Agenda Packets - 2012/11/26 - Laserfiche WebLink

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Item No. 7.E. Meeting Date: November 26, 2012 Type of Business: Council Business City Administrator Review: ______ City of Mounds View Staff Report To: Honorable Mayor and City Council From: Mark Beer, Finance Director Item Title/Subject: Resolution 8026 Assigning General Fund Balance for Future Levy Reduction and Stabilization Background: The Governmental Accounting Standards Board (GASB) passed GASB Statement 54 which affected fund balance and fund types. The City implemented GASB 54 in 2011. The City closed the Levy Reduction Fund and reclassified the Vehicle and Equipment Special Revenue Fund and committed General Fund balance as part of the implementation. Discussion: The initial guidance for “committing” fund balance provided the City Council the opportunity to place a higher standard on the use of the former Levy Reduction funds. Subsequent guidance has clarified that guidance and the Levy Reduction funds no longer meet those criteria. The City Council can “assign” fund balance which is the next standard for the use of the former Levy Reduction funds. The bottom line is that it will take a council action under either of the below standards to change the intended use of the Levy Reduction funds. Committed - Specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision making authority. Assigned - Constrained by the government’s intent to be used for a specific purpose but are neither restricted or committed. Resolution 7824 established the method of calculating the amount of fund balance that would be set aside for levy reduction. The initial resolution provided for a maximum annual draw down of the set aside fund balance to no more than ten percent (10%) of the subsequent years budgeted expenditures. The 10% amount was by Council consensus and can be changed in the future by resolution at the Council’s direction. The “Assigned” balance will be determined by taking the prior year assigned amount, adding interest on that balance, and deducting the Council designated budget amount for the current year. The amount for 2012 will be $6,292,906 + interest $52,280 (approx.) – Council designated transfer $250,000 = $6,096,186. Conclusion Staff recommends approval of resolution 8026 assigning General Fund balance for levy reduction/stabilization. Respectfully Submitted, Mark Beer, Finance Director