FINANCIAL RESERVES POLICY COUNCIL POLICY Adopted: 7/6/2004 Last Adopted: 6/4/2024 A. Fiscal stability is an important factor for all cities. Sound financial management includes the practice and discipline of maintaining adequate reserve funds for known and unknown contingencies. Such contingencies and occurrences include, but are not limited to: • Cash flow requirements • Economic uncertainties including downturns in the local, state or national economy • Local emergencies and natural disasters • Loss of major revenue source • Unanticipated operating or capital expenditures • Uninsured losses • Tax refunds • Future capital projects • Vehicle and equipment replacement • Capital asset and infrastructure repair and replacement The establishment of prudent financial reserve policies is important to ensure the long-term financial health of the City. B. Applicability This policy will apply to the City General Fund. C. Reserve Target The City will maintain a minimum reserve equal to 50% of annual General Fund operating expenditures. At least 50% of the minimum reserve balance will be designated as the reserve for Financial and Economic Uncertainty. D. Reserve for Financial and Economic Uncertainty The City will maintain a Reserve for Financial and Economic Uncertainty equal to $15 million. City Council approval shall be required before expending any portion of the Reserve for Financial and Economic Uncertainty. Unforeseen circumstances that may require an expenditure of such amounts include, but are not limited to natural disasters, unforeseen deficiencies of a major revenue source, or unexpected operating or capital expenditures. 1 of 3 124