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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2023 <br /> <br /> <br /> <br /> <br />Committed - consists of internally imposed constraints. These constraints are established by a resolution approved by the <br />City Council, and committed amounts cannot be used for any other purpose unless the City Council removes or changes <br />the specified use by resolution. <br /> <br />Assigned - consists of internally imposed constraints for the specific purpose of the City’s intended use. These <br />constraints are established by the City Council and/or management. The City Council passed a resolution authorizing <br />the Finance Director to assign fund balances and their intended uses. <br /> <br />Unassigned - is the residual classification for the general fund. The general fund is the only fund that reports a positive <br />unassigned fund balance amount. In other governmental funds, if expenditures incurred for specific purposes exceed the <br />amounts that are restricted, committed or assigned to those purposes, it may be necessary to report a negative unassigned <br />fund balance in that fund. <br /> <br />When both restricted and unrestricted resources are available for use, it is the City’s policy to first use restricted resources, <br />and then use unrestricted resources as they are needed. When committed, assigned or unassigned resources are available for <br />use, it is the City’s policy to use resources in the following order: 1) committed 2) assigned and 3) unassigned. <br /> <br />The City formally adopted a fund balance policy for the General Fund. The policy establishes an unassigned fund balance <br />range of 40% - 50% of general fund operating expenditures. <br /> <br /> <br />S. USE OF ESTIMATES <br /> <br />The preparation of financial statements in accordance with generally accepted accounting principles (GAAP) requires <br />management to make estimates that affect amounts reported in the financial statements during the reporting period. Actual <br />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 by the City Council. <br />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 market value of collateral <br />pledged must equal 110% of deposits not covered by insurance or bonds. Securities pledged as collateral are required to be <br />held in safekeeping by the City or in a financial institution other than that furnishing the collateral. Minnesota Statue <br />118A.03 identifies allowable 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 returned to it. The City has <br />no additional deposit policies addressing custodial credit risk. <br /> <br />At December 31, 2023, the bank balance of the City’s deposits with financial institutions was $11,507,836 and the carrying <br />amount was $9,607,050. All deposits were covered by federal depository insurance or by collateral pledge and held in the <br />City’s name. <br /> <br /> <br />B. INVESTMENTS <br /> <br />Subject to rating, yield, maturity and issuer requirements as prescribed by statute, Minnesota Statutes 118A.04 and 118A.05 <br />authorize the City to invest in United States securities, state and local securities, commercial paper, time deposits, temporary <br />general obligation bonds, repurchase agreements, Minnesota joint powers investment trusts and guaranteed investment <br />contracts. <br /> <br />54 <br />61