Agenda - Council - 09/28/2021 - Laserfiche WebLink

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Summary: Ramsey, Minnesota; General Obligation • A formal investment management policy, along with management reporting investment holdings to the council monthly; • A formal, albeit limited debt management policy; and • A formal general fund reserve policy to maintain a minimum of 50% of expenditures, which the city has historically followed. We also note the city has implemented policies and practices to help mitigate its exposure to cybersecurity risks, including contracting with a regional service provider for cybersecurity. Sizable operating surplus, with federal stimulus funds, supports maintenance of very strong budgetary flexibility and liquidity For fiscal 2021, Ramsey budgeted for a breakeven result in the general fund, which management indicates the city is on track to achieve by fiscal year-end. The city will receive up to $3 million under the American Rescue Plan Act, which will likely be used toward capital improvements and equipment purchases over upcoming years. In fiscal 2020, the city reported a sizable $1.2 million (8.3%) general fund surplus, representing positive variance compared with its breakeven budget. Ramsey received a total of $2.0 million of funding distributed under the federal CARES Act for extraordinary pandemic -related expenses, which contributed to the positive result. The city's primary fiscal 2020 general fund revenues were stable throughout pandemic -induced recessionary pressures and consisted of property taxes (70%), intergovernmental sources (17.7%), and licenses and permits (5.6%). Based on Ramsey's historically positive budgetary performance and expectations for at least a breakeven result in fiscal 2021, we expect the city will likely maintain strong budgetary performance. At fiscal 2020 year-end, the city reported total available cash and investments available for liquidity of $79.3 million (320% of total governmental expenditures) and a general fund reserve of $10 million (69% of general fund expenditures). Management expects to maintain compliance with the city's formal general fund reserve policy of 50% and we anticipate that reserves will likely remain stable given the city's lack of plans to drawdown. Ramsey does not have any potential contingent liabilities and has no exposure to direct -purchase debt that could weaken its cash position. Given Ramsey's recent positive budgetary performance and balanced budget projections, we believe budgetary flexibility and liquidity will remain very strong. Weak debt and contingent liability profile with plans for new debt issuance Management indicates the city could issue up to $3.5 million in debt to finance capital equipment purchases over upcoming years. Based on these plans, we expect Ramsey's debt service carrying charge will remain elevated and that the city's overall debt and contingent liability profile will remain weak. Moderate pension and OPEB exposure, with medium term costs that are unlikely to accelerate We do not believe that pensions represent a significant credit pressure for Ramsey, as the cost -sharing, multiple -employer, defined -benefit plans in which the city participates are currently well -funded and costs are modest as a share of total spending. Although the city funds its OPEB on a pay-as-you-go basis, exposing it to cost acceleration and volatility, we expect that medium -term costs will remain only a small share of total spending and therefore not a significant budgetary pressure. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 21, 2021 4