HomeMy WebLinkAbout2013 Audit Report
CITY OF ST. JOSEPH
Stearns County, Minnesota
AUDITED FINANCIAL STATEMENTS
For the Year Ended December 31, 2013
CITY OF ST. JOSEPH
TABLE OF CONTENTS
ELECTED OFFICIALS AND ADMINISTRATION
................................................................... 1
INDEPENDENT AUDITORS REPORT
..................................................................................... 2
MANAGEMENTS DISCUSSION AND ANALYSIS
................................................................. 5
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Position ...................................................................................................... 24
Statement of Activities ........................................................................................................... 25
Fund Financial Statements:
Balance Sheet Governmental Funds ................................................................................... 26
Reconciliation of the Balance Sheet to the Statement of Net Position
Governmental Funds ............................................................................................................ 27
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds ............................................................................................................ 28
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund
Balances to the Statement of Activities Governmental Funds .......................................... 29
Statement of Revenues, Expenditures and Changes in Fund Balances Budget
and Actual General Fund .................................................................................................. 30
Statement of Net Position Proprietary Funds ...................................................................... 31
Reconciliation of the Statement of Net Position Business-Type Activities ........................ 32
Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary
Funds .................................................................................................................................... 33
Reconciliation of the Statement of Revenues, Expenses and Changes in Net
Position Business-Type Activities .................................................................................... 34
Statement of Cash Flows Proprietary Funds ....................................................................... 35
Notes to the Financial Statements ................................................................................................ 37
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress Other Post Employment Benefits ............................................. 66
SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures and Changes in Fund Balances Budget
and Actual General Fund ....................................................................................................... 68
Combining Balance Sheet Nonmajor Governmental Funds.................................................... 70
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds ............................................................................................... 76
CITY OF ST. JOSEPH
TABLE OF CONTENTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
............................................................................... 82
REPORT ON LEGAL COMPLIANCE
........................................................................................ 84
SCHEDULE OF FINDING AND RESPONSE ON INTERNAL
CONTROL
.....................................................................................................................................85
CITY OF ST. JOSEPH
ELECTED OFFICIALS AND ADMINISTRATION
December 31, 2013
Elected OfficialsPositionTerm Expires
Rick SchultzMayor January 2015
Robert LosoCouncil MemberJanuary 2017
Renee SymanietzCouncil MemberJanuary 2017
Steve FrankCouncil MemberJanuary 2015
Dale WickCouncil MemberJanuary 2015
Administration
Judy WeyrensCity AdministratorAppointed
Lori BartlettFinance DirectorAppointed
1
INDEPENDENT AUDITORS REPORT
Honorable Mayor and Members
of the City Council
City of St. Joseph
St. Joseph, Minnesota
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the City of St. Joseph,
Minnesota, as of and for the year ended December 31, 2013, and the related Notes to the Financial
S
Contents.
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Our responsibility is to express opinions on these 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 of the United States. Those Standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the fi
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the City
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the City.An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
2
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, each major fund,
and the aggregate remaining fund information of the City of St. Joseph, Minnesota, as of December 31,
2013, and the respective changes in financial position and, where applicable, cash flows thereof and the
budgetary comparison for the General Fund for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Implementation of GASB 65
As discussed in Note 13 to the financial statements, the City has adopted the provisions of the
Governmental Accounting Standards Board (GASB) Statement No. 65, Items Previously Reported as
Assets and Liabilities. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the M
Discussion and Analysis, which follows this report letter, and the Schedule of Funding Progress - Other
Post Employment Benefits on page 66 be presented to supplement the basic financial statements. Such
information, although not a part of the basic financial statements, is required by the GASB who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic or historical context. We have applied certain limited procedures to
the required supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing
the information and comparing the information for con
inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because
the limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the CityThe combining and individual nonmajor
fund financial statements are presented for purposes of additional analysis and are not a required part of
the basic financial statements.
The combining and individual nonmajor fund financial statements are the responsibility of management
and were derived from and relate directly to the underlying accounting and other records used to prepare
the basic financial statements. Such information has been subjected to the auditing procedures applied
in the audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the
basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In
our opinion, the combining and individual nonmajor fund financial statements are fairly stated, in all
material respects, in relation to the basic financial statements as a whole.
3
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 10, 2014
on our consideration of the s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on
internal control over financial reporting or on compliance.That report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the s internal control
over financial reporting and compliance.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
April 10, 2014
4
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
statements this narrative overview and analysis of the financial activities of the City of St. Joseph for the
fiscal year ended December 31, 2013.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2013 include the following:
The assets of the City of St. Joseph exceeded its liabilities at the close of the most recent fiscal year
by $ 30,425,969. Of this amount, $ 4,538,373 may be used
obligations to citizens and creditors (unrestricted net position).
net position decreased by $ 672,711 from 2012 to 2013. The decrease is due
to long-term debt payments, depreciation expense much higher than capital asset additions, capital
addition purchases made with reserved fund balances, and increases in improvement costs to
St. Cloud for the wastewater distribution and treatment system.
As of the close of the current fiscal year,
combined ending fund balances of $ 6,373,830, a decrease of $ 1,922,850. Of this amount
$ 1,133,625 is unassigned discretion. The remaining balance of
$ 5,240,205 is set aside for specific future expenditures.
At the end of the current fiscal year, unassigned fund balance for the general fund was $ 1,134,091
or 43.6% of total general fund expenditures ($ 1,124,825 or 52.6% excluding the fire and PEG
Access funds).
long-term debt decreased by $ 140,767 during the current fiscal year.
The decrease was due to a debt paid off for an advanced refunding less than debt issued in 2013.
The debt payments exceeded new debt issued.
OVERVIEW OF THE FINANCIAL STATEMENTS
are comprised of three
components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the
financial statements. This report also contains other supplementary information in addition to the basic
financial statements themselves.
Government-Wide Financial Statements.
The government-wide financial statements are designed to
private-sector business.
The Statement of Net Position presents in
liabilities, with the difference between the two reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City of
net position changed
during the most recent fiscal year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues
and expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
5
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
Both of the government-wide financial statements distinguish functions of the City of St. Joseph that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees and
charges (business-type activities). The governmental activities of the City of St. Joseph include general
government, public safety, public works, economic development, culture and recreation, and interest on
long-term debt. The business-type activities of the City of St. Joseph include water, sanitary sewer,
refuse, storm water and street light utility services.
The government-wide financial statements include not only the City of St. Joseph itself (known as the
primary government), but also a legally separate Economic Development Authority. Financial
information for this component unit is blended in the financial information.
The government-wide financial statements can be found on pages 24-25 of this report.
Fund Financial Statements.
A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City of St. Joseph,
like other state and local governments, uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements. All of the funds of the City of St. Joseph can be divided into two
categories: governmental funds and proprietary funds.
Governmental Funds.
Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
-term
financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long--term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and government-wide governmental activities.
The City of St. Joseph maintains thirty-two individual governmental funds. Information is presented
separately in the governmental fund balance sheet and in the governmental fund statement of revenues,
expenditures, and changes in fund balances for the general fund which is considered to be a major fund.
Data from the other governmental funds are combined into a single, aggregated presentation. Individual
fund data for each of these non-major governmental funds is provided in the form of combining
statements elsewhere in this report.
The City of St. Joseph adopts an annual appropriated budget for its general fund. A budgetary
comparison statement has been provided for the general fund (page 30) to demonstrate compliance with
this budget.
The basic governmental fund financial statements can be found on pages 26-30 of this report.
6
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
Proprietary Funds.
The City of St. Joseph maintains proprietary funds that are used to report the same
functions presented as business-type activities in the government-wide financial statements. The City of
St. Joseph uses proprietary funds to account for its water, sanitary sewer, refuse, storm water and street
light utility activities.
Proprietary funds provide the same type of information as the government-wide financial statements,
only in more detail. The proprietary fund financial statements provide separate information for the
water, sanitary sewer, refuse, storm water and street light utility, all of which are considered to be major
funds of the City of St. Joseph.
The basic proprietary fund financial statements can be found on pages 31-35 of this report.
Notes to the Financial Statements.
The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to
the financial statements can be found on pages 37-64 of this report.
Other Information.
The combining statements referred to earlier in connection with non-major
governmental funds can be found on pages 68-81 of this report.
Comparative Data.
While comparative data is not illustrated in this report, comments throughout this
narrative and overview will discuss significant changes from the prior year.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position
position. In the case of the City of St. Joseph, assets exceeded liabilities by $ 30,425,969 at the close of
the most recent fiscal year.
net position reflects its investment in capital assets
(e.g., land, buildings, machinery and equipment) net accumulated depreciation, less any related debt
used to acquire those assets that is still outstanding. The City of St. Joseph uses these capital assets to
provide services to citizens; consequently, these assets are not available for future spending. Although
that the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
7
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
NET POSITION
net position (16.5%) represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted net
position, $805,566,
At the end of the current fiscal year, the City of St. Joseph is able to report positive balances in all three
categories of net position for the government as a whole, as well as for its separate business-type
activities. The governmental activities had positive balances in all, but the unrestricted net position.
The governmental activities total net position balance decreased by 3.1% due to a stabilizing the tax levy
while increasing expenditures, capital spending out of reserved funds, the City opting to minimize
capital projects, and increases in compensated absence liability due to an increased number of full-time
employees.
There was a 1.7% decrease in the total net position for the business-type activities. The decrease is due
to the financial obligation of the City for St. Joseph proportionate share of the improvements to the St.
Cloud wastewater interceptor system and the wastewater treatment facility, and paying down the water
filtration plant debt with fewer connection fees than anticipated for the debt payments. The City issued
a crossover advanced refunding bond in the Water fund. The crossover date is December 1, 2014. Both
the original and refunded bonds are currently shown in the statements until the crossover date.
8
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
Governmental Activities.
Governmental activities reduced total net position by
$ 497,028. The most significant change in governmental net position is due to increases in accumulated
depreciation far exceeding capital asset additions. The City increased capital spending for equipment
purchased from reserved funds, and capital projects with bond issues postponed in 2012 to 2013 to
offset tax levy reductions and limited state aids. In addition, the Council approved hiring two full-time
staff in positions previously left vacant or at reduced hours. The City experienced little employee turn-
over resulting in accruals at higher amounts for long-term employees. In doing so, the compensated
absence liability increased 7.9%. Finally, the 2006C street improvement bonds were refunded with a
crossover advanced refunding bond. The crossover date was December 1, 2013 reducing the overall
debt liability by $ 1,585,000.
Business-Type Activities.
Business-type activities denet position by
$ 524,982 accounting for the 3.4% decrease in the Citytotal net position. The largest contributor to the
net position decrease is the sewer and storm water funds. In both cases, the City has opted to spend
down the equity to pay for sewer debt and storm water operations. The sewer fund built up equity in the
early to mid-2000s in preparation to pay for the St. Joseph portion of the St. Cloud wastewater treatment
facility improvements. To offset increasing rates in water and sewer services, the storm water rates were
reduced slightly. Storm water expenses continue to increase with normal inflation; however, the storm
water net position is able to absorb the increases.
The water utility (including the Water Access Charge [WAC] fund) net position increased by $ 1,085,
$ 363,815 decrease without transfers. The City issued debt to construct three new wells in 2005 and a
new water filtration plant in 2006 with the main revenue source new connections or WAC fees. The
City collected more connection fees than was required for the debt payments in 2004 - 2006. The carry-
over balance of the earlier connection fees covered the slower building years in 2007 - 2012. The
building activity increased significantly in 2009 and 2012, but not to the same levels as anticipated in
2005 and 2006 when the debts were approved. The 2013 building activity was slower with 25 new
WAC connections; bond estimates anticipated 85 connections. To help compensate unrealized revenue,
the City Council approved increasing the water rates as well as allocated reserves from the debt service
relief fund to the water fund.
The sewer utility (including the Sewer Access Charge [SAC] fund) net position decreased by $ 286,370.
The decrease is attributable to paying down debt for the St. Cloud projects. St. Joseph set aside
connection fees (SAC fees) and a portion of the sewer usage revenue in anticipation of the current
significant sewer note payments to St. Cloud. The SAC fee reserves will cover the debts through 2015.
New connection fees will add to the reserves and ability to pay future debt payments. In addition,
St. Joseph increased usage fees to help cover costs.
The change in net position in the storm water fund also decreased significantly by $ 63,412. The
Council opted to reduce storm water usage rates to offset larger increases for water and sewer usage
rates. Without depreciation, the storm water fund would have realized an increase in the change in net
position of $ 33,814. The storm water fund is covering approximately 34.8% of depreciation.
Eventually, Council plans to cover 100% of depreciation when the economic conditions improve for
overall rate increases.
9
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
The graphs and charts below and on the following pages summarize and graphically depict the changes
in net position for the governmental and business-type activities.
CHANGE IN NET POSITION
Governmental ActivitiesBusiness-Type ActivitiesTotal
201320122013201220132012
REVENUES:
Program Revenues:
Charges for Services$ 477,662$ 512,716$ 2,059,014$ 1,654,441$ 2,536,676$ 2,167,157
Operating Grants and
Contributions 185,693 203,827 8,604 2,373 194,297 206,200
Capital Grants and
Contributions 407,359 233,124 37,492 216 444,851 233,340
General Revenues:
Property Taxes 1,720,770 1,666,126 - - 1,720,770 1,666,126
Tax Increments 38,636 98,644 - - 38,636 98,644
Sales Tax 360,902 314,621 - - 360,902 314,621
Franchise Fees 117,894 116,668 - - 117,894 116,668
State Aids 647,620 648,717 - - 647,620 648,717
Unrestricted Investment Earnings 23,861 165,491 21,918 94,982 45,779 260,473
Gain on Sale of Capital Assets - 26,414 - - - 26,414
Total Revenues 3,980,397 3,986,348 2,127,028 1,752,012 6,107,425 5,738,360
EXPENSES:
General Government 547,927 540,533 - - 547,927 540,533
Public Safety 1,549,009 1,430,047 - - 1,549,009 1,430,047
Public Works 1,221,092 1,362,907 - - 1,221,092 1,362,907
Culture and Recreation 152,833 312,173 - - 152,833 312,173
Economic Development 431,908 186,933 - - 431,908 186,933
Interest on Long-Term Debt 249,823 361,739 - - 249,823 361,739
Water - - 1,090,286 1,120,823 1,090,286 1,120,823
Sanitary Sewer - - 1,003,244 791,275 1,003,244 791,275
Storm Water - - 316,087 296,119 316,087 296,119
Refuse - - 170,289 169,508 170,289 169,508
Street Light Utility - - 47,638 - 47,638 -
Total Expenses 4,152,592 4,194,332 2,627,544 2,377,725 6,780,136 6,572,057
Decrease in Net Position before
Tranfers (172,195) (207,984) (500,516) (625,713) (672,711) (833,697)
Transfers (169,249) 45,825 169,249 (45,825) - -
Change in Net Position (341,444) (162,159) (331,267) (671,538) (672,711) (833,697)
NET POSITION:
Net Position - Beginning 11,334,625 11,496,784 20,113,354 20,784,892 31,447,979 32,281,676
Change in Accounting Principle (155,584) - (193,715) - (349,299) -
Net Position - Beginning Restated 11,179,041 11,496,784 19,919,639 20,784,892 31,098,680 32,281,676
Net Position - Ending 10,837,597 11,334,625 19,588,372 20,113,354 30,425,969 31,447,979
10
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
EXPENSES AND PROGRAM REVENUES GOVERNMENTAL ACTIVITIES
REVENUES BY SOURCE GOVERNMENTAL ACTIVITIES
General Government
3%
Public Safety
14%
Public Works
8%
Culture and
Recreation
1%
General Revenues
Economic
73%
Development
1%
11
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
EXPENSES AND PROGRAM REVENUES BUSINESS-TYPE ACTIVITIES
1,200,000
Revenue
MANAGEMENT'S DISCUSSION AND ANALYSIS
Expenditures
1,000,000
December 31, 2005
EXPENSES AND PROGRAM REVENUES - BUSINESS-TYPE ACTIVITIES
800,000
600,000
400,000
200,000
-
WaterSanitary SewerRefuseStorm WaterStreet Light
Utility
REVENUES BY SOURCE BUSINESS-TYPE ACTIVITIES
Street Light Utility
Storm Water
2%
6%
Refuse
14%
Sanitary Sewer
Water
37%
41%
12
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
FINANCIAL ANALYSIS OF THE CITY AT THE FUND LEVEL
The financial performance of the City of St. Joseph as a whole is reflected in its governmental funds as
well. As the City completed the year, its governmental funds reported a combined fund balance of
$ 6,373,830, a decrease of $ 1,922,850 from 2012
$ 4,371,963, while total expenditures were $ 5,255,744. The excess of expenditures over revenues is
due to hiring two full-time employees and spending reserves for capital planning and outlay.
Expenditures were higher in 2013 due to a refunding debt payment for the 2006C street improvement
bonds. Capital spending for public safety increased substantially as the City purchased air tanks and
turnout gear. The fire department received a $ 91,000 federal grant to help pay for the air tanks.
A summary of financial highlights for each major governmental fund follows.
General Fund
The general fund is the chief operating fund of the City of St. Joseph. At the end of the current fiscal
year, unassigned fund balance of the general fund was $ 1,134,091
liquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned
fund balance represents 43.6% of total general fund expenditures, 52.6% (6.25 months working capital)
after removing the Fire and PEG Access fund. The City Council has a goal to maintain the General
Fund working capital fund balance equal to 4-6 months of expenditures. Although the General fund
experienced reductions in building permits and miscellaneous revenues, the intergovernmental revenues
increased $ 109,057 to help maintain a healthy fund balance.
General fund expenditures were higher than budgeted by $ 76,143, but under 2012 expenditures by
$ 72,832. In anticipation of Legislative limits to State Aid, the City Council decided to not replace a
full-time police officer and filled a full-time office staff position with temporary workers in previous
years. The council voted to fill the positions in 2013 as full-time. The expenditures decreased mainly
due to larger fire capital purchases made in 2012. The fire department replaced the pumper truck, rescue
van, ATV 6-wheeler and turnout gear in 2012. In 2013 additional turnout gear was purchased along
with replacing the air tanks using a federal grant. The cost of the pumper truck and rescue van came
partially from assigned fund balances.
As a result of the prudent financial policies of the City, the general fund remained stable.
The schedule on the next page presents a summary of General fund revenues and expenditures.
13
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
General Fund Budgetary Highlights
Over the course of the year, the City amended the annual operating budget to move budgeted capital
expenditures to the general capital outlay fund and the park dedication fund. This amendment is
typically an annual revision to the General fund budget. In 2013, the general fund transferred $ 8,500 to
fund the first four months of the street light utility. Historically, the City has minimal budget
amendments during the budget year.
Actual revenues were $ 95,555 more than expected due to increases in charges for services and
intergovernmental revenues. Charges for services increased in a variety areas. Most
significantly higher than budget came from land use deposits. Intergovernmental revenues had a
large variance over budget due to federal grants received for fire equipment and a FEMA storm
damage reimbursement. Police and fire aid also were higher in 2013.
Actual expenditures were $ 76,143 more than budget. The fire air packs purchased with a
federal grant were not included in the budget. Other capital costs were budgeted over several
years. The year of purchase will show expenditures over budget. Also, the police chief retired in
2013, paying out accumulated benefits upon retirement.
Proprietary Funds.
The City o provide the same type of
information found in the government-wide financial statements, but in more detail. The net position of
the proprietary funds decreased $ 320,231 overall. The paragraphs on the following pages provide a
brief financial overview of each major proprietary fund.
14
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
Water Enterprise Fund
The W2013, the Water
net position increased $ 1,088. Without transfers, the net position would show a decrease of
$ 318,812. The water fund has a couple large debts for the construction of a new water filtration plant
and three new wells to handle growth in the City. The 2005D water revenue debt will be refunded with
the 2012A crossover advanced refunding debt on the December 1, 2014 call date for a savings of
$ 366,766 in interest expense. In anticipation of high debt costs and low development to help pay for
the debts, the City increased rates and budgeted in transfers from the debt service relief fund. The
transfer amount is calculated to show a break-even in the water fund.
Sanitary Sewer Enterprise Fund
The Sanitary Sewer fund is used to account
2013, the Sanitary Snet position decreased $ 286,370 due to growing debt costs for
treatment in St. Cloud and upgrading aged facilities in St. Joseph. As a contract user of the St. Cloud
Wastewater Treatment Facility, St. Joseph is obligated to pay a portion of the costs to maintain the
St. Cloud treatment facility and conveyance system. St. Joseph issued four notes with St. Cloud for
various conveyance and treatment facility projects. In addition, St. Joseph issued a bond in 2012 to
rehabilitate the Sauk River manhole feed from the St. Joseph force main into St. Cloud to reduce toxins
discharged into the wastewater treatment system. In 2013 the City issued a $ 1.875M bond to cover
costs to rehabilitate the Main lift station and sewer mains under CSAH 75. The large debt costs are
partially paid for with reserved sewer connection and trunk fees along with sewer usage rates. The
reserves are estimated to be used up in 2015; however, new development will extend the estimate.
Utility rates have been increased also to offset lower development activity in the past few years.
Refuse Enterprise Fund
The Refuse fund is used to account for the contract services to provide residential refuse, recycling and
compost services. In 2013net position increased $ 24,488. The operating revenues
and expenses both increased. The City contracts for refuse hauling. Contracts are renewed every three
years. Bids are very competitive with the number of refuse haulers in the area. The last contract was
awarded in late 2012 with no increase in charges. The City was able to keep rates the same. Compost
rates are reviewed annually with no change in 2013. New in 2013, the City changed from operating a
compost site to outsourcing the service to a local business. Increased use of the compost site and the
City CouncilWendel Township to utilize the City compost site created a need to
look for alternatives sites as the existing site was no longer sufficient. In reviewing alternatives and
considering land prices, the best option for the City was to outsource the compost service. The
outsourcing of services allowed the City to expand the services and allow additional participants.
Storm Water Enterprise Fund
The storm water fund is use2013, the
storm water net position decreased $ 63,412. The storm water fund had an operating loss of
$ 68,280 or, $ 28,946 surplus after removing depreciation expense. The deficit is due to maintaining
storm water fees without covering much depreciation. The City Council chose to maintain the fees
while still covering some depreciation to allow for larger increases in other funds. The decision was
based on the fund having a healthy net position balance. The storm water fund has not collected any
development fees for the previous five years.
15
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
Street Light Utility Enterprise Fund
In 2013,
the City Council voted to create a street light utility fee to pay for operations of the street lights,
removing the expenditure from the general fund levy. The average household pays $ 3 more per year
while an average business pays $ 173 less per year for street lighting. The new user fee allows the City
to capture revenue from tax exempt properties to help pay for the service provided to them. The City of
St. Joseph is somewhat unique in that over 55% of the City property is classified as tax exempt. To be
fair to all users benefiting from street lighting, the City Council determined a user fee was a more
appropriate way to charge for services. The net position change of the street light utility fund was
positive $ 3,975 at December 31, 2013. Future rate increases and the State sales tax exemption law
change .
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
T for its governmental and business-type activities as
of December 31, 2013, amounts to $ 40,649,296 (net of accumulated depreciation), a decrease of
$ 172,790. The investment in capital assets includes land, intangible assets, buildings, improvements,
machinery and equipment, furniture and office equipment, infrastructure, and construction in progress.
Investment in capital assets, net related debt decreased $ 1,395,062. The decrease is attributable to
capital asset replacements for assets fully depreciated and increased debt for the new assets. The overall
debt related to capital assets increased $ 1,427,334 without including the refunded debt paid off in 2013.
There were two significant assets moved from construction in progress to depreciable assets in 2013 for
the St. Cloud treatment facility project and the interceptor phase IV improvements. The depreciation
added for these assets alone accounts for $ 128,993 annually.
The table on the next page
16
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
CAPITAL ASSETS
5 on pages 50-51
of this report. Total depreciation expense for 2013 was $ 2,040,296.
Long-Term Liabilities
At the end of the current fiscal year, the City of St. Joseph had total net bonded debt outstanding of
$ 24,958,588. Of this amount, $ 6,167,342 comprises debt backed by the full faith and credit of the
and notes secured by
specified revenue sources (i.e. utility and lease revenue bonds). Other long-term debt includes
compensated absences payable and other post employment benefits.
g-term liabilities is included in the table on the following page.
17
CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2013
OUTSTANDING LONG-TERM LIABILITIES
Percent
20132012Change
Governmental Activities:
General Obligation 1,400,758$ 1,405,068$ 0%
General Obligation Special Assessment Bonds4,766,584 6,661,327 -28%
General Obligation Revenue Bonds180,000 260,000 -31%
Compensated Absences Payable395,218 366,195 8%
Net Other Post Employment Benefits159,881 137,169 17%
Total Governmental Activities6,902,441$ 8,829,759$ -22%
Business-Type Activities:
General Obligation Revenue Bonds13,233,396$ 11,809,290$ 12%
Notes Payable5,377,850 4,980,569 100%
Compensated Absences Payable108,532 120,656 -10%
Net Other Post Employment Benefits46,706 39,939 17%
Total Business-Type Activities18,766,484$ 16,950,454$ 11%
The City of St. Joseph issued $ 2,545,000 General Obligation Bonds, Series 2013A in September 2013.
The bond issue funds three projects: general equipment certificates, sewer pump station revenue bonds
and 2013 street overlay improvement bonds. In addition, the City incurred a note with the City of St.
Cloud in the amount of $ 650,000 for sewer interceptor repairs and took the final draw on the St. Cloud
Public Facilities Authority loan.
The City paid down the net bonded debt by $ 1,979,053 on the governmental activities to end the year.
In 2013, one debt was paid in full with a crossover refunding. The business-type activities saw an
increase in bonded debt of $ 1,851,387 with the issuance of the 2013A sewer revenue bonds and 2013
St. Cloud revenue note. The wastewater treatment plant improvement PFA loan through St. Cloud was
finalized in 2013 with a final draw increase of $ 48,168. A reduction will be seen when the 2005D
water revenue bonds are refunded on December 1, 2014 with the 2012A crossover revenue refunding
bonds.
The City of St. Joseph maintained a bond rating to an “A+” rating from Standard & Poor’s for the
general obligation debt in 2013. According to Standard& Poor’s municipal credit analysis, the City’s
solid bond rating reflects the City’s financial operations characterized by maintaining very strong
reserves, good household income levels and moderate overall debt burden. In addition, the proximity to
St. Cloud, Minnesota’s diverse employment base lead into the rating provided.
Minnesota state statutes limit the amount of net general obligation debt a governmental entity may issue
to 3% of its taxable market value. Net general obligation debt is debt solely paid for, with limited
exceptions, by ad valorem taxes. The current debt limitation for the City of St. Joseph is $ 9,200,577
which significantly exceeds of the City of St. Joseph’s outstanding pure general obligation debt of
$ 1,380,000.
Additional information on the St. Joseph’s long-term liabilities can be found in note 6 on pages 52-56.
18
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
ECONOMIC FACTORS AND AND RATES
The City of St. Joseph experienced a stable financial position at the end of 2013 despite decreasing
taxable market values, declining development, and increases in St. Cloud sewer charges as evidenced by
the tax rate and General fund reserves.
While the housing market for newly constructed homes has significantly declined, the City of St. Joseph
anticipates growth in both residential and commercial. The construction of a community school (K-8)
will spur development adjacent to the school site as it is open space and a developer has already
preliminary platted a tract for 500+ homes. The new school opened for the 2009-2010 school year. In
2010 a developer began platting phase 2 of the Rivers Bend development to build 12 patio homes. The
developer has completed the construction of all needed infrastructure and has been marketing the
available building site.. The City of St. Joseph issued six building permits for new homes in 2013.
In 2013 the City of St. Joseph was awarded a $ 600,000 Minnesota Small Cities Development Program
(SCDP) housing rehabilitation grant to correct deficiencies of older, low to moderate income homes in
St. Joseph. A qualified homeowner in the targeted area can receive up to a $ 35,000 0% forgivable
seven year loan to upgrade t
-15% of the construction costs.
The City also anticipates commercial/industrial development with the expansion of the Industrial Park,
development to the west along Interstate 94, and planning initiatives for downtown revitalization. The
first downtown project began construction in 2006 with completion in 2009. The project consists of a
commercial and residential mixed-use facility and is known as the Millstream Shops and Lofts. All
units are occupied. In addition, the downtown commercial spaces were filled with the addition of Retail
Therapy opening in a vacant building. In 2012 the City began designing an 18,000 square foot
government center in the downtown area, replacing the current city hall/police station. The facility will
house city and police employees for the next fifty years and will include a community room with a
168 occupants. Construction is projected to begin in
spring 2014.
In 2009 the Coborns PUD was approved which contained three commercial development sites. The
PUD is located on CSAH 75 and CR133, one of the major commerce corridors in St. Joseph.
CentraCare medical clinic(including grocery and liquor stores) and Central MN
Credit Union currently occupy the development site. A recent market study of the St. Joseph area
indicated that the trade area of St. Joseph would increase by 150% if a grocery store was added to the
landscape of the City. In late 2012.
three adjacent vacant commercial lots.
The City Council has also identified an area near Interstate 94 for future commercial development and
focused on planning the infrastructure expansion and land use during 2008-2009. With the completion
of the realignment of County Road 2, the City Council authorized the annexation of over 92 acres of
property south and east of Minnesota Street, adjacent to I-94 and CR 2 in early 2014. The commerce
potential at the intersection of I-94 and CR 2 is an opportunity for St. Joseph to diversify its tax base.
The City is working with land owners in the area to plan for infrastructure expansion and look for
potential developers. A hotel chain is aggressively working with the land owners to purchase a lot for
construction in 2014.
19
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
The City of St. Joseph is also working with a developer to construct a $ 3.4 M downtown project to
mirror the project described above as the Millstream Shops and Lofts. The proposed project is expected
to begin construction in 2014 and will include a combination of restaurant, retail and residential flats.
Other developments include a 24 unit phase one senior development near downtown consisting of
cottage homes, twin homes, and an eight-plex assisted living unit; plumbing and mechanical business
building expansion, 12,000 sq. ft. commercial addition and industrial office build-out. JLT Partnership,
LLC was approved to develop ten patio-bay townhomes in the Graceview development for construction
to begin in 2014. In fall 2013, a business proposed a special use permit to add a rustic wedding and
conference destination on their property near the industrial park. Construction and events are planned
for 2014.
The St. Joseph Economic Development Authority (EDA) is an active group promoting business interests
within the St. Joseph Community. The EDA continues to work with property owners to develop
industrial and commercial sites. The EDA is also working with the Comprehensive Economic
Development Strategy (CEDS) to attract businesses from around the country to the area and to provide
opportunity for possible federal grant funding. In addition, the EDA is working on a plan to identify and
revitalize the downtown area to attract people to the area.
Property tax reforms and budget deficits at the state level have significantly impacted government aid
payments made to the City. Further, the taxable market value on properties has decreased slightly. The
Council continues to budget conservatively to keep minimal increases in the tax rate. As the
economic instability continues, the City is monitoring the federal and state legislation with the impacts
on the local government.
The City annually reviews the fee structures for all licenses and permits and services to recover
appropriate costs in lieu of raising property taxes.
rate structure for the utilities is established to help cover not only the operating costs but the
depreciation as well. Water and sanitary sewer is charged from the first gallon used with a separate line
charge to recover current and future capital replacements. This structure began in 2006 to promote
water conservation. Residential sewer rates are capped at the water used for the November/December
billing. The City monitors the rates annually so that the rates cover operation and depreciation. The City
has a long-term goal of covering depreciation fully through rates.
The City of St. Joseph is part of the St. Cloud Wastewater System. The wastewater system is managed
in part by the St. Cloud Area Wastewater Advisory Committee (SCAWAC) of which each city has
representation. SCAWAC has identified the need improve the treatment portion of the wastewater
system and repair several failing sewer interceptors and lift stations. St. Cloud set up a tiered schedule
of improvements to the collection system. The improvements are either paid for with cash on hand or
General Obligation Sewer Revenue bonds. The bonds are issued to St. Cloud with schedules of each
costs to pay St. Cloud.
was $650,000. In addition, the Public Facilities Authority (PFA) loan for the treatment facility
improvements were closed out in August 2013. The final cost to the City of St. Joseph was $4,824,675,
a savings of $56,981 from the estimated costs.
20
CITY OF ST. JOSEPH
Stearns County, Minnesota
N AND ANALYSIS
December 31, 2013
and fee schedule for the
2013 and future reporting years. As the City looks forward to 2014, improvement projects are planned
to rehabilitate the water tower, reconstruct street and utilities in the Park Terrace neighborhood, and
replace the government center. The property owners along I-94, CR121 and downtown are considering
new developments. To encourage development, the City Council approved subsidizing water and sewer
access charges for the first ten single family homes built in 2014. The subsidy comes from debt service
relief funds. A busy year is planned in 2014.
REQUESTS FOR INFORMATION
those with an interest in the s finances. Questions concerning any of the information provided in
this report or requests for additional financial information should be addressed to the Finance Director,
PO Box 668, 25 College Avenue North, St. Joseph, MN 56374.
21
(THIS PAGE LEFT BLANK INTENTIONALLY)
22
BASIC FINANCIAL STATEMENTS
23
CITY OF ST. JOSEPH
STATEMENT OF NET POSITION
December 31, 2013
Governmental Business-Type
ActivitiesActivitiesTotal
ASSETS
Cash and Investments
(Including Cash Equivalents)$ 6,018,051$ 2,879,129$ 8,897,180
Cash with Fiscal Agent - 4,682,985 4,682,985
Property Tax Receivable 50,790 - 50,790
Accounts Receivable 76,240 334,947 411,187
Interest Receivable 1,392 1,165 2,557
Due from Other Governments 114,494 - 114,494
Due from Other Funds (Internal Balances) 4,000 (4,000) -
Notes Receivable 29,035 - 29,035
Special Assessments Receivable:
Delinquent 137,554 604 138,158
Deferred 1,726,132 42,060 1,768,192
Prepaid Expenses 19,500 -
19,500
Capital Assets:
Land 457,194 377,882 835,076
Easements 5,820 67,915 73,735
Construction in Progress 938,569 84,230 1,022,799
Buildings 2,511,263 8,120,415 10,631,678
Infrastructure 16,142,002 - 16,142,002
Improvements 741,872 - 741,872
Plant and Lines - 21,195,993 21,195,993
Machinery and Equipment 3,254,963 670,838 3,925,801
Sewer Rights - 8,531,687 8,531,687
Less Accumulated Depreciation (14,018,827) (8,432,520) (22,451,347)
Capital Assets (Net of Accumulated Depreciation) 10,032,856 30,616,440 40,649,296
Total Assets$ 18,210,044$ 38,553,330$ 56,763,374
LIABILITIES AND NET POSITION
Liabilities
Accounts Payable$ 246,438$ 38,174$ 284,612
Contracts Payable 152,282 8,208 160,490
Due to Other Governments 4,438 50,401 54,839
Salaries and Benefits Payable 43,306 7,653 50,959
Interest Payable 23,542 94,038 117,580
Bond Principal Payable (Net):
Payable Within One Year 1,135,000 5,180,000 6,315,000
Payable After One Year 5,212,342 8,053,396 13,265,738
Notes Payable (Net):
Payable Within One Year - 301,494 301,494
Payable After One Year - 5,076,356 5,076,356
Compensated Absences Payable:
Payable Within One Year 19,067 2,556 21,623
Payable After One Year 376,151 105,976 482,127
Net Other Post Employment Benefits (OPEB) Obligation
159,881 46,706 206,587
Total Liabilities 7,372,447 18,964,958 26,337,405
Net Position
Net Investment in Capital Assets 6,289,255 16,865,194 20,868,221
Restricted for:
Debt Service 3,636,146 - 3,636,146
Other Purposes 1,383,229 - 1,383,229
Unrestricted (471,033) 2,723,178 4,538,373
Total Net Position 10,837,597 19,588,372 30,425,969
Total Liabilities and Net Position$ 18,210,044$ 38,553,330$ 56,763,374
The Notes to the Financial Statements are an integral part of this statement.24
CITY OF ST. JOSEPH
BALANCE SHEET - GOVERNMENTAL FUNDS
December 31, 2013
General Fund Other Total
(101, 105, Governmental Governmental
108)FundsFunds
ASSETS
Cash and Investments $ 1,707,989$ 4,895,965$ 6,603,954
Taxes Receivable - Delinquent 37,083 13,707 50,790
Special Assessments Receivable:
Delinquent 1,169 136,385 137,554
Deferred 5,494 1,720,638 1,726,132
Accounts Receivable 57,708 19,032 76,740
Interest Receivable 518 1,088 1,606
Due from Other Funds 4,000 500 4,500
Due from Other Governments 12,168 102,326 114,494
Notes Receivable - 29,035 29,035
Prepaid Expenses 19,500 - 19,500
Total Assets$ 1,845,629$ 6,918,676$ 8,764,305
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities
Accounts Payable$ 32,908$ 213,530$ 246,438
Contracts Payable - 152,282 152,282
Due to Other Funds - 500 500
Due to Other Governments 4,438 - 4,438
Salaries and Benefits Payable 43,306 - 43,306
Total Liabilities 80,652 366,312 446,964
Deferred Inflows Of Resources
Unavailable Revenue - Property Taxes$ 37,083$ 13,707$ 50,790
Unavailable Revenue - Special Assessments 6,663 1,857,023 1,863,686
Unavailable Revenue - Notes Receivable - 29,035 29,035
Total Deferred Inflows of Resources 43,746 1,899,765 1,943,511
Fund Balances
Nonspendable 19,500 - 19,500
Restricted 6,870 3,180,613 3,187,483
Committed - 112,486 112,486
Assigned 560,770 1,359,966 1,920,736
Unassigned 1,134,091 (466) 1,133,625
Total Fund Balances 1,721,231 4,652,599 6,373,830
Total Liabilities, Deferred Inflows
of Resources and Fund Balances$ 1,845,629$ 6,918,676$ 8,764,305
The Notes to the Financial Statements are an integral part of this statement. 26
CITY OF ST. JOSEPH
RECONCILIATION OF THE BALANCE SHEET TO
THE STATEMENT OF NET POSITION - GOVERNMENTAL FUNDS
December 31, 2013
Total Fund Balances - Governmental Funds$ 6,373,830
Amounts reported for governmental activities in the Statement of Net Position
are different because:
Capital assets used in governmental activities are not current financial resources
and, therefore, are not reported as assets in governmental funds.
Cost of Capital Assets 24,051,683
Less Accumulated Depreciation (14,018,827)
Long-term liabilities, including bonds payable, are not due and payable in
the current period and, therefore, are not reported as liabilities in the funds.
Long-term liabilities at year-end consist of:
(6,347,342)
Bond Principal Payable, Net of Premiums and Discounts
(395,218)
Compensated Absences Payable
Net OPEB Obligation (159,881)
Delinquent receivables will be collected in subsequent years, but are not
available soon enough to pay for the current period's expenditures and,
therefore, are deferred in the funds.
50,790
Property Taxes
137,554
Special Assessments
Other long-term assets are not available to pay for current expenditures and,
therefore, are deferred in the funds.
1,726,132
Deferred Special Assessments
29,035
Notes Receivable
The Water Access Capital Project Fund is proprietary in nature and, therefore,
(563)
included in the business-type activities in the Statement of Net Position.
The Sewer Access Capital Project Fund is proprietary in nature and, therefore,
(586,054)
included in the business-type activities in the Statement of Net Position.
Governmental funds do not report a liability for accrued interest
(23,542)
due and payable.
Total Net Position - Governmental Activities
$ 10,837,597
The Notes to the Financial Statements are an integral part of this statement. 27
CITY OF ST. JOSEPH
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2013
General Fund Other Total
(101, 105, Governmental Governmental
108)FundsFunds
REVENUES
Property Taxes$ 1,152,540$ 568,510$ 1,721,050
Tax Increments - 38,636 38,636
Sales Taxes (7) 360,909 360,902
Special Assessments 2,080 465,416 467,496
Franchise Fees 117,894 - 117,894
Licenses and Permits 97,192 - 97,192
Intergovernmental 884,370 44,595 928,965
Charges for Services 244,699 227,911 472,610
Fines and Forfeitures 45,439 - 45,439
Miscellaneous:
Investment Income 442 5,035 5,477
Contributions and Donations 38,174 22,263 60,437
Revolving Loan Repayments - 8,083 8,083
Other 43,632 4,150 47,782
Total Revenues 2,626,455 1,745,508 4,371,963
EXPENDITURES
Current
General Government 485,778 - 485,778
Public Safety 1,405,347 - 1,405,347
Public Works 344,935 117 345,052
Culture and Recreation 196,504 3,446 199,950
Economic Development - 152,833 152,833
Debt Service
Principal - 1,210,000 1,210,000
Interest and Other Charges - 268,566 268,566
Capital Outlay
General Government 17,784 95,703 113,487
Public Safety 121,771 54,006 175,777
Public Works 31,264 439,966 471,230
Culture and Recreation - 427,724 427,724
Total Expenditures 2,603,383 2,652,361 5,255,744
Excess of Revenues Over
(Under) Expenditures
23,072 (906,853) (883,781)
OTHER FINANCING SOURCES (USES)
Insurance Recoveries 6,000 - 6,000
Sale of Property 629 20,531 21,160
Bonds Issued - 670,000 670,000
Bond Premium - 11,121 11,121
Refunding Bond Payment - (1,435,000) (1,435,000)
Transfers In 20,416 523,193 543,609
Transfers Out (34,160) (821,799) (855,959)
Total Other Financing Sources (Uses) (7,115) (1,031,954) (1,039,069)
Net Change in Fund Balances 15,957 (1,938,807) (1,922,850)
FUND BALANCES
Beginning of Year1,705,274 6,591,406 8,296,680
End of Year$ 1,721,231$ 4,652,599$ 6,373,830
The Notes to the Financial Statements are an integral part of this statement. 28
CITY OF ST. JOSEPH
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES TO THE STATEMENT
OF ACTIVITIES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2013
Total Net Change in Fund Balances - Governmental Funds$ (1,922,850)
Amounts reported for governmental activities in the Statement of Activities are different because:
Capital outlays are reported in governmental funds as expenditures. However, in the
Statement of Activities, the cost of those assets is allocated over the estimated useful lives
as depreciation expense.
1,090,735
Capital Outlays
(1,170,275)
Depreciation Expense
(15,476)
Loss on Disposal
(44,049)
Transferred to Proprietary Funds
Principal payments on long-term debt are recognized as expenditures in the governmental
1,210,000
funds but as an increase in net position in the Statement of Activities.
Bonds were refunded during the year. The amount paid off with the new funding is reported in
the governmental funds as a use of financing. However, the payments are not expenditures
in the Statement of Activities, but rather a reduction in long-term liabilities in the Statement
of Net Position. 1,435,000
Some expenses reported in the Statement of Activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
3,569
Accrued interest payable
15,174
Amortization of bond discounts, premiums and issuance charges
Proceeds from long-term debt are recognized as an other financing source in the governmental
(670,000)
funds but as a decrease in net position in the Statement of Activities.
The governmental funds report the effect of premiums, discounts and
similar items when debt is first issued, whereas these amounts are deferred and amortized
(11,121)
in the Statement of Activities.
Compensated absences and OPEB payments are recognized as paid in the
(51,735)
governmental funds but recognized as the expense is incurred in the Statement of Activities.
Delinquent receivables will be collected in subsequent years, but are not available soon enough
to pay for the current period's expenditures and, therefore, are not revenues in the funds.
78,032
Delinquent Special Assessments
(280)
Delinquent Property Taxes
Certain revenues in the Statement of Activities that do not provide current financial resources
are not reported as revenues in the funds.
(292,108)
Deferred Special Assessments
(7,096)
Notes Receivable
The Water Access Capital Project Fund is proprietary in nature and, therefore, is reported
20,191
with business-type activities.
The Sewer Access Capital Project Fund is proprietary in nature and, therefore, is reported
(9,155)
with business-type activities.
Change in Net Position - Governmental Activities$ (341,444)
The Notes to the Financial Statements are an integral part of this statement.29
CITY OF ST. JOSEPH
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2013
Variance with
Original Final Actual Final Budget -
BudgetBudgetAmounts
Over (Under)
REVENUES
Property Taxes$ 1,154,645$ 1,154,645$ 1,152,540 $ (2,105)
Sales Taxes - - (7) (7)
Special Assessments 1,500 1,500 2,080 580
Franchise Fees 114,800 114,800 117,894 3,094
Licenses and Permits 90,605 90,605 97,192 6,587
Intergovernmental 768,335 768,335 884,370 116,035
Charges for Services 230,775 230,775 244,699 13,924
Fines and Forfeitures 62,500 62,500 45,439 (17,061)
Miscellaneous Revenues:
Investment Income 26,000 26,000 442 (25,558)
Contributions and Donations 37,590 37,590 38,174 584
Other 44,150 44,150 43,632 (518)
Total Revenues 2,530,900 2,530,900 2,626,455 95,555
EXPENDITURES
Current
General Government 520,070 520,070 485,778 (34,292)
Public Safety 1,371,315 1,371,315 1,405,347 34,032
Public Works 361,470 352,970 344,935 (8,035)
Culture and Recreation 214,185 214,185 196,504 (17,681)
Capital Outlay
General Government 6,250 3,000 17,784 14,784
Public Safety 47,545 40,700 121,771 81,071
Public Works 30,190 25,000 31,264 6,264
Culture and Recreation 10,375 - - -
Total Expenditures 2,561,400 2,527,240 2,603,383 76,143
Excess of Revenues Over
(Under) Expenditures (30,500) 3,660 23,072 19,412
OTHER FINANCING SOURCES (USES)
Insurance Recoveries - - 6,000 6,000
Sale of Property - - 629 629
Transfers In 2,000 2,000 20,416 18,416
Transfers Out - - (34,160) (34,160)
Total Other Financing Sources (Uses) 2,000 2,000 (7,115) (9,115)
Net Change in Fund Balances$ (28,500)$ 5,660 15,957$ 10,297
FUND BALANCES
Beginning of Year1,705,274
End of Year$ 1,721,231
The Notes to the Financial Statements are an integral part of this statement.30
CITY OF ST. JOSEPH
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
December 31, 2013
Sanitary Sewer Refuse Storm Water Street Light
Water (601)(602)(603)(651)Utility (652)Total
ASSETS
Current Assets
Cash and Investments$ 3,590$ 1,829,480$ 254,337$ 205,799$ 20 $ 2,293,226
Cash with Fiscal Agent 4,682,985 - - - - 4,682,985
Special Assessments Receivable:
Delinquent 78 285 204 37 - 604
Deferred 15,409 3,611 314 22,700 26 42,060
Accounts Receivable 117,494 127,435 59,259 19,656 10,603 334,447
Interest Receivable 575 227 82 68 (1) 951
Total Current Assets 4,820,131 1,961,038 314,196 248,260 10,648 7,354,273
Noncurrent Assets
Capital Assets:
Land 372,941 4,941 - - - 377,882
Easements - - - 67,915 - 67,915
Construction in Progress 46,066 31,300 - 6,864 - 84,230
Buildings 7,502,432 617,983 - - - 8,120,415
Plants and Lines 8,908,669 7,432,835 - 4,854,489 - 21,195,993
Machinery and Equipment 192,511 430,941 45,540 1,846 - 670,838
Sewer Rights - 8,531,687 - - - 8,531,687
Total Capital Assets 17,022,619 17,049,687 45,540 4,931,114 - 39,048,960
Less Accumulated Depreciation (3,674,373) (3,722,155) (6,506) (1,029,486) - (8,432,520)
Net Capital Assets 13,348,246 13,327,532 39,034 3,901,628 - 30,616,440
Total Assets$ 18,168,377$ 15,288,570$ 353,230$ 4,149,888$ 10,648 $ 37,970,713
LIABILITIES AND NET POSITION
Current Liabilities
Accounts Payable$ 4,871$ 7,073$ 23,288$ 269$ 2,673 $ 38,174
Contracts Payable - 8,208 - - - 8,208
Due to Other Governments 593 46,980 2,828 - - 50,401
Salaries and Benefits Payable 3,799 2,415 654 785 - 7,653
Interest Payable 28,852 65,186 - - - 94,038
Due To Other Funds - - - - 4,000 4,000
Long-Term Liabilities Due
Within One Year 5,016,048 467,542 128 332 - 5,484,050
Total Current Liabilities 5,054,163 597,404 26,898 1,386 6,673 5,686,524
Noncurrent Liabilities
Compensated Absences 44,008 44,008 7,510 13,006 - 108,532
Notes Payable, Net - 5,377,850 - - - 5,377,850
Bonds Payable, Net 10,838,785 2,394,611 - - - 13,233,396
Net OPEB Obligation 22,659 18,497 2,775 2,775 - 46,706
Less Amounts Due Within One Year (5,016,048) (467,542) (128) (332) - (5,484,050)
Total Noncurrent Liabilities 5,889,404 7,367,424 10,157 15,449 - 13,282,434
Total Liabilities 10,943,567 7,964,828 37,055 16,835 6,673 18,968,958
Net Position
Net Investment in Capital Assets 7,369,461 5,555,071 39,034 3,901,628 - 16,865,194
Unrestricted (144,651) 1,768,671 277,141 231,425 3,975 2,136,561
Total Net Position 7,224,810 7,323,742 316,175 4,133,053 3,975 19,001,755
Total Liabilities and Net Position$ 18,168,377$ 15,288,570$ 353,230$ 4,149,888$ 10,648 $ 37,970,713
The Notes to the Financial Statements are an integral part of this statement.31
CITY OF ST. JOSEPH
RECONCILIATION OF THE STATEMENT
OF NET POSITION - BUSINESS-TYPE ACTIVITIES
December 31, 2013
Total Net Position - Proprietary Funds$ 19,001,755
Amounts reported for business-type activities in the Statement of Net Position
are different because:
The Water Access Capital Project Fund is proprietary in nature and
relates to water improvements for the applicable funds. Therefore,
563
it is included as a business-type activity.
The Sewer Access Capital Project Fund is proprietary in nature and
relates to sewer improvements for the applicable funds. Therefore,
586,054
it is included as a business-type activity.
Total Net Position - Business-Type Activities
$ 19,588,372
The Notes to the Financial Statements are an integral part of this statement. 32
CITY OF ST. JOSEPH
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN NET POSITION - PROPRIETARY FUNDS
For the Year Ended December 31, 2013
Sanitary Refuse Storm Water Street Light
Water (601)Sewer (602)(603)(651)Utility (652)Total
OPERATING REVENUES
Charges for Services$ 713,136$ 662,011$ 298,123$ 102,009$ 43,066$ 1,818,345
Misc Operating Revenues - 47,881 - - - 47,881
Total Operating Revenues 713,136 709,892 298,123 102,009 43,066 1,866,226
OPERATING EXPENSES
Wages and Salaries 158,503 136,991 28,675 47,139 - 371,308
Materials and Supplies 49,686 37,173 2,366 379 - 89,604
Repairs and Maintenance 29,225 28,813 1,725 15,250 814 75,827
Professional Services 23,480 15,164 14,140 8,667 602 62,053
Insurance 12,356 9,854 - - - 22,210
Utilities 72,752 15,820 735 - 46,174 135,481
Depreciation 377,590 388,699 6,506 97,226 - 870,021
Contracted Services - 176,148 254,883 - - 431,031
Equipment 320 - - - - 320
Miscellaneous 9,614 716 7,057 1,628 48 19,063
Total Operating Expenses 733,526 809,378 316,087 170,289 47,638 2,076,918
Operating Loss (20,390) (99,486) (17,964) (68,280) (4,572) (210,692)
NONOPERATING REVENUES
(EXPENSES)
Investment Income 20,663 780 75 62 21 21,601
Special Assessments 5,234 3,069 362 22,378 26 31,069
Interest Expense (361,429) (143,925) - - - (505,354)
Amortization of Bond Premium 4,669 5,272 - - - 9,941
Bond Costs - (55,213) - - - (55,213)
Other Income 31,763 255 - - 32,018
Total Nonoperating Revenues
(Expenses) (299,100) (189,762) 437 22,440 47 (465,938)
Loss before Capital
Contributions and Transfers (319,490) (289,248) (17,527) (45,840) (4,525) (676,630)
Capital Contributions 678 678 42,015 678 - 44,049
Transfers In 364,900 47,200 - - 8,500 420,600
Transfers Out (45,000) (45,000) - (18,250) - (108,250)
Change in Net Position 1,088 (286,370) 24,488 (63,412) 3,975 (320,231)
NET POSITION
Beginning of Year
7,389,083 7,638,466 291,687 4,196,465 - 19,515,701
Change in Accounting Principle
(165,361) (28,354) - - - (193,715)
Beginning of Year, Restated
7,223,722 7,610,112 291,687 4,196,465 - 19,321,986
End of Year$ 7,224,810$ 7,323,742$ 316,175$ 4,133,053$ 3,975$ 19,001,755
The Notes to the Financial Statements are an integral part of this statement. 33
CITY OF ST. JOSEPH
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET POSITION - BUSINESS-TYPE ACTIVITIES
For the Year Ended December 31, 2013
Total Net Change in Fund Net Position - Proprietary Funds$ (320,231)
Amounts reported for business-type activities in the Statement of Activities
are different because:
Recognized current year activity from the Water Access Capital Project Fund
with the business-type activities. (20,191)
Recognized current year activity from the Sewer Access Capital Project Fund
with the business-type activities. 9,155
Capital contributions to governmental activities (44,049)
Transfers in of capital assets from governmental activities 44,049
Change in Net Position - Business-Type Activities $ (331,267)
The Notes to the Financial Statements are an integral part of this statement.34
CITY OF ST. JOSEPH
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
For the Year Ended December 31, 2013
Sanitary Refuse Storm Water Street Light
Water (601)Sewer (602)(603)(651)Utility (652)Total
CASH FLOWS - OPERATING ACTIVITIES
Receipts from Customers and Users$ 686,487 $ 688,766$ 297,090$ 101,822$ 32,463 $ 1,806,628
Payments to Suppliers (206,197) (283,006) (277,585) (26,057) (44,965) (837,810)
Payments to Employees (162,946) (142,708) (29,530) (41,750) - (376,934)
Other Miscellaneous Receipts 32,368 13 437 (27) - 32,791
Net Cash Flows - Operating Activities 349,712 263,065 (9,588) 33,988 (12,502) 624,675
CASH FLOWS - NONCAPITAL FINANCING
ACTIVITIES
Loan from Other Fund - - - - 4,000 4,000
Transfer from Other Funds 364,900 47,200 - - 8,500 420,600
Transfer to Other Funds (45,000) (45,000) - (18,250) - (108,250)
Net Cash Flows - Noncapital Financing 319,900 2,200 - (18,250) 12,500 316,350
Activities
CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTIVITIES
Principal Paid on Debt (405,000) (352,215) - - - (757,215)
Interest Paid on Debt (274,907) (154,953) - - - (429,860)
Bond Proceeds 2,573,168
- 2,573,168 - - -
Acquisition of Capital Assets (9,904) (778,817) (3,525) - - (792,246)
Net Cash Flows - Capital and Related (689,811) 1,287,183 (3,525) - - 593,847
Financing Activities
CASH FLOWS - INVESTING ACTIVITIES
Interest and Dividends Received 22,837 1,075 338 245 22 24,517
Net Change in Cash and Cash Equivalents 2,638 1,553,523 (12,775) 15,983 20 1,559,389
CASH AND CASH EQUIVALENTS
Beginning of Year 952 275,957 267,112 189,817 - 733,838
End of Year$ 3,590 $ 1,829,480$ 254,337$ 205,800$ 20 $ 2,293,227
RECONCILIATION OF OPERATING
LOSS TO NET CASH FLOWS -
OPERATING ACTIVITIES
Operating Loss$ (20,390)$ (99,486) $ (17,964) $ (68,280)$ (4,572)$ (210,692)
Adjustments to Reconcile Operating Loss
to Net Cash Flows - Operating Activities:
Depreciation Expense 377,590 388,699 6,506 97,226 - 870,021
Other Income 36,997 3,324 362 22,378 26 63,087
Accounts Receivable (26,649) (21,126) (1,033) (187) (10,603) (59,598)
Special Assessments Receivable (4,629) (3,311) 75 (22,405) (26) (30,296)
Accounts Payable (7,118) (774) 3,454 (133) 2,673 (1,898)
Due to Other Governmental Units (1,646) 1,456 (133) - - (323)
Salaries Payable 118 (553) 72 94 - (269)
Compensated Absences Payable (7,844) (7,844) (1,329) 4,893 - (12,124)
Net OPEB Obligation
3,283 2,680 402 402 - 6,767
Total Adjustments 370,102 362,551 8,376 102,268 (7,930) 835,367
Net Cash Flows - Operating Activities$ 349,712 $ 263,065$ (9,588) $ 33,988$ (12,502)$ 624,675
The Notes to the Financial Statements are an integral part of this statement. 35
(THIS PAGE LEFT BLANK INTENTIONALLY)
36
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of St. Joseph is a statutory city governed by an elected mayor and four council
members. The accompanying financial statements present the government entities for which the
government is considered to be financially accountable.
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 basic 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 if it appoints a voting majority of
the organizations governing body and it is able to impose its will on the organization by significantly
influencing the programs, projects, activities or level of services performed 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, certain organizations have been
defined and are presented in this report as follows:
Blended Component Unit Reported as if they were part of the City.
Joint Ventures The relationship of the City with the entity is disclosed.
For the categories above, the specific entities are identified as follows:
1. 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. The St. Joseph EDA is governed by a five member board appointed by the City Council,
two members of which are City Council Members. The St. Joseph EDA is included as a blended
component unit of the City because the St. Joseph EDA is financially accountable to the City, as the
City Council approves the budget as well as any expenditure over $ 1,000. The St. Joseph EDA
provides services almost entirely for the City. The St. Joseph EDA is presented as the Economic
Development Authority Special Revenue Fund and the City Hall General Obligation (G.O.) EDA
Refunding Bonds of 2005A Debt Service Fund. Separate financial statements are not prepared for
the St. Joseph EDA.
37
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity (Continued)
2. Joint Ventures
The Central Minnesota Major Crime Investigation Unit is a group of local law enforcement officers
within the four county surrounding areas that will be available to assist any of the participating
entities in the investigation and solution of major crimes. During 2013, the City contributed $ 5,121
to the organization. It is reported as a special revenue fund of the City of Sartell. Complete financial
statements can be obtained from: City of Sartell, P.O. Box 140, Sartell, Minnesota 56377.
The City of St. Cloud Human Rights Office is a joint venture between the cities of St. Cloud and
St. Joseph, which works to enhance the lives of the citizens of the communities. During 2013, the
City contributed $ 0 to the organization. It is reported as an agency fund of the City of St. Cloud.
nd
Complete financial statements can be obtained from: City of St. Cloud, 400 2 Street South, St.
Cloud, Minnesota 56301.
B.Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of
Activities) report information on all of the nonfiduciary activities of the City. Governmental activities,
which normally are supported by taxes and intergovernmental revenues, are reported separately from
business-type activities, which rely to a significant extent on fees and charges for support.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or
segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Interest on general long-term debt is considered an indirect expense and
is reported separately in the Statement of Activities. Program revenues include 1) charges to customers
or applicants who purchase, use or directly benefit from goods, services or privileges provided by a
given function or segment and 2) grants and contributions that are restricted to meeting the operational
or capital requirements of a particular function or segment. Taxes and other items not properly
included among program revenues are reported instead as general revenues. Internally dedicated
revenues are reported as general revenues rather than program revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate columns in
the fund financial statements.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows. Property taxes are recognized as revenues in the year for which they are levied.
Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
38
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available when they are collectible within the
current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the
City considers revenues to be available if they are collected within 60 days of the end of the current
period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures related to compensated absences and claims
and judgments, are recorded only when payment is due.
Property taxes, franchise taxes, licenses and interest associated with the current period are all
considered to be susceptible to accrual and so have been recognized as revenues of the current period.
Only the portion of special assessments receivable due within the current period is considered to be
susceptible to accrual as revenue of the current period. All other revenue items are considered to be
measurable and available only when cash is received by the City.
Description of Funds:
Major Governmental Funds:
General Fund This Fund is the Citys primary operating fund. It accounts for all financial resources
of the general City, except those required to be accounted for in another fund.
Proprietary Funds:
Water Fund This Fund accounts for the operations of the Citys water utility.
Sanitary Sewer Fund This Fund accounts for the operations of the Citys sanitary sewer utility.
Refuse Fund This Fund accounts for the operations of the Citys refuse and compost utility.
Storm Water Fund This Fund accounts for the operations of the Citys storm water utility.
Street Light Utility Fund street light utility.
39
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
As a general rule, the effect of interfund activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are charges between the Citys water, sanitary
sewer, refuse, storm water and street light utility functions and various other functions of the City.
Elimination of these charges would distort the direct costs and program revenues reported for the
various functions concerned.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary funds principal ongoing operations. The principal operating revenues of
the Water Enterprise, Sanitary Sewer Enterprise, Refuse Enterprise, Storm Water and Street Light Utility
Enterprise Funds are charges to customers for sales and services. Operating expenses for enterprise
funds include the cost of sales and services, administrative expenses and depreciation on capital assets.
All revenues and expenses not meeting this definition are reported as nonoperating revenues and
expenses.
D. Assets, Liabilities, Deferred Inflows and Net Position or Equity
1. Cash and Investments
The Citys cash and cash equivalents are considered to be cash on hand, deposits and highly liquid
debt instruments purchased with original maturities of three months or less from the date of
acquisition. Investments are stated at fair value.
Minnesota Statutes require all deposits made by cities with financial institutions are collateralized in
an amount equal to 110% of deposits in excess of Federal Deposit Insurance Corporation (FDIC)
insurance.
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies and
instrumentalities, shares of investment companies whose only investments are in the aforementioned
securities, obligations of the State of Minnesota 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 and in the Minnesota Municipal Investment Pool.
40
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities, Deferred Inflows and Net Position or Equity (Continued)
1. Cash and Investments (Continued)
Concentration of Credit Risk: Investments should be diversified to avoid incurring unreasonable
risks inherent in over investing in specific instruments, individual financial institutions or maturities.
The Citys investment policy states the City will attempt to diversify its investments according to
type, issuer and maturity. The portfolio, as much as possible, will contain both short-term and long-
term investments. The City will attempt to match its investments with anticipated cash flow
requirements. Extended maturities may be utilized to take advantage of higher yields. No more than
20% of the total investments should extend beyond five years and the weighted average maturity of
the portfolio shall never exceed five years.
Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not
fulfill its obligations. Minnesota Statutes 118A.04 and 118A.05 limit investments that are in the top
two ratings issued by nationally recognized statistical rating organizations. The Citys investment
policy limits the allowable investments in accordance with these Statutes.
Interest Rate Risk: The City should try to minimize the risk that arises from over investing in
specific instruments, individual financial institutions or maturities. The Citys investment policy
states the investment portfolio will be structured so that securities mature to meet cash flow
requirements and avoiding the need to sell securities prior to maturity, investing in short-term
securities, investing in long-term securities if the market rate is favorable.
Custodial Credit Risk Investments: For an investment, this is the risk that in the event of the
failure of the counterparty, the City will not be able to recover the value of its investments or
collateral securities that are in the possession of an outside party. The Citys investment policy
addresses this risk and states the City will permit investments only to the extent that there is
Securities Investor Protection Corporation (SIPC) and excess SIPC coverage available.
2. Receivables and Payables
All trade and property tax receivables are shown at a gross amount since both are assessable to the
property taxes and are collectible upon the sale of the property.
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.
Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. 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 four times a year. The tax levy
notice is mailed in March with the first half of the payment due on May 15 and the second half due
on October 15. Taxes not collected as of December 31 each year are shown as delinquent taxes
receivable.
41
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities, Deferred Inflows and Net Position or Equity (Continued)
2. Receivables and Payables (Continued)
The County Auditor prepares 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 submits the list of taxes and special assessments to be collected on each parcel
of property to the County Treasurer in January of each year.
3. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items in both government-wide and fund financial statements. Prepaid items are reported
using the consumption method and recorded as expenditures at the time of consumption.
4. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads,
sidewalks and similar items), are reported in the applicable governmental or business-type activities
columns in the government-wide financial statements. Capital assets are defined by the City as
assets with an initial, individual cost of more than $ 1,000 and an estimated useful life in excess of
two years. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the date of
donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets lives are not capitalized.
Property, plant and equipment of the City are depreciated using the straight-line full year convention
method over the following estimated useful lives:
AssetsYears
Land Improvements5-20
Buildings30-40
Building Improvements15
Infrastructure10-50
Sewer Rights20-50
Furniture and Fixtures5-10
Vehicles5-20
Equipment3-7
Machinery5-7
42
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities, Deferred Inflows and Net Position or Equity (Continued)
5. Deferred Inflows of Resources
In addition to liabilities, the statement of financial position and fund financial statements will
sometimes report a separate section for deferred inflows of resources. This separate financial
statement element represents an acquisition of net position that applies to a future period(s) and so
will not be recognized as an inflow of resources (revenue) until that time. The City only has one
type of item, which arises only under the modified accrual basis of accounting that qualifies for
reporting in this category. Accordingly, the item is reported only in the governmental funds balance
sheet as unavailable revenue. The governmental funds report unavailable revenues from three
sources: property taxes, special assessments and notes receivable. These amounts are deferred and
recognized as an inflow of resources in the period that the amounts become available.
6. Compensated Absences
The City compensates employees who leave City service in good standing for all earned, unused
vacation. Employees can accrue up to 200 hours of vacation depending on years of service. The
maximum amount of carryover from year-to-year is 100 hours or the amount of the current vacation
accrual rate. In addition, employees are compensated for unused sick leave (up to a maximum of
720 hours or 960 hours for LELS and AFSCME employees) at various rates depending on the
employee type and years of service, provided the Citys notice of termination policy has been
complied with.
7. Long-Term Obligations
In the government-wide financial statements, and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the applicable
governmental activities, business-type activities or proprietary fund type Statement of Net Position.
Bond premiums and discounts are deferred and amortized over the life of the bonds using the
effective interest method.
In the fund financial statements, governmental fund types recognize bond premiums and discounts,
as well as bond issuance costs, during the current period. The face amount of debt issued is reported
as other financing sources. Premiums received on debt issuances are reported as other financing
sources while discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
8. Fund Equity
a)Classification
In the fund financial statements, governmental funds report fund classifications that comprise a
hierarchy based primarily on the extent to which the City is bond to honor constraints on the
specific purpose for which amounts in those funds can be spent.
43
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities, Deferred Inflows and Net Position or Equity (Continued)
8. Fund Equity (Continued)
a)Classification (Continued)
Nonspendable Fund Balance These are amounts that cannot be spent because they are
not in spendable form as they are legally or contractually required to be maintained intact
and include amounts set aside for prepaid items.
Restricted Fund Balance These are amounts that are restricted to specific purposes
either by a) constraints placed on the use of resources by creditors, grantors, contributors,
or laws or regulations of other governments or b) imposed by law through enabling
legislation.
Committed Fund Balance These are amounts that can only be used for specific purposes
pursuant to constraints imposed by the City Council (highest level of decision making
authority) through resolution.
Assigned Fund Balance
be used for specific purposes but are neither restricted nor committed. Assignments are
Unassigned Fund Balance These are residual amounts in the General Fund not reported
in any other classification. The General Fund is the only fund that can report a positive
unassigned fund balance. Other funds would report a negative unassigned fund balance
should the total of nonspendable, restricted, committed and assigned fund balances
exceed the total net resources of that fund.
first use restricted resources, and then use unrestricted resources as they are needed. When
committed, assigned and unassigned resources are avail
resources in the following order: committed, assigned and unassigned.
b)Minimum Fund Balance
working capital, a portion of the
unassigned balance, in the ams budgeted expenditures
of the General Fund, excluding the fire department.
44
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities, Deferred Inflows and Net Position or Equity (Continued)
9. Net Position
Net position represents the difference between assets and liabilities and deferred inflows in the
government-wide financial statements. Net investment in capital assets consists of capital assets, net
of accumulated depreciation, reduced by the outstanding balance of any long-term debt used to build
or acquire the capital assets. A reclassification of $ 2,286,228 between the net position and
unrestricted net position on the total column in the Statement of Net Position to recognize the portion
of debt attributable to capital assets donated from governmental activities to business-type activities.
Net position is reported as restricted in the government-wide financial statement when there are
limitations on their use through external restrictions imposed by creditors, grantors or laws or
regulations of other governments. The restricted for other purposes restriction of net position for
governmental activities of $ 1,383,229 includes $ 14,120 for tax incrementing financing, $ 1,272,767
in state collected sales tax restricted by enabling legislation, $ 54,661 in park dedication fees, $ 3,949
restricted by donors for future projects, $ 30,862 in revolving loan funds restricted for EDA projects
and $ 6,870 of restricted PEG access fees.
10.Use of Estimates
The preparation of the financial statements in conformity with accounting principles 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.
NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
1.In August of each year, City staff submits to the City Council, a proposed operating budget for
the year commencing the following January 1. The operating budget includes proposed
expenditures and the means of financing them for the upcoming year.
2.Public hearings are conducted to obtain taxpayer comments.
3.The budget is legally enacted through passage of a resolution after obtaining taxpayer comments.
4.Budgets for the General Fund and the Economic Development Authority Special Revenue Fund
are adopted on a basis consistent with accounting principles generally accepted in the United
States of America.
45
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information (Continued)
5.Expenditures may not legally exceed budgeted appropriations at the department level. No funds
budget can be increased without City Council approval. The City Council may authorize transfer
of budgeted amounts between departments within any fund. Management may amend budgets
within a department level, so long as the total department budget is not changed.
6.Annual appropriated budgets are adopted during the year for the General Fund and the Economic
Development Authority Special Revenue Fund. Annual appropriated budgets are not adopted for
Debt Service Funds because effective budgetary control is alternatively achieved through bond
indenture provisions. Budgetary control for Capital Projects Funds is accomplished through the
use of project controls and formal appropriated budgets are not adopted.
7.Budgeted amounts are as originally adopted by the City Council. Budgeted expenditure
appropriations lapse at year-end.
Encumbrances outstanding at year-end expire and outstanding purchase orders are canceled and not
reported in the financial statements.
B.Deficit Fund Balance
The following Fund had a deficit fund balance at December 31, 2013.
Nonmajor Governmental Funds:
Special Revenue:
TIF 2-2 St. Joseph Meat Market$ 466
This deficit will be eliminated with future tax increment revenues.
C.Disbursements in Excess of Appropriations
Disbursements exceeded appropriations in the following Fund for the year ended December 31, 2013.
DisbursementsAppropriations
General Fund$ 2,603,383 $ 2,527,240
46
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 3 DEPOSITS AND INVESTMENTS
A. Deposits
investments authorized by Minnesota Statutess pool (or pools) is displayed
investments. For purposes of identifying
risk of investing public funds, the balances and related restrictions are summarized as follows.
Custodial Credit Risk Deposits: As of December 31, 2013
custodial credit risk because it was fully insured through the FDIC or NCUA and fully collateralized
wit
name. As of December 31, 2013ow.
Certificates of Deposit$ 1,458,423
Checking 1,033,222
Savings 3,449,690
Total$ 5,941,335
B.Investments
As of December 31, 2013, the City had the following investments:
Weighted
FairAverageMoody's
ValueMaturity (Years)Rating
Brokered Certificates of Deposit$ 1,989,154 2.37N/A
Brokered Money Market 28,806N/AN/A
State and Local Government Securities 4,682,9850.92N/A
Government Bonds/ Notes
937,6108.55AAA
Total$ 7,638,555
Credit Risk: As of December 31, 2013, the
Concentration of Credit Risk: As of December 31 2013
government securities (61.3%) and the investment in a Federal Home Loan Bank security (9.7%)
investment portfolio. Money market accounts are not subject to
concentration of credit risk.
47
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 3 DEPOSITS AND INVESTMENTS
C. Deposits and Investments
The following is a summary of deposits and investments as of December 31, 2013:
Deposits (Note 3.A.)$ 5,941,335
Investments (Note 3.B.) 7,638,555
Petty Cash 275
Total$ 13,580,165
Deposits and investments are presented in the December 31, 2013 basic financial statements as follows:
Statement of Net Position:
Cash and Investments$ 8,897,180
Cash with Fiscal Agents 4,682,985
Total Deposits and Investments$ 13,580,165
NOTE 4 INTERFUND BALANCES AND TRANSFERS
A. Interfund Balances
The composition of interfund balances as of December 31, 2013 is as follows:
Receivable FundPayable FundAmount
General FundStreet Light Utility Fund$ 4,000
Other Governmental FundsOther Governmental Funds 500
$ 4,500
The due from/due to other funds balances represent loan made to cash flow a new fund and to cover tax
increment financing (TIF) consulting costs to establish the TIF district.
48
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 4 INTERFUND BALANCES AND TRANSFERS
B.Transfers
The composition of interfund transfers as of December 31, 2013 is as follows:
Transfer InTransfer OutDescription Amount
Transfer unspent capital reserve
General FundOther Governmental Fundsfor closed project$ 20,000
General FundOther Governmental FundsClose fund 416
Water Other Governmental Funds 364,900
Annual transfer for bond payment
Annual transfer for bond payment
Sanitary SewerOther Governmental Funds 47,200
Other Governmental Funds
Close fund 386,233
Other Governmental Funds
Other Governmental FundsGeneral FundTransfer unspent capital budget 25,660
Transfer four months of operations
from general fund levy
Street Light Utility General Fund 8,500
Other Governmental FundsAnnual transfer for bond payment 3,050
Other Governmental Funds
Other Governmental FundsWaterAnnual transfer for bond payment 45,000
Other Governmental FundsSanitary SewerAnnual transfer for bond payment 45,000
Storm WaterAnnual transfer for bond payment 18,250
Other Governmental Funds
$ 964,209
49
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 5 CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2013 was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental Activities:
Capital Assets not being Depreciated:
Land$ 457,194$ - $ -$ 457,194
Easements 5,820 - - 5,820
Construction in Progress 465,568 691,919 218,918 938,569
Total Capital Assets
not being Depreciated 928,582 691,919 218,918 1,401,583
Capital Assets being Depreciated:
Buildings 2,479,464 31,799 - 2,511,263
Infrastructure
16,209,266 101,705 168,969 16,142,002
Improvements 637,001 104,871 - 741,872
Machinery and Equipment 3,024,213 377,385 146,635* 3,254,963
Total Capital Assets
being Depreciated 22,349,944 615,760 315,604 22,650,100
Less Accumulated Depreciation for:
Buildings 902,309 63,473 - 965,782
Infrastructure
9,967,212 856,600 168,969 10,654,843
Improvements 376,228 31,604 - 407,832
Machinery and Equipment 1,860,856 218,598 89,084 1,990,370
Total Accumulated
Depreciation 13,106,605 1,170,275 258,053 14,018,827
Total Capital Assets being
Depreciated, Net 9,243,339 (554,515) 57,551 8,631,273
Governmental Activities Capital
$ 10,171,921$ 137,404$ 276,469$ 10,032,856
Assets, Net
* A portion of the decrease in machinery and equipment was transferred to the business type activities.
50
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 5 CAPITAL ASSETS
BeginningEnding
BalanceIncreasesDecreasesBalance
Business-Type Activities:
Capital Assets not being Depreciated:
Land$ 377,882$ - $ -$ 377,882
Easements 67,915 - - 67,915
Construction in Progress 4,789,651 769,254 5,474,675 84,230
Total Capital Assets
not being Depreciated 5,235,448 769,254 5,474,675 530,027
Capital Assets being Depreciated:
Buildings 8,120,415 - - 8,120,415
Plant and Lines 21,195,993 - - 21,195,993
Machinery and Equipment 605,590 67,043 1,795 670,838
Sewer Rights 3,057,013 5,474,674 - 8,531,687
Total Capital Assets
being Depreciated 32,979,011 5,541,717 1,795 38,518,933
Less Accumulated Depreciation for:
Buildings 1,685,175 184,260 - 1,869,435
Plant and Lines 4,671,069 424,309 - 5,095,378
Machinery and Equipment 397,637 34,485 1,795 430,327
Sewer Rights 810,413 226,967 - 1,037,380
Total Accumulated
Depreciation 7,564,294 870,021 1,795 8,432,520
Total Capital Assets being
25,414,717 4,671,696 - 30,086,413
Depreciated, Net
Business-Type Activities Captial
$ 30,650,165$ 5,440,950$ 5,474,675$ 30,616,440
Assets, Net
Depreciation expense was charged to functions/programs of the City as follows:
Governmental Activities:
General Government$ 41,172
Public Safety 125,543
Public Works 919,104
Culture and Recreation 84,456
Total Depreciation Expense - Governmental Activities$ 1,170,275
Business-Type Activities:
Water$ 377,590
Sanitary Sewer 388,699
Refuse 6,506
Storm Sewer 97,226
Total Depreciation Expense - Business-Type Activities$ 870,021
51
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 6 LONG-TERM DEBT
A.G.O. Bonds
The City issues G.O. bonds to provide for financing improvement, development and street improvement
projects. Debt service is covered respectively by contract revenue, special assessments against benefited
properties, federal grants and lease revenue with any shortfalls being paid from general taxes.
G.O. bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally
are issued as 5 to 15 year serial bonds with equal debt service payments each year.
Revenue bonds are issued by the City where the City pledges income derived from the acquired or
constructed assets to pay debt service including access and trunk charges and utility user fees.
B.Components of Long-Term Liabilities
IssueInterestOriginalFinalPrincipalDue Within
DateRateIssueMaturityOutstandingOne Year
Governmental Activities:
G.O. Bonds, Including Refunding Bonds:
G.O. Capital Improvement Plan
Refunding Bonds 2009B09/03/091.10%-3.75%$ 495,000 12/01/18$ 285,000$ 55,000
G.O. Certificates of Indebtedness
of 2010A04/22/102.75% 150,000 12/01/15 60,000 30,000
G.O. Refunding Bonds of 2011A11/10/112.00% 430,000 10/01/17 290,000 70,000
G.O. Certificates of Indebtedness
of 2011A11/10/112.00%-2.40% 390,000 10/01/21 320,000 35,000
G.O. Capital Improvement Plan
Bonds of 2011A11/10/112.00%-2.40% 195,000 10/01/21 160,000 20,000
G.O. Bonds of 2013A09/01/132.00% 265,000 12/01/18 265,000 50,000
Total G.O. Bonds 1,380,000 260,000
G.O. Special Assessment Bonds:
G.O. Improvement Bonds of 2007A07/25/074.00%-4.13% 2,875,00012/01/17 280,000 65,000
G.O. Improvement Refunding
Bonds of 2007B11/14/073.60%-3.90% 980,000 12/01/14 115,000 115,000
G.O. Improvement Crossover Refunding
Bonds of 2009A03/19/091.25%-2.90% 2,555,00012/01/17 1,335,000 315,000
G.O. Improvement Refunding Bonds of 2010B09/28/102.00%-3.25% 1,035,00012/01/20 910,000 120,000
G.O. Improvement Refunding Bonds of 2010B09/28/102.00%-3.25% 790,000 12/01/25 655,000 50,000
G.O. Improvement Crossover
Refunding Bonds of 2011A11/10/112.00%-2.40% 1,040,00010/01/21 1,040,000 120,000
G.O. Bonds of 2013A09/01/132.00%-3.00% 405,000 12/01/24 405,000 -
Total G.O. Special
Assessment Bonds 4,740,000 785,000
Public Project Revenue Bonds:
EDA Revenue Refunding Bonds of 2005A03/15/052.75%-4.15% 645,000 12/01/15 180,000 90,000
Unamortized Premiums/Discounts 47,342 -
Compensated Absences 395,218 19,067
Total Long-Term Liabilities,
Governmental Activities$ 6,742,560$ 1,154,067
52
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 6 LONG-TERM DEBT
B.Components of Long-Term Liabilities (Continued)
IssueInterestOriginalFinalPrincipalDue Within
DateRateIssueMaturityOutstandingOne Year
Business-Type Activities:
G.O. Revenue Bonds:
G.O. Water Revenue Bonds of 2005D12/15/054.00%-4.25%$ 4,595,00012/01/14$ 4,595,000$ 4,595,000
G.O. Water Revenue Bonds of 2006A01/12/063.50%-4.00% 3,575,00012/01/16 1,125,000 360,000
G.O. Sewer Revenue Crossover Refunding
Bonds of 2009A03/19/091.25%-3.85% 455,000 12/01/21 315,000 35,000
G.O. Water Revenue Refunding
Bonds of 2009C
10/20/091.00%-2.60% 425,000 12/01/16 195,000 60,000
G.O. Sewer Revenue Bonds of 2011A11/10/112.00-2.40% 225,000 10/01/21 185,000 20,000
G.O. Water Revenue Crossover Refunding
Bonds of 2012A
04/19/121.00-2.85% 4,860,00012/01/28 4,860,000 -
G.O. Sewer Revenue Bonds of 2013A09/01/132.00-3.70% 1,875,00012/01/28 1,875,000 110,000
Total G.O. Revenue Bonds 13,150,000 5,180,000
Notes Payable:
City of St. Cloud SIS
Phases 1 and 2 (2009B Bonds)10/26/092.00%-4.0% 835,000 08/01/19 530,000 80,000
City of St. Cloud SIS
Phase 3 (2010 Bonds)10/28/102.00%-2.5% 180,000 08/01/20 130,000 15,000
City of St. Cloud SIS
Phase 4 (2013B Bonds)11/01/133.00%-4.00% 650,000 02/01/29 650,000 -
City of St. Cloud PFA Loan08/01/101.77% 4,527,70308/20/30 4,055,030 206,494
Total Notes Payable 5,365,030 301,494
Unamortized Premium 96,216 -
Compensated Absences 108,532 2,556
Total Business-Type Activities 18,719,778 5,484,050
Total all Long-Term Liabilities$ 25,462,338$ 6,638,117
Long-term bonded indebtedness listed on the previous page and above were issued to finance acquisition
and construction of capital assets or to refinance (refund) previous bond issues.
The City issued $ 1,040,000 of the G.O. Improvement Bonds 2011A for a crossover refunding of the
G.O. Improvement Bonds 2006C. The issue was called on December 1, 2013. The refunding was
undertaken to reduce total future debt service payments. The refunding resulted in a net present value
benefit of $ 77,442. The economic gain from the transaction was $ 140,270.
The City issued $ 4,860,000 of the G.O. Improvement Bonds 2012A for a crossover refunding of the
G.O. Improvement Bonds 2005D. The issue will be called on December 1, 2014. The refunding was
undertaken to reduce total future debt service payments. The refunding resulted in a net present value
benefit of $ 298,853. The economic gain from the transaction was $ 366,766.
53
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 6 LONG-TERM DEBT
C. Changes in Long-Term Liabilities
Long-term liability activity for the year December 31, 2013 was as follows:
ended
BeginningEnding
BalanceAdditionsReductionsBalance
Governmental Activities:
Bonds Payable:
General Obligation$ 1,385,000 $ 265,000$ 270,000 $ 1,380,000
G.O. Special Assessment Bonds 6,630,000 405,000 2,295,000 4,740,000
Public Project Revenue Bonds 260,000 - 80,000 180,000
Total Bonds Payable 8,275,000 670,000 2,645,000 6,300,000
Unamortized Premiums/Discounts 51,395 11,122 15,175 47,342
Compensated Absences 366,195 182,189 153,166 395,218
Total Governmental
Activities 8,692,590 863,311 2,813,341 6,742,560
Business-Type Activities:
Bonds Payable:
G.O. Utility Revenue Bonds 11,735,000 1,875,000 460,000 13,150,000
Notes Payable:
City of St. Cloud Notes 4,964,077 698,168 297,215 5,365,030
Unamortized Premiums
90,782 15,375 9,941 96,216
Compensated Absences 120,656 26,242 38,366 108,532
Total Business-Type
Activities 16,910,515 2,614,785 805,522 18,719,778
Total Long-Term Liabilities$ 25,603,105$ 3,478,096$ 3,618,863$ 25,462,338
The General Fund typically liquidates the liability related to compensate absences.
54
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 6 LONG-TERM DEBT
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Governmental Activities
G.O. Government ActivitiesG.O. Special Assessment Bonds
Year Ended
December 31,PrincipalInterestPrincipalInterest
2014$ 260,000$ 33,205$ 785,000$ 125,374
2015 265,000 25,905 725,000 100,621
2016 240,000 19,830 750,000 81,440
2017 250,000 14,480 770,000 61,446
2018 180,000 8,730 350,000 41,303
2019-2023 185,000 8,520 1,185,000 98,155
2024-2025 - - 175,000 7,675
Total$ 1,380,000$ 110,670 $ 4,740,000$ 516,014
Governmental Activities
Public Project Revenue Bonds
Year Ended
December 31,PrincipalInterestTotal
2014$ 90,000$ 7,335$ 1,300,914
2015 90,000 3,735 1,210,261
2016 - - 1,091,270
2017 - - 1,095,926
2018 - - 580,033
2019-2023 - - 1,476,675
2024-2025 - - 182,675
Total$ 180,000$ 11,070 $ 6,937,754
55
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 6 LONG-TERM DEBT
D. Minimum Debt Payments (Continued)
Business-Type Activities
Utility Revenue BondsNotes Payable
Year Ended
December 31,PrincipalInterestPrincipalInterestTotal
2014$ 5,180,000$ 424,629$ 301,494$ 110,618$ 6,016,741
2015 660,000 203,370 340,220 109,358 1,312,948
2016 680,000 182,545 358,946 101,485 1,322,976
93,196
2017 635,000 160,925 362,671 1,251,792
84,841
2018 650,000 147,865 366,510 1,249,216
2019-2023 3,255,000 526,465 1,513,063 301,343 5,595,871
2024-2028 2,090,000 155,102 1,524,980 148,413 3,918,495
- - 597,146 15,475 612,621
2029-2030
Total$ 13,150,000 $ 1,800,901 $ 5,365,030 $ 964,729 $ 21,280,660
E.Conduit Debt
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, 2013, the Citys conduit debt consisted of the following:
Commercial Development Revenue Note
(Independence Center), Series 2001$ 330,997
Industrial Revenue Bonds (St. Joseph
Development, LLC), Series 2002 700,000
Total$ 1,030,997
56
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 7 FUND BALANCE
Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective
funds.
Nonmajor
Governmental
GeneralFundTotal
Nonspendable:
Prepaid Expenses$ 19,500 $ -$ 19,500
Restricted:
PEG Access Fees 6,870 - 6,870
Debt Service - 1,804,254 1,804,254
Tax Increments - 14,120 14,120
State Collected Sales Tax Projects - 1,272,767 1,272,767
Park Dedication Fees - 54,661 54,661
Chartitable Gambling - 3,949 3,949
Revolving Loan - 30,862 30,862
Total Restricted 6,870 3,180,613 3,187,483
Committed:
Economic Development - 112,486 112,486
Assigned:
Elections 27,265 - 27,265
Street Seal Coating /Crack Filling 29,335 - 29,335
Loader Tires 13,000 - 13,000
Fire Operations 20,000 - 20,000
Fire Debt Service 180,000 - 180,000
Fire Capital 291,170 - 291,170
Capital Outlay Reserves - 1,097,882 1,097,882
Debt Service Relief - 262,084 262,084
Total Assigned 560,770 1,359,966 1,920,736
Unassigned 1,134,091 (466) 1,133,625
Total$ 1,721,231$ 4,652,599$ 6,373,830
57
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 8 RISK MANAGEMENT
The City purchases commercial insurance coverage through the League of Minnesota Cities Insurance
Trust (LMCIT) with other cities in the state, which is a public entity risk pool currently operating as a
common risk management and insurance program. The City pays an annual premium to the LMCIT for
its insurance coverage. The LMCIT 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 amount of these deductibles is considered immaterial to
the financial statements.
There were no significant reductions in insurance from the previous year or settlements in excess of
insurance coverage for any of the past three years.
The Citys workers compensation insurance policy is retrospectively rated. With this type of policy,
final premiums are determined after loss experience is known. The amount of premium adjustment for
2013 is estimated to be immaterial based on workers compensation rates and salaries for the year.
At December 31, 2013, there were no other claims liabilities reported in the fund based on the
requirements of GASB Statement No. 10, which requires a liability for claims be reported if information
prior to the issuance of the financial statements indicates it is probable a liability has been incurred at the
date of the financial statements and the amount of the loss can be reasonably estimated.
NOTE 9 DEFINED BENEFIT PENSION PLANS STATE-WIDE
A. Plan Description
All full-time and certain part-time employees of the City are covered by defined benefit plans
administers the General G
Fire Fund (PEPFF), which are cost-sharing, multiple-employer retirement plans. These Plans are
established and administered in accordance with Minnesota Statutes Chapters 353 and 356.
GERF members belong to either the Coordinated or Basic Plan. Coordinated Plan members are covered
by Social Security and Basic Plan members are not. All new members must participate in the
Coordinated Plan. All police officers, firefighters 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 five years of
credited service. The defined retirement benefits are based on a members highest average salary for any
five successive years of allowable service, age and years of credit at termination of service.
58
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 9 DEFINED BENEFIT PENSION PLANS STATE-WIDE
ued)
A. Plan Description (Continued)
retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual
formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of
average salary for each of the first 10 years of service and 2.7% for each remaining year. The annuity
accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first 10 years and
1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for
Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For PEPFF
members, the annuity accrual rate is 3.0% for each year of service. For all GERF and PEPFF members
hired prior to July 1, 1989, whose annuity is calculated using Method 1, a full annuity is available when
age plus years of service equal 90. Normal retirement age is 55 for PEPFF members and 65 for Basic
and Coordinated Plan members hired prior to July 1, 1989. Normal retirement age is the age for
unreduced Social Security benefits capped at 66 for Coordinated Plan members hired on or after July 1,
1989. A reduced retirement annuity is also available to eligible members seeking early retirement.
There are different types of annuities available to members upon retirement. A single-life 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 be 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 current provisions and apply
to active Plan participants. Vested, terminated employees who are entitled to benefits but are not yet
receiving them 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 information for GERF and PEPFF. That report may be obtained on the Internet at
www.mnpera.org, by writing to PERA at 60 Empire Drive, #200, St. Paul, Minnesota 55103-2088 or by
calling (651) 296-7460 or (800) 652-9026.
59
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 9 DEFINED BENEFIT PENSION PLANS STATE-WIDE
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. GERF Basic Plan members and
Coordinated Plan members were required to contribute 9.1% and 6.25%, respectively, of their annual
covered salary in 2013. PEPFF members were required to contribute 9.6% of their annual covered salary
in 2013. In 2013, the City was required to contribute the following percentages of annual covered
payroll: 11.78% for Basic Plan members, 7.25% for Coordinated Plan members and 14.4% for PEPFF
members. The Citys contributions to the for the years ending
December 31, 2013, 2012 and 2011 were $ 53,773, $ 51,941 and $ 52,013, respectively. The Citys
contributions to the PEPFF for the years ending December 31, 2013, 2012 and 2011 were $ 72,518,
$ 66,427 and $ 63,930, respectively. The Citys contributions were equal to the contractually required
contributions for each year as set by state statute.
Defined Contribution Plan
The City provides pension benefits for its elected local government officials through a defined
(PEDCP) is a multi-employer tax qualified plan under Section 401(a) of the Internal Revenue Code and
all contributions by or on behalf of employees are tax deferred until time of withdrawal.
Plan benefits depend solely on amounts contributed to the plan plus investment earnings, less
administrative expenses. Minnesota Statutes Chapter 353D.03, specifies plan provisions, including the
employee and employer contribution rates for those qualified personnel who elect to participate. An
eligible elected official who decides to participate contributes 5% of salary which is matched by the
ambulance service personnel, employer contributions are determined by
the employer and for salaried employees must be a fixed percentage of salary. Employer contributions
for volunteer personnel may be a unit value for each call or period of alert duty. Employees who are
paid for their services may elect to make member contributions in an amount not to exceed the employer
share. Employer and employee contributions are combined and used to purchase shares in one or more
of the seven accounts of the Minnesota Supplemental Investment Fund. For administering the plan,
PERA receives 2% of employer contributions and twenty-five hundredths of 1% of the assets in each
There is no vesting period required to receive benefits in the PEDCP. Both the City and the elected local
government officials made the required 5% contribution, amounting to $ 1,632 from each source, or
$ 3,265 in total. As of December 31, 2013 and for the year then ended, PERA held no securities issued
by the City or other related parties.
60
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 10 POST EMPLOYMENT HEALTH CARE PLAN
A. Plan Description
The City provides a single-employer defined benefit health care plan to eligible retirees. The plan offers
medical coverage.
periodically review its medical coverage, and to obtain requests for proposals in order to provide the
most favorable benefits and premiums for City employees and retirees.
B.Funding Policy
Retirees contribute to the health care plan at the same rate as City employees. This results in the retirees
receiving an implicit rate subsidy. Contribution requirements are established by the City, based on the
contract terms with BlueCross BlueShield. The required contributions are based on projected pay-as-
you-go financing requirements. For 2013, the City contributed $ 4,487 to the plan. As of December 31,
2013, there was one retiree
C. Annual OPEB Cost and Net OPEB Obligation
bution (ARC)
of the City, an amount actuarially determined in accordance with the parameters of GASB Statement
No. 45. The City prospectively implemented this Statement during the 2009 year. The ARC represents
a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and
amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The
table on the following page , the
ARC$ 37,124
Interest on Net OPEB Obligation 7,084
Adjustment to ARC (10,242)
Annual OPEB Cost 33,966
Contributions Made 4,487
Increase in Net OPEB Obligation 29,479
Net OPEB Obligation - Beginning of Year 177,108
Net OPEB Obligation - End of Year$ 206,587
61
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 10 POST EMPLOYMENT HEALTH CARE PLAN
C. Annual OPEB Cost and Net OPEB Obligation (Continued)
B cost, the percentage of annual OPEB cost contributed to the plan and the net
OPEB obligation for 2013, 2012 and 2011 was as follows:
Percentage of
Annual OPEB Employer Annual OPEB Cost Net OPEB
Year EndedCostContributionContributedObigation
12/31/11$ 55,435$ 6,88912%$ 145,185
12/31/12 32,788 8653% 177,108
12/31/13 33,966 4,48713% 206,587
D. Funded Status and Funding Progress
As of January 1, 2012, the most recent actuarial valuation date, the City had no assets deposited to fund
the plan. The actuarial accrued liability for benefits was $ 239,852 and the actuarial value of assets was
$ 0, resulting in an unfunded actuarial accrued liability (UAAL) of $ 239,852. The covered payroll
(annual payroll of active employees covered by the plan) was $ 1,386,050, and the ratio of the UAAL to
the covered payroll was 17.3%.
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality and the health care cost trend. Amounts determined regarding the funded status
of the plan and the ARC of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
The Schedule of Funding Progress Other Post Employment Benefits, presented as required
supplementary information following the Notes to the Financial Statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or decreasing over time relative
to the actuarial accrued liabilities for benefits.
E.Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the time
of each valuation and the historical pattern of sharing of benefit costs between the employer and plan
members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the
long-term perspective of the calculations.
62
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 10 POST EMPLOYMENT HEALTH CARE PLAN
E.Actuarial Methods and Assumptions (Continued)
At the January 1, 2012 actuarial valuation date, the projected unit credit with 30 year amortization of the
unfunded liability method was used. The actuarial assumptions included a 4.0% discount rate. The City
currently does not plan to prefund for this benefit. At the actuarial valuation date, the annual health care
cost trend rate was calculated to be 10% initially, reduced incrementally to an ultimate rate of 5% after
10years. The UAAL is being amortized as a level percentage of projected payroll on an open basis.
The remaining amortization period at December 31, 2013 was 25 years.
NOTE 11 COMMITMENTS
The City has entered into contracts for construction as follows:
Expended
Contractthrough
ProjectAmount12/31/13Commitment
County Road 2 Trail Extension$ 346,442$ 310,960$ 35,482
Government Center Design 266,102 103,842 162,260
2013 Street Overlays 312,501 229,102 83,399
Total$ 281,141
NOTE 12 RELATED PARTY TRANSACTION
The St. Joseph EDA has issued Public Project Revenue Bonds of 2005A. These Bonds are to finance
the City Hall and maintenance facility projects. Rental payments are due from the City to the St. Joseph
EDA. The City will own the projects upon completion of the rental payments. Since the St. Joseph
EDA is reported as a blended component unit of the City the lease transactions are not reported. The
debt and projects are recorded as though part of the City.
NOTE 13 CHANGE IN ACCOUNTING PRINCIPLE
For the year ended December 31, 2013, the City implemented GASB Statement No. 65. The Statement
establishes standards of financial reporting for deferred outflows and deferred inflows as established by
GASB Statement No. 63. This statement also eliminated the recognition of deferred charges associated
with bond issuances resulting in a restatement of beginning Net Position of $ 155,584 and $ 193,715;
respectively in the Governmental Activities and Business-Type Activities on the Statement of Activities
and $ 165,361 and $ 28,354, respectively, in the Water and Sanitary Sewer Funds on the Statement of
revenues, Expenses and Changes in Net Position Proprietary Funds.
63
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2013
NOTE 14 GASB STATEMENTS ISSUED BUT NOT YET IMPLEMENTED
GASB Statement No. 68 replaces the requirements of Statement No. 27, Accounting for Pensions by
State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to
governments that provide pensions through pension plans administered as trusts or similar arrangements
that meet certain criteria. Statement 68 requires governments providing defined benefit pensions to
recognize their long-term obligation for pension benefits as a liability for the first time, and to more
comprehensively and comparably measure the annual costs of pension benefits.
NOTE 15 CONTINGENCIES
In the normal course of operations, the City is exposed to various claims and litigation. As of
December 31, 2013
statements.
64
REQUIRED SUPPLEMENTARY INFORMATION
65
CITY OF ST. JOSEPH
SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS
December 31, 2013
ActuarialUAAL as a
ActuarialAccrued LiabilityUnfundedPercentage of
ActuarialValue of (AAL) -AALFunded CoveredCovered
ValuationAssetsEntry Age(UAAL)RatioPayrollPayroll
Date(a)(b)(b-a)(a/b)(c)((b-a)/c)
12/31/09$ -$ 345,319$ 345,3190.0%$ 1,070,51532.3%
12/31/12 - 239,852 239,8520.0% 1,386,05017.3%
* This Schedule was implemented in 2009. The City has had two actuarial studies complete to date;
therefore, the Schedule contains only two years of data. See Note 10 in the Notes to the Financial
Statements for more details on this Schedule.
66
SUPPLEMENTARY INFORMATION
67
CITY OF ST. JOSEPH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2013
Variance with
Final Budget -
Original Final Actual
BudgetBudgetAmounts
Over (Under)
REVENUES
Property Taxes$ 1,154,645$ 1,154,645$ 1,152,540$ (2,105)
Sales Taxes - - (7) (7)
Special Assessments 1,500 1,500 2,080 580
Franchise Fees 114,800 114,800 117,894 3,094
Licenses and Permits 90,605 90,605 97,192 6,587
Intergovernmental Revenue:
Local Government Aid 645,150 645,150 645,151 1
PERA Aid 1,540 1,540 1,541 1
Fire Aid 39,000 39,000 53,961 14,961
Police Aid 48,500 48,500 55,137 6,637
Federal Grants 8,000 8,000 101,880 93,880
State Grants 7,145 7,145 8,473 1,328
Other Grants and Aids 19,000 19,000 18,227 (773)
Total Intergovernmental Revenue 768,335 768,335 884,370 116,035
Charges for Services:
General Government 25,650 25,650 37,071 11,421
Public Safety 192,375 192,375 194,922 2,547
Public Works 3,550 3,550 4,041 491
Culture and Recreation 9,200 9,200 8,665 (535)
Total Charges for Services 230,775 230,775 244,699 13,924
Fines and Forfeitures 62,500 62,500 45,439 (17,061)
Miscellaneous Revenues:
Investment Income 26,000 26,000 442 (25,558)
Contributions and Donations 37,590 37,590 38,174 584
Other 44,150 44,150 43,632 (518)
Total Miscellaneous Revenues 107,740 107,740 82,248 (25,492)
Total Revenues 2,530,900 2,530,900 2,626,455 95,555
EXPENDITURES
General Government
Mayor and Council 65,670 65,670 69,822 4,152
Administrative and Finance 350,530 350,530 315,484 (35,046)
Other General Government 103,870 103,870 100,472 (3,398)
Capital Outlay 6,250 3,000 17,784 14,784
Total General Government 526,320 523,070 503,562 (19,508)
68
CITY OF ST. JOSEPH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2013
Variance with
Final Budget -
Original Actual
BudgetFinal BudgetAmounts
Over (Under)
EXPENDITURES
Public Safety
Police:
Current$ 941,265$ 941,265$ 977,228$ 35,963
Capital Outlay 4,845 - - -
Total Police 946,110 941,265 977,228 35,963
Fire:
Current 333,600 333,600 331,669 (1,931)
Capital Outlay 40,700 40,700 121,771 81,071
Total Fire 374,300 374,300 453,440 79,140
Other:
Current 96,450 96,450 96,450 -
Capital Outlay 2,000 - - -
Total Other 98,450 96,450 96,450 -
Total Public Safety 1,418,860 1,412,015 1,527,118 115,103
Public Works
Streets and Highways:
Street Maintenance and Storm Sewers 226,270 226,270 223,900 (2,370)
Snow and Ice Removal 91,700 91,700 94,427 2,727
Street Engineering 35,000 35,000 26,608 (8,392)
Street Lighting 8,500 - - -
Capital Outlay 30,190 25,000 31,264 6,264
Total Public Works 391,660 377,970 376,199 (1,771)
Culture and Recreation
Current 214,185 214,185 196,504 (17,681)
Capital Outlay 10,375 - - -
Total Culture and Recreation 224,560 214,185 196,504 (17,681)
Total Expenditures 2,561,400 2,527,240 2,603,383 76,143
Excess of Revenues Over
(Under) Expenditures (30,500) 3,660 23,072 19,412
OTHER FINANCING SOURCES (USES)
Insurance Recoveries - - 6,000 6,000
Sale of Property - - 629 629
Transfers In 2,000 2,000 20,416 18,416
Transfers Out - - (34,160) (34,160)
Total Other Financing Sources (Uses) 2,000 2,000 (7,115) (9,115)
Net Change in Fund Balances$ (28,500)$ 5,660 15,957$ 10,297
FUND BALANCES
Beginning of Year1,705,274
End of Year$ 1,721,231
69
CITY OF ST. JOSEPH
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2013
Special Revenue
TIF 2-1 TIF 2-2 St.
Economic Millstream Joseph Meat
Development Shops and Market State Collected
Authority (150)Lofts (157)(158)Sales Tax (200)
ASSETS
Cash and Investments $ 116,318$ 14,115 $ 34$ 1,340,119
Taxes Receivable - Delinquent 1,962 - - -
Special Assessments Receivable:
Delinquent - - - -
Deferred - - - -
Accounts Receivable - - - -
Interest Receivable 33 5 - -
Due from Other Funds 500 - - -
Due from Other Governments 569 - - 75,912
Notes Receivable - - - -
Total Assets$ 119,382$ 14,120 $ 34$ 1,416,031
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities
Accounts Payable$ 4,934$ -$ -$ 2,437
Contracts Payable - - - 140,827
Due to Other Funds - - 500 -
Total Liabilities 4,934 - 500 143,264
Deferred Inflows Of Resources
Unavailable Revenue - Property Taxes 1,962 - - -
Unavailable Revenue - Special Assessments - - - -
Unavailable Revenue - Notes Receivable - - - -
Total Deferred Inflows of Resources 1,962 - - -
Fund Balances
Restricted - 14,120 - 1,272,767
Committed 112,486 - - -
Assigned - - - -
Unassigned - - (466) -
Total Fund Balances 112,486 14,120 (466) 1,272,767
Total Liabilities, Deferred Inflows
of Resources and Fund Balances$ 119,382$ 14,120 $ 34$ 1,416,031
70
Special RevenueDebt Service
G.O.
G.O. Crossover Improvement
Park Charitable Refunding Refunding
Dedication Gambling Revolving Bonds of Bonds of
(205)(215)Loan (250)Total2009A (318)2007B (320)
$ 54,660$ 3,947 $ 30,853$ 1,560,046$ 378,931$ 90,199
- - - 1,962 2,107 -
- - - - 2,351 3,403
- - - - 447,822 42,951
32 - - 32 - -
22 2 9 71 152 62
- - - 500 - -
- - - 76,481 21,654 867
- - 29,035 29,035 - -
$ 54,714$ 3,949 $ 59,897$ 1,668,127$ 853,017$ 137,482
$ 53$ -$ - $ 7,424$ 65$ 132
- - - 140,827 - -
- - - 500 - -
53 - - 148,751 65 132
- - - 1,962 2,107 -
- - - - 450,173 46,354
- - 29,035 29,035 - -
- - 29,035 30,997 452,280 46,354
54,661 3,949 30,862 1,376,359 400,672 90,996
- - - 112,486 - -
- - - - - -
- - - (466) - -
54,661 3,949 30,862 1,488,379 400,672 90,996
$ 54,714$ 3,949 $ 59,897$ 1,668,127$ 853,017$ 137,482
71
CITY OF ST. JOSEPH
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2013
Debt Service
City Hall G.O.
G.O. EDA Fire Hall G.O. Improvement G.O.
Refunding Refunding Bonds of Improvement
Bonds of Bonds of 2005B/2010B Bonds of
2005A (322)2003B (331)(333)2013A (348)
ASSETS
Cash and Investments $ 3,801$ 96,884$ 279,471$ 85,293
Taxes Receivable - Delinquent 2,795 858 388 -
Special Assessments Receivable:
Delinquent - - 128,275 -
Deferred - - 417,375 72,336
Accounts Receivable - - - -
Interest Receivable 5 37 119 22
Due from Other Funds - - - -
Due from Other Governments 462 129 53 -
Notes Receivable - - - -
Total Assets$ 7,063$ 97,908$ 825,681$ 157,651
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities
Accounts Payable$ 65$ 65$ 64$ 65
Contracts Payable - - - -
Due to Other Funds - - - -
Total Liabilities 65 65 64 65
Deferred Inflows Of Resources
Unavailable Revenue - Property Taxes 2,795 858 388 -
Unavailable Revenue - Special Assessments - - 545,650 72,336
Unavailable Revenue - Notes Receivable - - - -
Total Deferred Inflows of Resources 2,795 858 546,038 72,336
Fund Balances
Restricted 4,203 96,985 279,579 85,250
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total Fund Balances 4,203 96,985 279,579 85,250
Total Liabilities, Deferred Inflows
of Resources and Fund Balances$ 7,063$ 97,908$ 825,681$ 157,651
72
Debt Service
G.O. G.O.
G.O. Improvement G.O. G.O. Capital Certificates of G.O. G.O.
Certificates of Bonds of Improvement Improvement Indebtedness Improvement Certificates of
Indebtedness of 2011A/2006C Bonds of Plan Bonds of of 2010A Bonds of Indebtedness of
2013A (349)(338)2007A (341)2009B (343)(344)2010B (345)2011A (346)
$ 5,191$ 149,632$ 451,442$ 5,161$ 3,597$ 215,136$ 1,560
- 1,500 329 1,911 770 175 328
- 2,356 - - - - -
- 341,156 178,711 - - 207,143 -
- - - - - - -
21 76 163 5 3 76 1
- - - - - - -
- 1,963 8 326 161 26 92
- - - - - - -
$ 5,212$ 496,683$ 630,653$ 7,403$ 4,531$ 422,556$ 1,981
$ 65$ 66$ 65$ 65$ 65$ 65$ 65
- - - - - - -
- - - - - - -
65 66 65 65 65 65 65
- 1,500 329 1,911 770 175 328
- 343,512 178,711 - - 207,143 -
- - - - - - -
- 345,012 179,040 1,911 770 207,318 328
5,147 151,605 451,548 5,427 3,696 215,173 1,588
- - - - - - -
- - - - - - -
- - - - - - -
5,147 151,605 451,548 5,427 3,696 215,173 1,588
$ 5,212$ 496,683$ 630,653$ 7,403$ 4,531$ 422,556$ 1,981
73
CITY OF ST. JOSEPH
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2013
Debt Service
Capital Projects
G.O. Capital
Improvement Debt Service 2013 Street
Plan Bonds of Relief Fund Improvements
2011A (347)(390)Total(448)
ASSETS
Cash and Investments $ 12,287$ 288,442$ 2,067,027$ 105,699
Taxes Receivable - Delinquent 394 190 11,745 -
Special Assessments Receivable:
Delinquent - - 136,385 -
Deferred - 13,144 1,720,638 -
Accounts Receivable - - - -
Interest Receivable 61 - 803 -
Due from Other Funds - - - -
Due from Other Governments 102 2 25,845 -
Notes Receivable - - - -
Total Assets$ 12,844$ 301,778$ 3,962,443$ 105,699
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
Liabilities
Accounts Payable$ 65$ 26,360$ 27,337$ 948
Contracts Payable - - - 11,455
Due to Other Funds - - - -
Total Liabilities 65 26,360 27,337 12,403
Deferred Inflows Of Resources
Unavailable Revenue - Property Taxes 394 190 11,745 -
Unavailable Revenue - Special Assessments - 13,144 1,857,023 -
Unavailable Revenue - Notes Receivable - - - -
Total Deferred Inflows of Resources 394 13,334 1,868,768 -
Fund Balances
Restricted 12,385 - 1,804,254 -
Committed - - - -
Assigned - 262,084 262,084 93,296
Unassigned - - - -
Total Fund Balances 12,385 262,084 2,066,338 93,296
Total Liabilities, Deferred Inflows
of Resources and Fund Balances$ 12,844$ 301,778$ 3,962,443$ 105,699
74
Capital Projects
City
2013 Hall/Police
Equipment Garage Capital General Total
Certificates Improvements Capital Water Access Sewer Access Governmental
(449)(447)Outlay (490)Fund (501)Fund (502)TotalFunds
$ 200,496$ 174,042$ 202,752$ 44$ 585,859 $ 1,268,892$ 4,895,965
- - - - - - 13,707
- - - - - - 136,385
- - - - - - 1,720,638
18,500 - - 500 - 19,000 19,032
- - - 19 195 214 1,088
- - - - - - 500
- - - - - - 102,326
- - - - - - 29,035
$ 218,996$ 174,042$ 202,752$ 563$ 586,054 $ 1,288,106$ 6,918,676
$ 168,821$ -$ 9,000$ -$ -$ 178,769$ 213,530
- - - - - 11,455 152,282
- - - - - - 500
168,821 - 9,000 - - 190,224 366,312
- - - - - - 13,707
- - - - - - 1,857,023
- - - - - - 29,035
- - - - - - 1,899,765
- - - - - - 3,180,613
- - - - - - 112,486
50,175 174,042 193,752 563 586,054 1,097,882 1,359,966
- - - - - - (466)
50,175 174,042 193,752 563 586,054 1,097,882 4,652,599
$ 218,996$ 174,042$ 202,752$ 563$ 586,054 $ 1,288,106$ 6,918,676
75
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2013
Special Revenue
Economic TIF 2-1 TIF 2-2 St.
Development Millstream Joseph Meat State Collected Park
Authority Shops and Market Sales Tax Dedication
(150)Lofts (157)(158)(200)(205)
REVENUES
Property Taxes$ 124,883$ -$ -$ -$ -
Tax Increments - 34,911 3,725 - -
Sales Taxes - - - 360,909 -
Special Assessments - - - - -
Intergovernmental 27,395 - - - -
Charges for Services - - - - 166
Miscellaneous:
Investment Income 30 4 - - 20
Contributions and Donations - - - - 15,625
Revolving Loan Repayments - - - - -
Other - - - - -
Total Revenues 152,308 34,915 3,725 360,909 15,811
EXPENDITURES
Current
Public Works - - - - -
Culture and Recreation - - - - 2,155
Economic Development 117,473 31,639 3,721 - -
Debt Service
Principal - - - - -
Interest and Other Charges - - - - -
Capital Outlay
General Government - - - 89,656 -
Public Safety - - - - -
Public Works - - - - -
Culture and Recreation - - - 282,585 32,806
Total Expenditures 117,473 31,639 3,721 372,241 34,961
Excess of Revenues Over
(Under) Expenditures
34,835 3,276 4 (11,332) (19,150)
OTHER FINANCING SOURCES (USES)
Sale of Property - - - - -
Bonds Issued - - - - -
Bond Premium - - - - -
Refunding Bond Payment - - - - -
Transfers In - - - 19,274 3,000
Transfers Out - - - - -
Total Other Financing Sources (Uses) - - - 19,274 3,000
Net Change in Fund Balances 34,835 3,276 4 7,942 (16,150)
FUND BALANCES
Beginning of Year 77,651 10,844 (470) 1,264,825 70,811
End of Year$ 112,486$ 14,120$ (466)$ 1,272,767$ 54,661
76
Special RevenueDebt Service
G.O.
G.O. Crossover Improvement City Hall G.O.
Charitable Refunding Refunding EDA Refunding
Recreation Gambling Revolving Loan Bonds of Bonds of 2007B Bonds of 2005A
Center (210)(215)(250)Total2009A (318)(320)(322)
$ -$ -$ -$ 124,883$ 73,882$ 93 $ 93,997
- - - 38,636 - - -
- - - 360,909 - - -
- - - - 173,479 61,183 -
- - - 27,395 - - -
- - - 166 - - -
(1) 1 8 62 138 56 5
- - - 15,625 - - -
- - 8,083 8,083 - - -
- - - - - - -
(1) 1 8,091 575,759 247,499 61,332 94,002
- - - - - - -
- 1,291 - 3,446 - - -
- - - 152,833 - - -
- - - - 315,000 160,000 80,000
- - - - 48,619 11,461 11,137
- - - 89,656 - - -
- - - - - - -
- - - - - - -
8,093 - - 323,484 - - -
8,093 1,291 - 569,419 363,619 171,461 91,137
(8,094) (1,290) 8,091 6,340 (116,120) (110,129) 2,865
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - 22,274 80,000 3,050 -
(19,274) - - (19,274) - - -
(19,274) - - 3,000 80,000 3,050 -
(27,368) (1,290) 8,091 9,340 (36,120) (107,079) 2,865
27,368 5,239 22,771 1,479,039 436,792 198,075 1,338
$ -$ 3,949$ 30,862$ 1,488,379$ 400,672$ 90,996$ 4,203
77
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2013
Debt Service
G.O.
Improvement G.O. G.O.
Fire Hall G.O. Bonds of Improvement Certificates of
Refunding Bonds 2005B/2010B Bonds of Indebtedness of
of 2003B (331)(333)2013A (348)2013A (349)
REVENUES
Property Taxes$ 25,661$ 10,059$ -$ -
Tax Increments - - - -
Sales Taxes - - - -
Special Assessments - 38,468 77,054 -
Intergovernmental - - - -
Charges for Services 29,085 - - -
Miscellaneous:
Investment Income 34 109 127 78
Contributions and Donations - - - -
Revolving Loan Repayments - - - -
Other - - - -
Total Revenues 54,780 48,636 77,181 78
EXPENDITURES
Current
Public Works - - - -
Culture and Recreation - - - -
Economic Development - - - -
Debt Service
Principal 70,000 125,000 - -
Interest and Other Charges 7,555 22,103 11,990 7,868
Capital Outlay
General Government - - - -
Public Safety - - - -
Public Works - - - -
Culture and Recreation - - - -
Total Expenditures 77,555 147,103 11,990 7,868
Excess of Revenues Over
(Under) Expenditures
(22,775) (98,467) 65,191 (7,790)
OTHER FINANCING SOURCES (USES)
Sale of Property - - - -
Bonds Issued - - 16,210 5,665
Bond Premium - - 3,849 7,272
Refunding Bond Payment - - - -
Transfers In - - - -
Transfers Out - - - -
Total Other Financing Sources (Uses) - - 20,059 12,937
Net Change in Fund Balances (22,775) (98,467) 85,250 5,147
FUND BALANCES
Beginning of Year 119,760 378,046 - -
End of Year$ 96,985$ 279,579$ 85,250$ 5,147
78
Debt Service
G.O. G.O.
Improvement G.O. Certificates of G.O. Capital G.O. G.O.
Bonds of Improvement Indebtedness Improvement G.O. Certificates Improvement Certificates of
2011A/2006C Bonds of of 2008A Plan Bonds of of Indebtedness of Bonds of 2010B Indebtedness of
(338)2007A (341)(342)2009B (343)2010A (344)(345)2011A (346)
$ 41,976$ 157$ 50,126 $ 66,735$ 33,849 $ 5,032$ 19,973
- - - - - - -
- - - - - - -
65,429 22,023 - - - 24,418 -
- - - - - - -
- - - - - - 22,863
3,821 148 7 4 2 70 1
- - - - - - -
- - - - - - -
- - - - - - -
111,226 22,328 50,133 66,739 33,851 29,520 42,837
- - - - - 117 -
- - - - - - -
- - - - - - -
150,000 65,000 60,000 55,000 30,000 45,000 35,000
87,954 14,324 2,291 10,931 2,731 17,812 7,715
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
237,954 79,324 62,291 65,931 32,731 62,929 42,715
(126,728) (56,996) (12,158) 808 1,120 (33,409) 122
- - - - - - -
- - - - - - -
- - - - - - -
(1,435,000) - - - - - -
15,000 366,959 - - - 13,250 -
- - (416) - - - -
(1,420,000) 366,959 (416) - - 13,250 -
(1,546,728) 309,963 (12,574) 808 1,120 (20,159) 122
1,698,333 141,585 12,574 4,619 2,576 235,332 1,466
$ 151,605$ 451,548 $ -$ 5,427$ 3,696 $ 215,173$ 1,588
79
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2013
Debt Service
Capital Projects
G.O. Capital
Improvement Debt Service Jade Road Street
Plan Bonds of Relief Fund Improvements
2011A (347)(390)Total(441)
REVENUES
Property Taxes$ 21,872$ 215$ 443,627$ -
Tax Increments - - - -
Sales Taxes - - - -
Special Assessments - 3,362 465,416 -
Intergovernmental - 17,200 17,200 -
Charges for Services - - 51,948 -
Miscellaneous:
Investment Income 56 - 4,656 -
Contributions and Donations - - - -
Revolving Loan Repayments - - - -
Other - - - -
Total Revenues 21,928 20,777 982,847 -
EXPENDITURES
Current
Public Works - - 117 -
Culture and Recreation - - - -
Economic Development - - - -
Debt Service
Principal 20,000 - 1,210,000 -
Interest and Other Charges 4,075 - 268,566 -
Capital Outlay
General Government - - - -
Public Safety - - - -
Public Works - 39,552 39,552 -
Culture and Recreation - - - -
Total Expenditures 24,075 39,552 1,518,235 -
Excess of Revenues Over
(Under) Expenditures
(2,147) (18,775) (535,388) -
OTHER FINANCING SOURCES (USES)
Sale of Property - - - -
Bonds Issued - - 21,875 -
Bond Premium - - 11,121 -
Refunding Bond Payment - - (1,435,000) -
Transfers In - - 478,259 -
Transfers Out - (228,000) (228,416) (366,959)
Total Other Financing Sources (Uses) - (228,000) (1,152,161) (366,959)
Net Change in Fund Balances (2,147) (246,775) (1,687,549) (366,959)
FUND BALANCES
Beginning of Year 14,532 508,859 3,753,887 366,959
End of Year$ 12,385$ 262,084 $ 2,066,338$ -
80
Capital Projects
2013 City Hall/Police
2013 Street Equipment Garage Capital General Total Other
Improvements Certificates Improvements Capital Water Access Sewer Access Governmental
(448)(449)(447)Outlay (490)Fund (501)Fund (502)TotalFunds
$ - $ -$ -$ - $ -$ -$ -$ 568,510
- - - - - - - 38,636
- - - - - - - 360,909
- - - - - - - 465,416
- - - - - - - 44,595
- - - - 116,570 59,227 175,797 227,911
- - - - 139 178 317 5,035
- - - 6,638 - - 6,638 22,263
- - - - - - - 8,083
- - - 4,150 - - 4,150 4,150
- - - 10,788 116,709 59,405 186,902 1,745,508
- - - - - - - 117
- - - - - - - 3,446
- - - - - - - 152,833
- - - - - - - 1,210,000
- - - - - - - 268,566
- 5,526 1 520 - - 6,047 95,703
- 40,391 - 13,615 - - 54,006 54,006
295,494 93,471 - 11,449 - - 400,414 439,966
- 88,453 - 15,787 - - 104,240 427,724
295,494 227,841 1 41,371 - - 564,707 2,652,361
(295,494) (227,841) (1) (30,583) 116,709 59,405 (377,805) (906,853)
- 18,681 - 1,850 - - 20,531 20,531
388,790 259,335 - - - - 648,125 670,000
- - - - - - - 11,121
- - - - - - - (1,435,000)
- - - 22,660 - - 22,660 523,193
- - - (20,000) (136,900) (50,250) (574,109) (821,799)
388,790 278,016 - 4,510 (136,900) (50,250) 117,207 (1,031,954)
93,296 50,175 (1) (26,073) (20,191) 9,155 (260,598) (1,938,807)
- - 174,043 219,825 20,754 576,899 1,358,480 6,591,406
$ 93,296$ 50,175$ 174,042$ 193,752$ 563$ 586,054$ 1,097,882$ 4,652,599
81
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
Honorable Mayor and Members
of the City Council
City of St. Joseph
St. Joseph, Minnesota
We have audited, in accordance with the 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, the financial statements of the governmental
activities, the business-type activities, each major fund and the aggregate remaining fund information of
the City of St. Joseph, Minnesota, as of and for the year ended December 31, 2013 and the related Notes
to the Financial Statements, which collectively comprise the
issued our report thereon dated April 10, 2014.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate
in the circumstances for the purpose of expressing our opinions on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the internal control. Accordingly, we
do not express an opinion on the effectiveness of the internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were
not identified. However, as described in the accompanying Schedule of Finding and Response on
Internal Control, we identified a certain deficiency in internal control that we consider to be a material
weakness.
82
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the financial statements will not be prevented or detected and corrected on a
timely basis. We consider the deficiencies described in the accompanying Schedule of Finding and
Response on Internal Control to be a material weakness, listed as Audit Finding 06-01.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements, noncompliance with which could have a direct and material effect on the
determination 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 or other matters that are required to be
reported under Government Auditing Standards.
Response to Findings
identified in our audit is described in the accompanying Schedule of
Finding and Response on Internal Control. response was not subjected to the auditing
procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the City control and
compliance. Accordingly, this communication is not suitable for any other purpose.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
April 10, 2014
83
REPORT ON LEGAL COMPLIANCE
Honorable Mayor and Members
of the City Council
City of St. Joseph
St. Joseph, Minnesota
We have audited, 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 of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund and the aggregate remaining fund information of
the City of St. Joseph, Minnesota, as of and for the year ended December 31, 2013, which collectively
and have issued our report thereon dated April 10, 2014.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State
Auditor pursuant to Minnesota Statutes § 6.65, contains seven categories of compliance to be tested:
contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, claims and
disbursements, miscellaneous provisions and tax increment financing.Our audit considered all of the
listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City of
St, Joseph failed to comply with the provisions of the Minnesota Legal Compliance Audit Guide for
Political Subdivisions. However, our audit was not directed primarily toward obtaining knowledge of
such noncompliance. Accordingly, had we performed additional procedures, other matters may have
come to our attention regarding the
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this communication is not
suitable for any other purpose.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
April 10, 2014
84
CITY OF ST. JOSEPH
SCHEDULE OF FINDING AND RESPONSE ON
INTERNAL CONTROL
December 31, 2013
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING:
Material Weakness:
Audit Finding 06-01 Improve Segregation of Accounting Duties
Adequate segregation of accounting duties is in place when the four areas of a transaction have been
separated: authorization, custody, recording and reconciliation.
significant areas including: cash receipts, cash disbursements, capital assets, payroll and utility
billing. The lack of adequate segregation of accoun
ability to initiate, record, process and report financial data consistent with the assertions of
management in the financial statements. Some of the areas in which we noticed a lack of segregation
or an overlap in duties are as follows:
Cash Receipts
The Office Specialist or City Administrator enters cash and checks into the point of sale system,
reconciles the entries and prepares the deposit. The Police Records Specialist records police
receipts, receives payments and reconciles the collections. The Finance Director or police take
deposits to the bank.
Cash Disbursements
The Finance Director approves some invoices for payment, enters invoices into the system,
generates checks and a check register. The Finance Director is also an authorized signer and has
access to the Maelectronic signature. The Administrator reviews and approves checks for
payment. At year-end, the Finance Director reconciles and records accounts and contracts
payable.
Capital Assets
The Finance Director records, processes, reconciles and posts journal entries related to capital
assets. The department heads review their listing for accuracy.
Payroll
The Finance Director enters employees time, processes and posts payroll, generates a payroll
report, distributes paystubs to employees, and posts the journal entries related to payroll. In
addition, this same employee reconciles payroll accruals and time off balances. The City
Administrator does review payroll reports and time off balances and calculates compensated
absences balances for the audit.
85
CITY OF ST. JOSEPH
SCHEDULE OF FINDING AND RESPONSE ON
INTERNAL CONTROL
December 31, 2013
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING:
Material Weakness: (Continued)
Audit Finding 06-01 Improve Segregation of Accounting Duties (Continued)
Utility Billing
The Utility Billing Clerk enters new accounts into the utility billing system and uploads meter
readings via interfacing with electronic readers. The Utility Billing Clerk enters any rate changes
to the system and can enter manual adjustments. The Utility Billing Clerk calculates and enters
final bills, prints and mails utility bills, reconciles receipts to billed amounts and enters receipts
batches.
Cash Reconciliation and Access
The Finance Director performs the above noted responsibilities, while also reconciling cash and
generating manual journal entries.
The City Council and City staff are aware of the limited personnel handling
matters. The processes and internal controls are reviewed frequently to look for ways to improve
internal controls. The department heads, City Administrator and City Council each have active roles
in monitoring the financial matters of the City to provided additional oversight. It is unlikely
complete segregation of accountings duties will be achieved due to the cost of hiring several
additional staff.
86