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reconstruction or system upgrades,may need to be funded from enterprise revenue bonds. <br /> Annual utility rate reviews will be made in regard to projected operating expenses and capital <br /> • improvements. The Council will,on an annual basis,establish rates in accordance to operating <br /> cost recovery and the projected capital improvement. <br /> 9. Internal Service Funds were established to account for operations which are designed to be self- <br /> supporting from"internal"user charges. <br /> a. Risk Management Fund <br /> This fund was established to pool dividends received the City's insurance providers for <br /> positive claims experience. This funds tracks dividend revenues and deductible costs for <br /> claims. The goal of this fund is to build a fund balance that would allow the City to increase <br /> deductible limits in order to reduce premium costs. Dividends from the City's health <br /> insurance provider are also used to provide wellness programs. Funds received from the <br /> League of Minnesota Cities Insurance Trust are committed while funds received from the <br /> City's health insurance carrier are assigned. <br /> b. Engineering <br /> This fund is used to account for the provision of engineering services to development <br /> projects, infrastructure projects,and the City in general. This fund is financed predominantly <br /> through user charges both internally and externally to developers and is normally not <br /> expected to carry a fund balance at year-end. <br /> c. Central Garage and Equipment <br /> • This fund is used to account for the materials,supplies,and expenses of the Central Garage <br /> and equipment of Public Works which is comprised of the following departments; Streets, <br /> Parks,Water, Sanitary Sewer,and Surface Water Management. This fund is financed <br /> predominantly through user charges internally to the public works departments. Fund <br /> balance is assigned for the purchase,replacement,and repair of equipment and vehicles used <br /> by public works. <br /> 10. Fund balances will be assigned according to the above guidelines up to the amount available after <br /> restrictions and other commitments. This policy is not intended to require the reporting of deficit <br /> unassigned fund balances. <br /> Nonspendable Fund Balances—consists of amounts that are not in spendable form. <br /> The City has several amounts unavailable for appropriation such as: prepaid items, inventories,etc. <br /> Restricted Fund Balance and Restricted Net Assets—consists of amounts related to externally imposed <br /> constraints established by creditors,grantors or contributors;or constraints imposed by state statutory <br /> provisions. It is the portion of fund balance that is not appropriable for expenditure or is legally <br /> segregated(restricted net assets)for specific future uses. <br /> The City has several items that are legally restricted to a certain use such as: police forfeiture funds, <br /> federal and state economic development revolving loans,park dedication fees,and bond proceeds. <br /> Committed Fund Balance—consists of internally imposed constraints. These constraints are established <br /> by Resolution of the City Council. Commitments may be changed or lifted only by the government <br /> • taking the same formal action that imposed the constraint originally. <br /> P:\Finance\Policies and Procedures\Policies\Fund Balance Policy-2011.doc <br /> Adopted 11/28/2011 <br />