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30, 2005 balance of $2,323,578 and the Lower Income Housing fund projected June 30, 2005 balance of $7,579,792 as reflected on page 11 of Appendix A. Ms. Rossi said page nine reflects the recommended changes. Staff has increased the beginning fund balance projections. Page ten shows what the budget looks like after making the recommended changes. She referred to page seven of Appendix A and noted that the projected June 30, 2004 fund balance was projected at $7.9 million dollars for the Lower Income Housing fund, which is slightly less than what staff had projected. She noted that development fees were not as significant as staff had projected for June 30, 2004. Ms. McGovern asked if the Retirees Medical Reserve fund of $19 million dollars is money that is set aside in an account to pay for these costs. Ms. Rossi said that in the late 80's, the accounting standards in the pdvate sector changed and required private businesses to recognize the liability for future promises it made towards retiree medical costs. Staff figured it would not be to long before the governmental accounting standards would also make this requirement, so staff started early on conducting actuarial studies to determine what the City's liability was at that point in time, which would be the liability for the future. Every two or three years, staff updates the liability amounts. The funds in the Retirees Medical Reserve fund represent the money that has been set aside towards the liability. She noted that there are two Retiree Medical Reserve funds: one is a separate fund for Livermore/Pleasanton Fire Department employees and the other is a separate fund for all non-fire employees. In total, there is $28 million dollars in reserves, which was the City's liability as of the actuarial study that was conducted by staff in 2001. This $28 million dollars is out of date, and staff is in the process of reevaluating this amount. She noted that the governmental accounting standards have changed, and beginning in the year 2008, the City will be required to show this liability. The money in the Retiree Medical Reserve funds will need to be moved to a trust fund to receive credit to show it against the City's liability. In response to an inquiry by Ms. McGovern, Ms. Rossi said that in the current year, the proposed expenditures for the Livermore Pleasanton Fire Department Retirees Medical Reserve is $333,000 and in the non-fire department employees Retirees Medical Reserve fund, the expenditures are $500,000. She pointed out that the reserves stand at $28 million dollars because the City has incurred a liability for the future. As part of the City's policy, it does not to burden future generations with a liability that has already been incurred. Mr. Brozosky mentioned that the Assisted Living Center is a project that the previous Council wanted funds to be dedicated towards. He asked if there is a separate fund for this project, or would the costs be reflected in the balance of the Lower Income Housing funds? Mr. Bocian said the predevelopment loan should be reflected in the Lower Incoming Housing funds. Contributions or the larger loan to the project would not be reflected, as Council has not approved it. Pleasanton City Council 13 01/18105 Minutes