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• CITY OF FALCON HEIGHTS, MINNESOTA MANAGEMENT'S DISCUSSION AND ANALYSIS December 31, 2003 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS As noted earlier, the City of Falcon Heights uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds -The focus of the City of Falcon Heights' governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City of Falcon Heights' financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal yeaz. As of the end of the current fiscal yeaz, the City of Falcon Heights' governmental funds reported combined ending fund balances of $ 5,261,741, a decrease of $ 328,650 in comparison with the prior year. Approximately 83% of the total amount $ 4,513,472, constitutes unreserved fund balance, which is available for spending at the government's discretion. The remainder of fiand balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to pay debt service ($ 817,061), or 2) to pay various prepaid expenditures in the general fund ($ 56,208). • The general fund is the chief operating fund of the City of Falcon Heights. At the end of the current fiscal year, unreserved fund balance of the general fund was $ 1,080,800, while total fund balance reached $ 1,137,008. As a measure of the general fund's liquidity, it maybe useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 81 % of total general fund expenditures, while total fund balance represents 85% of that same amount. The fund balance of the City of Falcon Heights' general fund increased by $ 76,750 during the current fiscal year. Key factors in this increase are: • A $ 37,490 increase in licenses and permits over budgeted amounts was primarily due to residential improvements in property throughout the City and the start of the City's housing redevelopment. • A $ 10,869 refund on insurance premiums from the League of Minnesota Cities self insured insurance plan representing savings passed back to the member cities. • A $ 17,564 increase in fines and forfeits over budgeted amounts. The major debt service fund (Improvement Bonds of 1999) has a total fund balance of $ 405,647, all of which is reserved for the payment of debt service. The net increase in fund balance during the current year in this debt service fund was $ 265,987. During the year, the City paid off its 1991 Improvement Bonds and the remaining fund balance was transferred to the 1999 • Improvement Bonds. This was a net increase over and above the current year debt service payments. ?~