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City of Arden Hills <br /> April 14,2001 <br /> t Page Three <br /> It is important to maintain an adequate fund balance for the following reasons: <br /> • Expenditures are incurred somewhat evenly throughout the year. However,property tax and state aid revenues are <br /> not received until the second half of the year. An adequate fund balance will provide the cash flow required to <br /> finance the General Fund expenditures. <br /> • The City is vulnerable to legislative actions at the State and Federal level. In recent years,the State had adjusted the <br /> local government aid and property tax credit formulas and implemented levy limits. An adequate fund balance will <br /> provide a temporary buffer against those aid adjustments and levy limits. <br /> • Expenditures not anticipated at the time the annual budget was adopted may need immediate Council action. These <br /> would include capital outlay replacement,lawsuits and other items. An adequate fund balance will provide the <br /> financing needed for such expenditures. <br /> • A strong fund balance has assisted the City in determining its bond rating. The City received an AAA rating from <br /> Standard and Poors on its 1998 bond issue. <br /> A surnrnary of the 2000 operations is as follows: <br /> Variance <br /> Favorable <br /> Budget Actual (Unfavorable <br /> • Revenue $ 2,653,044 $ 2,846,543 $ 193,499 <br /> Expenditures 2,745,840 2,333,301 412,539 <br /> Excess of Revenue Over Expenditures (92,796) 513,242 606,038 <br /> Other Financing Sources(Uses) <br /> Operating transfers in 275,400 2,404 (272,996) <br /> Operating transfers out (183,750) (481,750) (298,000) <br /> Total Other Financing Sources(Uses) 91,650 (479,346) (570,996) <br /> Excess of Revenue and Other Financing <br /> Sources Over Expenditures and <br /> Other Uses $ (1.146) 33,896 $ 35,042 <br /> Fund Balance,January 1 601,394 <br /> Fund Balance,December 31 $ 635 290 <br /> • <br />