Management Report and Recommendations 12/31/1991

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City of Lino Lakes, Minnesota Management Report, Page 19 The City's minimum cash flow reserve requirement is measurable. For the City of Lino Lakes, the minimum required surplus is $822,293 computed as follows: 1992 Budgeted Levy (Includes Homestead Credit) $1,557,076 1992 Anticipated Local Government Aid 87,511 Total $1 644 587 Minimum Required Cash -Flow Reserve $822 294 A schedule of General Fund designations at December 31, 1991 and 1990 is as follows: 1991 1990 Reserve for prepaid items $76,450 $70,667 Designated for general contingencies 366,492 217,151 Designated for cash flow reserve 822,294 824,523 Designated for installment purchase contract 57,283 Total $1,265,236 $1,169,624 Without adequate General Fund reserve, the independence and autonomy of the City may be impaired. The City of Lino Lakes has taken actions over the past several years to improve the financial position of its General Fund. We commend the City for these actions and encourage the City to continue to monitor this reserve balance. An adequate reserve structure will enable the City to retain its financial independence and integrity during adverse economic conditions. Recent management reports have discussed the possibility of the State targeting aid reductions to cities based on "excess" fund balances. Past management reports have recommended that cities strongly oppose this legislation for a variety of reasons. As discussed earlier in this report, the legislative commission on planning and fiscal policy has recommended standardization of accounting for cities. We believe this may be a first step in giving the State authority to target State aid reductions to cities. We recommend City officials closely monitor future proposed legislation in this area.