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REQUEST FOR COUNCIL ACTION <br />Date: 03/18/2019 <br />Item No.: 7b. <br />Department Approval City Manager Approval <br />Item Description: Discussion on Establishing a Cash Reserve Fund and Related Financial <br />Sustainability Impacts <br />1 B ACKGROUND <br />2 At the September 17, 2018 joint City Council-Finance Commission meeting, the Finance Commission <br />3 recommended that the City establish a Cash Reserve (cash carry-forward) Fund by reassigning excess <br />4 cash reserves that were being held in the City’s unrestricted operating funds. The recommendation was <br />5 preceded by nearly two years of on-going discussion at various Commission and City Council meetings. <br />6 <br />7 As mentioned in previous discussions, the conversation surrounding the establishment of a Cash Reserve <br />8 Fund has the potential to impact a number of wide-ranging policies, planning efforts, and funding <br />9 strategies. Some of these impacts are identified following the initial discussion on excess cash reserves. <br />10 <br />11 Identifying Excess Cash Reserves <br />12 For purposes of this exercise, we define ‘cash’as monies currently in the bank plus the net of near-term <br />13 cash collections and payouts. ‘Excess’ cash reserves are further defined as cash being held excluding the <br />14 following: <br />15 <br />16 Donations received, but not yet expended <br />17 Amounts reserved or transferredfor capital replacements <br />18 Amounts needed for day-to-day cash flow purposes <br />19 <br />20 The amount needed for cash-flow purposes is more specifically defined as the amount that exceeds the <br />21 HIGH Target cash reserve level as identified in the City’s Operating Cash Reserve Policy and as shown <br />22 in the table below: <br />23 <br />Cash Reserve Target Levels <br />TargetTarget <br />Operating FundLowHigh <br />General (unrestricted portion)35%45% <br />Parks & Recreation25%25% <br />Communications10%30%Target High revised from 25% to 30% <br />Information Technology10%15%Target High revised from 25% to 15% <br />License Center10%15%Target High revised from 25% to 15% <br />Percentages reflect the amount of cash holdings relative to the operating budget <br />24 <br />25 <br />Page 1 of 4 <br /> <br />