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ARDEN HILLS CITY COUNCIL WORK SESSION — NOVEMBER 24, 2025 7 Mayor Grant asked if this goes from year to year it should have been accounted for it in 2026 with it's full value. We don't put a contract in for less because we can recapture the base from a previous year. City Administrator Jagoe said she thinks Director Yang is saying the base budget did not include that and we are trying to capture the entire amount. Mayor Grant said it should be included in the 2026 numbers. City Administrator Jagoe said that is what is showing here because it was not captured in 2025. The budget was underfunded. Councilmember Monson understands there is a budget deficit and if we leave that hole, it will carry over. She asked what Staff what amount of the $900,000 assumption should be reserved for if another cost comes in. Finance Director Yang thinks some should be left in the reserves in case any one-time unplanned expenditures come in. Councilmember Monson wanted to know what amount can safely be used. She threw out 75% but she wants Staff s opinion on what the actual amount is. Finance Director Yang thinks it would be safe to utilize 50%. Councilmember Monson asked what other one-time fees, like the permitting software and the IT migration, Staff would recommend utilizing this money on. Finance Director Yang said we could us it for the Comp Plan. We have $60,000 in the budget for this year and $60,000 for 2027. It will be a $120,000 cost and some of this could go towards that. Councilmember Monson asked where else we should apply the money to reduce the levy. Finance Director Yang said at this point, she is trying to get a gauge on what Council is thinking in terms of how a surplus could be utilized. Staff would go through a process in June when the books are closed. At that time Council can make the decision on how to utilize the surplus. Councilmember Monson asked if Council can just say we want to use a certain amount to the general fund and this much to reduce the levy. Then we decide later how we use it. Finance Director Yang confirmed. This is in front of Council today so Council can understand what the potential surplus may be and how we want to think about it in terms of the 2026 budget. Councilmember Monson said Staff is not recommending changing anything in the 2026 budget. Finance Director Yang said we will have to wait until next year before we can make a decision. It is likely that we'll see some savings. We can utilize those savings to reduce the levy for one- time costs like the permit software or the IT server migration.