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STUART J. BONNIWELL Certified Public Accountant 0201 Wayzata Blvd.-Suite 235 �w Office:(612)545-1522 Minneapolis,MN 55305 The CPA.Never Unde,estin,ale The Value:' Fax: (612)545-8891 April 15, 1997 Mayor and Members of the City Council City of St. Anthony, Minnesota I have audited the general purpose financial statements of the City of St. Anthony, Minnesota •as of and- for the year ended December 31 , 1996, and have issued my report thereon dated April 15, 1997. The purpose of this letter is to communicate certain observations noted during the audit of the general purpose financial statements of the City of St. Anthony for the year ended December 31 , 1996. These comments are presented for your consideration and are intended to enhance the performance of City management in fulfilling its duties and responsibilities. This report is intended solely for the information and use of the City Council , management and others within the organization. Recommendations are intended to improve or strenghthen financial management and administration. • Financial Condition The City maintained and improved its overall financial stability for the year ending December 31 , 1996. For_ the year ended December 31 , 1996, revenues exceeded expenditures (before oper- ating transfers) by $332,000 in the General Fund. Portions of this excess were designated or transferred to other funds as outlined in a memorandum to the City Council by the Finance Director. The net increase in the fund: balance, after the effect of these transfers, was $110,000, increasing the fund balance to $971 ,200. Although •this fund balance is completely designated by the Council , this balance represents approximately 329 of the General Fund's budgeted expenditures in 1997. To reduce the magnitude of the General Fund's fund balance, I recommend transfer- ring $150,000 to the Revolving Improvement Fund and designate the amount for capi- tal acquisitions. The effect of this transfer reduces the fund balance of the General Fund to $821 ,200, which is 27% of budgeted expenditures for 1997. Of this amount, $795,720 is designated as follows; $483,748 for working capital purposes; $168,387 for self-insurance reserves; and the remaining balance of $143,585 de- signated for various City programs. -The reserve for working capital represents approximately 169 of budgeted expendi- tures for 1997 (down slightly from 1995) . As previously noted, working capital reserves provide needed working capital to finance current operations until tax settlements and state aids are received. This reserve also serves as a safeguard against potential revenue shortages or unexpected expenditures. The self-insurance' reserve increased slightly as a result of favorable insurance experience during the year.