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Home My WebLink About2001 Audit Report CITY OF ST. JOSEPH, MINNESOTA Stearns County AUDITED FINANCIAL STATEMENTS As of December 31,2001 CITY OF ST. JOSEPH, MINNESOTA TABLE OF CONTENTS ELECTED OFFICIALS AND ADMINISTRATION ..................................................... 1 INDEPENDENT AUDITORS' REPORT.......... ..... .... .................................................... 2 GENERAL PURPOSE FINANCIAL STATEMENTS - Combined Balance Sheet - All Fund Types and Account Groups............................. 4 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental Fund Types.. ................ ........ ........... ....... ..................... ................ 5 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General and Special Revenue Fund Types ............................. 6 Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types.... ........................ ............... ......................... 7 Combined Statement of Cash Flows - All Proprietary Fund Types .......................... 8 Notes to the Financial Statements ..... ....... ................. ................................................. 9 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS - General Fund - Comparative Balance Sheets... ........ ........................ ............................................. 32 Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual.. .... ........... ............................ .................. ............................... 33 Special Revenue Fund - Combining Balance Sheet... .... ...................... ....................................................... 39 Combining Statement of Revenues, Expenditures and Changes in Fund Balance.. ................................................................................................... 40 Debt Service Funds - Combining Balance Sheet.................................................................................... 41 Combining Statement of Revenues, Expenditures and Changes in Fund Balance............ ................... .............................................. .................................. 42 Capital Proj ect Funds - Combining Balance Sheet............ ...... ............... ................................................... 43 Combining Statement of Revenues, Expenditures and Changes in Fund Balance.............................................................................................................. . 44 Enterprise Funds - Combining Balance Sheet.... ...... ........ ...................... ............... ...... ............ ........... 45 Combining Statement of Revenues, Expenses and Changes in Retained Earnings... ....... ... ..... ................... ......... ..... ..... ......... .......................... .................. 46 Combining Statement of Cash Flows .......... ..... ........................ ....... ......... ........... 47 Statement of General Long-Term Debt ....... ........... ............................... .................... 48 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT AUDITING STANDARDS ....................... ..... ........................... 49 AUDITORS! REPORT ON LEGAL COMPLIANCE .................................................... 51 FINDINGS AND CORRECTIVE ACTION PLANS ON COMPLIANCE WITH MINNESOTA STATUTES AND INTERNAL CONTROLS ......................................... 52 CITY OF ST. JOSEPH, MINNESOTA ELECTED OFFICIALS AND ADMINISTRATION December 31,2001 Term City Council Position Expires Larry J. Hosch Mayor January 6,2003 Cory Ehlert Councilmember January 6, 2003 Bob Loso Councilmember January 6, 2003 Kyle Schneider Councilmember January 6,2005 Al Rassier Councilmember January 6,2005 Administration Judy Weyrens City Clerk! Treasurer/ Administrator Appointed 1 ßr::JÞV Kern, DeWenter, Viere, Ltd. Certified Public Accountants INDEPENDENT AUDITORS' REPORT May 8, 2002 Honorable Mayor and City Council City of St. Joseph St. Joseph, Minnesota We have audited the accompanying general purpose financial statements of the City ofSt. Joseph, Minnesota, as of and for the year ended December 31, 2001, as listed in the table of contents. These general purpose financial statements are the responsibility ofthe City's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position ofthe City of St. Joseph, Minnesota, as of December 31, 2001, and the results of its operations and the cash flows of its proprietary fund types, for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated May 8, 2001 on our consideration ofthe City of St. Joseph's internal control over financial reporting and our tests of its compliance with certain provisions oflaws, regulations, contracts and grants. This report is an integral part of a Government Auditing Standards audit, and in considering the results of the audit, this report should be read along with the auditor's report on the financial statements. 71 00 Northland Circle No., Suite 119 220 Park Avenue South, p.o. Box 1304 Minneapolis, MN 55428-1500 St. Cloud, MN 56302 763-537-3011 · Fax: 763-537-9682 320-251-7010 · Fax: 320-251-1784 2 www.kdv.com Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the City taken as a whole. The combining and individual fund financial statements listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City ofSt. Joseph, Minnesota. Such infoll1ation has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. ¡(-VL "-, 7)¿Jv~.nI-t/U~ Vlki-L ~ ¿..J-cl. Kern, DeW enter, Viere Ltd. St. Cloud, Minnesota 3 CITY OF ST. JOSEPH, MINNESOTA COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS December 31, 2001 Govenm1ental Fund Types Special Debt Capital ASSETS AND OTHER DEBITS General Revenue Service Proiects ASSETS: Cash and Investments (Including Cash Equivalents) $ 1,574,568 $ 43,881 $ 2,293,762 $ 294,312 Taxes Receivable - Delinquent 5,036 0 2,066 0 Special Assessments Receivable - Deferred 7,418 0 1,599,340 145,699 Delinquent 208 0 3,091 0 Accounts Receivable 42,225 0 108,754 0 Notes Receivable 20,000 0 0 0 Interest Receivable 32,413 906 63,852 (10,736) Due from Other Governmental Units 190,437 0 76,082 0 Fixed Assets - Net 0 0 0 0 OTHER DEBITS: Amount Available in Debt Service Funds 0 0 0 0 Amount to be Provided from Special Assessments 0 0 0 0 Amount to be Provided for Compensated Absences Payable 0 0 0 0 Amount to be Provided for Retirement of General Long-Tenn Debt 0 0 0 0 TOTAL ASSETS AND OTHER DEBITS $ 1.872.305 $ 44.787 $ 4.146.947 $ 429.275 LIABILITIES, EQUITY AND OTHER CREDITS LIABILITIES: Cash Overdraft $ 0 $ 0 $ 16,891 $ 46,005 Accrued Liabilities 144,412 105 30,655 43,720 Due to Other Governmental Units 0 0 0 0 Contracts Payable 0 0 0 0 Deferred Revenue 12,662 0 1,604,497 145,699 Compensated Absences Payable 15,716 0 0 0 Bonds Payable 0 0 0 0 Loans Payable 0 0 0 0 Total Liabilities 172,790 105 1,652,043 235,424 EQUITY AND OTHER CREDITS: Investment in General Fixed Assets 0 0 0 0 Contributed Capital 0 0 0 0 Retained Earnings (Deficit) 0 0 0 0 Fund Balance (Deficit) - Reserved 20,000 0 2,494,904 0 Umeserved - Designated 972,398 0 0 0 Undesignated 707,117 44,682 0 193,851 Total Equity and Other Credits 1,699,515 44,682 2,494,904 193,851 TOTAL LIABILITIES, EQUITY AND OTHER CREDITS $ 1.872.305 $ 44.787 $ 4.146.947 $ 429.275 The notes to the financial statements are an integral part of this statement. Proprietary Fund Types Account Groups General General Totals Fixed Long-Term (Memorandum Only) Enterprise Assets Debt 2001 2000 $ 888,680 $ 0 $ 0 $ 5,095,203 $ 4,562,022 0 0 0 7,102 7,101 0 0 0 1,752,457 1,652,275 0 0 0 3,299 3,299 178,809 0 0 329,788 190,801 0 0 0 20,000 30,000 19,828 0 0 106,263 98,636 0 0 0 266,519 257,554 5,478,795 3,540,296 0 9,019,091 7,963,797 0 0 2,494,904 2,494,904 2,055,016 0 0 1,602,431 1,602,431 1,473,261 0 0 54,584 54,584 51,754 0 0 3,465,749 3,465,749 2,971 ,465 $ 6.566.112 $ 3.540.296 $ 7.617.668 $ 24.217.390 $ 21.316.981 $ 0 $ 0 $ 0 $ 62,896 $ 265,414 57,545 0 0 276,437 203,930 0 0 0 0 17,117 0 0 0 0 23,079 0 0 0 1,762,858 1,662,675 31,935 0 54,584 102,235 98,998 0 0 7,340,000 7,340,000 6,250,000 0 0 223,084 223,084 249,742 89,480 0 7,617,668 9,767,510 8,770,955 0 3,540,296 0 3,540,296 3,515,497 6,683,167 0 0 6,683,167 5,519,572 (206,535) 0 0 (206,535) (41,012) 0 0 0 2,514,904 2,085,016 0 0 0 972,398 903,044 0 0 0 945,650 563,909 6,476,632 3,540,296 0 14,449,880 12,546,026 $ 6.566.112 $ 3.540.296 $ 7.617.668 $ 24.217.390 $ 21.316.981 4 CITY OF ST. JOSEPH, MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES Year Ended December 31, 2001 Governmental Fund Types Special Debt General Revenue Service REVENUES: General Property Taxes $ 403,689 $ 0 $ 254,430 Special Assessments 12,938 0 880,891 Licenses and Pennits 90,366 0 0 Intergovernmental 681,626 0 62,584 Charges for Services 170,593 0 0 Fines 80,512 0 0 Miscellaneous 229,944 8,322 263,547 Total Revenues 1,669,668 8,322 1,461,452 EXPENDITURES: Current - General Government 298,701 0 0 Public Safety 720,711 477 0 Public Works 337,298 0 0 Culture and Recreation 156,382 0 0 Economic Development 48,866 0 0 Miscellaneous 222 0 0 Capital Outlay 0 0 0 Debt Service 0 0 729,149 Total Expenditures 1 ,562,180 477 729,149 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 107,488 7,845 732,303 OTHER FINANCING SOURCES (USES): Operating Transfers In 0 0 50,000 Operating Transfers Out 0 0 0 Proceeds from Loans 0 0 0 Proceeds from the Sale of Bonds 0 0 24,493 Total Other Financing Sources (Uses) 0 0 74,493 EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES AND OTHER FINANCING USES 107,488 7,845 806,796 FUND BALANCE (DEFICIT) - January 1 1,592,027 36,837 2,055,016 RESIDUAL EQUITY TRANSFER 0 0 (366.908) FUND BALANCE (DEFICIT) - December 31 $ 1.699.515 $ 44.682 $ 2.494.904 The notes to the financial statements are an integral part of this statement. Totals Capital (Memorandum Only) Projects 2001 2000 $ 0 $ 658,119 $ 528,848 30,051 923,880 448,177 0 90,366 73,607 0 744,210 680,123 23,488 194,081 158,914 0 80,512 85,003 (31,770) 470,043 448,299 21,769 3,161,211 2,422,971 0 298,701 266,588 0 721,188 725,973 0 337,298 233,305 0 156,382 152,835 0 48,866 65,292 0 222 1,600 1,721,820 1,721,820 1,157,346 0 729,149 957,060 1,721,820 4,013,626 3,559,999 (1,700,051) (852,415) (1,137,028) 247,000 297,000 276,000 0 0 (231,000) 0 0 276,136 1,411,905 1 ,436,398 941 , 184 1,658,905 1,733,398 1,262,320 (41,146) 880,983 125,292 (131,911) 3,551,969 3,426,677 366.908 0 0 $ 193.851 $ 4.432.952 $ 3.551.969 5 CITY OF ST. JOSEPH, "MINNESOTA COMBThTED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALAt"lCE - BUDGET AND ACTUAL - GENERAL AND SPECIAL REVENUE FU1\TO TYPES Year Ended December 31, 2001 General Fund Over (Under) Budget Actual Budget REVENUES: General PropeIiy Taxes $ 368,465 $ 403,689 $ 35,224 Special Assessments 30,000 12,938 (17,062) Licenses and Pern1its 66,910 90,366 23,456 Intergovernmental 639,821 681,626 41,805 Charges for Services 166,794 170,593 3,799 Fines 73,150 80,512 7,362 Miscellaneous 72,000 229,944 157,944 Total Revenues 1,417,140 1,669,668 252,528 EXPENDITURES: Current - General Government 269,729 298,701 28,972 Public Safety 729,454 720,711 (8,743) Public Works 251,695 337,298 85,603 Culture and Recreation 142,688 156,382 13,694 Economic Development 66,765 48,866 (17,899) Miscellaneous 500 222 (278) Total Expenditures 1,460,831 1,562,180 101,349 REVENUES OVER (UNDER) EXPENDITURES $ (43,691 ) 107,488 $ 151,179 FUND BALANCE - January 1 1,592,027 FUND BALAJ\fCE - December 31 $ 1,699,515 The notes to the financial statements are an integral part of this statement. Special Revenue Funds Over (Under) Budget Actual Budget $ 0 $ 0 $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 8,322 8,322 0 8,322 8,322 0 0 0 0 477 477 0 0 0 0 0 0 0 0 0 0 0 0 0 477 477 $ 0 7,845 $ 7,845 36,837 $ 44,682 6 CITY OF ST. JOSEPH, "MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES Year Ended December 31, 2001 With Comparative Totals for the Year Ended December 31, 2000 Totals 2001 2000 OPERATING REVENUES: Charges for Services $ 656,677 $ 541,715 OPERATING EXPENSES: Salaries and Benefits 136,203 126,903 Utilities 28,748 27,218 Supplies 14,638 13,440 Sewer Use Rental 123,898 125,470 Postage 1,890 1,249 Repairs and Maintenance 32,649 7 Professional Fees 765 19,506 Fees and Tests 12,535 8,438 Dues and Subscriptions 610 690 Refuse Disposal 96,745 89,101 Depreciation 142,395 125,139 Insurance 8,734 8,015 Miscellaneous 5,292 2,737 Total Operating Expenses 605,1 02 547,913 OPERATING INCOME (LOSS) 51,575 (6,198) NON-OPERATING REVENUES: Investment Income 60,011 64,611 Other Revenues 19,891 17,801 Total Non-Operating Revenues 79,902 82,412 INCOME BEFORE OPERATING TRANSFERS 131,477 76,214 Operating Transfers Out (297,000) (45,000) NET INCOME (LOSS) (165,523) 31,214 RETAINED EARNINGS (DEFICIT) - January 1 (41,012) (72,226) RETAINED EARNINGS (DEFICIT) - December 31 $ (206.535) $ (41.012) The notes to the financial statements are an integral part of this statement. 7 CITY OF ST. JOSEPH, MINNESOTA COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES Year Ended December 31, 2001 With Comparative Totals for the Year Ended December 31, 2000 Totals 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: Operating mcome (Loss) $ 51,575 $ (6,198) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation 142,395 125,139 Other Non-operating Revenues 19,891 17,801 Change in Assets and Liabilities: Accounts Receivable (1,119) (26,756) Accrued Liabilities 16,725 (82,614) Due to Other Governmental Units (17,117) 8,902 Compensated Absences Payable 3,720 (8,891) Total Adjustments 164,495 33,581 Net Cash Provided by Operating Activities 216,070 27,383 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating Transfers to Other Funds (297,000) (45,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital Acquisitions (9,295) (2,969) CASH FLOWS FROM INVESTING ACTIVITIES: mvestment mcome 60,791 55,591 Net mcrease in Cash and Cash Equivalents (29,434) 35,005 Cash and Cash Equivalents, January 1 918,114 883,109 Cash and Cash Equivalents, December 31 $ 888.680 $ 918.114 The notes to the financial statements are an integral part of this statement. 8 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 1 - SUMMARY OF SIG1\TJFICANT ACCOUNTING POLICIES The City of St. Joseph, Minnesota, has a mayor-council fonn of government. A mayor and four council members are elected by the voters of the City for two-year and four-year tenns, respectively. The accounting policies of the City conforn1 to accounting principles generally accepted in the United States of America as applicable to governments. With respect to proprietary activities, the City has adopted GASB No. 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting." The City has elected to apply all applicable GASB pronouncements as well as Financial Accounting Standards Board (F ASB) pronouncements, Accounting PIinciples Board (APB) Opinions and Accounting Research Bulletins (ARB), issued on or before November 30, 1989 unless those pronouncements conflict with or contradict GASB pronouncements. In addition, the City has elected not to apply FASBs, APBs and ARBs issued after November 30, 1989. The following is a summary of the City's more significant accounting policies. A. Financial Reporting Entity The financial statements present the City and its component units. The City includes all funds, account groups, organizations, institutions, agencies, departments, and offices that are not legally separate from such. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit ifit appoints a voting majority of the organization's goveming body and it is able to impose its \vill on the organization by significantly influencing the programs, projects, activities, or level of services perfom1ed or provided by the organization, or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the City. As a result of applying the component unit definition criteria above, the City of St. Joseph's component unit is presented in this report as follows: Blended Component Unit - The St. Joseph Economic Development Authority (EDA) was organized for the purpose of preserving and creating jobs, enhancing the tax base, and promoting the general welfare of the people of the City of St. Joseph. The Authority is governed by a five member board appointed by the City Council. The EDA is included as a blended component unit of the City because the EDA is financially accountable to the City, and the Authority provides services almost entirely for the City. The St. Joseph EDA is presented as a department in the City's general fund, the City Hall Project Capital Project Fund and the EDA Public Project Revenue Bonds of2000 Debt Service fund. Separate financial statements are not prepared for the EDA. 9 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Fund Accounting The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which expending activities are controlled. The various funds are grouped, in the financial statements in this report, into five generic fund types and two broad fund categories, described below. Governmental Funds The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. Capital Proiects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by enterprise funds). Proprietary Funds Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises--where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered through user charges; or (b) where the governing body has decided that periodic detennination of revenues eamed, expenses incurred, or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The City maintains Refuse, Water and Sewer Enterprise Funds. 10 CITY OF ST. JOSEPH, l\HNNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Fixed Assets, and Long- Tern1 Liabilities The accounting and reporting treatment applied to the fixed assets and long-tenn liabilities associated with a fund are detennined by its measurement focus. All govel11menta1 funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and CUITent liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of available spendable resources during a period. Fixed assets used in govel11mental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in govel11mental funds. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, including roads, curbs and gutters, streets and sidewalks, are not capitalized by the City. No depreciation has been provided on general fixed assets. All fixed assets are valued at their historical cost or estimated historical cost if actual historical cost is not available. Donated fixed assets are valued at their estimated fair value on the date donated. Because of their spending measurement focus, expenditure recognition for govel11mental fund types is limited to exclude amounts represented by noncurrent liabilities. Since they do not affect net current assets, such 10ng-tenn amounts are not recognized as govemmental fund type expenditures or fund liabilities. They are instead reported as liabilities in the General Long-Tenn Debt Account Group. The two account groups, General Fixed Assets and General Long-Tenn Debt, are not "funds". They are concerned only with the measurement of financial position. They are not involved with measurement ofresu1ts of operations, All proprietary funds are accounted for on a flow of economic resources measurement focus, This means that all assets and all liabilities (whether current or noncurrent) associated with the funds' activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. 11 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Fixed Assets, and Long-Term Liabilities (Continued) Major outlays for capital assets and improvements are capitalized in proprietary funds as projects are constructed. Interest incurred during the construction phase of proprietary fund fixed assets is reflected in the capitalized value of the asset constructed. Capital assets constructed in governmental funds for proprietary funds are recorded as contributed capital. Depreciation of all exhaustible fixed assets used by proprietary funds is charged as an expense against their operations. Accumulated depreciation is reported on proprietary fund balance sheets. Depreciation has been provided over the assets' estimated useful lives, which range from five to fifty years, using the straight-line method. Depreciation expense for the years ended December 31, 2001 and 2000 is $ 142,395 and $ 125,139, respectively. D. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. All governmental funds are accounted for using the modified accrual basis of accounting, in which revenues are recognized when they become measurable and available as net current assets. The more significant revenues which have been accrued are intergovernmental revenues and interest earnings. Expenditures are generally recognized in the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include sick pay and principal and interest on generallong-tenn debt, which are recognized when due. All proprietary funds are accounted for using the accrual basis of accounting; revenues are recognized when they are earned and expenses are recognized when.they are incurred. E. Budgetary Data The City Council adopts an annual budget. The amounts shown in the financial statements as "budget" represent the original budgeted amount and all revisions made during the year. The City follows these procedures in establishing the budgetary data reflected in the financial statements. 12 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Budgetarv Data (Continued) 1. In August of each year, the City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them for the upcommg year. 2. Public hemings are conducted to obtain taxpayer comment. 3. Prior to December 31, the budget is legally enacted through passage of a resolution. 4. Fonnal budgetary integration is employed as a management control device during the year for the Genera] and Special Revenue Funds. Fonna] budgetary integration is not employed for Debt Service Funds because effective budgetary control is altematively achieved through general obligation bond indenture provisions. Budgetary control for Capital Projects Funds is accomplished through the use of project controls. 5. The Budgets for the General and Special Revenue Funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America. F. Encumbrances Encumbrances represent outstanding purchase orders and unfulfilled commitments that are issued to outside vendors and budgeted in the current year but do not include amounts that are set up as liabilities, amounts for personal services to be perfom1ed by City employees and purchase orders applicable to the subsequent year's budget. As of December 31, 2001, no outstanding encumbrances existed. G. Cash and Investments (Including Cash Equivalents) (See Note 3) Cash balances from all funds are combined and invested to the extent available in authorized investments. Eamings from such investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund. Investments are carried at fair value. For purposes of the statement of cash flows, the City considers all short-tenn, highly liquid investments with original maturity dates of three months or less from the date of purchase to be cash equivalents. In addition, cash invested in the City's cash management pool is considered to be cash equivalents. Based on this policy, the total cash and investments of the proprietary funds are considered to be cash equivalents. 13 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 1 - SUMMARY OF SIGNlFICANT ACCOUNTING POLICIES (Continued) H. Taxes Receivable Delinquent taxes receivable represent the past six years of uncollected tax levies, 1. Special Assessments Receivable Delinquent special assessments represent the past six years of uncollected special assessments. Deferred special assessments represent the principal portion of those assessments to property owners for improvements made by the City. These assessments are made at various times by City resolution and are collectible over periods ranging from ten to thirty years and bear annual interest of 7 percent to 8 percent and are to be received in 2002 and years thereafter. J. Defened Revenue Deferred revenue represents delinquent taxes and defened and delinquent assessments receivable. This revenue is defened until it is measurable and available as net cunent assets. K. Compensated Absences The City compensates employees who leave City service in good standing for all earned, unused vacation. In addition, employees are compensated for unused sick leave (up to a maximum of720 hours) at 50% ofthe current regular rate of pay, provided the City's notice of termination policy has been complied with. L. Fund Equity Fund equity is divided into sections as follows: - Contributed capital represents fixed assets purchased by other funds and contributed to the enterprise funds. - Investment in General Fixed Assets represents the City's equity in general fixed assets. - Retained earnings of enterprise funds are available for expending in future periods. 14 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGl\TIFICAi~T ACCOUNTING POLICIES (Continued) L. Fund Equity (Continued) - Fund balance accounts are subdivided as follows: Reserved accounts indicate the portion of fund balance which has been reserved for a specific purpose. Unreserved, designated accounts indicate the portion of fund balance which has been designated for a specific purpose. The unreserved, undesignated account is the portion of fund balance which is available for budgeting and expending in future periods. M. Revenues. Expenditures and Expenses 1. Revenues Property taxes and special assessment principal and interest are recognized as revenue when measurable and available. Portions of taxes paid by the State in the fon11 of HAC A and other tax credits are included in intergovemmental revenue. Intergovemmental revenues are reported under the legal and contractual requirements of the individual programs. Licenses and pen11its, charges for services, fines and forfeits, and miscellaneous revenues (except investment eamings) are recorded as revenues when received in cash because they are generally not measurable until then. Investment eamings are recorded when eamed because they are measurable and available. 2. Property Tax Collection Calendar The City levies its property tax for the subsequent year during the month of December. December 28 is the last day the City can certify a tax levy to the County Auditor for collection the following year. The property tax is recorded as revenue when it becomes measurable and available. Stearns County is the collecting agency for the levy and remits the collections to the City three times a year. Taxes not collected as of December 31 each year are shown as delinquent taxes receivable. 15 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Revenues, Expenditures and Expenses (Continued) 2. Property Tax Collection Calendar (Continued) The County Auditor creates the tax list for all taxable property in the City, applying the applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The County Auditor also collects all special assessments, except for certain prepayments paid directly to the City. The County Auditor tums over the list of taxes and special assessments to be collected on each parcel of property to the County Treasurer in January of each year. The County Treasurer collects all taxes, and all special assessments, except as noted above. The County Treasurer is required to mail copies of all personal property tax statements by April 15, and copies of all real estate tax statements by April 15, of each year. Property owners are required to pay one-half of their real estate taxes due by May 15 and the balance by October 15. If taxes due May 15 are not paid on time, a penalty of 3% is assessed on homesteaded property, and 7% on non-homesteaded property. An additional 1 % penalty is added each month the taxes remain unpaid, until October 15. If the taxes due May 15 are not paid by October 15, a 2% penalty per month is added to homesteaded property and 4% per month to non-homesteaded property until January 1. If the taxes are not paid by January 1, further penalties are added. Penalties and interest apply to both taxes and special assessments. There are some exceptions to the above penalties, but they are not material. Within 30 days after the tax settlement date, the County Treasurer is required to pay 70% ofthe estimated collections of taxes and special assessments to the City Treasurer. The County Treasurer must pay the balance to the City Treasurer within 60 days after settlement, provided that after 45 days interest accrues. 3. Expenditures Expenditure recognition for governmental fund types includes only amounts represented by current liabilities. Since noncurrent liabilities do not affect net current assets, they are not recognized as governmental fund expenditures or fund liabilities. They are reported as liabilities in the General Long-Term Debt Account Group. 4. Expenses Enterprise funds recognize expenses when they are incurred. 16 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) N. Interfund Transactions Quasi-external transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures or expenses initially made from it that are properly applicable to another fund are recorded as expenditures or expenses in the fund that is reimbursed. All other interfund transactions, except quasi-extemal and reimbursements, are reported as transfers. Nonrecuning or nomoutine pennanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. O. Total Columns on General Purpose Statements Total columns on the general purpose financial statements are captioned "memorandum only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or cash flows in conformity with accounting principles generally accepted in the United States of America. Interfund eliminations have not been made in the aggregation of these data. P. Comparative Data Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the City's financial position and operations. However, prior year totals by fund type have not been presented in each of the statements since their inclusion would make the statements unduly complex and difficult to read. Comparative data have been restated to reflect reclassifications. Q. Use of Estimates The preparation of general purpose financial statements in confom1Ïty with accounting pIinciples generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 17 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Fund Deficits The following funds have deficit fund balance/retained earnings at December 31, 2001 : Debt Service Funds EDA Public Proiect Revenue Bonds of2000 $ (13,760) Capital Proiects Funds- 2002 Street Improvements (21,001 ) County Road 121 (37,612) Sewer Capacity Conveyance (253,665) Enterprise Fund - Sewer (576,268) These deficits will be eliminated by future revenues, user charges or transfers from other funds. B. Expenditures in Excess of Appropriations Expenditures exceeded appropriations in the following funds for the year ended December 31,2001: Exnenclitl1res A nnronriation General Fund $ 1.562.180 $ 1.460.831 Suecial Revenue Funds: DARE Pro0"am 477 0 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. Assets 1. Cash and Investments (Including Cash Equivalents) Cash balances of the City's funds are combined (pooled) and invested to the extent available in various investments authorized by Minnesota Statutes. Each fund's portion of this pool (or pools) is displayed on the financial statements as "cash and investments (including cash equivalents)." For purposes of identifying risk of investing public funds, the balances and related restrictions are summarized below: a. Deposits - Minnesota Statutes require that all deposits with financial institutions must be collateralized in an amount equal to 110% of deposits in excess of FDIC Insurance. 18 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) A. Assets (Continued) 1. Cash and Investments (Including Cash Equivalents) (Continued) a. Deposits - (Continued) Category 1 - Deposits covered by Federal Depository Insurance (FDIC) and those deposits collateralized with securities held by the City or by its agent in the City's name. Category 2 - Collateralized with securities held by the pledging institutions tmst department or agent in the District's name. Category 3 - Deposits which are not insured or collateralized; or those deposits where collateral assignment has not been perfected. Category Bank Carrying 1 2 3 Balance Amount - - Bank Accounts $ 603,397 $0 SO $ 603,397 $ 524,200 Certificates of Deposit 2,111,936 0 0 2,111,936 2,111,936 - - Total Deposits $ 2.715,333 $0 $0 $ 2,715,333 $ 2,636,136 b. Investments - Minnesota Statutes authorize the City to invest in obligations of the U.S. Treasury, agencies, and instmmentalities, shares of investment companies whose only investments are in the aforementioned securities, obligations of the State of MÍ1mesota or its municipalities, bankers' acceptances, future contracts, repurchase and reverse repurchase agreements, and commercial paper of the highest quality with a maturity of no longer than 270 days, Investments held by the City at year end classified as to credit risk are as follows: Category 1 - Insured or registered, or secmities held by the City's agent in the City's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's tmst department or agent in the City's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty or by its tmst department or agent but not in the City's name. 19 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) A. Assets (Continued) 1. Cash and Investments (Including Cash Equivalents) (Continued) b. Investments - (Continued) Category Carrying and 1 2 3 Fair Value U.S. Government and Federal Agency Notes and Bonds $ 713,534 $ 0 $ 0 $ 713,534 Negotiable Certificates of Deposit 1 ,662,836 0 0 1 ,662,836 Total Investments $ 2.376.370 $ 0 $ 0 2,376,370 Unclassified as to Risk: Money Market Mutual Funds 19,581 Total Deposits (See Note 3 A.1.a.) 2,636,136 Petty Cash 220 Total Cash and Investments (Including Cash Equivalents) $ 5,032,307 Cash and investment balances are presented in the general purpose financial statements as follows: Cash and Investments (Including Cash Equivalents) $ 5,095,203 Cash Overdraft (62,896) Total $ 5,032,307 20 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS Ai'\JD ACCOUNT GROUPS (Continued) A. Assets (Continued) 2. Due from Other Govemmental Units The following is a summary of due from other govemmental units at December 31,2001: S1. Wendel S1. Joseph Steams State of Township Township County ¡vIN Total General Fund - Fines $ 0 $ 0 $ 0 $ 4,357 S 4,357 Property Taxes/Special Assessments 0 0 173,294 0 173,294 IVliscellaneous 2,312 484 0 9,990 12,786 Total General Fund 2,312 484 173,294 14,347 190,437 Debt Service Funds - G.O. Improvement Bonds of 1977 - Intergovernmental 12,500 0 0 0 12,500 G.O. Improvement Bonds of 1998 - Property Taxes/Special Assessments 0 0 18,561 0 18,561 G.O. Improvement Bonds of 1999 - Property Taxes/Special Assessments 0 0 45,021 0 45,021 Total Debt Service 12,500 0 63,582 0 76.082 Total S 14,812 $ 484 $ 236,876 $ 14,347 $ 266,5 19 21 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) A. Assets (Continued) 3. Fixed Assets A summary of changes in general fixed assets follows: Balance Balance 1-1-01 Additions Disposals 12-31-01 Land $ 164,044 $ 0 $ 6,500 $ 157,544 Buildings 1,706,171 0 75,413 1,630,758 Improvements Other than Buildings 363,998 22,465 0 386,463 Machinery and Equipment 736,512 897 5,1 06 732,303 Office Furniture 101,226 24,062 17,191 108,097 Motor VehicIes 211,337 57,988 22,608 246,717 Other Equipment 232,209 46,520 315 278,414 Total $ 3,515,497 $ 151,932 $ 127,133 $ 3,540,296 A summary of Enterprise Fund fixed assets at December 31, 2001, is as follows: Water Sewer Fund Fund Total Land and Land Improvements $ 12,996 $ 4,941 $ 17,937 Treatment Plant and Lines 2,045,497 3,128,886 5,174,383 Buildings 0 517,983 517,983 Water Storage Facility 1,236,542 0 1,236,542 Machinery and Equipment 90,684 179,138 269,822 Total Cost 3,385,719 3,830,948 7,216,667 Less: Accumulated Depreciation (565,401) 1,172,471 (1,737,872) Net Fixed Assets $ 2,820,318 $ 2,658,477 $ 5,478,795 22 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL ST A TEIVlENTS December 31, 2001 NOTE 3 - DEI AILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities 1. Defined Benefit Pension Plans - Statewide A. Plan Description All full-time and certain part-time employees of the City of St. Joseph are covered by defined benefit plans administered by the Public Employees Retirement Association of Mim1esota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost- sharing, multiple-employer retirement plans. These plans are established and administered in accordance with J\lillllesota Statutes, Chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must par1icipate in the Coordinated Plan. All police officers, fire- fighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after thTee years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at tennination of service. Two methods are used to compute benefits for PERF's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accnIal fOillmla (Method 1) or a level accmal fonnula (Method 2). Under Nlethod 1, the arilluity accmal rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accmal rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the ammity accmal rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the annuity accmal rate is 3.0 percent for each year of service. For all PEPFF members and for PERF members whose milluity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. A reduce retirement annuity is also available to eligible members seeking early retirement. 23 · CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 1. Defined Benefit Pension Plans - Statewide (Continued) A. Plan Description (Continued) There are different types of annuities available to members upon retirement. A normal annuity is a lifetime annuity that ceases upon the death of the retiree--no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will reduce the monthly nOnTIal annuity amount, because the annuity is payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are CUlTent provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary infonnation for PERF and PEPFF. That report may be obtained by writing to PERA, 60 Empire Drive #200, St. Paul, Minnesota, 55103- 1855 or by calling (651) 296-7460 or 1-800-652-9026. B. Funding Policy Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 8.75 percent and 4.75 percent, respectively, of their arumal covered salary. PEPFF members are required to contribute 6.20 percent of their annual covered salary. The City of St. Joseph is required to contribute the following percentages of annual covered payroll: 11.43 percent for Basic Plan PERF members, 5.18 percent for Coordinated Plan PERF members, and 9.30 percent for PEPFF members. Member and employer contribution rates for Basic and Coordinated members will increase by 0.35 percent effective January 2002. The City's contributions to the Public Employees Retirement Fund for the years ending December 31,2001,2000, and 1999 were $ 17,465, $ 17,887, and $ 15,286, respectively. The City's contributions to the Public Employees Police and Fire Fund for the years ending December 31,2001,2000, and 1999 were $ 25,979, $ 23,975, and $ 24,295, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. 24 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 2. Defined Contribution - Statewide The City provides pension benefits for its elected local govermnent officials through a defined contribution plan administered by the Public Employees Retirement Association (PERA). The Public Employees Defined Contribution Plan (PEDCP) is a multi-employer deferred compensation plan. Elected officials \vho are covered by a public or private pension plan because of their employment are not eligible to participate in the PEDCP. Plan benefits depend solely on amounts contributed to the plan plus investment earnings. J\1i11l1esota Statutes, Chapter 353D.03 requires that both the elected local government official and the City contribute an amount equal to 5% of the elected local govenm1ent official's salary. There is no vesting period required to receive benefits in the PEDCP. The City's total payroll in the year 2001 was $ 722,476. The City's contributions were calculated using the base salary amount of $ 20,396. Both the City and the elected local government official made the required 5% contribution, amounting to $ 1,020 from each source, or $ 2,040 in total. 3. Deferred Revenue Deferred revenue at December 31, 2001, consisted of: Debt Capital General Service Projects Total Taxes Receivable - Delinquent S 5,036 S 2,066 S 0 S 7,102 Special Assessments Receivable - Deferred 7,418 1,599,340 145,699 1,752,457 Delinquent 208 3,091 0 3,299 Total S 12,662 $ 1.604.497 S 145.699 $ 1,762.858 25 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 3 - DETAILED NOTES ON ALLFUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 4. Bonds Payable The following is a summary of bond transactions for the year ended December 31,2001: General Obligation General General Special Obligation Obligation Assessment Revenue Revenue Total Bonds Payable - January I, 2001 $ 1,125,000 $ 3,235,000 $ 930,000 $ 960,000 $6,250,000 Bonds Issued 0 8 I 0,000 640,000 0 1,450,000 Bonds Retired (40,000) (210,000) (70,000) (40,000) (360,000) Bonds Payable - December 31, 2001 $ 1,085,000 $ 3,835,000 $ 1,500,000 $ 920,000 $7,340,000 Bonds outstanding at December 31, 2001, comprise the following issues: General Obligation Bonds: $ 1,235,000 General Obligation Bonds of 1997 due in annual installments of$ 35,000 to $ 100,000 through December 1,2017, interest at 4.00 to 5.75 percent $ 1,085,000 General Obligation Special Assessment Bonds: $ 200,000 General Obligation Improvement Bonds of 1992 due in annual installments of$ 10,000 to $ 20,000 through December 1,2007, interest at 4.60 to 6.40 percent 105,000 $ 550,000 General Obligation Improvement Bonds of 1993 due in annual installments of $ 25,000 to $ 50,000 through December 1,2008, interest at 3.00 to 5.30 percent 300,000 $ 1,280,000 General Obligation Improvement Bonds of 1996 due in annual installments of $ 60,000 to $ 120,000 through December 1,2011, interest at 4.30 to 5.90 percent 950,000 26 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 4. Bonds Pavable (Continued) General Obligation Special Assessment Bonds: (Continued) $ 545,000 General Obligation Improvement Bonds of 1998 due in annual installments of$ 25,000 to $ 50,000 through December 1,2013, interest at 3.85 to 5.00 percent $ 470,000 S 1,330,000 General Obligation Improvement Bonds of 1999 due in mmual installments of S 65,000 to S 125,000 through December 1,2014, interest at 4.875 to 5.20 percent 1,200,000 S 810,000 General Obligation Improvement Bonds of2001 due in mmual installments of $ 160,000 to $ 165,000 through December 1,2006, interest at 3.00 to 3.85 percent 810,000 Total General Obligation Special Assessment Bonds 3,835,000 General Obligation Revenue Bonds: $ 475,000 General Obligation Water Revenue Bonds of 1992 due in annual installments of $ 30,000 to $ 50,000 through December 1,2005, interest at 4.00 to 6.00 percent 190,000 $ 780,000 General Obligation \Vater Revenue Bonds of 1996 due in annual installments of $ 20,000 to $ 70,000 through December 1, 2016, interest at 4.30 to 6.00 percent 670,000 $ 640,000 General Obligation Sewer Revenue Bonds of2001 due in an annual installments of $ 25,000 to $ 45,000 through December 1,2021, interest at 3.30 to 5.15 percent 640,000 Total General Obligation Revenue Bonds 1,500,000 Revenue Bonds: $ 960,000 EDA Public Project Revenue Bonds of2000 due in annual installments of $ 40,000 to $ 95,000 through December 1,2015, interest at 5.60 to 6.60 percent 920,000 TOTAL BONDS PAYABLE $ 7,340,000 27 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 4. Bonds Payable (Continued) The annual requirements to amortize all bonded debt outstanding as of December 31, 2001, including interest payments of$ 2,967,655 are: General Obligation General Year Ending General Special Obligation December 31, Obligation Assessment Revenue Revenue Total 2002 $ 103,055 $ 575,806 $ 178,550 $ 102,000 $ 959,411 2003 100,985 577,986 169,047 99,435 947,453 2004 103,870 560,989 174,293 101,825 940,977 2005 101,470 562,863 168,907 98,900 932,140 2006 104,020 548,225 118,493 100,950 871,688 Thereafter 1,149,570 2,143,033 1,454,795 908,588 5,655,986 Totals $ 1,662,970 $ 4,968,902 $ 2,264,085 $ 1,411,698 $ 10,307,655 5. Loans Payable The following is a summary ofloan transactions for the year ended December 31, 2001: Steams Electric Loans Payable - January 1,2001 $ 249,742 Loans Issued 0 Loans Retired 26,658 Loans Payable - December 31, 2001 $ 223,084 The annual requirements to amortize all loans outstanding as of December 31, 2001, including interest payments of $ 10,156 are: 2002 $ 29,155 2003 29,155 2004 29,155 2005 29,155 2006 29,155 2007-2009 87,465 Totals $ 233,240 28 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 6. Conduit Debt Obligations Conduit debt obligations are certain limited-obligation revenue bonds or similar debt instruments issued for the express purpose of providing capital financing for a specific third party. The City has issued various revenue bonds to provide funding to private- sector entities for projects deemed to be in the public interest. Although these bonds bear the name of the City, the City has no obligation for such debt. Accordingly, the bonds are not reported as liabilities in the financial statements of the City. As of December 31, 2001, the City's conduit debt consisted of the following: Outstanding Balance 12/31/01 Commercial Development Revenue Note (Independence Center) Series 2001 $ 605,000 C. Fund Equity Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective funds: 1. Fund Balance a. Reserved Fund Balance is comprised ofthe following: General Debt Service Total Notes Receivable $ 20,000 $ 0 $ 20,000 Debt Service 0 2,494,904 2,494,904 Total $ 20,000 $ 2,494,904 $ 2,514,904 29 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31,2001 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) C. Fund Equity (Continued) 1. Fund Balance (Continued) b. Unreserved fund balance is comprised of the following: Special Capital General Revenue Projects Total Designated for Fire $ 595,007 $ 0 $ 0 $ 595,007 Designated for Fire Hall 2,438 0 0 2,438 Designated for Capital Expenditures (49,792) 0 0 (49,792) Designated for Debt Service 174,745 0 0 174,745 Designated for Working Capital 250,000 0 0 250,000 Undesignated 707,117 44,682 193,851 945,650 Total Unreserved Fund Balance $ 1,679,515 $ 44,682 $ 193,851 $ 1,918,048 2. Contributed Capital Contributed capital in the Enterprise Funds represents fixed assets which were purchased by other funds and transferred to the Enterprise Funds. Contributed capital is as follows: Balance December 31. 2000 $ 5.519.572 CaDital Contributed in 2001 1 163 595 Balance December 31. 2001 <¡; () ()Ri 1 ()7 30 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2001 NOTE 4 - SEGMENT INFORMATION FOR ENTERPRISE FUNDS The City maintains three Enterprise Funds which provide refuse, water and sewer services. Segment infonnation for the year ended December 31, 2001, is: Refuse Water Sewer Fund Fund Fund Total Operating Revenues $ 145,007 $ 226,998 $ 284,672 $ 656,677 Depreciation 0 58,343 84,052 142,395 Operating Income (Loss) 31,591 51,977 (31,993) 51,575 Operating Transfers Out (10,000) (40,000) (247,000) (297,000) Net Income (Loss) 30,649 48,042 9,451 88,142 Contributed Capital 0 2,915,424 3,767,743 6,683,167 Fixed Assets - Acquisitions 0 9,295 0 9,295 Net Working Capital 156,893 307,946 532,998 997,837 Total Assets 168,836 3,154,681 3,242,595 6,566,112 Total Equity 156,893 3,128,264 3,191,475 6,476,632 NOTE 5 - RISK MANAGEMENT The City is exposed to various risk of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. In order to protect against these risks of loss, the City purchases commercial insurance through the League of Minnesota Cities Insurance Trust, a public entity risk pool. This pool currently operates common risk management and insurance programs for municipal entities. The City pays an annual premium to the League for its insurance coverage. The League of Minnesota Cities Insurance Trust is self-sustaining through commercial companies for excess claims. The City is covered through the pool for any claims incurred but unreported, however, retains risk for the deductible portion of its insurance policies. The amounts of these deductibles are considered immaterial to the financial statements. The City's workers compensation insurance policy is retrospectively rated. With this type of policy, final premiums are determined after loss experience, workers compensation rates and salaries for the year are known. The final premium adjustment was recorded in the year the adjustment was made. During the year ended December 31,2001, there were no significant reductions in insurance coverage from the prior year. Settled claims have not exceeded the City's commercial coverage in any of the past three years. NOTE 6 - SUBSEQUENT EVENT In January 2002, the City issued $ 245,000 General Obligation Certificates of Indebtedness. 31 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS CITY OF ST. JOSEPH, MINNESOTA THE GENERAL FUND The General Fund accounts for all revenues and expenditures of a governmental unit which are not accounted for in other funds, and it is usually the largest and most important accounting activity for state and local governments. It normally receives a greater variety and number of taxes and other general revenues than any other fund. This fund has flowing into it such revenues as general property taxes, licenses and permits, fines and penalties, rents, charges for CUlTent services, state aids, and interest earnings. The fund's resources also finance a wider range of activities than any other fund. Most of the current operations of governmental units will be financed from this fund. CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND COrvIPi\RATIVE BALANCE SHEETS December 31 2001 2000 ASSETS Cash and Investments S 1,574,568 S 1,447,215 Taxes Receivable - Delinquent 5,036 5,036 Special Assessments Receivable - Deferred 7,418 18,988 Delinquent 208 208 Accounts Receivable 42,225 6,094 Notes Receivable 20,000 30,000 Interest Receivable 32,413 31,442 Due from Other Govenm1ental Units 190,437 199,096 TOTAL ASSETS $ 1 ,872,305 S 1,738,079 LIABILITIES AND FUND BALANCE Liabilities: Accmed Liabilities $ 144,412 $ 102,791 Deferred Revenue 12,662 24,232 Compensated Absences Payable 15,716 19,029 Total Liabilities 172,790 146,052 Fund Balance: Reserved for Notes Receivable 20,000 30,000 Unreserved - Designated 972,398 903,044 Undesignated 707,117 658,983 Total Fund Balance 1,699,515 1,592,027 TOTAL LIABILITIES AND FUND BALANCE $ 1 ,872,305 $ 1,738,079 32 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2001 (With Comparative Actual Totals for the Year Ended December 31, 2000) 2001 2000 Over (Under) Budget Actual Budget Actual REVENUES: General Property Tax $ 368,465 $ 401,973 $ 33,508 $ 371,327 Tax Increments 0 1,716 1,716 2,676 Special Assessments 30,000 12,938 (17,062) 24,880 Licenses and Pennits 66,910 90,366 23,456 73,607 Intergovernmental - Federal Grants 10,000 21,425 11,425 3,345 State - Local Government Aid 531,754 531,754 0 492,663 HACA 60,776 62,113 1,337 60,827 Police Aid 28,000 24,815 (3,185) 24,318 Fire Aid 2,150 24,969 22,819 25,047 Other 1,541 9,799 8,258 4,765 County Grants 5,600 6,751 1,151 6,457 Total Intergovernmental 639,821 681,626 41,805 617,422 Charges for Services - General Government 8,110 10,144 2,034 10,766 Public Safety - Fire 144,684 143,411 (1,273) 133,326 Culture and Recreation 14,000 17,038 3,038 14,822 Total Charges for Services 166,794 170,593 3,799 158,914 Fines 73,150 80,512 7,362 85,003 MisceIlaneous - Sale of Surplus Property 0 69,471 69,471 50,823 Investment Income 54,000 83,802 29,802 88,379 Park Dedication Fees 0 19,806 19,806 0 Refunds and Reimbursements 18,000 29,444 11,444 31,516 Contributions 0 27,421 27,421 36,313 Total MisceIlaneous 72,000 229,944 157,944 207,031 Total Revenues 1,417,140 1,669,668 252,528 1,540,860 33 CITY OF ST. JOSEPH, MINNESOTA GE1\TERAL FUND STATEìvŒNT OF REVENUES, EXPENDITURES AND CHANGES IN F~1) BALAi'!CE - BUDGET AND ACTUAL Year Ended December 31, 2001 (With Comparative Actual Totals for the Year Ended December 31,2000) (Continued) 2001 2000 Over (Under) Budget Actual Budget Actual EXPENDITURES: General Govemment: Mayor and Council - Salaries and Benefits S 25,549 $ 24,747 $ (802) $ 22,894 Supplies 150 236 86 0 Travel and Conferences 2,400 2,893 493 1,011 Advertising 0 43 43 64 Insurance 550 550 0 1,000 Dues and Subscriptions 9,150 10,546 1,396 5,699 Other 0 37 37 4 Legislative Committees - Legislative Bodies 5,000 3,800 (1,200) 2,780 Other 2,275 4,496 2,221 13,045 Elections - Supplies 100 0 (100) 244 Professional Services 200 804 604 8,319 Other 8,400 759 (7,641 ) 1,355 Assessing - Salaries and Benefits 10,228 10,471 243 9,967 Supplies 150 0 (150) 59 Travel and Conferences 100 130 30 0 Other 300 306 6 235 Administration - Salaries and Benefits 61,975 48,474 (13,501) 76,588 Supplies and Maintenance 7,700 6,741 (959) 6,646 Professional Services 700 1,045 345 55 Telephone 2,500 1,918 (582) 1,406 Travel and Conferences 3,000 1,240 (1 ,7 60) 2,347 Insurance 1,700 1,700 0 1,700 Capital Expenditures 29,190 20,463 (8,727) 3,489 Other 2,600 2,301 (299) 2,339 Accounting - Salaries and Benefits 39,221 29,123 (10,098) 44,668 Supplies 1,450 2,372 922 1,777 Travel and Conferences 500 328 (172) 434 Other 1,450 496 (954) 770 Independent Auditing - Services and Charges 8,400 9,736 1,336 7,860 Legal - Services and Charges 10,000 19,894 9,894 10,721 34 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2001 (With Comparative Actual Totals for the Year Ended December 31, 2000) (Continued) 2001 2000 Over (Under) Budget Actual Budget Actual EXPENDITURES: (Continued) General Government: (Continued) Planning and Zoning - Annexation Fee $ 500 $ 205 $ (295) $ 253 Property Tax Sharing 3,500 30,259 26,759 8,932 Joint Planning 500 0 (500) 109 St. Wendel Sewer 0 2,801 2,801 0 General Government Buildings - Salaries and Benefits 2,461 2,116 (345) 1,958 Supplies and Maintenance 4,300 9,283 4,983 2,988 Professional Services 1,600 4,763 3,163 2,149 Telephone 650 1,145 495 812 Insurance 1,400 700 (700) 1 ,400 Utilities 12,800 19,691 6,891 11,491 Other 1,400 0 (1,400) 2,454 Cable Access 5,680 22,089 16,409 6,474 Total General Government 269,729 298,701 28,972 266,496 Public Safety: Police - Salaries and Benefits 375,850 384,655 8,805 370,252 Supplies and Maintenance 11,200 12,334 1,134 9,270 Professional Services 31,800 30,826 (974) 35,225 Travel and Conferences 1,500 1,307 (193) 2,757 Insurance 5,000 4,882 (118) 5,708 Advertising 100 50 (50) 126 Capital Expenditures 9,800 14,370 4,570 3,708 Other 1,870 1,108 (762) 1,230 Fire Protection - Salaries and Benefits 60,354 42,760 (17,594) 42,660 Supplies and Maintenance 16,100 12,386 (3,714) 12,769 Professional Services 4,700 7,262 2,562 44,562 Travel and Conferences 3,750 2,220 (1,530) 2,074 Fire Protection 47,000 57,801 10,801 51,340 Insurance 15,000 14,900 (100) 13,100 Utilities and Telephone 8,400 10,099 1,699 7,993 State Aid Reimbursement 25,000 27 ,969 2,969 30,084 Training 4,300 4,872 572 3,334 Capital Expenditures 40,700 14,125 (26,575) 23,799 Other 1,880 1,432 (448) 1,755 35 CITY OF ST. JOSEPH, MINNESOTA GENERAL FlThTI STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31,2001 (V'lith Comparative Actual Totals for the Year Ended December 31, 2000) (Continued) 2001 2000 Over (Under) Budget Actual Budget Actual EXPENDITURES: (Continued) Public Safety: (Continued) Building Inspection - Supplies $ 200 $ 0 $ (200) S 117 Professional Services 27 ,200 34,261 7,061 31,340 Other 5,100 3,480 (1,620) 3,863 Communication Service - Supplies and Maintenance 750 645 (105) 1,234 Telephone 5,500 5,551 51 5,049 Capital Expenditures 400 0 ( 400) 952 Automotive Service - Supplies and :Maintenance 14,500 16,072 1,572 20,852 Motor Vehicles 7,200 14,729 7,529 0 Emergency Management Service - Professional Services 400 380 (20) 0 Capital Expenditures 2,400 0 (2,400) 335 Other 700 0 (700) 0 Animal Control - Supplies 100 0 (100) 0 Professional Services 700 235 ( 465) 485 Other 0 0 0 0 Total Public Safety 729,454 720,711 (8,743) 725,973 Public Works: Ordinance Enforcement - Professional Services 500 0 (500) 0 Street Maintenance - Salaries and Benefits 80,126 101,494 21,368 81,392 Supplies and Maintenance 16,300 15,624 (676) 9,568 Professional Services 100 0 (100) 0 Travel and Conferences 200 89 (111) 20 Insurance 6,000 6,642 642 5,274 Utilities and Telephone 4,750 3,989 (761) 3,138 Capital Expenditures 30,720 75,560 44,840 25,902 Other 700 2,127 1,427 614 Industrial Development - Professional Services 5,000 351 (4,649) 9 Ice and Snow Removal - Salaries and Benefits 24,958 32,663 7,705 21,564 Supplies and Maintenance 17,000 13,973 (3,027) 16,469 Professional Services 0 1,395 1,395 0 Capital Expenditures 8,000 314 (7,686) 0 Other 3,000 3,460 460 1,005 36 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2001 (With Comparative Actual Totals for the Year Ended December 31, 2000) (Continued) 2001 2000 Over (Under) Budget Actual Budget Actual EXPENDITURES: (Continued) Public Works: (Continued) Engineering - Professional Services $ 12,000 $ 38,080 $ 26,080 $ 37,644 Street Lighting - Supplies and Maintenance 250 23 (227) 0 Utilities 28,550 24,883 (3,667) 23,317 Capital Expenditures 1,200 5,880 4,680 1,250 Street Cleaning - 0 Salaries and Benefits 5,141 3,669 (1,472) 5,126 Supplies and Maintenance 5,500 7,082 1,582 933 Travel and Conferences 100 0 (100) 80 Capital Expenditures 1,600 0 (1,600) 0 Total Public Works 251,695 337,298 85,603 233,305 Culture and Recreation: Participant Recreation - Salaries and Benefits 11 ,165 8,879 (2,286) 9,799 Supplies and Maintenance 900 2,726 1,826 6,213 Professional Services 2,000 1,300 (700) 2,407 Insurance 500 500 0 500 Advertising 100 63 (37) 257 Other 1,500 829 (671 ) 77 Ball Park and Skating Rink - Salaries and Benefits 2,310 10,395 8,085 8,134 Supplies and Maintenance 700 453 (247) 278 Professional Services 0 364 364 0 Rentals 100 128 0 0 Utilities 500 1,023 523 560 Capital Expenditures 0 1,623 1,623 21,431 Maintenance Shop - Supplies and Maintenance 3,725 4,588 863 1,264 Telephone 1,100 1,440 340 1,414 Utilities 1,250 2,192 942 1,440 Capital Expenditures 2,000 0 (2,000) 0 Other 100 0 (100) 0 Park Areas - Salaries and Benefits 50,868 54,338 3,470 52,569 Supplies and Maintenance 13,500 11,677 (1,823) 12,699 Telephone 200 227 27 329 Insurance 1,200 1,425 225 1,200 Utilities 3,800 2,176 (1,624) 1,005 Capital Expenditures 36,720 42,471 5,751 22,159 Other 775 278 (497) 1,818 37 CITY OF ST. JOSEPH, IVIINNESOT A GENERAL FUND ST A THvŒNT OF REVENUES, EXPENDITURES A!\TD CHANGES IN FUND BALANCE - BUDGET A1\TD ACTUAL Year Ended December 31, 2001 (With Comparative Actual Totals for the Year Ended December 31, 2000) (Continued) 2001 2000 Over (Under) Budget Actual Budget Actual EXPENDITURES: (Continued) Culture and Recreation: (Continued) Shade Tree Disease Control - Supplies and Ivlaintenance $ 75 $ 0 $ (75) $ 0 Travel and Conferences 100 55 (45) 150 Community Support - Insurance 300 300 0 300 Other 7,200 6,932 (268) 6,832 Total Culture and Recreation 142,688 156,382 13,694 152,835 Economic Development Authority: Salaries and Benefits 49,965 29,792 (20,173) 46,902 Supplies 500 70 (430) 130 Telephone 1,200 836 (364) 1,273 Travel and Conferences 2,000 1,394 (606) 1,869 Professional Services 2,000 8,720 6,720 6,915 Capital Expenditures 400 240 ( 160) 186 Other 10,700 7,814 (2,886) 8,017 Total Economic Development 66,765 48,866 (17,899) 65,292 Miscellaneous: Other 500 222 (278) 1,600 Total Expenditures 1,460,831 1,562,180 101,349 1,445,501 REVENUES OVER (U1\TDER) EXPENDITURES (43,691) 107,488 151,179 95,359 OTHER FINANCING USES: Operating Transfers In (Out) 0 0 0 (231,000) EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES $ (43.691) 107,488 $ 151.179 (135,641 ) FUND BALANCE - January 1 1,592,027 1,727,668 FUND BALANCE - December 31 $ 1,699,515 $ 1,592,027 38 CITY OF ST. JOSEPH, MINNESOTA SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for revenues derived from specific taxes or other eannarked revenue sources. They are usually required by statute, charter provision, or local ordinance to finance particular functions or activities of government. CITY OF ST. JOSEPH, MINNESOTA SPECIAL REVEN1Æ FUNDS COMBINING BALANCE SHEET December 31,2001 \Vith Comparative Totals for December 31, 2000 Recreation DARE Center Program ASSETS Cash and Investments $ 36,532 $ 979 Interest Receivable 772 0 TOTAL ASSETS $ 37,304 $ 979 LIABILITIES Ai~D FU}\.1]) BALANCE Liabilities: Accounts Payable $ 0 $ 105 Fund Balance: Unreserved - Undesignated 37,304 874 TOTAL LIABILITIES AI\1]) FUND BALANCE $ 37,304 $ 979 Lake Wobegon Totals Trail 2001 2000 $ 6,370 $ 43,881 $ 36,058 134 906 779 $ 6,504 $ 44,787 $ 36,837 $ 0 $ 105 $ 0 6,504 44,682 36,837 $ 6,504 $ 44,787 $ 36,837 39 CITY OF ST. JOSEPH, MINNESOTA SPECIAL REVENUE FUNTIS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FU1\TD BALAi'\JCE Year Ended December 31,2001 ·With Comparative Totals for the Year Ended December 31, 2000 Recreation DARE Lake \V obegon Center Pro gram Trail REVENUES: Miscellaneous - Investment Income $ 2,161 $ (29) $ 190 Contributions 0 0 6,000 Total Revenues 2,161 (29) 6,190 EXPENDITURES: Public Safety - Supplies and Maintenance 0 477 0 Total Expenditures 0 477 0 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 2,161 (506) 6,190 FUND BALANCE - January 1 35,143 1,380 314 FU1\TD BALANCE - December 31 $ 37.304 $ 874 $ 6,504 Totals 2001 2000 $ 2,322 $ 2,393 6,000 0 8,322 2,393 477 92 477 92 7,845 2,301 36,837 34,536 $ 44,682 $ 36,837 40 CITY OF ST. JOSEPH, MINNESOTA DEBT SERVICE FUNDS Debt Service Funds are created to account for the payment of interest and principal on long-telm, general obligation debt other than debt issued for and serviced primarily by a governmental enterprise. CITY OF ST. JOSEPH, j\IINNESOT A DEBT SERVICE FUNDS COMBINING BALANCE SHEET December 31, 200 I With Comparative Totals for December 3 I. 2000 General General Genera] Obligation General ObJigation General ObJigation Water ObJigation Water ObJigation Improvement Revenue Improvement Revenue Improvement Bonds Bonds Bonds Bonds Bonds ofl992 of 1992 ofl993 ofl996 of 1996 ASSETS Cash and Investments S 36.706 S 39,960 S 155.580 S 481.858 S 660.5 15 Taxes ReceivabJe - DeJinquent 126 0 296 0 582 SpeciaJ Assessments Rcceivable - Defcrred 13.691 0 41,909 0 133,326 DeJinquent 0 0 0 0 1,031 Accounts Receivab]e 0 3,853 0 459 0 Interest Receivable 508 844 3,285 9.119 15,425 Due from Other Governmental Units 0 0 0 0 0 TOTAL ASSETS S 51.031 S 44.657 S 201.070 S 491.436 S 810.879 LIABILITIES AND FUND BALANCE Liabilities: Cash Overdraft S 0 S 0 S 0 S 0 S 0 Accounts Payable 0 0 0 0 0 Dcferred Revenue 13.817 0 42,205 0 134,939 Total Liabilities 13,817 0 42,205 0 134.939 Fund Ba]ance (Deficit): Reserved for Debt Service 37,214 44,657 158,865 49],436 675,940 TOTAL LIABILITIES AND FUND BALANCE S 51.03 I S 44,657 S 201.070 S 491,436 S 810,879 EDA General Public Obligation General General General Project General Sewer Obligation Obligation Obligation Revenue Obligation Revenue Bonds Bonds Bonds Bonds Bonds Bonds Totals of 1997 ofl998 of 1999 of 2000 of2001 of2001 2001 2000 $ 205,926 $ 231,166 $ 0 $ 0 $ 481,728 $ 323 $ 2,293,762 $ 1,948,229 659 90 313 0 0 0 2,066 2,065 0 197,213 893,754 0 319,447 0 1,599,340 1,470,170 0 301 1,759 0 0 0 3,091 3,091 0 0 104,442 0 0 0 108,754 7,017 3,712 4,922 (1,019) (285) 27,341 0 63,852 41,312 12,500 18,561 45,021 0 0 0 76,082 58,458 $ 222,797 $ 452.253 $ I ,044,270 $ (285) $ 828,5 I 6 $ 323 $ 4,146.947 $ 3,530,342 $ 0 $ 0 $ 3,416 $ 13,475 $ 0 $ 0 $ 16,891 $ 0 1,500 0 29,155 0 0 0 30,655 0 659 197,604 895,826 0 319,447 0 1.604,497 1,475.326 2,159 197,604 928,397 13,475 319,447 0 1,652,043 1,475,326 220,638 254,649 II 5,873 (13,760) 509,069 323 2,494,904 2,055,0 16 $ 222,797 $ 452.253 $ 1,044.270 $ (285) $ 828,5 I 6 $ 323 $ 4,146,947 $ 3,530,342 41 CITY OF ST. JOSEPH, 1\lINNESOTA DEBT SERVICE FUNDS CŒvlBINING ST A TEÌ\1ENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCE Year Endcd December 3]. 200 I With Comparative Tota]s for the Year Ended December 3],2000 Genera] Genera] Genera] Obligation Genera] Obligation Genera] Obligation Water Ob1igation Water Obligation Improvement Revenue Improvement Revenue Improvement Bonds Bonds Bonds Bonds Bonds of 1992 of ] 992 of ] 993 of]996 of 1996 REVENUES: General Property Taxes S 8.909 S 0 S 20.778 S 0 S 41,569 Special Assessments 2.961 0 7,93 I 0 44,175 Intergovernmenta] 0 0 440 0 0 MisceJlaneous - Investment Income 1,634 2,8] ] 10,265 27,333 4],782 Other 0 73,266 0 20,264 0 Tota] Revenues 13,504 76.077 39.4]4 47,597 127,526 EXPENDITURES: Debt Service - Bond Principal ]5,000 45,000 35,000 25.000 70.000 Bond Interest and Fiscal Charges 7,535 ]3,ì62 16.955 39.655 55.605 Tota] Expenditures 22,535 58.762 5] .955 64,655 ] 25,605 EXCESS OF REVENUES OVER (lJNDER) EXPENDITURES (9,031) ] 7,3] 5 (]2,54]) (17,058) ].92] OTHER F]NANCING SOURCES: Operating Transfers In ° ° ° 50,000 0 Proceeds from the Sale of Bonds 0 0 0 0 0 Total Other Financing Sources 0 ° 0 50.000 0 EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES (9,03]) ] 7,3 15 (I 2.541) 32,942 ],921 FUND BALANCE - January I 46.245 27,342 171,406 458.494 674.0]9 RESIDUAL EQUITY TR.4NSFER 0 ° 0 0 0 FUND BALANCE (DEFICIT) - December 3 I S 37.214 S 44,657 S 158.865 S 49 I .436 S 675,940 EDA General Public Obligation General General General Project General Sewer Obligation Obligation Obligation Revenue Obligation Revenue Bonds Bonds Bonds Bonds Bonds Bonds Totals of 1997 of ] 998 of 1999 of 2000 of200] of 200 I 2001 2000 $ 49,804 $ 7,379 $ 28,822 $ 97, I 69 $ 0 $ 0 $ 254,430 $ 154,845 0 74,409 305.991 0 445,424 0 880,891 423,297 62,144 0 0 0 0 0 62,584 62,701 13,976 13,843 16,596 2,302 39,475 0 170,017 156,690 0 0 0 0 0 0 93,530 78,897 125,924 95,631 35 I ,409 99,471 484,899 0 1,461,452 876,430 40,000 25,000 91,657 40,000 0 0 386,657 596,394 61,335 23,013 65,392 59,240 0 0 342,492 360,666 101,335 48,013 ]57,049 99,240 0 0 729,149 957,060 24,589 47,618 194,360 231 484,899 0 732,303 (80,630) 0 0 0 0 0 0 50,000 276,000 0 0 0 0 24,170 323 24,493 61,750 0 0 0 0 24, I 70 323 74,493 337,750 24,589 47,618 194,360 231 509,069 323 806,796 257,120 196,049 207,03 I 24 1,605 32,825 0 0 2,055,016 1,802,436 0 0 (320,092) (46,816) 0 0 (366,908) (4,540) $ 220,638 $ 254,649 $ I 15,873 $ (13,760) $ 509,069 $ 323 $ 2,494.904 $ 2,055,016 42 CITY OF ST. JOSEPH, MINNESOTA CAPITAL PROJECTS FUNDS Capital Projects Funds are created to account for all resources used for the acquisition of capital facilities by a govemmental unit except those financed by enterprise funds. CITY OF ST. JOSEPH, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET December 31, 2001 With Comparative Totals for December 31, 2000 2002 County Northland Street Road 121 Phase Five Improvements ASSETS Cash and Investments $ 0 $ 139,367 $ 0 Special Assessments Receivable Deferred 0 0 0 Interest Receivable 0 (13,278) 0 TOTAL ASSETS $ 0 $ 126.089 $ 0 LIABILITIES AND FUND BALANCE Liabilities: Cash Overdraft $ 30,634 $ 0 $ 15,371 Accrued Liabilities 6,978 31,112 5,630 Contracts Payable 0 0 0 Deferred Revenue 0 0 0 Total Liabilities 37,612 31,112 21,001 Fund Balance (Deficit): Unreserved - Undesignated (37,612) 94,977 (21.001) Total Fund Balance (Deficit) (37,612) 94,977 (21,001) TOTAL LIABILITIES AND FUND BALANCE $ 0 $ 126.089 $ 0 Trunk Totals Sewer 2001 2000 $ 154,945 $ 294,312 $ 212,406 145,699 145,699 163,117 2,542 (10,736) 4,495 $ 303.186 $ 429.275 $ 380.018 $ 0 $ 46,005 $ 265,414 0 43,720 60,319 0 0 23,079 145,699 145,699 163,117 145,699 235,424 511 ,929 157,487 193,851 (131,911) 157,487 193,851 (131,911) $ 303.186 $ 429.275 $ 380.018 43 CITY OF ST. JOSEPH, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVEN1ÆS, EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31,2001 With Comparative Totals for the Year Ended December 31, 2000 1999 Street City Hall County Improvements Proiect Road 121 REVEN1ÆS: Special Assessments $ 0 $ 0 $ ° Charges for Services 0 0 0 Miscellaneous - Investment Income (18,802) (3,857) 235 Total Revenues (18,802) (3,857) 235 EXPENDITURES: Capital Outlay - Construction Costs 41,253 84,867 26,732 Other 0 0 0 Total Expenditures 41,253 84,867 26.732 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (60,055) (88,724) (26,497) OTHER FINANCING SOURCES (USES): Operating Transfers In 0 0 0 Loan Proceeds 0 0 ° Proceeds fÌom the Sale of Bonds 0 0 0 Total Other Financing Sources (Uses) 0 0 ° EXCESS OF REVENUES At'ID OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (60,055) (88,724) (26,497) FUND BALANCE (DEFICIT) - January 1 (260,037) 41,908 (11,115) RESIDUAL EQUITY TRANSFER 320,092 46,816 ° FUND BALANCE (DEFICIT) - December 31 $ ° $ 0 $ (37.612) 2002 Sewer Northland Street Capacity Trunk Totals Phase Five Improvements Conveyance Sewer 2001 2000 $ 0 $ 0 $ 0 $ 30,051 $ 30,051 $ 0 0 0 0 23,488 23,488 11,600 (16,031) 0 70 6,615 (31 ,770) (8,312) (16,031) 0 70 60,154 21,769 3,288 657,157 21,001 860,100 0 1,691,110 1,147,621 13,980 0 16,730 0 30,710 9,725 671,137 21,001 876,830 0 1,721,820 1,157,346 (687,168) (21,001) (876,760) 60,154 (1,700,051) (1,154,058) 0 0 247,000 0 247,000 0 0 0 0 0 0 276,136 782,145 0 629,760 0 1 ,411 ,905 879,434 782,145 0 876,760 0 1,658,905 1,155,570 94,977 (21,001) 0 60,154 (41 , 146) 1,512 0 0 0 97,333 (131,911) (137,963) 0 0 0 0 366,908 4,540 $ 94.977 $ (21.001) $ 0 $ 157.487 $ 193.851 $ 031.911) 44 CITY OF ST. JOSEPH, MINNESOTA ENTERPRlSE FUNDS Enterprise Funds are established to account for the financing of self-supporting activities of governmental units which render services on a user charge basis to the general public. The most universal type of governmental enterprise is the public utility engaged in the provision of such basic services as water, electricity, and natural gas. Sanitary sewer systems financed by user charges have also assumed the status of public utility operations in many urban areas, and many cities have combined water and sewer systems under the same management. CITY OF ST. JOSEPH, l\HNNESOTA ENTERPRISE FUNDS COMB~GBALANCESHEET December 31, 2001 With Comparative Totals for December 31, 2000 Refuse Water Sewer Fund Fund Fund ASSETS Current Assets: Cash and Cash Equivalents $ 139,571 $ 297,955 $ 451,154 Accounts Receivable 26,107 29,272 123,430 Interest Receivable 3,158 7,136 9,534 Total Current Assets 168,836 334,363 584,118 Fixed Assets: Land and Land Improvements 0 12,996 4,941 Treatment Plant and Lines 0 2,045,497 3,128,886 Buildin,gs 0 0 517,983 Water Storage Facility 0 1,236,542 0 Machinery and Equipment 0 90,684 179,138 0 3,385,719 3,830,948 Less: Accumulated Depreciation 0 (565,401 ) (1,172,471) Net Fixed Assets 0 2,820,318 2,658,477 TOTAL ASSETS $ 168.836 $ 3.154.681 $ 3.242.595 LIABILITIES AND FUND EQUITY Current Liabilities: Accrued Liabilities $ 9,330 $ 10,509 $ 37,706 Due to Other Governmental Units 0 0 0 Compensated Absences Payable 2,613 15,908 13,414 Total Current Liabilities 11,943 26,417 51,120 Fund Equity: Contributed Capital 0 2,915,424 3,767,743 Retained Earnings (Deficit) - Unreserved 156,893 212,840 (576,268) Total Fund Equity 156,893 3,128,264 3,191,475 TOTAL LIABILITIES AND FUND EQUITY $ 168.836 $ 3.154.681 $ 3.242.595 Totals 2001 2000 $ 888,680 $ 918,114 178,809 177,690 19,828 20,608 1,087,317 1,116,412 17,937 17,936 5,174,383 4,010,789 517,983 517,983 1,236,542 1,236,542 269,822 260,527 7,216,667 6,043,777 (1,737,872) (1,595,477) 5,478,795 4,448,300 $ 6.566.112 $ 5.564.712 $ 57,545 $ 40,820 0 17,117 31 ,935 28,215 89,480 86,152 6,683,167 5,519,572 (206,535) (41,012) 6,476,632 5,478,560 $ 6.566.112 $ 5.564.712 45 CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS Year Ended December 31, 2001 With Comparative Totals for the Year Ended December 31, 2000 Refuse Water Sewer Fund Fund Fund OPERATING REVENUES: Charges for Services S 145,007 $ 226,998 $ 284,672 OPERATING EXPENSES: Salaries and Benefits 15,413 60,516 60,274 Utilities 0 20,052 8,696 Supplies 457 8,405 5,776 Sewer Use Rental 0 0 123,898 Postage 625 628 637 Repairs and Maintenance 253 12,439 19,957 Professional Fees 98 63 604 Fees and Tests 357 6,883 5,295 Dues and Subscriptions 0 428 182 Refuse Disposal 96,109 0 636 Depreciation 0 58,343 84,052 Insurance 0 3,717 5,017 Miscellaneous 104 3,547 1,641 Total Operating Expenses 113,416 175,021 316,665 OPERATING INCOME (LOSS) 31,591 51,977 (31,993) NON-OPERATING REVENUES: Investment Income 8,338 16,894 34,779 Other Revenues 720 19,171 0 Total Non-Operating Revenues 9,058 36,065 34,779 INCOME BEFORE OPERATING TRANSFER 40,649 88,042 2,786 Operating Transfer Out (10,000) (40,000) (247,000) NET INCOME (LOSS) 30,649 48,042 (244,214) RETAINED EARNINGS (DEFICIT) - January 1 126,244 164,798 (332,054) RETAINED EARNINGS (DEFICIT) - December 31 $ 156.893 $ 212.840 $ (576.268) Totals 2001 2000 $ 656,677 $ 541,715 136,203 126,903 28,748 27,218 14,638 13 ,440 123,898 125,470 1,890 1,249 32,649 7 765 19,506 12,535 8,438 610 690 96,745 89,101 142,395 125,139 8,734 8,015 5,292 2,737 605,102 547,913 51,575 (6,198) 60,011 64,611 19,891 17,801 79,902 82,412 131,477 76,214 (297,000) (45,000) (165,523) 31,214 (41,012) (72,226) $ (206.535) $ (41.012) 46 CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS Year Ended December 31, 2001 With Comparative Totals for the Year Ended December 31, 2000 Refuse Water Sewer Fund Fund Fund CASH FLOWS FROM OPERATING ACTIVITIES: Operating Income (Loss) $ 31,591 $ 51,977 $ (31,993) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation 0 58,343 84,052 Other Non-Operating Revenues 720 19,171 0 Change in Assets and Liabilities: Accounts Receivable (151) (464) (504) Accrued Liabilities 1,301 (567) 15,991 Due to Other Governmental Units 0 0 (17,11 7) Compensated Absences Payable 864 189 2,667 Total Adjustments 2,734 76,672 85,089 Net Cash Provided by Operating Activities 34,325 128,649 53,096 CASH FLOWS FROM NONCAPIT AL FINANCING ACTIVITIES: Operating Transfer to Other Fund (10,000) (40,000) (247,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital Acquisitions 0 (9,295) 0 CASH FLOWS FROM INVESTING ACTIVITIES: Investment Income 7,509 14,919 38,363 Net Increase in Cash and Cash Equivalents 31,834 94,273 (155,541) Cash and Cash Equivalents, January 1 107,737 203,682 606,695 Cash and Cash Equivalents, December 31 $ 139.571 $ 297,955 $ 451.154 Totals 2001 2000 $ 51,575 $ (6,198) 142,395 125,139 19,891 17,801 (1,119) (26,756) 16,725 (82,614) (17,117) 8,902 3,720 (8,891) 164,495 33.581 216,070 27,383 (297,000) (45,000) (9,295) (2,969) 60,791 55,591 (29,434) 35,005 918,114 883,109 $ 888.680 $ 918.114 47 CITY OF ST. JOSEPH, MINNESOTA STATEMENT OF GENERAL LONG-TERM DEBT December 31, 2001 2001 2000 ATvIOUNT A V AILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEBT: Amount A vaílable in Debt Service Funds S 2,494,904 $ 2,055,016 Amount to be Provided from Special Assessments 1,602,431 1,473,261 Amount to be Provided for Compensated Absences Payable 54,584 51,754 Amount to be Provided for Retirement of General Long-Tenn Debt 3,465,749 2,971,465 TOTAL AVAILABLE AND TO BE PROVIDED FOR RETIREMENT OF GENERAL LONG-TERlvl DEBT S 7,617,668 $ 6,551,496 GENERAL LONG-TERM DEBT: Compensated Absences Payable S 54,584 $ 51,754 Bonds Payable 7,340,000 6,250,000 Loans Payable 223,084 249,742 TOT AL GENERAL LONG- TERLvl DEBT S 7,617,668 $ 6,551,496 48 CITY OF ST. JOSEPH, MINNESOTA REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS May 8, 2002 Honorable Mayor and City Council City of St. Joseph St. Joseph, Minnesota We have audited the financial statements of City ofSt. Joseph, Minnesota as of and for the year ended December 31, 2001, and have issued our report thereon dated May 8, 2002. We conducted our audit in accordance \vith auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the detennination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be repOlied under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted a certain matter involving the internal control over financial reporting and its operation that we consider to be a reportable conditions. Reportable conditions involve matters corning to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect the City"s ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. The reportable condition is described in the accompanying Schedule of Findings and Conective Action Plans on Compliance with Minnesota Statutes and Internal Controls. 49 A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the nonnal course of perfonning their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weakness. However, we do not believe the reportable condition described is a material weakness. We also noted other matters involving the internal control over financial reporting that we have reported to the management of the City of St. Joseph, Minnesota in a separate letter dated May 8, 2002. This report is intended solely for the infonnation and use of the City's Administration, City Council, and state and federal awarding and oversight agencies, and is not intended to be, and should not be, used by anyone other than those specified parties, KtA-J.- J Î)e)N¿l1-tt» I II U/J. I ~fd. Kern, DeWenter, Viere Ltd. St. Cloud, Minnesota 50 CITY OF ST. JOSEPH, MINNESOTA AUDITORS' REPORT ON LEGAL COMPLIANCE May 8, 2002 Honorable Mayor and City Council City of St. Joseph St. Joseph, Minnesota We have audited the financial statements of the City of St. Joseph as of and for the year ended December 31, 2001 and have issued our report thereon dated May 8, 2002. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the provisions of the Minnesota Legal Compliance Audit Guide for Local Government, promulgated by the Legal Compliance Task Force pursuant to Minnesota Statutes Section 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The Minnesota Legal Compliance Audit Guide for Local Government covers five main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, and claims and disbursements. Our study included all of the listed categories. The results of our tests indicate that for the items tested, the City of St. Joseph complied with the material tenns and conditions of applicable legal provisions. This report is intended solely for the information and use of the City's Administration, City Council, and state and federal awarding and oversight agencies, and is not intended to be, and should not be, used by anyone other than those specified parties. ¡(./A-IL, 'ìJ¿tVen.-tvD J t/u-u-, ¿f-d. Kern, DeWenter, Viere, Ltd. St. Cloud, Minnesota 51 CITY OF ST. JOSEPH, MINNESOTA FD\TDINGS A1\TD CORRECTIVE ACTION PLANS ON COMPLIANCE WITH MINNESOTA STATUTES AND INTERNAL CONTROLS Year Ended December 31, 2001 CURRENT A1\TD PRIOR YEAR INTERNAL CONTROL FINDING: The City does not have adequate segregation of duties due to a limited number of office employees. CORRECTIVE ACTION PLAN (CAP): 1. Explanation of Disagreement with Audit Finding There is no disagreement with the audit finding. 2. Actions Planned in Response to Finding City Council \vill review current segregation of duties to detennine if further segregation is possible. 3. Official Responsible for Ensuring CAP Larry Hosch, Mayor, is the official responsible for ensuring corrective action of the deficiency. 4. Planned Completion Date for CAP The planned completion date for the CAP is December 31, 2002. 5. Plan to Ivlonitor Completion of CAP The City Council will be monitOling this corrective action plan. 52 CITY OF ST. JOSEPH, MINNESOTA FINDINGS AND CORRECTIVE ACTION PLANS ON COMPLIANCE WITH MINNESOTA STATUTES AND INTERNAL CONTROLS Year Ended December 31, 2001 (Continued) PRlOR YEAR STATE STATUTE FINDING: Minnesota Statute Sec. 118A.02, Subd. 1 provides that all government units are to designate, on an annual basis, an official depository or have the board designate authority to the treasurer or executive director to exercise the powers of the board in designating an official depository for funds. The designation is to be documented within the City's minutes. The City of S1. Joseph did not properly designate depositories as official depositories for the City's funds. CORRECTIVE ACTION TAKEN: The City designated the depositories as official depositories for the City's funds in the meeting minutes. PRlOR YEAR STATE STATUTE FINDING: Minnesota State Statute 574.26 requires that contractors doing public work pledge a perfOlmance bond in an amount not less than the contract price if the contract is greater than $ 10,000. The City failed to obtain performance bonds on two different projects during 2000. CORRECTIVE ACTION PLAN TAKEN: Perfonnance bonds were obtained for applicable projects in 2001. 53