CCP 04-08-2002 - Laserfiche WebLink

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. . . ~ ~ EN HILLS MEMORANDUM DATE: March 22,2002 TO: Joe Lynch, City Administrator FROM: Terry Post, City Accountant ~ SUBJECT: Disposition of2001 General Fund Operating Surplus Backl!round Preliminary unaudited General Fund No. 101 operating results for the year ended December 31, 2001, indicate a projected surplus of approximately $190,000. Revenues are projected to result in an approximately $335,000 positive budget variance while expenditures are projected to result in a $145,000 negative budget variance (including a $44,239 reconciliation credit from the Ramsey County Sheriffs Department). The most significant driver in the projected surplus was a $222,000 positive revenue variance in the licenses and permits revenue category. Last Year When presented with a similar set of circumstances for the year ended December 31, 2000, the City Council approved a $150,000 transfer to Municipal Land Buildings Capital Fund No. 408. Past Practices Although an operating surplus could be used for any legal purpose, prior Council actions for the disposition of surpluses could be characterized as using them for one-time (typically capital) expenditures and not for operating needs. AdeQuacv of General Fund Balance Preliminary unaudited estimates of the December 31, 2001, General Fund No. 101 fund balance is approximately $825,000 (before any operating surplus transfers out). The January I, 2000, beginning year fund balance was approximately $635,000. The preliminary fund balance after a $190,000 operating transfer would remain at $635,000. This represents approximately 24% of the budgeted 2002 expenditures ($2,628,220). A return to the year 2000 level of25% of planned next year budgeted expenditures would require a fund balance of approximately $660,000. Building the General Fund balance to this level would limit an operating transfer out to $165,000 ($190,000 surplus in 2001 less $25,000 fund balance increase).