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REQUEST FOR COUNCIL ACTION Date: 3/3/2025 Item No.: 7.i. Department Approval City Manager Approval Item Description: Receive the 2024 Cash Reserve Fund Report and consider transfers 1 2 Background 3 The Operating Fund Reserve Policy, as revised on September 20, 2021, (Attachment 1) states that 4 excess reserves above the maximum reserve level for that specific fund (less funds needed for capital 5 expenditures and funds received as donations) shall be placed into the Cash Reserve Fund. 6 7 Identifying Excess Cash Reserves 8 Attachment 2 shows the cash reserve levels along with the targets for each fund. In accordance with the 9 cash reserve policy, the following amounts have been identified to be in excess of the high target 10 reserve level for each fund. Therefore, these amounts should be transferred to and (from) the cash 11 reserve fund. 12 13 Parks & Recreation fund $424,236 above the high target range of 30% 14 Communications Fund ($10,308) below the low target range of 10% 15 16* License Center Fund $153,352 above the high target range of 15%. 17 18 Parks and Recreation fund achieved higher than anticipated reserves as a result of higher participation 19 in various programs than were anticipated during the budget preparation. In addition, expenditures 20 came in under budget due to various costs coming in lower and staff vacancies. 21 22 License Center fund had anticipated revenues exceeding expenditures in the 2024 budget process 23 based on estimated transactions. The License Center cash reserve range is 10%-15% and the year 24 ended with an estimated 24% in reserves. Staff recommend leaving this excess in the License Center 25 fund to build reserves to help pay for preliminary costs associated with a new building. 26 27 General Fund, exclusive of the cash reserve fund, ended the year at a 31% cash reserve level, which is 28 below the minimum reserve threshold for this fund. When the City’s Comprehensive Annual Financial 29 Report is prepared, the Cash Reserve Fund is rolled up with this fund, so the audit report will show a 30 higher reserve level, currently estimated at 37%. 31 32 Communications fund ended the year with a 8% cash reserve level, which is below the minimum target 33 range set for this fund of 10%. Franchise fees came in lower than anticipated. 34 35 Information about other city fund balances will be included as part of the audit presentation in May. 36 37 Financial Sustainability Impacts 38 As noted previously, the COVID-19 pandemic demonstrated why the City has reserves and the impacts 39 that can occur from unforeseen events. The fund balance policies are set up to address such 40 unforeseen situations. The general fund reserve is set at a higher level as this fund is primarily funded Page 1 of 2 Qbhf!92!pg!242