to meet reserve policies, and the
avoidance or reduction of long term liabilities. The city will not use year-end surplus funds to fund
ongoing operations unless otherwise approved by City Council.
From time to time, the city manager may recommend to the City Council the use of surplus funds
consistent with the uses identified in this policy.
POLICY:
For the purposes of this policy, the term “surplus” refers to any actual revenues less actual
expenditures, in a given fiscal year, plus any unspent and unencumbered expenditure budget. To
achieve the purpose of this policy, the city will take the following actions:
1. The city will use surplus funds to replenish any General Fund reserve deficiencies, up to the
minimum level as set forth in the City Council General Fund Reserve Policy No. 74 and then any
pension liability deficiencies, as defined in City Council Policy No. 86, Pension Funding Policy.
2. If the reserve and pension funding policies have been met as stated above, the city manager is
authorized to approve the carry forward of any unspent and unencumbered budget for a
particular item equal to or less than $100,000 into the following fiscal year. These items will be
one-time expenditures and not for on-going services, programs or personnel.
Policy No. 87
Date Issued: 08-27-2019
Effective Date: 08-27-2019
Resolution No. 2019-153
Cancellation Date: N/A
Supersedes No. N/A
August 27, 2019 Item #11 Page 4 of 8
3. Any remaining surplus funds in excess of reserve and pension liability deficiencies, and items
equal to or greater than $100,000, as stated above, will be brought forward for City Council
approval.
4. One-time funds, such as grant proceeds, will be used for one-time expenditures; therefore, the
City Council may not use one-time revenues and surplus funds in a way that creates new on-going
expenditure requirements, unless the City Council can demonstrate that adequate resources exist
to support the on-going expenditure requirements.
5. After the close of the fiscal year, in preparation of the annual financial audit, city staff will
demonstrate accountability and transparency by communicating compliance with the General
Fund Reserve and Pension Funding Policy requirements in order for City Council to approve the
staff recommended use of surplus funds.
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