SEC. 9.113.5. RAINY DAY RESERVES.

(a) Beginning January 1, 2015, there shall be a City Rainy Day Reserve ("the City Reserve") and a School Rainy Day Reserve ("the School Reserve"), collectively referred to as the Rainy Day Reserves.

Allocations to the Reserves

(b) If the Controller projects that total General Fund revenues for the upcoming budget year will exceed total General Fund revenues for the current year by more than five percent, the budget shall allocate the anticipated General Fund revenues in excess of that five percent growth (the excess revenues) as follows:

1. 50 percent of the excess revenues to the Rainy Day Reserves, with 75 percent of that amount deposited to the City Reserve and 25 percent to the School Reserve;

2. 25 percent of the excess revenues to capital and other one-time expenditures; and,

3. 25 percent of the excess revenues to any lawful governmental purpose.

(c) Total monies in the City Reserve may not exceed 10 percent of actual total general fund revenues, as stated in the City's most recent independent annual audit. The budget shall allocate excess revenues that would otherwise be allocated to the City Reserve above the 10 percent cap instead to capital and other one-time expenditures.

(d) The Mayor and the Board of Supervisors may, at any time, appropriate monies from the capital and other one-time expenditures allocation for capital projects or for expenditures such as, but not limited to, acquisition of equipment or information systems.

(e) The Mayor and the Board of Supervisors may, at any time, appropriate monies from the general purpose allocation for any lawful governmental purpose.

Withdrawals from the City Reserve

(f) If the Controller projects that total General Fund revenues for the upcoming budget year will be less than the current year's total General Fund revenues, or the highest of any other previous year's total General Fund revenues, the budget may appropriate up to 50 percent of the current balance in the City Reserve, but no more than the shortfall in total General Fund revenues, for any lawful governmental purpose in the upcoming budget year.

1. If the trigger for withdrawals from the City Reserve was not met in the current year, the Controller shall calculate the shortfall for the upcoming budget year by subtracting the total projected General Fund revenues for the upcoming budget year from the total projected General Fund revenues for the current year.

2. If the trigger for withdrawals from the City Reserve was met in the current year, the shortfall shall be calculated by subtracting the total projected General Fund revenues for the upcoming budget year from the highest of any previous year's total General Fund revenues, plus two percent for each intervening year.

(g) If the City made appropriations from the City Reserve in the current year and in the immediately preceding budget year pursuant to subsection (f), the City is not required to allocate any anticipated excess revenues to the Rainy Day Reserves or to capital and other one-time expenditures for the upcoming budget year.

(h) If the Controller projects that the Consumer Price Index for the upcoming budget year shall exceed the index for the current year by more than five percent, the trigger for allocations to the Reserve as set forth in Subparagraph (b) above shall instead be the percentage of growth in the index plus two percent. If the Controller projects that the Consumer Price Index for the upcoming budget year shall be less than the index for the current year, the trigger for withdrawals from the Reserve as set forth in Subparagraph (f) above shall instead be the percentage of negative growth in the index. The Controller shall use for these purposes the San Francisco All Items Consumer Price Index for All Urban Consumers (CPI-U), or its successor, as reported by the U.S. Department of Labor's Bureau of Labor Statistics.

(i) If the Board of Supervisors or the voters take an action that changes the amount of total General Fund revenues in any material manner, such as reducing a tax or imposing a new fee, the revenue changes caused by that action will not be counted as part of the triggers for allocations to the Rainy Day Reserves or withdrawals from the City Reserve during the year or years in which the action is first implemented.

(j) In conjunction with the year-end close of the budget, the Controller shall reconcile the revenue projections triggering any budgeted allocations to or withdrawals from the Rainy Day Reserves with actual revenue results, as stated in the City's independent annual audit for the years in question, and rebalance the Rainy Day Reserves, the capital and other one-time expenditures allocation, and the general purpose allocation accordingly.

Withdrawals from the School Reserve

(k) If the San Francisco Unified School District ("SFUSD") projects that inflation-adjusted per-pupil discretionary revenues for the upcoming fiscal year will be reduced and that a significant number of layoffs would be required to balance its budget, the SFUSD Board of Education may approve, by majority vote, a draw from the School Reserve of up to 50 percent of the current balance in the School Reserve but no more than the shortfall in inflation-adjusted per-pupil discretionary revenues, as determined by the SFUSD Board of Education. Such action shall be transmitted to the Controller, who upon certification of the SFUSD calculation shall transfer such funds to the SFUSD. For purposes of this Section, allocations provided from the City to the SFUSD through the Public Education Enrichment Fund shall not be deemed discretionary.

(l) If the triggers for withdrawal from the School Reserve were met in the current fiscal year, the decline in per-pupil discretionary spending shall be calculated by subtracting the inflation-adjusted per-pupil discretionary revenues for the upcoming budget year from the highest of any previous year's inflation-adjusted per-pupil discretionary revenues.

(m) In conjunction with the year-end close of the SFUSD budget, the SFUSD shall reconcile the revenue projections triggering a budgeted withdrawal from the School Reserve with actual revenue results, as stated in the SFUSD's independent audit for the years in question. The SFUSD shall rebalance the withdrawal allocation and, if necessary, return funds required to rebalance the Reserve.

(n) Given possible changes in State school funding formulae, changes in local demographic or economic conditions, or other factors, the SFUSD may for a given fiscal year draw from the School Reserve amounts in excess of the limitations in subsection (k) or to offset revenue losses that are less than those that would otherwise permit a draw under subsections (k) and (l). Such action shall become operative for that fiscal year following approval of two-thirds of the SFUSD Board of Education and certification by the Controller of the Board of Education's action.

Transition to New Reserve Structure

(o) No later than January 1, 2015, the Controller shall transfer 50 percent of the Rainy Day Reserve existing as of that date to the City Reserve and 50 percent to the School Reserve.

Two-Year Budget

(p) The Controller shall promulgate procedures modifying the Rainy Day Reserve system, as necessary, to be consistent with the City's adoption of biennial rather than annual budgets.