5.7. SR 04-05-2010 - Laserfiche WebLink

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~/ Elk REQUEST FOR ACTION River To Item Number Ma or and Ci Council 5.7. Agenda Section Meeting Date Prepared by Administration Aril 5, 2010 Tim Simon, Finance Director Item Description Reviewed by 2009 Fund Balance Designations Lori ohnson, Ci Administrator Reviewed by Action Requested Approval on the 2009 unreserved, designated fund balances in the General and Severance Pay Reserve Funds. Background/Discussion Fund balance designations are presented to the City Council in accordance with the City's Financial Management Plan. Section 9.2 of the Financial Management Plan regarding General Fund balance is reprinted below for your reference. 9.2 The General Fund shall have an unreserved balance of not less than 40 percent of the next year's budgeted expenditures. This calculation is made at the end of each fiscal year. If the year-end fund balance exceeds this threshold, the City Council will consider the need to retain the excess and increase the minimum fund balance before allocating the monies to other uses. In previous years the City Council has set the unreserved, designated (fox working capital) fund balance at 41.5 percent of next year's General Fund budgeted expenditures and allocated the amount over that for capital equipment, pay adjustments, or other one-time expenditures. In 2008, the fund balance was 41.1 percent of next year's budgeted expenditures which was a slight decrease as we received our first unallotment for local government aid on December 26, 2008. The 2009 unreserved, designated fund balance has increased to 47 percent of next year's budgeted expenditures. The main reason for the increase is the anticipated reductions in 2010 revenues (LGA, MVHC), and using $325,000 of the fund balance in the 2010 budget. Overall, with the significant reductions in the governtent aids the financial condition has remained strong in the General Fund. Rating agencies (Moody's & S&P) have consistently reviewed the fund balance level in the General Fund as a financial condition of the City. As you can see in our most recent rating report, Standard and Poor's references the fund balances of the City. Maintaining a fund balance for working capital is very important to cash flow the City's General Fund between tax cycles Qune, Dec) and local government aid payments Quly, Dec). With the 2008 financial statements, the City had to implement Governmental Accounting Standards Board (GASB) statement number 45. The statement related to the accounting and reporting for postemployment benefits other than pensions (OPEB). The city has a very small OPEB liability since we only have the implicit rate subsidy. In 2008, we reviewed the actuarial calculations and our total actuarial