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\