Funds Reserve Policy

PURPOSE

The Goleta Sanitary District (the District) shall maintain financial reserves in the District’s funds. This policy establishes that reserves are necessary for maintaining the District's credit worthiness and for adequately providing for:

• Funding infrastructure replacement.

• Economic uncertainties and other financial hardships.

• Loss of significant revenue sources such as property tax receipts or connection fees.

• Local disasters or catastrophic events.

• Future debt or capital obligations.

• Cash flow requirements.

• Unfunded mandates including costly regulatory requirements.

POLICY

Running Expense Fund

The purpose of this fund is to provide for the receipt of revenues and disbursement of expenses, and to maintain a balance sufficient to fund a six month period of administration costs of the District and operations and maintenance costs relating to the District’s Collection System, influent pump station, industrial waste control program, wastewater treatment facilities, reclamation facilities, and effluent disposal ocean outfall.

(Per Resolution No. 99-360)

Plant Reserve Fund

The purpose of the Plant Reserve Fund is to fund extraordinary repairs, replacements, modifications, or reconstruction of the District’s Treatment Plant. The contracts among plant users specify that this fund must not exceed $25,000.

(Per Resolution No. 99-361)

Capital Reserve Fund

This fund is established through the collection of connection fees and annexation fees. The purpose of the Connection fees is to fund the expansion of the sanitation and sewerage facilities of the District to accommodate the demand for additional capacity. The purpose of the Annexation fees is to cover the annexed territory’s equitable share of the cost of maintaining facilities previously acquired and/or constructed by the District. The District will maintain adequate financial reserves in this fund to accomplish both purposes.

(Per Resolution No. 99-362)

Replacement Reserve Fund

The purpose of this fund is to finance the reconstruction and replacement of the sanitation and sewerage facilities of the District which may be required from time to time due to wear, tear, and aging. The District will maintain adequate financial reserves in this fund to accomplish this purpose.

(Per Resolution No. 99-363)

Outfall Reballasting Fund

The purpose of this fund is to pay costs associated with the reballasting of the District’s ocean outfall, which was completed in 1994. This fund does not carry any balances since it is used for management of the debt service of the State Revolving Fund (SRF) loan for the outfall re-rocking project. 

(Per Resolution No. 99-365)

Emergency Fund

The purpose of this fund is to pay costs and expenses related to the repair and/or replacement of the District’s facilities which may become necessary as a result of an emergency. The District will maintain adequate financial reserves in this fund to accomplish this purpose.

(Per Resolution No. 07-453)

Plant Upgrading Fund

The purpose of this fund is to pay for the costs and expenses related to the Upgrading Project, including, but not limited to planning, design, environmental review, permitting, and construction. The District will maintain adequate financial reserves in this fund to accomplish this purpose.

(Per Resolution No. 07-452)

Retiree Health Insurance Sinking Fund

In December 2004, the District’s Governing Board acted to provide medical insurance coverage for District employees upon retirement. In order to mitigate the impact of such benefit, the Board directed that a sinking fund be created for future payments of medical insurance premiums of District retirees. The District will maintain adequate financial reserves in this fund to accomplish this purpose.

REVIEW OF FUND BALANCES

The balances in the funds established by the District shall be reviewed on an annual basis at the time the District adopts its budget for the year. The adoption of the annual budget shall evidence the District’s determination that the monies contained in the funds (a) do not exceed an amount which is necessary to fulfill the purposes for which the funds have been established; (b) are necessary to meet the financial requirements of the District; and (c) may enable the District to avoid adverse financial impacts in the future.