STABILIZATION FUND - FUND 108
Introduction
The City of DeSoto has established a General Stabilization Fund for the purpose of: • Insulating General Fund programs and current service levels from large and unanticipated one-time expenditure requirements; • Insulating the General Fund from any revenue reductions due to a change in state or federal legislation, resulting from adverse litigation or similar unforeseen actions; • Temporarily insulating General Fund programs and current service levels from slower revenue growth that typically occurs during an economic recession; • Funding emergency, one-time unanticipated expenditures or to offset unanticipated revenue fluctuations occurring within a fiscal year; • Funding for one-time expenditures to restore prior service levels; • Decreasing the need for any short-term borrowing, which would be a positive indication of the City’s financial health and economic stability. Policies – The City created the Stabilization Fund to provide additional resilience above and beyond the amounts specified in the “Financial Reserves” section. This fund’s target is a balance of 5% of General Fund budgeted operating expenditures (as defined above). This reserve is not intended to be used in cases where General Fund expenditure growth exceeds normal revenue growth. Additions to the Stabilization Fund will be considered during the budget process for every even fiscal year. In addition, funding levels of the Stabilization Fund will be reviewed during periods of economic stagnation to avoid reductions in operating service levels.
Use Of Funds
Emergencies - Funds for emergency will only be considered when the result of emergency expenditures or an unexpected revenue reduction would likely result in actual expenditures exceeding actual annual revenues, excluding uses of fund balance, in the General Fund or other City funds. . The City Manager, after discussion with the Council, may access funds from the reserve after the General Fund’s contingency or reserve amount is exhausted. In connection with the recommendation for use of Stabilization Fund in emergencies, the Finance Director shall present a plan to restore expended amounts during future fiscal years.
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