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The Golf Course Operator Fund highlights include: - Ended the year with operating revenues of $4,679,462 and operating expenditures of $3,481,560 for a net income of $1,197,902 before making the annual debt service payment of $1,593,385 - Revenues exceeded the budget by $115,845 including: / Green fees $20,385 over budget estimates / Other revenues (cart fees, food and beverage, range revenue, etc.) $70,855 over budget estimates / Interest earnings $24,605 over budget estimates / 70,997 rounds of golf were played, a decrease of 3% from the prior year, but mitigated by an increase in the amount spent by player per golf round over the prior year - Expenses were $46,494 less than budgeted. The net income for FY 2007-08 and the projected income for FY 2008-09 and FY 2009-10, as well as approved reserves in the General Fund should be sufficient to pay golf bond debt service for FY 2008-09 and the next two years (FY 2009-10 & FY 2010-11), as required by policy. (The golf course debt service is funded two years in advance by accumulating reserves from net income of the golf course together with approved reserves held in the General Fund.) STORM DRAIN FUND The Storm Drain Operating Fund ended the year with a $2,320 surplus of revenues compared to expenditures which is $17,393 better than estimated in the revised budget. The General Fund budget included an operating transfer to the Storm Drain Fund of $300,000. INTERNAL SERVICE FUNDS Internal charges (accruals) are costs reflected in the operating budgets that represent liabilities we are accumulating over time. These liabilities may not result in actual expenditures in the short term, but will result in future expenditures for the future replacement of equipment we are now using (similar to charges for depreciation). They also include accruals for renovations of parks and facilities that are aging as we use them and employee costs that are accruing now but will be paid out later, such as unused vacation and benefits. In accordance with the City's adopted financial policies and the City's General Plan, the City recognizes costs as they accrue, and sets money aside to fund the future expenditures, rather than allowing these costs to accumulate and become a burden on future generations. An adjustment was necessary in the Retiree Medical Reserve Fund because the cost of employee benefits paid exceeded budget by $299,607 which was partially offset by the budget for professional services being under budget by $95,348. Consequently, the Retiree Medical Reserve Fund exceeded the budget by $204,259. By accepting the staff recommendation Council will be increasing the budget to match the expenditures. Page 7 of 9