Each fund in the City shall have a Statement of Purpose, adopted by ordinance of the City Council, which includes:
- Purpose(s) of the fund.
- Source(s) of significant revenues to the fund.
- The bureau responsible for managing the fund.
- Size and purpose of required contingencies and/or reserves, if any. Required contingencies and/or reserves shall be based on operating needs of the fund, bond covenants, or other legal requirements. Fund balances should be sufficient to keep the fund from going into a negative balance at year-end.
- Plans for the disposition of funds if the fund is closed.
Internal service funds will also include the following information, as appropriate:
- For purchase of capital items, a method for periodically testing the cost-effectiveness of pre-funding capital replacement versus leasing or lease purchasing. Each fund statement will indicate which levels of purchases are suitable for either direct cash payment or financing.
- Equipment replacement policies and reserves for equipment and major maintenance, where appropriate.
- A method of clearly accounting for equipment reserves and purchases for each bureau.
- A policy and procedure for protecting capital reserves from being used for operating purposes.
- A method for periodically testing the cost-effectiveness of providing services internally versus contracting out or directly purchasing all or part of the services provided by the fund. For insurance-related funds, this will mean a method for periodically testing the cost-effectiveness of self-insurance versus the purchase of all or part of the City’s insurance needs, as well as internal or contracted claims and loss-control services.
City Budget Office
Adopted by City Council August 2014