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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 />2014 2015 2016 2017 2018
<br /> Fund Bal $2,345,942 $3,082,410 $2,944,813 $3,639,317 $3,340,369
<br /> Cash Bal $2,734,366 $3,752,294 $3,506,967 $3,906,088 $3,850,270
<br /> Exp & Trans Out $4,324,507 $3,926,100 $4,940,586 $4,536,636 $5,181,629
<br />$–
<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 /> $5,500,000
<br />General Fund Financial Position
<br />Year Ended December 31,
<br />
<br />The City’s General Fund cash and investments balance at December 31, 2018 was $3,850,270 (net of
<br />borrowing), a decrease of $55,818 from the previous year. Total fund balance at December 31, 2018 was
<br />$3,340,369, a decrease of $298,948 from the prior year. This fund balance level represents approximately
<br />77 percent of the City’s annual General Fund expenditures, based on 2018 expenditure levels, which
<br />compares to a prior year fund balance level of 87 percent. The overall impact of operations on fund
<br />balance was $338,277 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 73 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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