Res No 077-96-9831l
r '
RESOLUTION NO 77 -96 -9831
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF SOUTH MIAMI,FLORIDA, ADOPTING A CASH
MANAGEMENT POLICY THAT REQUIRES $1,000,000.00 BE
MAINTAINED AT ALL TIMES BY THE CITY AS
CONTINGENCY RESERVES FUND TO BE USED SOLELY FOR
CATASTROPHES OR OTHER UNSCHEDULED EMERGENCIES.
WHEREAS, the City
has completed the audit
for 1994 /95 fiscal year,
Financial Report for the
Auditors, Sharpton, Brunson & Co . ,
of the City financial transactions
and issued the
same year; and
Comprehensive Annual
WHEREAS, as part of their responsibilities for
recommending improvements to our accounting control and
evaluating the financial soundness of the City, the Auditors
have recommended the creation of Contingency Reserves Fund
to be funded from the cash carryover balance in the General
Fund; and
WHEREAS, the City Administration has reviewed the
Auditors' recommendations, and considers it to be feasible
and beneficial to the City financial stability; and
WHEREAS, the City Manager is recommending the creation
of Contingency Reserves Fund with a balance of $1,000,000.00
to be maintained at all times and adoption of policy that
will restrict the use of
unscheduled emergencies.
this fund to catastrophes and other
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF SOUTH MIAMI:
Section 1. That the City Commission concurs with the
recommendation of the City Manager to create a Contingency
Reserves Fund, and adopts a policy that will restrict its
use to catastrophes and unscheduled emergencies.
I - t It
,CITY CLERK
READ AND APPROVED AS TO FORM:
w
CITY ATTORNEY
COMMISSION VOTE 5 -0
Mayor Cunningham:
Vice Mayor Robaina:
Commissioner Price:
Commissioner Bethel:
Commissioner Price.
Yea
Yea
Yea
Yea
Yea
TO:
FROM:
CITY OF SOUTH MIAMI
6130 Sunset Drive, South Miami, FL
Mayor and Commission
e
Eddie Cox, City Manager
DATE:
RE:
33143
April 11, 1996
Agenda Item #IL
Commission Meeting
April 16, 1996
Contingency Reserves Fund
The attached resolution authorizes the creation of $1, 000,000 Contingency Reserve Fund, and
adopts a policy of maintaining the same amount at all times by the City, as recommended by the
City Auditors, Sharpton, Brunson and Company in the 1994/95 fiscal year Comprehensive Annual
Financial Report.
This fund will serve as:
1. Contingency to be used only in the event of a catastrophe, such as a hurricane, when
emergencies develop and unexpected expenses are incurred by the City. For example,
during the immediate two month -period after Hurricane Andrew, the City hurricane
related expenses totaled almost $600,000. Fortunately, this two month -period was in
August and September, long after the a& valorem taxes have been collected and we
were able to re- arrange our expenses to accommodate the unexpected situation.
Although, the Federal Government eventually reimbursed part of these expenses, the
City had to pay almost $1,000,000 by itself before the first check was received from
FEMA. This was a situation that could have been worst for us had the hurricane hit
our City as hard as it did the City of Homestead.
2. Reserves for settlement of lawsuits in the event the claim is above our excess
insurance coverage limit, which is currently $1,000,000 a year. The City may be
involved in one or two EEOC or Automobile Accident claims which might exceed this
limit and require use of city funds to settle. If this happens, as things stand right now,
it will definitely cause financial strain on the City and result in borrowing funds from
the bank at higher interest rate in order to meet our day -to -day operations or impose
higher property taxes on our taxpayers to alleviate the problem.
3. Supplement to the budget for operations during the first three months of the fiscal year
when tax' payments are received slowly, and in most cases expenses are higher than
revenue collections.
From the audit report, we have determined our cash carryover at the beginning of the 1995/96
fiscal year to be $1491399. Of this amount, $566, 887 was approved by the City Commission to
be used in the current fiscal year. This leaves a balance of $924,512. At the current rate of
spending, it is tentatively projected that we will under - expend the budget by enough to reach the
$1, 000, 000 goal and transfer the remainder to supplement next year's budget.
In my opinion, approval of this
opportunity to firmly determin
year's budget because
resolution will bring financial stability to the City and allow us the
e the amount of cash reserve that should be used to balance each
any unused appropriation, or surplus generated from sound fiscal
management in any given year will not be transferred to the Contingency Reserves Fund, but the
budget.
I strongly recommend approval.