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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2019 <br /> <br /> <br /> <br /> <br />When both restricted and unrestricted resources are available for use, it is the City’s policy to first use <br />restricted resources, and then use unrestricted resources as they are needed. When committed, assigned <br />or unassigned resources are available for use, it is the City’s policy to use resources in the following <br />order: 1) committed 2) assigned and 3) unassigned. <br /> <br />The City formally adopted a fund balances policy for the general fund. The policy establishes an <br />unassigned fund balance range of 40% - 50% of general fund operating expenditures. <br /> <br /> <br />R. USE OF ESTIMATES <br /> <br />The preparation of financial statements in accordance with generally accepted accounting principles <br />(GAAP) requires management to make estimates that affect amounts reported in the financial <br />statements during the reporting period. Actual results could differ from such estimates. <br /> <br /> <br />Note 2 DEPOSITS AND INVESTMENTS <br /> <br />A. DEPOSITS <br /> <br />In accordance with Minnesota Statutes, the City maintains deposits at those depository banks authorized <br />by the City Council, all of which are members of the Federal Reserve System. <br /> <br /> Custodial Credit Risk – Custodial credit risk is the risk that in the event of a bank failure, the City’s <br />deposits may not be returned to it. Minnesota Statutes require that insurance, surety bonds or collateral <br />protect all City deposits. The market value of collateral pledged must equal 110% of deposits not <br />covered by insurance or bonds. The City has no additional deposit policies addressing custodial credit <br />risk. At December 31, 2019, the bank balance of the City’s deposits was insured by the FDIC or <br />covered by pledged collateral held in the City’s name. <br /> <br />Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City <br />Treasurer or in a financial institution other than that furnishing the collateral. Authorized collateral <br />includes the following: <br /> <br />a) United States government treasury bills, treasury notes, treasury bonds; <br /> <br />b) Issues of United States government agencies and instrumentalities as quoted by a recognized <br />industry quotation service available to the government entity; <br /> <br />c) General obligation securities of any state or local government with taxing powers which is rated <br />“A” or better by a national bond rating service, or revenue obligation securities of any state or local <br />government with taxing powers which is rated “AA” or better by a national bond rating service; <br /> <br />d) General obligation securities of a local government with taxing powers may be pledged as <br />collateral against funds deposited by that same local government entity; <br /> <br />e) Irrevocable standby letters of credit issued by Federal Home Loan Banks to a municipality <br />accompanied by written evidence that the bank’s public debt is rated “AA” or better by Moody’s <br />Investors Service, Inc. or Standard & Poor’s Corporation; and <br /> <br />f) Time deposits that are fully insured by the Federal Deposits Insurance Corporation. <br /> <br />At December 31, 2019, the carrying amount of the City’s deposits with financial institutions was $4,768,651. <br />53