The city manages finances in a way to hedge for the future
with some of its expenditures by placing funds in a separate fund for
designated purposes called the Revolving Capital Fund. This fund is part of the General Fund of the
city with funds being kept in earmarked categories. These earmarks include funds set aside for
roads, police, public works, and other designations. The largest amounts are for higher cost things
such as road and future improvements.
Funds being transferred to these earmarks come from
budgeting and unspent capital allocations.
Funds are also spent out of these earmarks to balance out budgeted expenditures. Using this fund requires in addition to
budgeting, a transfer resolution, accomplished after the year-end financial
statements are completed. So as an
example as to how this works; $30,000 was budgeted for a piece of equipment to
be purchased. The actual expenditure was
$24,560. The difference of $5,440 is available
to be placed in the appropriate earmark.
With the financial statement and budgeted amounts to be
transferred the financial statement is reviewed to see where these amounts
exist. They are listed in a transfer
resolution which is reviewed by the Finance Committee and considered by the
city council. The annual transfer
resolution was adopted by the council at the February meeting.
This past budget year we ran very close to budget resulting
in some questions about what should be transferred. We stuck to past practices which results in overall
expenditures being over budget but we also received move revenues than what was
budgeted. The outcomes that exist:
The General
Fund - revenues over budget $
87,852
expenses under budget $ 27,355
$115,207
Financial
Statement expense margin $
27,355
Transfer expense -$63,586
Resulting
expenses over budget -$36,231
Cash Flow
for the General Fund $115,207
Transfer expense -$63,586
Cash
Improvement overall $
51,621
With the Sewer Fund, the budgeted transfer was $69,297. The budget had also provided
for an $8,400 transfer to the general fund for a capital expenditure for
equipment. Combined this amounts to $77,697. The difference in expenditures versus
revenues in this fund, based on the year-end financial statement, is
$81,607. This results in a positive
difference of $3,910 keeping us slightly under budget.
