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GENERAL POLICY MANUAL
SECTION:
Finance
APPROVED BY:
County Council
NUMBER:
6.20
SIGNATURE:
Original signed by: Ben
Addley, CAO
PAGE:
1 of 12
DATE:
August 10, 2011
REFERENCE
POLICY:
6.16, 6.19, Asset
Management Plan
REVISED:
January 22, 2025
Reserves
POLICY
A financially sustainable County government provides an optimal mix and level of services to
citizens within available means while proactively taking measures to preserve the ability to
continue providing value in the long term. Reserves are established to accomplish this goal.
The objective of the reserves policy is to ensure adequate working capital is available for cash
flow and contingency purposes, and as a source of funding the County's long-term capital plan,
while maintaining reasonable tax rates and user fees.
DEFINITIONS
Reserves
A reserve is an allocation of accumulated net revenue. It has no
reference to any specific assets and does not require the physical
segregation of money or assets. Reserves are part of the revenue
fund and, therefore, do not earn interest on their own, as is the
case of reserve funds. Any earnings derived from investment of
reserves' money are reported as revenue fund earnings.
Reserve Funds
A reserve fund differs from a reserve in that the reserve fund
assets are segregated and restricted to meet the purpose of the
reserve fund. All earnings derived from such investments must
form part of the reserve fund. There are two types of reserve
funds: obligatory reserve funds and discretionary reserve funds.
Obligatory Reserve Funds
An obligatory reserve fund, as per statute or legislation
requirements, is comprised of funds received for special purposes
and are segregated from the general revenues of the County.
Obligatory reserve funds are created solely for the purpose
prescribed for them.
Discretionary Reserve Funds A discretionary reserve fund is not segregated from the general
revenues of the County, based on Council direction, to finance a
future expenditure or to provide for a specific contingent liability so
that the funds are available as required.
GENERAL POLICY MANUAL
SECTION:
Finance
APPROVED BY:
County Council
NUMBER:
6.20
SIGNATURE:
Original signed by: Ben
Addley, CAO
PAGE:
2 of 12
DATE:
August 10, 2011
REFERENCE
POLICY:
6.16, 6.19, Asset
Management Plan
REVISED:
January 22, 2025
PROCEDURES
1.0
Authority
1.1
Municipal Act, 2001
1.1.1 Subsection 289(2) - in preparing the budget, an upper tier municipality
may provide for such reserves as the upper tier municipality deems
necessary.
1.1.2 Section 293 - specifies that the Minister may make regulations requiring
a municipality to establish a reserve fund designated for prescribed
liabilities, defining "liabilities", requiring a municipality to make payments
into the reserve fund, prohibiting the municipality from changing the
purpose for which the reserve fund is designated; and prescribing the
conditions under which the municipality may change the designation of all
or any part of the reserve fund, and borrow from the reserve fund.
1.1.3 Section 417 - allows a municipality to provide in its budget for the
establishment or maintenance of a reserve fund for any purpose for which
it has authority to spend money and that a municipality may by by-law
provide that the money raised for a reserve fund may be spent or applied
to a purpose other than that for which the fund was established.
2.0
Principles and Objectives
2.1
The County recognizes that the strategic use of reserves and reserve funds is an
essential part of long term corporate financial planning (Policy 6.16 Long Term
Financial Sustainability Plan). In addition, reserves and reserve funds shall
receive priority consideration for the distribution of surplus funds and non-
recurring revenues.
2.2
Reserves represent an important tool in debt management as it is a source of
financing for larger projects. Capital budgets can vary from year-to-year, which
can create a funding need that may be best financed over time (Policy 6.19 Debt
Management Policy).
2.2
Reserves and reserve funds may be established for any purpose deemed
necessary by resolution of County Council, or if required in accordance with
provincial statute. Typical uses of reserves are for contingencies, stabilization
purposes and capital financing.
GENERAL POLICY MANUAL
SECTION:
Finance
APPROVED BY:
County Council
NUMBER:
6.20
SIGNATURE:
Original signed by: Ben
Addley, CAO
PAGE:
3 of 12
DATE:
August 10, 2011
REFERENCE
POLICY:
6.16, 6.19, Asset
Management Plan
REVISED:
January 22, 2025
2.3
Reserves and reserve funds may be closed only by resolution of Council.
2.4
The County Treasurer is authorized to process transfers to and from reserves
and reserve funds in compliance with the sources and uses listed in Appendix
"A", which forms an integral part of this policy, and in accordance with annual
operating and capital budgets.
2.5
Reserve transfers not part of the annual operating or capital budget or set out
specifically in this policy must be approved by County Council.
2.6
Target balances, funding sources and uses of reserves and reserve funds are set
out in Appendix "A".
3.0
Reserves and Reserve Fund Categories
Appropriate balances shall be maintained reflecting the nature of the accounts, such as:
3.1
Stabilization Reserves - used to offset extraordinary and unforeseen expense
requirements, one-time expenses, revenue shortfalls, to avoid significant
fluctuations on the general tax levy and to manage cash flows.
3.1.1 Corporate General
3.1.2
Water/Wastewater Community Servicing Assistance Program
3.1.3
Waste Collection
3.1.4
Legal
3.1.5 Insurance
3.1.6 WSIB
3.1.7 Pay Equity
3.1.8 Training
3.1.9 Working Funds
3.1.10 Growth - General
3.1.11 Growth - Library
3.2
Government Funded Reserves - established to track the revenues received
from the Provincial and Federal Governments for specific services. Funding
received from other levels of government will be used in future budgets as per
the guidelines or requirements of each program.
3.2.1 Canada Community-Building Fund
3.2.2 Ontario Community Infrastructure Fund
3.2.3 Safe Restart Agreement
GENERAL POLICY MANUAL
SECTION:
Finance
APPROVED BY:
County Council
NUMBER:
6.20
SIGNATURE:
Original signed by: Ben
Addley, CAO
PAGE:
4 of 12
DATE:
August 10, 2011
REFERENCE
POLICY:
6.16, 6.19, Asset
Management Plan
REVISED:
January 22, 2025
3.3
Program Specific Reserves - established in response to specific programs or
initiatives, or special funding that has been received.
3.3.1 Planning
3.3.2 Libraries
3.3.3 Child Care Mitigation Funding
3.3.4 Rural Trees
3.3.5 Landfill and Waste Diversion (reserve fund)
3.3.6 Source Water Protection
3.3.7 Housing For All
3.3.8 Broadband Expansion
3.3.9 Long-Term Care Future Capital
3.4
Capital Reserves - used to fund specific replacement or renewal of existing
capital assets. As the assets of the County increase, so should the contribution
from the Operating Budget to these reserves for the replacement and
refurbishment needs of the underlying capital assets, based on lifecycle costing.
3.4.1 Corporate General Facilities
3.4.2 Roads
3.4.3 Bridges and Structural Culverts
3.4.4 Fleet
3.4.5 Water - Townships
3.4.6 Water - Ingersoll
3.4.7 Water - Tillsonburg
3.4.8 Water - Woodstock
3.4.9 Wastewater - Embro
3.4.10 Wastewater - Drumbo
3.4.11 Wastewater - Ingersoll
3.4.12 Wastewater - Innerkip
3.4.13 Wastewater - Mt. Elgin
3.4.14 Wastewater - Norwich
3.4.15 Wastewater - Plattsville
3.4.16 Wastewater - Tavistock
3.4.17 Wastewater - Thamesford
3.4.18 Wastewater - Tillsonburg
3.4.19 Wastewater - Woodstock
3.4.20 Information Systems
3.4.21 Social Housing
3.4.22 Paramedic Services - Capital
3.4.23 Stormwater
3.4.24 Libraries - Capital
GENERAL POLICY MANUAL
SECTION:
Finance
APPROVED BY:
County Council
NUMBER:
6.20
SIGNATURE:
Original signed by: Ben
Addley, CAO
PAGE:
5 of 12
DATE:
August 10, 2011
REFERENCE
POLICY:
6.16, 6.19, Asset
Management Plan
REVISED:
January 22, 2025
3.4.25 Woodingford Lodge - Capital
4.0
Reserves and Reserve Fund Sustainability Strategies
Reserve and reserve fund preservation and sustainability has become more prevalent
over time with the reduction of transfer payments from other levels of government to
support local services. Municipalities are facing financial challenges to meet service
level expectations and must seek other means of sustaining an appropriate level of
reserves through increased revenues. The following strategies are designed for specific
revenue streams to reserves:
4.1
Interest Allocations - the following reserves, not represented by a reserve fund
with segregated assets, shall receive, or be charged, an allocation of interest in
the year, based on the quarterly average of the County's monthly interest rate
earned on its current bank deposit balances, to each of the reserves calculated
on their average opening and ending balances for each quarter.
4.1.1 Insurance
4.1.2 Corporate General Facilities
4.1.3 Roads
4.1.4 Bridges and Structural Culverts
4.1.5 Fleet
4.1.6 Water - Townships
4.1.7 Water - Ingersoll
4.1.8 Water - Tillsonburg
4.1.9 Water - Woodstock
4.1.10 Wastewater - Embro
4.1.11 Wastewater - Drumbo
4.1.12 Wastewater - Ingersoll
4.1.13 Wastewater - Innerkip
4.1.14 Wastewater - Mt. Elgin
4.1.15 Wastewater - Norwich
4.1.16 Wastewater - Plattsville
4.1.17 Wastewater - Tavistock
4.1.18 Wastewater - Thamesford
4.1.19 Wastewater - Tillsonburg
4.1.20 Wastewater - Woodstock
4.1.21 Information Systems
4.1.22 Social Housing
4.1.23 Paramedic Services - Capital
4.1.24 Stormwater
4.1.25 Libraries - Capital
GENERAL POLICY MANUAL
SECTION:
Finance
APPROVED BY:
County Council
NUMBER:
6.20
SIGNATURE:
Original signed by: Ben
Addley, CAO
PAGE:
6 of 12
DATE:
August 10, 2011
REFERENCE
POLICY:
6.16, 6.19, Asset
Management Plan
REVISED:
January 22, 2025
4.1.26 Woodingford Lodge - Capital
4.2 Annual Allocation of Operating Surpluses
Annual year-end audited operating surpluses allocated as follows:
4.2.1 Waste collection surplus funded through user fees allocated to the Waste
Collection reserve.
4.2.2 Legal expense surplus allocated to the Legal reserve.
4.2.3 Training expense surplus allocated to the Training reserve.
4.2.4 Library surplus allocated to the Libraries reserve.
4.2.5 Landfill surplus funded through user fees allocated to the Landfill and Waste
Diversion reserve fund.
4.2.6 Source Water Protection funded through user fees allocated to the Source Water
Protection reserve.
4.2.7 Housing surplus allocated to the Housing For All reserve.
4.2.8 Water and Wastewater Systems funded through user fees allocated to their
respective systems' reserve.
4.2.9 Tree harvesting revenue surplus allocated to the rural trees reserve.
4.2.10 The resulting consolidated County operating surplus after all the above
allocations have been accounted for allocated as follows:
i.
25% allocated to the Corporate General Reserve;
ii.
50% allocated to the Roads Reserve;
iii.
5% allocated to the Bridges and Structural Culverts Reserve;
iv.
20% allocated to the Social Housing Reserve.
GENERAL POLICY MANUAL
SECTION:
Finance
APPROVED BY:
County Council
NUMBER:
6.20
SIGNATURE:
Original signed by: Ben
Addley, CAO
PAGE:
7 of 12
DATE:
August 10, 2011
REFERENCE
POLICY:
6.16, 6.19, Asset
Management Plan
REVISED:
January 22, 2025
4.3 Annual Reporting and Monitoring
An annual review of cash flow requirements and appropriate fund balances shall be
undertaken to determine whether modifications are appropriate for the reserve policy.
On the basis of the annual policy review, the following year's budget report will include a
current year reserve continuity schedule and a five year projected reserve balance
schedule reflecting the reserve provisions contained in the budget.
Appendix A
Reserve and Reserve Funds
Reserve Name
Target Balance
Sources of Funding
Uses of Funding
Stabilization Reserves
Corporate General
15% of the County's current
year's tax levy
Operating budget and 25% of
year-end County operating
surplus
Emergency and unplanned situations; and
tax stabilization due to significant
assessment appeals beyond operating
budget provisions; as determined by
resolution of Council; and current year end
County deficits
Water/Wastewater
Community Servicing
Assistance Program
Balance projected through
most recent regular water
rate review that will meet the
future requirements of the
fund
No current funding sources
According to CSAP By-Law 5345-2012
Waste Collection
40% of estimated annual bag
tags sales based on prior 3
year's sales
Year-end surplus from waste
collection efforts (funded by
bag tag user fees)
To fund deficits in waste collection program
Legal
Two times the average
annual legal costs based on
prior three years - no less
than $500,000
Year-end surplus from legal
expenses until target balance
is met
Significant OMB or other unbudgeted or
extraordinary legal matters
Insurance
Average costs to the County
expended on claims below
the deductible plus claims
billed back by the insurer in
the past five years - no less
than $1,750,000
Operating budget; and
interest earned based on
average balance
Unbudgeted self insured claims, non-
insurable claims and claims less than the
County's insurance deductible; and to
mitigate significant increases in insurance
premiums. Computer and network
infrastructure security and insurance/self-
insurance not associated with regular and
reoccurring expenditures.
WSIB
Based on 75% of triennial
actuarial evaluation
Operating budget
To fund significant and/or unbudgeted WSIB
claims and employee injury related costs
Pay Equity
2% of payroll
Operating budget
Fund pay equity adjustments retroactive to
prior years or unanticipated adjustments in
current year
Training
$250,000
Year-end surplus from training
expenses until reserve target
has been met
Training programs having corporate
significance as determined by the CAO
Appendix A
Reserve and Reserve Funds
Reserve Name
Target Balance
Sources of Funding
Uses of Funding
Working Funds
10% of the County's current
year's tax levy
Operating budget
To support corporate cash flow
Growth - General
Average 10-year annual
amount required to fund
exemptions based on the
County's latest DC
Background Study.
General Operating Budget
To provide funds to cover shortfalls in growth
related capital funding exemptions,
reductions and limitations mandated by the
Development Charge Act, 1997 and
exemptions prescribed by the County's DC
By-law, and DC Exemption Policy.
Growth - Library
Average 10-year annual
amount required to fund
exemptions based on the
County's latest DC
Background Study.
Library Operating Budget
To provide funds to cover shortfalls in growth
related capital funding exemptions,
reductions and limitations mandated by the
Development Charge Act, 1997 and
exemptions prescribed by the County's DC
By-law, and DC Exemption Policy.
Reserve Name
Target Balance
Sources of Funding
Uses of Funding
Government Funded Reserves
Canada Community-
Building Fund
N/A
Federal Government -
administered by AMO
New incremental capital spending on
infrastructure including local roads, bridges
and active transportation such as bike lanes
that enhance sustainability outcomes in
accordance with the Keeping Canada's
Economy and Jobs Growing Act
Ontario Community
Infrastructure Fund
N/A
Government of Ontario under
Ontario Community
Infrastructure Fund
Agreement
Capital spending on renewal, rehabilitation
and replacement of core infrastructure
assets. Eligible project categories include:
paved roads, street lighting as part of a roads
project, bridges and culverts, water
treatment, water distribution/transmission,
wastewater treatment and disposal, sanitary
sewer systems and storm water systems,
subject to restrictions. The development and
implementation of asset management plans
for core infrastructure assets are also
eligible. The Agreement sets out the eligible
Appendix A
Reserve and Reserve Funds
Reserve Name
Target Balance
Sources of Funding
Uses of Funding
projects/categories as well as the terms and
conditions in further detail.
Safe Restart Agreement
N/A
Government of Ontario under
Safe Restart Agreement
Support any COVID-19 related operating
need
Program Specific Reserves
Planning
Average annual Official Plan
and planning studies cost
requirements based on equal
cost installment cycle
Operating budget
Official Plan review, comprehensive
amendments and planning related studies
(e.g. secondary plans etc.)
Libraries
5% of Library's current year's
tax levy
Operating budget, year-end
Library operating surplus
Unbudgeted extraordinary operating
expenses or new capital assets to provide
sufficient flexibility and protection for
unforeseen events in the Library system, tax
stabilization
Child Care Mitigation
Funding
N/A
Provincial funding
To offset child care service costs to support
transition to Ontario's new child care funding
formula over three to five years
Rural Trees
N/A
Surplus tree revenues over
budget
To fund additional tree plantings over base
budget
Landfill and Waste
Diversion (reserve fund)
Future landfill expansion
costs and to meet lifecycle
financing requirements based
on Asset Management Plan
Annual surplus of the Landfill
(generated exclusively from
user fees); and interest
revenue
Lifecycle requirements identified through the
Asset Management Plan of existing assets,
future expansion costs; and funding
programs that would extend the life of the
landfill by waste diversion and sustainability
efforts
Source Water Protection
N/A
Year-end surplus from Source
Water Protection program
(funded by user fees)
To fund spending deficits in the Source
Water Protection program
Housing For All
N/A
Operating budget, Disposal of
Land/Housing First Policy,
year-end surplus from
Housing division
Housing incentives and projects to address
needs across the housing continuum
Broadband Expansion
N/A
Operating budget
Fund future broadband expansion in
underserved areas
Appendix A
Reserve and Reserve Funds
Reserve Name
Target Balance
Sources of Funding
Uses of Funding
Long-Term Care Future
Capital
N/A
Operating budget
Future long-term care expansion capital
projects
Capital Reserves
Corporate General
Facilities
To meet lifecycle financing
requirements based on Asset
Management Plan for all
County buildings (except
libraries, paramedic services,
social housing, long-term
care, water and wastewater
facilities)
Operating budget; and annual
net rental income from
County-owned rural properties
and facilities (excluding
library, paramedic services,
social housing, long-term
care, water and wastewater
facilities)1
Lifecycle requirements identified through the
Asset Management Plan of existing County-
owned buildings and communication towers
and replacement of furniture and fixtures
(except libraries, paramedic services, social
housing, long-term care, water and
wastewater facilities)
Roads
To meet lifecycle financing
requirements based on Asset
Management Plan
Operating budget1; 50% of
year-end County operating
surplus
Lifecycle requirements identified through the
Asset Management Plan of existing County-
owned transportation related assets
(excluding bridges and structural culverts)
Bridges and Structural
Culverts
To meet lifecycle financing
requirements based on Asset
Management Plan
Operating budget1; 5% of
year-end County operating
surplus
Lifecycle requirements identified through the
Asset Management Plan of existing County-
owned bridges and structural culverts
Fleet
Contributions to date for
existing active fleet assets
Annual allocation based on
internal charges to
departments2
Lifecycle requirements identified through the
Asset Management Plan of existing rolling
stock and equipment (excluding paramedic
services vehicles and equipment). Fleet
operating cost deficits when proceeds from
equipment sales targets are not met.
Water - Townships
To meet lifecycle financing
requirements based on Asset
Management Plan
Annual surplus in operating
system (funded by user fees)2
Lifecycle requirements identified through the
Asset Management Plan of existing assets;
unplanned deficits of operating system; and
emergency and unplanned expenditures in
operating system
Water - Ingersoll
Water - Tillsonburg
Water - Woodstock
Wastewater - Embro
Wastewater - Drumbo
Wastewater - Ingersoll
Wastewater - Innerkip
1 And interest earned based on average balance
Appendix A
Reserve and Reserve Funds
Reserve Name
Target Balance
Sources of Funding
Uses of Funding
Wastewater - Mt. Elgin
Wastewater - Norwich
Wastewater - Plattsville
Wastewater - Tavistock
Wastewater - Thamesford
Wastewater - Tillsonburg
Wastewater - Woodstock
Information Systems
Average annual replacement
requirements for hardware in
accordance with replacement
policy for hardware; and
shared municipal network
infrastructure; and average
annual requirement for
cybersecurity testing
Annual allocation based on
internal charges to
departments2
Replacement or upgrades of computer
hardware, including shared municipal
network equipment, and cybersecurity
testing.
Social Housing
To meet lifecycle financing
requirements based on Asset
Management Plan for all
County-owned Housing
buildings
Operating budget3; 20% of
year-end County operating
surplus
Lifecycle requirements identified through the
Asset Management Plan of existing County-
owned Social Housing related assets
including facilities, furniture, fixtures and
equipment
Paramedic Services -
Capital
To meet lifecycle financing
requirements based on Asset
Management Plan
Dedicated funding provided
by the Ministry of Health and
Long-Term Care, operating
budget and proceeds from
asset sales3
Lifecycle requirements identified through the
Asset Management Plan of existing County-
owned Paramedic Services related assets
including facilities, furniture, fixtures, vehicles
and equipment
Stormwater
To meet lifecycle financing
requirements based on Asset
Management Plan
Operating budget3
Lifecycle requirements identified through the
Asset Management Plan of existing County-
owned stormwater related assets, including
County-owned assets part of a municipal
drain
Libraries - Capital
To meet lifecycle financing
requirements based on Asset
Operating budget and
proceeds from asset sales3
Lifecycle requirements identified through the
Asset Management Plan of existing County-
2 And interest earned based on average balance
3 And interest earned based on average balance
Appendix A
Reserve and Reserve Funds
Reserve Name
Target Balance
Sources of Funding
Uses of Funding
Management Plan
owned Library related assets including
facilities, furniture, fixtures and equipment
Woodingford Lodge -
Capital
To meet lifecycle financing
requirements based on Asset
Management Plan
Operating budget and
proceeds from asset sales3
Lifecycle requirements identified through the
Asset Management Plan of existing County-
owned long-term Care related assets
including facilities, furniture, fixtures and
equipment