05-28-13 Council Packet - Laserfiche WebLink

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6 Factors Affecting Financial Condition (Continued) Long-term financial planning. The City’s current five-year financial plan, adopted in January, 2008, identifies street and utility improvements totaling $23,287,990 ove r the period of 2008 through 2012. These improvements are anticipated to be funded through a number of funding sources, including special assessments, municipal state aid road funds, the area and unit trunk fund, the stormwat er management fund and vote r-approved tax levies. Also included in the final year of the plan is a feasibility study for a new public works facility. Scheduled capital equipment and office equipment needs and the financing fo r those needs are also incl uded in the plan. The five- year plan also includes funding projections for operati ons and operating impacts for the period of 2008-2012. This plan is in the process of being revised to refl ect the anticipated activity through the year 2017. Relevant Financial Policies The City uses a variety of financial policies to guide its fiscal actions and ensure fiscal stability. Fund balance policy . The City had adopted a Fund Balance polic y which identified the required designated amounts in the Fund Balance of the General Fund at fi scal year-end and directed the transfer of any excess revenues to other funds for specific purposes, as identif ied annually. For the year ended December 31, 2011 and subsequent years, the City amended its Fund Balance policy to conform to the requirements of GASB 54. The new policy targets the unassigned fund balance of the gene ral fund in a range of 40% to 50% of budgeted general fund expenditures and other financial uses. In addition, fund balances are classified in compliance with GASB 54 according to the hierarchy of usable fund balance res ources. The unassigned general fund balance as of December 31, 2012 was $5,053,031, which is 56% of general fund budgeted expenditures and other financing uses for the year. Cash management policies and practices. The City’s policy is to invest all available moneys at competitive rates in accordance with Minnesota la w. Investments are made by minimizing credit and market risks while maintaining a competitive yield. Funds are invested in certificates of deposit, commercial paper and U.S. government agencies. Cash is pooled in one account to provide maximum return. The City Council reviews the investment policy annually. The City’s investment policy’s primary objective is safety of principal. Therefore, all deposits were either insured by Federal depository insurance or were collateralized as required by State Statute. Due to the weakened economy, a historically low interest rate environment has persisted over the last several years and has had a dramatic impact on the city’s investment earnings. The average yield on investments for 2012 was 1.08%. Investment income includes positive or negative changes in the fair value of investments. Changes in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts, especially in the case of temporar y changes in the fair value of investments the City intends to hold to maturity.