Memorandum

City of Lawrence

City Manager’s Office

TO:	Mike Wildgen, City Manager
FROM:	Debbie Van Saun, Asst. City Manager
Date:	August 3, 2005
RE:	Budget Adjustment

At the July 26, 2005 City Commission meeting, Commissioner Schauner asked for a report from staff that would illustrate the impact to the General Fund fund balance if the mill levy was lowered an additional one mill.  To that end, I’ve prepared the attached:

ü Calculation of mill levy after lowering the revenue requirements for the General Fund from that which was calculated for the 2006 City Manager’s Recommended Operating and Capital Improvement Budget.  Note that those revenue requirements were reduced from $12,050,000 to $11,300,000 and the associated mill rate reduced from 16.015 to 15.018.  If this adjustment is approved, the total mill levy would be 26.361 for the 2006 budget compared to the 27.359 for the 2005 budget, a total reduction of 1.498 mills.

ü Comparison of General Fund Projections that illustrates the impact on the fund balance – included are the projections that are currently part of the aforementioned Recommended Budget and projections that include the revenue adjustment noted above (reducing the mill levy by an additional one mill).  Of concern to staff is the effect of this adjustment on the fund balance percentage for 2007 and 2008 (10.26% and 2.50%, respectively), given that all assumptions used to make these predications remain constant and reasonably accurate.

A copy of the General Fund Balance Policy, as approved by the City Commission, is also provided for informational purposes.  Note that the policy recommends a minimum unreserved balance of 15% of actual expenditures.