HomeMy WebLinkAbout4G - 1993 Financial Report
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CONSENT AGENDA #: 4 (g)
PREPARED BY: RALPH TESCHNER FINANCE DIRECTOR
SUBJECT: CONSIDER APPROVAL OF 1993 FINANCIAL REPORT AND
CONFIRMATION OF WORKING CAPITAL LEVEL
DATE: MAY 16,1994
INTRODUCTION:
BACKGROUND:
DISCUSSION:
Attached for your review is the 1993 Financial Report as prepared by the
George M. Hansen Company. A summary of the City's financial
condition and fund highlights are presented under the beginning section
entitled "Comments" on pages I-V under the IntroductoI:Y Section. As
noted within the General Fund, revenues exceeded expenditures by
$385,728.00 in 1993, thereby increasing the City of Prior Lake's overall
fund balance to $1,731,775.00.
On May 17, 1993 the City Council approved the engagement of the
George M. Hansen Company to complete the 1993 annual audit. The cost
for their professional services was approved at an amount of $9,500.00.
The Council re-appointed the George M. Hansen Company as the audit
firm for the current year on January 3, 1994.
Final budget figures came in very favorably primarily due to payment in
lieu of taxes revenue attributed to the newly negotiated contract with the
SMDC community and development contracts. Expenditures of
$4,013,757 compared to budget of $3,966,430 represented a 1% overage.
Also, indicated within Note 2 of the financial notes section, an investment
writedown of $141,000 occurred within the Franklin Government
Securities Mutual Fund because of the decline in interest rates that
resulted in depressing this particular investment return to 2.52% over the
past two years. The City replaced this investment, which was utilized in
the Debt Service Fund, with a laddered purchase of U.S. Treasury Bills.
Again, as in the past year, a portion of the General Fund balance has been
designated as working capital. This year the proposed amount has been
based upon 30% of our current operating budget which represents
$1,432,000. Staff recommends that the 30% level be maintained from year
to year. Past years the amount reserved for such purpose was a flat
$1,000,000. This increased level is necessary due to budget growth to
provide cash flow during the first half of the year before the City receives
its tax settlements and state aids.
The remaining balance accounts for the UNRESERVED portion of nearly
$300,000.00 which represents approximately 6% of the current operating
4629 Dakota St. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
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budget. I do not expect a repeat performance of this magnitude in
subsequent years as this year's revenue is not a typical experience.
While the entire amount can be used as working capital, this designation
provides us with appropriate flexibility of our reserve.
Also noted within the financial report is a legal compliance audit which
was performed to ensure compliance with Minnesota Statutes in the areas
of: contracting and bidding, deposits and investments, conflicts of interest,
public indebtedness and claims and disbursements.
ALTERNATIVES:
The following alternatives are available to the City Council:
1. Accept 1993 Audit Report as submitted, and modify working
capital designation to 30% of current operating budget on an
annual basis.
2. Delay action according to specific Council reason.
RECOMMENDATION: Staff would recommend approval of the financial report for the fiscal year
ended December 31, 1993 as submitted and an annual 30% designation of
working capital.
A City Financial Reporting Form, which is basically a condensed excerpt
of the official document, is required to be submitted to the Office of the
State Auditor by June 30, 1993 along with this report.
ACTION REQUIRED:
REVIEWED BY:
Please feel free to contact Staff prior to the meeting regarding content
interpretation. t
rov as part of the consent agenda is in order.
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