CCP 05-28-1996 - Laserfiche WebLink

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I I City of Arden Hills AE[X) April 12, 1996 ~ Page Two I . CERTlclELl PUHLlC ACCOU:--;TANTS ANn O)~"SlJLTANTS I Other Matters The following are areas that came to our attention during the audit that we feel I should be reviewed: General Fund I The General Fund improved $5,682 for an ending fund balance of $486,903. Some of the more significant activities are described below. Revenue: I General property taxes - Actual revenue of $1,489,708 was $174,892 less than budget of $1,664,600. Petitions and abatements were held out of tax settlements and this caused revenue to be short. I Licenses and permits - An increase in unplanned permit activity resulted in an extra $106,479 coming in over budget. Actual revenue was $253,729 and I budget was $147,250. Expenditures: I Administrative - This department had actual expenditures of $260,690 offset . by a budget of $290,885 and this produced a favorable variance of $30,195. Staff turnover and some shifting of job duties among existing staff helped bring this variance. I Protective inspection - This department saw an unfavorable variance of $35,344. Actual expenditures were $103,674 and budget was $68,330. More work in this department was needed as the license and permit revenue . activity went up. Operating transfers out - There were $38,905 more in actual transfers than budgeted. I We believe the minimum fund balance for working capital for an entity your size should be approximately 40\ of current year expenditures. With I expenditures of approximately $1,900,000, your minimum fund balance should be around $760,000. Although your general fund balance is approximately 23\ of current year expenditures, this does not give the whole financial picture. The Permanent I Improvement Revolving Fund, with a fund balance of $4,218,525, and various reserve funds (Municipal Land and Buildings, Capital Equipment Sinking and Fire Equipment Sinking Funds) provide additional resources that help provide I working capital. Relative to cities your size, on an overall basis, the City is in excellent financial position and has the ability to finance many of its improvements. I It is important to maintain an adequate fund balance for the following reasons: I . 0 Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are not received until the second half of the year. An adequate fund balance will provide the cash flow required to finance the General Fund expenditures. I --------- ---.-