Purpose

Santa Barbara County Local Agency Formation Commission (the Commission) shall maintain reserve funds. This policy establishes the level of reserves necessary for maintaining LAFCO's credit worthiness and for adequately providing for:

• Unexpected and unbudgeted expenses .
• Professional Services.
• Litigation and other legal services.
• Cash flow requirements.
• Unfunded mandates including costly regulatory requirements.

Policy

Operating Reserves

The minimum amount of operating reserves will equal two months of operating expenses. The maximum amount of operating reserves will equal 30-50 percent of operating expenses.

Procedure for Monitoring Reserve Levels

The Executive Officer shall perform a reserve analysis to be submitted to the Commission upon the occurrence of the following events:

• Commissions deliberation of the annual budget; or,
• When a major change in conditions threatens the reserve levels established within this policy.

If the analysis indicates projected or actual reserve levels falling 10% below or above the levels outlined in this policy, at least one of the following actions shall be included with the analysis:

• An explanation of why the reserve levels are not at the targeted level, and/or
• An identified course of action to bring reserve levels within the minimum and maximum levels prescribed.