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($548,000) for overtime, equipment and services. Staff is recommending that a net $19,000 <br />adjustment be made to transfers in to the General Fund. <br />With these recommended changes to the General Fund 1997-98 Budget, there will be a projected <br />increase of $800,000 added to the General Fund Capital Reserve. Staff is recommending that <br />these funds be left undesignated until the upcoming Operating and CIP budgets are reviewed at <br />midterm and presented to Council in June. __ <br />WATER AND SEWER OPERATING FUNDS <br />Water Maintenance and Operating (M & O) Fund <br />Water expenditures are being increased by $500,000 to reflect the Zone 7 rate increase as of <br />January 1, 1998. Revenue projections are being increased by $300,000 to reflect the pending <br />rate increase. A few other minor adjustments are being recommended. Overall, the <br />recommended adjustments result in a reduction of $98,000 in projected ending fund balance as <br />reflected in Appendix B (page 15). Actual ending fund balance last June 30, 1997 was $2.9 <br />million. Projected ending fund balance for the year ending June 30, 1998 is $2.5 million. <br />However, some of the Fund Balance represents restricted debt service reserves ($700,000). The <br />portion of the Fund Balance which relates to O & M was only $2.2 million on June 30, 1997, <br />and is projected to be only $1.8 million on June 30, 1998. In order to maintain a 10% <br />contingency and allow for a one to two months cash flow, the O & M portion should have a <br />balance of at least $2 - $3 million. Through the rate review process, staff will continue to <br />recommend that we gradually increase this reserve to a more optimal level. <br />Sewer Maintenance & O en rating (M & O) Fund <br />Appendix B (page 15) contains a recap of staff recommended budget amendments for the Sewer <br />Division in 1997-98, which will result in an increase of $87,000 in projected ending fund <br />balance. Actual ending fund balance last June 30, 1997 was $1.3 million. Projected ending <br />fund balance for the year ending June 30, 1998 is $1.4 million. This fund balance includes <br />$550,000 in restricted debt reserves. <br />ALL OTHER OPERATING FUNDS <br />Most Funds reflect some small adjustments to revenue projections, including changes to interest <br />earnings projections as outlined in Appendix C (pages 19-28). Expenditure changes are also <br />small, as reflected in Appendix B (page 15). <br />SR 98:63 <br />Page 10 <br />