Agenda - Council - 05/27/1986 - Laserfiche WebLink

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5 l, linutes CASt d'20: COUNCIL ACTION TO REAFFIRN ALL EQUITY TIL~SFERS AND OPERATING TRANSFERS FOR FISCAL Y~RI985 By: Noel Craczyk, Finance Officer Background: During fiscal operations for the year. there are two types of transfers that may occur. An "equity transfer" is made when it is necessary to close one fund into another fund. This type of transfer represents the transferring of fund balance directly from one fund to another. A typical example of an equity transfer is the closlng of a capital project fund into the debt service fund that provided the bond proceeds for the construction. In 1985, there were two equity transfers that occurred; one for the closing of the 1984 construction fund into the 1984 debt service fund and the second equity transfer closes the 1981 debt service fund into the 1985 refunding debt service fund. The second equity transfer is the result of the refunding bond issue. "Operating transfers" represent the transfer of funds from one fund to another for the purpose of conducting operations during the fiscal year. An example of an operating transfer is the federal revenue sharing transfer that is made each year. Under the federal revenue sharing program, the City is allotted federal revenue sharing dollars. These dollars may be spent based on Council appropriation. When the federal revenue sharing allotment is received by the City, it must be receipted into a special revenue fund. However, the Council approved expenditures for federal revenue sharing occur in the operating funds such as the general fund and the park fund; thus, it is necessary to make a transfer from the special revenue fund into the general fund and park fund to provide revenues for the expenditures that have been approved. Included in the reference material is a proposed resolution reaffirming transfers for 1985 for your information. Observations: The enclosed proposed resolution reaffirming the fiscal year 1985 operating transfers details all equity and operating transfers for the year and the reason for the transfer. It should be noted that each of these transfers for 1985 have already been approved or appropriated by prior Council action. This proposed resolution will only duplicate prior Council action. There are basically five types of actions that have been taken by the Council that have approved each of these transfers. The transfers that are marked with a prior approval type 1 are required under the debt service bond covenants that are established by the bond resolutions approved by the Council before the sale of bonds. Prior approval type 2 represents approval for the transfer of funds for the purpose of matching revenues with expenditures that have already been approved and expended. This type of transfer approval is most often encountered in regards to Minnesota State aid street construction reimbursement. Approval for this transfer was also established when the bonds were sold for the purpose of financing the construction. The bond covenants require that not only special assessment, but also the pledged State aid revenues that were used to calculate the special assessments also be placed into the debt service fund.