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<br />GENERAL FUND
<br />
<br />The City’s General Fund accounts for the financial activity of the basic services provided to the
<br />community. The primary services included within this fund are the administration of the municipal
<br />operation, police and fire protection, building inspection, street maintenance, and parks and recreation.
<br />
<br />The graph below illustrates the change in the General Fund financial position over the last five years. We
<br />have also included a line representing annual expenditures and transfers out to reflect the change in the
<br />size of the General Fund operation over the same period.
<br />2013 2014 2015 2016 2017
<br /> Fund Bal $2,365,706 $2,345,942 $3,082,410 $2,944,813 $3,639,317
<br /> Cash Bal $2,960,646 $2,734,366 $3,752,294 $3,506,967 $3,906,088
<br /> Exp & Trans Out $4,086,640 $4,324,507 $3,926,100 $4,940,586 $4,536,636
<br />$–
<br /> $500,000
<br /> $1,000,000
<br /> $1,500,000
<br /> $2,000,000
<br /> $2,500,000
<br /> $3,000,000
<br /> $3,500,000
<br /> $4,000,000
<br /> $4,500,000
<br /> $5,000,000
<br />General Fund Financial Position
<br />Year Ended December 31,
<br />
<br />The City’s General Fund cash and investments balance at December 31, 2017 was $3,906,088 (net of
<br />borrowing), an increase of $399,121 from the previous year. Total fund balance at December 31, 2017
<br />was $3,639,317, an increase of $694,504 from the prior year. This fund balance level represents
<br />approximately 87 percent of the City’s annual General Fund expenditures, based on 2017 expenditure
<br />levels, which compares to a prior year fund balance level of 71 percent. The overall impact of operations
<br />on fund balance was $890,459 better than anticipated in the final budget.
<br />
<br />As the graph illustrates, the City has generally been able to maintain stable cash and fund balance levels
<br />as the volume of financial activity has fluctuated. This is an important factor because a government, like
<br />any organization, requires a certain amount of equity to operate. A healthy financial position allows the
<br />City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the
<br />adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining
<br />the City’s bond rating and resulting interest costs. Maintaining an adequate fund balance has become
<br />increasingly important given the fluctuations in state funding for cities in recent years.
<br />
<br />A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the
<br />unusual cash flow experienced throughout the year. The City’s General Fund cash disbursements are
<br />made fairly evenly during the year other than the impact of seasonal services, such as snowplowing, street
<br />maintenance, and park activities. Cash receipts of the General Fund are quite a different story. Property
<br />taxes comprise approximately 68 percent of the fund’s total annual revenue. Approximately half of these
<br />revenues are received by the City in July and the rest in December. Consequently, the City needs to have
<br />adequate cash reserves to finance its everyday operations between these payments.
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