Management Report and Recommendations 12/31/1985

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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 1985 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 1984 balance of $541,791. The increase in cash primarily represents 1985 bond proceeds. 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 1985 1984 (Decrease) Treasurer's balance - checking $ 5,792 $(23,450) $ 29,242 Petty cash 150 150 Investments: Certificate of deposits 1,800,000 300,000 1,500,000 Small Business Administration (SBA) 75,252 80,926 (5,674) FNMA Pool 507,353 507,353 Government National Mortgage Association 98,727 (98,727) NOW account 216,596 85,438 131,158 Totals $2,605,143 $541,791 $2,063,352 The City had interest earnings on investments of $45,284 in 1984 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 and increased fund balance). In 1984, rates ranged from 8.5% to 12.25% and in 1985 ranged from 7.0% to 12.25 %. During 1985 and 1984, the City maintained an average negative balance of approxima- - tely $61,000 and $24,000 respectively 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 recom- mend that the City continue this practice of minimal balances in the City's checking account.