Agenda - Council - 06/28/2016 - Laserfiche WebLink

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Summary: Ramsey, Minnesota; General Obligation For fiscal 2016, the city adopted a break-even budget without the use of reserves, and management reports that actual performance is tracking better than budget so far due in part to higher building permit revenue. Ramsey has a consistent history of achieving operating surpluses and we expect fiscal 2016 will close with a surplus as well. Excluding one-time expenditures, we expect the total governmental funds result will be balanced for fiscal 2016. Very strong budgetary flexibility Ramsey's budgetary flexibility is very strong, in our view, with an available fund balance in fiscal 2015 of 67% of operating expenditures, or $7.3 million. We expect the available fund balance to remain above 30% of expenditures for the current and next fiscal years, which we view as a positive credit factor. Over the past three years, the total available fund balance has remained at a consistent level overall, totaling 70% of expenditures in 2014 and 68% in 2013. The city has no plans to substantially spend down the general fund balance and we expect budgetary flexibility will remain very strong. Management reports that Ramsey keeps a high fund balance for cash flow purposes, as it is highly dependent on property tax revenues for operations, which are only received twice a year. Very strong liquidity In our opinion, Ramsey's liquidity is very strong, with total government available cash at 3.9x total governmental fund expenditures and 21.8x governmental debt service in 2015. In our view, the city has strong access to external liquidity if necessary. Ramsey is a frequent issuer of GO debt with annual issuances in the past decade. It has no variable -rate or direct purchase debt. Ramsey's investments consist primarily of municipal bonds, treasuries, certificates of deposit, and money market funds. We therefore do not consider the city's investments to be aggressive and expect the city's liquidity profile to remain very strong. Adequate debt and contingent liability profile In our view, Ramsey's debt and contingent liability profile is adequate. Total governmental fund debt service is 17.8% of total governmental fund expenditures, and net direct debt is 184.2% of total governmental fund revenue. Overall net debt is low at 2.4% of market value, and approximately 66.1% of the direct debt is scheduled to be repaid within 10 years, which are in our view positive credit factors. Management reports that the city will likely issue approximately $3.4 million of GO debt in the next two years for street reconstruction projects. While we expect the city's debt profile to remain adequate in the near term, additional debt beyond what the city is currently considering could affect the amortization schedule and weaken the debt profile. Ramsey's combined required pension and actual other postemployment benefits (OPEB) contributions totaled 3.7% of total governmental fund expenditures in 2015. The city made its full annual required pension contribution in 2015. All full-time and certain part-time Ramsey employees are covered by defined -benefit plans administered by the Public Employees' Retirement Association of Minnesota (PERA). PERA administers the General Employees' Retirement Fund (GERF) and the Public Employees' Police and Fire Fund (PEPFF), which are cost -sharing, multiemployer retirement plans. State statute establishes and may amend benefit provisions. For our calculation purposes, we considered the city's statutorily determined contribution its required pension contribution. Per Government Accounting Standards WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JUNE 22, 2016 4 1661625 1302450320