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ARDEN HILLS CITY COUNCIL WORK SESSION — NOVEMBER 24, 2025 9 Councilmember Weber said it will affect the long-term outlook for the PIR. An email from Administrator Jagoe had a scenario that included the $180,000 to the PIR and the splitting the projects. Finance Director Yang said it didn't include the project split. Councilmember Weber said the email stated that, so it should be clarified. He is happy to hear that because the largest shortfall we saw for the PIR fund projection in that range was $8,000. Councilmember Monson said it sounds like some of these ideas are just mathematical ways to reduce the levy. She asked what a budget adjustment is, what it would look like and provide pros and cons. Finance Director Yang said it is adjusting the budget. For example. if the expenditure budget is $1 million, we would reduce that by $120,000. That would be the amount we would be subject to utilizing that year. It just reduces the overall budget. Councilmember Monson asked how much of the $900,000 is expenditures that aren't spent. Finance Director Yang said about half of it. Councilmember Monson said it's all the same outcome, it is just a question of how we do it. Finance Director Yang said the question is, is a budget adjustment necessary or do we cut our costs by $120,000 in 2026. She doesn't know where we would cut the $120,000. If we don't increase the levy by $120,000, we will have to cut costs by that much to balance the budget. Currently the revenues are less than the expenditures. Councilmember Monson said there is a lot of confusion around how this $122,000 is calculated and why we need to fix it. If there is a deficit budget, that number doesn't just go away. We have this $122,000 deficit from 2025. We know our expenditures are going to be less than that. How does the deficit amount not get calculated? Finance Director Yang said it doesn't go away because we have to think about it as 2025 and 2026 separately. In 2025, these are one-time savings. If the revenues and expenditures both came in at 100%, we would still have a $122,000 deficit. Councilmember Monson understands it can't just go away because this is a gap that we budgeted. She asked if there is any way to close that gap without adding a levy point. Finance Director Yang said it either needs to be a levy point or we have to cut costs. Councilmember Holden said the $122,000 also dictates the 50% that we have to have as the reserve. Finance Director Yang said it doesn't because the 50% is based off of the total budgeted expenditures.