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CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
FY 16-17 and 17-18
CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
FY 16-17 and 17-18
OPERATING AND CIP BUDGET
CITY OF MORGAN HILL
Fiscal Policies
(continued)
e. At other times, i.e., when reserves are 25%
or greater and projected to remain so,
achieving structural balance may be
postponed to the last year of the five-year
financial forecast.
f. Spending cuts prompted by the need to
achieve structural budget balance and/or
rebuild General Fund reserves will consist
of service-level reductions, mitigated as
much as possible by changes to employee
work schedules. Service-level reductions
almost certainly will require layoffs and/or
renegotiation of current labor costs.
g. With its bargaining units the City will
normally enter into new labor contracts of
no more than 12 months’ duration, unless
General Fund reserves are back up to the
long term goal of 25%, and projected to
remain there for the subsequent five years.
h. To reduce the rate of increase in labor
costs, the City will engage in good-faith
negotiations with bargaining units to make
cost-saving changes in retirement plans
and to reduce the City-paid share of health
benefits.
B. Water and Sewer Operating Funds – The City shall
make every effort to keep a minimum reserve level
of 25% of the appropriated operating budget for the
Sewer operating fund and the Water operating
fund.
C. Water and Sewer Rate Stabilization Funds – The
City shall make every effort to keep a minimum
reserve level equal to 20% of the annual estimated
utility usage revenue accounted for in the Sewer
operating budget and 20% of the annual estimated
utility usage revenue accounted for in the Water
operating budget.
D. Water and Sewer System Replacement Funds—The
January 2016 Rate Study approved by the City
Council establishes Capital System Replacement
Reserve target of a minimum of 3% of net
depreciable capital assets, which equates to a 33-
year replacement cycle for capital assets. This
target serves as a starting point for addressing long
-term capital system needs.
E. Community Development Fund – The City shall
make every effort to keep a minimum reserve level
of 30% of the appropriated operating budget for the
Community Development Fund, in order to provide
for
those
temporary
periods
when
less
development activity occurs and less revenue is
collected by the City.
F. Unemployment – The City shall make every effort to
maintain a minimum reserve level in the
Unemployment Fund equal to 100% of the
appropriation for unemployment claims.
G. Workers’ Compensation – The City shall make every
effort to maintain a minimum reserve level for
Workers’ Compensation equal to the sum of twice
the self insured amount for a single claim.
H. General Liability – The City shall make every effort
to maintain a minimum reserve level equal four
times the self insured retention for general liability
claims.
Budgetary Designations
A. A portion of General Fund Balance will be
designated for economic uncertainties and not be
reflected in available fund balance for budget
purposes. This is to avoid the need for service level
reductions in the event an economic downturn
causes revenues to come in lower than budget.
B. Reserves for Encumbrances and Continuing
Appropriations are established at the end of every