6.3. SR 03-11-2013 - Laserfiche WebLink

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• The fee structure for municipal utilities should produce a net annual surplus of revenues over expenditures after accounting for all operating costs,depreciation of capital assets and payment of debt service. • All municipal utility funds will maintain adequate cash reserves. The reserve needs vary for each municipal utility. The assessment of cash reserves should take into account future capital investments, diversity, and stability of revenues and potential for unanticipated changes in revenues and expenditures. • All utility rates should be reviewed annually to minimize the impacts of rate changes and to ensure adequate long-term funding. • Elk River Municipal Utilities will make an annual contribution to the city. The cash contribution will be based on 3% of gross electric sales within the corporate limits of the city. The City Council will determine the portion of this contribution to be allocated to the General Fund and the Equipment Replacement Fund. • The City Council will determine the chargeback to the Sewer and Garbage funds for administration of these funds. • Any other transfer of equity from a utility fund to the General Fund should only be done on a one- time exception basis, for example, to fund an unusual, unanticipated expense. In no event shall such equity transfers be made in consecutive years. Equity transfers must be approved by the City Council. CASH MANAGEMENT • The city shall pool cash balances from all funds to maximize investment earnings with an exception for legal and/or specific practical requirements that require segregation of funds. • Funds received are to be deposited into an interest-bearing account with the city's currently designated official depository by the next business day. • Cash on hand is to be kept to the minimum required to meet daily operational needs. INVESTMENTS Public funds shall be invested in a manner that provides the highest investment return,at the maximum security in conformance with all state and local statutes governing the investment of public funds while meeting the daily cash flow demands. This policy applies to all financial assets of the municipality. These funds are accounted for in the city's Annual Financial Report and include all city funds with the exception of the Water and Electric Funds, which fall under the investment policy adopted by the Elk River Utilities Commission. The standard of prudence to be used by investment officials shall be the "prudent person" standard,as defined by Minnesota Statute �356A.04, Subd. 2, and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes,provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. Financial Management Policies Page 2