Management Report and Recommendations 12/31/1983

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City of Lino Lakes Management Report, Page 18 changing legislation and budget such aids accordingly. A reserve "cushion" in the City's General Fund will mitigate the adverse effects of aid reductions which are received after expenditure budget commitments are made. The minimum cash flow reserve requirement is measurable. For the City of Lino Lakes, the minimum required reserve is $438,000 computed as follows: 1983/84 Budgeted Levy (Includes Homestead Credit) 1983/84 Anticipated Local Government Aid Total $ 690,000 185,196 $ 875,196 Minimum Required Cash -Flow Reserve (One -Half of Total) $ 438,000 The minimum required cash flow reserve of the City's General Fund is $438,000. The December 31, 1983 fund balance does not meet this requirement. The City was below its minimum required cash flow reserve by approximately $307,000. The City of Lino Lakes has improved its General Fund balance over the past year. We commend the City for this accomplishment, however, the City has not yet achieved the "required cash flow" reserve. This reserve has changed due to increased operating expenditures, changes in the timing of State aid payments and decreases in State aids provided. We recommend that the City continue to improve the fund balance of the City's General Fund and implement actions to achieve the minimum reserve requirement. The City should review General Fund reserve objectives and define what level of fund balance reserve is appropriate for the City of Lino Lakes. Once the amount is quantified, the City can maintain such reserves in future years through the use of unbalanced budgets (surplus versus deficit budgets). We recommend that the City address the issue of General Fund reserves and continue to take action to achieve and maintain the desired levels through formal Council action and /or policy statements.