12-21-11 Council Workshop A Minues

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MINUTES CITY COUNCIL DECEMBER 21, 2011 General Fund, as by being in any other fund, the City has stated its intent to use it for the purpose of that fund. The Finance Director reported that the Fund Balance Policy also establishes the Reserve Policy goal that was discussed by the Council at its November 9, 2011 meeting. The Director reported that 77% of the City's revenue comes from stable funding sources, and 23% from variable sources. The General Fund Cash Flow Reserve Policy has been drafted to recognize this variable component of revenues. This reserve is necessary to fund City operations given the timing of tax payments to the City. The proposed policy establishes that the City will strive to maintain a minimum unassigned fund balance in the General Fund in the range of 42.5% to 65% of the subsequent year's budgeted expenditures. This range represents the prior Fund Balance Policy of 42.5% plus 22.5% allowance for variable revenue sources. The Director indicated that the 65% reserve ceiling can be evaluated annually given anticipated revenue sources for the coming year as well as the annual status of Local Government Aids (LGA). The Director noted that the Fund Balance Policy also stated that funds in excess of the 65% reserve ceiling can be transferred out to other funds, specifically suggesting the General Capital Improvement Fund. That has been the City's current practice. The proposed policy language allows for some flexibility for any unusual circumstances or opportunities that may arise. The Director noted that the council has approval authority over annual surplus transfers, therefore can direct the surplus to the General Capital Improvement Fund. The Director noted that the final action for the Council is to authorize 2011 budgeted year -end transfers along with reserve fund estimated transfers. The Director reviewed a spreadsheet detailing the proposed transfers. She noted that these are typical reoccurring transfers that have been generally approved just prior to the issuance of the audit. However, approving them at this time will ensure they are recorded for year -end purposes. The Council and Finance Director had additional discussion related to the new fund balance categories required by GASB 54. FINANCE At this point in the workshop, the City Administrator noted that the City's DIRECTOR Finance Director has taken ajob with the City of St. Anthony and begins in TRANSITION that position on January 3, 2012. The Administrator reported that he is PLAN exploring transition options at this time which range from bringing in a retired finance director on an interim basis, to hiring a firm for the transition, to contracting with another city. The Administrator noted that the current Finance Director has agreed assist with 2011 audit work papers and other functions relative to the audit. He also reported that his plan is to advertise for a Finance Director right after the first of the year. 3