Agenda Packet Cc - work session 6/23/2025

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RELEVANT LINKS: League of Minnesota Cities Handbook for Minnesota Cities 9/10/2024 Municipal Budgeting Chapter 20 | Page 8 1. Budget preparation Cities begin budget preparations in May or June, examining current economic trends, as well as all revenue sources and expenditures and proposing increases or decreases accordingly. City staff collects budget information and presents it to the council at meetings where interested citizens may participate. The goal of budget preparation is to balance all revenues and expenditures, prioritize capital improvements, and appropriately manage outstanding debt. 2. Budget approval Minn. Stat. § 275.07, subd. 1. Section VI, A 2. Setting the property tax levy within limits. By law in Minnesota, the fiscal year of a city and all of its funds is the calendar year. By December of each year cities determine their financial condition. Cities adopt a new budget late in December to begin in January of the coming year. 3. Budget implementation City councils must monitor the current budget, directing how staff accounts for expenditures and revenues. The Importance of Internal Controls, Statement of Position, Office of the State Auditor Credit Card Use and Policies, Statement of Position, Office of the State Auditor. One important step is for council to adopt a policy on internal controls, meaning that the council sets the rules to prevent misuse of public money. For example, if possible, the same person should not be taking in money and paying it out. This ‘segregation of duties’ is part of a policy on internal control and budget implementation crucial to appropriate use of public funds. Petty Cash (Imprest) Funds, Statement of Position, Office of the State Auditor. Policies on the use of petty cash (known as imprest funds in financial jargon) and credit cards also help protect cities from loss or misuse of public funds. 4. Budget audits Minn. Stat. § 471.697, subd. 1. Minn. Stat. § 471.49, subd. 10. City councils must audit budgets, depending on the size, structure, and annual revenues of the city. The state auditor publishes the audit threshold in early February of each year. Minn. Stat. § 412.591, subd. 2. Minn. Stat. § 412.02, subd. 3. Handbook, Financial Reports, Accounting and Auditing. Audit Requirements for Cities, Frequently Asked Questions, Office of the State Auditor. At a minimum, a city with a population of 2,500 or less and a combined clerk/treasurer must have an annual audit done by a certified public accountant if its annual revenue is greater than $272,000—for the year ending Dec. 31, 2022. A city with a combined clerk/treasurer and annual revenue of less than $272,000 (for the year ending on Dec. 31, 2022) must have an audit done by a certified public accountant once every five years, and the person doing the auditing will select the year to be audited. 17