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<br />
<br />City of Centerville
<br />May 29, 2008
<br />Page 8
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<br />The purposes and benefits of a fund balance are as follows:
<br />
<br />. Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid revenues are not
<br />received until the second half of the year. An adequate fund balance will provide the cash flow required to finance the
<br />governmental fund expenditures.
<br />
<br />. The City is vulnerable to legislative actions at the State and Federal level. The State continually adjusts the local
<br />government aid and property tax credit formulas. We also have seen the State mandate levy limits for cities over 2,500
<br />in population. An adequate fund balance will provide a temporary buffer against those aid adjustments or levy limits.
<br />
<br />. Expenditures not anticipated at the time the annual budget was adopted may need immediate Council action. These
<br />would include capital outlay, replacement, lawsuits and other items. An adequate fund balance will provide the
<br />financing needed for such expenditures.
<br />
<br />. A strong fund balance will assist the City in maintaining, improving or obtaining its bond rating. The result will be
<br />better interest rates in future bond sales.
<br />
<br />The prior five years of fund balance relative to budget are presented below:
<br />
<br /> Percent
<br /> Fund General of Fund
<br /> Balance Budget Fund Balance to
<br />Year December 31 Year Budget Budget
<br />2003 $ 1,068,381 2004 $ 2,002,000 53 %
<br />2004 1,316,103 2005 2,046,000 64
<br />2005 1,549,356 2006 2,019,600 77
<br />2006 1,563,335 2007 2,177 ,200 72
<br />2007 1,435,164 2008 2,237,000 64
<br />
<br />Fund Balances as a Percent of Next Year's Budget
<br />
<br />$3,000,000
<br />
<br /> $2,177 ,200 $2,237,000
<br />-- --~
<br /> $2,002,000 $2,046,000 $2,019,600 - -
<br /> - -
<br /> - ---
<br /> -
<br /> 72% ..
<br />-- 77% 64%
<br />53% 64%
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<br />$2,500,000
<br />
<br />$2,000,000
<br />$1,500,000
<br />$1,000,000
<br />
<br />$500,000
<br />
<br />$-
<br />
<br />2003
<br />
<br />2004
<br />
<br />2006
<br />
<br />2007
<br />
<br />2008
<br />
<br />2005
<br />
<br />I~ Actual Fund Balance -Budget I
<br />
<br />952.835.9090 . Fax 952.835.3261
<br />
<br />www.aemcpas.com
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