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Staff is recommending allocating the $7.5 million surplus as follows: Table 2. Prouosed Use of General Fund Surplus Proposed Use Amount Rationale Increases FY 2021 /22 GF Reserve to General Fund Reserve $2,000,000 26% of Operating E enses Staff COVID tests, other Occupational Health support and reinstate some of the budget cuts made during the COVID Response & Recove 1,000,000 pandernic Begin to rebuild R&R reserves that were drawn down during the pandemic R&R Fund Reserves 2,000,000 to help balance the budget Begin to rebuild CIP reserves that were drawn down during the pandemic to CIP Reserves 2,501,382 help balance the budget Total $7,501,382 As described in the Table 2 above, staff is recommending allocating $6.5 million of the General Fund surplus to reserves including the operating reserve, Repair and Replacement (R&R) Fund reserves, and the Capital Improvement Program (CIP) reserve. The $2 million allocation to the General Fund reserve will increase the FY 2021/22 reserves to 26 percent of operating expenses and to 24 percent of FY 2022/23 operating expenses. The R&R and CIP reserve increases will help rebuild those reserves that were reduced in FYs 2019/20 and 2020/21 to create the Rainy Day Fund. The $1 million allocated to COVID Response and Recovery will help fund continuing costs associated with employee COVID testing and other Occupational Health support relate to COVID as well as provide funding to reinstate some of the operational budgets cut to help balance the budget during the pandemic. The $1 million will be added to the FY 2021/22 Mid -year budget. General Fund Revenues. General Fund revenues received (Actual) were greater than the midyear budget by $3.4 million or three percent. Table 3 presents the major revenue categories with a comparison of the midyear budget versus actual revenues and the variance to the midyear budget. Page 3 of 14