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Flow Reserve Policy has been drafted to recognize this variable component of revenues. <br />Prior Reserve Policies established 42.5% of current expenditures as the City's necessary <br />reserve. This policy was amended in 2010 to be 50% partially in recognition of LGA <br />instability and to simplify the calculation method in place. The proposed policy <br />establishes that the City will strive to maintain a minimum unassigned fund balance in the <br />General Fund in the range of 42.5% to 65% of the subsequent year's budgeted <br />expenditures. This range represents the prior Fund Balance Policy of 42.5% plus 215% <br />allowance for variable revenue sources. The ()SA has typically recommended that the <br />General Fund cash reserve be between 35% and 50% of prior year expenditures. <br />Therefore, prior policy split the difference at 42.5 %. The additional 22.5% proposed will <br />be evaluated annually given the revenue sources anticipated for the upcoming year. <br />Finally, as LGA is migrated to a Capital Fund revenue source over the next 3 -4 years, the <br />22.5% figure can be modified. <br />Lastly, the policy states that funds in excess of the 65% reserve ceiling can be transferred <br />out to other funds. Language that specifically stated that excess amounts be transferred <br />to the General Capital Improvement Fund was considered. Currently that has been the <br />practice. The proposed policy language allows for some flexibility for any unusual <br />circumstances or opportunities that may arise. Given that, the Council has approval <br />authority over surplus transfers made annually, the authority to direct the surplus to the <br />General Capital Improvement Fund remains with the Council <br />Staff is recommending the policy he adopted. <br />Resolution for Year End Transfers (Exhibit E) <br />The resolution for year -end transfers covers the 2011 budgeted transfers along with <br />reserve fund estimated transfers. A transfer spreadsheet has been attached detailing the <br />prior year's transfer amounts. The current year's transfer amounts will be included in the <br />final resolution document presented at the workshop. Please note these transfers are the <br />typical reoccurring transfers that have been generally approved just prior to the issuance <br />of the audit. Approving transfers at this time will ensure they are recorded for year -end <br />purposes. <br />3 <br />