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The next table indicates the types of fund balance and amount for 1992, when the policy was not in effect, and 1993 and 1994 when the policy was effective: Type of Fund Balance 1992 1993 1994 Designated for Working Capital/Reserved for Prepaid Expenses Designated for Compensated Absences Undesignated-Unreserved Total Fund Balance $1,122,778 $1,398,247 $1,327,969 113,041 123,078 154,782 496.970 279,649 265.594 $1,732,789 $1,800,974 $1,859,345 There has been over $550,000 transferred to the three designated funds over the past two years. If the City were to experience situations that would cause an operating deficit in 1995, or keep a potential excess low enough to create a shortage in fund balance, the policy would necessitate recovering from the three funds enough to bring fund balance into compliance. Since the three funds named above are not reliant on tax dollars, the deficit in the General Fund balance would be recovered in the same manner as excess are distributed, thus creating a "contingency" plan in the event that potential cuts in certified revenues such as LGA should not have a dramatic impact on current year operations. There had been concerns expressed over the past few months that the City would need to take drastic measures, such as delaying capital purchases in 1995, to offset pending cuts in the 1995 LGA amounts. While there is definitely reason to be concerned about cuts in these aids, it is not necessary to delay these types of purchases when the attached policy addresses those concerns, without impacting current operations. Staff Recommendation: It is staffs recommendation that the above policy be utilized to cover potential deficits in the General Fund rather than delaying capital included in the 1995 budget and to allow proceeding in the appropriate manner with the remaining capital for 1995. Committee Action: Recommend to the City Council that the above policy be utilized to cover potential deficits in the General Fund rather than delaying capital included in the 1995 budget and to allow proceeding in the appropriate manner with the remaining capital for 1995. Reviewed By: City Administrator Finance Officer FC: 03/28/95