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City of Lino Lakes, Minnesota <br />Management Report, Page 13 <br />The increase in designated fund balance reflects the City's adoption of a reserve policy <br />pursuant to resolution 91 -3. The reserve policy addresses three areas: 1) Cash flow requirements, <br />2) Contingent employee benefits, and 3) General contingencies. <br />As previously stated, property taxes and related state aids account for over 70% of budget 1995 <br />revenue sources of the General Fund. This revenue is not received until July and December of <br />each year (the second half of the year). As a result, the City is required to have sufficient reserves <br />at the beginning of the year to fund operations of the first half of the year. The City's cash flow <br />reserve requirement is computed as follows: <br />1995 Budgeted Levy (Includes Homestead Credit) <br />1995 Anticipated Local Government Aid <br />Total <br />Cash -Flow Reserve (50% of total) <br />$2,303,705 <br />149,372 <br />$2,453,077 <br />$1,226,539 <br />The general contingency reserve is equal to 15% of the City's general fund expenditure budget <br />for the ensuing year as follows: <br />1995 budgeted expenditures $3,601,584 <br />Applicable percentage 15% <br />General contingency reserve $540,238 <br />