03-13-2017 Council Packet - Laserfiche WebLink

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MINUTES OF THE ORONO CITY COUNCIL MEETING Monday, February 27, 2017 7:00 o'clock p.m. 13. 4t'' QUARTER FINANCIAL REPORT (continued) Olson noted 2016 was the second year of a rebound for the golf course and that revenues are now getting close to $200,000. Last year the golf course revenues came in at $188,000, which is a 50 percent increase in two years. Next year Staff will be increasing those revenue lines in the budget. The amount of money the City received in interest is pretty much the same as it has been in the past and will come in close to budget. In 2017, the City will likely see some improvement in that item as the economy improves and the Federal Reserve raises the interest rates. Olson noted the City is very restricted in what they can invest in, such as FDIC bonds, and that the City cannot buy stocks or anything risky. The City is able to purchase AAA municipal bonds. Olson displayed a graph depicting the City's revenues for the past five years. Olson noted the City's revenues have remained fairly consistent through the years. The overall General Fund expenditures are currently at 96.4 percent of budget. Five departments are over their expenditure budgets and will require budget adjustments. At 128.48 percent of budget, the special services department was significantly over budget, but this department is used to account for expenditures that are largely passed through to the parties that received the service. Olson noted the legal fees for 2016 were higher than normal because the City had to use a conflict prosecutor more often than usual. The City also had to pay $6,000 in jail charges to Hennepin County. The park budget was $1,720 over budget for the year and was in the maintenance area. All other departments were either at or below budgeted amounts. As it relates to the City's investments, the City earned 2.44 percent on the bonds, which is one of the better bond rates the City has had over the last several years. Money market and operating is slightly higher due to some debt service that came due in February. The City probably has close to $2 million in money markets at the current time. Total investments are $20,181,147 versus $20,068,259 at the end of 2015. Interest earnings in 2016 went up by approximately $14,000 Walsh stated it is not like the City has $20,000,000 but it is funds collected for specific purposes. Olson stated that is correct and that approximately $4 million is in the City's Enterprise Fund and is needed to fund infrastructure going forward. The state auditor recommends a 50 percent fund balance, which means the City should have close to $4 million in reserves. Olson noted the City does have money on hand but that they will not receive another tax payment until June. Olson stated one other benefit of a good fund balance is the Aaa rating the City receives. Orono is one of only 17 cities in the country that has an Aaa rating, and one of the reasons the City receives a strong bond rating is the City's strong financial reserves. Olson stated they would not want the fund balance to decrease too much. Olson stated another requirement of the Fund Balance Policy is that the Council be informed of the City's new investments. Olson stated as the City's investments were going up, they had fewer bonds called and only had three new investments during the quarter. The Federal Home Loan Step Up is at 2.44 percent, which is the best that has been seen for quite some time. Page 21 of 23