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Finance Commission Minutes August 21, 2014 Page 4 of 9 to determine if these are sound financial policies based on the City's cash flow needs and recommend what to do when there is excess in these funds. Commissioner Hodder stated on page 4 of the July 8 memo, Overview of Cash Reserve Policies, the projections show a significant drop in reserves from 2014 to 2018 if nothing is done. Finance Director Miller stated this particular chart is referring to the Capital Reserves not the Operating Reserves. Chair Schroeder stated the Commission would get an update of the Capital Reserve Funds at their next meeting. Vice Chair Rohloff stated the Commission should recommend a policy to the Council for what should be done when the reserves are above the targeted goal. He suggested either having the funds transferred or spent down to reduce the levy. He stated if the City does want to have large reserves in a particular fund then the Council could increase the goal amount for that particular fund. Chair Schroeder clarified if the money was over the goal the Council could look at other funds and if there were funds that were lacking, the excess funds could be transferred there or they could use it to offset a levy increase. Commissioner Bachhuber stated the Council might not want to mandate or set in policy what to do when the funds exceed the goals. He also stated he did not agree with moving the money into funds that are low because this will interfere with the historical accounting of the funds. If the Licensing Center would like to build a new facility, then the City could look at a bond similar to other projects versus building up cash reserves. Chair Schroeder stated if the Licensing Center was saving money for a new facility, these funds should be in the Capital Funds not in the Operating Funds. The Council is asking for a recommendation from the Commission regarding the Cash Reserve Policy. She stated she is comfortable with the goals established in the policy for the different funds and the Policy should include the Council having the opportunity or option to move these excess funds to use towards the levy. Commissioner Bachhuber stated the goals of the funds should be based on the cash flow needs for each particular fund and this should not be continually changed for special needs or projects. Vice Chair Rohloff stated the City Council has the option to change the fund goals as they feel necessary and this should be included in the Policy. The Policy states the budget shall be prepared on an all resources basis. This is stating the budget is reviewed as a whole and not each individual fund so the transfer of funds between them to accommodate needs in other funds should be a recommendation.