REPORT TO THE CITY COUNCIL
July 14, 2016
FROM: MICHAEL LIMA, Finance Director/Controller
Finance Department
BY: KAREN BRADLEY, Assistant Finance Director/Controller
Finance Department
SUBJECT
Title
Authorize the Controller to use 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.
Body
RECOMMENDATION
Staff recommends that the Controller be authorized to use monies in the Reserve Fund; namely, the Committed General Cash Reserve for Economic Uncertainties (REC), to cover short term year end deficit cash balances in grant funds.
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 Cash Management Pool (Pool) can function as a line of credit for individual funds. Changes to the Reserve Management Act (RMA) made last year authorized monies held in the REC and Committed General Cash Reserve for Contingency Stabilization (RCS) to be available for temporary loans at fiscal year-end. Staff is recommending that the Controller be authorized to draw from the REC an amount equal to that which is necessary to ensure the proper close out of the 2016 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. The...
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