Discretionary funds or restricted assets

2031 PLAN 2022 LONG TERM FINANCIAL

Discretionary funds or restricted assets

There are two types of reserve funds. A discretionary cash fund represents monies held in a reserve that can in reality be used for any purpose Council desires, irrespective of the reserve title. A restricted asset is a reserve that is comprised of funds, which Council is legally obliged to apply to a certain purpose. The following table summarises the nature of each reserve.

Reserve

Open space – planning, development and improvements Open space – acquisitions

Nature Statutory?

Restricted asset Yes

Restricted asset Yes

Development Contribution Plans (Council funded) Restricted asset No Native revegetation reserves Restricted asset No Keysborough maintenance levy Restricted asset No General reserve (aged care) Restricted asset No Future maintenance reserve (LXRA) Restricted asset No Major projects Discretionary fund No Self insurance Discretionary fund No Spring Valley landfill Springvale Activity Precinct parking and development Dandenong Activity Precinct parking and development Discretionary fund No

Discretionary fund No

Discretionary fund No

Strategic Direction Outcomes

1. That Council endorse the continued use of the reserve funds noted in this section.

2031 PLAN 2022 LONG TERM FINANCIAL

The tables in Appendix K highlight Council’s current and projected performance across a range of key financial performance indicators per the Local Government Performance Reporting Framework (LGPRF). These indicators provide a useful analysis of Council’s financial position and performance and should be interpreted in the context of the organisation’s objectives.

Commentary on several key sustainability indicator forecasts are provided below.

• Adjusted underlying result – After a forecast deficit result in 2020-21, Council’s underlying operational surplus is forecast to improve gradually over the next ten years, which means that Council’s overall asset base is not being eroded over the period of the strategy. It is an indicator of the sustainable operating result required to enable

Council to continue to provide core services and meet its objectives. Whilst improvement in financial performance is expected over the period, continued impacts from COVID-19 and rate capping means reliance on Council's cash reserves or increased debt to maintain services. • Working capital – The proportion of current liabilities represented by current assets.

Current assets to liabilities remain at a healthy level across all years indicating strong liquidity. • Debt compared to rates - Trend indicates Council's increasing reliance on debt against its annual rate revenue in years two, three and four due to new borrowings forecast. The debt ratio reduces again in year five and over the period remains within prudential guidelines. • Asset renewal and upgrade - This percentage indicates the extent of Council's renewal and upgrade expenditure against its depreciation charge (an indication of the decline in value of its existing capital assets). A percentage greater than 100 indicates

Council is maintaining its existing assets, while a percentage less than 100 means its assets are deteriorating faster than they are being renewed/upgraded and future capital expenditure will be required to renew/upgrade assets. Asset renewal in the 2020-21 forecast year is higher due to a number of key projects carried over from the prior year (Greater Dandenong Gallery of Art, Springvale Road Boulevard, Thomas

Carroll Pavilion and the Master Plan implementations at Dandenong Park and

Tatterson Park). The peaks in this indicator in 2022-23 and 2023-24 are due to forecast renewal works on the redevelopment of Dandenong Oasis (major project). • Rates concentration - Reflects extent of reliance on rate revenues to fund all of

Council's on-going services. Trend indicates Council will remain steadily reliant on rate revenue compared to all other revenue sources.