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Ms. Rossi stated the total amount over the next two years is about $9 million. Ms. McGovern asked when the City would be looking at additional personnel over and above what is predicted for the next two years. She had concerns related to additional staffing needed for Parks, and the Cultural Fire House Arts facility should it open by 2007. Mr. Fialho said that would come later. As programs come online and depending on the improvement, he would return to Council as part of the mid-term budget to request additional staff or through possible reorganization to support the services that are coming online in the City. He said this is part of the ongoing two-year review and any adjustments would be made to mid-term budget reviews. Ms. McGovern questioned the retiree medical reserve fund and whether it covers the cost. Ms. Rossi responded that an actuarial report was prepared in 2004 and the report indicated that the City was short approximately $10-12 million dollars in terms of fully funding what the City has accrued to date. Ms. McGovern asked where the City would get these funds. Ms. Rossi said these funds are part of the operating budget that the City has built in to continue to pay down the obligation and is part of what needs to be reviewed in the long-term in terms of these costs. Mr. Fialho reiterated that the City has a long-term liability and over a set period of time, money must be set aside to fund that long-term liability much like PERS is funded. The City was within a couple million dollars of fully funding the medical reserve; however, what has happened and is relayed in this budget message is that medical costs have increased beyond inflation, which has eroded the City's fiscal position as it relates to retiree medical, and the City must address this issue. Ms. McGovern asked if there was a cap on the retiree medical benefits. Mr. Fialho said there was no cap at this time. Mayor Hosterman acknowledged the $5.1 million temporary recession reserve but wondered if it would behoove the City to think in terms of setting aside additional funds. She wondered if there was an opportunity to take advantage of revenues and talk in terms of placing additional funding aside. Ms. Rossi noted that it is important to look at specific funds when talking about increasing reserves because many of these reserves increasing are part of the longer term plans such as funding the City's replacement plans. As staff monitors the economy and State budget impacts, if staff is concerned about something facing the City, staff should recommend the City start increasing its reserves as an alternative. City Council Workshop 9 06/08/05