Stabilization Reserves

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Finance

Goal: 10% of revenue ($588M in fiscal year 2018-19)
Goal Status: MEETING TARGET 
(pre-audit estimate)

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 two primary reserves: Budget Stabilization Reserve and Rainy Day 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. Please note that the Controller's Office has updated the target calculation to exclude funds in the Rainy-Day One-Time Reserve as these funds may be appropriated by the Mayor and Board for one time purposes at any time.

STABILIZATION RESERVES

How San Francisco is Performing

The City utilized its stabilization reserves in the wake of the economic recession beginning in fiscal year (FY) 2007-08, but reserves have recovered significantly since FY 2010-11. Strong revenue growth and the City’s reserve policies increased stabilization fund reserves to approximately $588 million by the end of FY 2018-19 – finally reaching 10% of General Fund revenues.

The City also deposited $37.4 million into the Budget Stabilization One-Time Reserve for the first time in FY 2018-19. When the City’s stabilization reserves reach 10% of General Fund revenue, any additional amount the City is required to reserve is deposited into a different fund called the Budget Stabilization One-Time Reserve. This fund is not considered part of the “economic stabilization reserves” because it can be used when there is not a recession. 

Additional Information

Data

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