Resolution 2019-30954 RESOLUTION NO. 2019-30954
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE
RECOMMENDATION OF THE FINANCE AND CITYWIDE
PROJECTS COMMITTEE AT ITS JULY 26, 2019 MEETING, AND
AMENDING AND RESTATING RESOLUTION NO. 2006-26341,
WHICH ADOPTED THE CITY OF MIAMI BEACH FINANCIAL
POLICIES RELATING TO STABILIZATION FUNDS; FUND
BALANCE; CONTINGENCY PLANNING AND CASH
RESERVES; USE OF NON-RECURRING REVENUES; CAPITAL
ASSET ACQUISITION, MAINTENANCE, REPLACEMENT AND
RETIREMENT; AND GUIDING THE DESIGN OF PROGRAM AND
SERVICES, TO INCORPORATE REVISIONS TO THE
STABILIZATION FUNDS AND FUND BALANCE/CONTINGENCY
PLANNING AND CASH RESERVES POLICY (GENERAL FUND
RESERVE POLICY), AS SET FORTH IN THE ATTACHED
EXHIBIT A, WHICH SHALL REPLACE AND SUPERSEDE THE
GENERAL FUND RESERVE POLICY SET FORTH IN
RESOLUTION NO. 2006-26341, AND WHICH IS CONSISTENT
WITH THE RECOMMENDATION OF THE CITY'S BUDGET
ADVISORY COMMITTEE.
WHEREAS, on September 21, 2006, the City Commission adopted Resolution No. 2006-
26341, which formalized the City's financial policies relating to Stabilization Funds; Fund Balance;
Contingency Planning and Cash Reserves; Use of Non-Recurring Revenues; Capital Asset
Acquisition, Maintenance, Replacement and Retirement; and Guiding the Design of Programs;
and
WHEREAS, on January 16, 2019, the City Commission adopted Resolution No. 2019-
30664,which revised the City's Resort Tax Reserve Policy to address the concerns of the Mayor's
Blue-Ribbon Emergency Response and Budget Advisory Committees; and
WHEREAS, at the May 21, 2019 Commission Budget Workshop, the Administration
recommended a revision of the City's General Fund Reserve Policy to help maintain or improve
the City's credit rating and financial position; and
WHEREAS, at the July 26, 2019 Finance and Citywide Projects Committee meeting, the
Committee recommended a revision of the City's General Fund Reserve Policy to help maintain
or improve the City's credit rating and financial position; and
WHEREAS, the Government Finance Officers Association (GFOA) recommends that
governments establish a formal policy on the level of unrestricted fund balance that should be
maintained in the General Fund for Generally Accepted Accounting Principles (GAAP) and
budgetary purposes; and
WHEREAS, the GFOA recommends that the adequacy of unrestricted fund balance in the
General Fund should take into account each government's own unique circumstances; for
example, governments that may be vulnerable to natural disasters, more dependent on a volatile
revenue source, or potentially subject to cuts in state aid and/or federal grants, may need to
maintain a higher level in the unrestricted fund balance; and
WHEREAS, the GFOA recommends, at a minimum, that general purpose governments,
regardless of size, maintain an unrestricted budgetary fund balance in their general fund of no
less than 2 months of the general fund budget; and
WHEREAS, the City of Miami Beach's current reserve policy is consistent with the GFOA's
minimum General Fund reserve recommendation, and the City's current reserve policy
establishes an 11% reserve of the General Fund Operating Budget for emergencies and a goal
to maintain a General Fund Reserve for Contingencies equal to 6%of the General Fund Operating
Budget, for a combined total of 17%, which represents 2 months of the General Fund Operating
Budget expenditures; and
WHEREAS, in light of the City's vulnerability to storm events and dependence on volatile
Resort Tax revenues, the objective of the proposed changes to the General Fund Reserve Policy
is to increase the required reserve for emergencies from 11% to 17%; increase the goal for
reserve for contingencies from 6% to 8%; and effectively increase the total reserve target from
17% to 25%, or from 2 months to 3 months of the City's General Fund Operating Budget; and
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, the Mayor and City Commission
hereby accept the recommendation of the Finance and Citywide Projects Committee at its July
26, 2019 meeting, and amending and restating Resolution No. 2006-26341, which adopted the
City of Miami Beach Financial policies relating to Stabilization Funds; Fund Balance; Contingency
Planning and Cash Reserves; Use of Non-Recurring Revenues; Capital Asset Acquisition,
Maintenance, Replacement and Retirement; and Guiding the Design of Programs, to incorporate
revisions to the Stabilization Funds and Fund Balance/Contingency Planning and Cash Reserves
Policy (General Fund Reserve Policy), as set forth in the attached Exhibit A, which shall replace
and supersede the General Fund Reserve Policy set forth in Resolution No. 2006-26341, and
which is consistent with the recommendation of the City's Budget Advisory Committee.
PASSED and ADOPTED, this 11th day of September, 2019.
ATTEST:
Dan Gelber, Mayor
111t1
Ra ael E. Granado, City Clerk APPROVED AS TO
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EXHIBIT A
CITY OF MIAMI BEACH FINANCIAL POLICIES
RELATING TO
STABILIZATION FUNDS; FUND BALANCE; CONTINGENCY PLANNING AND CASH
RESERVES; USE OF NON-RECURRING REVENUES; CAPITAL ASSET ACQUISITION,
MAINTENANCE, REPLACEMENT AND RETIREMENT; AND GUIDING THE DESIGN OF
PROGRAMS AND SERVICES
Stabilization Funds & Fund Balance/Contingency Planning and Cash Reserves
1. The City of Miami Beach shall maintain the Emergency Reserve at seventeen eleven
percent (44 17%) of the General Fund Operating Budget of the ensuing year (44 17%
Emergency Reserve) for use as defined in resolution 98- 22661.
2. The City of Miami Beach shall have a goal to also maintain a General Fund Reserve for
Contingencies equal to at least six eight (6--8%) of the General Fund Operating Budget
that, in combination with the 44 17% Emergency Reserve, represents two-three (2-3)
months of the General Fund Operating Budget expenditures.
3. Said reserve shall be increased or decreased annually but shall be maintained at a
minimum of six eight percent (6% 8%) of the then existing General Fund Operating
Budget.
4. Once the General Fund Reserve for Contingencies goal of eight percent (8%) is initially
achieved, if the amount falls below the six eight percent (6 8%) level, a plan of action will
be required to increase the reserves over three (3) to seven (7) years to at least six eight
percent (6 8%) and a percentage of any additional undesignated fund balance shall be
earmarked toward attainment of the-six eight percent (6 8%) level.
5. The City of Miami Beach shall have a goal to develop and maintain appropriate levels of
reserves in the Enterprise Funds as in the General Fund.
6. The City of Miami Beach shall have a goal of maintaining a reserve of one hundred percent
(100%) of pending claims in the Risk Management Fund and shall strive to fund two-thirds
(2/3) of the estimated value of insurance claims incurred but not reported.
Use of Non-Recurring Revenues
The City of Miami Beach will use one-time, non-recurring revenue for capital expenditures or one
time expenditures and not to subsidize recurring personnel, operations and maintenance cost.
Capital Asset Acquisition, Maintenance, Replacement and Retirement
1. The City shall maintain a dedicated portion of operating millage for General Fund Capital
Renewal and Replacement as defined in Resolution 2005-25832.
2. The City shall have a goal to fund for the following capital needs as a permanent part of
the budget in an amount not less than five percent (5%) of the annual fiscal operating
budget of the General Fund of the City:
• Capital Renewal and Replacement —to ensure adequate funding for the renewal and
replacement of the City's General Fund facilities to extend the useful life or replace
equipment whose useful life has expired.
• Capital Reserve Fund —to help ensure adequate funding related to previously approved
capital projects for expenditures due to bids that are over-budget, change orders, or other
unforeseen items for General Fund projects.
• Pay-As-You-Go Capital Fund — to ensure adequate on-going reinvestment in capital
plant and equipment and avoid deferring capital needs until there is a major bond issue.
The City of Miami Beach Resolution 2018-30429, dated July 25, 2018, established a
dedicated millage commencing in FY 2019 to continue funding General Fund capital
projects while simultaneously allowing for growth over time with property values.
• Capital Investment Upkeep Fund — to help ensure adequate funding for General Fund
non-facility related upkeep.
• Information and Communications Technology Fund - to help ensure adequate
funding for the procurement of new or enhanced information and technology needs of the
City.
3. The City shall strive to achieve as a goal that annual General Fund revenues in excess of
expenditures shall be transferred to the Capital Reserve Fund.
4. The City shall have a goal to develop and maintain appropriate levels of capital reserves
in the Enterprise Funds as in the General Fund.
Guiding the Design of Programs and Services
1. The City of Miami Beach shall create a strategic plan that identifies multi-year strategic
priorities{Key Intcndcd OutcomcG) with corresponding result measures for each priority.
2.. Annually, the City of Miami Beach shall use a strategic planning process to develop
initiatives that support the strategic plan priorities.
3. The budget process and format shall be performance-based and focused on Key Intended
Outcomes and performance measures.
4. Any new initiatives not core to the City's core mission or Key Intended Outcomes identified
in the strategic plan that is greater than 0.5% of budget for the fund impacted per year, or
cumulatively, shall be first considered as part of the City's annual strategic planning
process to develop initiatives.
Resolutions-C7 Q
MIAMI BEACH
COMMISSION MEMORANDUM
TO: Honorable Mayor and Members of the City Commission
FROM: Jimmy L. Morales, City Manager
DATE: September 11, 2019
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY
OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF
THE FINANCE AND CITYWIDE PROJECTS COMMITTEE AT ITS JULY 26,
2019 MEETING, AND AMENDING AND RESTATING RESOLUTION NO.
2006-26341, WHICH ADOPTED THE CITY OF MIAMI BEACH FINANCIAL
POLICIES RELATING TO STABILIZATION FUNDS; FUND BALANCE;
CONTINGENCY PLANNING AND CASH RESERVES; USE OF NON-
RECURRING REVENUES; CAPITAL ASSET ACQUISITION,
MAINTENANCE, REPLACEMENT AND RETIREMENT; AND GUIDING THE
DESIGN OF PROGRAM AND SERVICES, TO INCORPORATE REVISIONS
TO THE STABILIZATION FUNDS AND FUND BALANCE/CONTINGENCY
PLANNING AND CASH RESERVES POLICY (GENERAL FUND RESERVE
POLICY), AS SET FORTH IN THE ATTACHED EXHIBIT A, WHICH SHALL
REPLACE AND SUPERSEDE THE GENERAL FUND RESERVE POLICY
SET FORTH IN RESOLUTION NO. 2006-26341, AND WHICH IS
CONSISTENT WITH THE RECOMMENDATION OF THE CITY'S BUDGET
ADVISORY COMMITTEE.
RECOMMENDATION
See attached Memorandum
Legislative Tracking
Office of Management and Budget
Sponsor
Commissioner Samuelian
ATTACHMENTS:
Description
❑ Memo-Amend General Fund Reserve Policy
❑ Resolution
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ViAMIBEACH
City of Miami Beach, 1700 Convention Center Drive,Miami Beach,Florida 33139,www.miamibeochfl.gov
COMMITTEE MEMORANDUM
TO: Members of the Finance &Citywide Projects Committee
FROM: Jimmy L. Morales, City Manager
DATE: September 11, 2019
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI
BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE AND
CITYWIDE PROJECTS COMMITTEE AT ITS JULY 26, 2019 MEETING, AND
AMENDING AND RESTATING RESOLUTION 2006-26341 TO INCORPORATE
REVISIONS TO THE GENERAL FUND RESERVE POLICY, AS SET FORTH IN THE
ATTACHED EXHIBIT A, WHICH SHALL REPLACE AND SUPERSEDE THE
GENERAL FUND RESERVE POLICY SET FORTH IN RESOLUTION 2006-26341,
AND WHICH IS CONSISTENT WITH THE RECOMMENDATION OF THE CITY'S
BUDGET ADVISORY COMMITTEE
Background
On September 21, 2006, the City Commission adopted the City's financial policies relating to
Stabilization Funds; Fund Balance; Contingency Planning and Cash Reserves; Use of Non-
Recurring Revenues; Capital Asset Acquisition, Maintenance, Replacement and Retirement; and
Guiding the Design of Programs and Services by adopting Resolution 2006-26341.
On January 16, 2019, the City Commission accepted the recommendation of the Finance and
Citywide Projects Committee to revise the City's Resort Tax Reserve Policy, which addressed the
concerns of the Mayor's Blue-Ribbon Emergency Response and Budget Advisory Committees.
At the May 21, 2019 Commission Budget Workshop,the Administration recommended a revision
of the City's General Fund Reserve Policy to help maintain or improve the City's credit rating and
financial position.
At the July 26, 2019 Finance and Citywide Projects Committee meeting, the Committee
recommended a revision of the City's General Fund Reserve Policy to help maintain or improve
the City's credit rating and financial position.
Analysis
The Government Finance Officers Association (GFOA) recommends that governments establish
a formal policy on the level of unrestricted fund balance that should be maintained in the General
Fund for GAAP and budgetary purposes.
The adequacy of unrestricted fund balance in the General Fund should take into account each
government's own unique circumstances. For example, governments that may be vulnerable to
natural disasters, more dependent on a volatile revenue source, or potentially subject to cuts in
state aid and/or federal grants, may need to maintain a higher level in the unrestricted fund
Page 383 of 2228
RESTATE AND REVISE RESOLUTION 2006-26341 TO REVISE THE GENERAL FUND
RESERVE POLICY
Page 2.
balance.
The GFOA recommends, at a minimum, that general-purpose governments, regardless of size,
maintain unrestricted budgetary fund balance in their General Fund of no less than 2 months of
the General Fund budget.
Miami Beach's current reserve policy is consistent with the GFOA's minimum General Fund
reserve recommendation. The City's current reserve policy establishes an 11% reserve of the
General Fund Operating Budget for emergencies. In addition, the City has a goal to maintain a
General Fund Reserve for Contingencies equal to 6% of the General Fund Operating Budget. In
combination, the total of 17% represents 2 months of the General Fund Operating Budget
expenditures.
In light of the City's vulnerability to storm events and dependence on volatile Resort Tax revenues,
the objective of the proposed changes to the General Fund Reserve Policy is to:
• Increase the required reserve for emergencies from 11% to 17%
• Increase the goal for reserve for contingencies from 6%to 8%
• Increase the total reserve target from 17% to 25% or from 2 months to 3 months of
operating revenues.
The current General Fund reserve is estimated to be 20.3% or$67.1 million. This amount meets
the proposed required 17%emergency reserve and 3.2%of the proposed 8%goal for reserve for
contingencies.
Budget Advisory Committee Endorsement
On July 17, 2019, the Budget Advisory Committee reviewed the proposed revision to the General
Fund Reserve Policy. Although there were not enough members present to form a quorum to
approve a motion to recommend this proposed revision, the members in attendance endorsed
the proposed change to the City's General Fund Reserve Policy.
General Fund Reserve Policy (Blackiine Versionl
1. The City of Miami Beach shall maintain the Emergency Reserve at seventeen eleven
percent (44 17%) of the General Fund Operating Budget of the ensuing year (44 17%
Emergency Reserve) for use as defined in resolution 98- 22661.
2. The City of Miami Beach shall have a goal to also maintain a General Fund Reserve for
Contingencies equal to at least-six eight (68 ) of the General Fund Operating Budget
that, in combination with the 44 17% Emergency Reserve, represents twe--three (2-3)
months of the General Fund Operating Budget expenditures.
3. Said reserve shall be increased or decreased annually but shall be maintained at a
minimum of six eight percent (6% 8 of the then existing General Fund Operating
Budget.
4. Once the General Fund Reserve for Contingencies goal of eight percent (8%) is initially
achieved, if the amount falls below the six eight percent(6 8% level, a plan of action will
Page 384 of 2228
RESTATE AND REVISE RESOLUTION 2006-26341 TO REVISE THE GENERAL FUND
RESERVE POLICY
Page 3
be required to increase the reserves over three (3) to seven (7)years to at least aim eight
percent (6 8%) and a percentage of any additional undesignated fund balance shall be
earmarked toward attainment of theme eight percent(6 8%)level.
5. The City of Miami Beach shall have a goal to develop and maintain appropriate levels of
reserves in the Enterprise Funds as in the General Fund.
6. The City of Miami Beach shall have a goal of maintaining a reserve of one hundred percent
(100%)of pending claims in the Risk Management Fund, and shall strive to fund two-thirds
(2/3) of the estimated value of insurance claims incurred but not reported.
Conclusion
The revision to the City's reserve policy addresses the City's exposure to weather events and
dependence on volatile Resort Tax revenues and will help ensure continuity of operations during
emergencies and maintain or improve the City's credit ratings.
The attached resolution amends and restates Resolution 2006-26341 to incorporate revisions to
the General Fund Reserve policy and is consistent with the recommendations of the Finance and
Citywide Project Committee and the Budget Advisory Committee.
JLM/JW/TOS
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