Management Report and Recommendations 12/31/1986

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City of Lino Lakes, Minnesota Management Report, Page 6 Combined Financial Statements The Combined Financial Statements of the City are presented in Statements 1 through 5 of the 1986 Annual Financial Report. The following comments relate to those state- ments. Cash and Investments Cash and Investments held by the City at December 31, 1985 totaled $2,605,143 as com- pared to the 1986 balance of $1,415,996. The decrease in cash primarily represents 1985 bond proceeds expended in 1986. Additionally, the City increased the fund balance of the General Fund (see later comments). Cash and investments are summarized as follows: December 31, Increase Description 1986 1985 (Decrease) Treasurer's balance - checking $ (55,091) $ 5,792 $ (60,883) Petty cash 150 150 Investments: Certificate of deposits 706,932 1,800,000 (1,093,068) Small Business Administration (SBA) 71,577 75,252 (3,675) FNMA Pool 398,114 507,353 (109,239) NOW account 294,314 216,596 77,718 Totals $1,415,996 $2,605,143 $(1,189,147) The City had interest earnings on investments of $146,689 in 1986 as compared to 1985 earnings of $53,501. The increase in interest earnings was caused by an increase in the average cash available (to invest due to issuance of the 1985 Certificates of Indebtedness and the 1985 G.O. Improvement Bonds sold in November, 1985 and increased fund balance). The City maintains an average negative balance in the City's checking account. These negative balances are "book" balances only. These balances indicate that the City is depositing cash which is not needed for current expenses into interest bearing accounts. We recommend that the City continue this practice of minimal balances in the City's checking account to increase interest earnings.