Item No: 5H.(1)- Substitute for 5H.
Meeting Date: September 24, 2012
From: Bill Spinelli, Finance Director, CPA
Subject: Resolution approving a transfer from the Worker’s Compensation Fund to the General Fund in the amount of $568,000 to offset the FY 2012-13 General Fund Budget Shortfall
Staff recommends approval of a transfer from the Worker’s Compensation Fund to the General Fund in the amount of $568,000 to offset the FY 2012-13 General Fund Budget Shortfall.
Last year, the Health Insurance Fund had insufficient reserves, which necessitated the City to reserve $568,000. The funds were available in the Worker’s Compensation Fund and were restricted as a back-stop to the Healthcare Fund. The reserves in the Healthcare Fund have now been restored allowing the City to un-restrict the $568,000 which is now available to be transferred to the General Fund to offset a portion of the FY 2012-13 General Fund Budget Shortfall. This does not compromise the fiscal health of the Worker’s Compensation Fund.
After further review of the City’s projected budget shortfall for FY 2012-13 an alternative strategy has been developed to use the $568,000 to offset recurring General Fund expenses in the FY 2012-13 Budget. While this is not a recurring option and the General Fund FY 2013-14 Budget will not have these same funds available, it does lessen the amount of the General Fund FY 2012-13 shortfall.
In an effort to improve its cash position, staff updated and the City Commission adopted new cash policies in fiscal year 2007. Ordinance 07-80, Section 2-230 provides for utilization of surplus cash which is defined as cash that exceeds 115% of the minimum acceptable level of cash reserve. Utilization of Surplus Cash can be approved for any one of the following; elimination of shortfalls in related funds, reduction or avoidance of debt, funding of a renewal and replacement program, one time capital needs and for use in funding tax, fee or rate stabilization. In addition to the Surplus Cash test, Ordinance 07-82 provides for a five year pro forma cash flow projection to determine the financial impact if any on the fund from which the transfer is drawn (attached). The following test reflects the amount of Surplus Cash available as of September 30, 2012:
Minimum Cash Reserve Requirement $1,167,797
Add 15% Reserve 175,169
Minimum Level of Acceptable Cash Reserve $1,342,966
Unaudited Cash Balance as of September 2012 2,017,504
Surplus Cash $ 674,538
The calculation as reflects adequate surplus cash to allow for the special transfer.
1. Approve the transfer from the Worker’s Compensation Fund to the General Fund in the amount of $568,000; Or
2. Such alternative action as the Commission may deem appropriate
The impact on the surplus cash of the Worker’s Compensation Fund would be minimal decreasing the surplus cash from $674,538 to $106,538. In addition, pro forma cash flow projections for the next five years reflect continued growth in cash reserves.
Prepared by: ______________________
Attachments: Yes____ No ______
Advertised: ____Not Required ______
Attorney Review : Yes___ No ____
Reviewed by: Dept. Head ________
Finance Dept. __________________
Deputy C.M. ___________________
City Manager ___________________
Account No. 065-1350-581-9501 __
Project No. ___________________
WF No. ______________________
RESOLUTION OF THE CITY COMMISION OF THE CITY OF LEESBURG, FLORIDA AUTHORIZING A TRANSFER FROM THE WORKER'S COMPENSATION FUND TO THE GENERAL FUND NOT TO EXCEED $568,000; AND PROVIDING AN EFFECTIVE DATE.
BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:
THAT the City Commission hereby authorizes the transfer of $568,000 from the Worker’s Compensation Fund to the General Fund to offset the General Fund FY 2012-13 budget shortfall.
THAT this resolution shall become effective immediately.
PASSED AND ADOPTED by the City Commission of the City of Leesburg, Florida, at a regular meeting held the _24TH ____ day of _September________ 2012.