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Table 9.Cemetery Fund— Amended Budget vs. Actual FY 2018/19 FY 2018/19 Cemetery Operations Midyear Actual Variance Variance clio Beginning Balance. July 1 $200.431 $200,431 $0 0.0% Revenues 126,300 166,794 40,494 32.1% Expenses (216,702) (225.562) (8,860) 4.1% Net (90,402)' (58,768) 31,634 -35.0% Transfer In - General Fund subsidy 45,000 45,000 0 0.0% Net Income (S45,402) ($13,768) S31.634 -69.7% Ending Balance, June 30 $155,029 $186,663 $31,634 20.4% 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 Retirees Medical Reserve 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. Retirees Medical Reserve Fund. The FY 2018/19 actual revenues and expenditures reflect the 2018 OPEB actuarial study recommendations and actual retiree medical payments. As shown in Table 10 below, the actual expenditures to the Retiree Medical Reserve Fund are $572,526 less than budgeted, which is related to unused retiree medical benefits. In addition, $21.3 million of the initial $28 million allocation to the City's Section 115 Pension Trust Fund included $19.3 million from the Retiree Medical Reserve and approximately $2 million from the PERS Rate Stabilization fund that combined were invested in longer term, more aggressive investment portfolio. As part of the year-end closing, staff transferred the $2 million from the PERS Rate Stabilization fund to the Retiree Medical Reserve fund to be able to help track that investment portfolio. The FY 2019/20 midyear budget will include a new fund to house the Section 115 Pension Trust fund long-term investments. The remaining $6.7 million of the initial investment is part of the City's operating budget reserves and invested in a short-term conservative investment portfolio. As such, it will remain in the City's operating budget reserves. Page 9 of 11