3.3. SR 11-15-2010 - Laserfiche WebLink

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City of Elk River General Fund Balance Policy Purpose: It is important to establish sound financial management policies to ensure financial stability of the City of Elk River for the benefit of residents and businesses. Fund balance reserves are an important component in ensuring the overall financial health of a community, by giving the City sufficient funds to meet contingency and cash-flow timing needs. In establishing an appropriate fund balance, the City needs to consider the demands of cash flow, need for emergency reserves, ability to manage fluctuations of major revenue sources, credit rating and long-term fiscal health. Policy: • The City will maintain an unassigned General fund balance of not less than 40% of budgeted operating expenditures; however, this need could fluctuate with each year's budget objectives. • Annual proposed General fund budgets shall include this benchmark policy. Council shall review the amounts in fund balance in conjunction with the annual budget approval, and make adjustments as necessary to meet expected cash-flow needs. • In the event the unassigned General fund balance will be calculated to be less than the minimum requirement at the completion of any fiscal year, the City shall plan to adjust budget resources in the subsequent fiscal years to bring the fund balance into compliance with this policy. • The City Council may consider appropriating (for authorized purposes) year-end fund balance in excess of the policy level or increasing the minimum fund balance. An example of preferred use of excess fund balance would be for one- time expenditures, such as capital expenditures, which do not result in recurring operating costs. Appropriation from the minimum fund balance shall require the approval of the City Council and shall be used only for non-recurring expenditures, unforeseen emergencies or immediate capital needs that cannot be accommodated through current year savings. Replenishment recommendations will accompany the decision to utilize fund balance. • At the discretion of the City Council, fund balance maybe committed for specific purposes by resolution designating the specific use of fund balance and the amount. The resolution would need to be approved no later than the close of the reporting period and will remain binding unless removed in the same manner.