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3.d Update on General Fund year-end fund balance Staff Report Date of Meeting: March 6, 2019 To: City Council From: Neil Soltis, Administrator Re: Update on the General Fund Year-end Fund balance Background: The Fund Balance policy adopted by the Council provides for the following: FUND BALANCE GOAL General Fund: Maintain fund balance of 50% to 65% of total annual General Operating Fund expenditures. If the balance of the unassigned account rises above 65% at the end of the fiscal year, the amount above 65% shall either be budgeted in the next year’s annual operating budget or transferred to a capital improvement fund. The City Administrator shall annually report the projected unassigned fund balance of the General Fund when the annual budget for the forthcoming year is presented to the City Council. In approving the 2019 budget the certified maximum levy was reduced so that the property tax levy to be collected in 2019 is the same amount as the previous 3 years. The budgeted 2019 year-end balance reflects the reduced levy amount. At the end of 2019 the unassigned balance in the General Fund is currently projected to be approximately $1,587,653. The 2019 expenditure budget for the General Fund is $1,697,600. Based on the Fund Balance policy the target balance in the General Fund at the end of 2019 would range from $848,800 (50% of $1,697,600) and $1,103,440 (65% of $1,697,600). Using these amounts and the General Fund balance projected for 12/31/2019, the amounts in excess of the target fund balance are $738,853 (50%) and $484,213 (65%). 65% 50% Projected Fund Balance 12/31/2019 $ 1,587,653 $ 1,587,653 2019 Budgeted Expenditures $ 1,697,600 $ 1,697,600 Target Fund Balance (% of Budget) $ 1,103,440 $ 848,800 Excess Fund Balance (Year-end less Target) $ 484,213 $ 738,853 Note that the projected 2019 year-end balance reflects the Council’s decision to reduce the certified maximum levy and approve a property tax levy at the same amount as the previo us 3 years. The fund balances in the City’s four (4) Capital funds, which would be the potential recipients of the excess fund balance are as follows: Fund Projected Balance – 12/31/2018 Budgeted Balance – 12/31/2019 Capital Improvement Fund $620,134 650,134 Park Capital Fund $104,615 $88,695 Equipment Replacement Fund $276,977 $244,977 Local Road Improvement Fund - $1,362,995 1,374,635 This an update and no action is needed at this time. This information is based on the financial submitted for audit and will be updated based on the final audited financial information.