R2012-85 EXTENDING THE INTERFUND TRANSFERS BETWEEN VARIOUS CITY FUNDS

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FINANCIAL MANAGEMENT DEPARTMENT #2012- 09 DATE: March 30, 2012 TO: Honorable Mayor Michael T McElroy and City Council FROM: Ryan P. McCrady, City Manager Ron E. Neufeld, Finance Director SUBJECT: Interf ind Loan Authority SUMMARY RECOMMENDATION: It is recommended that the City Council approve the attached resolution, which authorizes the City Manager to make interfund loans between various funds. The maximum amount of the loans would be $1,000,000 and they would have to be repaid before the end of next fiscal year. BACKGROUND: Because of lower fund balances and delays in funding from the state and federal government, it may be necessary to do Interfund loans between various funds. The maximum amount of the loans would be $1,000,000 and it would have to be repaid before the end of next fiscal year. Many of the City's funds have revenues that are very cyclical but expenses incurred on a regular basis. The lack of an interfund loan policy requires us to keep an artificially high fund balance to supplement to times of low revenue activity. An interfund loan will allow us to better allocate our financial resources and lower the fund balance requirements for some of our funds. POTENTIAL OBJECTION: There are no known objections. INPUT FROM OTHER SOURCES: None STAFF REFERENCES: Ron Neufeld, Finance Director- 424-2702 The Finance Director, Ron Neufeld will be in attendance at the City Council meeting to answer any questions of the City Council on this item. BUDGET/TIME IMPLICATIONS: This has no direct impact on the City budget, but does provide the flexibility to move money from one fund to another, to avoid negative fund balances.