2025 Management Report - Laserfiche WebLink

Home

The City does not have a fund balance policy in place, but has a goal to maintain a minimum unassigned fund balance of 50.0 percent of total expenditures. The following graph presents this ratio for the last five years compared to the goal: Fund Balance as a Percentage of Expenditures Year Ended December 31, 160 % 150% 140% 130% 120% 1 10% 100 % 90% 80% 70% 60% 50% 40% 2021 2022 2023 2024 2025 —4-- Fund Balance Policy 50.0% 50.0% 50.0% 50.0% 50.0% *_ Unassigned Fund Balance 49.1% 59.0% 102.5% 109.8% 143.7% As the graph illustrates, the City has met this goal by maintaining a year-end unassigned fund balance of 50.0 percent in the last four fiscal years. A government, like any organization, requires a certain amount of equity to operate. A healthy financial position allows the City to avoid volatility in tax rates; helps minimize the impact of state funding changes; allows for the adequate and consistent funding of services, repairs, and unexpected costs; and is a factor in determining the City's bond rating and resulting interest costs. A trend that is typical to Minnesota local governments, especially the General Fund of cities, is the unusual cash flow experienced throughout the year. The City's General Fund cash disbursements are spread relatively evenly throughout the year, other than the impact of seasonal services such as snowplowing, street maintenance, and recreation activities. Cash receipts of the General Fund are quite a different story. Property taxes comprise about 70.6 percent of the fund's total annual revenue. Approximately half of the City's annual property tax levy is collected and remitted to the City by the end of June and the rest by December. Consequently, cities depend on the resources this fund balance represents to provide adequate cash reserves to finance its everyday operations between these collections. -10-