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Members of the City Council City of St. Anthony, Minnesota • Collateral Minnesota statutes require that City deposits (including investments) at each de- pository be protected by surety bonds, or collateral . Funds on deposit in excess of insurance provided by the depository must be protected by surety bonds and/or collateral. The market value of collateral pledged shall be at least 110% of the deposits not covered by insurance or surety bonds; 140% in the case of mortgage notes pledged. It appears that at certain times during the year City deposits exceeded the amount of collateral pledged by the depository. This situation occurred primarily when tax settlements and state aids were received and funds deposited were not invested for a short period thereafter. Although this situation occurred, the City did not sustain any losses. The amount of insurance (FDIC) coverage provided by the deposi- tory should be reviewed with bank officials. It is my understanding that $100,000 of coverage is provided by the bank regardless of the number of accounts maintained at the bank. Restricted Contributions and Donations During the year, the City received contributions from 'a private corporation. Based on discussions with City personnel , there were no restrictions on the use of these contributions except that they be used for police related activities. To assure • contributions received are appropriately used, a letter of acknowledgement should be sent to the donor outlining restrictions, if any, on the use of funds. In addi- tion, a memorandum should be added to the file indicating the potential use of the funds. When an expenditure is made, the city manager should initial the memorandum to indicate approval of the expenditure from the contribution. Such procedures would assure the donor and others that the funds are being used for their intended purposes. This would eliminate the potential use of these contributions to supple- ment current budget expenditures. Financial Condition The overall financial condition of the City remains healthy. Following is a brief review of significant activities of various funds. General Fund - The fund balance of the General Fund decreased $57,590 as a result of a residual transfer of prior year cable franchise fees of $58,084 to the Revol- ving Fund for the city hall/community center. Revenues exceeded expenditures for the year ended December 31 , 1994, which allowed the General Fund to make nonbudgeted transfers of $34,977 to the Capital Outlay Fund for capital expenditures (eliminat- ing the deficit in this fund) and $28,876 to the Employee Benefit Fund to fully fund the liability for accrued compensated absences. In addition, the City was able to fund the hiring of additional police officers for two months in anticipation of pro- viding police services to the City of Falcon Heights. The City also accrued a lia- bility for a retroactive worker's compensation insurance adjustment of $40,500. Also, $100,000 has been appropriated for. potential budget shortages in 1995.