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Regular City Council Meeting Monday,November 28, 2011 Page 4 Finance Director Chris Miller responded that was staff's suggestion based on past experience and what they deemed to be a reasonable timeframe under any circum- stance that the City Council would choose to draw down funds. Mr. Miller used, as an example, an unforeseen circumstance such as a natural disaster where the City may have to spend excess dollars, that this would provide a procedure to re- place those funds. Given the nature of such a circumstance, Mr. Miller noted that it may be difficult for the City to replace the funds within a single year, thus staff's suggestion for three (3) years; however, he noted that this was not a man- date,but simply a guideline for replacing the funds. Councilmember McGehee opined that, while concurring with Mr. Miller's exam- ple of a natural disaster scenario and additional time that could be necessary to re- plenish the funds, if the funds were shifted around based on mismanagement or misappropriate of the City's own established policies, she didn't think that there should be a lapse of three (3) years before he funds were replaced. Mayor Roe questioned Mr. Miller if this policy would be applicable to interfund loans. Mr. Miller noted that depending on the particular circumstance, the City may take longer to pay back interfund loans and that this was intended for those situations when the City Council specifically chose to fall out of compliance with its own internal policies. Mr. Miller advised that the purpose of this policy was to allow credit lending agencies to observe that the City had a policy in place. Mr. Miller advised that the City Council could make the policy two (2) or three (3) years at their discretion, but that staff recommended three (3) years to allow sufficient flexibility. Councilmember McGehee further questioned line 171 of the policy related to how money will be expended first from restricted fund balances and second from committee fund balances; and the procedure currently followed by staff and whether that procedure was dictated by formal City Council action or at staff's discretion. Mr. Miller advised that staff followed the directives of the City Council on how the funds are expended; and that this policy simply affirmed and memorialized current practice, with no changes proposed in staff's approach to that procedure. At the request of Mayor Roe, Mr. Miller confirmed that this reporting standard by the Government Accounting Standards Board (GASB), as issued in February of 2009 under GASB Statement #54 provided documentation of current procedures being used by staff. Mayor Roe asked if there were currently any fund balances outside City Council policy, or if by the end of 2011, there would be any.