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City of Lino Lakes, Minnesota <br />Management Report, Page 17 <br />* Avoids temporary overdrafts <br />prior to major receipts. <br />* Supplements revenues <br />with investment earnings. <br />* City may study effects of <br />revenue cuts before gradual <br />program reductions. <br />Benefits of <br />Reserves <br />* Provides resources <br />for minor projects or <br />feasability reports. <br />* Provides the City <br />greater options to deal <br />with unexpected events. <br />* Avoids overburdening <br />of annual budgets for <br />certain capital outlay. <br />The amount of General Fund reserve required to meet emergency and /or unanticipated <br />expenditures is not readily quantifiable. Rather, the level of this requirement must be <br />established by the City based on the history of the City and the philosophy of <br />"adequate" reserve coverage. <br />The reserve requirement to deal with unforeseen intergovernmental revenue reductions <br />is also difficult to quantify. State and federal legislation dealing with shared aids <br />is somewhat unpredictable. The City must strive to remain current on the effects of <br />changing legislation and budget such aids accordingly. A reserve balance in the City's <br />General Fund will mitigate the adverse effects of aid reductions which are received <br />after expenditure budget commitments are made. <br />