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<br />~ <br />/],\~HILLS <br /> <br />MEMORANDUM <br /> <br />DATE: <br /> <br />February 20, 2008 <br /> <br />TO: <br /> <br />Honorable Mayor and City Council <br />Jim Willis, Interim City Administrator \.. J <br /> <br />Sue Iverson, Finance Director/Treasure~- <br /> <br />Fund Balance Policy <br /> <br />FROM: <br /> <br />SUBJECT: <br /> <br />Background: <br /> <br />On March 12, 2007, the Council approved formation of the Financial Planning and Analysis <br />Committee. The Council expectation of this group was to work on Financial Policies. A Fund <br />Balance Policy for Fiscal Y ear-End designations was determined to be needed. <br /> <br />Discussion: <br /> <br />We currently to not have a formal fund balance policy. The completed draft policy has been <br />designed to GASB requirements. The committee incorporated cash flow requirements and <br />designations for each fund using policies from surrounding cities and other cities of similar size. <br />Rating agencies and the auditors look for these types of policies and they strengthen your credit <br />rating. The 2006 audit did conform to this policy as the General Fund balance was 53% of the <br />next year's total operating budget. <br /> <br />This is a fiscal year-end policy for reporting purposes. The Financial Planning and Analysis <br />Committee will work further to draft and bring back for review long-range policies for reserve <br />balances. <br /> <br />Staff Recommendation: <br /> <br />Staff recommends approval of the attached Fund Balance Policy being recommended by the <br />Financial Planning and Analysis Committee. <br />