09-11-07 FPAC Agenda - Laserfiche WebLink

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most cities keep their unreserved fund balance at between 35 and 50 percent of total IIIcurrent expenditures. This chart only examines the unreserved fund balance of the 508 cities (both large and small) that use a modified accrual basis of accounting. The remaining cities use a "cash-basis" of accounting and therefore this category would not apply. The State Auditor has concerns about the financial health of cities maintaining a fund balance below 20 percent of total current expenditures. These cities may not have enough reserves to carry them through financial downturns or unexpected contingencies. The Auditor also has concerns about cities that maintain fund balances far exceeding what is needed to carry them through financial downturns. Taxpayers in cities that have either low or high unreserved fund balances should press their local officials to explain the city's fund balance policy. For more information about unreserved fund balances please see our recent report Minnesota City Finances. FUND BALANCE % - This represents the percentage of unreserved fund balance versus total current expenditures. If a city has an unreserved fund balance of 75% as of December 31, 2003, this means that they have funds in reserve that equal 75% of what they spent that year. The State Auditor's Office recommends than most cities keep their fund balance at between 35 and 50 percent of total current expenditures. This data is not available on the chart prior to 2003, however it is available in PDF format in our 2001 and 2002 reports. 0 HEALTH - These expenditures are for the maintenance of vital statistics, restaurant inspection, communicable disease control, and various health services and clinics. HOUSING AND ECONOMIC DEVELOPMENT - These expenditures are for development and redevelopment activities in economically disadvantaged areas. GENERAL FUND - The fund used to account for all financial resources not required to be accounted for in another fund. This fund is the main operating fund. INTEREST EARNINGS - These revenues reflect interest earned on checking and savings accounts, CDs, money market funds, and bonds. This category also includes dividends. In addition, the net increase or decrease in the fair value of investments is recorded here. LICENSES AND PERMITS - These revenues reflect receipts from liquor licenses, cigarette licenses, other business licenses, street use permits, buildings permits, and other non-business licenses and permits. OTHER EXPENDITURES - These expenditures reflect the costs of activities that were not allocated to a specific function. Some activities included in this category are pension and insurance costs not allocated to a specific department. •