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Operating Fund Reserve Policy <br /> Revised September 20, 2021 <br /> <br /> <br /> <br />The Information Technology fund will operate with positive reserve balances of 10-15% which <br />will eventually be eliminated once Metro Inet is fully established at which time, the IT function <br />will simply be a division of the General Fund. <br />Capital Project funds are identified in the Capital investment policy. Annual property tax levies <br />supply funding for the various projects and fund balances increase over time to pay for <br />equipment and infrastructure projects, the balances then drop and rebuild over time to cover the <br />next projects. <br /> <br /> For the EDA, its General Operating Fund should maintain a reserve level of 35% of the annual <br />budget to ensure that it has sufficient funds to provide for operations in-between property tax <br />collection periods. <br />In the event the minimum fund balance drops below prescribed levels, the City shall dedicate <br />new incoming property tax or program revenues (where applicable) in an amount sufficient to <br />bring fund balance levels back into compliance within three fiscal years. <br /> <br /> Unless otherwise directed by the City Council, monies held in individual Funds shall be <br />expended first from restricted fund balances, second from committed fund balances, then from <br />assigned fund balances, before using unassigned fund balance. <br /> <br />Implementation <br />All fund reserves shall be reviewed each year at the time of the annual budget preparation and at the <br />annual audit for the purpose of complying with this policy. Budgets shall be prepared on an "All <br />Resources" basis, so that the City Council and Community can readily discern the current and projected <br />management of all reserves. <br /> <br />If aggregate unrestricted reserves in the tax-supported operating funds are outside of targeted goals, the <br />Council is advised to create a plan to get reserves into targeted goal ranges by committing reserve <br />funds, using aggregate excess reserves to reduce the levy, or making appropriate budget or tax levy <br />adjustments. With the creation of the Cash Reserve Fund, certain funds will have their reserves swept <br />if they exceed the high target range, see the next section. <br /> <br />Cash Reserve Fund <br />The City has established a Cash Reserve Fund that will take the excess cash reserves from selected funds that are <br />over the maximum reserve levels as defined under this policy, less funds needed for capital expenditures or funds <br />donated to the City. The following funds are subject to the Cash Reserve Fund policy: <br /> <br /> General Fund (unrestricted portion) <br /> Parks and Recreation Fund <br /> Communication Fund <br /> Information Technology Fund <br /> License Center <br /> <br /> <br />Page 2 of 3 <br /> <br />