City of La Porte Annual Budget 1995-1996

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I I I I I I I I I I I I I I I I I I I TARGETED OPERATING BALANCES The City strives to maintain a minimum working capital balance of 90 to 120 days of operating expenses in its Operating Funds and 60 to 90 days of working capital balance in its Debt Service Funds. With the exception of the Utility Fund, all funds currently meet or exceed this bench mark. REPORTING LEVELS The following represents the reporting structure used In this document. Fund Department Division Line Item Detail Departments cross fund lines, for exam'ple, the Utility Fund divisions are under the management of the Directors of Public Works and Finance. A description of the Organization of Funds for the City can be found on page 1-13. LONG RANGE STRATEGIC PLANS The City has a Long Range Strategic Plan (Five Years) for its utility operation and the Debt Service Funds. These plans have helped the City identify, and prepare to meet, Its needs in future years. DEBT MANAGEMENT The City has a Debt Management Plan that covers all of its debt service accounts. The plan outlines the extinguishment of current debt as well as future debt Issues. The plan places emphasis on the next five years. The plan is reproduced in its entirety in Section 8 of this budget document. Since the plan is a stand alone document, the City has elected to leave its Table of Contents with the document. Highlights of the three funds are: . The General Debt Service Fund is designed to maintain a constant tax rate of 16 cents per $100 dollar assessed valuation for the next six years. This rate allows for the servicing of existing debt and the issuance of new debt. This rate of 16 cents is equal to 22% of the total tax rate. . The Utility Debt Service Fund also is designed for constant payments. The Utility Debt Service Fund receives its revenue from the Utility Fund. The Utility Fund also makes payments to the General Debt Service Fund for tax supported debt issued by entities annexed by the City where the bonds were sold for improvements to the annexed areas water and sewer system. The relationship of these payments is such where the payments from the Utility Fund to the two debt service funds equals a constant $1,200,000 each year for the next five years. This fund also has future debt issuances built into its plan. . The La Porte Area Water Authority is also designed to provide for an even revenue stream. This fund needs $800,000 each year to service its debt. All three debt service funds use fund balance in a manner to allow for level annual revenues. CASH MANAGEMENT The City drastically changed its cash management practices In fiscal year 1991-92. A new employee was hired and given the responsibility of monitoring the City's cash position. An investment policy was created and approved by City Council. An analysis of past operational cash flows was prepared. Using these tools, the City changed its philosophy from investing short term to matching our Investments with cash flows and rate yields. The objectives of the Investment Policy are safety, liquidity, yield and risk of loss. A performance indicator was selected to meaSure the City's performance. 1-11