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• ROUGH DRAFT <br />Reserve Policy Recommendation <br />From Councilmember Lamb <br />Reserve Policies <br />A. Purpose <br />The city will maintain reserves sufficient to provide stable funding, to provide <br />working capital, and to secure a high credit rating. <br />B. Policies <br />The city will hold no more of the taxpayers' money than is necessary. <br />The city will maintain specified Fund reserves at the level required by state statute <br />(principally TIF and Bond Funds). <br />The city will strive to maintain a total reserve equal to 75% of the previous year's <br />expenditure. <br />• The reserve will be distributed among the Funds to meet cash flow needs and in <br />anticipation of future expenditures. <br />The city will address an excessive or a deficient reserve on a rolling four-year <br />basis. <br />Reserve Worksheet: all numbers are illustrative <br />Assumptions <br />1. 2002 total budget: $3,000,000 <br />2. 2002 total reserves, EOY: $7,000,000 <br />3. 2002 reserve required by statute, EOY: $2,000,000 <br />4. 2002 "unrestricted" reserve, EOY: $5,000,000 <br />Policy Option 1: Reserve level target = 75% of expenditure and utilize a 4 year rolling <br />average <br />Statutorily Required Reserve: $2,000,000 <br />Target for "unrestricted" reserve: $2,250,000 <br />"Excess" in Reserve: $2,750,000 <br />• Target reduction; $687,5000 ($2,750,000 X .25) <br />