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HomeMy WebLinkAbout2.d. Budget EncumbrancesCITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION City Council Work Session Meeting Date March 9, 2005 AGENDA ITEM: Encumbrance of 2004 Budget Items and AGENDA SECTION: General Fund Balance Excess Discussion Reallocation PREPARED BY: Jeff May, Finance Director AGED 2 ATTACHMENTS: Proposed 2004 Encumbrances, General Fund Balance Worksheet, Proposed 2004 Excess General Fund APPROVED BY: Encumbrance General Journal Entry, Fund Balance Polic RECOMMENDED ACTION: Discussion only ACTION: ISSUE The annual encumbrance of General Fund and CIP Funds items forward from the prior year to the current year and the redesignation of excess General Fund balances per the City's Fund Balance Policy. BACKGROUND This item is on the agenda for Council review staffs proposed encumbrances and to discuss the fund balance of the General Fund per the City's Fund Balance Policy Ti ese items will be brought forward to the City Council for formal action at the March 15 meeting One item not included in the General Fund calculations was the possible loss of $350,000 in 2005 for the Market Value Homestead Credit (MVHC) Staff felt that it would be best to reflect the 55% final year -end fund balance without encumbering for this potential cut We would propose to review this matter sometime later in the year after the legislative session is completed and we know the cut is a certainty and after we can review the current year's revenues and expenditures to see if the cut could possibly be absorbed in the current year's operations If that is not a possibility we would look at redesignation of the funds being set aside at this time SUMMARY Give staff direction to prepare the information for approval at the March 15 meeting 2004 Encumbrance General Journal Entries 101 41110 -01 -225 00 14,185 00 SKB Tree Program 101 -24420 14,185 00 To encumber 2004 SKB funds received and not expended for the $25,000 annual payment 101- 41110 -01 -598 00 198,000 00 Purchase of 3205 143rd Street 101 -24421 198,000 00 To encumber excess 2004 funds for the house located at 3205 143rd Street 101 41810 -01 -393 00 22,000 00 Docuware Equipment 101 -24422 22,000 00 To encumber excess 2004 funds for docuware equipment for Public Works Parks Recreation 101- 41940 01-401 02 10,00000 Siren Repairs 101 -24455 10,000 00 To encumber 2004 Government Buildings funds not expended for future siren repairs 101 43100 -01 -221 00 15,000.00 Equipment Parts /Repairs Contingencies 101 -24406 15,000 00 To encumber 2004 Fleet Maint Dept funds forward to 2005 for unanticipated equipment parts costs 101 43121 -01 -410 02 117,000 00 Sidewalk/ Curb Program 101 -24411 117,000 00 To encumber 2004 Street Marnt Dept (Sidewalk/Curb Program) funds forward to 2005 for future projects 207 49007 -01 -584 00 10,000 00 SCBA Unit Replacements (1991 Units; 207 -24495 10,000 00 207- 490007 01-586 00 5,000 CO Police Field Reporting Software 207 -24496 5,00000 To encumber 2004 Equipment CIP funds forward to 2005 for delayed purchases /projects GENERAL FUND (FUND 101) PROJECTED YEAR -END FUND BALANCE WORKSHEET 12131/03 Balance "Designated for Working Capital" Projected Revenues Thru 12/31/04 Less Projected Expenditures Thru 12/31104 Projected Surplus (Deficit) for Year Projected "Designated for Working Capital" as of 12/31/04 (Before Final Year -End Adjustments) Less 2004 Encumbrances Less Adjustment to Fund Balance to reflect 12/31104 Compensated Absences Balance (Per Fund Balance Policy) Projected "Designated for Working Capital" as of 12/31/04 (Before Adjustment Per Fund Balance Policy) Adopted 2005 General Fund Operating Budget Percentage of Fund Balance to Next Year's Budget 55% of 2005 General Fund Operating Budget Amount to be Redesignated to CIP Funds (Per Fund Balance Policy) 4,076,414 8,483,308 7,110,332 1,372,976 5,449,390 376,185 85,314 4,987,891 7,996,100 6238% 4,397,855 590,036 2004 Excess General Fund Encumbrance General Journal Entry 202 49002 -01 -525 00 590,000 00 202 -24434 590,000 00 To encumber 2004 Building CIP Funds forward for future building projects CITY OF ROSEMOUNT POLICY TITLE EFFECTIVE DATE: POLICY NUMBER PROPOSED BY DATE APPROVED BY COUNCIL FUND BALANCE POLICY December 16, 2003 F -7 FINANCE December 16, 2003 (Amended February 17, 2004) PURPOSE The purpose of this policy is to set up guidelines and procedures for dealing with fund balances of the General Fund, and indirectly, all other operating funds This policy will allow the City to provide a cushion against unexpected revenue shortfalls, to provide for working capital to ensure sufficient cash flow to meet the City's needs throughout the year, and to maintain and improve the City's credit rating POLICY The City will attempt to maintain an undesignated General Fund reserve of at least 55% of the next years operating budget This 55% reserve will be considered "Designated for Working Capital" and will be the funds that will enable the City to meet its daily operating needs Fund balances that are reserved for encumbrances and reserved for compensated absences will be excluded from the calculation of the 55% as they are designated for a specific purpose b Any surplus exceeding 55 as of the completion of the previous year's audit, will be transferred to one of the three Capital Improvement Program (CiP) funds (Budding CIP, Street CIP or Equipment CIP) at the discretion of the City Council by formal action If at all possible, as part of this action, the Council should reserve these transferred funds for specific capital needs (budding improvements, street rehabilitation projects, squad cars, fire equipment, etc) If the Council feels the necessity to use these funds for another purpose, action will be taken accordingly at the same time that the normal transfer authorization would take place with a special designation made for those funds in excess of the 55% c To avoid interest expense charges that would reduce the amount of funds available for current operations the City shall not use tax anticipation borrowing to cover operating expenses If it becomes apparent that the City may need to do this, the policy shall be adjusted by Council action to raise the fund balance percentage to a larger figure to prevent this from happening in the future d The City will also review and update the schedule of all other fund balances, reserves, and working capital in all other operating funds of the City and determine adequacy of those money balances in conjunction with the budgets set annually