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<br />. Securities for the construction or improvement of public streets and/or rights- <br />of-way in orger to relieve congestion or for public safety matters. <br /> <br />I <br /> <br />XIL FINANCIAL CONDITIOA'S, RESERVES, AND STABILITY RATIOS <br /> <br />A. Operational Coverage - The City's Enterprise Funds will comply with all bond covenants <br />and maintain an operational coverage of at least 120%, such that current operating <br />revenues will exceed current operating expenses. <br /> <br />B. Fund Balances/ Working Capital- <br /> <br />a) The General Fund's fund balance should be at least 25% of the General <br />Fund's annual operating expenditures. This percentage is the equivalent of <br />three months operational expenditures. As a goal, the City will strive to <br />achieve 33% fund balance, or the equivalent of four months of operational <br />expenditures. <br /> <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% fund 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 />I <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 issuances can be used <br />to fund 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 />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 /> <br />I <br /> <br />City of San Marcos Fmancial Policy - Revised April 2005 <br /> <br />Page l8 <br />