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Mounds View City Council June 12, 2000
<br />Regular Meeting Page 13
<br />Mr. Wischman stated they have taken the assets and subtracted the liabilities in the General
<br />Fund, to determine the Fund balance. He advised that at the end of 1988, the Fund balance was
<br />$100,294,000, and at the end of 1999, an eleven or twelve-year period, the Fund balance is
<br />$200,912,894. He indicated they generally look for a benchmark of approximately 6 months of
<br />operating expenditures as a Fund balance, to carry the City through the cash flow cycle. He
<br />advised that the City was at approximately 9 months of operating expenditures at the end of
<br />1999, which was very good. He explained that in terms of future trends, the City might find that
<br />the Fund balance is somewhat pressured, particularly with the variables of the Franchise tax and
<br />items of this nature, therefore, it was appropriate to have a Fund balance in excess of 6 months,
<br />in order to continue to operate the City in an efficient manner.
<br />Mr. Wischman provided the Council with a graph, which depicted the cash flow fluctuation. He
<br />advised that cash flow varies quite significantly in a City because the City receives large portions
<br />of tax and intergovernmental revenues in May and June, and also in November and December.
<br />He explained that as a result of this, there is somewhat of a spend-down pattern through May and
<br />June, after which the City receives a large chunk of money, which is generally spent through
<br />November. He indicated the month of December is generally the highpoint for the cash flow
<br />cycle of the General Fund. He stated at the low point of approximately $1.5 million dollars, the
<br />City was significantly lower than the ending balance, and the highpoint in the cycle was
<br />approximately 3 million dollars. He indicated the graph he has provided reflects the necessity for
<br />the Fund balance to carry the City through the operating cycle of the General Fund.
<br />Mr. Wischman stated the Debt Service funds are very tightly regulated in terms of tax levies, and
<br />the Debt Service Fund balance decreased approximately $447,000, primarily due to the transfer
<br />in for the Community Center Project. He indicated with regard to the Capital Projects Funds,
<br />given the various expenditures that are made, the Community Center is basically zeroed out at
<br />the end of every year. He explained that operating transfers are made from the Tax Increment
<br />funds to finance those projects, and in 1999, the Capital Projects expenditures were
<br />approximately $1.5 million dollars, between the Community Center and the State Aid Fund. He
<br />indicated at the end of 1999, the State Aid Fund had a balance of approximately $192,000.
<br />Mr. Wischman stated the Enterprise Funds are the Water, Sewer, and Golf Course Funds. He
<br />indicated 1999 was a fairly unique year in terms of the operating revenues and expenditures of
<br />the Water Fund, in that there were some expenses for contractual services that increased the
<br />operating expenses significantly due to the Year 2000, and as a result, there was a net operating
<br />loss, however, the retained earnings in that fund, at approximately $8.2 million dollars, was still
<br />very adequate. He explained that during the previous three years, the revenues in the Water Fund
<br />exceeded the operating expenses, and he would expect this to be the case in 2000 as well.
<br />Mr. Wischman advised that the Sewer Fund maintained fairly consistent operating results. He
<br />indicated operating revenues were $1.2 million dollars, and the Metropolitan Council billings
<br />were $671,000, which decreased from the previous billing of $730,000. He stated other
<br />operating expenses increased accordingly, however, the net income bottom line is that the Fund
<br />• gained $20,230, and therefore, the rates were exactly where they should be in the Sewer Fund, in
<br />order to account for depreciation and considerations of this nature. He advised that these were
<br />very consistent operations, which is very good from a budgeting standpoint m that it allows the
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