Finance Highlights 2011 0708 - Laserfiche WebLink

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CITY OF SAN LEANDRO MEMORANDUM DATE: July 8, 2011 TO: Finance Committee FROM: Lianne Marshall, Interim City Manager BY: Tracy Vesely, Finance Director Mary Ann Perini, Budget and Compliance Manager SUBJECT: Proposed Interfund Loan and Advances Process and Authority SUMMARY AND RECOMMENDATION Staff recommends that the Finance Committee review, and approve the City of San Leandro's Interfund Loan and Transfer process delegating and authorizing the City Manager to approve loans and advances at reasonable interest rates, between specified City funds. The interfund transactions will facilitate temporary financing needs. Staff also recommends that the Finance Committee forward to City Council for adoption on July 18, 2011. BACKGROUND Local governments use fund accounting to match available revenues and other resources to the expenditures for the particular governmental functions on which those revenues and resources may be legally expended. The City of San Leandro has several funds, of which the General Fund is the most significant, that create a framework for measuring the City's financial position, operating results, and cash flows, and that allow the City to demonstrate compliance with restrictions on how the City's revenues and other resources are spent. Occasionally, because of the need to start capital projects for which permanent financing sources are not yet available due to market conditions, or because of cash flow timing differences between City revenue and expenditures, some of the City's funds will need cash to prevent a cash fund deficit. At the same time, other funds, and the City as a whole, will have surplus cash that is temporarily invested. There have been and will be times when the City will be financially better off using such internal available funds for these financing needs rather than borrowing the money in the financial markets. Under favorable debt - market conditions, the City borrows externally using long -term debt for capital projects or short-term debt to meet cash flow deficits. Sometimes, financial market conditions exist where the City would be fiscally prudent to use cash rather than debt to meet these needs. The proposed policy shall establish guidelines for such transactions.