Each year the City's General Fund is reviewed as part of the closing process as we near the fieldwork portion of our annual audit. The city's fund balance policy for the General Fund targets a 40 to 45 percent unassigned fund balance of the subsequent year's expenditure budget. The General Fund has an estimated fund balance of $13,043,195 as of December 31, 2017. It is only estimated at this time because there are still a couple year-end entries that need to be made. These entries are not expected to have a material effect on the ending fund balance.  Based on the policy of maintaining a 45 percent fund balance, the General Fund will end the year with approximately $1,100,000 surplus. 

In the past, any excess fund balance has been directed towards one-time events such as capital improvements and future debt service payments. This year's request is no different. Staff is requesting General Fund transfers to the City Hall Construction Fund and the Self Insurance Internal Service Fund of $500,000 and $600,000, respectively. 

As you may recall, the financing of city hall involved various transfers. Most transfers were one-time upfront transfers, but there is also long-term financing involving yearly transfers from the Building Internal Service Fund. This transfer will reduce the term and overall amount of those annual transfers from the Building Internal Service Fund.

The $600,000 transfer to the Self-Insurance Fund Internal Service Fund is specifically directed towards the transition to self-funding employee health insurance. One of the requirements of incorporating self-funding health insurance is to have a certain threshold of reserves set aside to meet potential out of pocket costs. Preliminary calculations estimate that $600,000 should sufficiently fund any potential liability.  

City staff is in the preliminary stages of considering this change to self-funding. If for some reason, the city does not move towards self-funding, the council can easily approve a transfer of these dollars to another fund.