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<br />b) The Electric Utility and Water and Wastewater Utility Funds working <br />capital should be maintained at 25% of total operating expenses or the <br />equivalent of four months. This percentage is the equivalent of three <br />months operational expenses. As a goal, the City will strive to achieve <br />33% ftmd balance, or the equivalent of four months of operational <br />expenses. <br /> <br />c) Reserves will be used for emergencies or unforeseen expenditures, <br />except when balances can be reduced because their levels exceed <br />guideline minimums as stated below. <br /> <br />C. Capital and Debt Service Funds - <br /> <br />1. Monies in the Capital Improvement Program Funds should be used within twenty- <br />four months of receipt or within a reasonable time according to construction <br />schedules. Interest income and unspent monies from bond issu>ânces can be used <br />to ftmd similar projects as outlined by bond covenants. Any remaining monies <br />will be used to pay the bond issuance. <br /> <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 />ftmding 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 /> <br />D. Ratios/Trend Analysis- <br /> <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 />fmances through analytical procedures. We have selected the following ratios/balances as <br />key indicators: ' <br /> <br />. Fund Balance: <br /> FB <br />. Working Capital: <br /> CA - CL <br />. Current Ratio: <br /> CAlCL <br />. Quick Ratio: <br /> CAlCL <br /> <br />Assets Less Liabilities <br />AL (Acceptable level»25.0% of Expenditures <br /> <br />Current Assets Less Current Liabilities <br />AL> 25.0% of Expenses <br /> <br />Current Assets Divided By Current Liabilities <br />AL> 1.00 <br /> <br />"Liquid" Current Assets Divided By Current Liquid <br />Liabilities <br />AL> 1.00 <br /> <br />City of San Marcos Financial Policy <br /> <br />Page 15 of17 <br />