Proposed Text, NL 4-6 Financial Reserves Act

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Lyubov
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Proposed Text, NL 4-6 Financial Reserves Act

Post by Lyubov »

At today's RA meeting, we voted to update NL 4-6 Financial Reserves Act. The proposed text replaces references to “city” with “CDS”. This text is posted to the Forum for public comment, in advance of a final vote on the new language at the next RA meeting, on 23 July.
NL 4-6 Financial Reserves Act

The Confederation of Democratic Simulators (CDS) shall move 1 month’s tier in USD to a separate line item (reserve account), and make those funds unavailable for other use.

Funds in the account shall be disbursed at the discretion of the RA to pay recurring expenses in the event of a sudden and unexpected drop in $USD income.

CDS shall augment this account as funds are available until it contains enough funds to pay all recurring CDS expenses for a period of two months absent other income.
Original text, https://cdsdemocracy.org/faqs/nl-4-6-fi ... erves-act/
NL 4-6 Financial Reserves Act

The city shall move 1 month’s tier in USD to a separate line item (reserve account), and make those funds unavailable for other use.

Funds in the account shall be disbursed at the discretion of the RA to pay recurring expenses in the event of a sudden and unexpected drop in $USD income.

The city shall augment this account as funds are available until it contains enough funds to pay all recurring city expenses for a period of two months absent other income.
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Sudane Erato »

I completely agree that it's surely desirable to update old laws with current terminology, for the avoidance of confusion. But in this case, while the affected bodies may have their names updated, by leaving everything else intact, and indeed actually passing the law as a currently in force dictum, we increase the confusion with no benefit that I can see.

Tan makes reference in the meeting to a post of explanation that I recently made: http://forums.slcds.info/viewtopic.php? ... ves#p48529 Please have a look, and perhaps consider the following issues.

The issue of insurance against a possible sudden drop in community revenues is REAL. It is a worthy goal to put in place a system that protects us from the consequences of such an event. But what actually are the scenarios?

1) We have a sudden drop. The Treasurer wakes up one morning and sees that the existing Rudeen US$ account runs out of money. I do in fact have a Paypal account and a credit card attached to Rudeen's account, but those are only for extreme extremity... drawing on them would be very disadvantageous. Instead, I would simply log into the community reserves account, LadyJane, and transfer the needed L$s to Rudeen, and then have Rudeen sell L$s for US$s to make up the shortfall. This is very simple. No *law* is needed.

2) We have a sudden drop. But The Treasurer does NOT notice. Some possible life event might hinder her access or awareness to the money situation for the community. THIS IS WHAT YOU NEED THIS LAW, or if not a law, at least an understood administrative procedure, to protect against.

In this situation, the designated "separate line item (reserve account)" is useless. LL withdraws its tier payments from the US$ account of the Estate Owner, OR, from some designated RL account attached to the Estate Owner. Protection against a sudden drop of revenues, where there is no intervention to correct the matter, means that the intended "reserves" must be already IN the US$ account of the Estate Owner. That is the essence of the solution of the problem which this Act addresses.

Well, as I point out in the quoted post, I already do this. But this is not exactly what this law says, so my actions are "extra-legal" and intended to comply with the intent of the law rather than its wording. Each month when I "sell L$s" for US$s I make sure that the resulting sum in the US$ account is fully twice what is needed for the coming month.

Quite honestly, if anything, the community should be considering whether I should perhaps be instructed to INCREASE the margin that I now maintain. Instead of 2 months, should it be 3 months?, 6 months? Anything that puts sufficient overhead into the Estate Owner's US$ account so that the community can coast through any unforeseen absence of The Treasurer. Remember, the current problem needing to be addressed is not lack of cash... the May report indicated that the community possesses over US$10,000 in the Rudeen account and the LadyJane account. The PROBLEM is that in extremity the money be where it's needed.

So, please... don't mandate a structure that serves no function. 1) we do not receive US$ income, we receive L$ income. 2) we already have a reserve account, with funds unavailable for ANY use, except transfer back to the Estate Owner's account when needed. 3) the RA does not customarily disburse funds "at its discretion". The RA approves the Chancellor's budget, who directs the disbursal of funds. It is assumed that the disbursal of funds to LL for tier must proceed uninterrupted. 4) the balance in the reserve fund is "augmented" by any amounts more or less what is not foreseen to be needed in the Estate Owner's account.

Please let's not add to the confusion. I suggest that we toss this law, and instead focus on the actual functions of the Estate Owner and the Treasurer and how we can put in place systems which add to the security of the community (which is what this law is intended to achieve, but doesn't).


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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Tanoujin Milestone »

Thanks for picking that up, Sudane. Before we get into drafting a text, I would like to know how many months would pass until the emergency-mechanism kicks in? You know, the dead-man button-not-touched - give-keys-to-SC thingy that makes sure we can access the money when the treasurer is hit by a bus? (knocks on wood)
I think this should determine the amount Rudeen holds as a reserve...
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Sudane Erato »

Tanoujin Milestone wrote: Thu Jul 11, 2019 1:45 am Thanks for picking that up, Sudane. Before we get into drafting a text, I would like to know how many months would pass until the emergency-mechanism kicks in? You know, the dead-man button-not-touched - give-keys-to-SC thingy that makes sure we can access the money when the treasurer is hit by a bus? (knocks on wood)
I think this should determine the amount Rudeen holds as a reserve...
Well... what are the issues... what does the community depend on me (as Treasurer) to do? Most immediately, I would think, is to ensure that sufficient $$ is in the US$ account to pay LL tier, since it doesn't get there by itself. Other than that, only routine admin things, like change EM's when requested, monthly reports on the $$, fix and/or install Casper boxes. But the really immediate answer to your question is how many months of tier resides in the US$ account.


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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Kyoko »

Good discussion.

Would it be useful to have a second person authorized to manage our Casperlet in addition to Rudeen. (And I am NOT volunteering LOL)
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Tanoujin Milestone »

Maybe, Kyoko. But even if (and I would know a person already I would trust enough), the question what we do if we lose our Treasurer goes beyond the topic at hand.

I think a law that prescribes the good practice Sudane has set up would make a lot of sense.

We would have an alarm bell then: say Rudeen holds twice our monthly fee to the Lindens for security reasons, we would know that something is wrong by watching Rudeens account balance.

Hmmm. But how can we see that without her pw? I am afraid I opened a can of worms...
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Tanoujin Milestone »

Financial Reserves Act Draft

The Treasurer maintains an Alternate Account (Avatar Name removed from Forum Modertor). This Alt holds the reserve fund which CDS has accumulated over its history. This fund can easily be identified on the monthly financial report. It is touched in special circumstances only, after approval of the Chancellor’s budget by the Representative Assembly and, since it is assumed that the disbursal of funds to Linden Lab for monthly fees must process uninterrupted, by the Treasurer to augment the US$ balance needed in the Estate Owners account (as described below).

Additionally, the Estate Owners’s Account (Avatar Name removed from Forum Modertor) holds the monthly CDS income in parcel owners’ tier and donations to the community. Each month the Treasurer sells L$s to convert them to US$s for tier payment to Linden Lab (the monthly private region fees). At that moment the Treasurer shall make sure that the amount in Avatar1’s account is fully twice [xx] what is needed for LL tier in the coming month.

In case there is a sudden dop in community revenues, the Treasurer shall notice that AVATAR1 US$ account runs out of money, log into the community reserves account - Avatar2 - and transfer the needed L$s to Avatar1. After that she shall have Avatar1 sell L$s for US$s to make up the shortfall.

If the Treasurer is absent and Linden Lab draws the fees from the US$ account of the Estate Owner - Avatar1 - the LL tier reserve held by the Estate Owner will drop accordingly until it is used up. The overhead in the EO’s account serves as insurance against force majeure keeping the Treasurer from performing her tasks.

This gives the community 2 months to appropriately react to the Treasurers absence. [reaction to be defined.]
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Lilith Ivory »

After the discussion we had at the SC meeting today I decided to omit the names of the Treasurer and EO Avatar here too (bit in a hurry)
I hope I didn´t overreact :)
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Tanoujin Milestone »

Financial Reserves Act Draft

The Treasurer maintains an Alternate Account which holds the reserve fund CDS has accumulated over its history. This fund can easily be identified on the monthly financial report. It is touched in special circumstances only, after approval of the Chancellor’s budget by the Representative Assembly and, since it is assumed that the disbursal of funds to Linden Lab for monthly fees must process uninterrupted, by the Treasurer to augment the US$ balance needed in the Estate Owners account (as described below).

Additionally, the Estate Owners’s Account holds the monthly CDS income in parcel owners’ tier and donations to the community. Each month the Treasurer sells L$s to convert them to US$s for tier payment to Linden Lab (the monthly private region fees). At that moment the Treasurer shall make sure that the amount in the Estate Owner’s account is fully twice [xx] what is needed for LL tier in the coming month.

In case there is a sudden dop in community revenues, the Treasurer shall notice that the Estate Owner’s US$ account runs out of money, log into the community reserves account and transfer the needed L$s to the EO. After that she shall have the EO sell L$s for US$s to make up the shortfall.

If the Treasurer is absent and Linden Lab draws the fees from the US$ account of the Estate Owner the LL tier overhead held there will drop accordingly until it is used up. The overhead in the EO’s account serves as insurance against force majeure keeping the Treasurer from performing her tasks.

This gives the community 2 [xx] months to appropriately react to the Treasurers absence. [reaction to be defined.]
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Rosie Gray »

Thanks very much for the draft, Tan!
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Lyubov »

Thank you Sudane and Tan!

Given the time it might take to react to an unplanned event, it does appear prudent to increase the USD reserves above two months' tier. Four months seems sufficient to me, enough to acknowledge an event, make decisions, and take action.

I also think that the Act should stipulate that total reserves must also include sufficient funds to pay for the Linden Lab mandated cost of transferring the regions to a new Estate Owner. This is a significant expense, USD 3000 for our current six regions; if these funds are not available to the community for an orderly transition to a new EO, it may prove unlikely that the regions would be transferred at all. It may be desirable to keep these funds designated for region transfer, in L$ not USD, until actually needed.
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Re: Proposed Text, NL 4-6 Financial Reserves Act

Post by Em Warden »

This is a very fruitful discussion, and we are definitely close to finding a better solution. Thank you Sudane, Tan, Lyubov, Rosie and Lilith!

As Lyubov has already pointed out- we are aware of the difficulty to find a date and time for the gathering of all citizens concerned when called for, and the time needed to decide on necessary actions (and possibly to apppoint new citizens to take responsibility). So I very much support the suggestion of financial coverage for an extended time. 4-6 months have been mentioned. I opt for 5 months as a compromise :)

I think that the new law (or some other suitable Act) should also contain the rules of appointing a new EO and Treasurer(s), in case the need occurs sometimes in the future.
...and also I wonder if the EO has to always be a "she" according to the Financial Reserves Act... :wink: (" force majeure keeping the Treasurer from performing her tasks.")

Maybe it would be a good thing to state in the Act what to do with the funded money in case the CDS is dissolved one day (God forbid). Rosie suggested earlier (at a RA meeting, I believe) that the money should go to a charity organization and not be distributed among the citizens. I strongly agree. Especially if the funds will later be big enough to cover double the time or more. If so, it is practical to even tell which CDS institution (not the Chancellor alone, please) is to choose the recieving organization; or perhaps there should rather be a referendum about it.

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