REPORT TO THE CITY COUNCIL
July 16, 2015
FROM: MICHAEL LIMA, Finance Director/Controller
Finance Department
BY: KAREN BRADLEY, Assistant Finance Director/Controller
Finance Department
SUBJECT
Title
Authorize the Controller to make up to $4,934,130 of temporary loans from the Committed General Cash Reserve for Economic Uncertainties and Emergencies to cover short term deficit cash balances at year end resulting from timing differences in the receipt of grant revenues/reimbursements and the incurrence of grant-funded expenditures.
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RECOMMENDATION
Staff recommends that the Controller be authorized to draw up to $4,934,130 from the "Reserve Fund", namely, the Committed General Cash Reserve for Economic Uncertainties (REC).
EXECUTIVE SUMMARY
Temporary negative cash balances in certain funds may result from timing differences in the receipt of revenue compared to when expenditures must be incurred. This is particularly true at year end, and especially when funds are heavily supported by grant funding. While cash for all City funds are pooled together for investment purposes they are separately identified for accounting purposes. When an individual fund "overdraws" its share of pooled cash due to timing differences, the pool can function as a line of credit for the individual funds. The recently enacted changes to the Reserve Management Act (RMA) make monies held in the REC and Committed General Cash Reserve for Contingency Stabilization (RCS) available for temporary loans at fiscal year-end. Staff is recommending that the Controller be authorized to draw from the REC an amount up to $4,934,130, which is necessary to ensure the proper close out of the 2015 Fiscal Year. As required under the RMA, the loans will be repaid within 90 days after the end of the fiscal year.
BACKGROUND
It is not unusual for local governments to loan resources from one fund to another fund experiencing a temporary cash shortage. These te...
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