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REQUEST FOR COUNCIL ACTION <br /> Date: March 22, 2021 <br /> Item No.: 7.e <br />Department Approval City Manager Approval <br /> <br />Item Description: Receive the 2020 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. The following funds <br />9 have cash reserves that are above or below their target ranges. <br />10 <br />11 Parks & Recreation fund shows $235,798 below the target range of 25%. This fund currently shows a <br />12 reserve level at 20% which seems reasonable. Staff recommends that the reserve range be modified to a <br />13 low of 20% and high of 25%. (It should be noted that the Finance Commission recommended a range of <br />14 15-25% and Parks & Rec Commission recommended the target remain at 25%) <br />15 Information Technology fund shows $193,990 above the high target range of 15%. This fund currently <br />16 shows a reserve level at 21%. Based on the migration of the IT function to a standalone entity as Metro- <br />17 Inet, staff would recommend adjusting the high target rangeto 25% to retain these reserves during the <br />18 transition. <br />19 License Center fund shows $354,958 below the low target range of 10%. This fund currently shows a <br />20 deficit reserve of -10%. Staff recommends a transfer from the Cash Reserve fund to get the License <br />21 Center fund to the low reserve target. <br />22 <br />23 The General Fund, exclusive of the cash reserve fund ended the year at a 44% cash reserve level which <br />24 is a good financial sign. When the City’s Comprehensive Annual Financial Report is prepared, the Cash <br />25 Reserve Fund is rolled up with this fund, so the audit report will show a higher reserve level. <br />26 <br />27 The Communications fund ended the year with a 28% cash reserve level which is within the target range <br />28 for this fund. <br />29 <br />30 Information about other city fund balances will be included as part of the audit presentation in June. <br />31 <br />32 <br />33 <br />Page 1 of 2 <br /> <br />