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City Council Regular
Meeting Date: 04/16/2019  
Subject:    Consider Resolution 19-43 Authorizing the Transfer of Funds
From: Kevin Knopik, Assistant Accounting Manager

The 2018 and 2019 budget documents include a number of fund transfers that affect 2018.  Resolution 19-43 requesting these transfers is attached to this memo.
The transfers which affect 2018 are as follows:
General Fund to the Retirement Insurance Fund--$350,000.  This is a budgeted transfer, which when combined with other revenues and the fund balance in the Retirement Insurance Fund, will fund the actuarial requirement for health insurance benefits for qualified retired police and firefighters. 
General Fund to the Facilities Construction Fund--$1,575,000.  City policy is to maintain an unassigned fund balance in the General Fund of at least 45% of the following year expenditures and transfers.  Based on 2018 financial results and 2019 budgeted amounts, sufficient funds are available for this transfer while adhering to the fund balance policy.  The excess of revenues over expenditures was due to the following variances:
Expenditures:   2018 actual expenditures for personal services was $23,822,000 which was ($882,000) less than the 2018 budgeted amount of $24,704,000, primarily due to various vacancies throughout the year.
Revenues 2018 actual revenue for building permits and inspection plan check fees was $1,530,500 which was $593,500 over the 2018 budgeted amount of $937,000.  This was primarily due to continuing repairs for the hail storm in July of 2017, and an increase in remodeling projects on existing buildings throughout the City.

Lodging Tax Fund to the General Fund--$13,295.  The three percent lodging tax collected by hotels and motels in the City is recorded in the Lodging Tax Fund.  The City remits 95% of the payments received to Minnesota Metro North Tourism and retains five percent which is transferred to the General Fund to defray administrative expenses.
Senior Activity Fund to the General Fund--$10,000.  This budgeted transfer is from earnings on trips accounted for in the Senior Citizen Activity Fund and covers related administrative costs in the General Fund.

Park Improvement Bonds Fund to the Park Improvement Fund--$524,769.  Tax levies for the referendum approved park improvement bonds began in 2014.  Since the first year of principal and interest payments on the bonds was not due until 2016, a portion of these previous levies can be used to pay for park improvements directly and there will be a corresponding decrease in the amount of bonds that need to be issued to get to the total of $17,400,000 for improvements.
Equipment Certificate Debt Service Fund to the Equipment Certificate Capital Projects Fund--$173,490.  Available funds in the Debt Service Fund are used toward the cost of fire trucks in the Capital Projects Fund instead of issuing equipment certificates.

Revolving Construction Fund to the General Fund--$46,238.  Several recent street reconstruction projects included streets bordering City parks.  Therefore, the City is responsible for paying its portion of the assessments for those projects.  The assessment revenue goes in the Improvement Bonds Funds to repay the bonds.  This transfer will reimburse the General Fund.

Revolving Construction Fund to the Street Reconstruction Fund--$217,832.  The balance of revenues over expenditures in the Revolving Construction Fund contributes to the seal coating program and the City's portion of street reconstruction costs.

Insurance Reserve Fund to the Retirement Insurance Fund--$54,672  Prior year interest income in the Insurance Reserve Fund contributes toward the funding of the liability of other post employment benefits. 

Various transfers as follows are needed so the funding or expenditures from certain construction projects or other items are in the proper fund or to close funds which are no longer needed:
  • 2016 Bonded Projects Fund closed to the Revolving Construction fund--$1,311,279
  • 2017 Bonded Projects Fund closed to the Revolving Construction fund--$2,114,590
  • Insurance Reserve Fund to Park Improvement Fund to reimburse for storm related damage--$41,024
  • 2016 Improvement Bond Fund to the Revolving Construction Fund to redirect assessments--$600,000
  • 2018 Improvement Bond Fund to the 2018 Bonded Project Fund to redirect assessments--$534,642

Various funds to/from the Compensated Absences Fund--$208,358. Compensated absences (unused sick/vacation balances) for the non-enterprise funds are accounted for in the Compensated Absences Fund.  To fully fund the liability of $2,490,754 in this fund as of December 31, 2018, the following transfers are needed to cover the 2018 change in each fund’s liability:  $204,629 from the General Fund, $1,783 to the Public Communications Fund and $1,946 from the HRA Capital Projects Fund.

Staff recommends the adoption of Resolution 19-43 Authorizing the Transfer of Funds.

Resolution 19-43 Authorizing Transfer of Funds

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