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Date: September 23, 2024 Item: 4 <br />Presenter: Maggie Jin, Finance Director <br />Section: Consent Agenda <br /> <br />Title: Amend Fund Balance Policy - Resolution 7509 <br /> <br /> <br />1.Purpose: <br />The purpose of this council action item is to amend the Fund Balance Policy. <br />2.Background: <br />In order to comply with GASB standards and based on the League of Minnesota Cities (LMC) <br />policy, the Fund Balance Policy was first adopted by Resolution 5994 on November 22, 2010, <br />amended by resolution 6105 on December 12, 2011 with last amendment made on December 9, <br />2019. Best practices includes routine reviews of the City's financial management policies to ensure <br />that the City follows GASB standards and LMC recommendations while allowing reasonable <br />thresholds within the policies. <br /> <br />At the end of 2023 audit year, the City was at 36.4% of the next year's operating budget. Per the <br />financial management policy for fund balance reserve, the policy states that the minimum <br />unassigned General Fund balance reserve is 45%. In order to meet threshold for 2025, a surplus of <br />over $1.18 million dollars is needed to meet the current policy of 45% minimum unassigned <br />General Fund balance. If reduced down to 40%, the needed surplus cuts in half to $580,000, which <br />is more attainable. <br /> <br />Staff have reviewed other cities' policy and found that a number of cities have set their unassigned <br />fund balance reserve policy at the 40% threshold. Included in Exhibit C is a list of other cities, <br />including neighboring cities, and their threshold for General Fund balance reserve. In the attached <br />policy in Exhibit B, the included changes includes a reduction from 45% to 40% for the minimum <br />unassigned General Fund balance of the annual operating budget. <br /> <br />Also included is a the addition of the Golf Course Fund and a policy for that fund. As this fund's <br />history expands, the policy will be reevaluated. <br /> <br />3.Staff Recommendation: <br />Per council directive, staff recommends amending the Fund Balance Policy to reduce the <br />minimum unassigned General Fund balance to 40% of the fund's annual operating budget. <br />AGENDA ITEM <br /> <br /> <br /> <br /> <br /> <br />COUNCIL ACTION REQUESTED <br />A motion to approve Resolution 7509 Amending the Fund Balance Policy. <br />Exhibits <br />Exhibit A. Resolution 7509 Amend Fund Balance Policy <br />Exhibit B. Fund Balance Policy 2024 <br />Exhibit C. Comparison to Other Cities <br />29