HomeMy WebLinkAbout2015 Audit Report
City of St. Joseph
Stearns County, Minnesota
Financial Statements
December 31, 2015
City of St. Joseph
Table of Contents
Elected Officials and Administration 1
Independent Auditor's Report 2
Management's 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 Balance – 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 Financial Statements 37
Required Supplementary Information
Schedule of Funding Progress – Other Post Employment Benefits 76
Schedule of City's Proportionate Share of Net Pension Liability GERF
Retirement Fund 77
Schedule of City's Proportionate Share of Net Pension Liability PEPFF
Retirement Fund 77
Schedule of City Contributions GERF Retirement Fund 78
Schedule of City Contributions PEPFF Retirement Fund 78
Schedule of Changes in the Net Pension Liability and Related Ratios –
Fire Relief Association 79
Schedule of City Contributions and Non Employer Contributing Entities–
Fire Relief Association 80
City of St. Joseph
Table of Contents
Supplementary Information
Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget
and Actual – General Fund 82
Combining Balance Sheet – Nonmajor Governmental Funds 84
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances –
Nonmajor Governmental Funds 90
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 97
Report on Legal Compliance 99
Schedule of Finding and Response on Internal
Control 100
1
City of St. Joseph
Elected Officials and Administration
December 31, 2015
Elected Officials Position Term Expires
Rick Schultz Mayor January 2017
Robert Loso Council Member January 2017
Renee Symanietz Council Member January 2017
Dale Wick Council Member January 2019
Matt Killam Council Member January 2019
Administration
Judy Weyrens City Administrator Appointed
Lori Bartlett Finance Director Appointed
2
Independent Auditor's 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, 2015, and the
related notes to financial statements, which collectively comprise the City's basic financial
statements as listed in the Table of Contents.
Management's Responsibility for the Financial Statements
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.
Auditor's Responsibility
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 financial statements. The procedures selected depend on the auditor's
judgment, including the 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's 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's internal control. Accordingly, we express no such opinion. 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.
3
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinions.
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, 2015, 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 68 and GASB 71
As discussed in Note 13 to the financial statements, the City has adopted the provisions of
the Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and
Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for
Contributions Made Subsequent to the Measurement Date. 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
Management's Discussion and Analysis, which follows this report letter, and Required
Supplementary Information as listed in the Table of Contents be presented to supplement the
basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board (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 consistency with management's responses to our 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 City of St. Joseph's basic financial statements. The 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.
4
Other Information (Continued)
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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
April 28, 2016, on our consideration of the City of St. Joseph'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 City of St. Joseph's
internal control over financial reporting and compliance.
St. Cloud, Minnesota
April 28, 2016
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
5
As management of the City of St. Joseph, we offer readers of the City of St. Joseph's financial
statements this narrative overview and analysis of the financial activities of the City of St. Joseph for the
fiscal year ended December 31, 2015.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2015 include the following:
The assets and deferred outflows of resources of the City of St. Joseph exceeded its liabilities and
deferred inflows of resources at the close of the most recent fiscal year by $29,395,362. Of this
amount, $1,518,823 may be used to meet government's ongoing obligations to citizens and creditors
(unrestricted net position).
The governmental net position decreased by $110,473 from 2014 to 2015. The decrease is due to
transfers made to the water and sewer fund to help pay for utility debts while minimizing rate
increases in the funds.
As of the close of the current fiscal year, the City of St. Joseph's governmental funds reported
combined ending fund balances of $5,726,377, a decrease of $593,837. Of this amount $1,299,631 is
unassigned for spending at the government's discretion. The remaining balance of $4,426,746 is set
aside for specific future expenditures.
At the end of the current fiscal year, unassigned fund balance for the general fund was $1,315,805 or
49.1% of total general fund expenditures ($1,324,826 or 49.4% excluding the fire and PEG Access
funds).
The City of St. Joseph's total long-term debt increased by $550,061 during the current fiscal year.
The City had two debts paid in full in 2015 and incurred three new debts. The largest debt was
issued to purchase a community center.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City of St. Joseph's basic
financial statements. The City of St. Joseph's basic financial statements are comprised of three
components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to
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
provide readers with a broader overview of the City of St. Joseph's finances, in a manner similar to a
private-sector business.
The Statement of Net Position presents information on all of the City of St. Joseph's assets and
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 Cit y of
St. Joseph's is improving or deteriorating.
The Statement of Activities presents information showing how the government's 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).
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
6
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
the end of the fiscal year. Such information may be useful in evaluating a government's near-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 impact of the government's near-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-four 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 and State Collected Sales
Tax Fund which are considered to be major funds. 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 26-29 of this report.
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
7
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 37-74 of this report.
Other Information. The combining statements referred to earlier in connection with non-major
governmental funds can be found on pages 84-95 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 may serve over time as a useful indicator of a government's financial
position. In the case of the City of St. Joseph, assets and deferred outflows of resources exceeded
liabilities and deferred inflows of resources by $29,395,362 at the close of the most recent fiscal year.
By far the largest portion of the City of St. Joseph's net position reflects its investment in capital assets
(e.g., land, buildings, machinery, and equipment) net accumulated depreciation, less any related debt
used to acquire those assets that is still outstanding. The City of St. Joseph uses these capital assets to
provide services to citizens; consequently, these assets are not available for future spending. Although
the City of St. Joseph's investment in its capital assets is reported net of related debt, it should be noted
that the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
8
NET POSITION
2015 2014 2015 2014 2015 2014
Assers
Current and other assets 7,994,562$ 8,086,164$ 893,303$ 1,431,529$ 8,887,865$ 9,517,693$
Capital assets, net 12,072,185 10,015,177 32,642,113 33,208,533 44,714,298 43,223,710
Total assets 20,066,747 18,101,341 33,535,416 34,640,062 53,602,163 52,741,403
Deferred Outflows
of resources
Deferred outflows of resources
Related to pensions 339,470 - 33,738 - 373,208 -
Total deferred outflows 339,470 - 33,738 - 373,208 -
Liabilities
Current liabilities 1,640,535 1,329,513 1,358,124 1,457,613 2,998,659 2,787,126
Long-term liabilities 9,084,972 6,620,623 12,096,018 12,920,244 21,180,990 19,540,867
Total liabilities 10,725,507 7,950,136 13,454,142 14,377,857 24,179,649 22,327,993
Deferred Inflows
of Resources
Deferred inflows of resources
Related to lease receivables 231,089 - - - 231,089 -
Deferred inflows of resources
Related to pensions 146,834 - 22,437 - 169,271 -
Total deferred inflows 377,923 - 22,437 - 400,360 -
Net Position
Invested in capital assets,
net related debt 6,427,207 6,370,844 19,907,165 19,429,295 23,972,202 23,072,465
Restricted 3,904,337 4,556,952 - - 3,904,337 4,556,952
Unrestricted (1,028,757) (776,591) 185,410 832,910 1,518,823 2,783,993
Total net position 9,302,787$ 10,151,205$ 20,092,575$ 20,262,205$ 29,395,362$ 30,413,410$
Governmental Business-Type
Activities Activities Total
An additional portion of the City of St. Joseph's net position (13%) represents resources that are subject
to external restrictions on how they may be used. The remaining balance of unrestricted net position is a
deficit of $1,028,757. The deficit is the result of realizing a portion of the Minnesota employee's pension
liability (net pension liability), new in 2015 as required by GASB 68. Without the net pension liability,
the unrestricted net position would be a surplus of $84,316.
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.
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
9
The governmental activities change in net position balance decreased by 1.1% before the change in
accounting principles (8.4% decrease overall). A relatively stable year in operations. The decrease due
to the change in accounting principles is a new GASB requirement to recognize a pension liability for
the City's portion of contributions to the Public Employees Retirement Association of Minnesota
(PERA). The City and employees are effected by funding law changes as a result of PERA's funding
performance each year. A net pension liability was recorded for $1,113,073 in the governmental
activities.
There was a 0.3% increase (.8% decrease after the change in accounting principles) in the total net
position for the business-type activities. The increase is due to paying down bonds, increase utility rates,
and improved development fees collected. The City completed the main lift station improvement project
to fully capitalize the asset and substantially completed the water tower rehabilitation project. The full
value of the assets are netted against the bonds payable. The decrease due to the change in accounting
principles is a new GASB requirement as stated above. A net pension liability was recorded for
$249,768 in the business-type activities.
Governmental Activities. Governmental activities reduced the City of St. Joseph's total net position by
$848,418. The most significant change in governmental net position is a result of the change in
accounting principle to recognize net pension liability through PERA. The governmental activities
shows a break-even before transfers. Council approved transferring governmental reserved funds to
water and sewer to minimize the rate increase in 2015. The transfers were need to assist in utility debt
payments.
Business-Type Activities. Business-type activities decreased the City of St. Joseph's net position by
$169,630, without the decrease of $229,758 relating to the change in accounting principle to recognize
net pension liability, business type activities increased net position by $60,128. The largest contributors
were in the water, refuse, and street light utility funds. The water fund received transfers from the debt
service reserve fund, levied taxes and increased water rates 5% to help cover water debt costs. In
addition to utility rates, new development requires an access fee known as Water Access Charge (WAC)
and Sewer Access Charge (SAC). The WAC/SAC is intended to charge new development a proportional
fee for the asset that they will be utilizing. Utility rates in the refuse and street light utility funds is
sufficient to cover the operating expenses of these funds. The sewer fund received transfers from
governmental activities to pay debts. Sewer rates increased 7% in 2015 to cover expenses. Storm water
rates were left unchanged as the city council planned to spend down reserves in this fund.
The water utility inclusive of the WAC fund realized a net position increase of $165,479. Water rate
increases, development fees collected, transfers from governmental funds and debt levies improved the
water fund's financial health. Debt was spent down by $533,757 and asset values increased as the water
tower project was substantially completed along with project contributions from the Park Terrace
improvement project. Also, a waterline was extended along 1st Ave NE adding to the asset value. As a
result, the net position for investment in capital assets, net related debt increased $315,500. Unrestricted
net position decreased $144,545. The change in accounting principle to record net pension liabilities
reduced the water fund's net position by $101,572. Additional rate increases were approved for 2016
after the City hired a consultant to review the water fund's current and future health.
The sewer utility inclusive of the SAC fund realized a net position decrease of $217,985. Sewer rates
were increased and development activity improved to assist paying for sewer debts. In previous years
the City was able to minimize subsidy of the sewer fund as the SAC fund had a surplus fund balance
based on development; however, the account was depleted in 2015 to cover debt costs. Sewer projects
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
10
for the main lift station and Park Terrace were substantially completed during 2015. The full value of the
assets netted against the debt payments and depreciation increased the net position for investment in
capital assets, net related debt by $246,717. Unrestricted net position decreased $190,247 partly due to
the change in accounting principle of $83,395 to record net pension liability. Transfers to other funds for
debt payments totaled $103,150. Additional rate increases were approved for 2016 after the City hired a
consultant to review the sewer fund's current and future health.
The graphs and charts below and on the following pages summarize and graphically depict the changes
in net position for the governmental and business-type activities.
CHANGE IN NET POSITION
2015 2014 2015 2014 2015 2014
Revenues
Program revenues
Charges for Services 602,611$ 478,561$ 2,254,780$ 1,959,537$ 2,857,391$ 2,438,098$
Operating grants and
contributions 326,678 407,978 6,873 408 333,551 408,386
Capital grants and
contributions 409,469 876,982 12,104 306,381 421,573 1,183,363
General revenues
Property taxes 1,685,639 1,674,468 44,656 - 1,730,295 1,674,468
Tax increments 41,385 41,094 - - 41,385 41,094
Sales tax 405,859 380,113 - - 405,859 380,113
Franchise fees 124,283 124,940 - - 124,283 124,940
State aids 910,488 875,663 - - 910,488 875,663
Unrestricted investment earnings 76,419 88,145 36,799 88,986 113,218 177,131
Gain on sale of capital assets - - 2,810 - 2,810 -
Total revenues 4,582,831 4,947,944 2,358,022 2,355,312 6,940,853 7,303,256
Expenses
General government 641,393 604,527 - - 641,393 604,527
Public safety 1,547,886 1,616,153 - - 1,547,886 1,616,153
Public works 1,278,903 1,413,380 - - 1,278,903 1,413,380
Economic development 358,378 432,250 - - 358,378 432,250
Culture and recreation 439,504 334,232 - - 439,504 334,232
Interest on long-term debt 287,934 230,831 - - 287,934 230,831
Water - - 912,963 1,102,600 912,963 1,102,600
Sanitary sewer - - 1,001,928 1,027,840 1,001,928 1,027,840
Storm water - - 180,681 322,397 180,681 322,397
Refuse - - 287,877 181,074 287,877 181,074
Street light utility - - 53,751 50,531 53,751 50,531
Total expenses 4,553,998 4,631,373 2,437,200 2,684,442 6,991,198 7,315,815
Decrease in net position before
transfers 28,833 316,571 (79,178) (329,130) (50,345) (12,559)
Transfers (139,306) (1,002,963) 139,306 1,002,963 - -
Change in net position (110,473) (686,392) 60,128 673,833 (50,345) (12,559)
Net Position
Net position - beginning 10,151,205 10,837,597 20,262,205 19,588,372 30,413,410 30,425,969
Change in accounting principle (737,945) - (229,758) - (967,703) -
Net position - beginning restated 9,413,260 10,837,597 20,032,447 19,588,372 29,445,707 30,425,969
Net position - ending 9,302,787$ 10,151,205$ 20,092,575$ 20,262,205$ 29,395,362$ 30,413,410$
Governmental Activities Business-Type Activities Total
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
11
EXPENSES AND PROGRAM REVENUES – GOVERNMENTAL ACTIVITIES
REVENUES BY SOURCE – GOVERNMENTAL ACTIVITIES
EXPENSES AND PROGRAM REVENUES – BUSINESS-TYPE ACTIVITIES
REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
General
Government
Public Safety Public Works Culture and
Recreation
Economic
Development
Interest on Long-
term Debt
Revenue
Expenditures
General Government
2%
Public Safety
13%
Public Works
9%
Culture and
Recreation
1%
Economic
Development
4%
General Revenues
71%
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
12
EXPENSES AND PROGRAM REVENUES – BUSINESS-TYPE ACTIVITIES
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Water Sanitary
Sewer
Refuse Storm Water Street Light
Utility
Revenue
Expenditures
REVENUES BY SOURCE – BUSINESS-TYPE ACTIVITIES
Water 41%
Sanitary Sewer
39%
Refuse
13%
Storm Water
4%
Street Light Utility
3%
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
13
FINANCIAL ANALYSIS OF THE CITY'S FUNDS 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
$5,726,377, a decrease of $593,837 from 2014. Revenues for the City's governmental funds were
$4,919,442, while total expenditures were $7,719,832. The excess of expenditures over revenues is
mainly attributed to the City purchasing the former Kennedy School property known as Colts Academy,
including 13 acres of open land from ISD 742. The property was purchased for a future community
center and construction of a new government center. To facilitate the purchase of the property, the City
issued Tax Abatement Bonds and allocated $500,000 of local option sales tax reserves. The local option
sales tax has been set aside for the past few years pending future projects. In addition to purchasing the
property from ISD 742, transfers from debt service reserves and water and sewer connection fees to the
water and sewer funds accounted for a portion of the decrease in the net change in fund balances.
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 $1,315,805. As a measure of the general fund's
liquidity, it may be useful to compare both unassigned fund balance to total fund expenditures.
Unassigned fund balance represents 49.1% of total general fund expenditures, 49.4% (5.9 months
working capital) after removing the Fire and PEG Access fund. The City Council has adopted a financial
policy which includes 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 intergovernmental
revenues and property tax revenues, the contributions and charges for services increased $62,085 to help
maintain a healthy fund balance. New in 2015, the City purchased property for a future community
center. At the time of purchasing the property, the City entered into a five (5) year lease with a music
based daycare, Little Saints Academy (LSA), to operate in a portion of the existing facility located on
the property. Rent proceeds are collected from LSA and are added to the General Fund to help cover the
building operation.
General fund expenditures were less than budgeted by $146,773 and over 2014 expenditures by
$26,269. The City of St. Joseph sets funds aside for the street maintenance plan. The street maintenance
plan expenditures fluctuate each year, increasing in 2015. Spring 2014 was one of the snowiest periods
on record for Central Minnesota. The Council added to the ice and snow removal budget for 2015. The
2015 winter was warmer and dryer; thus, the City was under-budget in streets and allowing time for
other projects. Engineering expenditures were over budget as the city council approved studies to
consider downtown alley improvements, Parkway Business Center expansion, Minnesota Street
turnback, utility rate study, and Field Street construction. In addition, the City purchased Colts Academy
for a community center in August 2015. The facility operations is funded under the General Fund as a
new department recorded as culture and recreation.
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.
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
14
State Collected Sales Tax Fund
The State Collected Sales Tax Fund was established in 2005 for the collection of voter approved local
option sales taxes for regional development of facilities, parks and trails, and transportation. Voters
approved extending the local options sales tax collection through 2030. The City of St. Joseph purchased
a former elementary school to repurpose as a community center. The year-end restricted fund balance
was $1,296,254.
December 31,December 31,Increase Percent
2015 2014 (Decrease)Change
Revenues
Taxes 1,231,341$ 1,249,534$ (18,193)$ -1%
Special assessment 3,590 7,302 (3,712) -51%
Licenses and permits 152,158 105,929 46,229 44%
Intergovernmental 1,107,840 1,018,932 88,908 9%
Charges for services 270,508 243,067 27,441 11%
Fines and forfeitures 50,489 38,330 12,159 32%
Miscellaneous 111,983 82,048 29,935 36%
Total general fund revenue 2,927,909$ 2,745,142$ 182,767$ 7%
December 31,December 31,Increase Percent
2015 2014 (Decrease)Change
Expenditures
General government 595,071$ 552,709$ 42,362$ 8%
Public safety 1,416,039 1,455,771 (39,732) -3%
Public works 396,766 448,752 (51,986) -12%
Culture and recreation 274,636 199,011 75,625 38%
Total general fund expenditures 2,682,512$ 2,656,243$ 26,269$ 1%
General Fund Budgetary Highlights
Over the course of the year, the City did not amend the annual operating budget. Historically, the City
has minimal budget amendments during the budget year.
Actual revenues were $171,294 more than expected mainly due to development related revenues,
state aids and donor contributions. Tax delinquencies were down and a few foreclosed properties
sold increasing the tax collections.
Actual expenditures were $146,773 less than budget. To help minimize fluctuations in the
budget, the City budgets family insurance coverage for the majority of the employees even
though some elect single and some do not elect coverage. The City will be faced with a number
of retirements in the next five (5) years and along with that comes the payment of unused
accumulated benefit hours. Therefore, the savings between budgets to actual is transferred into a
retirement reserve account for payment of unused benefit hours. In addition, budgeting for the
highest insurance cost alleviates budget spikes when employees change from single to family or
a new employee is hired with family insurance and the employee they are replacing was at the
single rate. The City established and adopted a five-year capital improvement plan. During the
budget process the CIP is reviewed and the Council prioritizes which projects/equipment will be
funded and funds are set aside each year for equipment purchases until the useful life of the
equipment is reached. Due to the large expenditures associated with some of the needed
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
15
equipment such as a street sweeper and plow truck, fluctuations in budget to actual are realized.
Some years will show expenditures lower than budget, some over budget in the years larger
pieces are purchased. In 2015 the Public Works staff spent more time in culture and recreation.
The additional staff time and costs were a result of reconstructing a warming house and various
other park projects. The winter months were warmer and dryer than normal freeing up time for
staff to work on other projects. Engineering costs were over budget as many project and
development proposals surfaced the past couple years. When projects move forward, the
engineer costs are reimbursed from the project funding.
Proprietary Funds. The City of St. Joseph's proprietary fund statements provide the same type of
information found in the government-wide financial statements, but in more detail. The unrestricted net
position of the Proprietary Funds decreased $367,569 overall. The paragraphs on the following pages
provide a brief financial overview of each major proprietary fund.
Water Enterprise Fund
The Water Fund is used to account for the operations of the City's water utility. In 2015, the Water
fund's net position increased $272,527. Before transfers and capital contributions, the net position would
show a decrease of $28,983. The net position includes depreciation of $405,281. The water revenues are
covering over 100% of the depreciation. Bonded debt payments in the water fund totaled $684,968. Debt
payments are covered by water rates, debt levy, transfers from governmental funds and WAC fees.
Water rates have been and are projected to continue to be incrementally increased to cover operational
costs along with the debts. As the City was facing large rate increases and projected future projects that
would require funding, the City hired a consultant to review the water rates and provide a five (5) to ten
(10) year perspective. After reviewing the consultant report and verifying potential projects requiring
funding, the Council approved a 30% increase in water rates for 2016 to reduce the dependency on debt
levies and transfers from other funds to cover operational and non-operational expenses.
Sanitary Sewer Enterprise Fund
The Sanitary Sewer Fund is used to account for the operations of the City's sanitary sewer utility. In
2015, the Sanitary Sewer Fund's net position increased $139,865, a decrease before capital contributions
and transfers of $145,932. 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 2013 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 funded with reserved SAC fees, trunk
fees, and sewer usage rates. The reserves have been depleted in 2015; however, new development
increase revenues. As stated above in the water fund, the City hired a consultant to review the sewer
rates to conduct the same analysis as for water. That is, reviewing current operational expenses, debt and
future projects. After reviewing the consultant report, the council approved a 24% increase in sewer
rates for 2016. Operational revenues are covering near 100% of depreciation.
Refuse Enterprise Fund
The refuse fund is used to account for the contract services to provide residential refuse, recycling and
compost services. In 2015, the refuse fund's net position decreased $660. The operating revenues and
expenses decreased from 2014. The refuse fund has a net position balance that built up from earlier
years of operations. Council opted to maintain refuse rates to allow for larger increases in other utility
funds. In addition, city council approved paying for an aquatics and facilities studies out of the reserved
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
16
balance in previous year. The 2015 operations reflects true revenues and costs. The composting services
are also operated out of the refuse fund and in 2012 the City partnered with a local business to provide
the services. After the initial three year contract, the remaining contract is year to year and is anticipated
to be long term.
Storm Water Enterprise Fund
The Storm Water Fund is used to account for the operations of the City's storm water utility. In 2015, the
Storm Water Fund's net position decreased $78,695. The Storm Water Fund had an operating loss of
$82,548 or, $15,211 surplus after removing depreciation expense. The deficit is consistent with previous
years and expected with the decision to maintain storm water rates. 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.
Street Light Utility Enterprise Fund
The Street Light Utility Fund is used to account for the operations of the City's street lighting. 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 35% 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 equitable
way to charge for services. The net position change of the Street Light Utility Fund was positive $7,022
at December 31, 2015.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City of St. Joseph's investment in capital assets for its governmental and business-type activities as
of December 31, 2015, amounts to $44,714,298 (net of accumulated depreciation), an increase of
$1,490,588. The investment in capital assets includes land, intangible assets, buildings, improvements,
machinery and equipment, furniture and office equipment, infrastructure, and construction in progress.
Net investment in capital assets increased $899,737. The increase is attributable to capital asset
construction in progress for the street improvements and government center; and the purchase of a future
community center. The assets disposed were much smaller than the value of the improvements added. In
addition, construction in progress is not depreciated until the asset is fully constructed and operational.
The overall debt related to capital assets increased $552,112. The City of St. Joseph issued three debts in
2015 for street improvements, general equipment replacements and a community center. The bond
issues were more than what was paid off in 2015 mainly from the community center bonds.
The table on the next page is a summary of the City of St. Joseph's capital assets.
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
17
CAPITAL ASSETS
2015 2014 2015 2014 2015 2014
Land 561,194$ 457,194$ 377,882$ 377,882$ 939,076$ 835,076$
Easements 25,664 5,820 67,915 67,915 93,579 73,735
Construction in progress 1,760,591 960,861 1,154,199 3,212,639 2,914,790 4,173,500
Improvements 1,237,728 1,251,885 - - 1,237,728 1,251,885
Infrastructure 16,613,244 16,613,244 - - 16,613,244 16,613,244
Buildings 4,746,527 2,511,263 8,797,686 8,120,415 13,544,213 10,631,678
Plant and lines - - 22,599,469 21,461,161 22,599,469 21,461,161
Sewer rights - - 8,569,212 8,569,212 8,569,212 8,569,212
Machinery and equipment 3,343,262 3,242,495 787,554 680,376 4,130,816 3,922,871
Less: accumulated
Depreciation (16,216,025) (15,027,585) (9,711,804) (9,281,067) (25,927,829) (24,308,652)
Total 12,072,185$ 10,015,177$ 32,642,113$ 33,208,533$ 44,714,298$ 43,223,710$
Governmental Activities Business-Type Activities Total
Additional information on the City of St. Joseph's capital assets can be found in Note 5 on page 50 of
this report. Total depreciation expense for 2015 was $2,196,335.
Long-Term Liabilities
At the end of the current fiscal year, the City of St. Joseph had total net bonded debt outstanding of
$21,355,699. Of this amount, $8,620,751 comprises debt backed by the full faith and credit of the
government. The remainder of the City of St. Joseph's debt represents bonds and notes secured by
specified revenue sources (i.e. utility bonds). Other long-term debt includes compensated absences
payable, net pension liabilities and other post-employment benefits.
An illustration of the City's long-term liabilities is included in the table on the following page.
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
18
OUTSTANDING LONG-TERM LIABILITIES
Percent
2015 2014 Change
Governmental Activities
General obligation bonds 1,029,157$ 1,134,323$ -9%
General obligation special assessment bonds 5,731,903 5,800,026 -1%
Public project revenue bonds - 90,000 -100%
General obligation abatement bonds 1,859,691 - 100%
Compensated absences payable 428,803 439,015 -2%
Net other post employment benefits 195,197 183,098 7%
Net pension liability 1,113,073 - 100%
Total governmental activities 10,357,824$ 7,646,462$ 35%
Business-Type Activities
General obligation revenue bonds 8,005,087$ 8,706,244$ -8%
Notes payable 4,729,861 5,072,994 100%
Compensated absences payable 130,582 122,421 7%
Net other post employment benefits 57,227 53,620 7%
Net pension liability 249,768 - 100%
Total business-type activities 13,172,525$ 13,955,279$ -6%
The City of St. Joseph issued $760,000 General Obligation Bonds, Series 2015A in August 2015. The
bond issue funds the Clinton Village and Northland area street improvements; and general equipment
replacements. In addition, the City issued $1,840,000 General Obligation Tax Abatement Bonds, Series
2015B in August 2015 to fund the purchase of the Colts Academy for a future community center.
The City increased the net bonded debt by $1,596,402 on the governmental activities to end the year.
The business-type activities saw a decrease in bonded debt of $1,044,290. The 2015 debt issues were
recorded in governmental activities. The two bonds paid in full reduced bonded debt in governmental
activities.
The City of St. Joseph raised their bond rating to an AA-/Stable rating from A+/Stable rating from
Standard & Poor's for the general obligation debt issued in 2015. According to Standard & Poor's
municipal credit analysis, rating action is based on the city's improved economy, reflected by its
improved projected per capita effective buying income. The City's solid bond rating reflects the City's
financial operations characterized by strong management with good financial policies and practices,
adequate economy and budgetary performance, very strong budgetary flexibility and liquidity, and weak
debt and contingent liability position. Although a large debt liability, the report sites they positively
factored the City's rapids debt amortization (76.5% within the next ten years). The City's proximity to
the St. Cloud metro area factors positively for the City of St. Joseph.
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 $9,241,335
which significantly exceeds of the City of St. Joseph's outstanding pure general obligation debt of
$1,020,000.
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
19
Additional information on the St. Joseph's long-term liabilities can be found in Note 6 on pages 52-56.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The City of St. Joseph experienced a stable financial position at the end of 2015. After many years of
declining market values and slow development the City realized improvements. The taxable market
value increased 0.7% and development activities increased. The City has been able to keep a steady tax
rate and maintain service levels with other revenues and improving process efficiencies.
While the housing market for newly constructed homes has significantly declined since 2008, the City of
St. Joseph experienced growth in both residential and commercial development. The construction of a
community school (K-8) will spur development adjacent to the school site. The City has been working
with a developer to develop a lifecycle housing development on approximately 125 acres near Kennedy
School. The development is anticipated to include a campus with a combination of patio homes,
memory care, independent living apartments and commercial services such as a chapel, beauty salon,
rehabilitation center and bistro/restaurant. When fully developed with the site will accommodate
approximately 200 living units. In the same vicinity is a new patio home development that is nearing
completion; therefore, the developer will be seeking approval of phase 2 in 2016 adding approximately
12 more patio homes. The City is also working with a developer to construct a 40 unit apartment
building serving the elderly allowing for aging in place. The facility will be located centrally in the city
with construction anticipated in the spring of 2016. School enrollment has surpassed planning
expectations. ISD 742 began constructed a 10 classroom addition in 2014/2015 to accommodate the
growth. Other residential developments include Graceview phase 4 which is a phased development with
19 lots in the first phase, and Jasmine Court with 10 single family lots available. As an incentive for
single family construction, city council approved $50,000 in WAC/SAC incentives for the first ten new
homes. The incentive will be carried forward until used. The incentive was depleted in early 2016.
In 2014 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 their home's roofing, exterior, or interior health and safety items that improve
energy efficiency. The homeowner's match is 10-15% of the construction costs. The unused balance at
the end of 2015 was $138,517.
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 2014 city council approved another redevelopment TIF to add a mixed use facility in
downtown. The project is entitled Bayou Blues and Alley Flats. The Bayou Blues facility will include
residential, office space and restaurant. The Alley Flats consists of a four-unit two-story condominium
living space, complete with roof top decks.
In 2009 the Coborn's 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, Coborn's Superstore (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 grocer y store was added to the landscape of the
City. In late 2012, McDonald's opened in the adjacent area. The City also anticipates an auto parts store
to be constructed in mid-2016.
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
20
In addition, the city council approved TIF financing for the Central Minnesota Credit Union to construct
a $4.2M office building for a call center, information technology support/equipment, and other
administrative and support staff. A minimum of 30 employees will work in the facility with room to
expand to 80 employees. The new facility opened in late 2015.
The City is also experiencing new growth in the industrial park. Scenic Specialties landscape business
rehabilitated a barn on their site to create a rustic events center named Rolling Ridge Event Center.
Weddings, corporate gatherings, family gatherings can rent the facility for their event. There are few
options in the Central Minnesota area for a rustic event center. The first wedding was held in October
2015. The City is also working with a current business in the Industrial Park to expand to a new
location.
Other developments include a ten patio-bay townhomes in the Graceview development, a Kwik Trip
convenience store to replace a closed restaurant/bar and athletic fields for the College of St. Benedicts.
The Central Minnesota Housing Partnership (CMHP) was awarded federal grant money to rehabilitate
the 36 unit Cloverdale Townhomes for low to moderate income families. Construction began in late
2014 with occupancy taken in 2015. Finally, the College of St. Benedicts remodeled and expanded their
nursing school facility. The state of the art training facility will draw students to the campus.
Also new in St. Joseph is a government center to house city administration, council chambers and police
department. The City accepted bids for the $4.8M complex in April 2016. Construction is expected to be
completed by February 2017. The current facility is being sold for the current market value. A purchase
agreement was submitted and accepted by the City. The new facility is being constructed on the west
side of the future community center the City purchased in 2015.
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 fluctuations at the state level have significantly impacted government
aid payments made to the City. Further, the taxable market value on properties has just started to come
back the past two years. The Council continues to budget conservatively to keep minimal increases in
the tax rate. As the Nation's 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.
The City's rate structure for the utilities is established to help cover not only the operating costs but the
depreciation as well. Water and sanitary sewer are 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 hired Carl Brown Consulting in 2015 to review the water and sanitary sewer funds current and
future financial health. Mr. Brown determined the current rates were not sufficient to meet the financial
needs of the utilities. He recommended at a minimum a 30% increase in water rates and 24% increase in
sewer rates. At these minimum rate increases, further increases will be needed the next couple years
before the funds would stabilize. The amount of increase will depend somewhat on the growth of the
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
21
City. As development occurs additional access fees are collected offsetting some of the need for
increased usage fees. The Council agreed to the minimum rate beginning in 2016 with a follow up
performance review in September 2016. The City's long-term goal is for each fund to cover operations,
including depreciation, and debt payments through rates.
All the factors were considered in preparing the City of St. Joseph's budget and fee schedule for 2015
and future reporting years. As the City looks forward to 2016, construction of the government center
will begin, construction of the first phase of Field Street is anticipated, improvements to the filtration
system at water treatment plant one will start, a six-hole footgolf course in Northland Park will open,
park planning in Millstream Park will continue, and a potential dog park in the City will continue to be
researched. A busy 2016 is anticipated.
REQUESTS FOR INFORMATION
The financial report is designed to provide a general overview of the City of St. Joseph's finances for all
those with an interest in the City'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.
22
(THIS PAGE LEFT BLANK INTENTIONALLY)
23
BASIC FINANCIAL STATEMENTS
City of St. Joseph
Statement of Net Position
December 31, 2015
Governmental
Activities
Business-Type
Activities Total
Assets
Cash and investments (including cash equivalents)5,894,568$ 484,770$ 6,379,338$
Property tax receivable 27,366 299 27,665
Accounts receivable 28,908 368,315 397,223
Interest receivable 11,869 6,914 18,783
Due from other governments 115,895 298 116,193
Notes receivable 58,816 - 58,816
Lease receivable 231,089 - 231,089
Special assessments receivable
Delinquent 17,259 605 17,864
Deferred 1,479,108 32,102 1,511,210
Prepaid items 77 - 77
Net pension asset 129,607 - 129,607
Capital assets
Land 561,194 377,882 939,076
Easements 25,664 67,915 93,579
Construction in progress 1,760,591 1,154,199 2,914,790
Buildings 4,746,527 8,797,686 13,544,213
Infrastructure 16,613,244 - 16,613,244
Improvements 1,237,728 - 1,237,728
Plant and lines - 22,599,469 22,599,469
Machinery and equipment 3,343,262 787,554 4,130,816
Sewer rights - 8,569,212 8,569,212
Less accumulated depreciation (16,216,025) (9,711,804) (25,927,829)
Capital assets (net of accumulated depreciation)12,072,185 32,642,113 44,714,298
Total assets 20,066,747 33,535,416 53,602,163
Deferred outflows of resources
Deferred outflows of resources related to pensions 339,470 33,738 373,208
Total assets and deferred outflows of resources 20,406,217$ 33,569,154$ 53,975,371$
Liabilities and Net Position
Liabilities
Accounts payable 64,440$ 46,071$ 110,511$
Contracts payable 166,039 31,727 197,766
Due to other governments 4,151 130,896 135,047
Salaries and benefits payable 91,144 12,622 103,766
Interest payable 41,909 60,301 102,210
Bond principal payable (net)
Payable within one year 1,205,000 710,000 1,915,000
Payable after one year 7,415,751 7,295,087 14,710,838
Notes payable (net)
Payable within one year - 358,946 358,946
Payable after one year - 4,370,915 4,370,915
Compensated absences payable
Payable within one year 67,852 7,561 75,413
Payable after one year 360,951 123,021 483,972
Net other post employment benefits (OPEB) obligation 195,197 57,227 252,424
Net pension liability 1,113,073 249,768 1,362,841
Total liabilities 10,725,507 13,454,142 24,179,649
Deferred inflows of resources
Deferred inflows of resources related to lease receivables 231,089 - 231,089
Deferred inflows of resources related to pensions 146,834 22,437 169,271
Total deferred inflows of resources 377,923 22,437 400,360
Net position
Net investment in capital assets 6,427,207 19,907,165 23,972,202
Restricted for
Debt service 2,525,687 - 2,525,687
Other purposes 1,378,650 - 1,378,650
Unrestricted (1,028,757) 185,410 1,518,823
Total net position 9,302,787 20,092,575 29,395,362
Total liabilities, deferred inflows of resources, and net position 20,406,217$ 33,569,154$ 53,975,371$
See notes to financial statements.24
Program Revenues
Functions/programs Expenses
Charges for
Services
Operating Grants
and Contributions
Capital Grants
and Contributions
Governmental
Activities
Business-type
Activities Total
Governmental activities
General government 641,393$ 79,540$ 22,823$ -$ (539,030)$ -$ (539,030)$
Public safety 1,547,886 434,735 145,300 10,519 (957,332) - (957,332)
Public works 1,278,903 20,902 - 375,266 (882,735) - (882,735)
Economic development 358,378 48,711 153,355 - (156,312) - (156,312)
Culture and recreation 439,504 18,723 5,200 23,684 (391,897) - (391,897)
Interest on long-term debt 287,934 - - - (287,934) - (287,934)
Total governmental activities 4,553,998 602,611 326,678 409,469 (3,215,240) - (3,215,240)
Business-type activities
Water 912,963 924,640 - 12,104 - 23,781 23,781
Sanitary sewer 1,001,928 886,858 6,374 - - (108,696) (108,696)
Refuse 287,877 284,585 383 - - (2,909) (2,909)
Storm water 180,681 98,133 99 - - (82,449) (82,449)
Street light utility 53,751 60,564 17 - - 6,830 6,830
Total business-type activities 2,437,200 2,254,780 6,873 12,104 - (163,443) (163,443)
Total governmental and
business-type activities 6,991,198$ 2,857,391$ 333,551$ 421,573$ (3,215,240) (163,443) (3,378,683)
General revenues
Property Taxes 1,685,639 44,656 1,730,295
Tax Increments 41,385 - 41,385
Sales Taxes 405,859 - 405,859
Franchise Fees 124,283 - 124,283
State Aids 910,488 - 910,488
Unrestricted Investment Earnings 76,419 36,799 113,218
Gain on sale of assets - 2,810 2,810
Transfers (139,306) 139,306 -
Total general revenues and transfers 3,104,767 223,571 3,328,338
Change in net position (110,473) 60,128 (50,345)
Net position - beginning 10,151,205 20,262,205 30,413,410
Change in accounting principle (737,945) (229,758) (967,703)
Net position - beginning restated 9,413,260 20,032,447 29,445,707
Net position - ending 9,302,787$ 20,092,575$ 29,395,362$
2
5
See notes to financial statements.
And Changes In Net Position
Net (expense) Revenue
City of St. Joseph
Statement of Activities
Year Ended December 31, 2015
Special Revenue
General Fund
(101, 102,
105, 108)
State Collected
Sales Tax (200)
Other
Governmental
Funds
Total
Governmental
Funds
Assets
Cash and investments 2,086,928$ 1,212,524$ 2,595,338$ 5,894,790$
Taxes receivable - delinquent 19,357 - 8,009 27,366
Special assessments receivable
Delinquent 1,617 - 15,642 17,259
Deferred 3,636 - 1,475,472 1,479,108
Accounts receivable 28,878 - 30 28,908
Interest receivable 4,801 - 7,680 12,481
Due from other funds 6,600 - 11,500 18,100
Due from other governments 13,452 83,730 18,713 115,895
Notes receivable - - 58,816 58,816
Lease receivable 231,089 - - 231,089
Prepaid items 77 - - 77
Total assets 2,396,435$ 1,296,254$ 4,191,200$ 7,883,889$
Liabilities, Deferred Inflows of
Resources and Fund Balances
Liabilities
Accounts payable 44,589$ 13$ 19,838$ 64,440$
Contracts payable - 29,465 136,574 166,039
Due to other funds - - 18,100 18,100
Due to other governments 4,151 - - 4,151
Salaries and benefits payable 91,144 - - 91,144
Total liabilities 139,884 29,478 174,512 343,874
Deferred inflows of resources
Unavailable revenue - property taxes 19,357 - 8,009 27,366
Unavailable revenue - special assessments 5,253 - 1,491,114 1,496,367
Unavailable revenue - notes receivable - - 58,816 58,816
Unavailable revenue - leases receivable 231,089 - - 231,089
Total deferred inflows of resources 255,699 - 1,557,939 1,813,638
Fund balances
Nonspendable 77 - - 77
Restricted 20,366 1,266,776 1,331,440 2,618,582
Committed - - 85,665 85,665
Assigned 664,604 - 1,057,818 1,722,422
Unassigned 1,315,805 - (16,174) 1,299,631
Total fund balances 2,000,852 1,266,776 2,458,749 5,726,377
Total liabilities, deferred inflows
Of resources and fund balances 2,396,435$ 1,296,254$ 4,191,200$ 7,883,889$
See notes to financial statements.26
Balance Sheet - Governmental Funds
City of St. Joseph
Year Ended December 31, 2015
City of St. Joseph
Reconciliation of the Balance Sheet to
The Statement of Net Position - Governmental Funds
Total fund balances - governmental funds 5,726,377$
Capital assets used in governmental activities are not current financial resources
Cost of capital assets 28,288,210
Less accumulated depreciation (16,216,025)
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
Bond principal payable, net of premiums and discounts (8,620,751)
Compensated absences payable (428,803)
Net OPEB obligation (195,197)
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.
Property taxes 27,366
Special assessments 17,259
Other long-term assets are not available to pay for current expenditures and,
therefore, are deferred in the funds.
Deferred special assessments 1,479,108
Notes receivable 58,816
Deferred outflows of resources and deferred inflows of resources are
created as a result of various differences related to pensions that are
not recognized in the governmental funds.
Deferred inflows of resources related to pensions (146,834)
Deferred outflows of resources related to pensions 339,470
Fire relief net pension asset 129,607
Net pension liability (1,113,073)
The water access capital project fund is proprietary in nature and, therefore,
included in the business-type activities in the statement of net position.(195)
The sewer access capital project fund is proprietary in nature and, therefore,
i]ncluded in the business-type activities in the statement of net position.(639)
Governmental funds do not report a liability for accrued interest
due and payable.(41,909)
9,302,787$
See notes to financial statements.27
Amounts reported for governmental activities in the statement of net position
and, therefore, are not reported as assets in governmental funds.
Total net position - governmental activities
are different because
Year Ended December 31, 2015
Special Revenue
General Fund
(101, 102,
105, 108)
State Collected
Sales Tax (200)
Other
Governmental
Funds
Total
Governmental
Funds
Revenues
Property taxes 1,107,058$ -$ 600,291$ 1,707,349$
Tax increments - - 41,385 41,385
Sales taxes - 405,859 - 405,859
Special assessments 3,590 - 507,856 511,446
Franchise fees 124,283 - - 124,283
Licenses and permits 152,158 - - 152,158
Intergovernmental 1,107,840 - 153,355 1,261,195
Charges for services 270,508 - 223,049 493,557
Fines and forfeitures 50,489 - - 50,489
Miscellaneous
Investment income 18,206 - 41,359 59,565
Contributions and donations 43,825 110 6,650 50,585
Revolving loan repayments - - 11,149 11,149
Other 49,952 - 470 50,422
Total revenues 2,927,909 405,969 1,585,564 4,919,442
Expenditures
Current
General government 582,258 - - 582,258
Public safety 1,376,624 - - 1,376,624
Public works 329,004 - 5,940 334,944
Culture and recreation 264,168 - 7,233 271,401
Economic development - - 358,143 358,143
Debt service
Principal - - 1,015,000 1,015,000
Interest and other charges - - 282,775 282,775
Capital outlay
General government 12,813 - 352 13,165
Public safety 39,415 - 50,102 89,517
Public works 67,762 - 797,930 865,692
Culture and recreation 10,468 2,419,472 100,373 2,530,313
Total expenditures 2,682,512 2,419,472 2,617,848 7,719,832
Excess of revenues over
(under) expenditures 245,397 (2,013,503) (1,032,284) (2,800,390)
Other Financing Sources (uses)
Insurance recoveries 1,501 - - 1,501
Sale of property 278 - 22,403 22,681
Bonds issued - 1,794,000 806,000 2,600,000
Bond premium - - 28,021 28,021
Transfers in 14,562 - 117,140 131,702
Transfers out (1,800) - (575,552) (577,352)
Total other financing sources (uses)14,541 1,794,000 398,012 2,206,553
Net change in fund balances 259,938 (219,503) (634,272) (593,837)
Fund Balances
Beginning of year 1,740,914 1,486,279 3,093,021 6,320,214
End of year 2,000,852$ 1,266,776$ 2,458,749$ 5,726,377$
See notes to financial statements.28
City of St. Joseph
Statement of Revenues, Expenditures and
Changes in Fund Balances - Governmental Funds
Year Ended December 31, 2015
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances to the Statement
Total net change in fund balances - governmental funds (593,837)$
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.
Capital outlays 3,458,304
Capital contributions 5,350
Depreciation expense (1,254,066)
Loss on disposal (11,024)
Transferred to proprietary funds (141,556)
Principal payments on long-term debt are recognized as expenditures in the governmental
funds but as an increase in net position in the Statement of Activities.1,015,000
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.
Accrued interest payable (21,778)
Amortization of bond discounts, premiums and issuance charges 16,619
Proceeds from long-term debt are recognized as an other financing source in the governmental
funds but as a decrease in net position in the statement of activities.(2,600,000)
The governmental funds report the effect of premiums, discounts and
similar items when debt is first issued, whereas these amounts are deferred and amortized
in the statement of activities.(28,021)
Compensated absences and OPEB payments are recognized as paid in the
governmental funds but recognized as the expense is incurred in the statement of activities.(1,889)
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.
Delinquent special assessments (97,987)
Delinquent property taxes (21,710)
Certain revenues in the statement of activities that do not provide current financial resources
are not reported as revenues in the funds.
Deferred special assessments (98,018)
Notes receivable 37,092
Governmental funds recognized pension contributions as expenditures at the
time of payment whereas the statement of activities factors in items related to
pensions on a full accrual perspective.
Pension expense (58,013)
State aid related to pension expense 5,130
The water access capital project fund is proprietary in nature and, therefore, is reported
with business-type activities.5,476
The sewer access capital project fund is proprietary in nature and, therefore, is reported
with business-type activities.274,455
Change in net position - governmental activities (110,473)$
See notes to financial statements.29
of Activities - Governmental Funds
City of St. Joseph
Year Ended December 31, 2015
City of St. Joseph
Statement of Revenues, Expenditures and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2015
Original
Budget
Final
Budget
Actual
Amounts
Revenues
Property taxes 1,065,885$ 1,065,885$ 1,107,058$ 41,173$
Special assessments 2,000 2,000 3,590 1,590
Franchise fees 120,950 120,950 124,283 3,333
Licenses and permits 99,010 99,010 152,158 53,148
Intergovernmental 1,067,090 1,067,090 1,107,840 40,750
Charges for services 261,530 261,530 270,508 8,978
Fines and forfeitures 47,500 47,500 50,489 2,989
Miscellaneous revenues
Investment income 27,500 27,500 18,206 (9,294)
Contributions and donations 18,250 18,250 43,825 25,575
Other 46,900 46,900 49,952 3,052
Total revenues 2,756,615 2,756,615 2,927,909 171,294
Expenditures
Current
General government 641,515 641,515 582,258 (59,257)
Public safety 1,471,680 1,471,680 1,376,624 (95,056)
Public works 378,255 378,255 329,004 (49,251)
Culture and recreation 222,575 222,575 264,168 41,593
Capital outlay
General government 3,010 3,010 12,813 9,803
Public safety 62,250 62,250 39,415 (22,835)
Public works 50,000 50,000 67,762 17,762
Culture and recreation - - 10,468 10,468
Total expenditures 2,829,285 2,829,285 2,682,512 (146,773)
Excess of revenues over
(under) expenditures (72,670) (72,670) 245,397 318,067
Other Financing Sources (uses)
Insurance recoveries - - 1,501 1,501
Sale of property 200 200 278 78
Transfers in 67,930 67,930 14,562 (53,368)
Transfers out - - (1,800) (1,800)
Total other financing sources (uses)68,130 68,130 14,541 (53,589)
Net change in fund balances (4,540)$ (4,540)$ 259,938 264,478$
Fund Balances
Beginning of year 1,740,914
End of year 2,000,852$
See notes to the financial statements.30
Variance with
Final Budget -
Over (Under)
City of St. Joseph
Statement of Net Position - Proprietary Funds
Water (601)
Sanitary
Sewer (602)Refuse (603)
Storm Water
(651)
Street Light
Utility (652)Total
Assets
Current assets
Cash and investments 2,354$ 750$ 231,906$ 229,796$ 19,742$ 484,548$
Taxes receivable - delinquent 299 - - - - 299
Special assessments receivable
Delinquent 605 - - - - 605
Deferred 23,361 89 179 8,456 17 32,102
Accounts receivable 121,904 162,147 54,505 18,347 11,412 368,315
Interest receivable 4,830 166 622 644 40 6,302
Due from other governments 298 - - - - 298
Total current assets 153,651 163,152 287,212 257,243 31,211 892,469
Noncurrent Assets
Capital assets
Land 372,941 4,941 - - - 377,882
Easements - - - 67,915 - 67,915
Construction in Progress 523,622 448,735 - 181,842 - 1,154,199
Buildings 7,502,432 1,295,254 - - - 8,797,686
Plants and Lines 9,646,676 8,079,001 - 4,873,792 - 22,599,469
Machinery and Equipment 207,183 532,147 45,842 2,382 - 787,554
Sewer rights - 8,569,212 - - - 8,569,212
Total capital assets 18,252,854 18,929,290 45,842 5,125,931 - 42,353,917
Less accumulated depreciation (4,446,647) (4,036,157) (19,618) (1,209,382) - (9,711,804)
Net capital assets 13,806,207 14,893,133 26,224 3,916,549 - 32,642,113
Total assets 13,959,858 15,056,285 313,436 4,173,792 31,211 33,534,582
Deferred Outflows of Resources
Deferred outflows of resources related to pensions 14,915 12,246 2,425 4,121 31 33,738
Total assets and deferred outflows of 13,974,773$ 15,068,531$ 315,861$ 4,177,913$ 31,242$ 33,568,320$
Liabilities and Net Position
Current liabilities
Accounts payable 8,654$ 11,929$ 18,792$ 2,740$ 3,956$ 46,071$
Contracts payable 31,727 - - - - 31,727
Due to other governments 1,206 129,690 - - - 130,896
Salaries and benefits payable 5,575 5,000 662 1,081 304 12,622
Interest payable 11,849 48,452 - - - 60,301
Long-term liabilities due
Within one year 548,231 527,177 315 658 126 1,076,507
Total current liabilities 607,242 722,248 19,769 4,479 4,386 1,358,124
Noncurrent liabilities
Compensated absences 53,837 53,837 8,281 11,315 3,312 130,582
Notes payable, net - 4,729,861 - - - 4,729,861
Bonds payable, net 5,945,462 2,059,625 - - - 8,005,087
Net opeb obligation 27,763 22,664 3,400 3,400 - 57,227
Net pension liability 110,418 90,658 17,954 30,509 229 249,768
Less amounts due within one year (548,231) (527,177) (315) (658) (126) (1,076,507)
Total noncurrent liabilities 5,589,249 6,429,468 29,320 44,566 3,415 12,096,018
Total liabilities 6,196,491 7,151,716 49,089 49,045 7,801 13,454,142
Deferred inflows of resources
Deferred inflows of resources related to pensions 9,919 8,144 1,613 2,740 21 22,437
Net position
Net investment in capital assets 7,860,745 8,103,647 26,224 3,916,549 - 19,907,165
Unrestricted (92,382) (194,976) 238,935 209,579 23,420 184,576
Total net position 7,768,363 7,908,671 265,159 4,126,128 23,420 20,091,741
Total liabilities, deferred inflows
of resources and net position 13,974,773$ 15,068,531$ 315,861$ 4,177,913$ 31,242$ 33,568,320$
See notes to financial statements.31
December 31, 2015
City of St. Joseph
Reconciliation of the Statement
of Net Position - Business-Type Activities
December 31, 2015
Total net position - proprietary funds 20,091,741$
The water access capital project fund is proprietary in nature and
relates to water improvements for the applicable funds. Therefore,
it is included as a business-type activity.195
The sewer access capital project fund is proprietary in nature and
relates to sewer improvements for the applicable funds. Therefore,
it is included as a business-type activity.639
20,092,575$
See notes to financial statements.32
Amounts reported for business-type activities in the statement of net position
Total net position - business-type activities
are different because
Water (601)
Sanitary
Sewer (602)Refuse (603)
Storm Water
(651)
Street Light
Utility (652)Total
Operating revenues
Charges for services 770,889$ 840,148$ 284,585$ 98,133$ 60,564$ 2,054,319$
Operating Expenses
Wages and salaries 182,549 120,236 29,252 43,633 3,625 379,295
Materials and supplies 43,239 40,984 2,558 66 - 86,847
Repairs and maintenance 23,893 7,710 2,065 23,664 3,394 60,726
Professional services 24,395 13,170 9,301 13,852 901 61,619
Insurance 12,092 10,683 - - - 22,775
Utilities 61,591 15,291 590 - 44,428 121,900
Depreciation 405,281 441,623 6,606 97,759 - 951,269
Contracted services - 196,255 236,399 - - 432,654
Miscellaneous 9,383 2,415 1,106 1,707 1,403 16,014
Total operating expenses 762,423 848,367 287,877 180,681 53,751 2,133,099
Operating income (loss)8,466 (8,219) (3,292) (82,548) 6,813 (78,780)
Nonoperating revenues
(expenses)
Investment income 25,917 799 2,999 3,105 192 33,012
Special assessments 12,104 374 383 99 17 12,977
Gain on disposal of asset - 2,810 - - - 2,810
Property taxes 44,656 - - - 44,656
Operating grants and contributions - 6,000 - - - 6,000
Interest expense (159,297) (158,874) - - - (318,171)
Amortization of bond premium 8,757 5,313 - - - 14,070
Other income 30,414 5,865 - - 36,279
Total nonoperating revenues
(expenses)(37,449) (137,713) 3,382 3,204 209 (168,367)
Loss before capital
Contributions and transfers (28,983) (145,932) 90 (79,344) 7,022 (247,147)
Capital contributions 83,695 38,447 - 19,414 - 141,556
Transfers in 255,725 350,500 - - - 606,225
Transfers out (37,910) (103,150) (750) (18,765) - (160,575)
Change in net position 272,527 139,865 (660) (78,695) 7,022 340,059
Net Position
Beginning of year 7,597,408 7,852,201 282,334 4,232,888 16,609 19,981,440
Change in accounting principle (101,572) (83,395) (16,515) (28,065) (211) (229,758)
Beginning of year, restated 7,495,836 7,768,806 265,819 4,204,823 16,398 19,751,682
End of year 7,768,363$ 7,908,671$ 265,159$ 4,126,128$ 23,420$ 20,091,741$
See notes to financial statements.33
City of St. Joseph
Statement of Revenues, Expenses and Changes
in Net Position - Proprietary Funds
Year Ended December 31, 2015
City of St. Joseph
Reconciliation of the Statement of Revenues, Expenses
and Changes in Net Position - Business-Type Activities
Total net change in fund net position - proprietary funds 340,059$
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.(5,476)
Recognized current year activity from the sewer access capital project fund
with the business-type activities.(274,455)
Capital contributions from governmental activities (141,556)
Transfers in of capital assets from governmental activities 141,556
Change in net position - business-type activities 60,128$
See notes to financial statements.34
Year Ended December 31, 2015
Water (601)
Sanitary
Sewer (602)
Refuse
(603)
Storm Water
(651)
Street Light
Utility (652)Total
Cash Flows - Operating Activities
Receipts from customers and users 768,773$ 808,736$ 288,806$ 99,095$ 61,659$ 2,027,069$
Payments to suppliers (142,025) (446,678) (257,023) (36,683) (50,663) (933,072)
Payments to employees (171,887) (110,781) (27,901) (44,954) (1) (355,524)
Other miscellaneous receipts 73,737 12,448 437 3,213 33 89,868
Net cash flows - operating activities 528,598 263,725 4,319 20,671 11,028 828,341
Cash Flows - Noncapital Financing
Activities
Transfer from other funds 255,725 350,500 - - - 606,225
Transfer to other funds (37,910) (103,150) (750) (18,765) - (160,575)
Net cash flows - noncapital financing
Activities 217,815 247,350 (750) (18,765) - 445,650
Cash Flows - Capital and Related
Financing Activities
Principal paid on debt (525,000) (505,220) - - - (1,030,220)
Interest paid on debt (160,713) (170,926) - - - (331,639)
Proceeds from disposal of capital assets - 2,810 - - - 2,810
Acquisition of capital assets (103,329) (139,360) (302) (302) - (243,293)
Net cash flows - capital and related
Financing activities (789,042) (812,696) (302) (302) - (1,602,342)
Cash Flows - Investing Activities
Interest and dividends received 25,055 2,962 2,807 2,867 162 33,853
Net change in cash and cash equivalents (17,574) (298,659) 6,074 4,471 11,190 (294,498)
Cash and Cash Equivalents
Beginning of year 19,928 299,409 225,832 225,325 8,552 779,046
End of year 2,354$ 750$ 231,906$ 229,796$ 19,742$ 484,548$
Reconciliation Of Operating
Income (loss) To Net Cash Flows -
Operating Activities
Operating income (loss)8,466$ (8,219)$ (3,292)$ (82,548)$ 6,813$ (78,780)$
Adjustments to reconcile operating loss
to net cash flows - operating activities
Depreciation expense 405,281 441,623 6,606 97,759 - 951,269
Pension Expense 3,850 3,161 627 1,063 8 8,709
Other income 86,875 12,239 383 99 17 99,613
Accounts receivable (1,818) (31,412) 4,221 962 1,095 (26,952)
Special assessments receivable (13,138) 209 54 3,114 16 (9,745)
Due from other governments (298) - - - - (298)
Prepaid items 125 125 - - - 250
Accounts payable 1,983 (8,078) (2,411) 2,606 (537) (6,437)
Contracts payable 31,727 (185,741) - - - (154,014)
Due to other governmental units (1,267) 33,524 (2,593) - - 29,664
Salaries payable 1,425 1,228 70 267 304 3,294
Compensated absences payable 3,638 3,638 439 (2,866) 3,312 8,161
Net opeb obligation 1,749 1,428 215 215 - 3,607
Total adjustments 520,132 271,944 7,611 103,219 4,215 907,121
Net cash flows - operating activities 528,598$ 263,725$ 4,319$ 20,671$ 11,028$ 828,341$
Non Cash Activities
Capital asset contributions from
governmental funds 83,695$ 38,447$ -$ 19,414$ -$ 141,556$
See notes to financial statements.35
City of St. Joseph
Statement Of Cash Flows - Proprietary Funds
Year Ended December 31, 2015
36
(THIS PAGE LEFT BLANK INTENTIONALLY)
City of St. Joseph
Notes to Financial Statements
37
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of St. Joseph (the "City") 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 represent 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 organization's 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. 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.
City of St. Joseph
Notes to Financial Statements
38
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 2015, the City contributed $2,422
to the organization. It is reported as a special revenue fund of the City of Sauk Rapids. Complete
financial statements can be obtained from: City of Sauk Rapids, 250 Summit Avenue North, Sauk
Rapids, Minnesota 56379.
The City of St. Cloud Human Rights Office is a joint venture between the cities of St. Cloud,
St. Joseph, Sauk Rapids and Sartell, which works to enhance the lives of the citizens of the
communities. During 2015, the City contributed $0 to the organization. It is reported as an agency
fund of the City of St. Cloud. Complete financial statements can be obtained from: City of St.
Cloud, 400 2nd 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.
City of St. Joseph
Notes to Financial Statements
39
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 City's primary operating fund. It accounts for all financial resources of
the general City, except those required to be accounted for in another fund.
State Collected Sales Tax Special Revenue Fund – This fund accounts for the receipts associated with
the special sales tax collections. In addition, the fund accounted for a building purchase and related
financing.
Proprietary Funds
Water Fund – This Fund accounts for the operations of the City's water utility.
Sanitary Sewer Fund – This Fund accounts for the operations of the City's sanitary sewer utility.
Refuse Fund – This Fund accounts for the operations of the City's refuse and compost utility.
Storm Water Fund – This Fund accounts for the operations of the City's storm water utility.
Street Light Utility Fund – This Fund accounts for the operations of the City's street light utility.
City of St. Joseph
Notes to Financial Statements
40
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 City's 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 fund's 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 Outflows/ Inflows of Resources, and Net Position or Equity
1. Cash and Investments
The City's 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.
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 City's 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.
City of St. Joseph
Notes to Financial Statements
41
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
1. Cash and Investments (Continued)
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 City's 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 City's 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 City's 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.
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.
City of St. Joseph
Notes to Financial Statements
42
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
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:
Years
Land improvements 5-20
Buildings 30-40
Building improvements 15
Infrastructure 10-50
Sewer rights 20-50
Furniture and fixtures 5-10
Vehicles 5-20
Equipment 3-7
Machinery 5-7
Assets
5. Deferred Outflows/ Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element represents a consumption
of net position that applies to future periods and so will not be recognized as an outflow of resources
(expense/expenditure) until that time. The City has one item that qualifies for reporting in this
category. The City presents deferred outflows of resources on the Statements of Net Position for
deferred outflows of resources related to pensions. Deferred outflows of resources related to pensions
results from the net effect of the change in proportionate share and employer contributions paid to
PERA subsequent to the measurement date.
City of St. Joseph
Notes to Financial Statements
43
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
5. Deferred Outflows/ Inflows of Resources (Continued)
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 future periods and so will
not be recognized as an inflow of resources (revenue) until that time. The City has two items that
qualify for reporting in this category. The City presents deferred inflows of resources on the
Governmental Fund Balance Sheet as unavailable revenue. The governmental funds report
unavailable revenues from four sources: property taxes, special assessments, notes receivable, and
leases receivable. These amounts are deferred and recognized as an inflow of resources in the period
that the amounts become available. The City presents deferred inflows of resources on the
Statements of Net Position for deferred inflows of resources related to pensions and leases
receivable. Deferred inflows of resources related to pensions results from the net difference between
projected and actual earnings on plan investments.
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 City's 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.
City of St. Joseph
Notes to Financial Statements
44
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources and Net Position or Equity
(Continued)
8. Pensions
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and
pension expense, information about the fiduciary net position of the Public Employees Retirement
Association (PERA) and the relief association and additions to/deductions from PERA's and the
relief association's fiduciary net position have been determined on the same basis as they are reported
by PERA and the relief association except that PERA's fiscal year end is June 30. For this purpose,
plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds
are recognized when due and payable in accordance with the benefit terms. Investments are reported
at fair value.
9. 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.
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 – These are amounts that are constrained by the City's intent to be
used for specific purposes but are neither restricted nor committed. Assignments are made
by the City's Finance Director based on the City Council's direction.
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.
City of St. Joseph
Notes to Financial Statements
45
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
9. Fund Equity (Continued)
a) Classification (Continued)
When both restricted and unrestricted resources are available for use, it is the City's policy to first
use restricted resources, and then use unrestricted resources as they are needed. When committed,
assigned, and unassigned resources are available for use, it is the City's policy to use resources in
the following order: committed, assigned, and unassigned.
b) Minimum Fund Balance
The City's target General Fund balance is to maintain working capital, a portion of the
unassigned balance, in the amount of four to six months of the next year's budgeted expenditures
of the General Fund, excluding the fire department.
10. Net Position
Net position represents the difference between assets and deferred outflows of resources and
liabilities and deferred inflows of resources 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 $2,362,170 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 $1,378,650
includes $17,330 for tax incrementing financing, $1,266,776 in state collected sales tax restricted by
enabling legislation, $59,727 in park dedication fees, $2,400 restricted by donors for future projects,
$12,051 in revolving loan funds restricted for EDA projects and $20,366 of restricted PEG access
fees.
11. Use of Estimates
The preparation of 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. Estimates also affect the reported amounts of revenues and
expenditures/expenses during the reporting period. Actual results could differ from those estimates.
City of St. Joseph
Notes to Financial Statements
46
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.
5. Expenditures may not legally exceed budgeted appropriations at the department level. No fund's
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. Budgetary control for the remaining special
revenue fund is done through the use of project controls when the council authorizes the project.
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, 2015.
Nonmajor governmental funds
Special revenue
TIF 2-2 St. Joseph Meat Market 256$
TIF 2-3 Bayou Blues/ Alley Flat 4,263
TIF 3-1 Central Minnesota Credit Union 5,597
G.O. Capital Improvement Plan Bonds of 2011A 6,058
This deficit will be eliminated with future tax increment revenues and future debt levies.
City of St. Joseph
Notes to Financial Statements
47
NOTE 2 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
C. Disbursements in Excess of Appropriations
Disbursements exceeded appropriations in the following Fund for the year ended December 31, 2015.
Disbursements Appropriations
Economic Development Authority 267,967$ 130,595$
NOTE 3 – DEPOSITS AND INVESTMENTS
A. Deposits
Cash balances of the City's funds are combined (pooled) and invested to the extent available in various
investments authorized by Minnesota Statutes. Each fund's portion of this pool (or pools) is displayed in
the financial statements as "cash and cash equivalents" or "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, 2015, the City's bank balance was not exposed to
custodial credit risk because it was fully insured through the FDIC or NCUA and fully collateralized
with securities held by the pledging financial institutions trust department or agent and in the City's
name. As of December 31, 2015, the City's deposits had a carrying value as shown below.
Certificates of deposit 1,827,147$
Checking 471,388
Savings 1,329,978
Total 3,628,513$
B. Investments
As of December 31, 2015, the City had the following investments:
Value Maturity (Years)Rating
Brokered certificates of deposit 1,962,177$ 3.30 N/A
Brokered money market 917 N/A N/A
Government bonds/ notes 787,456 7.09 AAA
Total 2,750,550$
Credit Risk: As of December 31, 2015, the City's investments were rated as listed in the table above.
City of St. Joseph
Notes to Financial Statements
48
NOTE 3 – DEPOSITS AND INVESTMENTS (CONTINUED)
B. Investments (Continued)
Concentration of Credit Risk: As of December 31 2015, the City's investment in government securities,
Federal Home Loan Banks (28.6%), and investments of CD's, ST Bank of India (8.9%), Ally Bank
(7.8%), GE Money Bank- UT (7.3%), GE Captial Financial Inc.- UT (7.3%), American Express – Salt
Lake City, UT (8.9%), Capital One Bank – Glen Allen (8.9%), and Discover Greenwood, DE (7.8%)
exceeded 5% of the City's total investment portfolio. Money market accounts are not subject to
concentration of credit risk.
C. Deposits and Investments
The following is a summary of deposits and investments as of December 31, 2015:
Deposits (Note 3.A.)3,628,513$
Investments (Note 3.B.)2,750,550
Petty cash 275
Total 6,379,338$
Deposits and investments are presented in the December 31, 2015, basic financial statements as follows:
Statement of Net Position
Cash and Investments 6,379,338$
NOTE 4 – INTERFUND BALANCES AND TRANSFERS
A. Interfund Balances
The composition of interfund balances as of December 31, 2015, is as follows:
General fund 6,600$
Other governmental funds 11,500
Total 18,100$
The due from/due to other funds balances represent loans made to cover tax increment financing (TIF)
consulting costs to establish the TIF districts and to cover a cash deficit.
City of St. Joseph
Notes to Financial Statements
49
NOTE 4 – INTERFUND BALANCES AND TRANSFERS (CONTINUED)
B. Transfers
The composition of interfund transfers as of December 31, 2015, is as follows:
Transfer In Transfer Out Description Amount
General fund Other governmental funds Close fund 562$
General fund Other governmental funds
Transfer tanker reserve to seal
coating reserve 7,000
General fund Water Transfer retirement reserve funding 2,910
General fund Sanitary sewer Transfer retirement reserve funding 2,825
General fund Refuse Transfer retirement reserve funding 750
General fund Storm water Transfer retirement reserve funding 515
Other governmental funds General fund Transfer for equipment purchase 1,800
Other governmental funds Other governmental funds
Reimburse fund for tif
development costs 9,134
Other governmental funds Other governmental funds
Allocate funds to the revolving
loan program 7,951
Other governmental funds Other governmental funds Reimburse wac/ sac incentives 10,000
Other governmental funds Other governmental funds Close fund 5
Other governmental funds Water Annual transfer for bond payment 35,000
Other governmental funds Sanitary sewer Annual transfer for bond payment 35,000
Storm water Annual transfer for bond payment 18,250
Water Other governmental funds Annual transfer for bond payment 190,400
Water Sanitary sewer
Transfer costs funded with the
main lift station project 58,325
Water Sanitary sewer Annual transfer for bond payment 7,000
Sanitary sewer Other governmental funds Annual transfer for bond payment 350,500
737,927$
Other governmental funds
City of St. Joseph
Notes to Financial Statements
50
NOTE 5 – CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2015, was as follows:
Beginning Ending
Balance Increases Decreases Balance
Governmental Activities
Capital assets not being depreciated
Land 457,194$ 104,000$ -$ 561,194$
Easements 5,820 19,844 - 25,664
Construction in progress 960,861 799,730 - 1,760,591
Total capital assets
Not being depreciated 1,423,875 923,574 - 2,347,449
Capital assets being depreciated
Buildings 2,511,263 2,235,264 - 4,746,527
Infrastructure 16,613,244 - - 16,613,244
Improvements 1,251,885 1,500 15,657 1,237,728
Machinery and equipment 3,242,495 161,760 60,993 3,343,262
Total capital assets
Being depreciated 23,618,887 2,398,524 76,650 25,940,761
Less accumulated depreciation for
Buildings 1,029,155 137,882 - 1,167,037
Infrastructure 11,403,690 859,265 - 12,262,955
Improvements 460,747 52,942 15,656 498,033
Machinery and equipment 2,133,993 203,977 49,970 2,288,000
Total accumulated
Depreciation 15,027,585 1,254,066 65,626 16,216,025
Total capital assets being
depreciated, net 8,591,302 1,144,458 11,024 9,724,736
Governmental activities capital
assets, net 10,015,177$ 2,068,032$ 11,024$ 12,072,185$
City of St. Joseph
Notes to Financial Statements
51
NOTE 5 – CAPITAL ASSETS (CONTINUED)
Beginning Ending
Balance Increases Decreases Balance
Business-Type Activities
Capital assets not being depreciated
Land 377,882$ -$ -$ 377,882$
Easements 67,915 - - 67,915
Construction in progress 3,212,639 203,965 2,262,405 1,154,199
Total capital assets
not being depreciated 3,658,436 203,965 2,262,405 1,599,996
Capital assets being depreciated
Buildings 8,120,415 1,195,254 517,983 8,797,686
Plant and lines 21,461,161 1,138,308 - 22,599,469
Machinery and equipment 680,376 109,728 2,550 787,554
Sewer rights 8,569,212 - - 8,569,212
Total capital assets
being depreciated 38,831,164 2,443,290 520,533 40,753,921
Less accumulated depreciation for
Buildings 2,053,695 214,141 517,982 1,749,854
Plant and lines 5,505,598 465,488 - 5,971,086
Machinery and equipment 455,551 42,797 2,550 495,798
Sewer rights 1,266,223 228,843 - 1,495,066
Total accumulated
depreciation 9,281,067 951,269 520,532 9,711,804
Total capital assets being
depreciated, net 29,550,097 1,492,021 1 31,042,117
Business-type activities captial
assets, net 33,208,533$ 1,695,986$ 2,262,406$ 32,642,113$
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities
General government 38,251$
Public safety 123,445
Public works 905,133
Culture and recreation 178,002
Economic development 235
Total depreciation expense - governmental activities 1,245,066$
Business-type activities
Water 405,281$
Sanitary sewer 441,623
Refuse 6,606
Storm sewer 97,759
Total depreciation expense - business-type activities 951,269$
City of St. Joseph
Notes to Financial Statements
52
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 special sales tax collections, 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 20 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
Issue Interest Original Final Principal Due Within
Date Rate Issue Maturity Outstanding One Year
Governmental Activities
G.O. Bonds, Including Refunding Bonds
G.O. capital improvement plan
Refunding bonds 2009b 09/03/09 1.10%-3.75%495,000$ 12/01/18 175,000$ 55,000$
G.O. refunding bonds of 2011a 11/10/11 2.00%430,000 10/01/17 150,000 75,000
G.O. certificates of indebtedness
of 2011a 11/10/11 2.00%-2.40%390,000 10/01/21 245,000 40,000
G.O. capital improvement plan
bonds of 2011a 11/10/11 2.00%-2.40%195,000 10/01/21 120,000 20,000
G.O. certificates of indebtedness of 2013a 09/01/13 2.00%265,000 12/01/18 165,000 50,000
G.O. equipment certificates 2015a 08/13/15 1.20%-2.00%165,000 12/01/20 165,000 30,000
Total G.O. Bonds 1,020,000 270,000
G.O. Special Assessment Bonds
G.O. improvement crossover refunding
bonds of 2009a 03/19/09 1.25%-2.90%2,555,000 12/01/17 690,000 340,000
G.O. improvement refunding bonds of 2010b 09/28/10 2.00%-3.25%1,035,000 12/01/20 665,000 130,000
G.O. improvement bonds of 2010b 09/28/10 2.00%-3.25%790,000 12/01/25 555,000 50,000
G.O. improvement crossover
refunding bonds of 2011a 11/10/11 2.00%-2.40%1,040,000 10/01/21 795,000 125,000
G.O. Improvement bonds of 2013a 09/01/13 2.00%-3.00%405,000 12/01/24 375,000 30,000
G.O. improvement bonds of 2014a 06/15/14 2.00%-3.40%2,010,000 12/01/30 2,010,000 110,000
G.O. improvement bonds of 2015a 08/13/15 1.20%-3.00%595,000 12/01/25 595,000 55,000
Total G.O. special
assessment bonds 5,685,000 840,000
G.O. Abatement Bonds
G.O. tax abatement bonds of 2015b 08/13/15 2.00%-3.05%1,840,000 12/01/30 1,840,000 95,000
Unamortized premiums/discounts 75,751 -
Compensated absences 428,803 67,852
Total long-term liabilities,
governmental activities 9,049,554$ 1,272,852$
City of St. Joseph
Notes to Financial Statements
53
NOTE 6 – LONG-TERM DEBT (CONTINUED)
B. Components of Long-Term Liabilities (Continued)
Issue Interest Original Final Principal Due Within
Date Rate Issue Maturity Outstanding One Year
Business-type activities
G.O. revenue bonds
G.O. water revenue bonds of 2006a 01/12/06 3.50%-4.00%3,575,000 12/01/16 390,000$ 390,000$
G.O. sewer revenue crossover refunding
bonds of 2009a 03/19/09 1.25%-3.85%455,000 12/01/21 245,000 35,000
G.O. water revenue refunding
bonds of 2009c 10/20/09 1.00%-2.60%425,000 12/01/16 70,000 70,000
G.O. sewer revenue bonds of 2011a 11/10/11 2.00-2.40%225,000 10/01/21 145,000 20,000
G.O. water revenue crossover refunding
bonds of 2012a 04/19/12 1.00-2.85%4,860,000 12/01/28 4,805,000 55,000
G.O. sewer revenue bonds of 2013a 09/01/13 2.00-3.70%1,875,000 12/01/28 1,655,000 110,000
G.O. utility improvement bonds of 2014a 06/15/14 2.00%-3.40%660,000 12/01/32 630,000 30,000
Total G.O. revenue bonds 7,940,000 710,000
Utility revenue notes payable
City of St. Cloud SIS
phases 1 and 2 (2009b bonds)10/26/09 2.00%-4.0%835,000 08/01/19 365,000 90,000
City of st. Cloud SIS
phase 3 (2010 bonds)10/28/10 2.00%-2.5%180,000 08/01/20 100,000 20,000
City of St. Cloud SIS
phase 4 (2013b bonds)11/01/13 3.00%-4.00%650,000 02/01/29 620,000 35,000
City of St. Cloud PFA loan 08/01/10 1.77%4,527,703 08/20/30 3,638,316 213,946
Total notes payable 4,723,316 358,946
Unamortized premium 71,632 -
Compensated absences 130,582 7,561
Total business-type activities 12,865,530 1,076,507
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.
City of St. Joseph
Notes to Financial Statements
54
NOTE 6 – LONG-TERM DEBT (CONTINUED)
C. Changes in Long-Term Liabilities
Long-term liability activity for the year ended December 31, 2015, was as follows:
Beginning Ending
Balance Additions Reductions Balance
Governmental Activities
Bonds payable
General obligation 1,120,000$ 165,000$ 265,000$ 1,020,000$
G.O. special assessment bonds 5,750,000 595,000 660,000 5,685,000
Public project revenue bonds 90,000 - 90,000 -
G.O. abatement bonds - 1,840,000 - 1,840,000
Total bonds payable 6,960,000 2,600,000 1,015,000 8,545,000
Unamortized premiums/discounts 64,349 28,021 16,619 75,751
Compensated absences 439,015 167,990 178,202 428,803
Total governmental
activities 7,463,364 2,796,011 1,209,821 9,049,554
Business-Type Activities
Bonds payable
G.O. utility revenue bonds 8,630,000 - 690,000 7,940,000
Notes payable
City of St. Cloud notes 5,063,536 - 340,220 4,723,316
Unamortized premiums 85,702 - 14,070 71,632
Compensated absences 122,421 46,170 38,009 130,582
Total business-type
activities 13,901,659 46,170 1,082,299 12,865,530
Total long-term liabilities 21,365,023$ 2,842,181$ 2,292,120$ 21,915,084$
For Governmental Activities, the General Fund typically liquidates the liability related to compensated
absences. For Business-Type Activities, the Water, Sanitary Sewer, Refuse, Storm Water and Street
Light Utility Funds typically liquidates the liability related to the compensated absences.
City of St. Joseph
Notes to Financial Statements
55
NOTE 6 – LONG-TERM DEBT
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Year Ended
December 31,Principal Interest Principal Interest
2016 270,000$ 22,300$ 840,000$ 141,358$
2017 280,000 16,590 860,000 121,598
2018 215,000 10,480 525,000 101,688
2019 95,000 5,305 540,000 91,303
2020 95,000 3,580 550,000 80,193
2021-2025 65,000 1,560 1,595,000 251,730
2026-2030 - - 775,000 76,295
Total 1,020,000$ 59,815$ 5,685,000$ 864,165$
Year Ended
December 31,Principal Interest Total
2016 95,000$ 61,647$ 1,430,305$
2017 110,000 44,335 1,432,523
2018 110,000 42,135 1,004,303
2019 115,000 39,935 886,543
2020 115,000 37,635 881,408
2021-2025 620,000 150,500 2,683,790
2026-2030 675,000 61,358 1,587,653
Total 1,840,000$ 437,545$ 9,906,525$
Governmental Activities
Abatement Bonds
Governmental Activities
G.O. Government Activities G.O. Special Assessment Bonds
City of St. Joseph
Notes to Financial Statements
56
NOTE 6 – LONG-TERM DEBT (CONTINUED)
C. Minimum Debt Payments (Continued)
Year Ended
December 31,Principal Interest Principal Interest Total
2016 710,000$ 199,860$ 358,946$ 101,485$ 1,370,291$
2017 670,000 177,640 362,671 93,196 1,303,507
2018 685,000 163,880 366,510 84,841 1,300,231
2019 700,000 149,440 380,461 75,418 1,305,319
2020 700,000 134,488 289,526 65,525 1,189,539
2021-2025 3,430,000 437,618 1,434,611 237,932 5,540,161
2026-2030 955,000 85,343 1,530,591 86,358 2,657,292
2031-2032 90,000 4,590 - - 94,590
Total 7,940,000$ 1,352,859$ 4,723,316$ 744,755$ 14,760,930$
Utility Revenue Bonds
Business-Type Activities
Notes Payable
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, 2015, the City's conduit debt consisted of the following:
Industrial revenue bonds (St. Joseph
Development, LLC), Series 2002 120,000$
City of St. Joseph
Notes to Financial Statements
57
NOTE 7 – FUND BALANCE
Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective
funds.
Nonmajor
Collected Governmental
General Sales Tax Fund Total
Nonspendable
Prepaid expenses 77$ -$ -$ 77$
Restricted
Peg access fees 20,366 - - 20,366
Debt service - - 1,239,932 1,239,932
Tax increments - - 17,330 17,330
State collected sales tax projects - 1,266,776 - 1,266,776
Park dedication fees - - 59,727 59,727
Chartitable gambling - - 2,400 2,400
Revolving loan - - 12,051 12,051
Total restricted 20,366 1,266,776 1,331,440 2,618,582
Committed
Economic development - - 85,665 85,665
Assigned
Elections 23,709 - - 23,709
Street seal coating /crack filling 15,945 - - 15,945
Street maintenance plan 5,000 - - 5,000
Schneider field 2,250 - - 2,250
Loader tires 1,764 - - 1,764
Fire operations 20,000 - - 20,000
Fire debt service 160,000 - - 160,000
Fire capital 334,060 - - 334,060
Police forfeiture 9,317 - - 9,317
Severance pay 92,559 - - 92,559
Capital outlay reserves - - 872,826 872,826
Debt service relief - - 184,992 184,992
Total assigned 664,604 - 1,057,818 1,722,422
Unassigned 1,315,805 - (16,174) 1,299,631
Total 2,000,852$ 1,266,776$ 2,458,749$ 5,726,377$
City of St. Joseph
Notes to Financial Statements
58
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 City's 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 2015 is
estimated to be immaterial based on workers' compensation rates and salaries for the year.
At December 31, 2015, 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 – PENSION PLANS
Public Employees' Retirement Association
A. Plan Description
The City participates in the following cost-sharing multiple-employer defined benefit pension plans
administered by PERA. PERA's defined benefit pension plans are established and administered in
accordance with Minnesota Statutes, Chapters 353 ad 356. PERA's defined benefit pension plans are tax
qualified plans under Section 401(a) of the Internal Revenue Code.
General Employees Retirement Fund (GERF)
All full-time and certain part-time employees of the City are covered by the GERF. GERF members
belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by
Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967.
All new members must participate in the Coordinated Plan.
Public Employees Police and Fire Fund (PEPFF)
The PEPFF, originally established for police officers and firefighters not covered by a local relief
association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999, the
PEPFF also covers police officers and firefighters belonging to a local relief association that elected to
merge with and transfer assets and administration to PERA.
City of St. Joseph
Notes to Financial Statements
59
NOTE 9 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
B. Benefits Provided (Continued)
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state
statute and can only be modified by the state legislature.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding
ratio of the plan. Members in plans that are at least 90% funded for two consecutive years are given
2.5% increases. Members in plans that have not exceeded 90% funded, or have fallen below 80%, are
given 1% increases.
The benefit provisions stated in the following paragraphs of this section are current provisions and apply
to active plan participants. Vested, terminated employees who are entitled to benefits but are not
receiving them yet are bound by the provisions in effect at the time they last terminated their public
service.
GERF Benefits
Benefits are based on a member's highest average salary for any five successive years of allowable
service, age and years of credit at termination of service. Two methods are used to compute benefits for
PERA's Coordinated and Basic Plan members. The 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 ten 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 ten 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 members hired prior to July 1, 1989, a full annuity is available
when age plus years of service equal 90 and normal retirement age is 65. For members hired on or after
July 1, 1989, normal retirement age is the age for unreduced Social Security benefits capped at 66.
Disability benefits are available for vested members, and are based upon years of service and average
high-five salary.
PEPFF Benefits
Benefits for the PEPFF members first hired after June 30, 2010, but before July 1, 2014, vest on a
prorated basis from 50% after five years up to 100% after ten years of credited service. Benefits for
PEPFF members first hired after June 30, 2014, vest on a prorated basis from 50% after ten years up to
100% after twenty years of credited service. The annuity accrual rate is 3% of average salary for each
year of service. For PEPFF who were first hired prior to July 1, 1989, a full annuity is available when
age plus years of service equal at least 90.
City of St. Joseph
Notes to Financial Statements
60
NOTE 9 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
C. Contributions
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution
rates can only be modified by the state legislature.
GERF Contributions
Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.50%,
respectively, of their annual covered salary in calendar year 2015. The City was required to contribute
11.78% of pay for Basic Plan members and 7.50% for Coordinated Plan members in calendar year 2015.
The City's contributions to the GERF for the year ended December 31, 2015, were $57,804. The City's
contributions were equal to the required contributions as set by state statute.
PEPFF Contributions
Plan members were required to contribute 10.8% of their annual covered salary in calendar year 2015.
The City was required to contribute 16.20% of pay for PEPFF members in calendar year 2015. The
City's contributions to the PEPFF for the year ended December 31, 2015, were $85,925. The City's
contributions were equal to the required contributions as set by state statute.
D. Pension Costs
GERF Pension Costs
At December 31, 2015, the City reported a liability of $715,188 for its proportionate share of the GERF's
net pension liability. The net pension liability was measured as of June 30, 2015, and the total pension
liability used to calculate the net pension liability was determined by an actuarial valuation as of that
date. The City's proportion of the net pension liability was based on the City's contributions received by
PERA during the measurement period for employer payroll paid dates from July 1, 2014, through
June 30, 2015, relative to the total employer contributions received from all of PERA's participating
employers. At June 30, 2015, the City's proportion was 0.0138%.
For the year ended December 31, 2015, the City recognized pension expense of $85,938 for its
proportionate share of GERF's pension expense.
City of St. Joseph
Notes to Financial Statements
61
NOTE 9 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
At December 31, 2015, the City reported its proportionate share of GERF's deferred outflows of
resources and deferred inflows of resources, and its contributions subsequent to the measurement date,
from the following sources:
Differences between expected and actual economic experience -$ 36,058$
Difference between projected and actual investment earnings 67,703 -
Changes in proportion - 28,185
Contributions paid to PERA subsequent
to the measurement date 28,902 -
96,605$ 64,243$
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
$28,902 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2016. Other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense as follows:
Year Ended Pension Expense
December 31,Amount
2016 (4,488)$
2017 (4,488)
2018 (4,488)
2019 16,924
City of St. Joseph
Notes to Financial Statements
62
NOTE 9 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
PEPFF Pension Costs
At December 31, 2015, the City reported a liability of $647,653 for its proportionate share of the
PEPFF's net pension liability. The net pension liability was measured as of June 30, 2015, and the total
pension liability used to calculate the net pension liability was determined by an actuarial valuation as of
that date. The City's proportion of the net pension liability was based on the City's contributions received
by PERA during the measurement period for employer payroll paid dates from July 1, 2014, through
June 30, 2015, relative to the total employer contributions received from all of PERA's participating
employers. At June 30, 2015, the City's proportion was 0.057%.
For the year ended December 31, 2015, the City recognized pension expense of $111,606 for its
proportionate share of the PEPFF's pension expense. The City also recognized $5,130 for the year ended
December 31, 2015, as pension expense (and grant revenue) for its proportionate share of the State of
Minnesota's on-behalf contributions to the PEPFF. Legislation passed in 2013 required the State of
Minnesota to begin contributing $9 million to the PEPFF each year, starting in fiscal year 2014.
At December 31, 2015, the City reported its proportionate share of the PEPFF's deferred outflows of
resources and deferred inflows of resources related to pensions from the sources below.
Differences between expected and actual economic experience -$ 105,028$
Difference between projected and actual investment earnings 112,843 -
Contributions paid to PERA subsequent
to the measurement Date 42,962 -
155,805$ 105,028$
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
City of St. Joseph
Notes to Financial Statements
63
NOTE 9 – PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
$42,962 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2016. Other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense as follows:
Year Ended Pension Expense
December 31,Amount
2016 7,205$
2017 7,205
2018 7,205
2019 7,205
2020 (21,005)
E. Actuarial Assumptions
The total pension liability in the June 30, 2015, actuarial valuation was determined using the entry age
normal actuarial cost method and the following actuarial assumptions:
Inflation 2.75 %Per Year
Active member payroll growth 3.50 %Per Year
Investment rate of return 7.90 %
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
survivors, and disabilitants were based on RP-2000 tables for males or females, as appropriate, with
slight adjustments. Benefit increases for retirees are assumed to be 1% effective every January 1 through
2026 and 2.5% thereafter.
Actuarial assumptions used in the June 30, 2015, valuation were based on the results of actuarial
experience studies. The experience study in the GERF was for the period July 1, 2004 through June 30,
2008, with an update of economic assumptions in 2014. Experience studies have not been prepared for
PERA's other plans, but assumptions are reviewed annually.
City of St. Joseph
Notes to Financial Statements
64
NOTE 9 –PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
E. Actuarial Assumptions (Continued)
The long-term expected rate of return on pension plan investments is 7.9%. The State Board of
Investment, which manages the investments of PERA, prepares an analysis of the reasonableness of the
long-term expected rate of return on a regular basis using a building-block method in which best-
estimate ranges of expected future rates of return are developed for each major asset class. These ranges
are combined to produce an expected long-term rate of return by weighting the expected future rates of
return by the target asset allocation percentages.
The target allocation and best estimates of arithmetic real rates of return for each major asset class are
summarized in the following table:
Target Allocation
Domestic stocks 45%5.50 %
International stock 15%6.00
Bonds 18%1.45
Alternative assets 20%6.40
Cash 2%0.50
Total 100%
Asset Class
Long-Term Expected
Real Rate of Return
F. Discount Rate
The discount rate used to measure the total pension liability was 7.9%. The projection of cash flows used
to determine the discount rate assumed that employee and employer contributions will be made at the
rates specified in statute. Based on those assumptions, each of the pension plan's fiduciary net position
was projected to be available to make all projected future benefit payments of current active and inactive
employees. Therefore, the long-term expected rate of return on pension plan investments was applied to
all periods of projected benefit payments to determine the total pension liability.
City of St. Joseph
Notes to Financial Statements
65
NOTE 9 –PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
G. Pension Liability Sensitivity
The following table presents the City's proportionate share of the net pension liability for all plans it
participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what
the City's proportionate share of the net pension liability would be if it were calculated using a discount
rate 1 percentage point lower or 1 percentage point higher than the current discount rate:
1% Decrease in 1% Increase in
City's proportionate share of
the GERF net pension liability 1,124,529$ 715,188$ 377,134$
City's proportionate share of
the PEPFF net pension liability 1,262,283 647,653 139,862
Discount Rate
(6.9%)
Discount Rate
(7.9%)
Discount Rate
(8.9%)
H. Pension Plan Fiduciary Net Position
Detailed information about each pension plan's fiduciary net position is available in a separately-issued
PERA financial report that includes financial statements and required supplementary information. 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 1-800-652-9026.
Defined Contribution Plan
Five of the City's council members are covered by the Public Employees Defined Contribution Plan
(PEDCP), a multiple-employer deferred compensation plan administered by PERA. The PEDCP is a 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
elected official's employer. For 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% (.0025) of the assets in each
member's account annually.
City of St. Joseph
Notes to Financial Statements
66
NOTE 9 –PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
H. Pension Plan Fiduciary Net Position (Continued)
Total contributions made by the entity during fiscal year 2015 were:
1,535$ 1,535$ 5%5%5%
Contribution Amount Percentage of Covered Payroll
Employee Employer Employee Employer Required Rate
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association
A. Plan Description
The City of St. Joseph Volunteer Fire Department Relief Association is the administrator of a single
employer defined benefit pension plan established to provide benefits for members of the Relief
Association per Minnesota State Statutes.
The Association issues a publicly available financial report that includes financial statements and
required supplementary information. That report may be obtained by writing to the St. Joseph Volunteer
Fire Department Relief Association, P.O. Box 4, St. Joseph, MN 56374.
B. Benefits Provided
Volunteer firefighters of the City are member of Joseph Volunteer Fire Department Relief Association.
Full retirement benefits are payable to members who have reached age 50 and have completed twenty
years of service for lump sum service pension. Partial benefits are payable to members who have reached
50 years and have completed ten years of service. Disability benefits and widow and children’s survivor
benefits are also payable to members or their beneficiaries based upon requirements set forth in the
bylaws. These benefit provisions and all other requirements are consistent with enabling state statutes.
C. Employees Covered by Benefit Terms
At December 31, 2015, the following employees were covered by the benefit terms:
Inactive employees entitled to but not yet receiving benefits 3
Active employees 28
Total 31
City of St. Joseph
Notes to Financial Statements
67
NOTE 9 –PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
D. Contributions.
Minnesota Statutes Chapter 424A.092 specifies minimum support rates required on an annual basis. The
minimum support rates from the municipality and from State aids are determined as the amount required
to meet the normal cost plus amortizing any existing prior service costs over a ten year period. The City's
obligation is the financial requirement for the year less state aids. Any additional payments by the City
shall be used to amortize the unfunded liability of the relief association. The Association is comprised of
volunteers: therefore, there are no payroll expenditures (i.e. there are no covered payroll percentage
calculations). During the year, the City recognized as revenue and as an expenditure an on behalf
payment of $52,164 made by the State of Minnesota for the Relief Association.
E. Net Pension Liability
The City's net pension liability was measured as of December 31, 2015, and the total pension liability
used to calculate the net pension liability was determined by an actuarial valuation as of that date.
Actuarial assumptions.
The total pension liability in the December 31, 2015, actuarial valuation was determined using the
following actuarial assumptions, applied to all periods included in the measurement:
Inflation 2.75 %
Salary increase 0 %, average, including inflation
Investment rate of return 6.25 %, net of pensions plan investment
expense including inflation
The value of death benefits is similar to the value of the retirement pension. Because of low retirement
ages, the plan assumes no pre-retirement mortality. Post-retirement mortality does not apply as the
benefit structure and form of payment do not reflect lifetime benefits.
City of St. Joseph
Notes to Financial Statements
68
NOTE 9 –PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
E. Net Pension Liability (Continued)
The long-term return on assets has been set based on the plan's target investment allocation along with
long-term return expectations by asset class. When there is sufficient historical evidence of market
outperformance, historical average returns may be considered. Best estimates of arithmetic real rates of
return for each major asset class included in the pension plan's target asset allocation as of the
measurement date are summarized in the table on the following page.
Long-Term Expected
Asset Class Target Allocation Real Rate of Return
Cash 0.35%0.25%
Fixed income 52.40%1.75%
Equities 47.25%5.25%
Total 100%
Discount rate.
The discount rate used to measure the total pension liability was 6.25%. Assets were projected using
expected benefit payments and expected asset returns. Expected benefit payments by year were
discounted using the expected asset return assumption for years in which the assets were sufficient to
pay all benefit payments. Any remaining benefit payments after the trust fund is exhausted are
discounted at the municipal bond rate. The equivalent single rate is the discount rate.
City of St. Joseph
Notes to Financial Statements
69
NOTE 9 –PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
F. Changes in the Net Pension Liability
Total Plan Fiduciary Net
Pension Net Pension
Liability Position Liability
(a) (b)(a) - (b)
Balances at January 1, 2015 475,033$ 740,099$ (265,066)$
Changes for the year
Service cost 20,898 - 20,898
Interest cost 29,709 - 29,709
Change in assumptions, changes
in benefit terms 86,916 - 86,916
Contributions - state and local - 52,164 (52,164)
Net investment income - (41,979) 41,979
Benefit payments, including refunding of
employee contributions (41,168) (41,168) -
Administrative expense - (8,121) 8,121
Other charges - - -
Net charges 96,355 (39,104) 135,459
Balances at December 31, 2015 571,388$ 700,995$ (129,607)$
Increase (Decrease)
City of St. Joseph
Notes to Financial Statements
70
NOTE 9 –PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
F. Changes in the Net Pension Liability (Continued)
Sensitivity of the net pension liability to changes in the discount rate. The following presents the net
pension liability of the City, calculated using the discount rate of 6.25%, as well as what the City's net
pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower
(5.25%) or 1-percentage-point higher (7.25%) than the current rate:
1%Current 1%
Decrease Discount Increase
(5.25%)Rate (6.25%)(7.25%)
County's net pension liability (114,780)$ (129,607)$ (143,888)$
Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary net position
is available in the separately issued relief association financial report.
G. Pension Expense and Deferred Outflows of Resources, and Deferred Inflows of Resources
Related to Pensions
For the year ended December 31, 2015, the City recognized pension expense of $66,826. At
December 31, 2015, the City reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Changes of assumptions 50,137$ -$
Net difference between projected and actual earnings on
pension plan investments 70,660 -
Total 120,797$ -$
City of St. Joseph
Notes to Financial Statements
71
NOTE 9 –PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan – Volunteer Fire Fighter's Relief Association (Continued)
G. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions (Continued)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized in pension expense as follows:
Year Ending
June 30,
2016 22,561$
2017 22,561
2018 22,561
2019 22,561
2020 4,896
Therafter 25,657
Total 120,797$
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. Medical coverage is administered by BlueCross BlueShield. It is the City's policy to
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 2015, the City contributed $5,388 to the plan. As of December 31,
2015, there was one retiree receiving health benefits from the City's health plan.
City of St. Joseph
Notes to Financial Statements
72
NOTE 10 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED)
C. Annual Other Post Employment Benefits Cost and Net Other Post Employment
Benefits Obligation
The City's annual other post employment benefits (OPEB) cost (expense) is calculated based on the
annual required contribution (ARC) of the City, an amount actuarially determined in accordance with the
parameters of GASB Statement No. 45. The City prospectively implemented this Statement during the
2009 year. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover
normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period
not to exceed 30 years. The table on the following page shows the components of the City's annual
OPEB cost of the year, the amount actually contributed to the plan, and changes in the City's net OPEB
obligation to the plan.
ARC 25,315$
Interest on net OPEB obligation 9,469
Adjustment to ARC (13,690)
Annual OPEB cost 21,094
Contributions made 5,388
Increase in net OPEB obligation 15,706
Net OPEB obligation - beginning of year 236,718
Net OPEB obligation - end of year 252,424$
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net
OPEB obligation for 2015, 2014, and 2013 was as follows:
Year Ended
Annual OPEB
Cost
Employer
Contribution
Percentage of
Annual OPEB Cost
Contributed
Net OPEB
Obigation
12/31/13 33,966 4,487 13%206,587
12/31/14 35,044 4,913 14%236,718
12/31/15 21,094 5,388 26%252,424
D. Funded Status and Funding Progress
As of January 1, 2015, the most recent actuarial valuation date, the City had no assets deposited to fund
the plan. The actuarial accrued liability for benefits was $188,649 and the actuarial value of assets was
$0, resulting in an unfunded actuarial accrued liability (UAAL) of $188,649. The covered payroll
(annual payroll of active employees covered by the plan) was $1,522,110, and the ratio of the UAAL to
the covered payroll was 12.4%.
City of St. Joseph
Notes to Financial Statements
73
NOTE 10 – POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED)
D. Funded Status and Funding Progress (Continued)
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.
At the January 1, 2015, 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 7.2% initially, reduced incrementally to an ultimate rate of 5% after
seven years. The UAAL is being amortized as a level percentage of projected payroll on an open basis.
NOTE 11 – COMMITMENTS
The City has entered into contracts for construction as follows:
Expended
Contract through
Project Amount 12/31/15 Commitment
2015 1st Ave NE waterline 94,497$ 81,923$ 12,574$
2015 Jasmine court 117,066 19,844 97,222
2015 Street improvements 516,767 454,909 61,858
Government Center design 309,400 241,600 67,800
Total 239,454$
City of St. Joseph
Notes to Financial Statements
74
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. These bonds were paid in
full at December 31, 2015. 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, 2015, the City implemented GASB Statement No. 68, Accounting and
Financial Reporting for Pensions and GASB Statement No. 71, Pension Transition for Contributions
Made Subsequent to the Measurement Date. This resulted in an adjustment to the beginning net position
on the Statement of Activities of $737,945 to add the beginning net pension liability, and an adjustment
to the beginning net position on the Statement of Revenues, Expenses, and Changes in Fund Net
Position – Proprietary Funds of $229,758 to add the beginning net pension liability.
NOTE 14 – NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED
GASB has issued GASB Statement No. 75, Accounting and Financial Reporting for Postemployment
Benefits other than Pensions. The new statement requires governments in all types of OPEB plans to
present more extensive note disclosures and required supplementary information (RSI) about OPEB
liabilities.
NOTE 15 – SUBSEQUENT EVENTS
On April 4, 2016, the City approved the issuance of G.O. Capital Improvement Plan Bonds to finance
the government center. The council also accepted bids and approved contracts for the government center
totaling $4,717,888.
75
REQUIRED SUPPLEMENTARY INFORMATION
City of St. Joseph
Schedule of Funding Progress - Other Post Employment Benefits
Actuarial UAAL as a
Actuarial Accrued Liability Unfunded Percentage of
Actuarial Value of (AAL) -AAL Funded Covered Covered
Valuation Assets Entry Age (UAAL)Ratio Payroll Payroll
Date (a)(b)(b-a)(a/b)(c)((b-a)/c)
12/31/09 -$ 345,319$ 345,319$ 0.0%1,070,515$ 32.3%
12/31/12 - 239,852 239,852 0.0%1,386,050 17.3%
12/31/15 - 188,649 188,649 0.0%1,522,110 12.4%
76
December 31, 2015
City's Covered-
Employee Payroll
2015 0.0138%715,188$ 799,773$ 89.42%78.19%
For Fiscal Year
Ended June 30,
City's Proportion
of the Net
Pension Liability
(Asset)
City's
Proportionate
Share of the Net
Pension Liability
(Asset)
City's Covered-
Employee Payroll
City's
Proportionate
Share of the Net
Pension Liability
(Asset) as a
Percentage of its
Covered-
Employee Payroll
Plan Fiduciary
Net Position as a
Percentage of the
Total Pension
Liability
2015 0.0570%647,653$ 505,160$ 128.21%86.61%
77
Plan Fiduciary
Net Position as a
Percentage of the
Total Pension
Liability
For Fiscal Year
Ended June 30,
Last Ten Years PEPFF Retirement Fund
Schedule of City's Proportionate Share
of Net Pension Liability
City of St. Joseph
Schedule of City's Proportionate Share
of Net Pension Liability
GERF Retirement Fund
City's Proportion
of the Net
Pension Liability
(Asset)
City's
Proportionate
Share of the Net
Pension Liability
(Asset)
City's
Proportionate
Share of the Net
Pension Liability
(Asset) as a
Percentage of its
Covered-
Employee Payroll
2015 59,983$ 59,983$ -$ 799,773$ 7.50%
2015 81,836$ 81,836$ -$ 505,160$ 16.20%
78
Contributions as a
Percentage of
Covered-
Employee Payroll
Statutorily
Required
Contribution
Contributions in
Relation to the
Statutorily
Required
Contributions
Fiscal Year
Ending June 30,
City of St. Joseph
Schedule of City Contributions
GERF Retirement Fund
Contribution
Deficiency
(Excess)
City's Covered-
Employee Payroll
Schedule of City Contributions
PEPFF Retirement Fund
Contributions as a
Percentage of
Covered-
Statutorily
Required
Contribution
Contributions in
Relation to the
Statutorily
Contribution
Deficiency
(Excess)
Fiscal Year
Ending June 30,
City's Covered-
Employee Payroll
2015
Total Pension Liability (TPL)
Service cost 20,898$
Interest 29,709
Changes of assumptions 55,033
Changes of benefit terms 31,883
Benefit payments, including refunds or member contributions (41,168)
Net change in total pension liability 96,355
Beginning of year (1)475,033
End of Year 571,388$
Plan Fiduciary Net Pension (FNP)
Contributions - employer 52,164$
Net investment income (41,979)
Benefit payments, including refunds of member contributions (41,168)
Administrative expense (8,121)
Net change in plan fiduciary net position (39,104)
Beginning of year 740,099
End of year 700,995$
Net Pension Liability (NPL)(129,607)$
79
City of St. Joseph
Schedule of Changes in Net Pension Liability
and Related Ratios - Fire Relief Association
The City implemented the Provisions of Governmental Accounting Standards Board Statement No. 68 for
the year ended Decmber 31, 2015. The schedules within the Require Supplementary Information section
required a ten year presentation, but does not require retroactive reporting. Information prior to 2015 is not
available.
Year Ended December 31, 2015
2015
Employer
Statutorily determined contribution (sdc)-$
Contribution sdc 3,000
Contribution deficiency (excess)(3,000)$
Non-employer
2% aid 52,164$
80
City of St. Joseph
Schedule of Employer Contributions
and Non-Employer Contributing
Entities - Fire Relief Association
The Association implemented the Provisions of Governmental Accounting Standards Board Statement
No. 68 for the year ended December 31, 2015. The schedules within the Require Supplementary
Information section required a ten year presentation, but does not require retroactive reporting.
Information prior to 2015 is not available.
Year Ended December 31, 2015
81
SUPPLEMENTARY INFORMATION
City of St. Joseph
Schedule of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2015
Original
Budget
Final
Budget
Actual
Amounts
Revenues
Property taxes 1,065,885$ 1,065,885$ 1,107,058$ 41,173$
Special assessments 2,000 2,000 3,590 1,590
Franchise fees 120,950 120,950 124,283 3,333
Licenses and permits 99,010 99,010 152,158 53,148
Intergovernmental revenue
Local government aid 902,580 902,580 902,582 2
Pera aid 1,540 1,540 1,541 1
Fire aid 39,000 39,000 53,664 14,664
Police aid 53,500 53,500 67,664 14,164
Federal grants 8,000 8,000 3,390 (4,610)
State grants 43,475 43,475 49,408 5,933
Other grants and aids 18,995 18,995 29,591 10,596
Total intergovernmental revenue 1,067,090 1,067,090 1,107,840 40,750
Charges for services
General government 25,950 25,950 24,599 (1,351)
Public safety 223,805 223,805 224,678 873
Public works 3,775 3,775 3,575 (200)
Culture and recreation 8,000 8,000 17,656 9,656
Total charges for services 261,530 261,530 270,508 8,978
Fines and forfeitures 47,500 47,500 50,489 2,989
Miscellaneous revenues
Investment income 27,500 27,500 18,206 (9,294)
Contributions and donations 18,250 18,250 43,825 25,575
Other 46,900 46,900 49,952 3,052
Total miscellaneous revenues 92,650 92,650 111,983 19,333
Total revenues 2,756,615 2,756,615 2,927,909 171,294
Expenditures
General government
Mayor and council 77,095 77,095 71,252 (5,843)
Administrative and finance 452,685 452,685 404,581 (48,104)
Other general government 111,735 111,735 106,425 (5,310)
Capital outlay 3,010 3,010 12,813 9,803
Total general government 644,525 644,525 595,071 (49,454)
82
Variance with
Final Budget -
Over (Under)
City of St. Joseph
Schedule of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2015
Original
Budget
Final
Budget
Actual
Amounts
Expenditures
Public safety
Police
Current 1,034,310$ 1,034,310$ 932,028$ (102,282)$
Capital outlay - - 3,726 3,726
Total police 1,034,310 1,034,310 935,754 (98,556)
Fire
Current 343,125 343,125 348,697 5,572
Capital outlay 62,250 62,250 35,689 (26,561)
Total fire 405,375 405,375 384,386 (20,989)
Other
Current 94,245 94,245 95,899 1,654
Total public safety 1,533,930 1,533,930 1,416,039 (117,891)
Public works
Streets and highways
Street maintenance and storm sewers 244,095 244,095 232,694 (11,401)
Snow and ice removal 106,160 106,160 49,331 (56,829)
Street engineering 28,000 28,000 46,979 18,979
Capital outlay 50,000 50,000 67,762 17,762
Total public works 428,255 428,255 396,766 (31,489)
Culture and recreation
Current 222,575 222,575 264,168 41,593
Capital outlay - - 10,468 10,468
Total culture and recreation 222,575 222,575 274,636 52,061
Total expenditures 2,829,285 2,829,285 2,682,512 (146,773)
Excess of revenues over
(under) expenditures (72,670) (72,670) 245,397 318,067
Other Financing Sources (Uses)
Insurance recoveries - - 1,501 1,501
Sale of property 200 200 278 78
Transfers in 67,930 67,930 14,562 (53,368)
Transfers out - - (1,800) (1,800)
Total other financing sources (uses)68,130 68,130 14,541 (53,589)
Net change in fund balances (4,540)$ (4,540)$ 259,938 264,478$
Fund Balances
Beginning of year 1,740,914
End of year 2,000,852$
83
Variance with
Final Budget -
Over (Under)
Economic
Development
Authority
(150)
TIF 2-1
Millstream
Shops and
Lofts (157)
TIF 2-2 St.
Joseph Meat
Market (158)
TIF 2-3 Bayou
Blues/ Alley
Flat (159)
TIF 3-1
Central
Minnesota
Credit Union
(152)
Assets
Cash and investments 73,709$ 17,162$ 243$ 737$ 403$
Taxes receivable - delinquent 1,707 - - - -
Special assessments receivable
Delinquent - - - - -
Deferred - - - - -
Accounts Receivable - - - - -
Interest Receivable 243 48 1 - -
Due from Other Funds 11,500 - - - -
Due from Other Governments 12,016 1,205 - - -
Notes Receivable - - - - -
Total assets 99,175$ 18,415$ 244$ 737$ 403$
Liabilities, Deferred Inflows Of
Resources and Fund Balances
Liabilities
Accounts payable 11,803$ 1,085$ -$ -$ -$
Contracts Payable - - - - -
Due to Other Funds - - 500 5,000 6,000
Total liabilities 11,803 1,085 500 5,000 6,000
Deferred inflows of resources
Unavailable revenue - property taxes 1,707 - - - -
Unavailable revenue - special assessments - - - - -
Unavailable revenue - notes receivable - - - - -
Total deferred inflows of resources 1,707 - - - -
Fund balances
Restricted - 17,330 - - -
Committed 85,665 - - - -
Assigned - - - - -
Unassigned - - (256) (4,263) (5,597)
Total fund balances 85,665 17,330 (256) (4,263) (5,597)
Total liabilities, deferred inflows
of resource,s and fund balances 99,175$ 18,415$ 244$ 737$ 403$
84
December 31, 2015
Special Revenue
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
Park
Dedication
(205)
Charitable
Gambling
(215)
Revolving
Loan (250)Total
G.O. Crossover
Refunding
Bonds of
2009A (318)
Fire Hall G.O.
Refunding Bonds
of 2003B (331)
G.O.
Improvement
Bonds of
2005B/2010B
(333)
59,508$ 2,391$ 11,994$ 166,147$ 264,400$ 49,619$ 200,061$
- - - 1,707 1,203 402 208
- - - - 648 - -
- - - - 217,786 - 221,657
30 - - 30 - - -
124 9 57 482 1,003 194 719
- - - 11,500 - - -
65 - - 13,286 549 166 105
- - 58,816 58,816 - - -
59,727$ 2,400$ 70,867$ 251,968$ 485,589$ 50,381$ 422,750$
-$ -$ -$ 12,888$ 62$ 62$ 62$
- - - - - - -
- - - 11,500 - - -
- - - 24,388 62 62 62
- - - 1,707 1,203 402 208
- - - - 218,434 - 221,657
- - 58,816 58,816 - - -
- - 58,816 60,523 219,637 402 221,865
59,727 2,400 12,051 91,508 265,890 49,917 200,823
- - - 85,665 - - -
- - - - - - -
- - - (10,116) - - -
59,727 2,400 12,051 167,057 265,890 49,917 200,823
59,727$ 2,400$ 70,867$ 251,968$ 485,589$ 50,381$ 422,750$
85
Debt Service Special Revenue
G.O.
Improvement
Bonds of 2013A
(348)
G.O.
Certificates of
Indebtedness of
2013A (349)
G.O.
Improvement
Bonds of
2011A/2006C
(338)
G.O. Capital
Improvement
Plan Bonds of
2009B (343)
G.O.
Improvement
Bonds of
2010B (345)
Assets
Cash and investments 148,037$ 3,339$ 116,549$ 1,481$ 215,398$
Taxes receivable - delinquent - 608 752 997 86
Special assessments receivable
Delinquent 1 - 5,183 - 775
Deferred 58,954 - 256,756 - 137,367
Accounts Receivable - - - - -
Interest Receivable 470 29 365 37 620
Due from Other Funds - - - - -
Due from Other Governments 334 383 2,120 394 64
Notes Receivable - - - - -
Total assets 207,796$ 4,359$ 381,725$ 2,909$ 354,310$
Liabilities, Deferred Inflows of
Resources and Fund Balances
Liabilities
Accounts payable 62$ 62$ 62$ 62$ 62$
Contracts Payable - - - - -
Due to Other Funds - - - - -
Total liabilities 62 62 62 62 62
Deferred inflows of resources
Unavailable revenue - property taxes - 608 752 997 86
Unavailable revenue - special assessments 58,955 - 261,939 - 138,142
Unavailable revenue - notes receivable - - - - -
Total deferred inflows of resources 58,955 608 262,691 997 138,228
Fund Balances
Restricted 148,779 3,689 118,972 1,850 216,020
Committed - - - - -
Assigned - - - - -
Unassigned - - - - -
Total fund balances 148,779 3,689 118,972 1,850 216,020
Total liabilities, deferred inflows
of resources, and fund balances 207,796$ 4,359$ 381,725$ 2,909$ 354,310$
86
Debt Service
Nonmajor Governmental Funds
December 31, 2015
City of St. Joseph
Combining Balance Sheet -
G.O.
Certificates of
Indebtedness of
2011A (346)
G.O. Capital
Improvement
Plan Bonds of
2011A (347)
G.O.
Improvement
Bonds of
2014A (350)
G.O.
Improvement
Bonds of
2015A (351)
Equipment
Certificates of
Indebtedness
2015A (352)
G.O. Tax
Abatement
Bonds of
2015B (353)
Debt Service
Relief Fund
(390)
2,752$ 102$ 199,691$ 23,411$ 2,220$ 3,391$ 184,349$
323 185 34 - - - 1,504
- - 996 - - - 8,039
- - 197,713 225,029 - - 160,210
- - - - - - -
18 499 1,779 370 101 382 -
- - - - - - -
153 3 34 - - - 643
- - - - - - -
3,246$ 789$ 400,247$ 248,810$ 2,321$ 3,773$ 354,745$
62$ 62$ 62$ 62$ 62$ 62$ -$
- - - - - - -
- 6,600 - - - - -
62 6,662 62 62 62 62 -
323 185 34 - - - 1,504
- - 198,709 225,029 - - 168,249
- - - - - - -
323 185 198,743 225,029 - - 169,753
2,861 - 201,442 23,719 2,259 3,711 -
- - - - - - -
- - - - - - 184,992
- (6,058) - - - - -
2,861 (6,058) 201,442 23,719 2,259 3,711 184,992
3,246$ 789$ 400,247$ 248,810$ 2,321$ 3,773$ 354,745$
87
Debt Service
Debt Service
Total
City Hall/Police
Garage Capital
Improvements
(447)
Park Terrace
Improvements
(450)
Clinton
Villiage/
Northland
Improvements
(451)
2015
Equipment
Certificates
(452)
Assets
Cash and investments 1,414,800$ 174,042$ 322,467$ 166,458$ 93,174$
Taxes receivable - delinquent 6,302 - - - -
Special assessments receivable
Delinquent 15,642 - - - -
Deferred 1,475,472 - - - -
Accounts Receivable - - - - -
Interest Receivable 6,586 - - - -
Due from Other Funds - - - - -
Due from Other Governments 4,948 - - - -
Notes Receivable - - - - -
Total assets 2,923,750$ 174,042$ 322,467$ 166,458$ 93,174$
Liabilities, Deferred Inflows of
Resources and Fund Balances
Liabilities
Accounts payable 868$ -$ 1,245$ 4,719$ -$
Contracts Payable - - 125,201 11,373 -
Due to Other Funds 6,600 - - - -
Total liabilities 7,468 - 126,446 16,092 -
Deferred inflows of resources
Unavailable revenue - property taxes 6,302 - - - -
Unavailable revenue - special assessments 1,491,114 - - - -
Unavailable revenue - notes receivable - - - - -
Total deferred inflows of resources 1,497,416 - - - -
Fund Balances
Restricted 1,239,932 - - - -
Committed - - - - -
Assigned 184,992 174,042 196,021 150,366 93,174
Unassigned (6,058) - - - -
Total fund balances 1,418,866 174,042 196,021 150,366 93,174
Total liabilities, deferred inflows
of resources, and fund balances 2,923,750$ 174,042$ 322,467$ 166,458$ 93,174$
88
Nonmajor Governmental Funds
December 31, 2015
Capital Projects
City of St. Joseph
Combining Balance Sheet -
General Capital
Outlay (490)
Water Access
Fund (501)
Sewer Access
Fund (502)Total
Total
Governmental
Funds
258,028$ 99$ 123$ 1,014,391$ 2,595,338$
- - - - 8,009
- - - - 15,642
- - - - 1,475,472
- - - - 30
- 96 516 612 7,680
- - - - 11,500
479 - - 479 18,713
- - - - 58,816
258,507$ 195$ 639$ 1,015,482$ 4,191,200$
118$ -$ -$ 6,082$ 19,838$
- - - 136,574 136,574
- - - - 18,100
118 - - 142,656 174,512
- - - - 8,009
- - - - 1,491,114
- - - - 58,816
- - - - 1,557,939
- - - - 1,331,440
- - - - 85,665
258,389 195 639 872,826 1,057,818
- - - - (16,174)
258,389 195 639 872,826 2,458,749
258,507$ 195$ 639$ 1,015,482$ 4,191,200$
89
Capital Projects
Economic
Development
Authority (150)
TIF 2-1
Millstream
Shops and
Lofts (157)
TIF 2-2 St.
Joseph Meat
Market (158)
TIF 2-3 Bayou
Blues/ Alley
Flat (159)
TIF 3-1 Central
Minnesota
Credit Union
(152)
Revenues
Property taxes 94,402$ -$ -$ -$ -$
Tax increments - 37,426 3,959 - -
Special assessments - - - - -
Intergovernmental 153,355 - - - -
Charges for services - - - - -
Miscellaneous
Investment income 1,169 231 3 - -
Contributions and donations - - - - -
Revolving loan repayments - - - - -
Other - - - - -
Total revenues 248,926 37,657 3,962 - -
Expenditures
Current
Public works - - - - -
Culture and recreation - - - - -
Economic development 267,967 34,041 3,816 413 4,580
Debt service
Principal - - - - -
Interest and other charges - - - - -
Capital outlay
General government - - - - -
Public safety - - - - -
Public works - - - - -
Culture and recreation - - - - -
Total expenditures 267,967 34,041 3,816 413 4,580
Excess of revenues over
(under) expenditures (19,041) 3,616 146 (413) (4,580)
Other Financing Sources (Uses)
Sale of property - - - - -
Bonds issued - - - - -
Bond premium - - - - -
Transfers in 9,134 - - - -
Transfers out (7,951) (4,267) - (3,850) (1,017)
Total other financing sources (uses)1,183 (4,267) - (3,850) (1,017)
Net change in fund balances (17,858) (651) 146 (4,263) (5,597)
Fund Balances
Beginning of year 103,523 17,981 (402) - -
End of year 85,665$ 17,330$ (256)$ (4,263)$ (5,597)$
90
Year Ended December 31, 2015
Special Revenue
City of St. Joseph
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Nonmajor Governmental Funds
Park
Dedication
(205)
Charitable
Gambling (215)
Revolving Loan
(250)Total
G.O. Crossover
Refunding
Bonds of
2009A (318)
City Hall G.O.
EDA
Refunding
Bonds of
2005A (322)
Fire Hall G.O.
Refunding
Bonds of
2003B (331)
9,469$ -$ -$ 103,871$ 76,008$ 92,245$ 24,125$
- - - 41,385 - - -
- - - - 138,487 - -
- - - 153,355 - - -
9,299 - - 9,299 - - 25,760
596 43 273 2,315 4,833 1,110 937
1,450 5,200 - 6,650 - - -
- - 11,149 11,149 - - -
- - 470 470 - - -
20,814 5,243 11,892 328,494 219,328 93,355 50,822
- - - - - - -
1,173 6,060 - 7,233 - - -
- - 47,326 358,143 - - -
- - - - 330,000 90,000 70,000
- - - - 30,311 4,230 4,462
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
1,173 6,060 47,326 365,376 360,311 94,230 74,462
19,641 (817) (35,434) (36,882) (140,983) (875) (23,640)
- - - - - - -
- - - - - - -
- - - - - - -
- - 7,951 17,085 60,000 - -
- - - (17,085) - (5) -
- - 7,951 - 60,000 (5) -
19,641 (817) (27,483) (36,882) (80,983) (880) (23,640)
40,086 3,217 39,534 203,939 346,873 880 73,557
59,727$ 2,400$ 12,051$ 167,057$ 265,890$ -$ 49,917$
91
Debt ServiceSpecial Revenue
G.O.
Improvement
Bonds of
2005B/2010B
(333)
G.O.
Improvement
Bonds of
2013A (348)
G.O.
Certificates of
Indebtedness of
2013A (349)
G.O.
Improvement
Bonds of
2011A/2006C
(338)
G.O. Capital
Improvement
Plan Bonds of
2009B (343)
Revenues
Property taxes 15,195$ -$ 55,026$ 48,779$ 56,960$
Tax increments - - - - -
Special assessments 69,188 12,363 - 48,275 -
Intergovernmental - - - - -
Charges for services - - - - -
Miscellaneous
Investment income 3,466 2,265 140 1,762 176
Contributions and donations - - - - -
Revolving loan repayments - - - - -
Other - - - - -
Total revenues 87,849 14,628 55,166 98,816 57,136
Expenditures
Current
Public works - - - - -
Culture and recreation - - - - -
Economic development - - - - -
Debt service
Principal 125,000 30,000 50,000 125,000 55,000
Interest and other charges 17,010 9,731 4,363 19,787 8,057
Capital outlay
General government - - - - -
Public safety - - - - -
Public works - - - - -
Culture and recreation - - - - -
Total expenditures 142,010 39,731 54,363 144,787 63,057
Excess of revenues over
(under) expenditures (54,161) (25,103) 803 (45,971) (5,921)
Other Financing Sources (Uses)
Sale of property - - - - -
Bonds issued - - - - -
Bond premium - - - - -
Transfers in - - - 15,000 -
Transfers out - - - - -
Total other financing sources (uses)- - - 15,000 -
Net change in fund balances (54,161) (25,103) 803 (30,971) (5,921)
Fund Balances
Beginning of year 254,984 173,882 2,886 149,943 7,771
End of year 200,823$ 148,779$ 3,689$ 118,972$ 1,850$
92
Year Ended December 31, 2015
Debt Service
Nonmajor Governmental Funds
City of St. Joseph
Combining Statement Of Revenues, Expenditures And Changes In Fund Balances -
G.O.
Certificates of
Indebtedness of
2010A (344)
G.O.
Improvement
Bonds of
2010B (345)
G.O.
Certificates of
Indebtedness of
2011A (346)
G.O. Capital
Improvement
Plan Bonds of
2011A (347)
G.O.
Improvement
Bonds of
2014A (350)
G.O.
Improvement
Bonds of
2015A (351)
Equipment
Certificates of
Indebtedness
2015A (352)
25,687$ 4,591$ 22,011$ 227$ 4,984$ -$ -$
- - - - - - -
- 35,666 - - 39,387 12,362 -
- - - - - - -
- - 23,808 - - - -
113 2,990 89 2,653 8,576 2,194 570
- - - - - - -
- - - - - - -
- - - - - - -
25,800 43,247 45,908 2,880 52,947 14,556 570
- - - - - - -
- - - - - - -
- - - - - - -
30,000 50,000 40,000 20,000 - - -
824 15,716 6,024 2,983 53,895 30,140 8,307
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
30,824 65,716 46,024 22,983 53,895 30,140 8,307
(5,024) (22,469) (116) (20,103) (948) (15,584) (7,737)
- - - - - - -
- - - - - 32,545 9,996
- - - - - 6,758 -
- 13,250 - - - - -
(562) - - - - - -
(562) 13,250 - - - 39,303 9,996
(5,586) (9,219) (116) (20,103) (948) 23,719 2,259
5,586 225,239 2,977 14,045 202,390 - -
-$ 216,020$ 2,861$ (6,058)$ 201,442$ 23,719$ 2,259$
93
Debt Service
G.O. Tax
Abatement
Bonds of
2015B (353)
Debt Service
Relief Fund
(390)Total
City Hall/Police
Garage Capital
Improvements
(447)
Park Terrace
Improvements
(450)
Revenues
Property taxes -$ 1,053$ 426,891$ -$ -$
Tax increments - - - - -
Special assessments - 23,006 378,734 - -
Intergovernmental - - - - -
Charges for services - - 49,568 - -
Miscellaneous
Investment income 3,383 - 35,257 - -
Contributions and donations - - - - -
Revolving loan repayments - - - - -
Other - - - - -
Total revenues 3,383 24,059 890,450 - -
Expenditures
Current
Public works - - - - 5,940
Culture and recreation - - - - -
Economic development - - - - -
Debt service
Principal - - 1,015,000 - -
Interest and other charges 66,935 - 282,775 - -
Capital outlay
General government - - - - -
Public safety - - - - -
Public works - - - - 256,814
Culture and recreation - - - - 19,525
Total expenditures 66,935 - 1,297,775 - 282,279
Excess of revenues over
(under) expenditures (63,552) 24,059 (407,325) - (282,279)
Other Financing Sources (uses)
Sale of property - - - - -
Bonds issued 46,000 - 88,541 - -
Bond premium 21,263 - 28,021 - -
Transfers in - 5 88,255 - -
Transfers out - (93,000) (93,567) - -
Total other financing sources (uses)67,263 (92,995) 111,250 - -
Net change in fund balances 3,711 (68,936) (296,075) - (282,279)
Fund Balances
Beginning of year - 253,928 1,714,941 174,042 478,300
End of year 3,711$ 184,992$ 1,418,866$ 174,042$ 196,021$
94
Capital Projects
Year Ended December 31, 2015
Debt Service
City of St. Joseph
Combining Statement Of Revenues, Expenditures And Changes In Fund Balances -
Nonmajor Governmental Funds
Clinton
Villiage/
Northland
Improvements
(451)
2015
Equipment
Certificates
(452)
General Capital
Outlay (490)
Water Access
Fund (501)
Sewer Access
Fund (502)Total
Total Other
Governmental
Funds
-$ -$ 69,529$ -$ -$ 69,529$ 600,291$
- - - - - - 41,385
129,122 - - - - 129,122 507,856
- - - - - - 153,355
- - - 123,337 40,845 164,182 223,049
- - - 587 3,200 3,787 41,359
- - - - - - 6,650
- - - - - - 11,149
- - - - - - 470
129,122 - 69,529 123,924 44,045 366,620 1,585,564
- - - - - 5,940 5,940
- - - - - - 7,233
- - - - - - 358,143
- - - - - - 1,015,000
- - - - - - 282,775
- - 352 - - 352 352
- 33,632 16,470 - - 50,102 50,102
515,692 14,179 11,245 - - 797,930 797,930
25,519 14,019 41,310 - - 100,373 100,373
541,211 61,830 69,377 - - 954,697 2,617,848
(412,089) (61,830) 152 123,924 44,045 (588,077) (1,032,284)
- - 22,403 - - 22,403 22,403
562,455 155,004 - - - 717,459 806,000
- - - - - - 28,021
- - 1,800 8,000 2,000 11,800 117,140
- - (7,000) (137,400) (320,500) (464,900) (575,552)
562,455 155,004 17,203 (129,400) (318,500) 286,762 398,012
150,366 93,174 17,355 (5,476) (274,455) (301,315) (634,272)
- - 241,034 5,671 275,094 1,174,141 3,093,021
150,366$ 93,174$ 258,389$ 195$ 639$ 872,826$ 2,458,749$
95
Capital Projects
96
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97
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
Independent Auditor's Report
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, 2015, and the related notes to financial statements, which
collectively comprise the City's basic financial statements, and have issued our report
thereon dated April 28, 2016.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City's
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 City's internal control. Accordingly, we do not express an opinion on the effectiveness of
the City's internal control.
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 City's financial statements will
not be prevented, or detected and corrected on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a
material weakness, yet important enough to merit attention by those charged with
governance.
98
Our consideration of internal control was for the limited purpose described in the first
paragraph of this section 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. We did identify a
certain deficiency in internal control, described in the accompanying Schedule of Finding
and Response on Internal Control that we consider to be material weaknesses, listed as Audit
Finding 2006-001.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's 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.
City's Response to Findings
The City's response to the finding identified in our audit is described in the accompanying
Schedule of Finding and Response on Internal Control. The City's 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 City's 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's internal control and compliance. Accordingly, this communication is not suitable for
any other purpose.
St. Cloud, Minnesota
April 28, 2016
99
Report on Legal Compliance
Independent Auditor's Report
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, 2015, and the related Notes to the Financial Statements, and
have issued our report thereon dated April 28, 2016.
The Minnesota Legal Compliance Audit Guide for Cities, 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 Cities. 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 City's noncompliance with the
above referenced provisions.
This report is intended solely for the information and use of those charged with governance
and management of the City and the State Auditor and is not intended to be and should not
be used by anyone other than these specified parties.
St. Cloud, Minnesota
April 28, 2016
City of St. Joseph
Schedule of Finding and Response on
Internal Control
100
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING
Material Weakness
Audit Finding 2006-001 – 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.
As part of this year's audit, we reviewed the City's documentation of its internal control over
significant areas including: cash receipts, cash disbursements, capital assets, payroll, and utility
billing. The lack of adequate segregation of accounting duties could adversely affect the City's 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 Mayor's electronic 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, time off balances, and calculated compensated
absences balances for the audit.
101
City of St. Joseph
Schedule of Finding and Response on
Internal Control
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING
Material Weakness (Continued)
Audit Finding 2006-01 – 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.
During the course of the audit, we proposed a material audit adjustment that may not have been
identified as a result of the city's existing internal control and therefore, could have resulted in a
material misstatement of the financial statement.
City's Response
The City Council and City staff are aware of the limited personnel handling the City's financial
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.
City of St. Joseph
Communications Letter
December 31, 2015
City of St. Joseph
Table of Contents
Report on Matters Identified as a Result of
the Audit of the Financial Statements 1
Material Weakness 3
Other Deficiency 5
Required Communication 6
Financial Analysis 9
Emerging Issues 23
1 1
Report on Matters Identified as a Result of
the Audit of the Financial Statements
Honorable Mayor, Members
of the City Council and Management
City of St. Joseph
St. Joseph, Minnesota
In planning and performing our audit of the financial statements of the City of St. Joseph,
Minnesota, as of and for the year ended December 31, 2015, in accordance with auditing
standards generally accepted in the United States of America, we considered the City's
internal control over financial reporting (internal control) as a basis for designing auditing
procedures that are appropriate in the circumstances for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control. Accordingly, we do not express an opinion on
the effectiveness of the City's 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.
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 City's financial statements will
not be prevented, or detected and corrected on a timely basis. The material weakness
identified is stated within this letter.
A significant deficiency is a deficiency, or combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those
charged with governance.
During our audit, we also became aware of a deficiency in internal control other than
significant deficiencies or material weaknesses, and other matters that are opportunities for
strengthening internal controls and operating efficiency. It is described in the accompanying
letter under Other Deficiency.
2 2
The accompanying memorandum also includes financial analysis provided as a basis for
discussion. The matters discussed herein were considered by us during our audit and they do
not modify the opinion expressed in our Independent Auditor's Report dated April 28, 2016,
on such statements.
This communication is intended solely for the information and use of the City Council,
management, others within the City and state oversight agencies and is not intended to be
and should not be used by anyone other than these specified parties.
St. Cloud, Minnesota
April 28, 2016
3 3
City of St. Joseph
Material Weakness
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.
As part of this year's audit, we reviewed the City's documentation of its internal control over significant
areas including: cash receipts, cash disbursements, capital assets, payroll, and utility billing. The lack of
adequate segregation of accounting duties could adversely affect the City's 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,
reconcile the entries, and prepare 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, and
generates checks and a check register. The Finance Director also is an authorized signer and has
access to the Mayor's electronic signature. At year-end, the Finance Director reconciles and records
accounts and contracts payable. The City Administrator reviews and approves checks for payment.
Capital Assets
The Finance Director records, processes, reconciles, and posts journal entries related to capital
assets. Department heads review their listing for accuracy.
Payroll
The Finance Director enters employee's 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.
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. The Utility Billing Clerk can enter manual adjustments, 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.
4 4
City of St. Joseph
Material Weakness
IMPROVE SEGREGATION OF ACCOUNTING DUTIES (CONTINUED)
During the course of our audit, we proposed a material audit adjustment that may not have been
identified as a result of the City's existing internal control and, therefore, could have resulted in a
material misstatement of the financial statements.
We recommend management and the City Council review the above deficiencies and improve
segregation of accounting duties where possible to build upon the control environment. We also
recommend the City closely follow its internal control plan and follow through with the control
activities that have been designed.
5 5
City of St. Joseph
Other Deficiency
POLICE DEPARTMENT DEPOSIT RECONCILIATION
During our testing of police deposits, it was noted no one reviews the police secretary's reconciliation of
the Police Department's daily receipts or records maintained by the Police Department. This could lead
to unrecorded collections the City's Finance Department is not aware of. We also noted that deposits are
not being made to the bank in a timely manner.
In addition, we noted that there were several past due, uncollected tickets on hand that were not
currently being pursued. This could result in reduced revenues for the City.
We recommend an additional person, other than the Police Secretary, reconcile the daily collections to
records maintained by the Police Department and that deposits are made to the bank in a timely manner.
We also recommend that the City develop a process for collecting past due tickets.
6 6
City of St. Joseph
Required Communication
We have audited the financial statements of the City of St. Joseph for the year ended December 31,
2015, and have issued our report thereon dated April 28, 2016. Professional standards require that we
provide you with the following information related to our audit.
OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN
THE UNITED STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS
As stated in our engagement letter, our responsibility, as described by professional standards, is to
express an opinion about whether the financial statements prepared by management with your oversight
are fairly presented, in all material respects, in conformity with accounting principles generally accepted
in the United States of America. Our audit of the financial statements does not relieve you or
management of your responsibilities.
As part of our audit, we considered the internal control of the City. Such considerations were solely for
the purpose of determining our audit procedures and not to provide any assurance concerning such
internal control.
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations,
contracts, and grants. However, the objective of our tests was not to provide an opinion on compliance
with such provisions.
Our responsibility for the supplementary information accompanying the financial statements, as
described by professional standards, is to evaluate the presentation of the supplementary information in
relation to the financial statements as a whole and to report on whether the supplementary information is
fairly stated, in all material respects, in relation to the financial statements as a whole.
PLANNED SCOPE AND TIMING OF THE AUDIT
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit involved judgment about the number of transactions to be
examined and the areas to be tested.
Our audit included obtaining an understanding of the City and its environment, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to design
the nature, timing, and extent of further audit procedures. Material misstatements may result from
(1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or
governmental regulations that are attributable to the City or to acts by management or employees acting
on behalf of the City.
7 7
City of St. Joseph
Required Communication
QUALITATIVE ASPECTS OF ACCOUNTING PRACTICES
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 to the financial statements. No new
accounting policies were adopted and the application of existing policies was not changed during the
year ended December 31, 2015. The City implemented GASB 68 and 71 relating to pension accounting
during the year ended December 31, 2015. We noted no transactions entered into by the City during the
year for which there is a lack of authoritative guidance or consensus. All significant transactions have
been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
Depreciation – The City is currently depreciating its capital assets over their estimated useful lives,
as determined by management, using the straight-line method.
Net Other Post Employment Benefits (OPEB) Obligation – This liability is based on an actuarial
study using the estimates of future obligations of the City for post employment benefits.
Net Pension Liability, Deferred Outflows of Resources Relating to Pension Activity, and Deferred
Inflows of Resources relating to Pension Activity – These balances are based on an allocation by
the pension plans using estimates based on contributions.
The financial statement disclosures are neutral, consistent, and clear.
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in performing and completing
our audit.
CORRECTED AND UNCORRECTED MISSTATEMENTS
Professional standards require us to accumulate all misstatements identified during the audit, other than
those that are clearly trivial, and communicate them to the appropriate level of management.
Management did not identify, and we did not notify them, of any uncorrected financial statement
misstatements. A material misstatement relating to capital assets detected as a result of audit procedures
was corrected by management.
8 8
City of St. Joseph
Required Communication
DISAGREEMENTS WITH MANAGEMENT
For purposes of this letter, a disagreement with management is a financial accounting, reporting, or
auditing matter, whether or not resolved to our satisfaction that could be significant to the financial
statements or the auditor's report. We are pleased to report that no such disagreements arose during the
course of our audit.
MANAGEMENT REPRESENTATIONS
We requested certain representations from management that are included in the management
representation letter.
MANAGEMENT CONSULTATIONS WITH OTHER ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves
application of an accounting principle to the City's financial statements or a determination of the type of
auditor's opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
OTHER AUDIT FINDINGS OR ISSUES
We generally discuss a variety of matters, including the application of accounting principles and
auditing standards, with management each year prior to retention as the City's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
OTHER MATTERS
With respect to the supplementary information accompanying the financial statements, we made certain
inquiries of management and evaluated the form, content and methods of preparing the information to
determine that the information complies with accounting principles generally accepted in the United
States of America, the method of preparing it has not changed from the prior period, and the information
is appropriate and complete in relation to our audit of the financial statements. We compared and
reconciled the supplementary information to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
9 9
City of St. Joseph
Financial Analysis
The following pages provide graphic representation of select data pertaining to the financial position and
operations of the City for the past five years. Our analysis of each graph is presented to provide a basis
for discussion of past performance and how implementing certain changes may enhance future
performance. We suggest you view each graph and document if our analysis is consistent with yours. A
subsequent discussion of this information should be useful for planning purposes.
GENERAL FUND
For the year ended December 31, 2015, General Fund revenues exceeded expenditures by $245,397. In
addition to this, the City received $1,501 in insurance recoveries, $278 in proceeds from the sale of
property, $14,562 transferred in from other funds and transferred out $1,800 to other funds. This
resulted in an increase in the General Fund balance of $259,938. Of the City's General Fund balance at
December 31, 2015, $664,604 was assigned for specific expenditures, such as the fire department,
elections, and a City structure/facility study. Another $20,366 was restricted by PEG access fees
restricted for future cable access expenditures. The City also has $77 of its fund balance in nonspendable
form as the funds have already been spent on prepaid insurance. The unassigned portion of the fund
balance, which includes monies set aside for working capital, totaled $1,315,805 represents
approximately five months of 2015 General Fund expenditures. The City's target General Fund balance
is to maintain working capital, a portion of the unassigned balance, in the amount of four to six months
of the next year's budgeted expenditures of the General Fund, excluding the fire department.
The graphs below and on the following page show the City's General Fund balance and the General
Fund revenues and expenditures for the last five years.
$1,034,354
$1,146,290 $1,134,091 $1,090,634
$1,315,805
$615,568 $501,399 $491,170 $500,085
$514,060 $48,993 $32,448 $69,600 $112,556
$150,544 $6,870 $15,216
$20,366
$15,903 $16,058
$19,500 $22,423
$77
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2011 2012 2013 2014 2015
General Fund
Unassigned Assigned for Fire Fund Assigned for Other Purposes Restricted Nonspendable
10 10
City of St. Joseph
Financial Analysis
GENERAL FUND (CONTINUED)
2011 2012 2013 2014 2015
Total Revenues $2,773,578 $2,645,201 $2,626,455 $2,745,142 $2,927,909
Total Expenditures 2,519,310 2,676,215 2,603,383 2,656,243 2,682,512
Fund Balance 1,714,818 1,705,274 1,721,231 1,740,914 2,000,852
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
General Fund
During the year ended December 31, 2015, the City's General Fund revenues increased $182,767, or
6.7%, from 2014, while expenditures increased by $26,269, or 1.0%. These changes in revenues and
expenditures will be discussed by source and function, respectively, on the following pages.
As discussed earlier, fund balance did increase $259,938 from 2014 to 2015. Fund balance has increased
$286,034 or 16.7% since 2010.
11 11
City of St. Joseph
Financial Analysis
GENERAL FUND REVENUES
2011 2012 2013 2014 2015
Taxes 1,193,326$ 1,104,008$ 1,152,533$ 1,124,594$ 1,107,058$
Special assessments 1,458 845 2,080 7,302 3,590
Franchise fees 115,583 116,668 117,894 124,940 124,283
Licenses and permits 141,035 138,631 97,192 105,929 152,158
Intergovernmental 801,027 775,313 884,370 1,018,932 1,107,840
Charges for services 345,032 268,653 244,699 243,067 270,508
Fines and forfeitures 69,592 62,065 45,439 38,330 50,489
Miscellaneous 106,525 179,018 82,248 82,048 111,983
Total Revenues 2,773,578$ 2,645,201$ 2,626,455$ 2,745,142$ 2,927,909$
As discussed earlier, the City's revenue increased $182,767 from 2014 to 2015. The most significant
variance was an increase in intergovernmental revenue of $88,908 primarily due to increased local
government aid and state grants received. License and permit revenue increased $40,229 a result of
increased building activity, miscellaneous revenues increased $29,935 due to a donation from the
College of St. Benedict which they did not receive in 2014.
12 12
City of St. Joseph
Financial Analysis
GENERAL FUND REVENUES (CONTINUED)
Total revenues have been consistent since 2011, increasing just 5.6% overall. The largest variances
between the types of revenue have been the increases in intergovernmental revenues offset by the
decreases in taxes and charges for services. The taxable tax capacity increased in 2015 causing the tax
rate to increase.
$3,675,356
$3,289,107 $3,199,935 $3,215,462 $3,272,269
$1,782,327
$1,660,190
$1,724,270 $1,673,870 $1,704,320
48.49%
50.48%53.89%54.78%
52.70%
96.80%96.92%97.00%97.10%98.38%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
2011 2012 2013 2014 2015
Tax Capacity, Levy and Rates
Taxable Tax Capacity Certified Tax Levy Tax Rate Collection Rate
The pie charts on the following page show the General Fund sources of revenue for 2015 and 2014 as a
percentage of total revenues. The allocation of sources of revenue fluctuates minimally from year-to-
year. Taxes account for the largest component of General Fund revenues, making up 38% of the total.
Intergovernmental revenue accounts for 38%. The total of these two categories accounts for
approximately 76% and 78% of General Fund revenues in 2015 and 2014.
13 13
City of St. Joseph
Financial Analysis
GENERAL FUND REVENUE (CONTINUED)
Taxes
38%
Special assessments
less than 1%
Franchise fees
4%
Licenses and permits
5%Intergovernmental
38%
Charges for services
9%
Fines and forfeitures
2%
Miscellaneous
4%
2015 General Fund Revenues
Taxes
41%
Special assessments
less than 1%
Franchise fees
5%
Licenses and permits
4%Intergovernmental
37%
Charges for services
9%
Fines and forfeitures
1%Miscellaneous
3%
2014 General Fund Revenues
14 14
City of St. Joseph
Financial Analysis
GENERAL FUND REVENUE (CONTINUED)
Taxes Special assessments Franchise fees Licenses and
Permits Intergovernmental Charges for
Services
Fines and
Forfeitures Miscellaneous
Budget $1,065,885 $2,000 $120,950 $99,010 $1,067,090 $261,530 $47,500 $92,650
Actual 1,107,058 3,590 124,283 152,158 1,107,840 270,508 50,489 111,983
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
General Fund Revenues Budget and Actual
The graph above illustrates revenue of the General Fund for 2015 compared to budgeted amounts by
source. Total revenues were over budget by $171,294 or 6.2%.
Tax revenue were $41,173 over budget, a large component to this was collections on delinquent taxes.
Licenses and permit revenues were $53,148 over budget due to conservatively budgeting for
development. Intergovernmental revenues were $40,750 over budget due to police and fire aid coming
in higher than anticipated.
15 15
City of St. Joseph
Financial Analysis
GENERAL FUND EXPENDITURES
2011 2012 2013 2014 2015
General government 492,861$ 499,170$ 485,778$ 552,559$ 582,258$
Public safety 1,277,072 1,290,614 1,405,347 1,419,890 1,376,624
Public works 374,154 353,298 344,935 403,435 329,004
Culture and recreation 202,065 211,578 196,504 199,011 264,168
Capital outlay 173,158 321,555 170,819 81,348 130,458
Total Expenditures 2,519,310 2,676,215 2,603,383 2,656,243 2,682,512
As discussed earlier, General Fund expenditures increased $26,269, or 1.0%, from 2014 to 2015. The
most significant increases in expenditures occurred in general government, culture and recreation, and
capital outlay expenditures. General government expenditures increased by $29,699, or 5.4%, from
2014, due to a rate study being completed. Culture and recreation expenditures increased $65,157 or
32.7% due to staff time and supplies relating to redoing the warming house.
Partially offsetting these increases were decreases in public safety and public works expenditures. Public
safety expenditures decreased $43,266 or 3.0%, a large portion of this was related to open police officer
position in which the replacements were hired at lower rates as well as decreases in fire calls and
utilities. Public works expenditures decreased $74,431 or 18.4%. Lower snow and ice removal
expenditures made up the largest component of this decrease.
The pie charts on the following page show the General Fund expenditures by function for 2015 and
2014 as a percentage of total expenditures. The allocation of expenditures by function was fairly
consistent from 2014 to 2015. Public safety remains the largest component of General Fund
expenditures, decreasing from 53% to 51% during 2015. The most significant change between the two
years is public works expenditures, which decreased from 15% to 12% of total expenditures due to the
decrease in snow and ice removal.
16 16
City of St. Joseph
Financial Analysis
GENERAL FUND EXPENDITURES (CONTINUED)
General government
22%
Public safety
51%
Public works
12%
Culture and recreation
10%
Capital outlay
5%
2015 General Fund Expenditures
General government
21%
Public safety
53%
Public works
15%
Culture and recreation
8%
Capital outlay
3%
2014 General Fund Expenditures
17 17
City of St. Joseph
Financial Analysis
GENERAL FUND EXPENDITURES (CONTINUED)
The chart below illustrates expenditures of the General Fund for 2015 compared to budgeted amounts by
function. Total expenditures were lower than the total budgeted expenditures by $146,773, or 5.2%.
General Government Public Safety Public Works Culture and Recreation Capital Outlay
Budget $641,515 $1,471,680 $378,255 $222,575 $115,260
Actual 582,258 1,376,624 329,004 264,168 130,458
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
General Fund Expenditures Budget and Actual
General government expenditures were $59,257 under budget, the largest pieces of this variance were
health insurance, and software support as more was allocated to other funds. Public safety expenditures
were $95,056 under budget due to open positions throughout the year, a long term officer replaced with
a newer, less expensive officer and budgeting a reserve for fire equipment. Public works expenditures
were $49,251 under budget due to a savings on snow removal. Culture and recreation expenditures were
$41,593 over budget due to staff time and supplies relating to the warming house project.
18 18
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS
Enterprise funds are used to account for operations financed and operated in a manner, similar to private
business enterprises, where the City intends the cost of providing goods or services to the public be
financed or recovered primarily through user charges. The City's Enterprise Funds include the Water,
Sanitary Sewer, Refuse, Storm Water, and Street Light Utility Funds.
Water Fund
The Water Fund showed operating income for the first time in 2015, after four years of operating losses.
Operating revenues increased $47,039, or 6.5%, from 2014 due to rate increases, while operating
expenses increased $8,698, or 1.2%, from 2014 to 2015, due to increased depreciation.
Operations produced a small operating income; with the exclusion of $405,281 in depreciation expense,
the Fund experienced operating income of $413,747. However, depreciation should be considered as a
true expense in operations, being that most equipment and facilities will eventually need upgrades or
replacement. The operations of the Water Fund covered about 102% of depreciation expense.
In addition to the operating revenues and expenses of the Water Fund, there were net non-operating
expenses of $37,449, which is mainly due to interest expense paid on outstanding debt. The operating
and non-operating activities netted with capital contributions and transfers resulted in an increase in net
position of $272,527 to $7,768,363 at December 31, 2015. The cash and investments balance at
December 31, 2015, totaled $2,354, a decrease of $17,574.
2011 2012 2013 2014 2015
Operating Revenues $502,359 $626,360 $713,136 $723,850 $770,889
Operating Expenses 734,017 758,440 733,526 753,725 762,423
Operating Income (Loss) with Depreciation (231,658)(132,080)(20,390)(29,875)8,466
Operating Income without Depreciation 153,517 250,450 357,200 349,539 413,747
$(400,000)
$(200,000)
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
Water Fund
19 19
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Sanitary Sewer Fund
Operating revenues increased $178,469, or 27.0%, from 2014 to 2015, while operating expenses
increased $1,745, or 0.2%. The increase in revenue is due to the City raising rates.
The Sewer Fund has shown operating losses for each of the past five years. Due to the nature and cost of
the Sewer Fund's assets, it is difficult to establish sewer rates sufficient to cover replacement of the
assets represented by depreciation expense. Ideally, sewer revenues should cover all operating expenses,
including depreciation. However, depreciation of Sewer Fund assets is a difficult cost to recover from
system users since there are relatively few users in relation to the cost of asset replacement. The
operations of the Sewer Fund covered 98% of depreciation expense.
The graph below indicates the Sewer Fund did generate operating income each year when depreciation
expense is not considered (indicated by the orange bar), thereby covering a portion, but not all of annual
depreciation expense.
In addition to the operating revenues and expenses of the Sewer Fund, there were net non-operating
expenses of $137,713, which is mainly due to $158,874 of interest expense paid on outstanding debt.
Capital contributions and transfers along with the operating and non-operating activities resulted in an
increase in net position of $139,865 to $7,908,671 at December 31, 2015. The cash balance at
December 31, 2015, totaled $750, a decrease of $298,659.
2011 2012 2013 2014 2015
Operating Revenues $494,160 $460,685 $709,892 $661,679 $840,148
Operating Expenses 682,708 681,214 809,378 850,112 848,367
Operating Loss with Depreciation (188,548)(220,529)(99,486)(188,433)(8,219)
Operating Income without Depreciation 66,234 42,217 289,213 204,478 433,404
$(400,000)
$(200,000)
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
Sanitary Sewer Fund
20 20
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Refuse Fund
The following graph displays selected financial data for the Refuse Fund for the past five years. The
Fund consistently showed an operating loss each year. Operating revenues decreased $612, or 0.2%,
while operating expenses decreased $34,520, or 10.7%, from 2014 to 2015 as a result of no rate
increases and monitoring contractor charges versus city billings to residents. These changes resulted in
an operating loss of $3,292 for 2015. The Fund produced operating income of $3,314 when depreciation
is not factored in. The operations of the Refuse Fund cover 50% of the depreciation expense. It should
be noted that the Refuse Fund receives non-operating revenues including interest income and special
assessments revenue, which resulted in a decrease in the Fund's net position of $660. The cash balance
increased $6,074 in 2015 and totaled $231,906 at December 31, 2015.
2011 2012 2013 2014 2015
Operating Revenues $298,909 $294,998 $298,123 $285,197 $284,585
Operating Expenses 305,660 296,119 316,087 322,397 287,877
Operating Loss with Depreciation (6,751)(1,121)(17,964)(37,200)(3,292)
Operating Income (Loss) without Depreciation (6,751)(1,121)(11,458)(30,694)3,314
$(50,000)
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Refuse Fund
21 21
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Storm Water Fund
The Storm Water Fund showed operating losses in the past five years. Operations were consistent with
the prior year. Operating revenues increased $628, or 0.6%, from 2014 to 2015, while operating
expenses increased $12,742, or 7.6%.
The Storm Water Fund produced an operating loss of $82,548 with depreciation and operating income
of $15,211 without depreciation expense. The operations of the Storm Water Fund covered
approximately 16% of depreciation expense. The Storm Water Fund also reported non-operating
revenues including investment income and special assessments totaling $3,204, with capital
contributions and transfers of $18,765 for bonded improvement projects to other funds. Fund activity
resulted in decrease in net position of $78,695. The cash balance increased $4,471 in 2015 and totaled
$229,796 at December 31, 2015.
We recommend the City continue to monitor rates as well as operating expenses to ensure the Fund's
profitability in the future.
2011 2012 2013 2014 2015
Operating Revenues $100,093 $101,336 $102,009 $97,505 $98,133
Operating Expenses 171,383 169,508 170,289 167,939 180,681
Operating Loss with Depreciation (71,290)(68,172)(68,280)(70,434)(82,548)
Operating Income without Depreciation 26,153 29,179 28,946 27,224 15,211
$(100,000)
$(50,000)
$-
$50,000
$100,000
$150,000
$200,000
Storm Water Fund
22 22
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Street Light Utility
The Street Light Utility Fund was opened during 2013 to track activity relating to the street light utility.
The Street Light Utility Fund showed operating income in 2014 and 2015 compared to an operating loss
in 2013. Operating revenues decreased $2,473, or 3.9%, from 2014 to 2015 while operating expenses
increased $3,220, or 6.4% as a result of increased time allocation and repairs and maintenance.
The Street Light Utility Fund produced an operating income of $6,813. The fund also reported non-
operating income including investment income and special assessments totaling $209, which resulted in
an increase in net position of $7,022. The cash balance increased $11,190 in 2015 and totaled $19,742 at
December 31, 2015.
We recommend the City continue to monitor rates as well as operating expenses to ensure the Fund's
profitability in the future.
$(20,000)
$(10,000)
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
2013 2014 2015
2013 2014 2015
Operating Revenues $43,066 $63,037 $60,564
Operating Expenses 47,638 50,531 53,751
Operating Income (Loss)(4,572)12,506 6,813
Street Light Utility
23 23
City of St. Joseph
Emerging Issues
Executive Summary
The following is an executive summary of financial and business related updates to assist you in staying
current on emerging issues in accounting and finance. This summary will give you a preview of the new
standards that have been recently issued and what is on the horizon for the near future. The most recent
and significant updates include:
Accounting Standard Update –GASB Statement No. 75 - Accounting and Financial Reporting
for Postemployment Benefits Other Than Pensions –GASB has issued GASB statement 75
relating to accounting and financial reporting for postemployment benefits other than pensions. The
new statement requires governments in all types of OPEB plans to present more extensive note
disclosures and required supplementary information (RSI) about their OPEB liabilities.
The following are extensive summaries of each of the current updates. As your continued business
partner, we are committed to keeping you informed of new and emerging issues. We are happy to
discuss these issues with you further and their applicability to your city.
ACCOUNTING STANDARD UPDATE – GASB STATEMENT NO. 75 - ACCOUNTING AND
FINANCIAL REPORTING FOR POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
The primary objective of this Statement is to improve accounting and financial reporting by state and
local governments for postemployment benefits other than pensions (other postemployment benefits or
OPEB). It also improves information provided by state and local governmental employers about
financial support for OPEB that is provided by other entities. This Statement results from a
comprehensive review of the effectiveness of existing standards of accounting and financial reporting
for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful
information, supporting assessments of accountability and interperiod equity, and creating additional
transparency.
This Statement replaces the requirements of Statements No. 45, Accounting and Financial Reporting by
Employers for Postemployment Benefits Other Than Pensions, as amended, and No. 57, OPEB
Measurements by Agent Employers and Agent Multiple-Employer Plans, for OPEB. Statement No.
74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new
accounting and financial reporting requirements for OPEB plans.
GASB Statement 75 requires governments to report a liability on the face of the financial statements for
the OPEB that they provide:
Governments that are responsible only for OPEB liabilities related to their own employees and
that provide OPEB through a defined benefit OPEB plan administered through a trust that meets
specified criteria will report a net OPEB liability—the difference between the total OPEB
liability and assets accumulated in the trust and restricted to making benefit payments.
24 24
City of St. Joseph
Emerging Issues
ACCOUNTING STANDARD UPDATE – GASB STATEMENT NO. 75 - ACCOUNTING AND
FINANCIAL REPORTING FOR POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
(CONTINUED)
Governments that participate in a cost-sharing OPEB plan that is administered through a trust
that meets the specified criteria will report a liability equal to their proportionate share of the
collective OPEB liability for all entities participating in the cost-sharing plan.
Governments that do not provide OPEB through a trust that meets specified criteria will report
the total OPEB liability related to their employees.
GASB Statement 75 carries forward from Statement 45 the option to use a specified alternative
measurement method in place of an actuarial valuation for purposes of determining the total OPEB
liability for benefits provided through OPEB plans in which there are fewer than 100 plan members
(active and inactive). This option was retained in order to reduce costs for smaller governments.
GASB Statement 75 requires governments in all types of OPEB plans to present more extensive note
disclosures and required supplementary information (RSI) about their OPEB liabilities. Among the new
note disclosures is a description of the effect on the reported OPEB liability of using a discount rate and
a healthcare cost trend rate that are one percentage point higher and one percentage point lower than
assumed by the government. The new RSI includes a schedule showing the causes of increases and
decreases in the OPEB liability and a schedule comparing a government's actual OPEB contributions to
its contribution requirements.
Information provided above was obtained from www.gasb.org.