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Reserve Policy and General Fund -Page 3 of 3 - October 21, 2011 <br />The Self Insurance Fund provides the City insurance protection against public liability cases and <br />worker's compensation claims related to injuries to City employees. The Fund's balance sheet <br />records the liability for Claims and Judgments for outstanding cases and claims. As of June 30, <br />2011, the total liability amounted to $7,931,100. In addition, as noted on the reserve worksheet, <br />the Self Insurance Fund fund balance was recorded at $308,000. <br />The preliminary year -end close for the Self Insurance Fund reflected a fund balance deficit of <br />($1,192,000). The deficit occurred as a result of significantly higher Fund expenditures in 2010- <br />11. One unanticipated cost was that case reserves for liability and workers' compensation <br />increased by $2,361,400. The City Manager authorized a transfer of $1,500,000 from the <br />General Fund fund balance to the Self Insurance Fund allowing the year -end financial statements <br />to be prepared without a fund balance deficit. <br />Staff recommends that the City Council confirm this transfer and direct that this transfer be <br />included in the mid -year budget amendment resolution to be presented to the City Council. It <br />should be noted that $3,000,000 has been transferred from the Self Insurance Fund to the <br />General Fund since 2007 -08 as a budget strategy to balance the General Fund. <br />CONCLUSION <br />Staff recommends that the Finance Committee review and approve transfers from the General <br />Fund fund balance and include this adjustment in the mid -year budget adjustment approved by <br />the City Council. The transfer to the Self Insurance Fund was approved by the City Manager to <br />facilitate the preparation of the City's 2010 -11 financial statements. This transfer should be <br />confirmed by the City Council. An additional transfer to the Economic Uncertainty reserve from <br />General Fund fund balance is recommended by staff. <br />G:AFinance CommitteeA2011- 12 \10- 21 -11 \fc memo re cc reserve policy and GF reserves as of 6- 30- 11.docx <br />