Management Report and Recommendations 12/31/1985

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City of Lino Lakes, Minnesota Management Report, Page 17 The level of fund balance of the City's General Fund is one indicator of the finan- cial strength or independence of a city. This often becomes critical during periods of high inflation; decreasing State aids; and, poor economic growth. With adequate reser- ves, these external factors are more manageable by the City. We commend the City for the improvements made in recent years to the General Fund reserve balance. These impro- vements indicate a responsible approach to City government which will assure the con- tinued ability of the City to deliver basic required services on a timely basis. Special Revenue Funds The financial statements of the Special Revenue Funds are presented in Statements 8 and 9 of the 1985 Annual Financial Report. A special revenue fund is a classification of funds to account for revenues segregated by City ordinance or Federal or State Statutes for specific purposes. The City maintains the Federal Revenue Sharing Fund as the only Special Revenue Fund of the City. The fund balance of the Federal Revenue Sharing fund of $12,230 at December 31, 1985 consists of the fourth quarter allotment receivable ($11,022) and accumulated interest earned over the past year. The City has appropriated the 1986 entitlement for the Fire and Police Departments. The rules and regulations of the Office of Revenue Sharing are considerable (and are subject to frequent change). Certain requirements deal with publications of notices. The City did meet all the publications requirements for 1985 with minor exceptions. We recommend that the City publish all required notices and monitor the notices to assure compliance with Revenue Sharing regulations. Current pending Federal legislation indicates that Revenue Sharing will be eliminated. Additionally, the 1986 entitlement may be cut by at least 8 %. We recommend that the City anticipate the effects of such legislation and prepare plans for substi- tute financing of expenditures which have been funded by Revenue Sharing (or plan to eliminate programs for which adequate funding is no longer available).