Stabilization Reserves

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Finance

Goal: 10% of revenue ($436M in fiscal year 2015-16)
Goal Status: NEEDS IMPROVEMENT

The City’s budget is guided by financial policies that plan for unforeseen financial circumstances that cannot be factored into revenue and expenditure projections. The City Charter charges the Controller’s Office with proposing to the Mayor and Board of Supervisors financial policies addressing reserves, use of volatile revenues, debt, and financial measures in the case of disaster recovery, and requires the City to adopt budgets consistent with these policies once approved.

The City’s reserve policy, adopted under City Charter procedures, establishes a stabilization reserve policy made up of three primary reserves: 1) Budget Stabilization Reserve, 2) Rainy Day Reserve, and 3) Rainy Day One-Time Reserve. The adopted policy for these stabilization reserves determines when funds are deposited into each reserve, typically in years of strong revenue growth. Conversely, the adopted policy limits withdrawals from these reserves to periods of economic and tax revenue declines. The target level adopted for these reserves is 10% of General Fund revenues.

STABILIZATION RESERVES ARE 6.9 PERCENT, BELOW THE GOAL OF 10 PERCENT

How San Francisco is Performing

The City utilized its stabilization reserves in the wake of the economic recession beginning in FY 2007-08, but reserves have recovered significantly since FY 2010-11. Strong revenue growth and the City’s reserve policies have led to increased stabilization fund reserves, growing to $247 million—6 percent of General Fund revenues—as of the end of fiscal year (FY) 2014-15 and $299 million—or 6.9 percent of General Fund revenues—as of the end of FY 2015-16, an improvement from the prior year balance of 0.9 percentage points. While improved, this balance is still lower than targeted levels of 10 percent.

Additional Information

Data

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