Financial Analysis & Management Considerations Report 12/31/1997

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City of Lino Lakes, Minnesota Management Report Agency Funds AGENCY FUNDS I An Agency Fund is designed to account for transactions for other individuals, private organizations and/or other funds. During 1997, the City had four Agency Funds as follows: • Contractor's Deposits • Pending Assessments • Investment Fund • Deferred Compensation The Contractor's Deposits Fund is used to account for "pass through" types of expenditures relating to prospective developers. The City pays certain legal, engineering and planning amounts to assure compliance with various City ordinances relating to pertinent applications. The City receives deposits and/or bills the various developers for costs incurred. We recommend that the City continue to maintain detailed records of amounts due from developers and assure that adequate deposits are received prior to incurring expenses on a developer's behalf. The Pending Assessments Fund was established in 1991 to account for the prepayment of special assessments by contractors prior to the final assessment being adopted by the City Council. The Investment Fund is designed to pool all available cash balances of the City to maximize the investment efficiency of the City. Interest is allocated to funds annually based on the average cash balance of the participating funds. The Deferred Compensation Fund was established in 1987 in response to the issuance of the Governmental Accounting Standards Board (GASB) Statement No. 2. GASB Statement No. 2 requires deferred compensation plans adopted under the provisions of Internal Revenue Code Section 457 to be included in the City's Annual Financial Report. During 1997, the City's deferred compensation plan balances were removed from the City's financial statements in accordance with GASB Statement No. 32, which, for the City of Lino Lakes, was required to be implemented in 1997. Page 61