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Fund of $330,000. Because of the large fund balance that exists in this fund, staff recommended in the Two Year Budget that the General Fund transfer of $330,000 not be done in the 2012/13FY. Even doing this the fund balance increased by $110,832. The annual transfer is planned to be made in 2013/14FY; however, in light of the large fund balance, staff may consider a Midyear Budget amendment to forego the transfer another year to further reduce the fund balance in the Storm Drain Fund. Table 9. Storm Drain Fund — Amended Budget vs. Actual Amended Storm Drain Budget Actual S Variance %Variance Beginning Fund Balance $998,506 $998,506 $0 Plus Revenues 691,264 696,082 4,818 0.7% Less Net Transfers - - - NA Less Expenditures (930,129) (824,115) 106,014 -11.4% Ending Fund Balance $759,641 $870,473 $110,832 Change in Fund Balance ($238,865) ($128,033) $110,832 INTERNAL SERVICE FUNDS Internal Service Funds account for the financing of goods or services provided by a department to other departments on a cost-reimbursement basis. Three examples of this are the Employee Benefit Fund, the Repair and Replacement Fund and the Self Insurance Fund. These funds not only account for current year expenditures but also long term liabilities of the City. These liabilities may not result in actual expenditures in the short term, but will result in future expenditures for the future replacement of equipment or the payment in the future of employee retirement, medical benefits and unused vacation. In accordance with the City's adopted financial policies and the City's General Plan, the City recognizes costs as they accrue, and sets money aside to fund the future expenditures, rather than allowing these costs to accumulate and become a future financial burden. Employee Benefit Fund The Employee Benefit Fund (EBF) is used to account for employee benefit costs. The departments' budgets are charged for benefit expenses as a percent of salary, and the dollars then flow to the EBF, where the actual costs are recorded. For 2012/13FY, the variance in actual revenues and expenditures to budget was $88,287 as shown in Table 10. The Year-End Budget adjustment of $478,000 is due to the transfer of the implied subsidy from the retiree medical fund to the employee benefit fund to repay a portion of the PERS Side Fund Loan. The reduction in the Fund Balance is equal to the amount of the outstanding PERS Side Fund Loan paid off in July 2011 (current balance $5.5 million). The Retiree Medical Fund advanced the monies to pay off the Side Fund Loan with PERS for the Police Officers Group. The original loan was $7.8 million. It is anticipated that the loan will be repaid by 2018/19FY. Table 10 presents the activity in 2012/13FY for the Employee Benefit Fund. Page 9of11