prior fiscal years for operating or capital expenditures, or any other municipal purpose that the City Council deems prudent or necessary. J. Annual Adjustment of Reserve Levels Reserve levels will be adjusted annually in accordance with this policy. Reserve levels will be set at the end of each fiscal year in conjunction with the preparation of the City annual audited financial statements. K. Annual Review of Policy The City Council shall annually review the Financial Reserve Policy, and consider such changes, if any, that it deems appropriate. Such review shall occur in conjunction with the review and adoption of the annual City Budget and Capital Improvement Program. L. Comprehensive Annual Financial Report In accordance with generally accepted accounting principles and practices, all classifications of General Fund balance will appear in the Notes to Financial Statements of the Comprehensive Annual Financial Report and be classified in accordance with GASB 54. FINANCIAL RESERVES POLICY 3 of 3 COUNCIL POLICY ADOPTED 6/4/2024 126