HomeMy WebLinkAbout5D - Building Fund
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
STAFF AGENDA REPORT
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
JUNE 7, 2004
5D
RALPH TESCHNER, FINANCE DIRECTOR
CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING
GENERAL FUND TRANSFER TO THE BUILDING FUND
DISCUSSION:
The General Fund balance for the City increased by $248,781 to
$4,088,907 during the past year as indicated in the 2003 City of
Prior Lake Financial Report. This fund balance represents a net
increase and takes into account the $1 million dollars in transfers
authorized by the Council at mid-year in 2003. In accordance with
the City's Council's previous direction, we are requesting specific
designation of these funds.
History
The City Council has a standing resolution that supports a working
capital designation or General Fund reserve of 30% of the current
year's Operating Budget, based upon the availability of sufficient
funds. Any remaining portion is to be allocated by the Council as
unreserved fund balance. Each year the Council is to review these
amounts for the purpose of allocating them on an as needed basis.
The existing audited General Fund balance represents a reserve of
47% of the City's 2004 operating budget.
Current Circumstances
As indicated in the Management Letter the Minnesota Office of the
State Auditor has classified cities unreserved fund balance levels
into the following four categories:
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It appears from the classification descriptions that the State
Auditor's Office is taking the position that an appropriate fund
balance should be in the range of 35 to 50%. In an effort to stay
within this guideline and to provide adequate funding for future city
police station/city hall construction, a 250,000 dollar transfer from
the General Fund to the Building Fund is recommended. Continuing
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H: \A UDIT\Agendal004transfer. doc
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ALTERNATIVES:
RECOMMENDA TION:
RECOMMENDED
MOTION:
REVIEWED BY:
Attachments:
H: \AUDIT\Agenda2004transfer.doc
allocations in the future would allow for the issuance of lower lease
purchase bonds, thereby minimizing the impact upon property taxes.
A synopsis of the proposed utilization of the City's General Fund
balance would look like this:
General Fund Balance 1/1/04
less Building Fund transfer...
Remaining General Fund Balance
$4,088,907.00
<$250,000.00>
$3,838,907.00
This transfer would leave our General Fund balance at $3.8 million
dollars. This amount would still represent a reserve of 44% that is
comparable to the auditor's recommendation of 40-50% and
favorable to the present City Council minimum annual objective of
30%.
The following alternatives are available to the City Council:
1. Approve A Resolution Authorizing General Fund Transfer to the
Building Fund.
2. Approve an amount for specific expenditures or fund reserves as
identified by the Council.
3. Maintain 100% of the excess reserves within the existing
General Fund balance.
Staff would recommend Alternative #1. The remaining fund balance
would still be above the established minimum 30% threshold. Staff
believes the use is consistent with the City's overall strategic plan
and does not compromise our financial strength to an extent that our
Al credit rating would be jeopardized.
Motion and a second to approve A Resolution Authorizing General
Fund Transfer to the ~ ilding Fund.
q
Authorizing General Fund Transfer to the
16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
RESOLUTION 04-xx
RESOLUTION AUTHORIZING GENERAL FUND TRANSFER
TO THE BUILDING FUND
MOTION BY:
SECOND BY:
WHEREAS,
The City of Prior Lake's General Fund balance on December 31,2003 increased by
$248,781.00 to an amount of $4,088,907.00; and
WHEREAS,
The General Fund balance represents a reserve of 47% of the City of Prior Lake's
current 2004 operating budget; and
WHEREAS,
It is the decision of the City Council to review, on an annual basis, the availability of
such reserves and to allocate these funds in a manner that would best serve the
community on a long term basis; and
WHEREAS,
It is recognized by the City Council that it is in the best interest of the City to
maintain a strong General Fund reserve as financial protection for unexpected
emergencies and expenditures that would require contingency funding.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE that:
1. The recitals set forth above are incorporated herein.
2. The following appropriation transfer from the General Fund balance is hereby authorized as
follows:
Purpose Fund Transfer
Amount
Reserve capital for new city hall/police facility Building Fund
$250,000.00
Passed and adopted this 7th day of June 2004.
YES
NO
Haugen
Blomberg
LeMair
Petersen
Zieska
Haugen
Blomberg
LeMair
Petersen
Zieska
{Seal}
City Manager
City of Prior Lake
www.cityofpriorlake.com
H: \AUDIT\Res2004transfer. doc
Phone 952.447.4230 / Fax 952.447.4245