Delivery Program 2009–2012 - Rockdale City Council - NSW ...

Cash Reserves PolicyThe establishment and funding of cash reserves is a financial management strategy to provide funds for futureexpenditure that could not otherwise be financed during a single year without having a material impact on the budget.For example, local government elections occur every four years, so Council sets aside one quarter of the estimatedcost of this activity each financial year.Council has established the following reserves towards which an annual investment of about $3.6 million istransferred:RESERVEBexley Pool ComplexTown Hall UpgradeCentral Library ReservePlant ReplacementComputer, Telephone and Office EquipmentOpen Space and S94 ObligationsLocal Government ElectionBuilding Income EqualisationStreet Lighting HardwareWorkers’ Compensation EqualisationInterest on Investments EqualisationPublic Liability InsurancePURPOSEA level of $1,000,000 be provided for the future upgrade, major repairs orreplacement of Bexley Pool.An annual provision of $50,000 be allocated for the future upgrade of theRockdale Town Hall facilities.The cash balance in this reserve to be retained towards the provision of a newcentral library. Note: Four years ago, Council discontinued the annual provisionof $200,000 to this reserve which has been allocated to the Strategic Prioritiesreserve for the past three years.An amount equivalent to maintain a balance of $600,000 in this reserve beprovided for the future replacement of Council’s plant and equipment.$340,840 be provided per annum for the future upgrade and expansion ofCouncil’s computer and telephone systems.An annual provision of $510,000 be allocated from general revenue to providethe additional funds required to provide the assets and works as outlined inCouncils S94 Contribution Plan. It is recommended that for the next 7 years, thisannual provision will be used towards the delivery of the major capital projects(as resolved by Council on 18 June 2008).An annual provision of $126,000 be allocated from general revenue each yeartowards the cost of conducting Council’s general elections every four (4) years.Building Income fluctuates in accordance with the building and developmentmarket. This reserve quarantines income in favourable years to help minimisefinancial risk exposure when there’s a downturn in the building market.This reserve is provided by setting aside the unspent budget allocation for streetlighting energy costs in a particular year, to be used towards the cost of providingstreet lighting hardware in public places, the financial burden of which recentlybecame the Council’s responsibility.On an annual basis the workers’ compensation premium fluctuates with recentclaims history. One year there could be a saving, and the next there could bean adverse impact on the budget. This reserve is utilised to put funds away in agood year, and use them to relieve pressure on the budget when the workers’compensation result is unfavourable.Interest on investments fluctuates in accordance with market forces, and thequantum of funds held in cash reserves is subject to demands and prioritiesset by Council. This reserve is provided by quarantining interest income whichexceeds budget, to offset a downturn in interest received in subsequent years.Also, this reserve acts as a safeguard to the current year budget if a significantdraw-down on investments is required.The timing of claims under excess cannot be controlled. This reserve is providedby setting aside the unspent budget allocation in a particular year, to offset ahigher number of claims and increasing excesses in a subsequent year.Delivery Program 2009-2012 | 37