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<br /> 67 <br />City of Elk River <br />Notes to Basic Financial Statements <br /> <br /> <br />NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br /> <br />G. Budgetary Information (Continued) <br />On or before July 1 of each year, all departments and agencies of the City submit requests for <br />appropriation to the City's administrator so that a budget may be prepared. Before September 30, <br />the proposed budget is presented to the City Council for review and approval. The City Council holds <br />public hearings and may add to, subtract from, or change appropriations. Any changes in the budget <br />must be within the revenue and reserves estimated as available or the revenue estimates must be <br />changed by an affirmative vote by a majority of the City Council. <br /> <br />The budget is prepared by fund, function, and activity and includes information on the past year, <br />current year estimates, and requested appropriations for the next fiscal year. Expenditures may not <br />legally exceed budgeted appropriations at the fund level without Council approval. Spending control <br />is established by the amount of expenditures budgeted for the fund, but management control is <br />exercised at the department level. Reported budget amounts are as originally adopted or as <br />amended by Council approved supplemental appropriations and budget transfers. <br /> <br />NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY <br /> <br />A. Deficit Fund Balances <br />The following funds had a deficit fund balance at December 31, 2023: <br /> <br />Amount <br />Nonmajor Special Revenue <br />Multipurpose Facility 207,655$ <br />Insurance Reserve 52,165 <br />Nonmajor Capital Projects <br />TIF Districts 1,252,358 <br />Fund <br /> <br />The deficits will be funded with future charges for services, refunds and reimbursements, transfers <br />and tax increment revenue. <br /> <br />NOTE 3 – DEPOSITS AND INVESTMENTS <br /> <br />Cash balances of the City's funds that are intended to be invested on a long-term basis are combined <br />(pooled) and invested to the extent available in various investments authorized by Minnesota <br />Statutes. Each fund's portion of this pool (or pools) is displayed in the financial statements as "cash <br />and investments". For purposes of identifying risk of investing public funds, the balances and related <br />restrictions are summarized as follows. <br /> <br />A. Deposits <br />Custodial Credit Risk – Deposits: This is the risk that in the event of a bank failure, the City's <br />deposits may not be returned to it. The City (including Elk River Municipal Utilities) has an <br />investment policy in place to address custodial credit risk for deposits, stating all deposits and <br />investments must be in compliance with Minnesota Statutes § 118A, with collateralization levels of <br />110% of the market value of the principal and accrued interest. As of December 31, 2023, the City's <br />bank balance of $25,595,122 was not exposed to custodial credit risk because it was insured and fully <br />collateralized by federal depository insurance and collateral pledged. The book balance as of <br />December 31, 2023, was $27,027,395. <br /> <br />Page 188 of 464