6.1. SR 06-06-2016 - Laserfiche WebLink

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Financial Position and Results of Operations Our principal observations and recommendations are summarized on the following pages. These recommendations resulted from our observations made in connection with our audit of the City's financial statements for the year ended December 31, 2015. General Fund The General fund is used to account for resources traditionally associated with government, which are not required legally or by sound principal management to be accounted for in another fund. The General fund balance increased $401,196 from 2014. The fund balance of $6,564,798 is 47.3 percent of the 2016 budgeted expenditures. The total fund balance and percent of the 2015 budgeted expenditures is split between nonspendable $23,676 (0.2 percent), restricted $7,000 (0.1 percent) committed $376,943 (2.9 percent) and unassigned $6,157,179 (47.9 percent). In addition, the City's fund balance policy for the General fund identified a target minimum unassigned fund balance of 40-45 percent of the following year's budgeted expenditures and transfers out. The City has maintained this target level as illustrated on the following page. Some of the purposes and benefits of a fund balance are as follows: • Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are not received until the second half of the year. An adequate fund balance will provide the cash flow required to finance the General fund expenditures until these revenue sources are received. • Expenditures not anticipated at the time the annual budget was adopted may need immediate City Council action. These would include capital outlay replacement, lawsuits, tax court refunds, and other items. An adequate fund balance will provide the financing needed for such expenditures. • A strong fund balance will assist the City in obtaining, maintaining or improving its bond rating. The result will be better interest rates in future bond issues or refunding opportunities. -4- People +Process® Going Beyondthe Nuiiibers