Title
Funding Recommendation for Risk-Based Analysis of Reserve Levels Study
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Move to recommend using $29,000 of the Budget Stabilization Reserve to fund a Risk-Based Analysis of Reserve Levels Study and forward to the full City Council for consideration.
Report
Issue:
Whether to recommend funding a Risk-Based Analysis of Reserve Levels Study using the Budget Stabilization Reserve
Staff Contact:
Debbie Sullivan, Administrative Services Director, 360.753.8499
Presenter(s):
Debbie Sullivan, Administrative Services Director, 360.753.8499
Background and Analysis:
In 2019, as part of a one-time accounting adjustment, City Council approved Finance Committee's recommendation to dedicate $7.8 million to a budget stabilization reserve. The next step is to update the City's Financial Policies to reflect this new reserve fund, establish target levels, and define the conditions under which they can be used.
Staff will discuss with Finance Committee a recommendation to use $29,000 of the Budget Stabilization Reserve to hire the Government Finance Officers Association (GFOA) to assess the appropriate level of reserve funds and recommend updated language to the City's Financial Management Policies.
GFOA is the leading association for public sector finance professionals; and, they specialize in local government financial management with a particular emphasis on budgeting and financial policies. Their Research and Consulting Center provides local governments with comprehensive analytical and advisory services and research.
GFOA will conduct a risk-based reserve analysis to recommend the appropriate level of reserve funds the City should maintain. The risk analysis relies on historical experiences, the experience of other cities, and third-party experts (i.e. Geological Survey for earthquakes). Once they examine the risk factors, GFOA uses "Probability Management"...
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