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IAS ALTOS IIILi,S <br />a <br />y Town of Los Altos Hills Reserve Policy <br />CALIFORNIA Approved by the City Council on June 15, 2023 <br />Purpose <br />To set forth the Town's policy for establishing and maintaining fund reserve targets for each of the <br />Town's governmental funds. Fiscal reserves provide working capital for operations and <br />maintenance activities, funding for, vehicle, and equipment needs, fulfillment of legal, regulatory, <br />and contractual obligations and mitigation of risk and liability exposures. <br />Policy <br />This policy is intended to ensure that the Town has sufficient cash flow to meet current and future <br />needs and provide transparency to its residents by establishing fund reserve targets for each of the <br />Town's governmental funds. Reserve funds are needed to provide funding for planned and <br />unplanned events. Planned events include, but are not limited to, (1) accumulating balances to fund <br />operating needs; (2) debt service obligations (if any); and (3) funding for employee related pension <br />and other post -employment benefits. Unplanned events include, but are not limited to, (1) <br />accounting for revenue shortfalls; (2) unanticipated expenses; and (3) paying for unforeseen <br />emergency events. <br />The established reserve targets defined. herein provide guidance for long-term financial planning <br />and maintaining the Town's long-term financial health. Adequate fund reserves are of value to: <br />(1) provide working capital to fund operating needs; (2) provide a financial cushion for dealing <br />with unanticipated financial needs and emergencies; and (3) are a component of achieving <br />favorable credit ratings which can help reduce the costs of issuing debt. <br />This policy designates specific reserve accounts. For each reserve, this policy specifies the reserve <br />purpose, the threshold amount, allowable uses of reserves, and replenishment of the reserve. This <br />policy establishes committed and assigned reserves. Committed or Assigned reserves may be <br />established, changed, applied, and deleted by Council resolution. Committed reserves may be used <br />for one or more limited activities noted in the purpose or usage of the reserve. Assigned reserves <br />are not limited to one single activity and may be used for any Town specific activity described. in <br />the purpose or usage of the reserve. <br />This policy will be reviewed annually during the budget process to ensure conformance with the <br />Town's goals and objectives and compliance with any changes in regulations or standards. In <br />conjunction with the annual policy review, the Administrative Services Director will include <br />updated calculated thresholds, review of use and replenishment of the reserves, and any anticipated <br />changes to be included in the annual budget preparations. <br />Committed Reserves <br />A. Pension Contribution Reserve <br />Purpose of the Reserve: <br />The Pension Contribution Reserve is to constrain funds for the Town's estimated unfunded <br />liability. Ca1PERS prepares an annual Actuarial Report for each of the Town's three pension <br />Town of Los Altos Hills <br />a&iended Reserve Policy <br />Updated June 2023 <br />Resolution 57-23 Page 2 <br />