6.2. SR 04-08-2013 - Laserfiche WebLink

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Objectives ■ No change from March 11, 2013,work session review. Revenue and Expenditure ■ No change from March 11, 2013,work session review. Utilities ■ No change from March 11, 2013,work session review. Cash Management ■ No change from March 11, 2013,work session review. Investments ■ No change from March 11, 2013,work session review. Fund Balance • Staff reviewed best practices of the GFOA, State Auditor's office, and several communities in regards to reserve policies. • With the implementation of Governmental Accounting Standard Board (GASB) Statement No. 54, fund balance was reorganized into several categories: Nonspendable,Restricted, and Unrestricted. In the past, the city's practice was to transfer out any amount above the minimum to fund capital projects or other one-time expenditures. This has really helped in the replacement of capital assets and future capital assets that would otherwise need to be included in the General Fund budget. Over the past several years,with the decline in values and other variables in the budget,we have kept any amount above the minimum for discussion in the next budget cycle. With Statement No. 54 we can only assign fund balance in the General Fund that we are using for the next subsequent budget,not future budgets. During our recent audit, the auditors reviewed Statement No. 54 and the revised guidance to make sure we comply with GASB. Statement No. 54 is reprinted for your reference. Paragraph 16 of GASB Statement No. 54 16. An appropriation of existing fund balance to eliminate a projected budgetary deficit in the subsequent year's budget in an amount no greater than the projected excess of expected expenditures over expected revenues satisfies the criteria to be classified as an assignment of fund balance. As discussed in paragraph 15, assignments should not cause a deficit in unassigned fund balance to occur. What this means is that the amount above our maximum we will transfer out to a Capital Project Fund and we still have the flexibility of each budget cycle to make an annual transfer in similar to the way it may have been done in the past. • For over 20 years we have not increased our minimum amount greater than 40% of next year's budget. Maintaining fund balance in the General Fund is important to provide cash flow between revenue collections (tax settlements),tax delinquencies, tax court cases, unforeseen circumstances, capital expenditures,and a strong financial condition and credit rating. With the growth of the city and budget over those years, staff would like to discuss putting a range with a minimum and maximum percentage. Attached is a survey of AAA rated cities and their General Fund policy N:\Public Bodies\City Council\Council RCA\Agenda Packet\04-08-2013\Financialpolicyupd2tepartlLdocx