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REQUEST FOR COUNCIL ACTION <br /> Date:May 11, 2020 <br /> Item No.: 7.d <br />Department Approval City Manager Approval <br /> <br />Item Description: Receive the 2019 Cash Reserve Fund Report and consider transfers to other <br />funds <br /> <br />1 B ACKGROUND <br />2 At the April 27, 2020 City Council meeting, the Operating Fund Reserve Policy was updated to reflect <br />3 the new Cash Reserve Fund(Attachment A). The policy states that excess reserves above the maximum <br />4 reserve level for that specific fund (less funds needed for capital expenditures and funds received as <br />5 donations) shall be placed into the Cash Reserve Fund. <br />6 <br />7 Identifying Excess Cash Reserves <br />8 Attachment B shows the cash reserve levels along with the targets for each fund. In accordance with the <br />9 cash reserve policy, the following amounts have been identified to be in excess of the high target reserve <br />10 level for each fund. Therefore these amounts should be transferred to the cash reserve fund. <br />11 <br />12 From Parks & Recreation $169,985 <br />13 From Communications $124,947 <br />14 From Information Technology $234,924 <br />15 From License Center$249,140 <br />16 Total Transfers to the Cash Reserve Fund $778,995 <br />17 <br />18 Information about other city fund balances will be included as part of the audit presentation in June. <br />19 <br />20 Financial Sustainability Impacts <br />21 <br />22 Based on the ongoing issues with the COVID-19 pandemic, staff recognizes that there will be revenue <br />23 shortfalls and increased unbudgeted expenses in 2020. The fund balance policies are set up to address <br />24 such unforeseen situations. <br />25 <br />26 In addition, the General Fund reserve amount at year end is below its recommended minimum level of <br />27 35% by $317,565, as shown on Attachment B. The 2019 budget predicted a use of reserves in the amount <br />28 of $340,805, so 2019 ended slightly better than anticipated. <br />29 <br />30 Based on COVID-19, reserve fund policies, and operational needs, staff recommends that the following <br />31 amounts should be transferred from the cash reserve fund: <br />32 <br />33 $317,565 to General Fund – to maintain minimum fund balance <br />34 $169,985 to Parks & Recreation Fund –to offset lost revenues <br />Page 1 of 2 <br /> <br />