HomeMy WebLinkAbout07 19 20 City Council work sessionCITY COUNCIL WORKSHOP AGENDA REPORT
MEETING DATE: JULY 19, 2010
PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR
PRESENTER: JERILYN ERICKSON
TOPIC: FUND BALANCE RESERVE POLICY
DISCUSSION: Introduction
The City's 2030 Vision and Strategic Plan calls for the establishment of a
Comprehensive Financial Management Policy as one of the goals under the
vision element "Strong Financial Management." The policy should address the
City's approach to fund balances, revenues, expenditures and debt. The
discussion today will cover fund balance reserves, the first component of the
Comprehensive Financial Management Policy.
History
The City of Prior Lake currently does not have a formal Fund Balance
Reserve policy for any of its funds. In 2007, the City Council adopted
resolution 07-087 which approved the revised 2030 Vision and Strategic
Plan. Contained within this revised Plan was a goal which established the
Finance Performance Gold Standards. One of the objectives of this goal
was to "Maintain a 45% General Fund reserve balance - OSA (Office of
State Auditor) and City Auditor recommended reserve to provide adequate
cash flow, offset revenue shortfalls, provide for one-time purchases and
insurance for unforeseen catastrophic events."
The Office of the State Auditor (OSA) has recommended that each city
establish a formal policy on the level of unreserved fund balance that
should be maintained in the General Fund. The OSA also encourages the
adoption of similar policies for all other special revenue funds.
The State Auditor has taken a position on the level of unreserved fund
balance only in the general and special revenue funds, because the nature
of other governmental funds (capital projects and debt service) is such that
the fund balance is restricted for the purpose of the fund.
A workshop was held on March 15, 2010 to discuss the various issues
related to fund balance reserves: fund balance classifications, preliminary
minimum fund balance calculations for the General Fund, defining and
quantifying the emergency component, and the impact of a lower reserve
on the City's bond rating.
Current Circumstances
When drafting a Fund Balance Reserve Policy, there are a number of
factors that should be taken into account, specifically the city's revenue
streams. Funds, such as the General Fund, that rely heavily on property
taxes must maintain sufficient financial resources to cover expenditures
through the next tax revenue collection cycle. Funds that rely on state
appropriations and grants should also consider the timing and reliability of
those payments. Cities need to maintain a prudent level of financial
resources to protect against reducing service levels or raising taxes and
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fees because of temporary revenue shortfalls or unpredicted one-time
expenditures.
Other considerations include the predictability of revenues and the volatility
of expenditures. Higher levels of unreserved fund balance may be needed
if significant revenue sources are subject to unpredictable fluctuations or if
operating expenditures are highly volatile.
The adequacy of unreserved fund balance should be assessed based on
an individual city's own circumstances. Nevertheless, the State Auditor has
recommended that cities maintain unreserved fund balances in the General
Fund and special revenue funds of approximately 35 to 50 percent of fund
operating revenues or no less than five months of operating expenditures.
Such measures should be applied within the context of long-term
forecasting, thereby avoiding the risk of placing too much emphasis on the
level of unreserved fund balance at any one time.
From the March 15 workshop, Staff was directed to look at the following
issues related to the General Fund:
1) Identify the components that would be included in the calculation
of a minimum fund balance;
2) Consider the peaks and valleys of the cash flow;
3) Consider the option of borrowing from other funds for short-term
cash shortages.
Components of General Fund Minimum Fund Balance
Staff has identified five primary components of a minimum fund balance
reserve:
1) Cash flow for operating expenditures
2) Potentially volatile revenues
3) Contingency for unforeseen expenditures
4) Planned one-time uses
5) Debt service
Cash Flow for Operating Expenditures
The City receives tax settlements in June and December. For 2010,
property taxes comprise $8.5 million or 70% of the revenue sources for the
General Fund. Operating expenditures are paid for, in large part, by the
property taxes collected. In addition, non-property tax revenues contribute
to the cash flow to fund the operating expenditures. With that in mind, staff
recommends that the operating expenditure component reflect the
dependency on property taxes as a funding source at 70%.
Potentially Volatile Revenues
In addition to property taxes, the City receives revenues from other sources
including intergovernmental charges, fees for services, interest on
investments, contributions, fines, etc. Certain individual revenues comprise
a relatively small but significant percentage of the General Fund revenues.
If these revenues are discontinued or reduced, this will have a significant
impact on the City's ability to fund services. Either another funding source
will be needed to replace the lost revenue in order to continue the same
level of services or an adjustment to services will be necessary. Staff
recommends that the volatile revenue component address the revenues
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that have the greatest exposure and reflects the level of risk.
Staff believes there are a number of revenue areas that the City has the
greatest exposure for uncertainty: governmental entities (State of MN,
County); contracts for services (Fire contract with Townships); and large
contributions (SMSC).
The City receives approximately $520,000 annually from the State of
Minnesota as shown in the following table:
Municipal State Aid $ 230,000 Feb (50%), July (40%), Jan
(10%)
Police Aid $ 155,000 October (100%)
Fire Aid $ 123,000 October (100%)
PERA Aid $ 11,905 July (50%), Dec (50%)
Total $ 519,905 5% of Revenues
Staff does anticipate that the above funding sources could be reduced or
even eliminated and are susceptible to reductions because of how they are
generated (i.e. MSA is generated from taxes on fuel and motor vehicles; fire
aid and police are generated from insurance premiums). Lower tax
collections from reduced sales of fuel and motor vehicles or insurance
premiums will potentially result in lower distributions to the City.
A good example is the Market Value Homestead Credit Aid (MVHC), a
program that is supposed to be funded by the State of MN, was unallotted
for 2010, 2009 and 50% in 2008. In anticipation of an unallotment for 2010,
the City's 2010 budget included a $227,000 contra revenue for the MVHC in
property tax revenues. As market values decline, MVHC will increase.
Consequently, our exposure to a further reduction in property tax revenues
will also increase.
The City currently has fire service agreements in place with Spring Lake
Township and Credit River Township. These two agreements comprise
$348,000 or 3% of the 2010 budget. Both Townships continue to explore
their options to secure fire services with other agencies due to proximity,
cost, or other factors. The agreements include termination provisions.
The Shakopee Mdewakanton Sioux Community currently contributes
$380,000 or 3% of General Fund revenues. If the State approves
legislation authorizing a racino, the City could potentially lose some or all of
this contribution from SMSC.
Contingency for Unforeseen Expenditures
Natural and man-made disasters and other unplanned expenditures happen
regardless of all of the long-term planning that we conduct. These can be
costly and require significant resources from the City. Typically, the City
would be required to pay for all of costs associated with the cleanup, repair,
etc. and submit reimbursement requests to the appropriate agencies.
Reimbursement is not guaranteed. It will be dependent on the eligibility of
the expenses and if the agency has the funding available.
Staff recommends that the contingency component address the types of
expenditures that should be included and the estimated funding that the
City should set aside to address the potential exposure.
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Planned One-Time Uses
Staff recommends that the planned one-time uses component address the
commitments and efforts communicated by staff and council members as
having a significant and long-standing impact on improving service delivery,
achieving goals and objectives in the 2030 Vision and Strategic Plan and
addressing budget challenges. Areas currently identified include funding for
the Technology Plan, grant matching opportunities, economic development
efforts, mitigation of property tax demands, and future levy limits.
Debt Service
Staff has included the cost of debt service in the first component (operating
expenditures) for the General Fund. When addressing minimum fund
balance requirements for other fund types, this should be reflected
separately due to the dependency on fee revenue to support the debt
payments as well as the contractual reserve requirements of the bond
issue.
A chart has been included with this agenda report that reflects the five
components mentioned.
Peaks and Valleys of General Fund Cash Flows
Staff has reviewed the cash flows for the General Fund for years 2007-2009
and year-to-date 2010. The trend is comparable from one year to the next
whereas the fund balance is drawn down during January-June 15 and July-
November until the tax settlements are received in late June and early
December.
During the years 2007-2010, the fund balance has not been drawn down to
zero. If the purpose of the fund balance was only to cover cash flow for
operating expenditures, it would be reasonable to assume that the fund
balance should be at or near zero. Because the fund balance should also
reflect funding for the other components identified above, the balance will
not be at or near zero.
A chart has been included with this agenda report that reflects the General
Fund cash flows for years 2007-2009 and year-to-date 2010.
Borrowing from Other Funds for Short-Term Cash Shortages
Staff recommends that the components of a minimum fund balance reserve
be set at levels that maintain self-sufficiency for each fund. Several issues
need to be addressed prior to even considering the option of borrowing
from other funds: 1) Reserve balances have not been established for other
funds; 2) How would ashort-term (or potentially longer-term) draw-down of
fund balance reserves impact the long-term operating plans that have been
adopted; 3) How will the fund balance be replenished if the interfund loan
cannot be repaid in the short-term; and 4) A policy has not been
established for interfund borrowing that addresses when it would be
appropriate to use this tool, interest rates to be charged, etc.
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Conclusion
Staff has prepared a draft Comprehensive Financial Management Policy. A
copy has been included with this agenda report. The draft policy identifies
the purpose of having such a policy, policy areas and corresponding
objectives. Even though the draft includes language which addresses fund
balance reserves for other types of funds, the primary focus of the
workshop will be the General Fund. Later this fall, Staff will be bringing
forth long-term operating plans for Water, Sewer and Water Quality at
which time recommendations will be made for the reserves in those funds.
The primary focus of the workshop is to receive direction on the following:
1) Are the components identified appropriate in scope and amount for
the General Fund?
2) Does the policy language sufficiently address other criteria:
• Establishing a target fund balance percentage;
• Reserve expenditure criteria;
• Absolute minimum percentage;
• Replenishment of reserve.
3) How would the Council like to proceed on adopting a policy?
• Adopt policy for General Fund Reserves only;
• Adopt policy when all fund balance reserves have been
addressed;
• Adopt policy when all policy areas have been addressed
(reserves, revenues, expenditures, debt and financial
reporting);
• Time frame for adopting a policy.
4) Other issues as determined by the Council.
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COMPREHENSIVE FINANCIAL MANAGEMENT POLICY
ORIGIN -The City's 2030 Vision and Strategic Plan calls for the establishment of a
Comprehensive Financial Management Policy in its Vision, as one of ten Vision Elements and
as a Goal
The Vision: "STRONG FINANCIAL MANAGEMENT -The people of Prior Lake have a powerful vision
and great hopes for the community's future. For the 2030 Vision to become a reality, the City must
ensure that there is financial confidence in the City and that financial resources are available, in the
amount and within appropriate time frames, to fund the operating and capital costs associated with
implementing the Strategic Plan regardless of the pace of development. Financial strength includes
always assuring that financial resources are used to achieve r77 ~ximum value for the lowest reasonable
expenditure needed to achieve the 2030 Vision"- 2030 Vision and Strategic Plan, adopted November
9, 2009
Vision Element: "Strong Financial Management,"one of tl~e ten vision elements of the 2030 Vision
and Strategic Plan (2030 VSP), represents an area of strategic im~~ortance that must be addressed to
make the 2030 VSP a reality.
Goal: "Establish a comprehensive financial management policy which addrPSSes the City's approach to
fund balances, revenues, expenditures and debt."
PURPOSE
The Comprehensive Financial Management Policy serves three main purposes:
1) To draw together in a single document.the City's major financial policies;
2) To establish principles to guide both staff and Council members to make consistent and
informed financial decisions.
3) To inform the citizenry that the City is a prudent steward of their resources.
POLICY AREAS
The Comprehensive Financial Management Policy establishes City policy in the following
areas:
1) Reserves
2) Revenues (to be added in the future)
3) Expenditures (to be added in the future)
4) Debt (to be added in the future)
5) Financial Planning & Reporting (to be added in the future)
(Financial Performance Standards; interim reporting)
COMPREHENSIVE FINANCIAL MANAGEMENT POLICY - CITY OF PRIOR LAKE (DRAFT - 2010.07.19. Page 1
OBJECTIVES OF THIS POLICY
^ To provide both short-term and .long-term financial stability to city government by ensuring
adequate funding for providing services and protecting infrastructure needed by the
community today and for years to come;
^ To protect the City Council's policy-making ability by ensuring that important policy decisions
are not constrained by financial problems or local, state, regional or national emergencies;
^ To provide sound financial principles to guide the decisions of the City Council and City
management;
^ To create a document that City management and City Council members can refer to when
engaged in financial planning, day to day decision making, budget preparation and other
financial management endeavors.
1. RESERVES
The goal of the City Council in establishing a Reserve Policy is to ensure the long-term economic stability
of the organization by providing sufficient funds for cash flow purposes, to accumulate savings for
projects (one-time and grant-matching opportunities), anti to have reserves for unexpected revenue
shortfalls or emergencies, while providing a specific plan for increasing or decreasing the level of fund
balance as appropriate. In creating this policy, the City Council expressly acknowledges that a key
element in sound financial management is having a reserve at all times. This policy seeks to establish
parameters for the reserves so it is neither larger- than needed nor less than desirable and based upon
financial and management analysis and principles.
A. GENERAL FUND
The City will maintain a General Fund reserve Balance at a level which that takes into
consideration the following:
^ six months of projected operating expenditures recognizing that an increasingly larger
share of the General Fund is dependent upon property taxes and that this trend is likely
to continue;
~recogniz+n« that a portion of the expenditures is funded bynon-property tax
r eve n ryes;
^ potentially volatile revenue sources recognizing that the City is dependent upon others
in large funding categories of state aid, township fire agreements and SMSC
contributions;
property tax collections;
state aids such as Market Value Homestead Credit;
voluntary contribution from SMSC;
agreements with other entities such as Township Fire Agreement.]
^ contingency for unforeseen natural or man-made disasters and emergencies which will
require advance payment by the City without any guarantee of repayment by the
federal government or an insurer;
(snow & ice contra!, oak wilt, emerald ash borer, etc.)
COMPREHENSIVE FINANCIAL MANAGEMENT POLICY -CITY OF PRIOR LAKE (DRAFT) - 2010.07.19 Page 2
^ savings for one-time expenditures and grant matching opportunities which become
available but require immediate liquidity to take advantage of;
(Technology Plan & Facilities Management Plan; Economic Development seed
money.]
^ debt service for market referenda debt obligations;
(Fire Station 1 & 2, park and library improvements]
^ impact on City's bond rating;
^ status of public retirement systems and understanding that as an employer the City has
a statutory obligation to fund unforeseen deficits.
Reserve Amount
Based on the above criteria, the goal would be to maintain a minimum General Fund
balance of 45%; however, this need could fluctuate with each year's budget objectives and
appropriations such as large capital expenditures, ar~d variations in the collections of
revenues. This amount is consistent with the expertise and official opinion of the
Minnesota State Auditor and the City's independent auditing firm.
Reserve Expenditure Criteria
The City Council may consider the judicious use of reserve- balances in the following
situations:
^ to fund an expenditure of significant long-tenY~ benefit or legacy to the community
^ to fund aone-time (non-recurring) expenditure or grant matching opportunity
^ to fund aone-time unplanned revenue shortfall
^ to fund an unplanned expenditure due to an erl~ergency or disaster
^ to moderate a property tax increase
Reserve minirnurn: In no case will the reserve be allowed to fall below 40%.
The City Council recognizes that any such funds may be appropriated for non-recurring
expenditures as they represent prior year surpluses that may or may not materialize in
sr~bsequent fiscal years. This should only be considered after reviewing the long-term
financial plan to ensure that short-term decisions are not compromising the long-term
viability of the Fund.
Replenishment of Reserve
In the event that the yearend reserve balance is projected to be less than the target level
due to the use of reserve balances for purposes identified above, a plan must be presented
at the time the reserve funds are appropriated that will reestablish the target level within 12
months.
Should the Fund Balance Reserve amount fall below the 45% targeted level, the City Council
must approve and adopt a plan to restore this balance to the target level within 12 months.
If restoration of the reserve cannot be accomplished within such period without severe
hardship to the City, then the City Council will establish a different time period.
COMPREHENSIVE FINANCIAL MANAGEMENT POLICY- CITY OF PRIOR LAKE (DRAFT) - 2010.07.19 Page 3
B. ECONOMIC DEVELOPMENT AUTHORITY FUND
The City will strive to maintain a fund balance within the EDA Fund, a Special Revenue Fund,
in order to meet both anticipated and unanticipated future economic development needs.
The City will maintain a reserve balance at a level which that takes into consideration the
following:
^ professional services needed to conduct market surveys;
^ significant funding which may be required for acquisition of land for development
opportunities;
^ potential relocation costs or legal costs attributable to economic development actions;
^ anticipated or unanticipated environmental concerns or impacts.
(soil contamination) '
Included for discussion purposes only:
^ EDA Special Revenue
C. OTHER SPECIAL REVENUE FUNDS
The City will maintain reserves in the Special Revenue Funds at levels sufficient to provide
working capital for current expenditure needs plus an amount of cash that is estimated to
be needed to meet legal restrictions and pay for future capital, projects. Future capital
projects must he identified and quantified in a written finance plan for the fund, which shall
be included in the City's annual Capital Improvement Program document.
Included for dial-ussion E~urpose ;only:
^ Cable Franchi~ e Fun ,~
^ Capita! Perk Fund
^ ~'e'/F'fd!"1C'F' C,O!71;:?CIIS~: ilOf;
^ Er_;ol~ Gev FeU~ral P,evolving Loan Fund
^ Edon Dev MN Revch~in~/ Loan F,Inr!
^ C~e~~eloperAgreement Fund
D. ENTERPRISE FUNDS AND CAPITAL FUNDS
The City will maintain reserves in Enterprise and Capital Funds at levels sufficient to provide
adequate working capital for current. expenditure needs, for the replacement of capital
assets within the fund over their estimated useful life, and to pay for future capital projects.
Future capital projects must be identified and quantified in a written finance plan for the
fund, which shall be included in the City's annual Capital .Improvement Program document.
The City will maintain a reserve balance at a level which that takes into consideration the
following:
^ Three months of projected operating expenditures
(revenues are generated on a bimonthly basis]
COMPREHENSIVE FINANCIAL MANAGEMENT POLICY -CITY OF PRIOR LAKE (DRAFT) - 201 Q. 07.19 Page 4
^ potentially volatile revenue sources
jcansumption is dependent on weather conditions)
^ contingency for unforeseen natural or man-made disasters and emergencies
(watermain or sewer repairs; contamination intakes)
^ savings for one-time expenditures and grant matching opportunities
jReconstruction apportunities with County, State or Federal funding)
^ debt service obligations
jWater Treatment Facility & Maintenance Facility)
^ impact on City's bond rating
Included for discussion purposes only (Enterprise Funds):
^ Water Fund
^ Sewer Fund
^ Water Quality Fund
^ Transit Fund
Included for discussion purposes only (Capital Fur~ci is
^ Downtown Revaluing Fund
^ Tax Increment
^ TIF 1 3
^ TIF 3 1
^ TIF 41
^ TIF 5 1
^ TIF 6 1
^ Revolving Equit?n;c~~ Fun,~+
^ Building Funcl
^ Revolving Pt:; i~ Equir~n~r~n` r~rr?d
^ Construction F~ i ~ ~ ~l
^ Trunk ReseniA Funr_l
E. MONITORING AND REPORTING
The City Manager ar~d Finance Director shall annually prepare a report documenting the
status of the fund balance with this policy and present it to the City Council in conjunction
with the development of the annual budget and/or other long-term financial planning
documents. Should the report disclose there are unreserved, undesignated funds available,
a recommendation"for use of said funds shall be presented to the City Council in the report.
The City will annually review the adequacy of the reserve balances.
COMPREHENSIVE FINANCIAL MANAGEMENT POLICY- CITY OF PRIOR LAKE (DRAFT) - 2090.07.19 Page 5
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City of Prior Lake
COUNCIL WORKSHOP 07.19.2010
General Fund
2010 General Fund Revenues/Expenses2010 General Fund Ending Cash
201020102010201050.0% of 2010
$7,000,000
RevenueExpenseNetEnding Cash Balance$ 12,120,546 $3,500,000
January 245,263.41 753,948.95 (508,685.54) 5,542,175.22 6,036,756.00$6,000,000
$3,000,000
February 313,405.78 646,626.02 (333,220.24) 5,238,606.69 6,036,756.00
$5,000,000
$2,500,000
March 138,735.11 726,741.71 (588,006.60) 4,615,849.01 6,036,756.00
April 353,535.64 869,286.82 (515,751.18) 4,117,906.38 6,036,756.00
$4,000,000
$2,000,000
May 216,274.26 674,254.90 (457,980.64) 3,661,912.54 6,036,756.00
$1,500,000
June 1-15 64,829.44 358,179.56 (293,350.12) 3,324,034.99 6,036,756.00$3,000,000
June 16-30 3,401,833.94 842,378.30 2,559,455.64 5,902,745.74 6,036,756.00
$1,000,000
$2,000,000
July - - - 5,902,745.74 6,036,756.00
$500,000
August - - - 5,902,745.74 6,036,756.00
$1,000,000
September - - - 5,902,745.74 6,036,756.00
$-
October - - - 5,902,745.74 6,036,756.00$-
November - - - 5,902,745.74 6,036,756.00
December - - - 5,902,745.74 6,036,756.00
4,733,877.58 4,871,416.26 (137,538.68)
49.8%
Average 788,979.60 811,902.71 (22,923.11)
12/31/09 FB / 2010 Budget
RevenueExpense
Ending Cash Balance50.0% of 2010
5 Mos Op 4,059,513.55
2009 General Fund Revenues/Expenses2009 General Fund Ending Cash
200920092009200944.0% of 2009
$7,000,000
RevenueExpenseNetEnding Cash Balance$ 12,476,934
$4,500,000
January 275,654.97 714,657.09 (439,002.12) 4,775,994.76 5,489,435.00
$6,000,000
$4,000,000
February 364,758.60 706,430.37 (341,671.77) 4,530,010.90 5,489,435.00
$3,500,000
$5,000,000
March 141,848.60 736,661.64 (594,813.04) 3,931,891.87 5,489,435.00
$3,000,000
April 401,112.31 734,607.34 (333,495.03) 3,599,535.79 5,489,435.00
$4,000,000
$2,500,000
May 262,445.94 927,794.30 (665,348.36) 2,952,579.86 5,489,435.00
$2,000,000
$3,000,000
June 1-15 134,328.75 390,864.06 (256,535.31) 2,684,497.02 5,489,435.00
$1,500,000
$2,000,000
June 16-30 4,441,939.38 751,255.08 3,690,684.30 6,381,202.59 5,489,435.00
$1,000,000
July 446,919.42 1,064,674.09 (617,754.67) 5,770,170.42 5,489,435.00
$500,000
$1,000,000
August 202,676.16 909,012.65 (706,336.49) 5,071,735.42 5,489,435.00
$-
$-
September 318,752.30 741,265.80 (422,513.50) 4,659,003.41 5,489,435.00
October 573,319.16 867,942.58 (294,623.42) 4,355,670.24 5,489,435.00
November 91,193.52 1,405,594.08 (1,314,400.56) 3,036,780.86 5,489,435.00
December 4,433,733.52 1,600,659.69 2,833,073.83 6,045,408.58 5,489,435.00
RevenueExpense
Ending Cash Balance44.0% of 2009
12,088,682.63 11,551,418.77 537,263.86
44.0%
Average 1,007,390.22 962,618.23 44,771.99
12/31/08 FB / 2009 Budget
5 Mos Op 4,813,091.15
2008 General Fund Revenues/Expenses2008 General Fund Ending Cash
$6,000,000
200820082008200840.4% of 2008
$5,000,000
RevenueExpenseNetCash Balance$ 12,426,431
$4,500,000
$5,000,000
January 366,288.30 741,613.37 (375,325.07) 4,540,835.51 5,020,666.00
$4,000,000
$3,500,000
February 148,900.34 754,392.37 (605,492.03) 3,908,952.14 5,020,666.00
$4,000,000
$3,000,000
March 127,239.29 654,723.88 (527,484.59) 3,396,411.59 5,020,666.00
$2,500,000
$3,000,000
April 320,346.02 897,781.08 (577,435.06) 2,803,375.23 5,020,666.00
$2,000,000
May 113,438.21 1,253,675.04 (1,140,236.83) 1,668,573.05 5,020,666.00
$2,000,000
$1,500,000
June 4,291,814.68 796,589.81 3,495,224.87 5,175,843.15 5,020,666.00
$1,000,000
July 488,578.44 1,057,270.42 (568,691.98) 4,614,672.84 5,020,666.00
$1,000,000
$500,000
August 237,925.49 954,223.82 (716,298.33) 3,915,078.15 5,020,666.00
$-
$-
September 150,311.97 866,308.50 (715,996.53) 3,184,378.04 5,020,666.00
October 786,775.18 974,901.56 (188,126.38) 3,054,557.87 5,020,666.00
November 83,655.35 1,311,580.12 (1,227,924.77) 1,748,611.29 5,020,666.00
December 4,906,119.37 1,289,562.33 3,616,557.04 5,071,672.81 5,020,666.00
RevenueExpense
Ending Cash Balance44.0% of 2009
12,021,392.64 11,552,622.30 468,770.34
40.4%
Average 1,001,782.72 962,718.53 39,064.19
12/31/07 FB / 2008 Budget
5 Mos Op 4,813,592.63
2007 General Fund Revenues/Expenses2007 General Fund Ending Cash
$6,000,000
200720072007200745.2% of 2007
$5,000,000
RevenueExpenseNetCash Balance$ 11,685,807
$4,500,000
$5,000,000
January 247,016.49 577,697.06 (330,680.57) 5,123,822.18 5,276,400.00
$4,000,000
$3,500,000
February 313,774.89 654,394.90 (340,620.01) 4,733,549.50 5,276,400.00
$4,000,000
$3,000,000
March 171,163.78 677,559.20 (506,395.42) 4,072,089.28 5,276,400.00
$2,500,000
$3,000,000
April 342,807.43 807,036.25 (464,228.82) 3,620,645.84 5,276,400.00
$2,000,000
May 305,851.28 1,501,184.27 (1,195,332.99) 2,435,475.30 5,276,400.00
$2,000,000
$1,500,000
June 3,881,194.12 998,970.87 2,882,223.25 5,297,994.06 5,276,400.00
$1,000,000
July 491,024.58 1,032,401.67 (541,377.09) 4,746,367.13 5,276,400.00
$1,000,000
$500,000
August 296,769.37 785,262.54 (488,493.17) 4,295,084.56 5,276,400.00
$-
$-
September 413,957.59 857,742.51 (443,784.92) 3,858,080.63 5,276,400.00
October 401,228.67 1,129,102.88 (727,874.21) 3,078,490.49 5,276,400.00
November 102,840.35 1,702,815.74 (1,599,975.39) 1,477,483.88 5,276,400.00
December 4,781,327.81 1,280,275.21 3,501,052.60 5,370,302.97 5,276,400.00
RevenueExpense
Ending Cash Balance44.0% of 2009
11,748,956.36 12,004,443.10 (255,486.74)
45.2%
Average 979,079.70 1,000,370.26 (21,290.56)
12/31/06 FB / 2007 Budget
5 Mos Op 5,001,851.29
O:\Fund Balance\2010.07.19 Workshop - Prior Lake - General Fund Cash Balances 2007-2009 : General Fund w half mo7/19/2010
CALCULATIONS FOR FUND BALANCE RESERVE - GENERAL FUND
COUNCIL WORKSHOP 07.19.2010
EOY 2010EOY 2010EOY 2011EOY 2012EOY 2013EOY 2014EOY 2015Growth
1Operating Expenditures
Projected Expenditures for following year*$ 12,484,162$ 12,484,162 12,858,687 13,244,448 13,641,781 14,051,035 14,472,5663.00%
x 6 months50%50%50%50%50%50%50%
Six months of Expenditures$ 6,242,081 $ 6,242,081 $ 6,429,344$ 6,622,224$ 6,820,891$ 7,025,517$ 7,236,283
x 70% funded by taxes70%70%70%70%70%70%70%
Exp portion of FB$ 4,369,457 $ 4,369,457 $ 4,500,541$ 4,635,557$ 4,774,623$ 4,917,862$ 5,065,398
*includes debt service
2Potentially volatile revenues:
2% of property tax collections$ 84,829$ -$ 85,677$ 86,534$ 87,399$ 88,273$ 89,1561.00%
SMSC Contribution$ 190,000$ 190,000$ 190,000 $ 190,000$ 190,000$ 190,000$ 190,0000.00%
Fire-Spring Lake Township$ 68,185$ 68,185$ 70,230$ 72,337$ 74,507$ 76,742$ 79,0453.00%
Fire-Credit River Township$ 105,981$ 105,981$ 109,160 $ 112,435$ 115,808$ 119,283$ 122,8613.00%
State Police Aid$ -$ -$ -$ -$ -$ -$ -0.00%
State Fire Aid$ -$ -$ -$ -$ -$ -$ -0.00%
Municipal State Aid - Maintenance$ -$ -$ -$ -$ -$ -$
-0.00%
Subtotal volatile revenues$ 448,994$ 364,166$ 455,067 $ 461,306$ 467,714$ 474,298$ 481,061
Risk of Volatility50%
3Contingency for Unforeseen Disasters/Catastrophes/Other Expenditures:
Oak Wilt (example)$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,000$ 50,0000.00%
Pension Deficits$ -$ -$ -$ -$ -$ -$ -0.00%
Estimate for Disaster Cleanup$ 250,000$ 250,000 257,500 265,225 273,182 281,377 289,8193.00%
Subtotal contingencies$ 300,000$ 300,000$ 307,500 $ 315,225$ 323,182$ 331,377$ 339,819
4Planned one-time uses:
Technology Plan$ 250,000$ 250,000$ 250,000 $ -$ -$ -$ -
Grant Matching Opportunities$ 100,000$ 100,000$ 100,000 $ 100,000$ 100,000$ 100,000$ 100,000
Economic Development Efforts$ -$ -$ -$ -$ -$ -$
-
Budget - Mitigate Impact of Property Tax Incr$ 500,000$ 500,000$ 250,000 $ 250,000$ 250,000$ 250,000$
250,000
Budget - Levy Limits$ -$ -$ -$ -$ -$ -$ -
Other$ -$ -$ -$ -$ -$ -$ -
Subtotal one-time uses$ 850,000$ 850,000$ 600,000 $ 350,000$ 350,000$ 350,000$ 350,000
5Debt Service - legal requirements$ -$ -$ -$ -$ -$ -$
-
Total$ 5,968,451$ 5,883,622$ 5,863,108$ 5,762,088$ 5,915,520$ 6,073,537$ 6,236,278
Projected Expenditures for following year$ 12,484,162$ 12,484,162$ 12,858,687$ 13,244,448$ 13,641,781$ 14,051,035$ 14,472,566
FB as % of Projected Expenditures for following year47.8%47.1%45.6%43.5%43.4%43.2%43.1%
BREAKDOWN OF TARGET FUND BALANCE:
Expenditures$ 4,369,457 $ 4,369,457 $ 4,500,541$ 4,635,557$ 4,774,623$ 4,917,862$ 5,065,398
Volatile Revenues$ 448,994$ 364,166$ 455,067 $ 461,306$ 467,714$ 474,298$ 481,061
Contingency - Catastrophes$ 300,000$ 300,000$ 307,500 $ 315,225$ 323,182$ 331,377$ 339,819
Planned One-time Uses$ 850,000$ 850,000$ 600,000 $ 350,000$ 350,000$ 350,000$ 350,000
Debt Service$ -$ -$ -$ -$ -$ -$ -
Target Fund Balance$ 5,968,451 $ 5,883,622 $ 5,863,108$ 5,762,088$ 5,915,520$ 6,073,537$ 6,236,278
Expenditures73%74%77%80%81%81%81%
Volatile Revenues8%6%8%8%8%8%8%
Contingency - Catastrophes5%5%5%5%5%5%5%
Planned One-time Uses14%14%10%6%6%6%6%
Debt Service0%0%0%0%0%0%0%
Target Fund Balance100%100%100%100%100%100%100%
Target Fund Balance as % of Projected Expenditures for Following Year
Expenditures35%35%35%35%35%35%35%
Volatile Revenues4%3%4%3%3%3%3%
Contingency - Catastrophes2%2%2%2%2%2%2%
Planned One-time Uses7%7%5%3%3%2%2%
Debt Service0%0%0%0%0%0%0%
Target Fund Balance48%47%46%44%43%43%43%
CURRENT FUND BALANCE 6,036,756 6,036,756 6,036,756 5,786,756 5,286,756 5,286,756 5,286,756
Planned use of FB:
1) Budget (250,000) (250,000) - - -
2) Technology Plan - (250,000) - - -
3) Economic Development - - - - -
4) Other - - - - -
Planned increase in FB - - - - - -
-
Adjusted balance 6,036,756 6,036,756 5,786,756 5,286,756 5,286,756 5,286,756 5,286,756
VARIANCE FROM TARGET FUND BALANCE 68,305 153,134 (76,352) (475,332) (628,764) (786,781)
(949,522)
FB as % of Projected Expenditures for following year48.4%48.4%45.0%39.9%38.8%37.6%36.5%
VARIANCE FROM TARGET FUND BALANCE0.5%1.2%-0.6%-3.6%-4.6%-5.6%-6.6%
O:\Fund Balance\2010.07.19 Workshop - Prior Lake - General Fund Cash Balances 2007-2009 : FB Calc7/19/2010