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11 THE CITY OF IMr1114111f1 -• -'e ' CITY COUNCIL AGENDA REPORT pL-EASA\TON December 6, 2022 Finance TITLE: ADOPT A RESOLUTION TO ACCEPT THE FY 2021/22 YEAR-END OPERATING BUDGET REPORT, ALLOCATE THE GENERAL FUND SURPLUS, AND DESIGNATE THE GENERAL FUND BALANCE SUMMARY This report presents the results of operations for the FY 2021/22 Operating Budget (Budget) and recommends designations of the General Fund reserves. This information is unaudited. The audited information will be included in the City's Annual Comprehensive Financial Report (ACFR) and will be presented to City Council once the City's independent auditor has issued its opinion on the ACFR and it has been reviewed by the Audit Committee, which is expected to occur in January or February 2023. If there are any differences in the financial information presented in this report and the ACFR as a result of the audit, those changes will be highlighted at the time the ACFR is presented to City Council for acceptance. RECOMMENDATIONS Staff recommends the City Council: 1. Adopt the attached resolution (Attachment 1) to accept the FY 2021/22 Year-end Operating Budget Report; and 2. Allocate the General Fund surplus, and designate the June 30, 2022, General Fund Balance. FINANCIAL STATEMENT The recommendation ratifies City Council's actions since the last approved budget adjustment (Mid-year Operating Budget adopted by Council on March 1 , 2022) and designates the June 30, 2022, General Fund Balances as outlined in this report. The proposed unrestricted General Fund reserves will be $22.9 million, which is 16.7 percent of the budgeted FY 2022/23 General Fund operating expenditures.' When combined with restricted and other committed General Fund reserves, the total General Fund reserves will be $42.0 million, which is 30.6 percent of FY 2022/23 General Fund operating expenditures. While this amount is greater than the 30.0 percent threshold stated in the City's reserve policy, in order to maintain a minimum unrestricted fund balance equivalent to two months of operating expenditures in the General Fund, which is a widely accepted best practice, staff recommends allowing the overall percentage to slightly exceed the threshold. As part of the FY 2023/24 and FY 2024/25 biennial budget 'The Government Finance Officers Association(GFOA)recommends maintaining an unrestricted budgetary fund balance equivalent to at least two months(16.7 percent or higher)of regular general fund operating revenues or expenditures.