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REQUEST FOR COUNCIL ACTION Date:April 27, 2020 Item No.:7.c Department Approval City Manager Approval Item Description: Consider Amending the Operating Fund Reserve Policy regarding the Cash Reserve Fund 1 B ACKGROUND 2 At the September 19, 2019 City Council joint meeting with the Finance Commission, the Council 3 asked the Finance Commission to create a policy regarding the mechanisms around the sweeping of 4 excess cash reserves from selected funds to a separate Cash Reserve Fund. As a reminder, here are 5 the funds that are subject to the Cash Reserve Fund policy and suggested reserve levels. 6 7 Operating Funds Target Low Target High 8 General (unrestricted) 35% 45% 9 Parks and Recreation 25% 25%* 10 Communications 10% 30% 11 Information Technology 10% 15% 12 License Center 10% 15% 13 14 *The target low and high range for the Parks and Recreation Fund is currently under review. The Finance Commission 15 recommended the target low and high change to 15% to 25%. The Park and Recreation Commission has reviewed this 16 proposal and expressed a desire to keep the target low and high at 25% but has not yet formally made a recommendation 17 to the City Council. Staff will work on getting their final recommendation to the City Council as soon as possible. 18 19 Over several meetings last year, the Finance Commission worked on draft language for this new 20 policy. At its January 14, 2020 meeting (Attachment A), the Finance Commission finalized its policy 21 and made the recommendation that the City Council adopt changes to the Operating Reserve policy 22 as shown in Attachment B. 23 24 The new language to the Operating Fund Reserve policy describes the new Cash Reserve Fund and 25 lists the funds that are subject to having excess reserves removed and placed into the Cash Reserve 26 Fund. The policy also states that excess reserves above the maximum reserve level for that fund (less 27 funds needed for capital expenditures and funds received as donations) shall be placed into the Cash 28 Reserve Fund. The transfer of funds would then be reported to the Finance Commission and City 29 Council. Under the policy, any expenditures from the Cash Reserve Fund must be authorized by the 30 City Council. 31 32 Finance Director Michelle Pietrick suggests changing the date of the transfer of excess funds to the st 33 Cash Reserve Fund from the March 1 date suggested by the Finance Commission to April 1. This 34 later date will give us a more definitiveyear-end balance. 35 36 Due to the change of Finance Department leadership and the COVID-19 pandemic, staff has not Page 1 of 2