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Metropolitan Wastewater Management Commission ___ Budget and Program Summa <br />6. The Working Capital Reserve acts as a revolving account which is drawn down and replenished on a <br />monthly basis to fund Eugene's and Springfield's cash flow needs. <br />7. The Rate Stability Reserve is used to accumulate revenues available at year-end after the budgeted <br />Operating Reserve target is met. It is budgeted based on projected revenues and expenditures and is <br />intended to lessen the size of needed rate increases over time. <br />8. The Operating Reserve is used to account for the accumulated operating revenues net of operations <br />expenditures. The Commission has adopted a policy of maintaining a minimum Operating Reserve <br />balance approximately equal to 10% of the adopted Operating Budget. This targeted level of funding <br />provides for contingency funds in the event unanticipated expenses or revenue shortfalls occur during the <br />budget year. <br />9. The Revenue Bond Reserve was established in FY OS-O6 to recognize and record reserves required by <br />revenue bond covenants. <br />10. The Debt Service line item is the sum of interest and principal payments on the Revenue Bonds. <br />Page 12 FY OS-06 BUDGET AND CIP <br />