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(Draft January 2002) Key Financial Strategies <br /> For Elk River <br /> <br />7.5 <br /> <br />8.1 <br /> <br />8.2 <br /> <br />8.3 <br /> <br />8.4 <br /> <br />9.1 <br /> <br />9.2 <br /> <br />9.3 <br /> <br />review monthly reports comparing actual revenues and expenditures to <br />the budgeted amounts. Any negative variance in any revenue or <br />spending category (Personal Services, Supplies, Other Charges and <br />Services, Capital Outlay) for their department as a whole projected to <br />exceed $5,000 by year-end will be reported in writing to the Finance <br />Director and the City Admimstrator. <br /> <br />The City will comply with the requirements of GASB 34 by the end of <br />fiscal year 2003. <br /> <br />The City will establish and maintain reserves necessary to provide <br />adequate working capital, minimize indebtedness by accumulating <br />monies for capital investment, prevent the use of external short-term <br />borrowing by providing monies for contingencies and emergencies, and <br />provide stability in taxation and user fees. <br /> <br />Reserves in special revenue funds shall be accumulated and used solely <br />for the purposes served by the specific fund. <br /> <br />The capital improvements planning process will earmark reserves in <br />special revenue, capital project and enterprise funds to be used for <br />capital investment. <br /> <br />Subject to relevant legal constraints, reserves may be used for short-term <br />internal borrowing. <br /> <br />The balance in the General Fund is an essential part of the overall <br />financial management of the City. The General Fund balance indicates <br />the City's overall financial condition Fund balance trends point to <br />financial management practices. The Fund balance is essential in <br />financing operations. This balance is needed to provide adequate cash <br />flow during the first six months of the year, to fund unexpected, <br />unbudgeted expenditures, to provide a temporary buffer against <br />legislative actions that may reduce state aid payments, to provide <br />revenue base stabilization, and to maintain or improve the City's bond <br />rating. <br /> <br />The General Fund shall have an unreserved balance of not less than 40 <br />percent of the next year's budgeted expenditures. This calculation is <br />made at the end of each fiscal year. If the year-end fund balance exceeds <br />this threshold, the City Council will consider the need to retain the <br />excess and increase the minimum fund balance before allocating the <br />monies to other uses. <br /> <br />The unreserved balance in excess of the minimum in 9.2 shall be <br />allocated to other purposes at the discretion of the City Council. The <br />Council shall annually approve a resolution designating the use of the <br /> <br />8. Reserves <br /> <br />General Fund Balance <br /> <br />Page <br /> 19 <br /> <br /> <br />