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Attachment B Staff Recommendation As noted in previous discussions, City Staff has previously recommended that if the Council chooses to create a separate Cash Reserve fund that itbe limited to excess monies that are derived solely from the General Fund. This recommendation is rooted in a number of policy considerations which are cited below. General(Core) vs. Specific-Purpose Functions The General Fund is specifically and statutorily designated for general-purpose functions funded primarily by general-purpose (i.e. property tax) dollars.General Fund functions such as police, fire, streets, administration, etc.,typically lack the ability to recover much if any of their costs through revenue-generating initiatives. In fact, societal norms discourage attempts to generate a fee-for-service for these types of functions. As a result, Organizational responsibility to create sustainable funding (i.e. property taxes) for these functions lies primarily with the City Council. Fortunately, these funding sources are fairly reliable. In contrast, specific-purpose functions such as Parks & Recreation, Communications, Information Technology, and the License Center are associated with program-specificrevenues that have been intentionallyestablished to recover some or all of the related costs. Both the Council and Staff are encouraged to exploreentrepreneurial means to offset costs and minimize any burden on property taxpayers.This entailsa different business model whichcarries less certainty and greater risk from year- to-year because a significant funding source(s) is outside of the City’s direct control. As a result, specific-purpose funds are more likely to experience volatility in cash reserves as investments in opportunities are made, and uncertainties & added risks play out. Systematically removingexcess monies at fiscal year-enddiminishes the City’s ability to adjust the business model in response to changing circumstances. Staff believes that apreferred approach for specific-purpose funds is to monitor financial performance over an extended period of time and where applicable, determine which component of the business model needs adjustment including whether Staff is making sound decisions or fees are set too high. Unrestricted vs. Dedicated Funds As noted earlier, the cash held in the four specific-purpose funds noted above are considered unrestricted in the sense that there are no legally-imposed restrictions. However, the monies associated with these funds have been intentionally dedicated for a specific purpose for several decades or more.That intent should be considered before advocating for a different outcome. For example, Information Technology Fund monies have largely accumulated due to service fee amounts chargedto other agencies that we provide IT Support to. Those agencies are aware that were holding excess funds with the understanding that they willbe used for IT-related functions that directly benefit them.If we re-purpose these funds for non-technology initiatives, it would undermine the very trust those partneringagencies place with the City of Roseville, and we can expect them to question the fee structure that we have in place.