08-23-84 Agenda & Packet - Laserfiche WebLink

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. • 4., / Page 3 January 12, 1984 1 I we were able to make budget modifications and thus absorb those re_ ductions we may not have that time in the future and thus we may loose our ability to make budget modifications. Additionally future reductions could be more severe. A reserve for emergency or unan- ticipated expenditures would allow us to absorb those reductions and give ample time to modify future budgets and preserve the well being of our residents. Additionally City operations are so diverse that financial flexibility is required to handle unforseen events. Natural disasters , unexpected capital outlay requirements and preliminary financing for vital im- provements require financing on a current and timely basis. A secondary benefit of adequate fund balance reserves is interest in- come. Such income would be available to help offset the costs of current operations . In order to maintain the financial strength and independence of the General Fund, I recommend that a transfer of an additional $100,000 be made to the fund balance of the General Fund from the Special Projects Fund. This amount would be designated as a reserve for contingencies and would be used in the event of reductions of State Aids, unforseen events and emergencies. I am not recommending an interest bearing loan be made to the Improv ment Bonds of 1981 Bond Fund. In their most recent management letter our auditors recommended obtaining a legal opinion regarding the qualifying uses of residual MSA construction monies. As a result of the legal opinion from our City Attorney, those residual monies must be restricted, however, one of the permissable uses would be a loan to the bond fund. As a consequence it is not necessary that monies of the proposed Special Projects Fund be used for these bonds. A separate memo that you will be receiving along with this one will explain the City Attorney' s opinion in more detail. RECOMMENDATION : Adopt the proposed ordinance establishing a Special Projects Fund and direct staff to prepare a resolution authorizing the transfer of $338, 000 from the Special Projects Fund to the fund balance of the General Fund. DB/ds Attachment J 4111