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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2021 <br /> <br /> <br /> <br /> <br /> <br />Unassigned - is the residual classification for the general fund. The general fund is the only fund <br />that reports a positive unassigned fund balance amount. In other governmental funds, if <br />expenditures incurred for specific purposes exceed the amounts that are restricted, committed or <br />assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that <br />fund. <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 statements <br />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 such banks are members of the Federal Reserve System. <br /> <br />Minnesota Statutes require that insurance, surety bonds or collateral protect all City deposits. The <br />market value of collateral pledged must equal 110% of deposits not covered by insurance or bonds. <br />Securities pledged as collateral are required to be held in safekeeping by the City or in a financial <br />institution other than that furnishing the collateral. Minnesota Statue 118A.03 identifies allowable <br />forms of collateral. <br /> <br /> Custodial Credit Risk – the risk that in the event of a bank failure, the City’s deposits may not be <br />returned to it. The City has no additional deposit policies addressing custodial credit risk. <br /> <br />At December 31, 2021, the bank balance of the City’s deposits with financial institutions was <br />$13,274,313 and the carrying amount was $13,083,090. All deposits were covered by federal <br />depository insurance or by collateral pledge and held in the City’s name. <br /> <br /> <br />B. INVESTMENTS <br /> <br />Subject to rating, yield, maturity and issuer requirements as prescribed by statute, Minnesota Statutes <br />118A.04 and 118A.05 authorize the City to invest in United States securities, state and local securities, <br />commercial paper, time deposits, high-risk mortgage-backed securities, temporary general obligation <br />bonds, repurchase agreements, Minnesota joint powers investment trusts and guaranteed investment <br />contracts. <br /> <br />53