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CITY OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS (Continued) December 31, 1988 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E. Budgets and Budgetary Accounting (continued) 1) The City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing on January 1 of the following year. The operating budget includes proposed expenditures and the means of financing them. 2) Public hearings are conducted to obtain public comments. 3) The budget is legally enacted through passage of a resolution. 4) As required by City Charter Section 7.06.01, the City Council may authorize the transfer of budgeted amounts between depart- ments within any fund; however, no amendment to the budget may increase expenditures to an amount greater than the estimated funds available. 5) Formal budgetary integration is employed as a management control device during the year for the General. Fund and Special Revenue Funds. Budgetary control for Debt Service Funds is achieved through general obligation bond provisions. Budgetary control for Capital Project Funds is accomplished through the use of project controls. 6) Budgets for the General Fund and Special Revenue Funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). 7) As required by City Charter, the Council sets the level of budgetary control. Budgetary control is maintained by fund. Budgeted amounts presented are as originally adopted, or as amended by the City Council. Individual amendments were not material in relation to the original appropriations which were amended. Budgeted expenditure appropriations lapse at year -end. Encumbrances outstanding at year -end expire and are not reported in the financial statements. F. Cash and Temporary Cash Investments Cash balances from all funds are combined and invested to the extent available as authorized by Minnesota State Statutes. Earnings from such investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund. Temporary cash investments are stated at cost plus accrued interest, which approxi- mates market. Investments are adjusted to market value only when a permanent decline in market value has occurred or when such invest- ments will not be carried to maturity. Assets held by deferred com- pensation trustees are stated at market value. -17-