Budget and Financial Policies_rev June 2017

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Internal Service Funds Background Internal Service Funds are established to administer and, account for va,rious activities whose purpose is to provide for goods and services to support other departments, for their ongoing operational and programming needs. The delivery ofthese services isrecovered onacost recovery basis. Purpose It is the intent of the Internal Service Fund Reserve Policy to establish general guidelines as to the establishment of proper recovery rote structure and define an appropriate level of reserves for each internal Service Fund. It will also establish criteria for the use of reserves and establish a process by which to replenish reserves if utilized. Although this policy only addresses the Risk Management Funds (i.e. Liability and property Insurance and Workers Compensation Fund), it is the intent to build upon and include all internal service funds within this policy. Risk Management The Risk Management programs are established to protect the City's assets through the administration of a properly funded liability c(a[m and insurance program and by minimizing the cost and effect of work-related injuries. Rates for these programs are established onabiennial actuarial basis. Reserves Reserves for these accounts will be funded at not less than 80% as defined in the actuarial study. In addit�om, three months of operational reserves will be included to address any variations related to revenues and expenditures. Any surplus amounts defined in these accounts from general agencies shall be available for transfer to the General Fund until such time that the General Fund reserve meets the minimum requirement of1596 or to establish the reserve for Economic Uncertainty. Transfers shall be submitted toCouncil for approval. There after any surplus can be used 1ofund any deficits identified in other Internal Service Fund reserves, as well as other unfunded capit�a\and deferred related maintenance. Budget & Financial PoHces (Rev, 6/2017) Page S