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Memorandum <br /> <br />Date: June 24, 2020 <br /> <br />To: Honorable Mayor and City Council Members <br /> <br />Through: Mark R. Statz, City Administrator/City Engineer <br /> <br />From: Bruce DeJong, Finance Director <br /> <br />Item: Fund Balance Policy and City Hall Renovation Finance Plan <br /> <br />City staff would like to discuss the current fund balance policy to determine if it <br />accurately reflects the level of cash reserves that the City Council would like to keep on <br />hand. It is important to understand this policy as we formulate a Financing Plan for the <br />proposed City Hall Renovation Project. <br />Policy Review <br />The current policy is included as an attachment. The relevant section for this discussion <br />reads: <br /> Unassigned fund balance represents the residual classification for the General <br />fund. Includes amounts that have not been assigned to other funds and that have <br />not been restricted, committed, or assigned to specific purposes within the General <br />fund. The General fund should be the only fund that reports a positive unassigned <br />fund balance amount. <br />i. The City will maintain an unassigned fund balance in the General fund of <br />40% to 50% of the next yearÓs budgeted expenditures of the General fund. <br />This will assist in maintaining an adequate level of fund balance to provide <br />for cash flow requirements and contingency needs because major revenues, <br />including property taxes and other government aids are received in the <br />second half of the CityÓs fiscal year. <br />There are several ways of calculating the amount of fund balance percentage, as shown <br />on the attached spreadsheet. The State Auditor calculates the fund balance as of a fiscal <br />year end. They divide the final fund balance by the final amount of expenditures in both <br />the general fund and any special revenue funds. Centerville only has the Cable TV fund <br /> of those numbers for the current year at <br /> <br />