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26 The following table provides a preliminary (unaudited) summary of the available cash reserves that could 27 be reassigned to a Cash Reserve Fund based on the Finance Commission’s recommendation: 28 29 12/31/201812/31/201812/31/2018 12/31/2018Less Available 12/31/2018AmountAmount CashFromCashReserve Above HighBelow Low Operating FundReservesDonationsReservesLevelTarget %Target % General (unrestricted portion)$ 5,103,081$ (62,803)$ 5,040,27832%$ -$ 456,689 Parks & Recreation 2,171,463 (300,612) 1,870,85138%634,968 - Communications 101,056 - 101,05619% - - Information Technology 616,458 - 616,45821%169,644 - License Center 356,665 - 356,66519% 80,990 - $ 885,602 $ 456,689 30 31 32 As shown in the table, approximately $885,000 collectively would be considered ‘excess’ under the 33 determiningcriteria noted above. However when we consider that the General Fund is approximately 34 $456,000 below the minimum target level, the ‘excess’ drops to $429,000. Even then, there are a number 35 of other potential impacts that should be considered before transferring any monies. They are identified 36 in separate sections below starting with comments related to the financial performance of selected 37 operating funds. 38 39 Financial Sustainability Impacts 40 41 General Fund 42 As depicted in the table above, the General Fund reserve amount has dropped below its recommended 43 minimum level of 35%. As it turns out, the 2018 Budget proved to be remarkably accurate with actual 44 revenues and expenditures at 99.8% of expected amounts. However, the 2018 Budget also had a planned 45 deficit of $681,000 and when coupled with the 0.2% variance we’re showing an operating loss of 46 approximately $733,000 in 2018. 47 48 The higher-than-expected loss was primarily due to higher overtime costs, added remodel of City Hall 49 space for the Roseville Historical Society, and lower contracted engineering services (revenue source) 50 provided to the City of Falcon Heights. This negative outcome is compounded by the fact that the 2019 51 Budget has a planned deficit of another $340,000. 52 53 Based on these results, the Council is asked to consider three potential courses of action: 54 55 1)Do nothing now and institute corrective measures with the 2020 Budget 56 2)Authorize an immediate transfer of cash from another fund(s) into the General Fund to 57 bring it into compliance with the Operating Fund Cash Reserve Policy before we close 58 the 2018 fiscal year. 59 3)A combination of options #1 & #2. 60 61 There are a number of policy-related issues that are now in play due to the operating results highlighted 62 above. We know with certainty that the bond rating agencies will examine the City’s 2018 financial 63 statements when they’re published later this spring. Eventually our investors will do the same. Staff 64 expects to field questions on why cash reserve levels dropped below target levels as well as how the city 65 will prevent future occurrences. 66 Page 2 of 4