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City of Lino Lakes, Minnesota <br />,_ Management Report, Page 14 <br />ACCOUNT BALANCE ANALYSIS OF THE <br />'- COMBINED FINANCIAL .. STATEMENTS <br />The combined financial statements of the City of Lino Lakes are presented in Statements 1 <br />— through 5 of the 1990 Annual Financial Report. The following comments relate to the Combined <br />Balance Sheet - All Funds (Statement 1). <br />VoNIII <br />am <br />Imo <br />Cash and Investments <br />Cash and investments were as follows at December 31, 1990 and 1989: <br />Description <br />Treasurer's balance - checking <br />Petty cash <br />Investments: <br />Certificates of deposit <br />Commercial paper <br />4M money market fund <br />FNMA pool <br />NOW account <br />Shearson money market <br />Totals <br />December 31, <br />1990 1989 <br />$77,666 ($69,847) <br />150 150 <br />5,324,222 <br />1,251,759 <br />29,085 <br />201,830 <br />318,165 <br />4 <br />3,295,495 <br />2,230,875 <br />26,900 <br />231,348 <br />494,035 <br />Increase <br />(use) <br />$147,513 <br />0 <br />2,028,727 <br />(979,116) <br />2,185 <br />(29,518) <br />(175,870) <br />4 <br />$7,202,881 $6,208,956 $993,925 <br />The City occasionally maintains a negative balance in the City's checking account. These <br />negative balances are "book" balances only. These balances indicate that the City is depositing <br />— <br />cash which is not needed for current expenses into interest bearing accounts. We concur with the <br />City's practice of maintaining minimal balances in the City's checking account to increase interest <br />earnings. <br />Interest on investments totaled $531,817 in 1990 and $369,971 in 1989. The ability of a city <br />to generate investment earnings is an indication of sound fiscal management. Interest earnings are <br />required for the City to meet bonded debt payments in those funds which have received assessment <br />-- prepayments. Assessment prepayments reduce future interest generated from the assessment rolls <br />and therefore must be replaced through investment earnings. Capital project monies are restricted <br />WIN through bond resolution and/or City Council policy. Interest earned in these funds increases the <br />restricted assets which is intended to be expended at a future date. The interest earnings of the <br />General and Special Revenue Type Funds indicate that the City is maintaining operating reserves in <br />these funds. Operating reserves are mandatory to compensate for cash flow timing differences in <br />the receipt of major revenue sources and for various other purposes as discussed later in this report <br />— (see "General Fund "). <br />Iwo <br />