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<br />
<br />city ofCentervi11e
<br />February 6, 2003
<br />Page Four
<br />
<br />Other Matters
<br />
<br />The following are areas that came to our attenticm. during the audit that we feel should be reviewed:
<br />
<br />FiDneia1 PositlOD and Results ofOperatioDs
<br />General Fund
<br />
<br />The general fimd is used to acc:ount for resources traditionallyaBJCiated with government, which are not required legally or
<br />by sound principal management to be accounted for in another fimd. The general fimd fimd balance increased $224,852
<br />from 2001. The fimd balance of$937,932 is 49 percent of the 2003 budgeted expenditures. We recommend the fimd
<br />balance be maintained at a level sufficient to fimd operations until the major revenue S01D'ce8 are received in June. We feel a
<br />reserve of applOxiInately 40 to 50 percent of planned expenclittn'es and transfers out is adequate to meet working capital and
<br />small emergency needs. At the current level, the fimd balance is witbh1 the range ofwhat is generally recommended as a
<br />minimmn. The State has recently indicated they may consider reviewing fimd balance reserves at local governments when
<br />adjusting the local government aid formulas. This could negatively impact the City ifreserves in excess of the amount
<br />needed for working capital are not desig....rted Designations indicate intended use offimd balance. The City should
<br />consider a formal fimd balance policy and annual designations if the general fimd is maintained at a level above the 50
<br />percent threshold.
<br />
<br />A table summarizing the general fimd balance in relation.to budget follows:
<br />
<br /> Fund
<br /> Following Balance
<br /> Fund Year as a Percent
<br />Year Balance Budget ofBudaet
<br />2002 $ 937,932 $ 1,899,469 49%
<br />2001 713,080 1,797,613 40
<br />2000 841,154 1,654,352 51
<br />1999 1,051,596 1,345,674 78
<br />1998 905,692 1,212,029 7S
<br />
<br />Fund Balance as a Percent of Next Year's Budget
<br />
<br />$2,000,000
<br />$1,800,000
<br />$1,600,000
<br />$1,400,000
<br />$1,200,000
<br />$1,000,000
<br />$800,000
<br />$600,000
<br />$400,000
<br />$200,000
<br />$-
<br />
<br /> :.::...::::.-
<br /> -
<br /> 1,345,674
<br />1,212,029 ~ 1,654,352 1,797,613 1,899,469
<br /> .....
<br />... ---.:: .----.
<br />75% 78% 'OF
<br /> 51% 40% 490At
<br />. . .
<br />
<br />1998
<br />
<br />1999
<br />
<br />2000
<br />
<br />2001
<br />
<br />2002
<br />
<br />I-+- Fund Balance - Budget I
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