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Roseville Finance Commission Agenda Item Page 1 of 2 Memo To: Roseville Finance Commission From: Chris Miller, Finance Director Date: February 14, 2017 Re: Item #5: Continue Discussion on Establishing a Cash Reserve Fund Background At the January Finance Commission meeting, the Commission held an opening discussion on the concept of establishing a Cash Reserve Fund. The concept was based on the idea of forgoing the current practice of holding excess cash reserves in specific-purpose funds in favor of a single all-encompassing fund. A number of talking points were made during the discussion including:  The desire to more easily determine whether overall financial results produced a surplus or deficit.  The desire to more easily demonstrate the level of overall cash reserves.  The desire to be good financial stewards and re-direct excess funds to other areas to avoid unnecessarily raising taxes. During the discussion Staff noted a few concerns with moving towards a single cash reserve fund approach including:  Repurposing monies that were originally raised for specific intentions  The potential for disrupting a means of holding staff accountable for programs and assets.  The potential for de-emphasizing entrepreneurial initiatives that lead to the capture resources from non-tax or voluntary sources. To add some clarity to these concerns, I will add that under our current financial circumstances City Staff is regularly issued the challenge to find new efficiencies, create economies of scale, or capture new funding from voluntary sources. At the same time, Staff is also held accountable for creating service delivery systems that are sustainable and resilient enough to withstand future uncertainties. These efforts can result in the carrying of excess cash reserves in advance of planned initiatives that enhance programs and services. These implications should be factored in when considering whether to re-purpose excess cash reserves. It should be noted that under governmental accounting practices, the General Fund serves as the central repository for all unrestricted and undesignated monies – effectively acting as both a ‘rainy-day’ fund and ‘tax-stabilization’ fund. A cash reserve fund without a specific purpose will effectively get rolled- up into the General Fund for financial statement purposes.