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covenants and maintain an operational coverage of at least 120 %, such that current <br />operating revenues will exceed current operating expenses. <br />A. Fund Balances/ Working capital — <br />1. The General Fund's fund balance should be at least 25% of the General Fund's <br />annual operating expenditures. This percentage is the equivalent of three months <br />operational expenditures. As a goal, the City will strive to achieve 30% fund <br />balance. <br />2. The Water and Wastewater Utility Fund working capital should be maintained at <br />25% of total recurring operating expenses or the equivalent of three months <br />operating expenses Ending fund balances above 25% will be moved to cash fund <br />future Capital Improvement projects <br />3. The Electric Utility Fund working capital should be maintained at the equivalent <br />of 60 days of recurring operating expenses. Ending fund balances above the 60 <br />days of recurring operating expenses will be moved to cash fund future Capital <br />Improvement projects. <br />4. Reserves will be used for emergencies or unforeseen expenditures, except when <br />balances can be reduced because their levels exceed guideline minimums as stated <br />below. <br />C. Capital and Debt Service Funds — <br />I . Monies in the Capital Improvement Program Funds should be used within <br />twenty -four months of receipt or within a reasonable time according to <br />construction schedules. Interest income and unspent monies from bond issuances <br />can be used to fund similar projects as outlined by bond covenants. Any <br />remaining monies will be used to pay the bond issuance. <br />2. Revenues in the Debt Service Fund are based on property tax revenues and <br />interest income. Reserves in the Debt Service Fund are designed to provide <br />funding between the date of issuance of new debt and the time that property tax <br />levies are adjusted to reflect the additional debt. Article 10, Section 10.02 of the <br />City Charter requires that the City maintain a reserve balance of two percent of all <br />outstanding general obligation debt. <br />D. Ratios /Trend Analysis — <br />Ratios and significant balances will be incorporated into financial reports. This <br />information will provide users with meaningful data to identify major trends of the City's <br />finances through analytical procedures. We have selected the following ratios /balances as <br />key indicators: <br />- Fund Balance: Assets Less Liabilities <br />FB AL (Acceptable level) >25.0% of Expenditures <br />