FRESNO WESTSIDE MOSQUITO ABATEMENT DISTRICT

POLICY TITLE: Reserves       

POLICY NUMBER: 3105

3105.1 The Fresno Westside Mosquito Abatement District (the District) shall maintain reserve funds in order to maintain the District's credit worthiness and to adequately provide for:

3105.1.1 Funding infrastructure maintenance and replacement.

3105.1.2 Economic uncertainties and other financial hardships.

3105.1.3 Loss of significant revenue sources such as property tax receipts.

3105.1.4 Public health emergencies, local disasters or catastrophic events.

3105.1.5 Future debt or capital obligations.

3105.1.6 Cash flow requirements.

3105.1.7 Unfunded mandates including costly regulatory requirements.

3105.2 Operating Reserves: The amount of operating reserves will equal 60% of the next fiscal year’s operating budget.

3105.2.1 Operating reserves can be used at any time to meet cash flow requirements of District operations.  Authority to use the funds will be consistent with the District's Expense Authorization Policy and the budget.

3105.3 Capital Reserves: Capital reserves will be accumulated to fund infrastructure projects and equipment replacement.  A key objective for accumulating capital reserves is to minimize external borrowing and interest expense.  Capital reserves shall be identified by the project each is intended to fund.  The minimum amount of capital reserves will be equal to one year's projected capital expense.  The maximum amount of capital reserves will be equal to five year’s projected capital expense.

3105.3.1 The Board of Trustees will authorize use of capital reserves during the budget process. Capital reserves are also available for unplanned (unbudgeted) capital replacement.  Authorization for the use of capital reserves for unplanned capital replacement or other purposes listed in Policy Number 3105.1, is given by the Board of Trustees at a duly noticed Board of Trustees meeting.

3105.4 Aircraft Replacement Reserve:  Aircraft Replacement Reserve will be accumulated to cover replacement costs for the District’s aircraft.  The minimum aircraft replacement reserve will equal $100,000. The maximum aircraft replacement reserve will equal $250,000.

3105.4.1 Aircraft replacement reserves can be used at any time to meet cash flow requirements of District operations.  Authorization for the use of the reserves will be granted by the Board of Trustees at a duly noticed Board of Trustees meeting.

3105.5 Contingency Reserve:   The Contingency Reserve will be used to provide for loss of significant revenue sources (such as property tax revenues) and/or any financial requirements, beyond and outside of insurance coverage that may arise from legal claims, unfunded mandates or costly regulatory requirements.  The amount of contingency reserves will equal 10% of the current year’s operational budget. 

3105.5.1 Contingency reserves can be used at any time upon a finding of the Board of Trustees that an unforeseen situation exists that is beyond the availability of the funding in the budget.  Authorization for the use of contingency reserves will be granted by the Board of Trustees at a duly noticed Board of Trustees meeting.

3105.6 Medical Self-Fund Reserve The Medical Self-Reserve Fund will be used to ensure adequate funds are available for the District’s obligations in the self-funded portion of the medical plan.  The amount of this reserve shall be equal to the District’s maximum liability under the current medical plan. 

3105.6.1 Medical Self-Fund reserves can be used at any time upon a finding of the Board of Trustees that unexpectedly high medical costs exist that are beyond the availability of the funding in the budget.  Authorization for the use of this reserve will be granted by the Board of Trustees at a duly noticed Board of Trustees meeting.

3105.7 Pension Unfunded Accrued Liability Reserve The Pension UAL Reserve will be used to ensure adequate funds are available for the District’s unfunded liability for all CalPERS pension plans.  The amount of this reserve shall be equal to the District’s combined UAL for all plans as of the most recent Valuation Report at the time the budget is passed.  

3105.8 The Manager shall perform a reserve analysis to be submitted to the Board of Trustees annually during deliberation of the budget.

3105.9 If the analysis indicates projected or actual reserve levels falling 10% below or above the levels outlined in this policy, at least one of the following actions shall be included with the analysis:

3105.9.1 An explanation of why the reserve levels are not at the targeted level, and/ or

3105.9.2 An identified course of action to bring reserve levels within the minimum and maximum levels prescribed.

3105.10 This policy shall be implemented beginning in the 2008-2009 fiscal year.

September 9, 2021