8.1. SR 06-04-2012 - Laserfiche WebLink

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CITY OF ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 Note 2: STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY — CONTINUED On or before July 1 of each year, all departments and agencies of the City submit requests for appropriation to the City's administrator so that a budget may be prepared. Before September 15, the proposed budget is presented to the City Council for review and approval. The City Council holds public hearings and may add to, subtract from, or change appropriations. Any changes in the budget must be within the revenue and reserves estimated as available or the revenue estimates must be changed by an affirmative vote by a majority of the City Council. The budget is prepared by fund, function, and activity and includes information on the past year, current year estimates, and requested appropriations for the next fiscal year. Expenditures may not legally exceed budgeted appropriations at the fund level without Council approval. Spending control is established by the amount of expenditures budgeted for the fund, but management control is exercised at the department level. Reported budget amounts are as originally adopted or as amended by Council approved supplemental appropriations and budget transfers. Supplemental budgetary appropriations decreased $65,000 due mainly to an increase in building permit revenues offset with an increase in expenditures related to personnel adjustments. B. Excess of Expenditures Over Appropriations For the year ended December 31, 2011, expenditures exceeded appropriations in the Landfill fund by $22,438, which was funded by available fund balance. C. Deficit Fund Equity The following funds had deficit fund balances at December 31, 2011: Primary Government Capital Projects Funds Park Dedication $ 833,820 TIF Districts 225,827 The City plans to eliminate these deficits through future park dedication and tax increment fund revenues. Note 3: DETAILED NOTES ON ALL FUNDS A. Deposits and Investments Deposits Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. In accordance with Minnesota statutes, the City maintains deposits at the depository banks authorized by the City Council, all of which are members of the Federal Reserve System. Minnesota Statutes require that all City deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments as prescribed by Minnesota statutes, as well as certain first mortgage notes, and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City Treasurer or in a financial institution other than that furnishing the collateral. At year end, the City's carrying amount of deposits was $10,096,771 and the bank balance was $10,241,653. The bank balance was covered by federal depository insurance totaling $750,000 and the remaining balance was covered by securities held by the pledging financial institution's agent in the City's name. 44