HomeMy WebLinkAbout#27 2016 YE Excess General Fund Balance Reserves
MAYOR & COUNCIL COMMUNICATION
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DATE: December 20, 2016
REGULAR
ITEM #27
MOTION
AGENDA ITEM: 2016 Year End Recommendation Related to Excess General Fund Balance
SUBMITTED BY: Cathy Bendel, Finance Director
THROUGH: Cathy Bendel, Finance Director
REVIEWED BY: Kristina Handt, City Administrator
SUGGESTED ORDER OF BUSINESS:
- Introduction of Item .............................................................. City Administrator
- Report/Presentation…………………………………………City Administrator
- Questions from Council to Staff ............................................. Mayor Facilitates
- Call for Motion ............................................................... Mayor & City Council
- Discussion ....................................................................... Mayor & City Council
- Action on Motion .................................................................... Mayor Facilitates
POLICY RECOMMENDER: Finance Committee
SUMMARY AND ACTION REQUESTED: A recommendation is being brought forward
from the Finance Committee to transfer $200,000 from the General Fund Reserves to a Legal
Reserve Fund in the amount of $200,000.
BACKGROUND INFORMATION: The 2016 projected year results are anticipated to be
$400-450k better than budgeted.
$250k of this is due to the current Building Official having the certifications necessary to do state
inspections for the ISD 916 new school project. This generated $250k in permit fees that were
not budgeted as the prior Building Official did not have these certifications.
The remaining excess is a result of some new building and planning department fees initiated in
2016, as well as diligent management of expenses to the budget by all departments.
City Council Meeting [Regular Agenda Item #27]
December 20, 2016
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STAFF REPORT: At the Finance Committee meeting on December 13, 2016, there was a
discussion surrounding the projected excess fund balance for 2016 and its possible uses. During
the 2017 budget process, the Finance Committee discussed potentially setting up a legal reserve
to cover the increased insurance deductible.
The Finance Committee was clear they do not believe in “Contingency Funds”. However, there
was discussion about a specific length of time and an end date for the fund to ensure the funds
would be used or returned to the general fund reserves. Once in a fund, those funds are
considered “restricted” and can only be used for the specific purpose of the fund.
RECOMMENDATION: The Finance Committee is recommending setting up a new “Legal
Reserve Fund” effective 1/1/2017. It was specifically recommended that all deductible
payments by the City would be charged to this fund. This fund will be reviewed in November
each year as to whether the funds need to be replenished and if so to what balance, or
discontinued and transfer the funds back to the General Fund Reserve.
“Motion to adopt Resolution #2016-112 setting up a new Legal Reserve Fund effective
January 1, 2017 in the amount of $200,000 to be used specifically to pay any insurance
deductible payouts”
ATTACHMENTS:
1. Resolution #2016-112
Resolution 2016-112 1
CITY OF LAKE ELMO
WASHINGTON COUNTY
STATE OF MINNESOTA
RESOLUTION 2016-112
RESOLUTION AUTHORIZING INITIALIZATION OF A NEW LEGAL RESERVE
FUND
WHEREAS, the insurance deductible for the City of Lake Elmo has been
increased to $200,000;
WHEREAS, the increased deductible is for a time uncertain;
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF LAKE ELMO, MINNESOTA, THAT:
1. The City of Lake Elmo will set up a new Legal Reserve Fund of $200,000
effective January 1, 2017.
2. The Legal Reserve Fund will be reviewed in November of each year in order
to determine whether the funds need to be replenished, and if so to what
balance, or discontinued and transfer the funds back to the General Fund
Reserve for the following year.
3. The Finance Committee will review and make a recommendation to the City
Council each year.
ADOPTED BY THE LAKE ELMO CITY COUNCIL ON THE 20th DAY OF
DECEMBER, 2016.
By: __________________________
Mike Pearson
Mayor
(Seal)
________________________________
Julie Johnson, City Clerk