9.0. SR 05-25-1993 - Laserfiche WebLink

Home Browse Search

State auditor reports on local -fund balances ~) Cities fund balances decline, counties increase between 1990 and 1991 Sarah Hacke/( Although individual situations varied greatly among cities, those above 2,500 population reduced their fund balance total by9.2 percent between 1990 and 1991. The report, released by the Office of the State Auditor, notes, however, that over half of these 181 cities reported increases in their fund balances, and that large decreases in the fund balances of the largest cities influenced the' decrease in the total percentage change. Encouraging to cities is a state- ment in the auditor's report that defends existing fund balance levels. "W11ile the overall size of city and county general fund balances may appear large, many cities and counties e will experience serious cash flow ,- problems if the fund balances were to be reduced below their current levels." The report also notes that although "the total size of ... fund balances may appear large, the cash flow situation of counties and cities requires substantial fund balances to avoid the need for short-term borrowing." The report explains factors which contribute to cities' need for adequate fund bal- ances-the timing of state aid and property tax payments, and the dependence on these revenues for most of their funding compared to the state's ability to use multiple tax and revenue sources it collects more evenly through the year. Just how much any particular city or county may need for an adequate fund balance though, depends on State auditor's bill passes Senate . Joel Jamnik On Tuesday, the Senate gave final approval to S.F.580 (Reichgou, DFL-New Hope), the state auditor's proposal to increase the department's oversight role and to limit or modify several local government practices. The Senate adopted an amendment to sever- ance payments to highly compen- sated employees. The amendment would exempt some public manag- ers and administrators who have worked for some jurisdictions for more than 10 years. Only a handful of city employees are likely to benefit from the amendment, which the school lobby promoted. Page 6 fY1 />.1 IL/j J 1'13 Ironically, later on Tuesday the Minneapolis School Board reached a severance settlement with Superin- tendent Robert Ferrara worth $187,000. The school board's attorneys estimated that the school could have lost almost $400,000, exclusive of attorney's fees and costs, had the severance agreement not been reached. Because the settlement with Superintendent Ferrara included a $95,000 payment to release any civil claims, even if the state auditor's bill were in effect, the total settlement would only have decreased to $169,000 or $18,000 less. 0 several factors, according to tJ1C staLe auditor. Certain cities will require fund balances of 40 percent of their total current expenditures, while others with more revenues from fees, service charges, or intergovernmental grants would need lower fund balances-- perhaps 10 percent. (The report does not comment on those cities or counties with unreserved fund bal- ances of 60, 70, or even 100 percent of their current expenditures.) There is some discussion of the opportunity for cities to "delay certain payments" until they receive their aid and tax pay- ments as a means of keeping down tJ1C need for large fund balances. Some otherhighlightsJrom the report: . In 1991, unreserved fund balances for cities over 2,500 population represented approximately 18.4 percent of their total current operating expenditures; . Metro area counties and larger counties reported significant increases in their fund balances; a total of 52 counties increased their unreserved fund balance; . Thirteen cities reported no unreserved fund balance for calendar year 1991; . Cities have approximately $170.7, million in unreserved special revenue fund balances; counties had fundbalanccs of approxi- mately $372 million in their road and bridge, and welfare funds; . Two cities reported negative fund balances; seven cities reported elimination (or more) of their 1990 fund balances by 1991; . Nearly all counties in the north- west area of the state reported that their fund balances had been reduced by more than 10 percent (1990 to 1991). 0 .) *' LMC Cities Bulletin