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Regular City Council Meeting Monday,April 23,2012 Page 9 Mr. Mayer noted that, based on recommendations of the State Auditor's Office, best practices for reserves was between 35-50%, this contingency was advised due to the most significant stream received through property tax levies,with that first settlement in June, causing municipalities to use up their reserves within the first six (6) months of a year; and requiring a fund balance sufficient to stand on its own. Councilmember Pust noted that the City's reserves seemed to be high at 51%. Mr. Mayer clarified that the City's actual liquid or discretionary position overall was approximately 43% (referenced on Page 28 of the Comprehensive Financial Statement) with a total fund balance at $6.2 million, and incorporating some le- gally restricted funds of$5.91 million and the remainder unassigned fund bal- ances. Mr. Miller noted that the City's current fund balance policy was 45%; however, he noted that contractual services to other cities were included in the General Fund and those dollars were set aside for those services to accommodate fluctu- ations from year to year. Councilmember Pust questioned if those dollars took into consideration any of those contracts going away(e.g. City of Arden Hills Engineering services); with Mr. Miller clarifying that the contract was still in place; and that any accumula- tion of surplus funds would be assigned to engineering services allowing lati- tude for contracts with other communities and those fluctuations. At the request of Councilmember Pust on how much the City contracted out on an annual basis, Mr. Miller and Mr. Schwartz responded that the amount was approximately$350,000, and that the City currently had double that. Noting that the $500,000 that was referenced by Councilmember Pust was car- ried forward based on City Council actions in 2011, Mayor Roe suggested that there was a cut from the 2011 to 2012 budgets of the $, $700,000 - $800,000 added to the Capital Improvement Program, with Mr. Miller concurring and not anticipating any surplus for 2012. Councilmember Johnson sought further detail on the HRA finding regarding balances. Mr. Mayer referenced Page 3 of the Management Letter and recommended ad- justments to the fund carrying significant notes for receivable balances for low- cost housing, with the HRA the loaner of those funds and collecting those re- ceivables. Mr. Mayer clarified that the finding found balances overstated and the dollars were written down; with some dollars from Ramsey County for fed-