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FINANCIAL MANAGEMENT DEPARTMENT <br /> #2011- 21 <br /> DATE: May 3, 2011 <br /> TO: Honorable Mayor Michael T McElroy and Ci Council <br /> Y Y City <br /> FROM: Ryan P. McCrady, City Manager <br /> Ron E. Neufeld, Finance Director <br /> SUBJECT: Interfund Loan Authority <br /> SUMMARY RECOMMENDATION: <br /> It is recommended that the City Council approve the attached resolution, which <br /> authorizes the City Manager to make interfund loans between various funds. The <br /> maximum amount of the loans would be $1,000,000 and they would have to be repaid <br /> before the end of this fiscal year. <br /> BACKGROUND: <br /> Because of lower fund balances, delays in funding from the state and federal government <br /> as well as lower than anticipated revenues, it may be necessary to do Interfund loans <br /> between various funds. The maximum amount of the loans would be $1,000,000 and it <br /> would have to be repaid before the end of the fiscal year. <br /> Many of the City's funds have revenues that are very cyclical but expenses incurred on a <br /> regular basis. The lack of an interfund loan policy requires us to keep an artificially high <br /> fund balance to supplement to times of low revenue activity. An interfund loan will <br /> allow us to better allocate our financial resources and lower the fund balance <br /> requirements for some of our funds. <br /> POTENTIAL OBJECTION: There are no known objections. <br /> INPUT FROM OTHER SOURCES: None <br /> STAFF REFERENCES: Ron Neufeld, Finance Director - 424-2702 <br /> The Finance Director, Ron Neufeld will be in attendance at the City Council meeting to <br /> answer any questions of the City Council on this item. <br /> BUDGET/TIME IMPLICATIONS: <br /> This has no direct impact on the City budget, but does provide the flexibility to move <br /> money from one fund to another, to avoid negative fund balances. <br />