4.2 ERMUSR 01-12-2021UTILITIES COMMISSION MEETING
TO:FROM:
ERMU Commission Theresa Slominski –General Manager
MEETING DATE:AGENDA ITEMNUMBER:
January 12, 2021 4.2
SUBJECT:
Electronic Funds Transfer Policy
ACTION REQUESTED:
Delegate and authorize the Finance Manager to make electronic funds transfers of Elk River
Municipal Utilities.
BACKGROUND:
On August 8, 2017, the Commission adopted Governance Policy G.4i Financial Condition and
Transactions. The policy states that the “General Manager (GM) shall not allow financial
transactions to occur outside of the boundaries established by other applicable provisions of
the Commission’s governance policies.” The policy specifically states in item 11 that the GM
shall “implement internal policies and procedures that comply and ensure timely accounting
and reporting of financial condition and transactions in accordance with legal or regulatory
requirements, and generally accepted industry practices.”
At the recommendation of our auditors, we are implementing an Electronic Funds Transfer
(EFT) management policy to comply with Minnesota Statutes 471.38, Subd 3 and 3a. There is no
explicit portion that states a formal written policy is required, however due to the State’s
emphasis on it, the auditors recommend a formal written policy. The Statutes are attached for
reference.
DISCUSSION:
Minnesota Statute 471.38, Subd3 defines what an EFT is and what a local government may
make an EFT for. Additionally, Minnesota Statute 471.38 Subd 3a lists the policy controls that a
local government must have in place to transact EFTs. Elk River Municipal Utilities (ERMU)has
all of these required controls through our signature cards on file with our bank, authorization
controls within our accounting system, and documentation provided monthly in the
commission packet. The one formality we do not have in place is an annual delegation of
authority (discussed below) and we are remedying that. The attached policy A.27 references
the state statute and the fact that our policies and procedures are compliant.
Minnesota Statute 471.38, Subd 3a sets forth the requirements for processing EFTs and it is
necessary for the Utilities Commission to annually delegate and authorize a designated business
administrator or chief financial officer or the officer’s designee to make these transactions. We
are asking for this official delegation now with the implementation of the new policy, and in the
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future,this will be done annually in December with the other official designations(Newspaper,
Depository, etc.)
Staff recommendsdelegating and authorizing the Finance Manager to make electronic funds
transfers of Elk River Municipal Utilities for 2021.
ATTACHMENTS:
Minnesota Statute 471.38 Subd 3 and 3a – for reference only
Management Policy – A.27 – Electronic Funds Transfer Policy – for reference only
Commission Policy – G.4i – Financial Condition and Transactions – for reference only
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70
MANAGEMENT POLICY
Section:Category:
ManagementAdministration Policies
Policy Reference:Policy Title:
A.27 Electronic FundsTransfer(EFT) Policy
POLICY:
It is the policy of Elk River Municipal Utilities (ERMU) to comply with the Minnesota
Electronic funds transfer (Minnesota Statutes, 471.38 Subd. 3), which states that a local
government may make an EFT that has enacted all of the policy controls listed in 471.38 Subd
3a. Pursuant to the above Minnesota Statutes, ERMU has established policies and procedures to
ensure compliance with all EFTs transacted.
POLICY HISTORY:
Established January 12, 2021
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COMMISSION POLICY
Section:Category:
GovernanceDelegation to Management Policies
Policy Reference:Policy Title:
G.4iFinancial Condition and Transactions
PURPOSE:
With this policy, the Commission sets forth its expectations for the General Manager
POLICY:
The General Manager shall not intentionally
become precarious or to materially deviate from the Financial Plan or Business Plan/Budget.
The General Manager shall not allow financial transactions to occur outside of the boundaries
established by other applicable provisions of the governance policies. The
General Manager shall not allow financial reporting that fails to comply with applicable
standards for governmental accounting.
Consistent with this general statement, the General Manager shall:
1.Provide monthly financial reports to the Commission which accurately and adequately
2.Provide quarterly financial report presentations which discuss any material changes (1% or
greater of annual revenues or expenditures for each utility enterprise) to the projections for
the balance of the fiscal year including any appropriate remedial actions.
3.Not allow the cumulative expenditure of funds during a fiscal year to exceed by more than
$1 million the amounts that have been allocated through the approved capital and
operating budgets without prior approval by the Commission in the form of a budget
amendment.
4.Advise the Commission of any individual project expenditure in excess of 10% above the
approved budgeted amount.
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ERMU Commission Policy G.4iFinancial Condition and Transactions
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5.Not reallocate an amount greater than $500,000 among line items in the approved capital
and operating budgets without prior approval by the Commission in the form of a budget
amendment.
6.Advise the Commission of any financial transaction or event deemed by the General
financial condition.
7.Not take any financial action that violates bond covenants or otherwise jeopardizes
8.Not allow working capital and other designated reserves to fall below the levels
established in the Financial Plan.
9.Make payroll andpay other financial obligations in a timely way.
10.Collect or otherwise resolve receivables.
11.Implement internal policies and procedures that comply and ensure timely accounting and
reporting of financial condition and transactions in accordance with legal or regulatory
requirements, and generally accepted industry practices.
12.Not acquire, encumber, or dispose of real property without approval of the Commission.
POLICY HISTORY:
Adopted August 8, 2017
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