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W NW <br />N IMBI <br />City of Lino Lakes, Minnesota <br />Management Report, Page 18 <br />Debt Service Funds <br />Debt Service Funds are governmental type funds used to account for accumulation or <br />resources for (and the payment of) principal and interest on general debt. The City had <br />one general debt bond issue outstanding during 1985 (the 1985 Certificates of <br />Indebtedness). <br />The following schedule reflects the projected final fund balance of the 1985 <br />Certificates of Indebtedness Debt Service fund. This projection is based on future <br />scheduled tax levies and future bond principle and interest payments. It does not <br />include future investment interest earnings which would increase the projected reserve <br />balance. <br />Fund Balance 12/31/85 <br />Future tax levies <br />Future bond principle and interest <br />Projected reserve <br />Year of final maturity <br />$ 292 <br />126,000 <br />121,831 <br />$ 4,461 <br />12/1/88 <br />The above schedule indicates that the 1985 Certificates are adequately financed. <br />However, the interest payments are due June 1st and December 1st of each year. <br />Principle payments are due December 1st of each year. The City does not receive its tax <br />remittances until mid -July and mid - December. Therefore, this fund will experience a <br />temporary cash overdraft in June and December of each year until final bond maturity. <br />We recommend that for future issues, the City prepare cash flow schedules to assure that <br />adequate cash will be on hand in the fund prior to scheduled debt payments. <br />