Laserfiche WebLink
CITY OF ORONO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br /> <br /> <br />(35) <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />Q. Net Position/Fund Balance (Continued) <br />When an expenditure is incurred for purposes for which both restricted and unrestricted <br />fund balance is available, it is the City’s policy to use restricted first, then unrestricted <br />fund balance. <br /> <br />When an expenditure is incurred for purposes for which committed, assigned and <br />unassigned amounts are available, it is the City’s policy to use committed first, than <br />assigned, and finally unassigned amounts. <br /> <br />The City formally adopted a fund balance policy for the General Fund. The policy <br />establishes a year-end target unassigned fund balance of 45% of the fund’s annual <br />operating budget. Unassigned fund balance in excess of 50% will be transferred to the <br />Community Investment Construction Fund pursuant to Council approval. <br /> <br />R. Cash and Investments Held by Trustee <br />Cash and investments held by trustee represents restricted assets including cash and <br />cash equivalents and the related interest receivable whose use is limited by legal <br />requirements such as a bond indenture. Interest receivable is included within "accounts <br />and interest receivable." <br /> <br />S. Budgets and Budgetary Accounting <br />Each fall, after holding a meeting to obtain public comments, the City Council legally <br />adopts the General Fund and all of the special revenue funds' budgets, except the <br />Affordable Housing Fund, Lurton Park Fund, and Golf Course Improvements Fund, for <br />the following fiscal year beginning January 1. These budgets are adopted on a basis <br />consistent with accounting principles generally accepted in the United States of America. <br />The City has established budgetary control at the department level. City management <br />must request City Council approval before exceeding the budget at that level. City <br />management may transfer appropriations within the department level without City <br />Council approval. Appropriations lapse at year-end; however, the City Council may <br />approve the carryover of specific amounts. Encumbrance accounting is not used. <br /> <br />T. Risk Management <br />The City is exposed to various risks of loss related to torts: theft of, damage to, and <br />destruction of assets; errors and omissions; and natural disasters. The City participates <br />in the League of Minnesota Cities Insurance Trust (LMCIT), a public entity risk pool for <br />its general property and casualty, workers' compensation, and other miscellaneous <br />insurance coverages. LMCIT operates as a common risk management and insurance <br />program for a large number of cities in Minnesota. The City pays an annual premium to <br />LMCIT for insurance coverage. The LMCIT agreement provides that the trust will be self- <br />sustaining through member premiums and will reinsure through commercial companies <br />for claims in excess of certain limits. The City also carries commercial insurance for <br />certain other risks of loss. Settled claims resulting from these risks have not exceeded <br />insurance coverage in any of the past three fiscal years. There were no significant <br />reductions in insurance coverage in 2015.