03-09-20 Regular Meeting of the La Porte City Council (2)

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CITY OF LA PORTE MANAGEMENT’S DISCUSSION AND ANALYSIS (continued) FINANCIAL ANALYSIS OF THE CITY'S FUNDS The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $102.0 million, an increase of $13.4 million from the prior year. This increase is due to an increase in property taxes, sales taxes, investment earnings and cost containment. As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal requirements. Governmental Funds - The focus of the City’s governmental funds is to provide information of near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year. The General fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was $57.3 million, an increase of $10.5 million due to an increase in revenue collections and cost containment. As a measure of the general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 140% of total general fund expenditures and total fund balance represents 140% of the same. The Debt Service fund has a total fund balance of approximately $4.5 million, all of which is restricted for the payment of debt service. The net increase in fund balance from the prior year of $94 thousand was due to an increase in property tax revenue. The Tax Increment Reinvestment Zone Fund had a total fund balance of approximately $1.8 million, all of which is restricted for capital projects. The net increase in fund balance from the prior year of $555 thousand was due an increase in property taxes. The 2015 Certificate of Obligation Bonds Fund had a total fund balance of approximately $2.8 million, all of which is restricted for capital projects. The net decrease in fund balance from the prior year of $647 thousand was due to capital outlay. Proprietary Funds.The City’s proprietary funds provide the same type of information found in the government-wide financial statements. Unrestricted net position of the respective proprietary funds are Utility - $5.4 million, La Porte Area Water Authority - $2.8 million and Airport - $0.1 million. The changes in net position of the proprietary funds for 2019 were as follows: Utility – increase of $317 thousand, La Porte Area Water Authority – decrease of $465 thousand and Airport – increase of $45 thousand. Increase in the Utility Fund is due to a decrease in expenses. The decrease in the La Porte Area Water Authority is due to an increase in operating expenses, specifically water purchases and a true-up of water purchase cost. 15 DRAFT 02.25.2020