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HomeMy WebLinkAbout5E, Fund Balance Policy City enterprise funds shall have operating cash reserves sufficient to provide for monthly cash flow, and for a reasonable level of equipment and infrastructure replacement. Major . reconstruction or system upgrades,may need to be funded from enterprise revenue bonds. Annual utility rate reviews will be made in regard to projected operating expenses and capital improvements. The Council will, on an annual basis, establish rates in accordance to operating cost recovery and the projected capital improvement. 9. Internal Service Funds were established to account for operations which are designed to be self- supporting from"internal"user charges. a. Risk Management Fund This fund was established to pool dividends received the City's insurance providers for positive claims experience. This funds tracks dividend revenues and deductible costs for claims. The goal of this fund is to build a fund balance that would allow the City to increase deductible limits in order to reduce premium costs. Dividends from the City's health insurance provider are also used to provide wellness programs. Funds received from the League of Minnesota Cities Insurance Trust are committed while funds received from the City's health insurance carrier are assigned. b. Engineering This fund is used to account for the provision of engineering services to development projects, infrastructure projects, and the City in general. This fund is financed predominantly through user charges both internally and externally to developers and is normally not expected to carry a fund balance at year-end. c. Central Garage and Equipment This fund is used to account for the materials, supplies, and expenses of the Central Garage and equipment of Public Works which is comprised of the following departments; Streets, Parks,Water, Sanitary Sewer, and Surface Water Management. This fund is financed predominantly through user charges internally to the public works departments. Fund balance is assigned for the purchase, replacement, and repair of equipment and vehicles used by public works. 10. Fund balances will be assigned according to the above guidelines up to the amount available after restrictions and other commitments. This policy is not intended to require the reporting of deficit unassigned fund balances. Nonspendable Fund Balances—consists of amounts that are not in spendable form. The City has several amounts unavailable for appropriation such as: prepaid items, inventories, etc. Restricted Fund Balance and Restricted Net Assets—consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. It is the portion of fund balance that is not appropriable for expenditure or is legally segregated(restricted net assets)for specific future uses. The City has several items that are legally restricted to a certain use such as: police forfeiture funds, federal and state economic development revolving loans,park dedication fees, and bond proceeds. PAAdmin\Council\Agendas & Packet Information\201 1\1 1-28-11 Regular\Packet Information\Fund Balance Policy-201 l.doc Adopted 11/28/2011 EN MILLS CITY OF ARDEN HILLS COUNTY OF RAMSEY STATE OF MINNESOTA FINANCIAL POLICIES- FUND BALANCE Fund Balance and Net Asset Guidelines(Fiscal Year-End) Purpose The pur-pose of this peliey is te establish guidelines feF the City of Ar-den.Nills' eempenefvts of fimd balanees .The purpose of the fund balance policies is to establish appropriate fund balance levels for each fund that is primarily supported by property tax revenues or user fees. These policies will ensure that adequate resources are available to meet cash flow needs for carrying out the regular operations of the City, as well as to meet the fund balance requirements identified in the City's Long Range Financial Management Plan The funds that will be addressed in this policy are: General Fund Cable Fund EDA Funds Equipment Building&Replacement Fund Parks Fund Public Safetv Capital Fund Permanent Improvement Revolving Fund Fund(PIR) Risk Management Fund and Enterprise Funds. Primary Policy Considerations 1. To meet the cash flow requirements of the City. 2. To maintain adequate fund balances and net assets in each individual fund of the City. 3. To provide for emergencies and contingency needs of the City. Policy Statements 1. The Finance Director as a part of the annual budget process shall prepare an analysis of this policy. The analysis shall project the status of the budget year ending fund balances and net assets. 2. The Finanee Pir-eeter-shall as a paA of the annual audit and year- end finaneial statemen The desigflations established through this pelie),shall be used in designating funds for-the year- a finaneial statement pttr- eyes The City Council authorizes the Director of Finance and PJVJ Administrative Services and/or City Administrator to assign fund balance that reflects the City's intended use of those funds. When both restricted and unrestricted resources are available for use it is the City's policy to first use restricted resources and then use unrestricted resources as they are needed When unrestricted resources are available for use it is the City's polity to use resources in the following order; 1)committed assi nom, ed. 3)unassigned. These fund balance classifications apply only to Governmental Funds not Enterprise Funds. P•\Admin\Council\A¢endas&Packet Informatidn\2011.\11-28-11 ReizularTacket Information\Fund Balance Policy-201 1.doc AF 1° 1 and P eduf s\,Pe ieies\FU Vl Last pf-i 4ed 11/10,120112!3 1 PMAdopted 11/28/2011 . 1 t lv