Report Prepared by: Venus Rodriguez, Finance Officer
Title
SUBJECT: Review, Discussion, and Recommendation Regarding Potential Modifications, if any, to Charter Section 1112 Regarding the Cash Basis Fund
REPORT IN BRIEF
Review Charter Section 1112 Cash Basis Fund
RECOMMENDATION
Citizens Advisory Charter Review Committee - Adopt a motion:
A. Making a recommendation to the City Council to remove Charter Section 1112; or
B. Making no changes to Charter Section 1112.
Body
AUTHORITY
Charter Section 1112
DISCUSSION
The City of Merced Charter includes Section 1112-Cash Basis Fund, which states:
"The City Council shall maintain a revolving fund to be known as the "Cash Basis Fund", for the purpose of placing the payment of running expenses of the City on a cash basis. An operating reserve shall be built up in this Fund from any available sources in an amount that the City Council deems sufficient with which to meet all lawful demands against the City for the first five months, or other necessary period, of the succeeding fiscal year prior to the receipt of ad valorem tax revenues. Transfers may be made by the City Council from such Fund to any other fund or funds of such sum or sums as may be required for the purpose of placing such funds, as nearly as possible, on a cash basis.
All moneys so transferred from the Cash Basis Fund shall be returned thereto before the end of the fiscal year."
Business Practice
The Finance Department established Fund 002 Cash Basis and transferred $4,000,000 from the General Fund in order to comply with Section 1112 of the Charter. The purpose of the funding was to have cash flow to cover expenses due to the timing city receives certain large revenues. For example, the City does not typically receive installments of revenues from property taxes until January and April of each fiscal year.
The City currently pools cash of all funds for investment and cash flow purposes. Since its inception, the City has only used $329,2...
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