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File #: 180640.    Version: Name:
Type: Discussion Item Status: Passed
File created: 1/2/2019 In control: General Manager for Utilities
On agenda: 2/7/2019 Final action: 2/7/2019
Title: Gainesville Regional Utilities Cash Balance Study (B)
Attachments: 1. 180640_GRU Cash Balance Pres_20180110, 2. 180640_UAB_Justification_for_Vote_20190207, 3. 180640 GRU Cash Balance Pres Revised2 20190207, 4. 180640 GRU 2019 Cash Balance Study 20190207, 5. 180640 Cover letter study to policy 20190207


Gainesville Regional Utilities Cash Balance Study (B)



As discussed during the FY19 GRU budget presentations last summer, GRU cash balances have been deteriorating since FY15 and liquidity ratios have eroded to levels which could potentially imperil GRU’s bond ratings.  To assist us in addressing this issue, GRU has engaged its financial advisor, Public Financial Management (PFM) to conduct a Cash Balance Study (CBS). The purpose of the CBS is to establish prudent cash levels to accommodate various sources of cash flow variability as well as manage risk. The conclusions of the study are:


                     There is a preferred level or range of cash balances for GRU

                     The CBS should be periodically reviewed to reassess preferred cash levels in view of changing economic conditions as well as changes in GRU’s risk profile


The fundamental reason for developing the CBS is to identify cash levels sufficient to absorb financial variability resulting from unexpected operating results. This will facilitate GRU’s ability to establish rates that reflect long-term costs, without necessarily imposing the full impact of short-term volatilities.


This item was presented to the UAB on January 10, 2019.


Fiscal Note




The City Commission

1) receive a presentation on the Cash Balance Study and

2) approve the range of cash levels to be maintained by GRU as identified in the Cash Balance Study. 

The UAB voted unanimously to recommend that the Commission approve the staff recommendation.  Their statement of justification is included in the back-up.


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