2017.05.09 WS Agenda C - Laserfiche WebLink

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COMMUNICATIONS LETTER The enclosed communications letter, prepared by the auditing firm, is intended to communicate information relevant to the City’s finances to the City Council. The report includes a variety of topics including emerging issues the City will be encountering. FINANCIAL REPORT The comprehensive annual financial report is organized into three sections, as follows: • Introductory Section (pages 1 to 12) - Contains the letter of transmittal, certificate of achievement from the GFOA, principal City officials and an organizational chart. • Financial Section (pages 13 to 130) – Contains the auditor’s opinion, the management discussion and analysis (MD&A), the basic financial statements (including government-wide statements and notes), general fund budget to actual comparison, non-major and internal service fund statements, and additional exhibits regarding individual fund statements for the tax increment financing districts. • Statistical Section (pages 131 to 157) – Contains general and historical information about the City, including financial trends, revenue capacity, debt capacity, demographic and economic information, and operating information. The financial statement format prescribed by the Governmental Accounting Standards Board (GASB) has strict reporting guidelines. A consequence of those guidelines is only the general fund is shown with budget to actual comparisons. Therefore, as a supplement the comprehensive annual financial report, a discussion and a two-year comparison of activity for each budgeted fund is presented on the next few pages. General Fund – The General Fund is the primary operating fund of the City. Unassigned fund balance at the end of 2016 is 43% of next year’s operating expenditures. New Brighton’s fund balance policy prescribes the formula that establishes the minimum fund balance for cash flow purposes and the targeted fund balance for all purposes. A. Targeted fund balance 1. Working capital allocation is equal to 50 percent of the ensuing years General Fund tax levy, less any debt service portion, and levy-based aids, because taxes and state aids (which are the primary revenue sources for the General Fund) are received in June and December of each year. 2. The unanticipated expenditure allocation is equal to no more than 10 percent of the ensuing years budgeted expenditures, less any debt service expenditures. 3. The targeted fund balance is equal to the combined working capital and unanticipated expenditure designations. 4. The total targeted unassigned fund balance should not be less than the minimum. In the event that the calculations of the targeted balance become less than the minimum, then the minimum will become the targeted balance. B. Minimum balance The City will maintain an unassigned fund balance in the General Fund of an amount of not less than 35% of the subsequent year’s budgeted operating expenditures. The total General Fund balance at the end of 2016 is $6,748,655, compared to $6,528,334 for 2015. According to the fund balance policy a transfer of the surplus in the amount of $177,211 should be requested to be transferred to the Community Reinvestment Fund to help assist with future needs. As noted during the 2017 first quarter financial update,