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The recommended actions to increase the reserve focus on that one-time transfer and move those funds into the General Fund's Temporary Recession Reserve as a preventative measure against any unforeseen impacts of the economy or State budget. He noted that the recently identified high priority capital projects approved by the City Council are either completed or under construction with budgeted funding and the $3 million being held is not programmed for any specific project. The transfer would result in a reduced CIPR balance of $1.9 million but would increase the Temporary Recession Reserve balance to $10.9 million. Mr. Culver reviewed operating reserves, both $60.3 million in unrestricted funds and another $72.5 million in restricted reserves for a combined reserve total of $132.9 million. Councilmember McGovern asked and confirmed that the restricted reserves include retired medical reserves that are insufficient to fund the long term debt and questioned the unfunded liability. Mr. Culver stated that the last actuarial evaluation identified a range of $77-118 million, depending on the interest rate earned. The actuarial evaluation is based on the assumption that funds will be placed in certain types of investments with interest rates ranging from 4-8%. Councilmember Sullivan referenced Page 7 of the staff report, noted that there is some additional anticipated revenue due to a rate adjustment in water service that has not yet been done. He commented on the dual purpose of the rate increase, as both an increase in revenues and discouragement of the overuse of water, and asked if staff will be presenting an update. Mr. Fialho estimated it would come before the Council in March or April. Councilmember Sullivan expressed support for the strategy to divert CIPR funds in the short- term. He asked what the recommended strategy is for the next two-year budget cycle. Mr. Fialho explained that the budget that comes forward will incorporate afive-year cash flow that will attempt to explain the strategy for a balanced budget while maintaining core service levels. He added that upon adoption of the General Plan, staff will present a fiscal impact analysis that will forecast expenditures over a 10-15 year planning horizon and match projected revenues that would be derived through build-out. Councilmember McGovern referred to Lions Wayside Park, its relationship with the Firehouse Arts Center and confirmed that only its design, not construction, has been funded. She noted that the CIPR balance will decrease to $1.9 million following the $3 million transfer and asked if this year could still realize the development of that section closest to the arts center. Mr. Fialho agreed and detailed the three phases of the project and their funding sources. He added that there is an expected transfer of $2.5 into the CIPR next year. Councilmember McGovern asked for clarification on the CIPR deposits, and Mr. Fialho explained that the annual General Fund contribution to the CIP may be reduced from $5 to $2.5 million in the next two-year budget. He added there is both opportunity and capacity for funds to support the Lions Wayside Park project if the City Council chooses to make it a priority. Councilmember McGovern asked and confirmed that recreation fee revenues are lower than anticipated and asked staff to follow that closely. She expressed concern that the recession is affecting families within the community to a point where they cannot participate in the City's recreational offerings. She thanked Mr. Culver for his work and suggested that staff publish the City's economic status in the Pleasanton Weekly so that they may see the value of the City's efforts. She offered several suggestions for the upcoming two-year budget including analyzing and perhaps re-evaluating property tax to fall in line with current home values and studying City Council Minutes Page 5 of 11 January 20, 2009