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<br /> '- <br /> \ <br /> , <br /> ff EHLERS . <br /> ",,",~ <br /> . ' .'." 't <br /> . . ~+..,,:~ & ASSOCIATES iN C <br /> '" "...,,;; <br /> . 1<( <br /> 0 To: City of Arden I-Iills <br /> ~ <br /> W From: Mark Ruff <br /> ~ Date: November 15, 2006 <br /> Subject: Update on Financial Management Plan <br /> We look forward to discussing the progress on the financial management plan with the City <br /> Council. <br /> Part of the process of a financial management is for the Council to set goals and parameters <br /> for future budgets. These goals will help guide decisions on use of budgeted, one-time, and <br /> unexpected revenues, The plan will also help prioritize capital expenditures and guide the <br /> use of debt, if any, as a tool. <br /> We wanted to raise a few issues prior to Monday's meeting for consideration: <br /> General Fund Balance: The Offiee ofthe State Auditor recommends general nmd balances <br /> of 35% to 50% of expenditures for cash flow and contingency purposes, The City is . <br /> currently at approximately 50%, which meets rating agency recommendation, The balance <br /> as a percentage will drop as the budget increases in future years, The Council may want to <br /> , consider using excess funds at the end of the each year to maintain this level. <br /> Use of Land Sale Proceeds trom the Old City HaH Site: We have preliminarily shown the <br /> majority of the expected land sale proceeds as transferred into public safety capital in <br /> anticipation of a new/renovated fire station in 2012. This may avoid the use of debt in the <br /> future, but we should discuss these options on Monday. <br /> Future Cash Flows of Streets and Equipment: Attached is a preliminary cash flow for street <br /> and capital replacement over the next ten years. The balance in this fund is expected to <br /> decline from over $6M to $3M, We look forward to a discussion on what is a reasonable <br /> minimum balance in this fund and what general fund sources should be utilizcd in the future, <br /> Establishment of Separate Capital Equipment Fund: Most cities eventually establish a <br /> separate fund for capital equipment and budget specifically for replacement of equipment out <br /> of the general fund, Our cash flows do not separate out these funding sources and uses, but <br /> we have anticipated a budget line item for equipment and would recommend a discussion on <br /> this topic. <br /> Please let us know if you need additional information <br /> LEADERS IN PUBLIC FINANCE . <br /> l' <br /> 3060 Centre Pointe Drive Phone: 651-697-8505 Fax: 651-697-8555 <br /> Roseville, MN 55113-1105 mark@ehlers-inc.com <br />