05-23-2016 BPU RPT 17 - Laserfiche WebLink

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W A T E R F N F R G Y CITY Oi RiVER$IDE lag P U B L I C U T I L I T I E S RIVERSIDE PUBLIC UTILITIES Board Memorandum BOARD OF PUBLIC UTILITIES DATE: May 23, 2016 ITEM NO: 17 File 16 -1604 SUBJECT: APPROVAL OF RIVERSIDE PUBLIC UTILITIES UPDATED FISCAL POLICIES ISSUE: The item for the Board of Public Utilities (Board) consideration is a recommendation to the City Council to approve Riverside Public Utilities (RPU) Fiscal Policies. RECOMMENDATION: That the Board recommend that the City Council: 1. Approve the updated RPU Fiscal Policies; and 2. Direct staff to annually review the Fiscal Policies and update, at a minimum, once every three years to reflect needed changes to policy. BACKGROUND: Importance of Fiscal Policies The adoption of strong fiscal policies are the cornerstone of sound financial management. The goals of solid fiscal policies for RPU are: • Promote long term financial stability by establishing clear and consistent financial reporting guidelines. • Ensure that RPU will maintain its financial health in order to meet its strategic goals. • Development of cash reserve and budgeting policies. • Provide guidelines for capitalization of RPU assets. • Provide funds to maintain and invest in its utility infrastructure. • Enhance short and long -term financial credit quality by helping to achieve the highest possible credit and bond ratings. • Provide guidance and controls for effective investment of RPU funds in accordance with City investment policies and State law. • Provide the Board and City Council with a framework for measuring fiscal performance of RPU against established parameters and guidelines. • Link long -term financial planning with day -to -day operations. • Document the Board and City Council philosophy for effective ratemaking and recovery of RPU costs of electric and water service. Policy History In June 2001, the Board and City Council approved the existing RPU Fiscal Policy. The approved policy documented and adopted financial goals for both the water and electric utilities and established policies for long -term, as well as day -to -day operations of both utilities. The policy covered operating and capital