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a <br /> t l <br /> City of Centerville <br /> April 14, 2000 <br /> Page Three <br /> I � 0 <br /> General Fund <br /> Overall, the fund balance increased $145,904 during 1999. The total fund balance is $1,051,596 and this is <br /> approximately 79% of current year expenditures and transfers out. We recommend fund balance be maintained at a <br /> minimum of 40% of planned expenditures and transfers out, so the current fund balance is adequate to meet working <br /> capital needs. From discussions with management it appears there are plans for the fund balance in excess of the <br /> recommended working capital minimum of 40 %. This excess could be designated to a purpose by council <br /> resolution. This would give clear indication of intended use. Fund balance should be maintained for the following <br /> reasons: <br /> Purposes and Benefits <br /> • Expenditures are incurred somewhat evenly throughout the year. However, property tax and state aid <br /> revenues are not received until the second half of the year. An adequate fund balance will provide the cash <br /> flow required to finance the General Fund expenditures. Your fund balance appears to be sufficient to <br /> provide this working capital. <br /> • The City is vulnerable to legislative actions at the State and Federal level. Recent years have seen the State <br /> adjust the local government aid and property tax credit formulas along with implementing levy Limits for some <br /> cities. An adequate fund balance will provide a temporary buffer against those aid adjustments and possible <br /> levy limits. <br /> • Expenditures not anticipated at the time the annual budget was adopted may need immediate Council action. <br /> These would include capital outlay replacement, lawsuits and other items. An adequate fund balance will <br /> provide the financing needed for such expenditures. <br /> • A strong fund balance will assist the City in maintaining or improving its bond rating. <br /> A summary of the 1999 operations is as follows: <br /> Variance - <br /> Favorable <br /> Budget Actual (Unfavorable) <br /> Revenue $ 1,212,029 $ 1,447,165 $ 235,136 <br /> Expenditures 1,089,727 1,222,194 (132.467) <br /> Excess (deficiency) of revenue over <br /> expenditures 122,302 224,971 102,669 <br /> Other financing sources (uses) <br /> Operating transfers in - 20,933 20,933 <br /> Operating transfers out (122,302) (100,000) 22302 <br /> Excess (deficiency) of revenue and <br /> other financing sources over <br /> expenditures and other financing uses $ - 145,904 <br /> Fund Balance, January 1 905,692 <br /> Fund Balance, December 31 aigaM <br />