HomeMy WebLinkAboutResolutions - No. 2021-164RESOLUTION NO. 2021-164
A RESOLUTION OF THE LODI CITY COUNCIL ADOPTING THE
CITY OF LODI FINANCIAL PLAN AND BUDGET FOR THE
FISCAL YEAR BEGINNING JULY 1, 2021 AND ENDING
JUNE 30, 2022; APPROVING THE 2021/22 APPROPRIATIONS
SPENDING LIMIT; APPROVING JOB SPECIFICATIONS AND
SALARY RANGES FOR THREE NEW POSITIONS; APPROVING
THE FISCAL YEAR 2021/22 INVESTMENT POLICY; AND
FURTHER APPROVING THE FISCAL YEAR 2021/22 TO
2022/23 BUDGET AND FISCAL POLICIES
WHEREAS, the City Manager submitted the 2021/22 Financial Plan and Budget to the
City Council on May 14, 2021; and
WHEREAS, the 2021/22 Financial Plan and Budget was prepared in accordance with the
City Council's goals, budget assumptions, and policies; and
WHEREAS, the City Council conducted public budget review meetings on May 4, 11, and
25, 2021; and
WHEREAS, the City Council is required to adopt the Appropriations Spending Limit for
2021/22; and
WHEREAS, the Appropriations Spending Limit and the annual adjustment factors selected
to calculate the Limit are part of the Financial Plan and Budget; and
WHEREAS, the City's five-year Capital Improvement Program is presented and included
in the Fiscal Plan and Budget document; and
WHEREAS, the City of Lodi Investment Policy is adopted each year; and
WHERAS, the City of Lodi Budget and Fiscal Policies are adopted every two years in odd -
numbered years.
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Lodi as follows:
That the 2021/22 Financial Plan and Budget, as proposed by the City Manager be
approved as follows:
General Fund
Budget
Police Department
27,157,950
Fire Department
16,392,350
Internal Services Department
5,799,340
Parks, Rec & Cultural Services
5,233,260
Non -Departmental
4,902,740
Public Works Department
3,175,320
Library (from Measure L)
1,663,200
City Manager
810,290
City Attorney
706,690
City Clerk
704,500
Economic Development
528,490
Total General Fund
67,074,130
Other Funds
Department
Electric Utility
85,326,720
Wastewater Utility
19,471,630
Water Utility
12,706,150
Transit
12,612,620
Employee Benefits Internal Service
9,661,250
Parks, Rec & Cultural Services
9,480,710
Streets
6,228,250
Self-Insurance Internal Service
6,048,360
Community Development
2,947,940
Capital Outlay Fund
4,126,440
Fleet Services
2,051,090
Vehicle & Equipment Replacement
1,866,030
Library
1,666,850
Debt Service
1,658,720
Community Improvement Grants
1,442,070
Special Revenue & Grants
839,800
Trust and Agency
76,000
TDA
30,000
Grand Total
245,314,760
2. That the funds for the 2021/22 Financial Plan and budget are appropriated in the
document on file in the City Clerk's Office; and
3. That the Appropriations Spending Limit be increased by $8,043,163 from the 2020/21
level of $116,864,705 to the 2021/22 level of $124,907,868 in accordance with the
calculations on Attachment A; and
4. That staffing position additions and deletions are approved as shown in the table below
effective July 1, 2021; and
Job Title
Department
+/-
Legal Secretary
City Attorney
+1
Management Analyst
Internal Services
+1
Sr. Customer Service Rep
Internal Services
+1
Utility Billing Specialist
Internal Services
-1
Network Administrator
Internal Services
+1
Code Enforcement Officer
Police
+1
Police Records Clerk
Police
+1
Asst/Assoc Civil Engineer
Public Works
+1
CDD Program Specialist
Community Development
+1
Administrative Assistant
Community Development
-1
Sr. Permit Technician
Community Development
+1
Permit Technician
Community Development
-1
Sr. Administrative Clerk
PRCS
+1
Administrative Clerk
PRCS
-1
Net Increase
+6
5. That the City Council approves the salary range as indicated below and approves the
job description as written for the Senior Customer Service position on Attachment B;
and
Position:
Step 0
1 Step 1
1 Step 2
1 Step 3
1 Step 4
Sr Customer Service Representative
1 $ 43,038.81
1 $ 45,190.69
1 $ 47.450.211
$ 49,822.73
J $ 52,313.98
6. That the City Council approves the salary range as indicated below and approves the
job description as written for the CDD Program Specialist position on Attachment C;
and
Position:I Step 0
1 Step 1
1 Step 2
1 Step 3
1 Step 4
Community Development Program Specialist 1 $ 61,702.69
1 $ 64,787.82
1 $ 68,027.21
1 $ 71,428.57
1 $ 75,000.00
7. That the City Council approves the salary range as indicated below and approves the
job description as written for the Senior Permit Technician position on Attachment D;
and
Position:
Step 0
Step 1
Step 2
Step 3
Step 4
Senior Permit Technician
$ 53,925.66
1 $ 56,622.581
$ 59,453.68
$ 62,426.47
$ 65,547.78
8. That the City Council approves the FY 2021/22 Investment Policy as provided in
Attachment E; and
9. That the City Council approves the FY 2021/22 to 2022/23 Budget and Fiscal Policies
as provided in Attachment F; and
10. That the City Council approves the City's five-year Capital Improvement Project
Program as follows:
City of Lodi Capital Improvement Project Program
FY 20/21 FY 21/22
FY 22/23 FY 23/24 FY 24/25
FY 25/26
21,506,8011 24,668,170
26,025,430 23,815,750 29,462,000
1 19,452,000
Dated: June 2, 2021
I hereby certify that Resolution No. 2021-164 was passed and adopted by the City Council
of the City of Lodi in a regular meeting held June 2, 2021, by the following vote:
AYES: COUNCIL MEMBERS — Chandler, Hothi, Khan, Kuehne, and
Mayor Nakanishi
NOES COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
�.�/zi`ryryL
JENNIFE CUSMIR
City Clerk
2021-164
ATTACHMENT A
2021-22 FINANCIAL PLAN AND BUDGET
APPROPRIATIONS SPENDING LIMIT
CITY OF LODI
SENIOR CUSTOMER SERVICE REPRESENTATIVE
Attachment B
May 2021
Job descriptions are intended to present a broad and general range of duties, which
includes, purpose, responsibilities, and scope of work. Job descriptions are not intended
to reflect all duties performed within the job.
DEFINITION
Under general supervision, provides a variety of general office support services related
to cashiering, customer service, research and analysis related to customer service, utility
billing, and/or other functions as assigned; this position may involve extensive public
contact; performs related duties as assigned.
DISTINGUISHING CHARACTERISTICS
This is an advanced journey level and lead worker classification that is distinguished from
Customer Service Representative II in that this class performs the more complex
customer service tasks that require analysis, judgement, and decision-making. In addition
to complex Customer Service Representative duties this class will be performing Utility
Billing functions, including daily tasks and serving as back-up as needed. The position
may also exercise technical oversight or indirect supervision over other positions, and
provide training, and mentorship to lower -level positions. Receives general supervision
from higher-level personnel.
EXAMPLES OF DUTIES
Duties may include, but are not limited to the following:
Provides technical information and instruction regarding policies and procedures to other
City departments and staff;
Serves as a lead to lower level staff, providing guidance, responding to questions, and
directing work activities and duties; may act as the Supervisor in their absence;
Reviews own work and work of others for accuracy, completeness, format and
compliance with policies and procedures;
Performs difficult or complex customer service office support work in assigned function;
Resolves the most complex problems involving customer statements, fees, payments and
other service related problems;
Provides training on customer service and utility billing functions;
Provides assistance to utility billing by completing reports, service orders, and other duties
as assigned;
Serves as a backup to utility billing and/or customer service duties when needed;
Attachment B
Responds to questions on utility billing, customer service, and other City financial
transactions; Acts as liaison to field personnel to initiate or resolve consumption related
issues, meter mis-reads and other exceptions related to billing and delinquent accounts;
Receives utility bill payments over a public counter or through the mail;
Receives revenue for licenses, permits, recreation fees, and other City revenue accounts;
Performs other duties related to the operation of the department and the city, including
additional duties that enable the department and City to meet the diverse needs of its
community.
MINIMUM QUALIFICATIONS:
Knowledge of:
Customer service principles and practices;
Utility rate structures and schedules;
Working principles of electric and water meters;
Research and analysis techniques;
Department policies and procedures pertaining to utility billing and collection;
Basic math skills;
Written and oral communication skills, including spelling, grammar and punctuation, and
letter writing;
Standard office equipment, including personal computer, and computer software such as
Microsoft Word, Excel, Outlook and financial applications/programs.
Ability to:
Conduct research, perform analysis of data, recommend solutions; use independent
judgment and decision-making skills; organize and maintain accurate financial and
customer records;
Explain policies and utility rates to customers; learn and apply approved general ledger
chart of accounts;
Establish and maintain effective working relationships with those contacted in the course
of work, often in stressful situations; Use good judgment and customer service skills in
responding to customer requests or complaints;
Communicate clearly and concisely;
Prioritize work and coordinate several activities;
Attachment B
Organize and oversee the work of others; provide input into the duties and performance
of staff;
Understand and carry out oral and written instructions; interact with the public and staff
efficiently and courteously; communicate clearly and concisely.
EDUCATION AND EXPERIENCE:
Any combination and education that would provide the required knowledge and ability is
qualifying. A typical combination is:
Education:
Equivalent to completion of high school. Associate degree from an accredited college or
university in Finance, Accounting, Business Administration, Public Administration or
comparable degree is highly desirable.
Experience:
Two years of experience performing a variety of customer service tasks related to utility
billing, service disconnects and reconnects, high/low bill investigation, customer inquiry
resolution, and collecting, recording and balancing cash OR one year as a Customer
Service Representative II with the City of Lodi.
WORKING CONDITIONS:
Environmental Conditions: Office environment
Physical Conditions: Essential and marginal functions may require maintaining physical
condition necessary for sitting, standing bending and stooping for prolonged periods of
time; using various office equipment including a computer screen and keyboard and
occasionally lifting up to 30 pounds.
*FLSA Status: NON-EXEMPT
CITY OF LODI
PROGRAM SPECIALIST
Attachment C
MAY 2021
Job descriptions are intended to present a broad and general range of duties,
which includes, purpose, responsibilities, and scope of work. Job descriptions are
not intended to reflect all duties performed within the job.
DEFINITION
Provides responsible analytical and journey -level program support; Performs
highly skilled, specialized professional activities related to the development,
implementation and administration of programs related to housing, community
and homeless services and projects requiring independent decision-making,
judgment and initiative; oversees the support functions of the assigned program.
DISTINGUISHING CHARACTERISTICS
Distinguished from Administrative Assistant position in that the latter is
responsible for all internal administrative support functions for a department.
SUPERVISION EXERCISED AND RECEIVED
Receives supervision from higher-level staff. May be responsible for direct and
indirect supervision of lower -level staff.
ESSENTIAL AND MARGINAL FUNCTIONS
Duties may include, but are not limited to the following:
Plans, coordinates and administers assigned project or program with department
or citywide impact;
Confers with department heads, division managers or other professional staff
concerning the administrative needs and requirements related to the program or
project; Represents the program to members of the public, businesses, other City
departments, and various outside public and private agencies;
Monitors program activity and objectives to assure compliance with State or
Federal administrative regulations and program guidelines; Monitors and
evaluates program effectiveness and outcomes; implements program policies
and procedures; helps develop guidelines, forms and related documents;
Researches, analyzes and reviews grant opportunities; compiles information for
preparation of grants, contracts and agreements; Implements, monitors and
prepares reports on conduct and performance of grants in coordination with
Division Manager;
Provides excellent customer service to those contacted in the course of work;
Produces various reports, charts, graphs, presentations and high-level
correspondence related to program or project;
Individual duties, tasks, and projects may vary or differ based on Departmental
assignment and operational needs;
Attachment C
CITY OF LODI Page 2 of 3
Program Specialist
Monitors, reviews, analyzes legislation, and provides legislative updates and
impacts to management staff;
Develop recommendations and conduct meetings with management staff
pertaining to assigned program area;
Establish and maintain record keeping, filing and tracking system;
Check and process invoices;
May supervisor, review, or coordinate the work of others;
Performs other duties related to the operation of the department and the City
including additional duties that enable the department and City to meet the
diverse needs of its community.
QUALIFICATIONS
Knowledge of:
English usage, spelling, grammar and punctuation;
Modern office methods, procedures and equipment, including word processing
spreadsheet, database and scheduling software for personal computers;
Applicable laws and administrative regulations relating to the program area to
which assigned;
Principles and practices of public administration and governmental finance,
budgeting, and accounting;
Procurement methods;
Research techniques, methods and procedures;
Methods and practices of modern office management;
Principles and practices of program management and administration;
Technical report writing;
Principles of supervision, training and performance evaluation.
Ability to:
Analyze administrative, operational and organizational problems, evaluate
alternatives and reach sound conclusions;
Collect, evaluate and interpret varied information and data, either in statistical or
narrative form;
Attachment C
CITY OF LODI Page 3 of 3
Program Specialist
Interpret and apply laws, regulations, policies and procedures;
Communicate effectively, orally and in writing; Prepare clear, concise and
complete reports and other written materials;
Maintain accurate records and files;
Coordinate and prioritize multiple projects and meet critical deadlines;
Exercise sound independent judgment within established guidelines; Use
initiative and independent judgement; Work independently;
Establish and maintain effective working relationships with those contacted in the
course of the work.
EDUCATION AND EXPERIENCE
Any combination of experience and education that would likely provide the
required knowledge and abilities is qualifying. A typical way to obtain the
knowledge and abilities are:
Education:
Equivalent to the completion of high school supplemented by college courses in
business or public administration or a closely related field. Bachelor's degree
preferred.
Experience:
Four years of progressively responsible professional -level administrative
experience.
LICENSES AND CERTIFICATES
Possession of a valid Driver's License (Class C) issued from the California
Department of Motor Vehicles.
WORKING CONDITIONS:
Environmental Conditions: Office environment
Physical Conditions: Essential and marginal functions may require maintaining
physical condition necessary for sitting, standing bending and stooping for
prolonged periods of time; using various office equipment including a computer
screen and keyboard and occasionally lifting up to 30 pounds.
*FLSA Status: NON-EXEMPT
CITY OF LODI
SENIOR PERMIT TECHNICIAN
Attachment D
MAY 2021
Job descriptions are intended to present a broad and general range of duties which
includes, purpose, responsibilities, and scope of work. Job descriptions are not intended
to reflect all duties performed within the job.
DEFINITION:
Under general direction, responsible for, organizing, and coordinating the day-to-day
operations of the Permit Center within the Community Development Department;
including, supervising the work and activities of Permit Center staff engaged in providing
information and direction to the public on building issues, processes, and requirements;
providing technical expertise in building, plan review administration; performs related
duties as assigned.
DISTINGUISING CHARACTERISTICS
This is an advanced journey level and first line supervisor classification that is
distinguished from the Permit Technician in that this class performs the more complex
Permit Technician tasks that require analysis, judgement, and decision-making. May be
responsible for functional, technical, or direct supervision over lower level staff.
Receives general supervision from higher level personnel.
EXAMPLES OF DUTIES:
Duties may include, but are not limited to the following:
Coordinates the activities and functions of the permit/customer center as required with
other departments and divisions within the City;
Responds to inquiries from staff and the general public and addresses any concerns or
complaints;
Reviews policies, procedures, regulations, reports and legislations to determine
operational changes;
Implements new technology; oversees enhancements/improvements to existing
technology and programs; maintains and improves processes to enhance work
efficiency and the delivery of services; Develops and oversees the distribution of
information handouts, brochures and website materials related to the Permit/Customer
Center;
Performs a full range of technical duties in support of the Community Development
Department's building services division, including but not limited to, conformance with
the City's building requirements and processes, minor plan checks, issue minor permits,
Attachment D
CITY OF LODI
Senior Permit Technician Pale 2 of 4
and review and approve plans and accompanying documents on over-the-counter
permits;
Operates and maintains the division's automated permit tracking system;
Calculates permit and mitigation fees, and provides fee estimates as requested;
Access, enter, and update computerized plan check data entry and tracking systems,
and provides information to the public relating to the status of projects and permits;
Supervises, trains and evaluates subordinates and assigned staff;
Preparesreports, memos, and letters pertaining to development review and permitting;
Collects, records, and balances permit -related monetary transactions;
Researches, compiles, and analyzes data for special projects and various reports;
Builds, and maintains positive working relationships with co-workers, other City
employees and the public using principles of good customer service;
Performs other duties related to the operation of the department and the city, including
additional duties that enable the department and City to meet the diverse needs of its
community.
MINIMUM QUALIFICATIONS:
Knowledge of:
Applicable codes and laws enforced by the Building Inspection Division;
Basic office practices and procedures, including filing and the operation of standard
office equipment;
Basic business data processing principles and the use of and operation of a personal
computer;
Basic real property descriptive terminology and concepts; building materials and
modern methods of building construction;
Customer service principles and practices;
Principles of supervision, training and performance evaluation;
Land use regulations;
Building plans, blueprints, site plans, maps and civil drawings;
Attachment D
CITY OF LODI
Senior Permit Technician Page 3 of 4
Business arithmetic, including the calculation of areas and fees.
Ability to:
Process permit applications for new construction and building modifications;
Assist in coordinating the permitting process with building official, inspectors, planners,
engineers, fire inspectors, other City staff, County, State and other outside agencies;
Calculate and collect building permit fees accurately;
Read and interpret blueprints, plans, codes, ordinances and procedures;
Communicate clearly, concisely and effectively both verbally and in writing;
Communicate tactfully and effectively with the public;
Operate office equipment including a computer and associated software programs;
Organize and maintain accurate records and office files;
Use and operate centralized telephone equipment, personal computer, related software
and peripheral equipment;
Organize and oversee the work of others; provide input into the duties and performance
of staff;
Establish and maintain cooperative and effective relationships with those contacted
during the course of work; Use good judgement and customer service skills in
responding to customer requests or complaints.
EDUCATION AND EXPERIENCE:
Any combination of experience and education that would likely produce the qualifying
knowledge and ability. A typical combination is:
Education:
Equivalent to the completion of high school including completion of College course work
in related field.
Experience:
Four years of responsible public agency experience reviewing and processing
commercial, industrial, or residential building permits; Some lead or supervisory
experience is desirable.
LICENSES AND CERTIFICATES:
Attachment D
CITY OF LODI
Senior Permit Technician Page 4 of 4
Possession of a valid Driver's License (Class C) issued from the California Department
of Motor Vehicles.
ICC Certification as a permit technician.
WORKING CONDITIONS:
Physical Conditions:
Must possess mobility to work in a standard office setting and use standard office
equipment, including a computer; vision to read printed materials and a computer
screen; and hearing and speech to communicate in person, and over the telephone.
Essential and marginal functions may require maintaining physical condition necessary
for sitting, standing, bending, stooping, kneeling, reaching, pushing and pulling;
occasionally lift and carry reports and records that typically weigh less than 20 pounds.
Environmental Conditions:
Office environment with moderate noise levels, controlled temperature conditions, and
no direct exposure to hazardous physical substances; may work in the field and
occasionally be exposed to loud noise levels, cold and hot temperatures, inclement
weather conditions, road hazards, vibration, mechanical and/or electrical hazards, and
hazardous physical substances and fumes; may interact with upset staff and/or
members of the public.
*FLSA Status: NON-EXEMPT
ATTACHMENT E
CITY OF LODI
INVESTMENT POLICY
Fiscal Year 2021/22
Resolution 2021-
TABLE OF CONTENTS
1.1 PURPOSE.......................................................................................................................................1
1.2 POLICY...........................................................................................................................................1
1.3 SCOPE...........................................................................................................................................1
1.4 PRUDENT INVESTOR STANDARD................................................................................................1
1.5 PUBLIC TRUST..............................................................................................................................2
1.6 ETHICS AND CONFLICTS OF INTEREST......................................................................................2
1.7 OBJECTIVES..................................................................................................................................3
1.8 LIMITING MARKET VALUE EROSION............................................................................................4
1.9 STATEMENT OF INVESTMENT POLICY........................................................................................4
1.10 DELEGATION OF AUTHORITY....................................................................................................4
1.11 MONITORING AND ADJUSTING THE PORTFOLIO.....................................................................4
1.12 INTERNAL CONTROL..................................................................................................................5
1.13 REPORTING.................................................................................................................................5
1.14 AUTHORIZED INVESTMENTS.....................................................................................................6
1.15 BANKS AND QUALIFIED BROKER/DEALERS.............................................................................7
1.16 PURCHASE OF CDs FROM LOCAL INSTITUTIONS....................................................................8
1.17 SAFEKEEPING AND COLLATERILIZATION................................................................................8
1.18 ADMINISTRATION.......................................................................................................................9
2.1 INTERNAL CONTROLS - GENERAL..........................................................................................11
2.2 INTERNAL CONTROL PROCEDURES.......................................................................................12
2.3 TREASURY FUNCTION RESPONSIBILITIES............................................................................13
2.4 BROKER/DEALER QUESTIONNAIRE........................................................................................14
2.5 BROKER DEALER CERTIFICATION..........................................................................................16
GLOSSARY.......................................................................................................................17
CITY OF LODI
INVESTMENT POLICIES
1.1 PURPOSE
The purpose of this policy is to state the City's policies for the investment of surplus funds in
the City treasury in a prudent and systematic manner conforming to all state and local
statutes governing the investment of public funds. Safety of principal is given the highest
priority. In addition, this statement is intended to formalize investment -related activities to
provide the highest investment return with maximum security while meeting daily cash flow
demands. The ultimate goal is to protect the City's pooled investment cash while enhancing
the City's economic status.
1.2 POLICY
It is the policy of the City of Lodi to invest public funds in a manner which will provide a sound
investment return with maximum security while meeting the daily cash flow demands of the
entity and conforming to all state and local statues governing the investment of public funds.
The City of Lodi's investment policy has three objectives: (1) protect principal, (2) provide for
liquidity needs, and (3) obtain the most reasonable rate of return possible within the first two
objectives. The overarching theme of this policy is to utilize the "prudent investor" standard
(see discussion below). This affords a broad range of investment opportunities so long as
the investment is prudent and permissible under current state and local law.
1.3 SCOPE
The investment policy applies to all funds under the direct authority of the City Treasurer of
the City of Lodi, including but not limited to the General Fund, Special Revenue Funds,
Capital Project Funds, Enterprise Funds, Internal Service Funds and Trust and Agency
Funds. All funds are accounted for in the City's Comprehensive Annual Financial Report.
Investments of debt proceeds held by bond trustee are governed by the provisions of the
debt agreements. Proceeds of bonds will be invested in accordance with the ordinance,
resolution, indenture or other agreement governing the issuance of the bonds.
1.4 PRUDENT INVESTOR STANDARD
The prudent investor standard requires all those involved in the investment process to act as
if the assets in the portfolio are their own. By the prudent investor standard, the rules
outlined in this policy, and other applicable state and local laws and regulation, are binding
constraints to be considered in taking any action.
The City Council, Treasurer and all persons authorized to make investment decisions on
behalf of the City are trustees and therefor fiduciaries subject to the prudent investor
standard. The "prudent investor" standard, is in accordance with Government Code Section
53600.3 which states "...all governing bodies of local agencies or persons authorized to
CITY OF LODI
INVESTMENT POLICIES
make investment decisions on behalf of those local agencies investing public funds pursuant
to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard.
When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public
funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances
then prevailing, including, but not limited to, the general economic conditions and the
anticipated needs of the agency, that a prudent person acting in a like capacity and familiarity
with those matters would use in the conduct of funds of a like character and with like aims, to
safeguard the principal and maintain the liquidity needs of the agency. Within the limitations
of this section and considering individual investments as part of an overall strategy,
investments may be acquired as authorized by law."
It is the City's full intent, at the time of purchase, to hold all investments until maturity to
ensure the return of all invested principal dollars. However, it is realized that market prices of
securities will vary depending on economic and interest rate conditions at any point in time.
It is further recognized, that in a well -diversified investment portfolio, occasional measured
losses are inevitable due to economic, bond market or individual security credit analysis.
These occasional losses must be considered within the context of the overall investment
program objectives and the resultant long tem rate of return.
The City Treasurer and other individuals assigned to manage the investment portfolio, acting
within the intent and scope of the investment policy and other written procedures and
exercising due diligence, shall be relieved of personal responsibility and liability for an
individual security's credit risk or market price changes, provided deviations from
expectations are reported in a timely manner, appropriate action is taken to control adverse
developments, and the relieved parties acted at all times in a fashion that met their fiduciary
obligation to the City of Lodi.
1.5 PUBLIC TRUST
All participants in the investment process shall act as fiduciaries and custodians of public
funds. Investment officials shall recognize the portfolio is subject to public review and
evaluation. The overall program shall be designed and managed with a degree of
professionalism that is worthy of the public trust.
1.6 ETHICS AND CONFLICTS OF INTEREST
As a minimum standard, the City Treasurer and all other personnel authorized to make
investment decisions are governed by The Political Reform Act of 1974 regarding disclosure
of material financial interests as well as Government Code Section 87103. The City
Treasurer and all other personnel authorized to make investment decisions shall refrain from
personal business activity that could conflict with proper execution of the investment program
or which could impair the ability to make impartial investment decisions. The Treasurer is
CITY OF LODI
INVESTMENT POLICIES
required to make known to the City Manager and City Council any conflicts of interest that
may arise immediately upon becoming aware of a potential conflict. The Treasurer and other
key finance personnel are required to annually file applicable financial disclosures as required
by the Fair Political Practices Commission (FPCC).
1.7 OBJECTIVES
Funds of the City will be invested with the following objectives in priority order:
Safety:
Safety of principal is the foremost objective of the investment program. Investments of the
City of Lodi shall be undertaken in a manner that seeks to ensure the preservation of capital
in the overall portfolio. To attain this objective, diversification is required in order that
potential losses on individual securities do not exceed the income generated from the
remainder of the portfolio. The City of Lodi will diversify its investments by security type and
institution. Financial institutions and broker/dealers will be prequalified and monitored as well
as investment instruments they propose.
The City shall seek to preserve principal by mitigating two types of risk:
Credit Risk — Defined as the risk of loss due to failure of the issuer of a security. Credit risk
shall be mitigated by investing in investment grade securities and by diversifying the
investment portfolio so that the failure of any one issuer does not unduly harm the City's
cash flow.
Market Risk — Defined as the market value fluctuations due to overall changes in the
general level of interest rates. Market risk shall be mitigated by limiting the weighted
average maturity of the City of Lodi s investment portfolio to three and one-half years, the
maximum maturity of any one security to five years, and structuring the portfolio based on
historic and current cash flow analysis, thereby eliminating the need to sell securities prior
to maturity.
Liquidity:
The investment portfolio will remain sufficiently liquid to enable the City to meet all operating
requirements which might be reasonably anticipated. This will be accomplished through
maturity diversification in accordance with California Government Code 53635 and the State
Local Agency Investment Fund with immediate withdrawal provision.
Yield:
CITY OF LODI
INVESTMENT POLICIES
The City's investment portfolio shall be designed with the objective of attaining a sound yield
(rate of return) through budgetary and economic cycles, commensurate with the City's
investment risk constraints and the cash flow characteristics of the portfolio. The City will
attempt to obtain the most reasonable yield possible when selecting an investment, provided
the criteria for safety and liquidity of the total portfolio are met.
1.8 LIMITING MARKET VALUE EROSION
It is the general policy of the City to limit the potential effects from erosion in market values by
adhering to the following guidelines:
All immediate and anticipated liquidity requirements shall be addressed prior to
purchasing investments.
Maturity dates for investments shall coincide with significant cash flow requirements,
where possible, to assist with cash requirements at maturity.
All securities shall be purchased with the intent to hold all investments to maturity.
However, economic or market conditions may change, making it in the City's best
interest to sell or trade a security prior to maturity.
1.9 STATEMENT OF INVESTMENT POLICY
The City of Lodi's Investment Policy shall be adopted by Resolution of the City Council. This
investment policy shall be reviewed at least annually to ensure its consistency with the
overall objectives of preservation of principal, liquidly and yield, and its relevance to current
law and financial and economic needs. Any amendments to the policy shall be forwarded to
the City Council for approval.
1.10 DELEGATION OF AUTHORITY
The Treasurer is designated by the authority of the legislative body as the investment officer
of the City as provided for in Government Code Section 53607 and is responsible for the
investment decisions and activities of the City. The Treasurer will develop and maintain
written administrative procedures for the operation of the investment program, consistent with
this investment policy. The Treasurer may delegate certain day to day functions as
necessary to execute this policy and manage the portfolio in the most efficient and effective
manner.
The Treasurer shall hereafter assume full responsibility for such transactions until such time
as the delegation of authority is revoked, and shall make a quarterly report of such
transactions to the legislative body.
1.11 MONITORING AND ADJUSTING THE PORTFOLIO
CITY OF LODI
INVESTMENT POLICIES
The Treasurer will routinely monitor the contents of the portfolio, the available markets and
the relative values of competing instruments, and will adjust the portfolio accordingly. It is the
City's full intent, at the time of purchase, to hold all investments until maturity to ensure the
return of all invested principal dollars.
1.12 INTERNAL CONTROL
The Treasurer will establish a system of written internal controls, which will be reviewed
annually by the City's independent audit firm. The controls will be designed to prevent loss of
public funds due to fraud, error, misrepresentation, unanticipated market changes or
imprudent actions.
1.13 REPORTING
The Treasurer will submit a quarterly investment report to the City Council, in accordance
with Government Code Section 53646, to disclose the following information:
• A listing of individual securities held at the end of the reporting period by authorized
investment category.
• Notation of Securities purchased within the reporting period.
• Percentage of the portfolio represented by each investment category.
• Institution.
• Average life and final maturity of all investments listed.
• Coupon, discount or earnings rate.
• Par value or cost of the security
• Current market value of securities with maturity in excess of 12 months and the source of
this valuation.
• Ability of the city to meet its expenditure requirements for the next six months or provide
an explanation of why sufficient funds will not be available as required by Gov. Code
53646 (b)(3).
The quarterly investment report to the Lodi City Council, acting legislative authority, as
endorsed by Government Code Section 53646, will be in addition to the Treasurer's monthly
report and accounting of all receipts, disbursements and fund balances.
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CITY OF LODI
INVESTMENT POLICIES
1.14 AUTHORIZED INVESTMENTS
The City will invest surplus funds not required to finance the immediate needs of the City as
provided in California Government Code Sections 16429.1, 53601, 53601.6, 53601.8, 53635,
53635.2, 53638 and 53684. In selecting authorized investments consideration must be given
to credit ratings, maturities, current makeup of the City's portfolio and collateralization of
applicable instruments. A list of eligible instruments is provided below.
Permitted Investments
Maturity
Maximum % of
Minimum
Portfolio
Quality
Requirements
U.S. Treasury Obligations (Bills, notes and
5 years
100%
None
bonds)
US Government Agency Securities and
5 years
100%
None
Instrumentalities
Bankers Acceptances
180 days
40%
None
Certificates of Deposit
5 years
100%
None
Negotiable Certificates of Deposit
5 years
30%
None
Commercial Paper
270 days
30%
Credit Rating
of P1/A1 or
Al +/F1 or F1+
by Moody's,
S&P or Fitch
California State Local Agency Investment
Indefinite
100%
None
Fund
Passbook Deposits
Indefinite
100%
None
Mutual Funds and Money Market Mutual
N/A
20%
Multiple
Funds
Requirements
per Gov't
Code
Medium Term Corporation Notes
5 years
30%
A-/A3/A- by
Moody's, S&P,
or Fitch
Joint Powers Authority Pool
Indefinite
30%
Multiple
(Funds held at
Requirements
NCPA shall not
per Gov't
count to this limit)
Code
Certificate of Deposit Account Registry
Indefinite
30%
None
Service (CDARS)
CITY OF LODI
INVESTMENT POLICIES
Supranational Obligations
5 years
30%
AA-/Aa3/AA-
by Moody's,
S&P, or Fitch
Municipal Securities (50 States or
5 years
100%
None
California Local Agencies)
Investments not listed in this section, including those otherwise authorized by California
Government Code are ineligible investments for the City of Lodi. Ineligible investments
include, but are not limited to, common stocks, long term (over five years in maturity) notes
and bonds, swaps, options, derivatives, repurchase and reverse repurchase agreements and
swap agreements.
Pooled funds invested for the City by entities such as California State Local Agency
Investment Fund, CaITRUST, NCPA, or other Joint Powers Authority Pools may invest in
swaps, options, derivatives or repurchase and reverse repurchase agreements as permitted
by California Government Code and the respective policy guidelines of the investing agency.
1.15 BANKS AND QUALIFIED BROKER/DEALERS
The Treasurer will consider the credit worthiness of institutions in selecting financial
institutions for the deposit or investment of City funds. These institutions will be monitored to
ensure their continued stability and credit worthiness.
The City shall conduct investment transactions only with qualified banks, savings and loans,
and broker/dealers. The Treasurer shall investigate dealers who wish to do business with
the City to determine that they are adequately capitalized, have no pending legal action
against the firm or the individual broker and that they participate in markets appropriate to the
City's needs. Third parties in this category will be required to provide their most recent
Consolidated Report of Condition ("call report") prior to transacting business with the City and
at the request of the Treasurer during the course of conducting business.
The Treasurer will maintain a list of financial institutions authorized to provide investment
services. In addition, a list will be maintained of approved security brokers/dealers selected
for credit worthiness. The City shall send a copy of the current investment policy to all
broker/dealers approved to do business with the City. Written and signed confirmation, on
company letterhead, of receipt of this policy shall be considered evidence that the dealer
understands the City's investment policies and intends to sell the City only appropriate
investments authorized by this policy and all applicable state and federal laws and
regulations.
CITY OF LODI
INVESTMENT POLICIES
In addition, all financial institutions and broker/dealers who desire to become qualified
bidders for investment transactions must supply the Treasurer with the following:
• Audited financial statements
• Proof of Financial Industry Regulatory Authority registration.
• Trading Resolution
• Proof of State Registration
• Certification of having read the City of Lodi's investment policy and depository contracts.
An annual review of the financial condition and registration of qualified bidders will be
conducted by the Treasurer.
The City will not normally use more than three qualified dealer/brokers to obtain bids.
1.16 PURCHASE OF CDs FROM LOCAL INSTITUTIONS
To the extent reasonable and within the limits specified above, the Treasurer may purchase a
Certificate of Deposit, up to the amount fully insured by the Federal Deposit Insurance
Corporation (FDIC), from each bank and savings and loan institution located within the
corporate limits of the City to promote economic development and as a statement of support
for those institutions maintaining an office in Lodi. These investments are limited to those
institutions which offer Certificates of Deposit insured by the Federal Deposit Insurance Act
and have a Community Reinvestment Act Rating of satisfactory or above.
To aid in the diversification of the portfolio, additional Certificates of Deposit in amounts up to
fully insured FDIC limits, may be purchased from local institutions provided the investment
has the safety, liquidity and a rate of return comparable to that offered from LAIF at the time
the original investment is made.
Additional Certificates of Deposit may be purchased from a single institution so long as the
amounts are fully collateralized as described in Section 1.17.
1.17 SAFEKEEPING AND COLLATERILIZATION
All investment securities purchased by the City will be held in third -party safekeeping by an
institution designated as primary agent. The custodian will hold these securities in a manner
that establishes the City's right of ownership. The primary agent will issue a safekeeping
receipt to the City listing the specific instruments, rate, maturity and other pertinent
information. Deposit type securities (i.e., certificates of deposit) will be collateralized.
CITY OF LODI
INVESTMENT POLICIES
Collateral for time deposits in savings and loans will be held by the Federal Home Loan Bank
or an approved Agent of Depository. If collateral is government securities, 110% of market
value to the face amount of the deposit is required. Promissory notes secured by first
mortgages and first trust deeds used as collateral require 150% of market value to the face
amount of the deposit. An irrevocable letter of credit issued by the Federal Home Loan Bank
of San Francisco requires 105% of market value to the face amount of the public deposit.
The collateral for time deposits in banks should be held in the City's name in the bank's Trust
Department, or alternately, in the Federal Reserve Bank. The City may waive collateral
requirements for deposits which are fully insured up to limits prescribed by the FDIC.
The amount of securities placed with an agent of depository will at all times be maintained in
accordance with California Government Code 53652.
1.18 ADMINISTRATION
The following administrative policies will be strictly observed:
Payment:
All transactions will be executed on a delivery versus payment basis which should be done
by the City's safekeeping agent.
Bid:
A competitive bid process in which no less than three competitive bids are obtained, when
practical, will be used to place all investment purchases. Typically when soliciting bids, the
Treasurer or Supervising Budget Analyst will specify through email with a blind copy to
qualified brokers the following: maturity date, credit quality, eligible investment category,
amount available to invest and security names the City will not consider due to
overconcentration. The open window for providing offers shall be a minimum of one hour
and the City's review period shall be no more than one hour in order to minimize the risk of
market price fluctuations between security offer and the City's decision to purchase.
Securities not matching the requirements for the portfolio will not be considered in that
solicitation. The Treasurer has the right to refuse all bids and reissue a solicitation. If less
than three qualifying responses are received, the Treasurer may choose to select from the
responses received or to reissue the solicitation.
Wire Transfers:
CITY OF LODI
INVESTMENT POLICIES
All wire transfers will be initiated by the Supervising Budget Analyst and approved by the
Treasurer. The City's utilizes electronic dual controls on all wire transfers requiring that
approvers cannot be initiators and vice versa.
Pre -formatted wire transfers will be used to restrict the transfer of funds with preauthorized
accounts only.
Confirmations:
Receipts for confirmation of a purchase of authorized securities should include the following
information: trade date; par value; maturity; rate; price; yield; settlement date; description of
securities purchased; net amount due; third -party custodial information. Confirmations of all
investment transactions are to be received by the Treasurer not later than the business day
immediately following the trade. Same day confirmations are preferred.
Pooled Cash:
The City will consolidate into one bank account and invest on a pooled concept basis.
Interest earnings will be allocated monthly based on current cash balances.
Bond Proceeds:
The City will comply with applicable federal tax law and regulations in connection with the
investment of bond proceeds.
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CITY OF LODI
INVESTMENT POLICY
2.1 INTERNAL CONTROLS - GENERAL
Through this system of internal control, the City is adopting procedures and establishing
safeguards to prevent or limit the loss of funds invested or held for investment due to errors,
losses, misjudgments and improper acts. Internal control procedures are not intended to
address every possible situation but are intended to provide a reasonable and prudent level
of protection for the City's funds.
Objectives:
These procedures and policies are established to ensure:
• the orderly and efficient conduct of investment practices, including adherence to
investment policies
• the safeguarding of surplus cash
• the prevention or detection of errors and fraud
• the accuracy and completeness of investment records
• the timely preparation of reliable investment reports
General Control Policies:
The following policies are to be used to safeguard investments:
• Organization
A description of responsibilities and procedures for the investment of City funds, lines of
authority and reporting requirement will be maintained.
Personnel
Only qualified and assigned personnel will be authorized to approve investment
transactions; make and liquidate investments; maintain investment records; and
maintain custody of negotiable instruments. Personnel assigned responsibility for the
investment of City surplus funds will maintain their professional qualifications by
continued education and membership in professional associations.
Segregation of functions
No one having general ledger functions will have responsibility for the investment of City
funds.
• Safekeeping
All securities are to be held in the name of the City of Lodi. The City will contract with a
third party, usually a bank, to provide custodial services and securities safekeeping.
Although a cost is involved, the risk of losing physical securities outweighs the fees
involved. Preference should be given to custodial services which include reporting
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CITY OF LODI
INVESTMENT POLICY
services as part of their service, including marking the portfolio to market value,
performance evaluation and internal reporting
• Reconciliation of records
Regular and timely reconciliation will be made of detailed securities records with the
general ledger control account.
• Performance evaluation
Performance statistics will be maintained and reported monthly as provided in the
Investment Policies.
2.2 INTERNAL CONTROL PROCEDURES
Assigned Responsibilities:
a. City Council responsibilities:
• Adoption of City's investment policies by Resolution
• Review and evaluation of investment performance.
b. Treasurer duties and responsibilities:
• Formulating, recommending and implementing the City's investment policies
• Approves all investment transactions prior to execution of any transaction
• Approves broker/dealer arrangements.
c. Supervising Budget Analyst duties and responsibilities:
• Recommends broker/dealer arrangements
• Recommends investments
• Executes investment transactions
• Maintains records of all investment transactions
• Prepares quarterly investment report for City Council review
• Prepare fiscal year end investment reports for City's independent audit firm review
• Review's financial condition of the City's depositories (banks) at least annually for
compliance with collateralization requirements under government code and financial
condition and reports results to City Treasurer.
d. Financial Services Manager duties and responsibilities:
• Maintains general ledger control account and duplicate records of investment
transactions
• Verifies investment records and reconciles detailed securities records with general
ledger control accounts.
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CITY OF LODI
INVESTMENT POLICY
e. City's independent audit firm:
• Will review the City's investment policies and procedures and make appropriate
recommendations and findings as to compliance and steps to be taken to improve
internal controls.
2.3 TREASURY FUNCTION RESPONSIBILITIES
FUNCTION RESPONSIBILITIES
1. Recommendations:
• Recommends broker/dealer arrangements Supervising Budget Analyst
• Recommends investments Supervising Budget Analyst
2. Authorization of Investment Transactions
• Formal investment policy prepared by Treasurer
• Formal investment policy approved by City Council
• Investment transactions approved by Treasurer
• Broker/deal arrangements approved by
Treasurer
3.
Execution of Investment Transactions
Supervising Budget Analyst
4.
Recording of Investment Transactions
• Recording of transactions in Treasurer's records
Supervising Budget Analyst
• Recording of transactions in Accounting records
Financial Services Manager
5.
Safeguarding of assets and records
• Maintenance of Treasurer's records
Supervising Budget Analyst
• Reconciliation of Treasurer's records to
accounting records
Financial Services Manager
• Review of (a) financial institution's financial
condition, (b) safety, liquidity, and potential yields
Supervising Budget Analyst
of investment instruments, and (c) reputation and
financial condition of investment brokers
• Periodic reviews of collateral
Supervising Budget Analyst
• Review and evaluation of performance
City Council
6.
Preparation of reports
Supervising Budget Analyst
7.
Annual review of investment portfolio for
City's Audit Firm
conformance to City's investment policy
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INVESTMENT POLICY
2.4 BROKER/DEALER QUESTIONNAIRE
BROKER/DEALER QUESTIONNAIRE
CITY OF LODI TREASURER'S OFFICE
P. O. Box 3006
Lodi, California 95241
1. Name:
2. Branch Address:
3.Telephone No.:
4. Primary Account
Name:
Title:
Telephone No.:
5. Is your firm a primary dealer in US Government Securities? Y/N
6. Identify the personnel who will be trading with or quoting securities to our agencies employees:
Name Title Telephone No.
7. National Headquarters Address:
Corporate Contract:
Telephone No.:
Compliance Officer (Name, Address,
Telephone):
8.What was your firm's total volume in US Government and Agency securities trading last calendar year?
9.Which securities are offered by your firm?
( ) US Treasury ( ) Commercial Paper
( ) US Treasury Notes ( ) BAs Domestic
( ) US Treasury Bonds ( ) BAs Foreign
( ) Agencies (specify) ( ) Repurchase Agreements
( ) Negotiable CD's ( ) Reverse Repurchase Agreements
10. List your personnel who have read the City of Lodi Treasurer's Investment Policy.
11. Please identify your public -sector clients in our geographical area who are most comparable to our
government with which you currently do business.
12. Have any of your clients ever sustained a loss on a securities transaction arising from
misunderstanding or misrepresentation of the risk characteristics of the instrument? If so, please explain.
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CITY OF LODI
INVESTMENT POLICY
13. Have any of your public -sector clients ever reported to your firm, is officers or employees, orally or in
writing, that they sustained a loss exceeding 10% of the original purchase price in a single year on any
individual security purchased thorough your firm? Explain.
14. Has your firm ever been subject to a regulatory or state/federal agency investigation for alleged
improper, fraudulent, disreputable or unfair activities related to the sale of securities? Have any of your
employees ever been so investigated? Explain.
15. Has a public sector client ever claimed in writing that your firm or members of your firm were
responsible for investment losses?
16. Please include samples of research reports that your firm regularly provides to public -sector clients.
17. Please explain your normal delivery process. Who audits these fiduciary systems?
18. Please provide certified financial statements and other indicators regarding your firm's capitalization.
19. Describe the capital line and trading limits that support/limit the office that would conduct business
with our government.
20. What training would you provide to our employees and investment officers?
21. Has your firm consistently complied with the Federal Reserve Bank's capital adequacy guidelines?
As of this date, does your firm comply with the guidelines? Has your capital position every fallen short? By
what factor (1.5x, 2x, etc.). Does your firm presently exceed the capital adequacy guidelines, measure of risk?
Include certified documentation of your capital adequacy as measured by the Federal Reserve standards.
22. Do you participate in the Securities Investor Protection Corporation (SIPC) insurance program? If
not, why?
23. What portfolio information do you require from your clients?
24. What reports, confirmations and paper trail will we receive?
25. Enclose a complete schedule of fees and charges for various transactions.
26. How many and what percentage of your transactions failed last month? Last year?
27. Describe the precautions taken by your firm to protect the interest of the public when dealing with
governmental agencies as investors.
28. Is your firm licensed by the State of California as a broker/dealer? Y/N
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INVESTMENT POLICY
2.5 BROKER/DEALER CERTIFICATION
CERTIFICATION ATTACHEDCERTIFICATION
hereby certify that I have personally read the latest adopted resolution of investment policies and objectives of
the City of Lodi Treasurer and the California Government Codes pertaining to the investments of the City of
Lodi, and have implemented reasonable procedures and a system of controls designed to preclude imprudent
investment activities arising out to transaction conducted between our firm and the City of Lodi. All sales
personnel will be routinely informed of the City of Lodi's investment objectives, horizon, outlook, strategies and
risk constraints whenever we are so advised. We pledge to exercise due diligence in informing the City of Lodi
of all foreseeable risks associated with financial transactions conducted with our firm. I attest to the accuracy of
our responses to your questionnaire.
SIGNED
TITLE DATE
COUNTERSIGNED DATE
(Person in charge of government securities operations)
NOTE: Completion of Questionnaire is only part of the City of Lodi's Certification process and DOES NOT
guarantee that the applicant will be approved to do business with the City of Lodi.
On this day of 20 before me the undersigned Notary Public
personally appeared
( ) personally known to me
( ) proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) subscribed to the
within instrument and acknowledged that executed it.
State of
County of
WITNESS my hand and official seal.
Notary's Signature
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CITY OF LODI
INVESTMENT POLICY
GLOSSARY
AGENT: an agent is a firm or individual which executes orders for others or acts on behalf of
others (the principal). The agent is subject to the control of the principal and does not have
title to the principal's property. The agent may charge a fee or commission for this service.
AGENCIES: federal agency securities and/or Government-sponsored enterprises.
AGREEMENT: an agreement is an arrangement or understanding between individual traders
to honor market quotes within predetermined limits on dollar amount and size.
AMORTIZATION: straight-line reduction of debt by means of periodic payments sufficient to
meet current interest charges and to pay off the debt at maturity.
ARBITRAGE: a technique used to take advantage of price differences in separate markets.
This is accomplished by purchasing securities, negotiable instruments or currencies in one
market for immediate sale in another market at a better price.
ASKED: the price at which securities are offered.
AT THE MARKET: a trading term for the buying or selling of securities at the current market
price rather than at a predetermined price.
BANKERS ACCEPTANCE (BA): a bearer time draft for a specified amount payable on a
specified date. An individual or business seeking to finance domestic or international trade
draws it on a bank. Commodity products collateralize the BA. Sale of goods is usually the
source of the borrower's repayment to the bank. The bank finances the borrower's
transaction and then often sells the BA on a discount basis to an investor. At maturity, the
bank is repaid and the investor holding the BA receives par value from the bank.
BASIS PRICE: price expressed in yield -to -maturity or the annual rate of return on the
investment.
BEAR MARKET: a period of generally pessimistic attitudes and declining market prices.
(Compare: Bull market)
BELOW THE MARKET: a price below the current market price for a particular security.
BID AND ASKED OR BID AND OFFER: the price at which an owner offers to sell (asked or
offer) and the price at which a prospective buyer offers to buy (bid). It is often referred to as
a quotation or a quote. The difference between the two is called the spread.
BOND: an interest-bearing security issued by a corporation, government, governmental
agency or other body, which can be executed through a bank or trust company. A bond is a
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CITY OF LODI
INVESTMENT POLICY
form of debt with an interest rate, maturity, and face value, and is usually secured by specific
assets. Most bonds have a maturity of greater than one year, and generally pay interest
semiannually.
BOND ANTICIPATION NOTE (BAN): short-term notes sold by states and municipalities to
obtain interim financing for projects which will eventually be financed by the sale of bonds.
BOND DISCOUNT: the difference between a bond's face value and a selling price, when the
selling price is lower than the face value.
BOND RATING the classification of a bond's investment quality. (See: Rating).
BOND RESOLUTION: a legal order or contract by a governmental unit to authorize a bond
issue. A bond resolution carefully details the rights of the bondholders and the obligation of
the issuer.
BOOK VALUE: the amount at which a security is carried on the books of the holder or issuer.
The book value is often the cost, plus or minus amortization, and may differ significantly from
the market value.
BROKER: a middleman who brings buyers and sellers together and handles their orders,
generally charging a commission for this service. In contrast to a principal or a dealer, the
broker does not own or take a position in securities.
BULL MARKET: a period of generally optimistic attitudes and increasing market prices.
(Compare: Bear Market).
BUYERS MARKET: a market where supply is greater than demand, giving buyers an
advantage in purchase price and terms.
CALL: an option to buy a specific asset at a certain price within a particular period.
CALLABLE: a feature which states a bond or preferred stock may be redeemed by the issuer
prior to maturity under terms designated prior to issuance.
CALL DATE: the date on which a bond may be redeemed before maturity at the option of the
issuer.
CALLED BONDS: bonds redeemed before maturity.
CALL PREMIUM: the excess paid for a bond or security over its face value.
CALL PRICE: the price paid for a security when it is called. The call price is equal to the face
value of the security, plus the call premium.
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CITY OF LODI
INVESTMENT POLICY
CALL PROVISION: the call provision describes the details by which a bond may be
redeemed by the issuer, in whole or in part, prior to maturity. A Security with such a
provision will usually have a higher interest rate than comparable, but noncallable securities.
CAPITAL GAIN OR LOSS: the amount that is made or lost, depending upon the difference
between the sale price and the purchase price of any capital asset or security.
CAPITAL MARKET: the market in which buyers and sellers, including institutions, banks,
governments, corporations and individuals, trade debt and equity securities.
CASH SALE: a transaction calling for the delivery and payment of the securities on the same
day that the transaction takes place.
CERTIFICATE OF DEPOSIT (CD): debt instrument issued by a bank that usually pays
interest. Institutional CD's are issued in denominations of $100,000 or more. Maturities
range from a few weeks to several years. Competitive forces in the marketplace set interest
rates.
CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SERVICE (CDARS): deposits made
with a "selected" depository institution, in accordance with California Government Code
Section 53601.8, that uses a private entity to assist in the placement of certificates of deposit.
Such deposits shall at all times be insured by the Federal Deposit Insurance Corporation or
the National Credit Union Administration. The selected depository institution shall serve as
custodian for each certificate of deposit that is issued with placement service for the City of
Lodi's account.
COLLATERAL: securities or other property, which a borrower pledges for the repayment of a
loan. Also refers to securities pledged by a bank to secure deposits of public monies.
COLLATERAL NOTE: a promissory note, which specifically mentions the collateral, pledged
by the borrower for the repayment of an obligation.
COMMERCIAL PAPER: short-term obligations with maturities ranging from 2 to 270 days
issued by banks, corporations, and other borrowers to investors with temporarily idle cash.
Such instruments are unsecured and usually discounted, although some are interest-bearing.
COMMISSION: the brokers or agent's fee for purchasing or selling securities for a client.
COUPON: the annual rate of interest that a bond's issuer promises to pay the bondholder on
the bond's face value.
COVENANT: a pledge in the bond resolution or indenture of the issuing government to
perform in a way that may benefit the bondholders, or to refrain from doing something that
might be disadvantageous to them.
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COVER: the spread between the winning bid (or offer) and the next highest bid (or the next
lowest offer). It is useful as a basis for evaluation of the bids.
COVERAGE RATIO: the ratio of income available to pay a specific obligation versus the total
amount obligated. This is a measure of financial stability.
CREDIT ANALYSIS: a critical review and appraisal of the economic and financial condition of
a government agency or corporation. The credit analysis evaluates the issuing entity's ability
to meet its debt obligations, and the suitability of such obligations for underwriting or
investment.
CURRENT MATURITY: amount of time left to the maturity of an obligation.
DEBENTURE: a bond secured by the general credit of the issuer rather than being backed
by a specific lien on property as in mortgage bonds.
DEBT COVERAGE: this term is normally used in connection with revenue and corporate
bonds. It indicates the margin of safety for payment of debt, reflecting the number of times
by which earnings for a certain period of time exceed debt payable during the same period.
DEBT LIMIT (OR CEILING): the maximum amount of debt that can legally be acquired under
the debt -incurring power of a state or municipality.
DEBT SERVICE: interest and principal obligation on an outstanding debt. This is usually for
a one-year period.
DEFAULT: failure to pay principal or interest promptly when due.
DELIVERY VERSUS PAYMENT: securities industry procedure, common with institutional
accounts, whereby delivery of securities sold is made to the buying customer's bank in
exchange for payment, usually in the form of cash. (Institutions are required by law to
require "assets of equal value" in exchange for delivery.) Also called Cash on Delivery.
DERIVATIVE: contracts written between a City and a counter party such as a bank,
insurance company or brokerage firms. Their value is derived from the value of some
underlying assets such as Treasury Bonds or a market index such as LIBOR. Derivatives
are used to create financial instruments to meet special market needs. Two contrasting
reasons for the use of derivatives are: 1) to limit risk or transfer it to those willing to bear it;
and, 2) to speculate about future interest rates and leverage in hope of increasing returns.
DISCOUNT: the difference between the cost price of a security and its maturity when quoted
at lower than face value. A security selling below original offering price shortly after a sale
also is considered to be at a discount.
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DIVERSIFICATION: dividing investment funds among a variety of securities offering
independent returns.
DUE DILIGENCE: exercising of due professional care in the performance of duties.
FACE VALUE: the principal amount owed on a debt instrument. It is the amount on which
interest is computed and represents the amount that the issuer promises to pay at maturity.
FANNIE MAE: trade name for the Federal National Mortgage Association.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): federal agency established in
1933 that guarantees (within limits) funds on deposit in member banks and performs other
functions such as making loans to or buying assets from members banks to facilitate mergers
or prevent failures.
FEDERAL FUNDS RATE: the rate of interest at which Fed funds are traded. This rate is
currently pegged by the Federal Reserve through open -market operations.
FEDERAL HOME LOAN BANKS (FHLB): government sponsored wholesale banks (currently
12 regional banks) which lend funds and provide correspondent banking services to member
commercial banks, credit unions and insurance companies. The mission of the FHLBs is to
liquefy the housing related assets of its members who must purchase stock in their district
Bank.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal
corporation working under the auspices of the Department of Housing and Urban
Development (HUD). It is the largest single provider of residential mortgage funds in the
United States. Fannie Mae, as the corporation is called, is a private stockholder -owned
corporation. The corporation's purchases include a variety of adjustable mortgages and
second loans, in addition to fixed-rate mortgages. FNMA's securities are also highly liquid
and are widely accepted. FNMA assumes and guarantees that all security holders will
receive timely payment of principal and interest.
FEDERAL OPEN MARKET COMMITTEE (FOMC): consists of seven members of the
Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The
President of the New York Federal Reserve Bank is a permanent member, while the other
Presidents serve on a rotating basis. The Committee periodically meets to set Federal
Reserve guidelines regarding purchases and sales of Government Securities in the open
market as a means of influencing the volume of bank credit and money.
FEDERAL RESERVE SYSTEM: the central bank of the United States created by Congress
and consisting of a seven member Board of Governors in Washington, D.C., 12 regional
banks and about 5,700 commercial banks that are members of the system.
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INVESTMENT POLICY
FIDUCIARY: an individual or group, such as a bank or trust company, which acts for the
benefit of another party or to which certain property is given to hold in trust, according the
trust agreement.
FISCAL YEAR: an accounting or tax period comprising any twelve-month period. The City's
fiscal year starts July 1.
FREDDIE MAC: trade name for the Federal Home Loan Mortgage Corporation.
FULL FAITH AND CREDIT: the unconditional guarantee of the United States government
backing a debt for repayment.
GENERAL OBLIGATION BONDS (GO's): bonds secured by the pledge of the municipal
issuer's full faith and credit, usually including unlimited taxing power.
GINNIE MAE: trade name for the Government National Mortgage Association.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): securities
influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers,
commercial banks, savings and loan associations, and other institutions. Security holder is
protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed
by the FHA, VA or FmHA mortgages. The term "pass-through" is often used to describe
Ginnie Maes.
HOLDER: the person or entity which is in possession of a negotiable instrument.
INDEBTEDNESS: the obligation assumed by a borrower, guarantor, endorser, etc. to repay
funds which have been or will be paid out on the borrower's behalf.
INDENTURE: a written agreement used in connection with a security issue. The document
sets the maturity date, interest rate, security and other terms for both the issue holder, issuer
and, when appropriate, the trustee.
INTEREST RATE: the interest payable each year on borrowed funds expressed as a
percentage of the principal.
INVESTMENT: use of capital to create more money, either through income-producing
vehicles or through more risk -oriented ventures designed to result in capital gains.
INVESTMENT PORTFOLIO: a collection of securities held by a bank, individual, institution,
or government agency for investment purposes.
IRREVOCABLE LETTER OF CREDIT: instrument or document issued by a bank
guaranteeing the payment of a customer's drafts up to a stated amount for a specified period.
It substitutes the bank's credit for the buyer's and eliminates the seller's risk. This
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INVESTMENT POLICY
arrangement cannot be changed or terminated by the one who created it without the
agreement of the beneficiary.
ISSUE PRICE: the price at which a new issue of securities is put on the market.
ISSUER: any corporation or governmental unit, which borrows money through the sale of
securities.
JOINT AND SEVERAL OBLIGATION: a guarantee to the holder in which the liability for a
bond or note issue may be enforced against all parties jointly or any one of them individually
so that one, several or all may be held responsible for its payment.
LAIF: trade name for California State Local Agency Investment Fund.
LEGAL INVESTMENT: a list of securities in which certain institutions and fiduciaries may
invest as determined by regulatory agencies.
LEGAL OPINION: an opinion concerning the legality of a bond issue, usually written by a
recognized law firm specializing in the approval of public borrowings.
LIQUIDITY: a liquid asset is one that can be converted easily and rapidly into cash without a
substantial loss of value. In the money market, a security is said to be liquid if the spread
between bid and asked prices is narrow and reasonable size can be done at those quotes.
MARKETABILITY: the measure of ease with which a security can be sold in the secondary
market.
MARKET ORDER: an order to buy or sell securities at the prevailing bid or ask price on the
market.
MARKET VALUE: the price at which a security is trading and could presumably be
purchased or sold.
MARKET VS. QUOTE: quote designates the current bid and ask on a security, as opposed
to the price at which the last security order was sold.
MASTER REPURCHASE AGREEMENT: a written contract covering all future transactions
between the parties to repurchase—reverse repurchase agreements that establishes each
party's rights in the transactions. A master agreement will often specify, among other things,
the right of the buyer -lender to liquidate the underlying securities in the event of default by
the seller -borrower.
MATURITY: the date that the principal or stated value of debt instrument becomes due and
payable. It is also used as the length of time between the issue date and the due date.
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INVESTMENT POLICY
MONEY MARKET: the market in which short-term debt instruments (bills, commercial paper,
bankers' acceptances, etc.) are issued and traded.
MORTGAGE BOND: a bond secured by a mortgage on property. The value of the property
used as collateral usually exceeds that of the mortgage bond issued against it.
NEGOTIABLE: a term used to designate a security, the title to which is transferable by
delivery. Also used to refer to the ability to exchange securities for cash or near -cash
instruments.
NO PAR VALUE: a security issued with no face or par value.
NON-NEGOTIABLE: a security whose title or ownership is not transferable through a simple
delivery or endorsement. (See: Negotiable.)
OBLIGATION: a responsibility for paying back a debt.
OFFER: the price of a security at which a person is willing to sell.
OFFERING: placing securities for sale to buyers. The offering usually states the price and
terms.
OPEN MARKET OPERATIONS: purchases and sales of government and certain other
securities in the open market by the New York Federal Reserve Bank as directed by the
FOMC in order to influence the volume of money and credit in the economy. Purchases
inject reserves into the bank system and stimulate growth of money and credit; sales have
the opposite effect. Open market operations are the Federal Reserve's most important and
most flexible monetary policy tool.
PAR VALUE: the stated or face value of a security expressed as a specific dollar amount
marked on the face of the security; the amount of money due at maturity. Par value should
not be confused with market value.
PAYING AGENT: the agency, usually a commercial bank, which dispenses the principal and
interest payable on a maturing issue.
PORTFOLIO: the collection of securities held by an individual or institution.
PREMIUM: the amount by which the price paid for a security exceeds the par value. Also,
the amount that must be paid over the par value to call an issue before maturity.
PRIMARY DEALER: a group of government securities dealers who submit daily reports of
market activity and positions and monthly financial statements to the Federal Reserve Bank
of New York and are subject to its informal oversight. Primary dealers include Securities and
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Exchange Commission (SEC) -registered securities broker-dealers, banks, and a few
unregulated firms.
PRINCIPAL: the face or par value of an instrument. It does not include accrued interest.
PRUDENT INVESTOR RULE: an investment standard adopted by the State of California in
1995. It states that a trustee shall consider the entire investment portfolio when determining
the prudence of an individual investment; diversification is explicitly required within a
portfolio; suitability of an investment is a primary determinant; and delegation of investment
management is acceptable.
PRUDENT MAN RULE: an investment standard established in 1630. It states that a trustee
who is investing for another should behave in the same way as a prudent individual of
discretion and intelligence who is seeking a reasonable income and preservation of capital.
QUOTATION (QUOTE): the highest bid to buy or the lowest offer to sell a security in any
market at a particular time.
RATE OF RETURN: 1) the yield which attainable on a security based on its purchase price
or its current market price. 2) This may be the amortized yield to maturity on a bond the
current income returns.
RATING: the designation used by investors' services to rate the quality of a security's
creditworthiness. Moody's ratings range from the highest Aaa, down through Aa, A, Baa, Ba,
B, etc., while Standard and Poor's ratings range from the highest AAA, down through AA, A,
BBB, BB, B, etc.
REFINANCING: rolling over the principal on securities that have reached maturity or
replacing them with the sale of new issues. The object may be to save interest costs or to
extend the maturity of the loan.
REGISTERED BOND: a bond whose principal and/or interest is payable only to that person
or organization which is registered with the issuer. This form is not negotiable and it can be
transferred only when endorsed by the registered owner.
REPURCHASE AGREEMENT (REPO): agreement between a seller and a buyer, usually of
U.S. Government securities, whereby the seller agrees to repurchase the securities at an
agreed upon price and, usually, at a stated time. The attraction of repos is the flexibility of
maturities that makes them an ideal place to "park" funds on a very temporary basis. Dealers
also arrange reverse repurchase agreements, whereby they agree to buy the securities and
the investor agrees to repurchase them at a later date.
REVENUE ANTICIPATION NOTES (RAN): short-term notes sold in anticipation of receiving
future revenues. The notes are to be paid from the proceeds of those revenues.
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REVENUE BOND: a state or local bond secured by revenues derived from the operations of
specific public enterprises, such as utilities. Such bonds are not generally backed by the
taxation power of the issuer unless otherwise specified in the bond indenture.
SAFEKEEPING: a service banks offer to customers for a fee, where securities are held in the
bank's vaults for protection.
SECURED DEPOSIT: bank deposits of state or local government funds which, under the
laws of certain jurisdictions, must be secured by the pledge of acceptable securities.
SECONDARY MARKET: a market made for the purchase and sale of outstanding issues
following the initial distribution.
SECURED DEPOSIT: bank deposits of state or local government funds which, under the
laws of certain jurisdictions, must be secured by the pledge of acceptable securities.
SECURITIES: investment instruments such as bonds, stocks and other instruments of
indebtedness or equity.
SECURITIES & EXCHANGE COMMISSION: agency created by Congress to protect
investors in securities transactions by administering securities legislation.
SERIAL BOND: bonds of the same issue, which have different maturities, coming due over a
number of years rather than all at once. This allows the issuer to retire the issue in small
amounts over a long period of time.
SETTLEMENT DATE: date by which an executed order must be settled, either by buyer
paying for the securities with cash or by a seller delivering the securities and receiving the
proceeds of the sale for them.
SINKING FUND: a reserve fund set aside over a period of time for the purpose of liquidating
or retiring an obligation, such as a bond issue, at maturity.
SPECIAL ASSESSMENT BONDS: bonds that are paid back from taxes on the property that
is benefiting from the improvement being financed. The issuing governmental entity agrees
to make the assessments and earmark the tax proceeds to repay the debt on these bonds.
SPREAD: the difference between two figures or percentages. For example, it may be the
difference between the bid and asked prices of a quote, or between the amount paid when
bought and the amount received when sold.
SUPRANATIONAL OBLIGATIONS: United States dollar denominated senior unsecured
unsubordinated obligations issued or unconditionally guaranteed by the International Bank
for Reconstruction and Development; International Finance Corporation, or Inter -American
Development Bank.
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TAX ANTICIPATION NOTES (TAN): short-term notes issued by states or municipalities to
finance current operations in anticipation of future tax collections which would be used to
repay the debt.
TAX-EXEMPT BONDS: interest paid on municipal bonds issued by state and local
governments or agencies is usually exempt from federal taxes, and in some cases, the state
and/or local taxes. The interest rate paid on these bonds is generally lower than rates on
non-exempt securities.
TERMS: the conditions of the sale or purchase of a security.
TREASURY BILL (T -BILL): a non-interest bearing discount security issued by the U.S.
Treasury to finance the national debt. Most bills are issued to mature in three months, six
months, or one year.
TREASURY BONDS AND NOTES: obligations of the U. S. government which bear interest.
Notes have maturities of one to seven years, while bonds have longer maturities.
TREASURY BONDS: long-term coupon bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities of more than 10 years.
TREASURY NOTES: medium-term coupon -bearing U.S. Treasury securities issued as direct
obligations of the U.S. Government and having initial maturities from two to 10 years.
TRUSTEE: a bank designated as the custodian of funds and the official representative for
bondholders.
UNDERWRITER: a dealer bank or other financial institution, which arranges for the sale and
distribution of a large batch of securities and assumes the responsibility for paying the net
purchase price.
UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that
member firms as well as nonmember broker-dealers in securities maintain a maximum ratio
of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio.
Indebtedness covers all money owed to a firm, including margin loans and commitments to
purchase securities, one -reason new public issues are spread among members of
underwriting syndicates. Liquid capital includes cash and assets easily converted into cash.
YIELD: the annual rate of return on an investment, expressed as a percentage of the
investment.
YIELD CURVE: graph showing the term structure of interest rates by plotting the yields of all
bonds of the same quality with maturities ranging from the shortest to the longest available.
The resulting curve shows if short-term interest rates are higher or lower than long-term
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rates. For the most part, the yield curve is positive (short-term rates are lower), since
investors who are willing to tie up their money for a longer period of time usually are
compensated for the extra risk they are taking by receiving a higher yield.
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ATTACHMENT F
City of Lodi
Budget and Fiscal Policies
CITY OF
CALIFORNIA
Adopted by the Lodi City Council
June 2, 2021
Resolution 2021-
City of Lodi Budget and Fiscal Polices
Table of Contents
1. Purpose ...................................................
2. Budget Development ...............................
3. Budget Administration and Adjustment
4. Appropriation Limit ...............................
5. Components of Fund Balance ................
6. Fund Balance Policies .............................
7. General Fund Reserves ...........................
8. Measure L Fund Reserves ......................
9. Special Revenue Fund Reserves .............
10. Enterprise Fund Reserves ......................
11. Internal Service Fund Reserves .............
12. Capital Improvement Plan .....................
13. Encumbrance Accounting ......................
14. Pension Stabilization Policy ....................
15. Review and Update .................................
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1. Purpose
The City's primary financial objective is to maintain the fiscal stability of the
organization. The purpose of this policy is to establish guidelines for budget
development, administration, and management as well as outline the City's fiscal policies
in regard to cost recovery of various programs, target reserve levels in all funds and
funding mechanisms for various programs.
2. Budget Development
The budget will reflect the goals and priorities of the Council each year and make the best
use of available funding within those goals and priorities. While goals and priorities may
change from year to year, some basic tenets will apply to all budgets. Those tenets are
reflected below.
A. The General Fund budget will be balanced each year, without the use of reserves.
Current year revenues will support current year expenditures.
B. One-time revenue will be used to fund one-time expenditures or be placed in
reserves. One-time revenue will not be used to fund on-going operations.
C. Annual budgetary savings will be used to fund one-time expenditures or be placed
in reserves.
D. Funding for the Vehicle Replacement Fund shall be based upon annual
depreciation schedules for vehicles and amounts will be reflected in departmental
budgets.
E. Funding for the Other Post -Employment Benefits (OPEB) Fund shall be no less
than the Actuarial Required Contribution shown in the actuarial report and
charged to each fund based upon ratio of current full time positions. All reserves
in the Benefits Fund category in excess of 25% of estimated annual costs for
benefits in this fund shall be budgeted for investment in the City's OPEB trust
fund.
F. Funding for CAPERS pension costs are as follows. Current year Normal Cost
will be budgeted in each fund based on the estimated cost for employees in that
fund. Current year Unfunded Accrued Liability (UAL) payments will be
budgeted within each fund based on each fund's share of employee's within each
class (Safety or Miscellaneous). For purposes of allocating UAL, employees
funded by Measure L will be allocated to the General Fund. The City will budget
for the monthly payment of the UAL but will make the annual UAL payment to
recognize the approximately 3.6% savings offered by Ca1PERS on this option.
The Deputy City Manager will then use the UAL savings to make Additional
Discretionary Payments (ADP) to CAPERS to further reduce the City's UAL.
G. Funding for the Information Technology (IT) Replacement Fund shall be based
upon the replacement cycle for equipment contained in the fund.
H. Budgetary allotments for OPEB, Pension Stabilization and IT Replacement shall
be reflected in the Non -Departmental Organization Unit for all General Fund
units.
a. Special Revenue, Enterprise and Internal Service funds will reflect
budgetary allotments for these items within their respective funds.
I. Fixed Assets
a. Capital purchases of $10,000 or more, with a three year useful life, will be
capitalized.
b. Infrastructure additions or new construction of $10,000 or more will be
capitalized.
c. Vehicle purchases of any amount will be capitalized and useful lives will
be determined based upon the Government Finance Officers Association
Best Practices guidelines.
d. Straight-line depreciation will be used for all depreciable assets.
J. Library
a. The Library is primarily funded through a transfer from the General Fund.
Council will set the level of funding each year based upon available
General Fund revenue.
K. Parks, Recreation and Cultural Services (PRCS)
a. Recreation and Community Center Programs
i. The goal is to recover, on average, 40% of program costs from
participants. Individual programs may be fully self-supporting
while other programs may have a nominal cost recovery ratio.
b. General Fund Transfer
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i. The General Fund Transfer shall be determined by Council each
year. The intent of the General Fund Transfer is to cover the costs
associated with Parks Maintenance, PRCS administration, Debt
Service and Hutchins Street Square Maintenance.
L. Community Development
a. The Community Development Department should primarily be self-
supporting through fee revenue.
b. A General Fund Transfer, determined by Council each year, will be
designed to support the value of the general information function that the
department provides and support at least one-half of the costs associated
with a Youth Outreach function designed to divert youth involvement in
gang activities.
M. Enterprise Funds
a. Enterprise funds will set fees and rates at levels that meet operating, debt
service, capital and reserve needs.
N. Internal Service Funds
a. Internal Service funds will set rates and charges at levels that will ensure
full recovery of costs each year.
3. Budget Administration and Adjustment
The City Council is ultimately responsible to the public for the delivery and conduct of
City services and facilities. Accordingly, the Council appropriates funds to ensure the
delivery of services at the levels and in the priority established by Council. The legal
level of budgetary control is at the fund level.
A. City Manager
The City Manager, as the chief administrative officer, provides staff with general
direction in the development and formulation of the City Manager's budget
recommendations to Council. This includes: evaluating and assessing current and
anticipated issues facing the City; determining the demand for services and
facilities; identifying the concerns of the citizenry; assessing the current and
projected financial condition of the City; and determining the final staffing
recommendations.
B. Deputy City Manager/Internal Services Director
The Deputy City Manager/Internal Services Director, as the chief financial
officer, is responsible for budget development and day-to-day administration of
adopted budgets. This includes: developing and issuing the budget instructions
and calendar; advising the City Manager on budget policies and issues, including
the recommended level of funding for each department within the General Fund;
reviewing budget requests to ensure they are complete and accurate; preparing the
preliminary budget recommendations for review by the City Manager; and
publishing the approved budget, Capital Improvement Plan, and Budget in Brief
documents.
C. Department Directors
Department directors are responsible for preparing their operating and capital
budget requests in accordance with the City's budget instructions and managing
their respective departments within their approved budget allotments.
D. Failure to Adopt a Budget
If the City fails to adopt the budget by July 1, the City Council may elect one of
the following courses of action until passage of a budget and appropriation of
funds: (1) Provide the City Manager with Continuing Resolution Authority to
allow continued services at expenditure levels not greater than those in the prior
year budget; or (2) Require staff to obtain prior approval for any expenditure
(payment) of City funds.
E. Public Record
The budget document will be available on-line at the City's website
(www.lodi.gov). Hard copies will be available for public review at the Lodi
Public Library, City Hall and the Carnegie Forum.
F. Budget Adjustments
a. City Council approval is required for any increase in total appropriations within
any individual fund. All budget adjustments that increase one fund's total
appropriations, including net zero budget adjustments, must have City Council
approval.
b. The City Manager and Deputy City Manager have the authority to adjust
appropriations within a fund, so long as total appropriations within the fund do
not increase. This includes adjustments between departments within a fund.
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c. Department directors have the authority to adjust appropriations within their
department, so long as total appropriations within the department within the
fund do not increase.
4. Appropriation Limit
The Council will annually adopt a resolution establishing its appropriation limit
calculated in accordance with Article XIIIB of the Constitution of the State of California,
Section 7900 of the State of California Government Code, and any other voter -approved
amendments or State legislation that affect the City's appropriation limit.
5. Components of Fund Balance
A. Governmental Accounting Standards Board Statement Number 54 — Fund
Balance Reporting and Governmental Fund Type Definitions outlines the
requirements to report fund balance for governmental funds in specific
classifications which create a hierarchy primarily based upon the extent to which
a City is bound to constraints on the specific purposes for which the funds can be
spent. Fund Balance consists of the following five categories:
i. Non -spendable fund balance: amounts that cannot be spent because they
are either (a) not in a spendable form (e.g., inventories or pre-paids) or (b)
legally or contractually required to be maintained intact (e.g.,
endowment).
ii. Restricted fund balance: amounts that can only be spent for the specific
purposes stipulated by external resource providers either constitutionally
or through enabling legislation (e.g., grants, gas tax, impact fees).
iii. Committed fund balance: amounts that can be used for the specific
purposes determined by formal action of the government's highest level of
decision making authority. Committed fund balance can be changed only
by the government taking the same formal action that initially created the
commitment. (e.g., Council approved catastrophic or economic reserves).
iv. Assigned fund balance: amounts that are intended to be used by the
government for specific purposes. Intent can be established by either the
governing body or delegated to a City official.
v. Unassigned fund balance: the remaining amount of fund balance after all
other fund balance classifications are accounted for and can be either
positive or negative. Positive unassigned fund balance is available for any
purpose.
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6. Fund Balance Policies
A. Committing Fund Balance
i. The City Council is the City's highest level of decision making authority
and the formal action that is required to be taken to establish, modify, or
rescind a fund balance commitment is a resolution or ordinance approved
by the City Council at a City Council meeting. For reporting purposes, the
resolution or ordinance approving, modifying or rescinding a fund balance
commitment must be approved prior to the last day of the fiscal year for
which the commitment is to be reported. The amount of the commitment
may be determined in a subsequent period.
B. Assigning Fund Balance
i. The City Council retains the authority to assign fund balance.
C. Hierarchy of Fund Balance Use
i. When multiple categories of fund balance are available for expenditure,
the City will spend the most restrictive funds first before moving down to
the next category with available funds in the following order:
1. Restricted
2. Committed
3. Assigned
4. Unassigned.
7. General Fund Reserves
Maintaining reserves in the General Fund is critical to the successful and stable short- and
long-term operations of the City. Adequate reserves in the General Fund ensure that the
City is able to respond to emergencies and continue providing services to the citizens of
Lodi. Adequate reserves also ensure that the City will have sufficient funds available to
meet its operating, capital and debt service obligations.
A. Catastrophic Reserve
i. A Catastrophic Reserve is established within the General Fund. This
reserve is established to maintain the ability of the City to meet
operational expenses during times of declared emergency or major
catastrophe.
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1. It is recognized that during a time of emergency, the City will need
to expend more resources than normal operations dictate to meet
the community's need. In addition to an increased level of
expenditure, the tax base of the City may be impaired after a major
catastrophic event.
ii. The amount of the Catastrophic Reserve shall be a minimum of 8% of
annual General Fund revenues, including Operating Transfers.
iii. The Catastrophic Reserve shall be exclusive of all other reserve amounts.
iv. Council may draw on the Catastrophic Reserve only upon declaration of
an emergency pursuant to the Lodi Municipal Code.
v. If the Catastrophic Reserve falls below 8% of annual General Fund
revenue, including Operating Transfers, the City Manager shall prepare a
plan within three months of Council approval of the Comprehensive
Annual Financial Report (CAFR) to restore the reserve balance to the 8%
level within 12 months.
vi. The Catastrophic Reserve is not intended for normal unanticipated
expenditures and shall be funded before all other committed General Fund
reserves.
B. Economic Reserve
i. An Economic Reserve is established within the General Fund. This
reserve is established to maintain the City's economic viability and to
meet seasonal cash flow needs.
1. It is recognized that economic cycles can cause significant
fluctuations in the revenue streams of the City and the recovery
from down cycles can be prolonged and affect service levels to the
community dramatically. The Economic Reserve is intended to
assist the City in maintaining service levels while revenues recover
from a down economic cycle.
ii. The amount of the Economic Reserve shall be a minimum of 8% of annual
General Fund revenues, including Operating Transfers.
iii. The Economic Reserve shall be exclusive of all other reserve amounts.
iv. Council may draw on the Economic Reserve only upon adoption of a
resolution of the City Council.
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v. If the Economic Reserve falls below 8% of annual General Fund revenue,
including Operating Transfers, the City Manager shall prepare a plan
within three months of Council approval of the Comprehensive Annual
Financial Report (CAFR) to restore the reserve balance to the 8% level
within 12 months.
vi. The Economic Reserve is not intended to be used to encourage
development through the expansion of infrastructure to undeveloped areas
of the City and shall be funded once the General Fund Catastrophic
Reserve is fully funded.
C. Should there be a lower fund balance presented in the proposed Budget, the City
Manager shall first recommend use of Pension Stabilization Funds to offset
Unfunded Accrued Liability (UAL) costs in the Fiscal year. The Deputy City
Manager shall first pay all UAL costs with current year resources and shall only
draw on the PSF in the final month of the Fiscal Year if in his/her opinion it is
still estimated a draw is needed to meet the 16% total fund balance requirement.
8. Measure L Fund Reserves
As a general purpose revenue, maintaining healthy reserves in the Measure L fund is
critical for the same reasons as in the General Fund. Adequate reserves ensure that the
City will continue to be able to provide Lodi citizens the services funded by Measure L in
the long term. The Measure L Fund shall maintain the same 8% Catastrophic and 8 %
Economic Reserves as outlined under Section 7 A. and Section 7 B. above. Measure L
Funds shall not be subject to the City's Pension Stabilization Policy. By allocating UAL
in the method described in Section 1 F. above, the General Fund will cover any UAL
costs attributable to the employees funded by Measure L.
As a new revenue stream beginning April 1, 2019, Measure L will take time to build up a
reserve to comply with this policy. Initially, the fund balance will be built to the full 16%
combined fund balance over a three year timeframe beginning with the FY 2019/20
budget and ending with FY 2021/22. Budgets from FY 2019/20 through FY 2021/22
shall include approximately 5.33% of revenue as a deliberate set aside to fund these
reserve categories.
9. Special Revenue Fund Reserves
Maintaining reserves in the City's Special Revenue Funds is also critical to the successful
and stable short- and long-term operations of the City. Adequate reserves in the Special
Revenue Funds, where appropriate, ensure that the City is able to carry out the purpose of
the special revenue fund and ensure compliance with underlying laws and contractual
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provisions associated with the funds. Additionally, bond rating agencies often evaluate a
City's General Fund financial resilience by looking at reserves that may be drawn from
Special Revenue funds to help support General Fund activities.
A. Library
i. Since the Library is primarily funded by a General Fund transfer, there is
no need to duplicate reserves associated with the transfer amount within
the Library Fund.
U. Reserves within the Library Fund should be maintained at a minimum
level of 16% of annual Non -General Fund Transfer revenue.
B. Parks, Recreation and Cultural Services (PRCS)
i. Since a significant portion of PRCS revenue comes from a General Fund
transfer, there is no need to duplicate reserves associated with the transfer
amount within the PRCS fund.
ii. Reserves within the PRCS Fund should be maintained at a minimum level
of 16% of annual Non -General Fund Transfer revenue.
C. Community Development
i. The Community Development Fund is primarily self-supporting from fee
revenue associated with development activities. The activities and
financing of this fund are subject to wide fluctuations based upon the state
of the development economy. Many of the fees assessed are collected
ahead of services being provided. In the event of an economic downturn,
the fund will have collected fees for services that have not yet been
provided. As such, it is prudent to carry a large reserve to recognize that
the reserve represents services that have not yet been provided.
ii. Reserves within the Community Development Fund should be maintained
at a minimum level of 50% of annual operating expenses, including
transfers.
D. Vehicle Replacement
i. It is the City Council's goal to maintain reserves in the Vehicle
Replacement equal to the accumulated depreciation of the vehicles in the
fund.
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1. The City Manager's proposed budget will recommend fully
funding vehicle replacement funds equal to the annual straight-line
depreciation of all vehicles in the fund.
2. Should Council elect not to fund the straight-line annual
depreciation in the budget, the Deputy City Manager will report on
the short fall in the fund within the budget document.
3. It is recognized that a shortfall currently exists and fully funding
only one year of straight-line depreciation will result in a continued
under -funding of vehicle replacements until the current vehicle
stock is replaced.
E. Information Technology Replacement
i. It is the City Council's goal to maintain reserves in the Information
Technology Replacement fund equal to the accumulated depreciation of
the equipment in the fund.
1. The City Manager's proposed budget will recommend fully
funding the Information Technology Replacement fund equal to
the annual straight-line depreciation of all equipment in the fund.
2. Should Council elect not to fund the straight-line annual
depreciation in the budget, the Deputy City Manager will report on
the shortfall in the fund within the budget document.
3. It is recognized that a shortfall currently exists and fully funding
only one year of straight-line depreciation will result in a continued
under funding of Information Technology Equipment replacements
until the current equipment stock is replaced.
F. Other Special Revenue Funds
i. All reserve balances in the following fund categories are restricted by the
terms of the individual funds within the fund category:
1. Streets
2. Transportation Development Act
3. Community Development Block Grant
4. Debt Service
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5. Public Safety Special Revenue
6. General Fund Capital Outlay
7. Parks Capital Outlay
8. Vehicle and Equipment Replacement
10. Enterprise Fund Reserves
Maintaining reserves in the City's Enterprise Funds is also critical to the successful and
stable short- and long-term operations of the City. Adequate reserves in the Enterprise
Funds ensures that the City is able to carry out the purpose of the fund and ensures
compliance with underlying laws and contractual provisions associated with the funds.
Among other metrics, bond rating agencies review compliance with reserve policies in
determining credit ratings.
A. Electric Utility
i. The City Council separately adopts a reserve policy for the Electric Utility
and reviews the components of the policy every three years. As part of the
annual budget process, Council is apprised of the level of reserves desired
under that policy.
B. Water Utility
i. The City Council has adopted a financial model for the Water Enterprise
that incorporates a reserve target of 25% of Operating Expenses.
ii. Additionally, all funds collected in relation to PCE/TCE rates or
settlements are restricted to use solely for the mitigation and remediation
of those pollutants.
C. Wastewater Utility
i. The City Council has adopted a financial model for the Wastewater
Enterprise that incorporates a reserve target of 25% of Operating
Expenses.
D. Transit
i. All reserve funds in the Transit Enterprise are restricted as to use solely
for transit purposes.
11. Internal Service Fund Reserves
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Maintaining reserves in the City's Internal Service Funds demonstrates fiscal
accountability and financial prudence. Adequate reserves in the Internal Service Funds
ensure that the City has set aside sufficient funds to meet the future obligations it has
committed to provide to its employees. Additionally, bond rating agencies review these
funds and look favorably upon entities that are funding the long-term liabilities
represented in the City's Internal Service Funds.
A. Benefits Fund
i. Reserves equal to 25% of the estimated annual cost of all benefits paid for
by this fund.
ii. The Deputy City Manager/Treasurer will invest all reserves in the fund, as
reported in the prior fiscal year's CAFR, in excess of 25% of the estimated
annual cost of all benefits paid in a current fiscal year upon completion of
the prior fiscal year's CAFR.
B. General Liability Insurance and Worker's Compensation Funds
i. Reserves, at a minimum, equal to the 90% confidence level shown in the
annual actuarial report, should be held locally and invested along with the
City's pooled cash portfolio.
ii. Funding at the 90% confidence level will be recommended in each annual
budget.
iii. The Deputy City Manager will review the status of the funds as of
December 31 each year. If it is estimated that the full budget transfer is
not needed to maintain the 90% confidence level in that year, he/she may
reduce the budgeted transfer for that Fiscal Year for each fund prorated to
each fund's budgeted contribution.
C. Fleet Maintenance Fund
i. Reserves equal to a minimum of 16% of Operating Expenses shall be held
in the Fleet Maintenance Fund.
12. Capital Improvement Plan
The City is committed to ensuring that all of its assets are operated, maintained and
replaced in a manner that is the most prudent method of maintaining the public
stewardship of those assets. To that end, the City will prepare and update annually a
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Capital Improvement Plan (CIP) that encompasses those assets and looks out over a five-
year lifespan. The first year of the five-year plan will be the current budget year. The
Internal Services Department will be responsible for gathering the data for inclusion in
the plan.
A. CIP Projects
i. Construction projects that are expected to cost $25,000 or more should be
included in the CIP. Projects will be a combination of projects that repair,
replace or enhance existing facilities and infrastructure and projects that
expand or add to the City's existing fixed assets. Vehicles and equipment
(rolling stock) are not to be included in the CIP.
B. CIP Appropriations
i. Approval of the CIP estimates beyond the current year budget do not
constitute appropriation of the funds necessary or designation of the funds
necessary to complete the project. Unspent current year budget
allocations will automatically carryforward until project completion with
the exception of unencumbered budgets in annual maintenance programs
within the CIP. Upon completion of a project, unspent budget is returned
to the fund until appropriated by future City Council action. Employee
labor costs do not carry forward.
C. Level of Budget Control
i. Budget control for CIP projects will be at both the general ledger account
level and the CIP project level. Budget allocated to one CIP project
cannot be moved to another project within the CIP or to a non-CIP use
without Council approval. Department Directors may transfer budget
between line items within a project and fund as long as the total
expenditure for the project or for the amount of the funding source specific
to that project does not increase.
D. Elements of the CIP
i. Each project listed in the CIP will address the following items:
• project description
• project timeline
• anticipated funding sources
• estimated expenditures
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• revenues and expenditures will be reflected by fiscal year over the
five-year timespan of the CIP
• estimated annual ongoing operating and maintenance costs
13. Encumbrance Accounting
Encumbrances represent commitments to contracts not yet performed and orders not yet
filled. They are used to control expenditure commitments for the year and to enhance cash
management. Encumbrances do not represent expenditures for a period, only a commitment
to expend resources. As a contract is completed, the budgetary encumbrance control
accounts are liquidated or reduced and the actual expenditure is recorded.
A. Lapsing Appropriations
i. All unencumbered funds lapse at the end of the Fiscal Year with the
exception of Capital Projects funds. Funds encumbered on contracts will
roll into the next year. The Deputy City Manager shall review all
contracts to determine what encumbered funds shall lapse due to contract
completion.
ii. Capital Projects — appropriated funds in the current fiscal year do not lapse
until project completion or abandonment, whether encumbered or
unencumbered.
14. Pension Stabilization Policy
This section replaces the policy adopted by Resolution 2017-219 and amends language and
form for consistency with this policy. The policy is also updated and amended to factor in
UAL funding for UAL costs attributable to positions funded by Measure L.
A. Pension Stabilization Funding
i. The Treasurer is authorized to invest all fund balance in excess of 16% in
the General Fund (Pension Stabilization Resources, or PSR), based on the
City's Comprehensive Annual Financial Report (CAFR) from the previous
year in the City's Internal Revenue Code Section 115 Trust account with
Public Agency Retirement Solutions (PARS); and with Council consent
use PARS trust funds to make:
a. ADP to the Safety Plan of the City of Lodi held by Ca1PERS; or
b. ADP to the Miscellaneous Plan of the City of Lodi held by
Ca1PERS;
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until such time that the combined Market Value of Assets at the two
Ca1PERS Plans plus the Market Value of Assets in the PARS fund exceed
80% of the combined "Entry Age Normal Accrued Liability" for both
Safety and Miscellaneous or its most proximate equivalent as calculated by
Ca1PERS in the annual Actuarial Reports.
B. Allocation of Pension Stabilization Reserve Funding
i. PSR investments made under this policy shall be accounted for by source
fund and be made from all source funds in equal proportions to the actual
allocation of Ca1PERS combined normal cost plus UAL cost within the
Fiscal Year of the most recently approved CAFR.
1. The Measure L Fund shall not contribute to the Pension
Stabilization Fund.
ii. The base fund for determining the amount of proportional PSR for other
funds shall be the City's General Fund (Fund 100).
1. If PSR for a particular fund is not adequate to cover the
proportional requirement for that fund, the Treasurer shall prepare
a report and recommendations to City Council to seek direction on
PSR for that Fiscal Year.
iii. Nothing in this policy shall allow the Treasurer to make PSR investments
of any fund to have a projected year end fund balance below thresholds
established in Section 7, 8, 9, 10, or 11 of this policy.
1. If proportional PSR investments would cause the projected year
end fund balance of any fund to fall below thresholds established
in the Fiscal Policies, the Treasurer shall prepare a report and
recommendations to City Council within the scope of this policy.
C. Budget Adjustments
i. The City Manager is authorized to make any necessary budget adjustments
to execute this policy in each Fiscal Year based on the calculated PSR.
D. Pension Stabilization Reporting
i. The Treasurer shall prepare and present the funded statuses of the City's
combined pension plans in the Annual Budget and the Mid -Year Budget
report.
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15. Review and Update
These policies will be in place for the 2021/22 and 2022/23 fiscal years beginning with the
FY 2021/22 budget. These policies will be reviewed and updated every two years in odd
numbered years in conjunction with the approval of the annual budget. The next review
cycle will be in conjunction with the FY 2022/24 budget.
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