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HomeMy WebLinkAbout5.F.3. Closing State Aid Capital Projects Fund S: F. 3 , CITY OF SHAKOPEE Memorandum TO: Mayor and Council CONSaNT Mark McNeill, City Administrator FROM: Gregg Voxland, Finance Director SUBJ: Closing State Aid Capital Projects fund DATE: July 14, 2010 Introduction Recently there was some discussion about merging the State Aid fund (SAF) into the Capital Improvement fund (CIF). Council direction was to bring back a recommendation. Background With the exception of the permitted use of the CIF for buildings, the two funds serve the same purpose of funding for streets and related items. Money in the SAF comes from state aid claimed for projects. Once the city receives the money there is no restriction on the use of the money. The wording of the ordinance that established the CIF is pretty specific to streets and buildings and the lack of mention of recreational purpose leads staff to believe that the CIF is not permitted to fund recreational use expenditures. Also, the CIF was established before there was much in the way of recreational facilities or programs in the city so council at that time probably did not think to include recreational use. Quote from the 2005 Governmental Accounting, Auditing, and Financial Reporting book published by the Government Finance Officers Association "Number of funds principle. Principle that only the minimum number of funds consistent with legal and operating requirements should be established, since unnecessary funds result in inflexibility, undue complexity, and inefficient financial administration. [National Council on Governmental Accounting Statement 1]" Since there is no external or internal restriction on the SAF and it serves the same purpose (streets and related items) as the CIF, the SAF should be combined into the CIF. Action Requested Move to merge the State Aid Fund in to the Capital Improvements Fund. / Vv Gregg Voxland Finance Director H: \Finance\