07-13-2016 Workshop Packet - Laserfiche WebLink

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(7) RELEVANT FINANCIAL POLICIES Financial trends in this millennium indicate the City will have experience an increased reliance on service fees and property taxes as key funding sources for operations and capital improvements. In Little Canada’s case, our fully developed status means building and development related fees need to be estimated conservatively to avoid huge fluctuations in revenue. Interest income on existing fund balances will likely remain low for the foreseeable future due to national monetary policies. FISCAL STEWARDSHIP The City maintains a set of Financial Management Policies which among several factors provides that one-time revenue sources should fund capital improvements rather than operations and that sufficient cash reserves must be maintained to avoid short-term borrowing or significant tax levy increases. The City’s computations of its direct debt and legal debt margin reports that it has less than 5.9% of its obligations that have general property taxes as the sole source of revenue. The City has approximately 94% of its legal debt limit, or $23,388,757 available for debt bonding as of December 31, 2015. The outstanding debt as of December 31, 2015 was $9,750,338 compared to $9,086,349 at the end of 2014. The City issued $1,335,000 of G.O. cross-over refunding bond in 2015 to take advantage of lower interest costs. This issue refunded only the Tax Increment Financing (TIF) portion of the 2008A GO issue. The TIF District affected is District 5-1. PENSION BENEFITS All full-time and certain part-time employees of City of Little Canada are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the General Employees Retirement Fund (GERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost sharing, multiple-employer retirement plans. GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All members must participate in the Coordinated Plan since July 1, 1968. The City’s covered employees are all Coordinated Plan members. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after five (5) years of credited service. The defined retirement benefits are based on a member’s highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. A defined contribution plan is also made available to City employees that is administered by ICMA Retirement Corporation. The is a tax qualified plan under Section 457 of the Internal Revenue Code and all contributions by or on behalf of the employee are tax deferred until the time of withdrawal. Additional information on City of Little Canada’s pension plan can be found in Note 7 in the notes to the financial statements.