Amend City Funds Policy/Review Respective Fund Balances & Amend Excess Revenue Transfer Policy

Purpose: Update the City's Ordinance entitled "City Funds" that outlines the respective sources and uses for each fund currently utilized in the city and review of current fund balances within these funds.

Chapter 7 (Section 7.9) Entitled 'Funds' of the City Charter Charter states that there should be maintained in the city treasury a general fund and such other funds as may be required by state statutes, resolution or ordinance. The council shall, by resolution or ordinance, create and abolish funds and shall define which funds are eligible for inter-fund loans as it may deem necessary and appropriate.

The last time the city's Funds Ordinance was amended was in 2004. Since that time, there have been some funds that are no longer utilized, some added, and some that just require an update in their authorized sources and uses. The Lawful Gambling Fund is an example of a fund that needed an update in its authorized sources and uses.

The fund policy was brought to the City Council worksession of May 12, 2015 (minutes are attached) and again on March 22, 2016 (minutes attached).  The suggestions from the minutes have been incorporated in the amended Fund Policy attached. The  Park Maintenance Fund is now entitled the Capital Maintenance Fund to meet all of the maintenance needs of the city (parks, city facilities, etc).  

The Excess Revenue Policy was also discussed at the work session of March 22 as four of the funds in the fund policy are affected by this policy.  The funds are Equipment Revolving Fund, Capital Maintenance Fund (formerly Park Maintenance Fund), Public Improvement Revolving Fund and the Facility Fund.  Their respective share of the excess (deficient) transfer are as follows:
          10%:  Equipment Replacement Fund
          10% Capital Maintenance Fund
          40% Public Improvement Revolving Fund
          40% Facility Fund

Based on current needs, staff is proposing the following breakout::
          30%:  Equipment Replacement Fund
          30% Capital Maintenance Fund
          30% Public Improvement Revolving Fund
          10% Facility Fund

All of the four funds listed above allow for interfund loans and council has the discretion to direct the transfer of funds at year end as they see current needs.  For example:  the total of the excess revenue transfers in the early 2000's was applied to Highway 47 improvements and not transferred to the four respective funds as the city had a major road improvement undertaking.

In regard to the Fund Balances/Cash Balances, the most significant fund balances are included as part of the city's annual Five-Year Capital Improvement Plan (CIP) and are updated annually based on actual revenues and expenditures and CIP.

30 minutes

Finance Director

Establish amended City Funds Ordinance and amended Excess Revenue Policy for future City Council adoption and review fund balances.