DEPARTMENT: Finance
FILE TYPE: Consent Action
TITLE
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Approval Of Revisions To Policy 2003 Fund Balance And Unrestricted Net Position
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PURPOSE/ACTION REQUESTED
Approve revisions to Policy 2003 Fund Balance and Unrestricted Net Position.
SUMMARY
Policy 2003 sets the fund balance targets for Dakota County’s General Fund, special revenue funds, capital project fund, debt service fund, and enterprise funds. The revised policy (Attachment) recommends a minimum unassigned fund balance of 35 percent of General Fund expenditures as of the end of the fiscal year to establish sufficient working capital and margin for subsequent year operations. The revised policy sets a maximum unassigned fund balance of 50 percent of General Fund expenditures as of the end of the fiscal year to ensure that Dakota County does not retain excess reserves. These thresholds are aligned with the recommended best practices for county governments published by the State of Minnesota’s Office of the State Auditor (OSA).
The revised policy also adopts a formal framework and milestones for fund balance replenishment when Dakota County is out of compliance with the fund balance policy minimum. This framework will ensure fiscal accountability while creating realistic targets for the County to achieve on the path back to sufficient reserve levels.
Additionally, the revised policy adopts fund balance minimums for Dakota County’s special revenue funds to ensure sufficient working capital and margin for operating and capital expenditures. New policies are also adopted for the capital projects fund and debt service fund to ensure sufficient reserves on-hand to cash flow capital projects and make scheduled debt service payments.
Lastly, the revised policy adopts an unrestricted net position minimum for the Byllesby Dam Enterprise Fund and the Geographic Information System Enterprise Fund, which are accounted for on a full accrual basis.
RECOMMENDATION
recommendation
Staff recommend Board approval of the revisions to Policy 2003 Fund Balance and Unrestricted Net Position.
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EXPLANATION OF FISCAL/FTE IMPACTS
The County will not directly incur any costs associated with this revised policy. If approved, this policy will go into effect beginning in the fiscal year ending December 31, 2026.
☒ None ☐ Current budget ☐ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
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WHEREAS, the Finance Department reviews and recommends revisions to policies and procedures to maintain and enhance the effective and responsive provisions of financial management functions in the County; and
WHEREAS, staff recommend revisions to Policy 2003 Fund Balance and Unrestricted Net Position, including the addition of a formal framework for General Fund unassigned fund balance replenishment, updates to fund balance minimums for special revenue funds, new fund balance minimums for the capital projects and debt service funds, and updates to the unrestricted net position minimums for the County’s enterprise funds.
NOW, THEREFORE, BE IT RESOLVED, that the Dakota County Board of Commissioners hereby adopts the proposed revisions to Policy 2003 Fund Balance and Unrestricted Net Position.
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PREVIOUS BOARD ACTION
11-630; 12/13/11
12-625; 12/11/12
19-781; 10/29/19
23-431; 09/26/23
ATTACHMENTS
Attachment: Policy 2003 Fund Balance and Unrestricted Net Position
Attachment: Policy 2003 - Redlined
BOARD GOALS
☐ Thriving People ☐ A Healthy Environment with Quality Natural Resources
☐ A Successful Place for Business and Jobs ☒ Excellence in Public Service
CONTACT
Department Head: Will Wallo
Author: Will Wallo