HomeMy WebLinkAbout[07] 2019 Audit Presentation
Council Agenda Item 7
MEETING DATE: May 4, 2020
AGENDA ITEM: 2019 Audit Presentation – Steve Wischmann, Audit Partner
SUBMITTED BY: Finance
PREVIOUS COUNCIL ACTION: The City Council hired BerganKDV to conduct the 2019
financial audit.
BACKGROUND INFORMATION: Annually the City is required to have an
independent audit completed. The final audited statements are presented to the City Council and
submitted to the State of Minnesota. Steve Wischmann from Bergan Kern, DeWenter, Viere,
Ltd. (BKDV) will be here to provide an overview of the audit and financial status as of
December 31, 2019.
The audited financial statements can be cumbersome to read. Although the entire report is
important for the users of the statements, the Management Discussion and Analysis (MD&A) on
pages 5-22 provide a nice overview of the financial highlights for 2019 and the economic factors
that will affect the upcoming years. City staff prepared the MD&A analysis. The report
provided titled “Communications Letter” is an analysis of the financial condition of the City by
BKDV.
BUDGET/FISCAL IMPACT: Informational only
ATTACHMENTS: Request for Council Action
2019 Audited Financial Statements
2019 Communications Letter
REQUESTED COUNCIL ACTION: Accept the 2019 Audited Financial Statements.
City of St. Joseph
Stearns County, Minnesota
Financial Statements
December 31, 2019
City of St. Joseph
Table of Contents
Required Supplementary Information (Continued)
Schedule of City Contributions and Non-Employer Contributing Entities
Fire Relief Association 86
Notes to Required Supplementary Information 88
Supplementary Information
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget
and Actual General Fund 94
Combining Balance Sheet Nonmajor Governmental Funds 96
Combining Statement of Revenues, Expenditures, and Changes in Fund
Balances Nonmajor Governmental Funds 102
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 109
Minnesota Legal Compliance 111
Schedule of Finding and Response on Internal Control 112
City of St. Joseph
Elected Officials and Administration
December 31, 2019
Elected OfficialsPositionTerm Expires
Rick SchultzMayor January 2021
Robert LosoCouncil MemberJanuary 2021
Troy GorackeCouncil MemberJanuary 2021
Brian TheisenCouncil MemberJanuary 2023
Anne BuckvoldCouncil MemberJanuary 2023
Administration
Kris AmbuehlCity AdministratorAppointed
Lori BartlettFinance DirectorAppointed
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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, 2019, 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
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Opinions
In our opinion, the financial statements referred to in the first paragraph 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, 2019, and the respective changes in financial position and, where applicable, cash
flows thereof, and the budgetary comparison for the General Fund and State Collected Sales Tax Fund
for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
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.
The combining and individual nonmajor fund financial statements are the responsibility of management
and were derived from and relates 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.
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Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 22,
2020,onour consideration of the Cityof St.Joseph'sinternal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contractsand grant agreements,and
other matters.The purpose of that report is solely to describe the scope of our testing of internal control
over financial reporting and compliance andthe results of that testing, and not to provide an opinion on
the effectiveness of the City'sinternal control over financial reporting or on compliance.That report is an
integral part of an audit performed in accordance with Government Auditing Standardsin considering
theCity of St.Joseph'sinternal control over financial reporting and compliance.
St. Cloud, Minnesota
April 22,2020
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City of St. Joseph
statements this narrative overview and analysis of the financial activities of the City of St. Joseph for the
fiscal year ended December 31, 2019.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2019 include the following:
The assets of the City of St. Joseph exceeded its liabilities at the close of the most recent fiscal
year by $38,854,716. Of this amount, $6,165,618 may be used to meet
obligations to citizens and creditors (unrestricted net position).
4,412,571 from 2018 to 2019. Half of
the increase represents unspent bond proceeds for the industrial park and street overlay projects.
Other funds with the largest increase in net position include the water, sewer and storm water
funds. All three enterprise funds received developer capital contributions totaling $1,973,043
amounting to 71% of the increase in net position in the proprietary funds.
combined ending fund balances of $9,153,995, an increase of $2,751,026. Of this amount
$1,622,111 . The remaining balance of
$7,531,884 is set aside for specific future expenditures.
At the end of the current fiscal year, unassigned fund balance for the general fund was
$1,631,900 or 47% of the total general fund expenditures ($1,641,091 or 48% excluding the fire
and PEG access funds).
-term debt increased by $1,917,938 during the current fiscal
year. The City had four debts paid in full, issued two larger debts, and added to the draw for the
St. Cloud biosolids Public Facilities Authority (PFA) loan in 2019. The new debts issued paid for
industrial park improvements, street overlay improvements, and ortion of the St.
Cloud biosolids improvements.
OVERVIEW OF THE FINANCIAL STATEMENTS
financial statements. ements are comprised of three
components: 1) government-wide financial statements, 2) fund financial statements and 3) notes to the
financial statements. This report also contains other supplementary information in addition to the basic
financial statements themselves.
Government-Wide Financial Statements. The government-wide financial statements are designed to
private-sector business.
The Statement of
liabilities, with the difference between the two reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City of
St. Joseph is improving or deteriorating.
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City of St. Joseph
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).
Both 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, utilize 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 one of
the following 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 -term
financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so readers may better understand the long--term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues,
expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison
between governmental funds and government-wide governmental activities.
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City of St. Joseph
The City of St. Joseph maintains forty-two individual governmental funds. Information is presented
separately in the governmental fund balance sheet and in the governmental fund statement of revenues,
expenditures and changes in fund balances for the general fund and state collected sales tax special
revenue 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 and state collected sales tax
funds. A budgetary comparison statement has been provided for these funds (pages 33-35) to
demonstrate compliance with the budgets.
The basic governmental fund financial statements can be found on pages 26 -31 of this report.
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 36-43 of this report.
Notes to 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
financial statements can be found on pages 45-80 of this report.
Other Information. The combining statements referred to earlier in connection with non-major
governmental funds can be found on pages 96-107 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
position. In the case of the City of St. Joseph, assets exceeded liabilities by $38,854,716 at the close of
the most recent fiscal year.
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City of St. Joseph
reflects its investment in capital assets
(e.g. land, buildings, machinery and equipment) net accumulated depreciation, less any related debt used
to acquire those assets that is still outstanding. The City of St. Joseph utilizes these capital assets to
provide services to citizens; consequently, these assets are not available for future spending. Although
that the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
NET POSITION
Governmental ActivitiesBusiness-Type ActivitiesTotal
Assets201920182019201820192018
Current and other assets$ 11,569,653$ 8,168,281$ 2,682,064$ 2,361,022$ 14,251,717$ 10,529,303
Capital assets, net 17,991,864 16,315,154 34,070,689 32,961,780 52,062,553 49,276,934
Total assets 29,561,517 24,483,435 36,752,753 35,322,802 66,314,270 59,806,237
Deferred Outflows
of Resources
Deferred outflows of resources
related to pensions 719,067 1,091,570 23,234 49,921 742,301 1,141,491
Total deferred outflows 719,067 1,091,570 23,234 49,921 742,301 1,141,491
Liabilities
Current liabilities 2,035,423 1,416,169 1,303,001 1,571,829 3,338,424 2,987,998
Long-term liabilities 13,922,151 11,182,087 9,717,387 10,814,010 23,639,538 21,996,097
Total liabilities 15,957,574 12,598,256 11,020,388 12,385,839 26,977,962 24,984,095
Deferred Inflows
of Resources
Deferred inflows of resources
related to lease receivables 89,817 132,460 - - 89,817 132,460
Deferred inflows of resources
related to pensions 1,079,913 1,325,459 54,163 63,569 1,134,076 1,389,028
Total deferred inflows 1,169,730 1,457,919 54,163 63,569 1,223,893 1,521,488
Net Position
Invested in capital assets,
net related debt 7,568,790 7,223,470 23,627,091 21,249,153 28,318,026 26,880,985
Restricted 4,371,072 3,857,499 - - 4,371,072 3,857,499
Unrestricted 1,213,418 437,861 2,074,345 1,674,162 6,165,618 3,703,661
Total net position$ 13,153,280$ 11,518,830$ 25,701,436$ 22,923,315$ 38,854,716$ 34,442,145
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City of St. Joseph
11%) represents resources that are subject
to external restrictions on how they may be used. The remaining balance of unrestricted net position is a
surplus of $6,165,618, or a surplus of $3,287,763 after removing the unrestricted portion of
governmental debt for enterprise assets. The surplus is largely
. The liability fluctuates significantly with
changes in amortization assumptions such as the rate of return. Without the net pension liability, the
unrestricted net position would be a surplus of $7,891,344.
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 and governmental activities.
Governmental Activities. The governmental activities change in net position balance increased
$1,634,450. with development activity,
increase in interest earnings, conduit debt fees received, and unspent bond proceeds. Contributed assets
were received from a developer project and recorded as a capital grant, increasing the governmental
activities net position.
Business-Type Activities. There was a $2,778,121 or 12% increase in the total net position for the
business-type activities. The increase is due to paying down bonds, raising utility rates and significant
development fees collected. The full value of the assets is netted against the bonds payable. Also, plant
and lines increased with developer contributions increasing the business-type net position.
The graph and charts on the following pages summarize and graphically depict the changes in net
position for the governmental and business-type activities.
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City of St. Joseph
CHANGE IN NET POSITION
RevenuesGovernmental ActivitiesBusiness-Type ActivitiesTotal
Program Revenues201920182019201820192018
Charges for services$ 903,089$ 1,195,623$ 3,371,497$ 3,420,138$ 4,274,586$ 4,615,761
Operating grants and
contributions 265,382 176,940 1,335 (35,337) 266,717 141,603
Capital grants and
contributions 3,554,879 210,562 - 84,109 3,554,879 294,671
General Revenues
Property taxes 2,340,046 2,183,051 22,356 22,554 2,362,402 2,205,605
Tax increments 140,321 118,903 - - 140,321 118,903
Sales taxes 498,304 442,677 - - 498,304 442,677
Franchise fees 134,704 131,212 - - 134,704 131,212
Lodging taxes 15,584 15,930 - - 15,584 15,930
Miscellaneous taxes 10,276 - - - 10,276 -
State aids 1,005,897 1,001,501 - - 1,005,897 1,001,501
Unrestricted investment earnings 238,224 33,638 109,852 22,551 348,076 56,189
Gain on disposal of assets 4,000 - 236 473 4,236 473
Total revenues 9,110,706 5,510,037 3,505,276 3,514,488 12,615,982 9,024,525
Expenses
General government 948,716 1,206,414 - - 948,716 1,206,414
Public safety 1,820,630 1,886,542 - - 1,820,630 1,886,542
Public works 1,409,166 1,415,942 - - 1,409,166 1,415,942
Economic development 394,944 187,355 - - 394,944 187,355
Culture and recreation 671,149 532,681 - - 671,149 532,681
Interest on long-term debt 309,733 283,649 - - 309,733 283,649
Water - - 947,461 1,044,241 947,461 1,044,241
Sanitary sewer - - 1,127,772 1,086,230 1,127,772 1,086,230
Storm water - - 319,085 307,941 319,085 307,941
Refuse - - 198,628 210,349 198,628 210,349
Street light utility - - 56,127 70,890 56,127 70,890
Total expenses 5,554,338 5,512,583 2,649,073 2,719,651 8,203,411 8,232,234
Increase (decrease) in net position
before transfers 3,556,368 (2,546) 856,203 794,837 4,412,571 792,291
Transfers (1,921,918) (32,270) 1,921,918 32,270 - -
Change in net position 1,634,450 (34,816) 2,778,121 827,107 4,412,571 792,291
Net Position
Net position - beginning 11,518,830 11,553,646 22,923,315 22,096,208 34,442,145 33,649,854
Net position - ending$ 13,153,280$ 11,518,830$ 25,701,436$ 22,923,315$ 38,854,716$ 34,442,145
10
City of St. Joseph
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City of St. Joseph
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12
City of St. Joseph
Governmental Funds. 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 fiscal year 2019, its governmental funds reported
a combined fund balance of $9,153,995, an increase of $2,751,026 from 2018.
governmental funds were $8,932,769, while expenditures were $10,207,674. The excess of expenditures
over revenues is largely attributed to construction costs for the industrial park and street overlay
improvements. The improvements are paid mainly from bond proceeds that are reported as other
financing sources. After adding other financing sources and uses, the net change in fund balance is an
increase of $2,751,026. By removing the two construction project funds, governmental revenues
exceeded expenditures by $898,073. The major funds will be discussed further below. Other
governmental non-major funds ended the year $390,952 increase in fund balances. Two non-major
funds to recognize are the Field Street improvement bonds of 2016 and the EDA fund. The Field Street
of $213,607. The EDA fund did not fully expend capital that was budgeted with property tax proceeds.
The EDA budgets capital programming over a five-year period. Some years will have higher
expenditures as other years. The EDA levy is stabilized with the five-year capital plan.
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 $1,631,900.
liquidity, it may be useful to compare both unassigned fund balance to total fund expenditures.
Unassigned fund balance represents 47%, (just under six months) working capital. 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. The excess unassigned fund balance can be attributed to
development related revenue, interest earnings, a one-time conduit debt fee, increased lease revenue and
under spending salaries and wages. Salaries and wages were less due to the retirement of a long-term
administrator, postponing the hire of a finance technician until late in the year, delaying the replacement
hire of the police sergeant and implementing the compensation study in 2020 versus 2019. General fund
revenues exceeded budgeted amounts by $189,400 (5% over budget).
General fund expenditures were less than budgeted by $95,238. The City of St. Joseph sets funds aside
for the street maintenance plan. The street maintenance plan expenditures fluctuate each year, increasing
in 2019 by $19,081. In addition to the general street maintenance, improvement projects are planned
over a five-year period. General government expenditures were under budgeted amounts mainly due to
the retirement of the administrator and postponing the hire of the finance technician. General
government wages and benefits were less than budget by $16,100. This budget item fluctuates with the
maintenance needs of the government center versus other departments. Police expenditures were
$84,255 under budget due to the sergeant replacement delayed to 2020. Ice and snow removal reported
$33,931 over budget. The City of St. Joseph annexed a portion of the St. Joseph Township in February
2019. Per the agreement, the City took over snow removal immediately. Spring 2019 was one of the
snowiest seasons in Minnesota causing the expenditures to go over-budget. The fire capital outlay
includes annual funding for the 5-year capital equipment plan where actual expenditures will occur in a
future year.
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City of St. Joseph
As a result of the prudent financial policies of the City, the general fund remained stable.
The schedule below presents a summary of general fund revenues and expenditures.
General Fund Budgetary Highlights
Over the course of the year, the City of St. Joseph did not amend the annual operating budget.
Historically, the City has minimal budget amendments during the budget year.
Actual revenues were $189,400 more than expected mainly due to development related charges,
interest earnings and conduit debt issuance fee. In addition, state aids came in higher than
budgeted. The City budgets conservatively for revenues not known at the time the budget is set.
Actual expenditures were $95,238 less than budget. A couple points on the expenditure budget:
o To help minimize fluctuations in the budget, the City budgets family insurance coverage
for the majority of the employees even though some elect single or no coverage. The City
will be faced with a number of retirees in the next five (5) years. Along with that comes
the payment of unused accumulated benefit hours. Therefore, health insurance savings
between budget and 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 their insurance election and when new hires are
made.
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City of St. Joseph
o The City manages a five-year capital equipment plan (CEP) and capital improvement
plan (CIP). During the budget process each year the plans are reviewed and the council
prioritizes which projects/equipment will be funded. The funds are set aside for future
purchases as the useful life of equipment and infrastructure are depleted, or as new
equipment needs are warranted. Due to the large costs associated with some of the
needed equipment (such as a street sweeper), setting funds aside minimizes the
fluctuations in the capital outlay budget.
o Staff changes in both the Police Department and Administration had a significant impact
on the expenditures for 2019. The position of sergeant has remained vacant and is
expected to be filled in 2020. The retirement of the long-term administrator and
replacement with a new person reduced the costs. In addition, the finance technician was
budgeted with an anticipated start
November 2019. Finally, the compensation study that began in 2017 was expected to be
implemented in 2019. The study was delayed until 2020. The result reflected in salaries
and benefit savings in 2019.
o Culture and recreational expenditures ended 2019 over budget. In 2015 the City of St.
Joseph purchased the former Kennedy Elementary (Colts Academy) from Independent
School District 742. The building is leased to a church and a child care center. It is also
used for the St. Joseph Food Shelf and Historical Society. The gym is open to the public
on limited hours. The costs to maintain the building is higher than anticipated.
o Streets and highways realized expenditures over budget mainly due to snow and ice
removal as discussed earlier.
State Collected Sales Tax Fund
The state collected sales tax fund began in 2006. The State of Minnesota and voters in the St. Cloud area
approved a 0.5% local option sales tax to fund regional projects such as a community facilities,
transportation needs, and parks and trails. As of December 31, 2019, the City of St. Joseph collected
$4,761,975; $939,221 more than originally budgeted when legislative authority was granted. The City
spent $6,395,099 since its inception. The fund received bond proceeds, a federal grant and other
revenues totaling $2,527,509. The fund balance at the end of the year was $973,112. In 2018 the City
authorized the construction of phase II/III of the CR2 trail. The trail extends adjacent to MN St W
th
starting at 4 Avenue NW to CR 2 and then south along CR 2 to CR 51. The funding for the trail
includes a combination of federal funds administered through the St. Cloud Area Planning Organization
and sales tax revenue. Construction is anticipated to be completed in August 2020.
State Collected Sales Tax Fund Budgetary Highlights
The city council adopts a budget for the state collected sales tax fund through the 5-year capital
improvement plan. Budgets were not amended during the year. The fund ended the year $656,422 over
budget. Sales tax revenues were $58,304 over budgeted amount and capital outlay was $8,002 under
budget. The federal highway grant received for the trail project was $559,394 over budget. The City
anticipated partial collections in 2019 with the balance in 2020. The entire grant was received in 2019.
Sales tax revenues continue to exceed original expectations when the State approved the St. Cloud area
local option collection. The City budgets conservatively to avoid over-committing available funds for
project planning.
15
City of St. Joseph
Proprietary Funds.
information found in the government-wide financial statements, but in more detail. The unrestricted net
position of the proprietary funds increased $2,774,809 overall. The following five paragraphs provide a
brief financial overview of each major proprietary fund.
Water Enterprise Fund
. In 2019
net position increased $1,188,443. Before transfers and capital contributions, the operating income
reported a $173,119 surplus. The net position includes depreciation of $432,706. The water operating
revenues are covering over 100% of the depreciation, both operationally and when adding non-
operational revenues and expenses. Bonded debt payments in the water fund totaled $691,873. Debt
payments are covered by water rates, debt levy, water connection and trunk fees, and transfers from the
sewer fund. Water rates have been incrementally increased over the past few years to cover operational
costs as well as water related debt. The current rates are sufficient for the water fund operations and debt
costs. Water revenues are set aside for future improvements such as required maintenance on the current
water tower and adding a second water tower to the utility system. Water connections can dip in trying
economic times. Having water reserves can level rate adjustments and help weather difficult economic
times. Rates are reviewed annually as part of the budget adoption.
Sanitary Sewer Enterprise Fund
. In 2019,
808,599 and realized $401,010 in operating income.
User fees are covering 100% of the depreciation, and non-operating revenues and expenses. 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 plant and conveyance system. St. Joseph issued four notes with the City of St.
Cloud for various facility and conveyance projects. In addition, St. Joseph issued one bond for
. In 2019, the City paid four sewer debts in
full, three of the debts were paid off early. The debt costs are partially paid with reserved Sewer Access
Charges (SAC), trunk fees and sewer usage rates. The development fees in 2019 greatly assisted in
covering debt costs. As a result, rate increases have slowed down to a more average increase (1-3%)
after a few years of significant user rate increases. Rates are reviewed annually as part of the budget
adoption.
Refuse Enterprise Fund
The refuse fund is used to account for the contract services to provide residential refuse, recycling and
compost services. The refuse fund ended 2019 with a net position of $239,856. City council opted to
under-fund the costs to operate the refuse and compost programs by using unused net position to cover
the difference. For 2019, the City expected to reduce the net position $20,000. Investment income came
in better than expected resulting in a $12,031 decrease in net position. The overall net position is healthy
and able to manage the decrease.
16
City of St. Joseph
Storm Water Enterprise Fund
. In 2019, the
increased $763,531; a decrease of $19,799 before capital contributions
and transfers. The storm water fund realized an operating loss of $31,172, covering 71% depreciation. In
2018 the city council opted to reduce the storm water usage rates by half in order to accommodate
increases in other utilities. The rates are being stepped up to get closer to covering costs. The operating
loss was anticipated and the storm water fund could absorb with the healthy net position balance. In
addition, the storm water fund collected $80,013 in development fees to assist in operational activities of
the fund.
Street Light Utility Enterprise Fund
. As of
December 31, 2019 change in net position increased $26,267, and an
operating income of $24,407. The city council increased rates slightly to ensure expenses are covered by
fees. The street light utility fund also covers expenses for holiday lights on the street lights and other
utility poles along Minnesota Street and College Avenue. Overall, the net position of the street light
utility fund has grown to $60,959 since splitting from the general fund in 2013.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The capital assets include land, intangible assets, buildings, improvements, machinery and equipment,
infrastructure, easements, plant and lines, sewer rights, and construction in progress. The City of St.
net capital assets for its governmental and business-type activities as of December 31, 2019,
amounts to $52,062,553 (net of accumulated depreciation), an increase of $2,785,619. The increase in
net capital assets was attributable to the developer infrastructure contribution of Jasmine Court. In
addition, construction is progress increased $14,908,809. Construction in progress is not depreciated and
increases the net capital assets. Net investment in capital assets increased $1,437,041. The contributed
assets aided in the increase due to no offsetting debt when the assets were acquired.
The table on the following page
an be found in Note 5 beginning on
page 58 of this report. Total depreciation expense for 2019 was $2,513,580.
17
City of St. Joseph
CAPITAL ASSETS
Governmental ActivitiesBusiness-Type ActivitiesTotal
201920182019201820192018
Land$ 763,197 $ 763,197 $ 377,882 $ 377,882 $ 1,141,079 $ 1,141,079
Easements 200,085 200,085 67,915 67,915 268,000 268,000
Construction in progress 3,637,903 764,136 3,769,371 1,860,536 7,407,274 2,624,672
Improvements 1,365,946 1,353,806 289,760 289,760 1,655,706 1,643,566
Infrastructure 20,551,930 20,389,483 - - 20,551,930 20,389,483
Buildings 8,735,795 8,735,795 8,797,686 8,797,686 17,533,481 17,533,481
Intangible assets 200,000 200,000 - - 200,000 200,000
Plant and lines - - 24,430,657 24,190,729 24,430,657 24,190,729
Sewer rights - - 9,068,746 9,068,746 9,068,746 9,068,746
Machinery and equipment 3,950,112 3,860,682 867,104 865,445 4,817,216 4,726,127
Less: accumulated
depreciation (21,413,104) (19,952,030) (13,598,432) (12,556,919) (35,011,536) (32,508,949)
Total net capital assets$ 17,991,864 $ 16,315,154 $ 34,070,689 $ 32,961,780 $ 52,062,553 $ 49,276,934
Long-Term Liabilities
-term liabilities includes bonded debt (including notes payables),
compensated absences and net pension liability. Overall the long-term liabilities totaled $24,469,890 as
of December 31, 2019, an increase of $1,854,380.
The City of St. Joseph issued two debts, added to a St. Cloud PFA loan draw and paid four debts in full
(three called early). The debt issuance amounts were higher than the amounts paid in full. The bonds and
notes liabilities increased $1.9 million.
At the end of the current fiscal year, the City of St. Joseph had total net bonded debt outstanding of
$24,379,143, an increase of $1,917,938. Of this amount, $13,935,545 comprises debt backed by the full
faith and credit of the government.
notes secured by specified revenue sources (i.e. utility bonds). Other long-term debt includes
compensated absences payable and net pension liabilities.
Compensated absences increased $4,306 in 2019. The general increase in wages including step increases
and the relatively low turnover rate caused the compensated absences liability to increase. A long time
employed city administrator retired in 2019. Although wages increased and accruals increased with low
turnover, the reduction of compensated absences from the one retiree kept the increase in compensated
absences relatively flat.
on of
Minnesota (PERA). As per Minnesota Statutes, the City is required to participate in the PERA program.
. For 2019,
the net pension liability decreased $67,864.
-term liabilities is included in the table on the following page.
18
City of St. Joseph
OUTSTANDING LONG-TERM LIABILITIES
IncreasePercent
Governmental Activities20192018(Decrease)Change
General obligation bonds$ 4,367,978 $ 4,719,469$ (351,491)-7%
General obligation special assessment bonds 8,146,149 4,490,835 3,655,31481%
General obligation abatement bonds 1,421,418 1,538,274 (116,856)-8%
Compensated absences payable 449,588 455,241 (5,653)-1%
Net pension liability 1,099,030 1,150,594 (51,564)-4%
Total governmental activities$ 15,484,163 $ 12,354,413$ 3,129,75025%
IncreasePercent
Business-Type Activities20192018(Decrease)Change
General obligation revenue bonds$ 5,281,450 $ 6,194,866$ (913,416)-15%
Notes payable 5,162,148 5,517,761 (355,613)-6%
Compensated absences payable 161,588 151,629 9,9597%
Net penion liability 234,921 251,221 (16,300)-6%
Total business-type activities$ 10,840,107 $ 12,115,477$ (1,275,370)-11%
The City of St. Joseph issued $3,705,000 general obligation improvement bonds, series 2019A in
August 2019. The bonds paid for the 2019 street improvements and industrial park expansion.
In addition, the City of St. Joseph added to the public facilities authority (PFA) note with the City of St.
Cloud for wastewater biosolids treatment improvements in the amount of $175,721. The City of St.
Joseph is a part of the St. Cloud Area Wastewater Advisory Commission (SCAWAC). Wastewater
treatment is provided by the City of St. Cloud to six area cities. Each city purchases sewer treatment
rights in the wastewater treatment facility. Also part of the agreement, the area cities participate in
conveyance costs to transport the wastewater to the facility. At the end of 2019, the City of St. Joseph
has four notes outstanding with the City of St. Cloud for treatment facility and conveyance projects.
As stated earlier, the City of St. Joseph increased bonded indebtedness by $1,917,938. After the two
bond issues and addition to the PFA note stated above, the City paid four debts in full in 2019. New debt
issues exceeded bond payments during the year.
The City of St. Joseph maintained their bond rating AA-. The report
stated the City had adequate economy, strong management and budgetary performance and very strong
liquidity. The debt and contingent liabilities of the City were rated weak.
Minnesota 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 $11,050,299
which significantly exceeds the outstanding pure general obligation debt of $4,674,000.
19
City of St. Joseph
Additional information on the Cit-term liabilities can be found in Note 6 beginning on page 60
of this report.
The past few years have been exciting in the City of St. Joseph after several years of contracting
economies from the 2008 Great Recession. After several years of declining market values and slow
19.65% the past five years and development has
been encouraging. As a result of improved conditions, the City has been able to keep a stable tax rate
while maintaining service levels.
In the development market the City added 7 new single-family homes and a market rate multi-family
facility for residential living units. New development on the commercial side included 87 remodels and
additions. For commercial new construction, Strack Construction completed an 8,854 square foot
building for office and warehouse facilities in the industrial park. Total market value additions in the
building department added $12,114,568 in value. In the past three years, new construction as well as
remodels/additions and repairs added over $67.8 million in market value for the City of St. Joseph.
In addition to new construction, current structures have impacted the net tax capacity. The sale prices
have increased along with the assessors estimated market values for existing properties. To stay in
compliance with Minnesota Statutes, the sales price ration indicated the need to increase existing market
values. This combined with the new buildings; market values increased 8.04% for the 2019 property
values.
As stated, single family residential construction included 7 new homes built in 2019. Nationally and in
Minnesota the housing market is improving. In the City of St. Joseph, two developers expanded their
developments to provide 34 lots in three subdivisions. In addition, the Country Manor senior
development began construction of single family homes in their first phase development. The first phase
includes twelve detached patio homes; three were constructed. St. Joseph is fortunate to have a very low
foreclosure rate. In fact, homes that become available for sale do not stay on the market for an extended
period of time.
Other new construction in 2019 included the completion of residential units in the 24 North Lofts on
College Ave and the start of the build out of the restaurant suite. The 24 North Lofts project includes 17
residential lofts and restaurant space that will be occupied by a New Orleans restaurant named Krewe.
The facility will also include a separate building that will house New Orleans bakery named Flour and
Flower Bakery. The restaurant and bakery will both open in spring 2020. Also under construction are
two 35 unit market rate apartments. The first complex will open summer 2020, the second in late 2020
or early 2021. mpleted construction of their artisan
studios/administrative offices/welcome center buildings. The College also completed several remodel
and updates to existing dorms and educational facilities.
20
City of St. Joseph
The City of St. Joseph anticipates commercial/industrial development with the expansion of the
Industrial Park that began in 2019. The City was awarded a $1,245,000 BDPI development grant from
the Minnesota Department of Employment and Economic Development department (MN DEED) to
assist with costs for public streets and utilities to create shovel ready industrial lots. Phase one of the
project began fall 2019 and includes 26 lots. The plat was designed with the majority of lots one acre in
size. Since it is easier to combine lots that it would be to split large lots, the small lots allow for
flexibility when selling lots and will be attractive to both small and large industries. The industrial park
project is a combined City and private partnership. The City secured the grant for the public
improvements and the private developer, CLC Partners LLC, own the property and will cover all costs
exceeding the grant amount.
The City Council approved an application with the Central MN Housing Partnership to secure funding
through the Minnesota Small Cities Development Program Grant (SCDP) in the amount of $178,624 in
2018. The grant provides funding to eligible property owners to complete major repairs on their homes.
Participants must meet income level eligibility requirements to receive a loan that is forgivable
incrementally over a seven-year period. The rehabilitation projects are anticipated to be completed in
2020.
Besides developments and rehabilitation projects, the City added to their property market value with the
annexation of a large portion of the St. Joseph Township. The City of St. Joseph and St. Joseph
Township entered into an orderly annexation (OAA) agreement in 1997. In December 2017 the City
notified St. Joseph Township of the intent to exercise their right to annex all the properties included in
the OAA agreement. After negotiations with the Township, the City agreed to annex a portion of the
properties included in the OAA and retain land use controls over the properties not annexed to the City
but included in the OAA. The properties that were not annexed included property east of Ridgewood
th
Road to the Sauk River and properties east of the proposed 20 Avenue Extension to the Sauk River.
The annexation included approximately 230 properties area with a taxable market value of $55.6
million. The annexation of the properties will have varied impacts to the City. The City agreed to create
a Rural Tax rate which would be equal to the Township Tax rate and be adjusted annually in the same
apportion as the City rate is adjusted. Properties zoned Rural Residential qualify for this tax rate. The
agreement includes conditions as to when the full city tax rate applies. Therefore, all properties taxed at
the Rural Tax rate will receive minimal services, equal to the services received while under the
jurisdiction of St. Joseph Township. All commercial and Industrial developed property annexed will be
phased into the City tax rate over a six year period in equal increments. The annexation was approved
and finalized by the State of Minnesota in January 2019.
21
City of St. Joseph
The City of St. Joseph submitted three bonding requests for State Legislative consideration in 2019. The
projects include: pedestrian crossing under CSAH 75 ($1.5 million); Jacob Wetterling Recreation Center
($2.5 million); and development of the East Park canoe and picnic area ($300,000). To help facilitate the
bonding process the City hired a lobbyist. The City has received hearings on the East Park and Jacob
Wetterling Recreation Center projects in the 2019 legislative session. The 2019 State bonding bill was
smaller with anticipation of funding a larger amount in 2020. St. Joseph re-submitted bonding requests
for the Jacob Wetterling Recreation ($4M) and East Park phase I development ($300,000). As part of the
bonding request, the City agrees to at least match the bonding request. In addition to the bonding
requests, the City of St. Joseph hired Four Winds Consulting to conduct a feasibility study on raising
funds for the Jacob Wetterling Recreation Center. If State bonding is awarding for the Recreation
Center, the City will begin a fundraising campaign and design phase.
The CR 2 Trail phase II/III was substantially completed in 2019. The project was awarded federal
transportation funds to assist with construction costs. The City of St. Joseph received $650,954 for the
project. Other projects that began in 2019 and will complete in 2020 include the industrial park
expansion and street overlay improvements. In addition, Minnesota Housing approved tax funding for a
46-unit multi-family affordable housing. The project will begin construction in 2020 with move-in early
in 2021. The housing project will be constructed on a foreclosed property purchased by the City of St.
Joseph.
With a busy year completed, 2020 is expected to be eventful as well. Along with completing 2019
projects and a couple new smaller projects in 2020, planning for 2021 and 2022 projects will be
commissioned.
REQUESTS FOR INFORMATION
. Questions concerning any of the information
provided in this report or requests for additional financial information should be addressed to the
Finance Director, 75 Callaway Street East, St. Joseph, MN 56374.
22
BASIC FINANCIAL STATEMENTS
23
City of St. Joseph
Statement of Net Position
December 31, 2019
Governmental Business-Type
ActivitiesActivitiesTotal
Assets
Cash and investments (including cash equivalents)$ 7,350,090$ 2,190,724$ 9,540,814
Property tax receivable 39,940 416 40,356
Accounts receivable 34,205 456,024 490,229
Interest receivable 22,028 10,058 32,086
Due from other governments 1,638,150 200 1,638,350
Notes receivable 314,663 - 314,663
Lease receivable 89,817 - 89,817
Special assessments receivable
Delinquent 5,134 - 5,134
Deferred 1,800,420 24,642 1,825,062
Prepaid items 9 -
9
Net pension asset 275,197 - 275,197
Capital assets
Land 763,197 377,882 1,141,079
Easements 200,085 67,915 268,000
Construction in progress 3,637,903 3,769,371 7,407,274
Buildings 8,735,795 8,797,686 17,533,481
Infrastructure 20,551,930 - 20,551,930
Improvements 1,365,946 289,760 1,655,706
Intangible asset 200,000 - 200,000
Plant and lines - 24,430,657 24,430,657
Machinery and equipment 3,950,112 867,104 4,817,216
Sewer rights - 9,068,746 9,068,746
Less accumulated depreciation (21,413,104) (13,598,432) (35,011,536)
Capital assets (net of accumulated depreciation) 17,991,864 34,070,689 52,062,553
29,561,517 36,752,753 66,314,270
Total assets
Deferred Outflows of Resources
719,067 23,234 742,301
Deferred outflows of resources related to pensions
$ 30,280,584$ 36,775,987$ 67,056,571
Total assets and deferred outflows of resources
Liabilities
Accounts payable$ 87,925$ 51,019$ 138,944
Contracts payable 224,069 - 224,069
Due to other governments 13,956 74,583 88,539
75,879 7,446 83,325
Salaries and benefits payable
70,582 47,233 117,815
Interest payable
1,000 - 1,000
Unearned revenue
Bond principal payable (net)
Payable within one year 1,479,000 701,000 2,180,000
Payable after one year 12,456,545 4,580,450 17,036,995
Notes payable (net)
Payable within one year - 400,903 400,903
Payable after one year - 4,761,245 4,761,245
Compensated absences payable
Payable within one year 83,012 20,817 103,829
Payable after one year 366,576 140,771 507,347
Net pension liability
1,099,030 234,921 1,333,951
Total liabilities 15,957,574 11,020,388 26,977,962
Deferred Inflows of Resources
89,817 - 89,817
Deferred inflows of resources related to lease receivables
1,079,913 54,163 1,134,076
Deferred inflows of resources related to pensions
Total deferred inflows of resources 1,169,730 54,163 1,223,893
Net Position
7,568,790 23,627,091 28,318,026
Net investment in capital assets
Restricted for
3,151,732 - 3,151,732
Debt service
1,219,340 - 1,219,340
Other purposes
Unrestricted 1,213,418 2,074,345 6,165,618
Total net position 13,153,280 25,701,436 38,854,716
Total liabilities, deferred inflows of resources, and net position$ 30,280,584$ 36,775,987$ 67,056,571
See notes to financial statements.
24
-
4,236
93,65124,41715,58410,276
(19,754)(31,122)
389,366360,852723,759140,321498,304134,704348,076
(771,604)(225,145)(309,733)(830,988)(107,229)
Total
1,479,8102,362,4021,005,8974,519,8004,412,571
(1,097,967)
34,442,14538,854,716
$
$
-------------
236
24,41722,356
(19,754)(31,122)
389,366360,852723,759723,759109,852
1,921,9182,054,3622,778,121
22,923,31525,701,436
Activities
$
$
Business-Type
Net (Expense) Revenue
------
and Changes in Net Position
4,000
93,65115,58410,276
140,321498,304134,704238,224
(771,604)(225,145)(309,733)(830,988)(830,988)
1,479,8102,340,0461,005,8972,465,4381,634,450
(1,097,967)(1,921,918)
11,518,83013,153,280
Activities
Governmental
$
$
--------
4,000
26,002
680,831
and
2,844,0463,554,8793,554,879
Contributions
$
$
Capital Grants
---
265010
206
1,0321,0431,335
164,103100,247265,382266,717
Operating
Grants and
Contributions
$
$
Program Revenues
-
44,93069,55283,96980,534
172,080532,558903,089299,305167,456
1,335,7841,488,4183,371,4974,274,586
Services
Charges for
$ $
City of St. Joseph
Statement of Activities
Year Ended December 31, 2019
Total general revenues and transfers
56,127
948,716394,944671,149309,733947,461319,085198,628
1,820,6301,409,1665,554,3381,127,7722,649,0738,203,411
Property taxesTax incrementsSales taxesLodging taxesMiscellaneous taxesFranchise feesState aidsUnrestricted investment earningsGain on sale of assets
Expenses
$ $
General revenuesTransfersChange in net positionNet position - beginningNet position - ending
Total governmental activitiesTotal business-type activitiesTotal governmental and business-type activities
See notes to financial statements.
General governmentPublic safetyPublic worksEconomic developmentCulture and recreationInterest on long-term debtWaterSanitary sewerRefuseStorm waterStreet light utility
25
Functions/ProgramsGovernmental activitiesBusiness-type activities
City of St. Joseph
Balance Sheet - Governmental Funds
December 31, 2019
Special RevenueCapital Projects
General Fund 2019 Street
(101, 102, 105, State Collected Overlay Project
108)Sales Tax (200)(407)
Assets
Cash and investments$ 2,676,103$ 903,870$ 521,515
Taxes receivable - delinquent 24,253 - -
Special assessments receivable
Delinquent - - -
Deferred 9,066 - -
Accounts receivable 32,400 - -
Interest receivable 9,249 2,481 -
Due from other funds 550 - -
Due from other governments 15,991 100,589 415,000
Notes receivable - - -
Lease receivable 89,817 - -
Prepaid items 9 - -
Total assets$ 2,857,438$ 1,006,940$ 936,515
Liabilities
Accounts payable$ 65,581$ 828$ 7,348
Contracts payable - 33,000 64,911
Due to other funds - - -
Due to other governments 13,619 - 337
Salaries and benefits payable 75,674 - -
Unearned revenue 1,000 - -
Total liabilities 155,874 33,828 72,596
Deferred Inflows of Resources
Unavailable revenue - property taxes 24,253 - -
Unavailable revenue - special assessments 9,066 - -
Unavailable revenue - notes receivable - - -
Unavailable revenue - leases receivable 89,817 - -
123,136 - -
Total deferred inflows of resources
Fund Balances
Nonspendable 9 - -
Restricted - 973,112 -
Committed - - -
Assigned 946,519 - 863,919
Unassigned 1,631,900 - -
Total fund balances 2,578,428 973,112 863,919
Total liabilities, deferred inflows
of resources, and fund balances$ 2,857,438$ 1,006,940$ 936,515
See notes to financial statements. 26
Capital Projects
2019 Industrial Other Total
Park Project Governmental Governmental
(408)FundsFunds
$ 278,857$ 3,477,253$ 7,857,598
- 15,687 39,940
- 5,134 5,134
- 1,791,354 1,800,420
- 1,805 34,205
- 12,807 24,537
- 10,300 10,850
1,089,713 16,857 1,638,150
- 314,663 314,663
- - 89,817
- - 9
$ 1,368,570$ 5,645,860$ 11,815,323
$ 5,185$ 8,983$ 87,925
126,158 - 224,069
- 10,850 10,850
- - 13,956
- 205 75,879
- - 1,000
131,343 20,038 413,679
- 15,687 39,940
- 1,796,488 1,805,554
- 312,338 312,338
- - 89,817
- 2,124,513 2,247,649
- - 9
- 1,511,854 2,484,966
- 228,884 228,884
1,237,227 1,770,360 4,818,025
- (9,789) 1,622,111
1,237,227 3,501,309 9,153,995
$ 1,368,570$ 5,645,860$ 11,815,323
27
(THIS PAGE LEFT BLANK INTENTIONALLY)
28
City of St. Joseph
Reconciliation of the Balance Sheet to
The Statement of Net Position - Governmental Funds
Year Ended December 31, 2019
Total fund balances - governmental funds$ 9,153,995
Amounts reported for governmental activities in the Statement of Net Position are different because:
Capital assets used in governmental activities are not current financial resources and, therefore, are not
reported as assets in governmental funds.
Cost of capital assets
39,404,968
Less accumulated depreciation
(21,413,104)
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.
(13,935,545)
Bond principal payable, net of premiums and discounts
(449,588)
Compensated absences payable
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.
39,940
Property taxes
5,134
Special assessments
Other long-term assets are not available to pay for current expenditures and, therefore, are deferred in the funds.
1,800,420
Deferred special assessments
312,338
Notes receivable
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 (1,079,913)
Deferred outflows of resources related to pensions 719,067
Fire relief net pension asset 275,197
Net pension liability (1,099,030)
The water access capital project fund is proprietary in nature and, therefore, included in the business-type activities
(481,313)
in the Statement of Net Position.
The sewer access capital project fund is proprietary in nature and, therefore, included in the business-type
(28,704)
activities in the Statement of Net Position.
(70,582)
Governmental funds do not report a liability for accrued interest due and payable.
Total net position - governmental activities$ 13,153,280
See notes to financial statements. 29
City of St. Joseph
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Governmental Funds
Year Ended December 31, 2019
Special RevenueCapital Projects
General Fund 2019 Street
(101, 102, 105, State Collected Overlay Project
108)Sales Tax (200)(407)
Revenues
Property taxes$ 1,421,090$ - $ -
Tax increments - - -
Sales taxes - 498,304 -
Lodging taxes - -
Miscellaneous taxes 10,276 - -
Special assessments 3,558 - 224,107
Franchise fees 134,704 - -
Licenses and permits 255,953 - -
Intergovernmental 1,230,507 659,394 415,000
Charges for services 406,047 - -
Fines and forfeitures 52,289 - -
Miscellaneous
Investment income 101,017 27,097 -
Contributions and donations 4,632 - -
Revolving loan repayments - - -
Other 91,527 3,625 -
Total revenues 3,711,600 1,188,420 639,107
Expenditures
Current
General government 815,401 - -
Public safety 1,625,599 - -
Public works 486,341 - -
Culture and recreation 397,204 - -
Economic development - - -
Debt service
Principal - - -
Interest and other charges - - 12,422
Capital outlay
General government 19,768 - -
Public safety 1,983 - -
Public works 80,930 - 1,511,035
Culture and recreation 1,936 941,998 -
Economic development - - -
Total expenditures 3,429,162 941,998 1,523,457
Excess of revenues over
(under) expenditures
282,438 246,422 (884,350)
Other Financing Sources (Uses)
Insurance recoveries 3,428 - -
Sale of property - - -
Bonds issued - - 1,515,812
Bond premium - - 269,222
Transfers in 56,640 - -
Transfers out (150,000) (180,000) (36,765)
Total other financing sources (uses) (89,932) (180,000) 1,748,269
Net change in fund balances 192,506 66,422 863,919
Fund Balances
Beginning of year2,385,922 906,690 -
End of year$ 2,578,428$ 973,112$ 863,919
See notes to financial statements. 30
Capital Projects
2019 Industrial Other Total
Park Project Governmental Governmental
(408)FundsFunds
$ - $ 898,295$ 2,319,385
- 140,321 140,321
- - 498,304
- 15,584 15,584
- - 10,276
- 325,440 553,105
- - 134,704
- - 255,953
1,089,713 313,854 3,708,468
- 401,750 807,797
- - 52,289
- 133,727 261,841
- 11,850 16,482
- 1,387 1,387
- 61,721 156,873
1,089,713 2,303,929 8,932,769
- - 815,401
- 1,398 1,626,997
- - 486,341
- 25,035 422,239
- 392,001 392,001
- 1,087,000 1,087,000
17,562 308,989 338,973
- 10,698 30,466
- 37,663 39,646
2,360,779 11,157 3,963,901
- 60,401 1,004,335
- 374 374
2,378,341 1,934,716 10,207,674
(1,288,628) 369,213 (1,274,905)
- - 3,428
- 4,000 4,000
2,142,875 46,313 3,705,000
380,156 - 649,378
14,313 427,718 498,671
(11,489) (456,292) (834,546)
2,525,855 21,739 4,025,931
1,237,227 390,952 2,751,026
- 3,110,357 6,402,969
$ 1,237,227$ 3,501,309$ 9,153,995
31
City of St. Joseph
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances to the Statement
of Activities - Governmental Funds
Year Ended December 31, 2019
Total net change in fund balances - governmental funds$ 2,751,026
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.
5,009,267
Capital outlays
112,791
Capital contributions
(1,472,067)
Depreciation expense
(238)
Loss on disposal
(1,973,043)
Transferred to proprietary funds
Principal payments on long-term debt are recognized as expenditures in the governmental funds but as an
1,087,000
increase in net position in the Statement of Activities.
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.
(51,171)
Accrued interest payable
80,411
Amortization of bond discounts, premiums and issuance charges
Proceeds from long-term debt are recognized as an other financing source in the governmental funds but as a
(3,705,000)
decrease in net position in the Statement of Activities.
The governmental funds report the effect of premiums, discounts and similar items when debt is first
(649,378)
issued, whereas these amounts are deferred and amortized in the Statement of Activities.
Compensated absence payments are recognized as paid in the governmental funds but
5,653
recognized as the expense is incurred in the Statement of Activities.
Delinquent receivables will be collected in subsequent years, but are not available soon enough to pay for the
current period's expenditures and, therefore, are not revenues in the funds.
(6,604)
Delinquent special assessments
20,661
Delinquent property taxes
Certain revenues in the Statement of Activities that do not provide current financial resources are not reported
as revenues in the funds.
403,429
Deferred special assessments
21,809
Notes receivable
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.
3,216
Pension expense
The water access capital project fund is proprietary in nature and, therefore, is reported with business-type
(65,884)
activities.
The sewer access capital project fund is proprietary in nature and, therefore, is reported with business-type
62,572
activities.
Change in net position - governmental activities$ 1,634,450
See notes to financial statements.32
City of St. Joseph
Statement of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2019
Variance with
Original and Actual
Final Budget -
Final BudgetAmounts
Over (Under)
Revenues
Property taxes$ 1,424,710$ 1,421,090$ (3,620)
Miscellaneous taxes 14,170 10,276 (3,894)
Special assessments 4,000 3,558 (442)
Franchise fees 137,725 134,704 (3,021)
Licenses and permits 223,840 255,953 32,113
Intergovernmental 1,207,675 1,230,507 22,832
Charges for services 382,030 406,047 24,017
Fines and forfeitures 60,000 52,289 (7,711)
Miscellaneous revenues
Investment income 25,000 101,017 76,017
Contributions and donations 3,850 4,632 782
Other 39,200 91,527 52,327
Total revenues 3,522,200 3,711,600 189,400
Expenditures
Current
General government 860,225 815,401 (44,824)
Public safety 1,695,700 1,625,599 (70,101)
Public works 436,315 486,341 50,026
Culture and recreation 354,750 397,204 42,454
Capital outlay
General government 12,110 19,768 7,658
Public safety 72,050 1,983 (70,067)
Public works 93,250 80,930 (12,320)
Culture and recreation - 1,936 1,936
Total expenditures 3,524,400 3,429,162 (95,238)
Excess of revenues over (under) expenditures
(2,200) 282,438 284,638
Other Financing Sources (Uses)
Insurance recoveries 2,000 3,428 1,428
Sale of property 200 - (200)
Transfers in 56,705 56,640 (65)
Transfers out - (150,000) (150,000)
Total other financing sources (uses) 58,905 (89,932) (148,837)
Net change in fund balances$ 56,705 192,506$ 135,801
Fund Balances
Beginning of year2,385,922
End of year$ 2,578,428
See notes to the financial statements.33
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34
City of St. Joseph
Statement of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - State Collected Sales Tax
Year Ended December 31, 2019
Variance with
Original and Actual
Final Budget -
Final BudgetAmounts
Over (Under)
Revenues
Sales taxes$ 440,000$ 498,304$ 58,304
Intergovernmental 100,000 659,394 559,394
Miscellaneous revenues
Investment income - 27,097 27,097
Other - 3,625 3,625
Total revenues 540,000 1,188,420 648,420
Expenditures
Capital outlay
Culture and recreation 950,000 941,998 (8,002)
Excess of revenues over
(under) expenditures
(410,000) 246,422 656,422
Other Financing Sources (Uses)
Transfers out (180,000) (180,000) -
Net change in fund balances$ (590,000) 66,422$ 656,422
Fund Balances
Beginning of year906,690
End of year$ 973,112
See notes to the financial statements.35
City of St. Joseph
Statement of Net Position - Proprietary Funds
December 31, 2019
Sanitary Sewer
Water (601)(602)Refuse (603)
Assets
Current assets
Cash and investments$ 821,108$ 247,584$ 235,896
Taxes receivable - delinquent 416 - -
Special assessments receivable
Deferred 24,642 - -
Accounts receivable 142,554 237,709 47,933
Interest receivable 2,768 2,743 854
Due from other governments 200 - -
Total current assets 991,688 488,036 284,683
Noncurrent assets
Capital assets
Land 372,941 4,941 -
Easements - - -
Construction in progress 805,281 2,188,720 -
Buildings 7,502,432 1,295,254 -
Improvements 289,760 - -
Plants and lines 10,332,895 8,727,703 -
Machinery and equipment 216,495 602,773 45,842
Sewer rights - 9,068,746 -
Total capital assets 19,519,804 21,888,137 45,842
Less accumulated depreciation (6,072,652) (5,848,792) (45,842)
Net capital assets 13,447,152 16,039,345 -
Total noncurrent assets 13,447,152 16,039,345 -
Total assets 14,438,840 16,527,381 284,683
Deferred Outflows of Resources
10,820 8,775 1,087
Deferred outflows of resources related to pensions
$ 14,449,660$ 16,536,156$ 285,770
Total assets and deferred outflows of resources
Liabilities
Current liabilities
Accounts payable$ 8,099$ 17,362$ 21,158
Due to other governments 2,229 70,486 1,868
Salaries and benefits payable 3,698 2,676 413
Interest payable 8,005 39,228 -
Long-term liabilities due
Within one year 589,062 528,965 983
Total current liabilities 611,093 658,717 24,422
Noncurrent liabilities
Compensated absences 63,797 63,797 8,951
Notes payable, net - 5,162,148 -
Bonds payable, net 4,079,640 1,201,810 -
Net pension liability 109,405 88,729 10,990
Less amounts due within one year (589,062) (528,965) (983)
Total noncurrent liabilities 3,663,780 5,987,519 18,958
Total liabilities 4,274,873 6,646,236 43,380
Deferred Inflows of Resources
25,224 20,457 2,534
Deferred inflows of resources related to pensions
Net Position
Net investment in capital assets 9,367,512 9,675,387 -
Unrestricted 782,051 194,076 239,856
Total net position 10,149,563 9,869,463 239,856
Total liabilities, deferred inflows of resources, and net position$ 14,449,660$ 16,536,156$ 285,770
See notes to financial statements.36
Storm Water Street Light
(651)Utility (652)Total
$ 318,239$ 60,389$ 1,683,216
- - 416
- - 24,642
14,494 13,334 456,024
1,018 166 7,549
- - 200
333,751 73,889 2,172,047
- - 377,882
67,915 - 67,915
775,370 - 3,769,371
- - 8,797,686
- - 289,760
5,370,059 - 24,430,657
1,994 - 867,104
- - 9,068,746
6,215,338 - 47,669,121
(1,631,146) - (13,598,432)
4,584,192 - 34,070,689
4,584,192 - 34,070,689
4,917,943 73,889 36,242,736
2,117 435 23,234
$ 4,920,060$ 74,324$ 36,265,970
$ 163$ 4,237$ 51,019
- - 74,583
521 138 7,446
- - 47,233
3,317 393 1,122,720
4,001 4,768 1,303,001
21,463 3,580 161,588
- - 5,162,148
- - 5,281,450
21,401 4,396 234,921
(3,317) (393) (1,122,720)
39,547 7,583 9,717,387
43,548 12,351 11,020,388
4,934 1,014 54,163
4,584,192 - 23,627,091
287,386 60,959 1,564,328
4,871,578 60,959 25,191,419
$ 4,920,060$ 74,324$ 36,265,970
37
City of St. Joseph
Reconciliation of the Statement
of Net Position - Business-Type Activities
December 31, 2019
Total net position - proprietary funds$ 25,191,419
Amounts reported for business-type activities in the Statement of Net Position are different because:
The water access capital project fund is proprietary in nature and relates to water improvements for the applicable
funds. Therefore, it is included as a business-type activity. 481,313
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.28,704
Total net position - business-type activities
$ 25,701,436
See notes to financial statements.
38
City of St. Joseph
Statement of Revenues, Expenses, and Changes
in Net Position - Proprietary Funds
Year Ended December 31, 2019
Sanitary Sewer Storm Water Street Light
Water (601)(602)Refuse (603)(651)Utility (652)Total
Operating revenues
Charges for services$ 1,001,282$ 1,393,095$ 297,500$ 167,456$ 80,534$ 2,939,867
Operating expenses
Wages and salaries 194,506 129,679 25,938 53,504 8,643 412,270
Materials and supplies 47,846 34,536 3,026 240 - 85,648
Repairs and maintenance 52,199 20,370 3,135 19,628 1,135 96,467
Professional services 24,963 32,560 4,570 12,258 - 74,351
Insurance 11,983 9,064 - - - 21,047
Utilities 68,247 18,531 455 192 46,116 133,541
Depreciation 432,706 493,433 6,506 108,868 - 1,041,513
Contracted services - 252,526 274,917 - - 527,443
Equipment 501 501 - 1,270 - 2,272
Miscellaneous 10,316 885 538 2,668 233 14,640
Total operating expenses 843,267 992,085 319,085 198,628 56,127 2,409,192
Operating income (loss) 158,015 401,010 (21,585) (31,172) 24,407 530,675
Nonoperating revenues
(expenses)
Investment income 30,232 29,956 9,323 11,123 1,814 82,448
Special assessments 789 - - - - 789
Gain on disposal of asset - - - 200 36 236
Property taxes 22,356 - - - - 22,356
Interest expense (109,952) (138,137) - - - (248,089)
Amortization of bond premium 5,758 2,450 - - - 8,208
Other income 65,921 1,456 1,831 50 10 69,268
Total nonoperating revenues
(expenses) 15,104 (104,275) 11,154 11,373 1,860 (64,784)
Income (loss) before capital
contributions and transfers 173,119 296,735 (10,431) (19,799) 26,267 465,891
Capital contributions 796,049 369,434 - 807,560 - 1,973,043
Transfers in 232,000 162,000 - - - 394,000
Transfers out (12,725) (19,570) (1,600) (24,230) - (58,125)
Change in net position 1,188,443 808,599 (12,031) 763,531 26,267 2,774,809
Net position
Beginning of year 8,961,120 9,060,864 251,887 4,108,047 34,692 22,416,610
End of year$ 10,149,563$ 9,869,463$ 239,856$ 4,871,578$ 60,959$ 25,191,419
See notes to financial statements. 39
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40
City of St. Joseph
Reconciliation of the Statement of Revenues, Expenses,
and Changes in Net Position - Business-Type Activities
Year Ended December 31, 2019
Total net change in fund net position - proprietary funds$ 2,774,809
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. 65,884
Recognized current year activity from the sewer access capital project fund with the business-type activities. (62,572)
Capital contributions from governmental activities (1,973,043)
Transfers in of capital assets from governmental activities 1,973,043
Change in net position - business-type activities$ 2,778,121
See notes to financial statements.
41
City of St. Joseph
Statement of Cash Flows - Proprietary Funds
Year Ended December 31, 2019
Sanitary Sewer
Water (601)(602)Refuse (603)
Cash Flows - Operating Activities
Receipts from customers and users$ 1,003,602$ 1,394,927$ 295,584
Payments to suppliers (234,019) (425,504) (287,459)
Payments to employees (197,081) (132,080) (26,415)
Other miscellaneous receipts 89,782 1,551 1,907
Net cash flows - operating activities 662,284 838,894 (16,383)
Cash Flows - Noncapital Financing
Activities
Transfer from other funds 232,000 162,000 -
Transfer to other funds (12,725) (19,570) (1,600)
Net cash flows - noncapital financing
Activities 219,275 142,430 (1,600)
Cash Flows - Capital and Related
Financing Activities
Principal paid on debt (581,000) (855,542) -
Interest paid on debt (110,873) (143,145) -
- - -
Proceeds from disposal of capital assets
Acquisition of capital assets (553) (553) -
Net cash flows - capital and related
Financing activities (692,426) (999,240) -
Cash Flows - Investing Activities
Interest and dividends received 29,956 32,510 9,391
Net change in cash and cash equivalents 219,089 14,594 (8,592)
Cash and Cash Equivalents
Beginning of year 602,019 232,990 244,488
End of year$ 821,108$ 247,584$ 235,896
Reconciliation of Operating
Income (Loss) to Net Cash Flows -
Operating Activities
Operating income (loss)$ 158,015$ 401,010$ (21,585)
Adjustments to reconcile operating income (loss)
to net cash flows - operating activities
Depreciation expense 432,706 493,433 6,506
Pension expense 419 613 (85)
Other miscellaneous receipts 89,782 1,551 1,907
Accounts receivable 2,366 1,832 (1,916)
Due from other governments (46) - -
Accounts payable (17,860) 4,255 328
Due to other governmental units (104) (60,786) (1,146)
Salaries payable (3,554) (3,574) (551)
Compensated absences payable 560 560 159
Total adjustments 504,269 437,884 5,202
Net cash flows - operating activities$ 662,284$ 838,894$ (16,383)
Non-Cash Capital and Financing Activities
Capital asset contributions from
governmental funds$ 796,049$ 369,434$ -
Capital asset contributions from
other governments - 175,721 -
Bond issued through other governments - 175,721 -
42
See notes to financial statements.
Storm Water Street Light
(651)Utility (652)Total
$ 161,823$ 79,724$ 2,935,660
(36,287) (47,376) (1,030,645)
(45,859) (8,811) (410,246)
57 20 93,317
79,734 23,557 1,588,086
- - 394,000
(24,230) - (58,125)
(24,230) - 335,875
- - (1,436,542)
- - (254,018)
200 36
236
(552) - (1,658)
(352) 36 (1,691,982)
11,094 1,753 84,704
66,246 25,346 316,683
251,993 35,043 1,366,533
$ 318,239$ 60,389$ 1,683,216
$ (31,172)$ 24,407$ 530,675
108,868 - 1,041,513
68 (34) 981
57 20 93,317
(5,633) (810) (4,161)
- - (46)
(31) 108 (13,200)
- - (62,036)
(1,039) (198) (8,916)
8,616 64 9,959
110,906 (850) 1,057,411
$ 79,734$ 23,557$ 1,588,086
$ 807,560$ -$ 1,973,043
- - 175,721
- - 175,721
43
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44
City of St. Joseph
Notes to Financial Statements
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 financially accountable.
The financial statements present the City and its component units. The City includes all funds, account
groups, organizations, institutions, agencies, departments, and offices that are not legally separate from
such. Component units are legally separate organizations for which the elected officials of the City are
financially accountable and are included within the basic financial statements of the City because of the
significance of their operational or financial relationships with the City.
The City is considered financially accountable for a component unit if it appoints a voting majority of
the 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.
Separate financial statements are not prepared for the St. Joseph EDA.
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 2019, the City contributed $10,857
to the organization. It is reported as a special revenue fund of the City of Sartell. Complete financial
statements can be obtained from: City of Sartell, 125 Pine Cone Road North, Sartell, Minnesota
56377.
45
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. Reporting Entity (Continued)
2. Joint Ventures (Continued)
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 2019, 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
nd
St. Cloud, 400 2 Street South, St. Cloud, Minnesota 56301.
B.Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Position and the Statement of
Activities) report information on all of the nonfiduciary activities of the City. Governmental activities,
which normally are supported by taxes and intergovernmental revenues, are reported separately from
business-type activities, which rely to a significant extent on fees and charges for support.
The Statement of Activities demonstrates the degree to which the direct expenses of a given function or
segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Interest on general long-term debt is considered an indirect expense and is
reported separately in the Statement of Activities. Program revenues include 1) charges to customers or
applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given
function or segment and 2) grants and contributions that are restricted to meeting the operational or
capital requirements of a particular function or segment. Taxes and other items not properly included
among program revenues are reported instead as general revenues. Internally dedicated revenues are
reported as general revenues rather than program revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate columns in
the fund financial statements.
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants
and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
46
City of St. Joseph
Notes to Financial Statements
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 This fund accounts for the collection of state approved local option sales
tax.
2019 Street Overlay Project This fund accounts for the bond proceeds and related project costs for
the 2019 Street Overlay Project.
2019 Industrial Park Project This fund accounts for the bond proceeds and related project costs for
the 2019 Industrial Park Project.
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.
47
City of St. Joseph
Notes to Financial Statements
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, Sanitary Sewer, Refuse, 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.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
1. Cash and Investments
Cash and investments include balances from all funds that are combined and invested to the extent
available in various securities as authorized by state law. Earnings from the pooled investments are
allocated to the individual funds based on the average of month-end cash and investment balances.
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-
term investments with original maturities of three months or less from the date of acquisition.
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.
Certain investments for the City are reported at fair value as disclosed in Note 3. The City
categorizes its fair value measurements within the fair value Hierarchy established by generally
accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the
fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2
inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.
48
City of St. Joseph
Notes to Financial Statements
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)
In accordance with GASB Statement No. 79, the Minnesota Municipal Investment Pool securities are
valued at amortized cost, which approximates fair value. There are no restrictions or limitations on
withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a
minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period will be subject to a
penalty equal to seven days interest on the amount withdrawn. Seven days' notice of redemption is
required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date
of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses,
and other costs attributable to the early redemption.
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.
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.
49
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
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 acquisition value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets' lives are not capitalized.
Property, plant, and equipment of the City are depreciated using the straight-line full year convention
method over the following estimated useful lives:
AssetsYears
Land improvements 5-20
Buildings30-40
Building improvements15
Infrastructure10-50
Sewer rights20-50
Furniture and fixtures 5-10
Vehicles 5-20
Equipment3-7
Machinery5-7
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 presents deferred outflows of resources on the
Statements of Net Position for deferred outflows of resources related to pensions for various estimate
differences that will be amortized and recognized over future years.
50
City of St. Joseph
Notes to Financial Statements
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 for various estimate
differences that will be amortized and recognized over future years. The City presents deferred
inflows of resources related to lease receivables that will be recognized in future years.
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.
51
City of St. Joseph
Notes to Financial Statements
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. The City Council must also pass a resolution to remove the
constraint of committed resources.
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.
52
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(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 and PEG Access Fees.
10. Net Position
Net position represents the difference between assets, deferred outflows of resources, 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 $2,877,855
between this 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 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 $1,219,340 includes $39,734 for tax
incrementing financing, $973,112 in state collected sales tax restricted by enabling legislation,
$34,786 restricted for lodging tax, $102,888 in park dedication fees, $2,189 restricted by donors for
future projects, $33,060 DEED Funds, and $33,571 in revolving loan funds restricted for EDA
projects.
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.
53
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E.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 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, State Collected Sales Tax and Park Dedication special revenue funds
and debt service funds. Budgetary control for the remaining special revenue fund is done through
the use of project controls when the council authorizes the project. 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.
NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Deficit Fund Balance
The following fund had a deficit fund balance at December 31, 2019.
Nonmajor governmental funds
Special Revenue
TIF 2-3 Bayou Blues/Alley Flat$ 9,394
Debt Service
G.O. Certificates of Indebtedness of 2011A 395
This deficit will be eliminated with future tax increment revenues and future debt levies.
54
City of St. Joseph
Notes to Financial Statements
NOTE 3 DEPOSITS AND INVESTMENTS
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 below.
A. Deposits
Custodial Credit Risk Deposits: This is the risk that in the event of a bank failure, the City's deposits
may not be returned to it. The City has a policy that requires the City's deposits be collateralized as
required by Minnesota Statutes for an amount exceeding FDIC, SAIF, BIF, or FCUA coverage. As of
December 31, 2019, 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, 2019, the
City's deposits had a carrying value as shown on the following page.
Certificates of deposit$ 8,174,841
Checking 247,054
Savings 53,016
Total$ 8,474,911
B.Investments
As of December 31, 2019, the City had the following investments:
Weighted
FairAverageMoody's
Investment TypeValueMaturity (Years)Rating
Brokered money market$ 25,236 N/AN/A
4M Fund 1,040,442 N/AN/A
Total$ 1,065,678
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. As of December 31, 2019, the City's
investments were rated as listed in the table above.
55
City of St. Joseph
Notes to Financial Statements
NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)
B.Investments (Continued)
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.
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. As of December 31, 2019, the City does not have any investments subject to
concentration of credit risk.
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.
C. Deposits and Investments
The following is a summary of deposits and investments as of December 31, 2019:
Deposits (Note 3.A.)$ 8,474,911
Investments (Note 3.B.) 1,065,678
Petty cash 225
Total$ 9,540,814
Deposits and investments are presented in the December 31, 2019, basic financial statements as follows:
Statement of Net Position
Cash and investments$ 9,540,814
56
City of St. Joseph
Notes to Financial Statements
NOTE 4 INTERFUND BALANCES AND TRANSFERS
A. Interfund Balances
The composition of interfund balances as of December 31, 2019, is as follows:
Amounts Due to
Other Funds
Other
Governmental
Funds
Amounts Due from Other Funds
General Fund$ 550
Other Governmental Funds 10,300
Total$ 10,850
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 contract revenue reductions.
B.Transfers
The composition of interfund transfers as of December 31, 2019, is as follows:
Description Amount
Transfer InTransfer Out
Transfer retirement reserve funding$ 6,725
General FundWater
Transfer retirement reserve funding 6,570
General FundSanitary Sewer
Transfer retirement reserve funding 1,600
General FundRefuse
Transfer retirement reserve funding 4,980
General FundStorm Water
Reimburse General Fund for feasibility study
36,765
General Fund2019 Street Overlay Project
Transfer to reimburse engineering fees
14,313
2019 Industrial ParkOther Governmental Funds
Transfer of residual funds for future debt payments 150,000
Other Governmental FundsGeneral Fund
Transfer sales tax revenue committed for bond payment
20,000
Other Governmental FundsState Collected Sales Tax
Transfer sales tax revenue committed for bond payment 160,000
Other Governmental FundsState Collected Sales Tax
Reimburse for engineering and legal costs
11,489
Other Governmental Funds2019 Industrial Park Project
Transfer to reimburse for costs
2,139
Other Governmental FundsOther Governmental Funds
Transfer of residual funds for future debt payments 52,840
Other Governmental FundsOther Governmental Funds
Annual transfer for bond payment
6,000
Other Governmental FundsWater
Annual transfer for bond payment 6,000
Other Governmental FundsSanitary Sewer
Annual transfer for bond payment
6,000
Other Governmental FundsStorm Water
Annual transfer for bond payment
13,250
Other Governmental FundsStorm Water
Annual transfer of WAC fees for debt payments 225,000
WaterOther Governmental Funds
Annual transfer for bond payment
7,000
WaterSanitary Sewer
Annual transfer for debt payments
162,000
Sanitary SewerOther Governmental Funds
$ 892,671
57
City of St. Joseph
Notes to Financial Statements
NOTE 5 CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2019, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities
Capital assets not being depreciated
Land$ 763,197$ -$ -$ 763,197
Easements 200,085 - - 200,085
Construction in progress 764,136 3,036,214 162,447 3,637,903
Total capital assets
not being depreciated 1,727,418 3,036,214 162,447 4,601,185
Capital assets being depreciated
Buildings 8,735,795 - - 8,735,795
Infrastructure
20,389,483 162,447 - 20,551,930
Improvements 12,140 -
1,353,806 1,365,946
Intangible assets
200,000 - - 200,000
100,661 11,231
Machinery and equipment 3,860,682 3,950,112
Total capital assets
being depreciated 34,539,766 275,248 11,231 34,803,783
Less accumulated depreciation for
Buildings 1,427,962 232,062 - 1,660,024
Infrastructure
15,230,935 883,148 - 16,114,083
Improvements 54,203 -
628,232 682,435
Intangible assets
20,000 10,000 - 30,000
292,654 10,993
Machinery and equipment 2,644,901 2,926,562
Total accumulated
19,952,030 1,472,067 10,993 21,413,104
depreciation
Total capital assets being
14,587,736 (1,196,819) 238 13,390,679
depreciated, net
Governmental activities capital
$ 16,315,154$ 1,839,395$ 162,685$ 17,991,864
assets, net
58
City of St. Joseph
Notes to Financial Statements
NOTE 5 CAPITAL ASSETS (CONTINUED)
Beginning
Ending
BalanceIncreasesDecreasesBalance
Business-type activities
Capital assets not being depreciated
Land$ 377,882$ -$ -$ 377,882
Easements 67,915 - - 67,915
Construction in progress 1,860,536 2,148,763 239,928 3,769,371
Total capital assets
not being depreciated 2,306,333 2,148,763 239,928 4,215,168
Capital assets being depreciated
Buildings 8,797,686 - - 8,797,686
Improvements other than buildings - -
289,760 289,760
Plant and lines
24,190,729 239,928 - 24,430,657
Machinery and equipment 1,659 -
865,445 867,104
- -
Sewer rights 9,068,746 9,068,746
Total capital assets
being depreciated 43,212,366 241,587 - 43,453,953
Less accumulated depreciation for
Buildings 2,396,395 214,141 - 2,610,536
Improvements other than buildings
14,488 14,488 - 28,976
Plant and lines
7,325,781 505,319 - 7,831,100
Machinery and equipment 53,745 -
588,708 642,453
253,820 -
Sewer rights 2,231,547 2,485,367
Total accumulated
12,556,919 1,041,513 - 13,598,432
depreciation
Total capital assets being
30,655,447 (799,926) - 29,855,521
depreciated, net
Business-type activities captial
$ 32,961,780$ 1,348,837$ 239,928$ 34,070,689
assets, net
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities
General government$ 151,385
Public safety 170,901
Public works 942,979
Culture and recreation 206,802
Total depreciation expense - governmental activities$ 1,472,067
Business-type activities
Water$ 432,706
Sanitary sewer 493,433
Refuse 6,506
Storm sewer 108,868
Total depreciation expense - business-type activities$ 1,041,513
59
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT
A. General Obligation Bonds
The City issues General Obligation (G.O.) bonds to provide for financing improvement, development,
and street improvement projects.
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
IssueInterestOriginalFinalPrincipalDue Within
DateRateIssueMaturityOutstandingOne Year
Governmental Activities
G.O. Bonds, including Refunding Bonds
G.O. Certificates of Indebtedness
of 2011A11/10/112.00%-2.40%$ 390,00010/01/21$ 85,000 $ 40,000
G.O. Certificates of Indebtedness 2015A08/13/151.20%-2.00% 165,00012/01/20 35,000 35,000
G.O. Certificates of Indebtedness 2016A07/07/162.00%-2.875% 4,275,000 12/15/36 3,740,000 185,000
G.O. Certificates of Indebtedness 2017A08/30/172.75% 337,00012/15/25 252,000 42,000
G.O. Certificates of Indebtedness 2018A02/28/182.50% 265,00012/15/23 215,000 52,000
Total G.O. Bonds 4,327,000 354,000
G.O. Special Assessment Bonds
G.O. Improvement Refunding Bonds of 2010B09/28/102.00%-3.25% 1,035,000 12/01/20 135,000 135,000
G.O. Improvement Bonds of 2010B09/28/102.00%-3.25% 790,00012/01/25 350,000 55,000
G.O. Improvement Crossover
Refunding Bonds of 2011A11/10/112.00%-2.40% 1,040,000 10/01/21 275,000 135,000
G.O. Improvement Bonds of 2013A09/01/132.00%-3.00% 405,00012/01/24 235,000 45,000
G.O. Improvement Bonds of 2014A06/15/142.00%-3.40% 2,010,000 12/01/30 1,560,000 120,000
G.O. Improvement Bonds of 2015A08/13/151.20%-3.00% 595,00012/01/25 365,000 60,000
G.O. Improvement Bonds of 2016B11/03/161.00%-3.00% 740,00012/15/32 640,000 50,000
G.O. Improvement Bonds of 2017B08/30/172.25%-3.00% 344,00012/15/27 274,000 35,000
G.O. Improvement Bonds of 2019A09/12/194.00%-5.00% 3,705,000 12/15/29 3,705,000 375,000
Total G.O. Special
Assessment Bonds 7,539,000 1,010,000
G.O. Abatement Bonds
G.O. Tax Abatement Bonds of 2015B08/13/152.00%-3.05% 1,840,000 12/01/30 1,410,000 115,000
Unamortized premiums/discounts 659,545 -
449,588
Compensated absences 83,012
Total long-term liabilities,
governmental activities$ 14,385,133 $ 1,562,012
60
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT (CONTINUED)
B.Components of Long-Term Liabilities (Continued)
IssueInterestOriginalFinalPrincipalDue Within
DateRateIssueMaturityOutstandingOne Year
Business-type activities
G.O. Revenue Bonds
G.O. Water Revenue Crossover Refunding
Bonds of 2012A
04/19/121.00-2.85%$ 4,860,000 12/01/28$ 3,350,000 $ 475,000
G.O. Sewer Revenue Bonds of 2013A09/01/132.00-3.70% 1,875,000 12/01/28 1,195,000 120,000
G.O. Utility Improvement Bonds of 2014A06/15/142.00%-3.40% 660,00012/01/32 495,000 35,000
G.O. Water Improvement Bonds of 2017B08/30/172.25% 353,00012/15/22 211,000 71,000
Total G.O. Revenue Bonds 5,251,000 701,000
Utility Revenue Notes Payable
City of St. Cloud SIS
Phase 4 (2013B Bonds)11/01/133.00%-4.00% 650,00002/01/29 475,000 40,000
City of St. Cloud RUE Project PFA Loan08/01/101.77% 4,527,703 08/20/30 2,759,728 229,526
City of St. Cloud Lift Station Improvements08/24/161.00% 469,26308/20/26 355,740 49,319
City of St. Cloud NR2 Biosolids10/09/171.10% 1,693,101 08/20/37 1,571,680 82,058
Total notes payable 5,162,148 400,903
Unamortized premium 30,450 -
Compensated absences 161,588 20,817
Total business-type activities 10,605,186 1,122,720
Total all long-term liabilities$ 24,990,319 $ 2,684,732
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.
61
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT (CONTINUED)
C. Changes in Long-Term Liabilities
Long-term liability activity for the year ended December 31, 2019, was as follows:
BeginningEnding
BalanceAdditionsReductionsBalance
Governmental activities
Bonds payable
General obligation$ 4,674,000 $ - $ 347,000 $ 4,327,000
G.O. special assessment bonds 4,459,000 3,705,000 625,000 7,539,000
G.O. abatement bonds 1,525,000 - 115,000 1,410,000
Total bonds payable
10,658,000 3,705,000 1,087,000 13,276,000
Unamortized premiums/discounts 90,578 649,378 80,411 659,545
Compensated absences 455,241 293,539 299,192 449,588
Total governmental
activities
11,203,819 4,647,917 1,466,603 14,385,133
Business-type activities
Bonds payable
G.O. utility revenue bonds 6,157,000 - 906,000 5,251,000
Notes payable
City of St. Cloud notes 5,516,969 175,721 530,542 5,162,148
Unamortized premiums
38,658 - 8,208 30,450
Compensated absences 151,629 78,760 68,801 161,588
Total business-type
activities 11,864,256 254,481 1,513,551 10,605,186
Total long-term liabilities$ 23,068,075$ 4,902,398$ 2,980,154$ 24,990,319
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.
62
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT (CONTINUED)
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Governmental Activities
G.O. Government ActivitiesG.O. Special Assessment Bonds
Year Ended
December 31,PrincipalInterestPrincipalInterest
2020$ 354,000$ 101,008$ 1,010,000$ 324,403
2021 330,000 93,272 885,000 246,150
2022 291,000 85,913 749,000 216,190
2023 293,000 79,507 764,000 188,763
2024 242,000 70,743 759,000 159,327
2025-2029 1,107,000 291,812 3,067,000 387,702
2030-2034 1,190,000 168,932 305,000 13,860
2035-2036 520,000 22,569 - -
Total$ 4,327,000$ 913,756$ 7,539,000$ 1,536,395
Governmental Activities
Abatement Bonds
Year Ended
December 31,PrincipalInterestTotal
2020$ 115,000$ 37,635$ 1,942,046
2021 120,000 35,335 1,709,757
2022 120,000 32,935 1,495,038
2023 125,000 30,535 1,480,805
2024 125,000 27,410 1,383,480
2025-2029 670,000 81,525 5,605,039
2030-2034 135,000 4,118 1,816,910
2035-2036 - - 542,569
Total$ 1,410,000$ 249,493$ 15,975,644
63
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT (CONTINUED)
D. Minimum Debt Payments (Continued)
Business-Type Activities
Utility Revenue BondsNotes Payable
Year Ended
December 31,PrincipalInterestPrincipalInterestTotal
2020$ 701,000$ 134,813$ 400,903$ 85,777$ 1,322,493
2021 710,000 120,495 406,256 79,301 1,316,052
72,059
2022 725,000 105,340 416,950 1,319,349
64,628
2023 670,000 88,688 422,538 1,245,854
57,331
2024 690,000 71,877 428,004 1,247,212
2025-2029 1,625,000 134,725 2,104,718 175,272 4,039,715
2030-2034 130,000 9,010 741,260 36,373 916,643
2035-2037 - - 293,155 6,443 299,598
Total$ 5,251,000 $ 664,948 $ 5,213,784 $ 577,184 $ 11,706,916
*
* Balance does not agree to amounts listed in Note 6.C. due to payment schedule including estimated
PFA draw that is scheduled to occur in 2020.
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.
At December 31, 2019, the City's outstanding conduit debt balances consisted of the following:
$21,195,000 Senior Housing and Healthcare Revenue Bonds,
Series 2019A$ 21,195,000
$450,000 Taxable Senior Housing and Healthcare Revenue Bonds,
450,000
Series 2019A-T
Total
$ 21,645,000
64
City of St. Joseph
Notes to Financial Statements
NOTE 7 FUND BALANCE
Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective
funds.
State20192019Nonmajor
CollectedStreetIndustrialGovernmental
GeneralSales TaxImprovementsParkFundTotal
Nonspendable
Prepaid items$ 9 $ -$ - $ - $ - $ 9
Restricted
Debt service - - - - 1,265,626 1,265,626
Tax increments - - - - 39,734 39,734
State collected sales tax projects - 973,112 - - - 973,112
Park dedication fees - - - - 102,888 102,888
Chartitable gambling - - - - 2,189 2,189
Lodging tax - - - - 34,786 34,786
DEED CDAP - - - - 33,060 33,060
Revolving loan - - - - 33,571 33,571
Total restricted - 973,112 - - 1,511,854 2,484,966
Committed
Economic development - - - - 228,884 228,884
Assigned
Elections 5,326 - - - - 5,326
Street seal coating /crack filling 163,901 - - - - 163,901
Loader tires 7,889 - - - - 7,889
Fire operations 20,000 - - - - 20,000
Fire debt service 64,176 - - - - 64,176
Fire capital 541,252 - - - - 541,252
Police forfeiture 7,830 - - - - 7,830
Severance pay 136,145 - - - - 136,145
Capital outlay reserves - - 863,919 1,237,227 1,082,269 3,183,415
Debt service relief - - - - 688,091 688,091
Total assigned 946,519 - 863,919 1,237,227 1,770,360 4,818,025
Unassigned 1,631,900 - - - (9,789) 1,622,111
Total$ 2,578,428$ 973,112 $ 863,919$ 1,237,227$ 3,501,309$ 9,153,995
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.
65
City of St. Joseph
Notes to Financial Statements
NOTE 8 RISK MANAGEMENT (CONTINUED)
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 2019 is
estimated to be immaterial based on workers' compensation rates and salaries for the year.
At December 31, 2019, 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
The City participates in various pension plans, total pension expense for the year ended December 31,
2019, was $191,971. The components of pension expense are noted in the following plan summaries.
For governmental activities, the General Fund typically liquidates the liability related to pensions. For
Business-Type Activities, the Water, Sanitary Sewer, Refuse, Storm Water, and Street Light Utility
Funds typically liquidate the liability related to pensions.
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 and 356. PERA's defined benefit pension plans are
tax qualified plans under Section 401(a) of the Internal Revenue Code.
General Employees Retirement Plan
All full-time and certain part-time employees of the City are covered by the General Employees Plan.
General Employees Plan members belong to the Coordinated Plan. Coordinated Plan members are
covered by Social Security.
Public Employees Police and Fire Plan
The Police and Fire Plan, 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 Police and Fire Plan also covers police officers and firefighters belonging to a local relief association
that elected to merge with and transfer assets and administration to PERA.
66
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
B.Benefits Provided
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state
statute and can only be modified by the state legislature. 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.
General Employees Plan Benefits
General Employees Plan benefits are based on a member's highest average salary for any 5 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 Plan members. Members hired prior to July 1, 1989, receive
the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30,
1989. Under Method 1, the accrual rate for a Coordinated member is 1.2% of average salary for each of
the first 10 years of service and 1.7% of average salary for each additional year. Under Method 2, the
accrual rate for Coordinated members is 1.7% of average salary for all years 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.
Annuities, disability benefits, and survivor benefits are increased effective every January 1. Beginning
January 1, 2019, the postretirement increase will be equal to 50% of the cost-of-living adjustment
(COLA) announced by the SSA, with a minimum increase of at least 1% and a maximum of 1.5%.
Recipients that have been receiving the annuity or benefit for at least a full year as of the June 30 before
the effective date of the increase will receive the full increase. For recipients receiving the annuity or
benefit for at least one month but less than a full year as of the June 30 before the effective date of the
increase will receive a reduced prorated increase. For members retiring on January 1, 2024, or later, the
increase will be delayed until normal retirement age (age 65 if hired prior to July 1, 1989, or age 66 for
individuals hired on or after July 1, 1989). Members retiring under Rule of 90 are exempt from the delay
to normal retirement.
Police and Fire Plan Benefits
Benefits for the Police and Fire Plan members first hired after June 30, 2010, but before July 1, 2014,
vest on a prorated basis from 50% after 5 years up to 100% after 10 years of credited service. Benefits
for Police and Fire Plan members first hired after June 30, 2014, vest on a prorated basis from 50% after
10years up to 100% after 20 years of credited service. The annuity accrual rate is 3% of average salary
for each year of service. A full, unreduced pension is earned when members are age 55 and vested, or for
members who were first hired prior to July 1, 1989, when age plus years of service equal at least 90.
67
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
B.Benefits Provided (Continued)
Police and Fire Plan Benefits (Continued)
Annuities, disability benefits, and survivor benefits are increased effective every January 1. Beginning
January 1, 2019, the postretirement increase will be fixed at 1%. Recipients that have been receiving the
annuity or benefit for at least 36 months as of the June 30 before the effective date of the increase will
receive the full increase. For recipients receiving the annuity or benefit for at least 25 months but less
than 36 months as of the June 30 before the effective date of the increase will receive a reduced prorated
increase.
C. Contributions
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution
rates can only be modified by the state legislature.
General Employees Fund Contributions
Coordinated Plan members were required to contribute 6.5%, of their annual covered salary in calendar
year 2019 and the City was required to contribute 7.5% for Coordinated Plan members. The City's
contributions to the General Employees Fund for the year ended December 31, 2019, were $76,798. The
City's contributions were equal to the required contributions as set by state statute.
Police and Fire Fund Contributions
% of pay to 11.3% and employer rates
increased from 16.2% to 16.95% on January 1, 2019. The City's contributions to the Police and Fire
Fund for the year ended December 31, 2019, were $106,850. The City's contributions were equal to the
required contributions as set by state statute.
68
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs
General Employees Fund Pension Costs
At December 31, 2019, the City reported a liability of $746,385 for its proportionate share of the General
Employees Fund's net pension liability. The City's net pension liability reflected a reduction due to the
State of Minnesota's contribution of $16 million to the fund in 2019. The State of Minnesota is
considered a non-employer contributing entity and the State's contribution meets the definition of a
special funding situation. The State of Minnesota's proportionate share of the net pension liability
associated with the City totaled $23,166. The net pension liability was measured as of June 30, 2019,
and the total pension liability used to calculate the net pension liability was determined by an actuarial
valuation as of that date. The City's proportionate share of the net pension liability was based on the
City's contributions received by PERA during the measurement period for employer payroll paid dates
from July 1, 2018, through June 30, 2019, relative to the total employer contributions received from all
of PERA's participating employers. At June 30, 2019, the City's proportionate share was 0.0135%,
which was a decrease of 0.0007% from its proportionate share measured as of June 30, 2018.
City's proportionate share of the net pension liability$ 746,385
State of Minnesota's proportionate share of the net pension
liability associated with the City 23,166
Total$ 769,551
For the year ended December 31, 2019, the City recognized pension expense of $92,626 for its
proportionate share of General Employees Plan's pension expense. In addition, the City recognized an
additional $1,735 as pension expense (and grant revenue) for its proportionate share of the State of
Minnesota's contribution of $16 million to the General Employees Fund.
69
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
General Employees Fund Pension Costs
At December 31, 2019, the City reported its proportionate share of the General Employees Plan's
deferred outflows of resources and deferred inflows of resources related to pensions from the following
sources:
Deferred Deferred
Outflows of Inflows of
ResourcesResources
Differences between expected and actual economic experience$ 21,207 $ -
Changes in actuarial assumptions - 61,078
Difference between projected and actual investment earnings - 81,880
Changes in proportion 14,209 29,124
Contributions paid to PERA subsequent
to the measurement date 38,399 -
Total$ 73,815 $ 172,082
$38,399 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2020. Other amounts reported as deferred outflows and deferred inflows of
resources related to pensions will be recognized in pension expense as follows:
Year Ended Pension Expense
December 31,Amount
2020$ (39,470)
2021 (72,939)
2022 (25,460)
2023 1,203
$ (136,666)
Total
70
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Police and Fire Fund Pension Costs
At December 31, 2019, the City reported a liability of $587,566 for its proportionate share of the Police
and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2019, 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 proportionate share 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, 2018, through June 30, 2019, relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2019, the City's proportionate share was 0.0559%, which
was a decrease of 0.0022% from its proportionate share measured as of June 30, 2018. The City also
recognized $7,546 for the year ended December 31, 2019 as revenue and an offsetting reduction of the
net pension liability for its proportionate share of the State of Minnesota's on-behalf contributions to the
Police and Fire Fund. Legislation passed in 2013 required the State of Minnesota to begin contributing
$9 million to the Police and Fire Fund each year until the plan is 90% funded or until the State Patrol
Plan (administered by the Minnesota State Retirement System) is 90% funded, whichever occurs later.
In addition, the state will pay $4.5 million on October 1, 2018 and October 1, 2019 in direct state aid.
Thereafter, by October 1 of each year, the state will pay $9 million until full funding is reached or July 1,
2048, whichever is earlier.
For the year ended December 31, 2019, the City recognized pension expense of $85,307 for its
proportionate share of the Police and Fire Plan's pension expense.
At December 31, 2019, the City reported its proportionate share of the Police and Fire Plan's deferred
outflows of resources and deferred inflows of resources related to pensions from the following sources.
Deferred Deferred
Outflows of Inflows of
ResourcesResources
Differences between expected and actual economic experience$ 25,233 $ 88,609
Changes in actuarial assumptions 477,064 646,903
Difference between projected and actual investment earnings - 125,108
Changes in proportion 36,904 30,902
Contributions paid to PERA subsequent
to the measurement date 53,425 -
Total$ 592,626 $ 891,522
71
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Police and Fire Fund Pension Costs (Continued)
The $53,425 reported as deferred outflows of resources related to pensions resulting from City
contributions subsequent to the measurement date will be recognized as a reduction of the net pension
liability in the year ended December 31, 2020. Other amounts reported as deferred outflows and inflows
of resources related to pensions will be recognized in pension expense as follows:
Year Ended Pension Expense
December 31,Amount
2020$ (42,726)
2021 (84,353)
2022 (225,567)
2023 4,736
2024 (4,411)
Total$ (352,321)
E.Actuarial Assumptions
The total pension liability in the June 30, 2019, actuarial valuation was determined using an individual
entry-age normal actuarial cost method and the following actuarial assumptions:
Inflation2.50%Per year
Active member payroll growth3.25Per year
Investment rate of return7.50
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
survivors, and disabilitants for all plans were based on RP 2014 tables for males or females, as
appropriate, with slight adjustments to fit PERA's experience. Cost of living benefit increases after
retirement for retirees are assumed to be 1.25% per year for the General Employees Plan and 1.0% per
year for the Police and Fire Plan.
Actuarial assumptions used in the June 30, 2019, valuation was based on the results of actuarial
experience studies. The most recent four-year experience study in the General Employees Plan was
completed in 2019. The most recent four-year experience study for Police and Fire Plan was completed
in 2016. Economic assumptions were updated in 2018 based on a review of inflation and investment
return assumptions.
72
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
E.Actuarial Assumptions (Continued)
The following changes in actuarial assumptions occurred in 2019:
General Employees Fund
Changes in Actuarial Assumptions:
The mortality projection scale was changed from MP-2017 to MP-2018.
Changes in Plan Provisions:
The employer supplemental contribution was changed prospectively, decreasing from $31.0
prospectively, requiring $16.0 million due per year through 2031.
Police and Fire Fund
Changes in Actuarial Assumptions:
The mortality projection scale was changed from MP-2017 to MP-2018.
Changes in Plan Provisions:
There have been no changes since the prior valuation
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the
reasonableness on a regular basis of the long-term expected rate of return 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 geometric real rates of return for each major asset class are summarized in the following table:
Long-Term Expected
Asset ClassTarget AllocationReal Rate of Return
Domestic Stocks35.5%5.10%
Private Markets25.05.90
Fixed Income20.00.75
International Equity17.55.90
Cash Equivalents2.00.00
Total100%
73
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
F. Discount Rate
The discount rate used to measure the total pension liability in 2019 was 7.5%. The projection of cash
flows used to determine the discount rate assumed that contributions from Plan members and employers
will be made at rates set in Minnesota Statutes. Based on these assumptions, the fiduciary net positions
of the General Employees Fund and the Police and Fire Fund were projected to be available to make all
projected future benefit payments of current plan members. 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.
G. Pension Liability Sensitivity
The following 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 in1% Increase in
Discount Rate
Discount Rate Discount Rate
(6.5%)
(7.5%)(8.5%)
City's proportionate share of
the General Employees Fund
net pension liability$ 1,227,016$ 746,385$ 349,528
1% Decrease in 1% Increase in
Discount Rate Discount Rate Discount Rate
(6.5%)(7.5%)(8.5%)
City's proportionate share of
the Police and Fire Fund
net pension liability (asset)$ 1,293,258$ 587,566$ (7,534)
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.
Public Employees Defined Contribution Plan (Defined Contribution Plan)
All of the City's council members are covered by the Defined Contribution Plan, a multiple-employer
deferred compensation plan administered by PERA. The Defined Contribution Plan 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.
74
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees Defined Contribution Plan (Defined Contribution Plan) (Continued)
The defined contribution plan consists of individual accounts paying a lump-sum benefit. Plan benefits
depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses;
therefore, there is not future liability to the City. 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. 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.
Pension expense for the year is equal to the contributions made. Total contributions made by the City
during fiscal year 2019 were:
Contribution AmountPercentage of Covered Payroll
EmployeeEmployerEmployeeEmployerRequired Rate
$ 1,278$ 1,2785%5%5%
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, 75 Callaway St E, 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 20 years
of service for lump sum service pension. Partial benefits are payable to members who have reached 50
years and have completed 10 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.
75
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan Volunteer Fire Fighter's Relief Association
C. Employees Covered by Benefit Terms
At December 31, 2018, the following employees were covered by the benefit terms:
Inactive employees entitled to but not yet receiving benefits2
Active employees29
Total31
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 $55,653 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, 2019, and the total pension liability
used to calculate the net pension liability was determined by an actuarial valuation as of that date.
The total pension liability in the December 31, 2019 actuarial valuation was determined using the
following actuarial assumptions, applied to all periods included in the measurement:
Inflation2.50%
Salary increase0%, average, including inflation
Investment rate of return5.25%, 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.
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.
76
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan Volunteer Fire Fighter's Relief Association (Continued)
E.Net Pension Liability (Continued)
Long-Term Expected
Asset ClassTarget AllocationReal Rate of Return
Cash10.00%0.74%
Fixed Income40.002.01
Real Estate and Alternatives0.004.53
Domestic Equity40.004.76
International Equity10.005.41
Total100%
The discount rate used to measure the total pension liability was 5.25%. 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.
F. Changes in the Net Pension Liability
Increase (Decrease)
Total Plan FiduciaryNet
PensionNet Pension
Liability PositionLiability
(a) (b)(a) - (b)
Balances at January 1, 2019$ 587,503$ 784,091$ (196,588)
Changes for the year
Service cost 28,180 - 28,180
Interest cost 32,323 - 32,323
Change in assumptions, changes
in benefit terms 28,541 - 28,541
Contributions - state and local - 58,653 (58,653)
Net investment income - 118,020 (118,020)
Administrative expense - (9,020) 9,020
Net charges 89,044 167,653 (78,609)
Balances at December 31, 2019$ 676,547$ 951,744$ (275,197)
77
City of St. Joseph
Notes to Financial Statements
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 5.25%, 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
(4.25%) or 1-percentage-point higher (6.25%) than the current rate:
1%Current1%
DecreaseDiscountIncrease
(4.25%)Rate (5.25%)(6.25%)
City's net pension liability$ (255,912) $ (275,197)$ (294,060)
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, 2019, the City recognized pension expense of $12,761. At
December 31, 2019, the City reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred Deferred
Outflows ofInflows of
ResourcesResources
Differences between expected and actual experience$ -$ 47,579
Changes of assumptions 75,860 -
Net difference between projected and actual earnings on
pension plan investments - 22,893
Total$ 75,860$ 70,472
78
City of St. Joseph
Notes to Financial Statements
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
December 31,Total
2020$ (2,771)
2021 2,043
2022 8,680
2023 (10,113)
2024 5,183
Therafter 2,366
Total$ 5,388
NOTE 10 COMMITMENTS
The City has entered into contracts for construction as follows:
Expended
Contract through
ProjectAmount12/31/19Commitment
CR2 Trail, Phase II/III$ 1,176,167$ 1,062,668$ 113,499
East Park Development, Phase I 23,200 19,957 3,243
Industrial Park East Improvements 3,082,855 2,036,417 1,046,438
2019 Bituminous Street Improvements 1,991,762 1,298,227 693,535
Total$ 1,856,715
79
City of St. Joseph
Notes to Financial Statements
NOTE 11 TAX INCREMENT FINANCING
The City has entered into five Tax Increment Financing agreements which meet the criteria for
disclosure under Governmental Accounting Standards Board Statement No. 77 Tax Abatement
Disclosures. The City's authority to enter into these agreements comes from Minnesota Statute 469. The
City entered into these agreements for the purpose of economic development.
Under each agreement, the City and developer agree on an amount of development costs to be
reimbursed to the developer by the City though tax revenues from the additional taxable value of the
property generated by the development (tax increment). A "pay-as-you-go" note is established for this
amount, on which the City makes payments for a fixed period of time with available tax increment
revenue after deducting for certain administrative costs.
During the year ended December 31, 2019, the City generated $140,321 in tax increment revenue and
made $126,494 in payments to developers.
In addition, the City had an abatement of $26,453 relating to a development agreement.
NOTE 12 SUBSEQUENT EVENTS
On March 5, 2020, the City issued equipment certificates of indebtedness for $220,000 to finance the
purchase of various equipment for the City.
On March 13, 2020, a national emergency was declared for the COVID-19 outbreak in the United States
of America. This event affects the economy and financial markets. The extent of the impact on the City
may be both direct and indirect and will vary based on the duration of the outbreak and various other
factors. An estim
cannot be determined at this time.
NOTE 13 NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED
GASB Statement No. 87, Leases establishes a single model for lease accounting based on the
foundational principle that leases are financings of the right to use an underlying asset. Under this
statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and
a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing
the relevance and consistency of information about governments' leasing activities. This statement will
be effective for the year ending December 31, 2020.
GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period
enhances the relevance and comparability of information about capital assets and the cost of borrowing
for a reporting period and simplifies accounting for interest cost incurred before the end of a construction
period. This statement will be effective for the year ending December 31, 2020.
80
REQUIRED SUPPLEMENTARY INFORMATION
81
City of St. Joseph
Schedule of City's Proportionate Share
of Net Pension Liability
General Employees Retirement Fund
Last Ten Years
City's
Proportionate
Share of the
State's Net Pension City's
City's City's Proportionate Liability and Proportionate
Proportionate Proportionate Share the State's Share of the Plan Fiduciary
Share Share (Amount) of Proportionate Net Pension Net Position
(Percentage) (Amount) of the Net Share of the Liability as a
of the Net the Net Pension Net Pension (Asset) as a Percentage of
For Fiscal Pension Pension Liability Liability Percentage of the Total
Year Ended Liability Liability Associated Associated City's Covered its Covered Pension
Payroll
June 30,(Asset)(Asset) with the Citywith the CityPayroll Liability
20150.0138%$ 715,188$ -$ 715,188$ 799,77389.42%78.19%
20160.0135% 1,096,133 14,341 1,110,474 839,240130.61%68.91%
20170.0142% 906,519 11,418 917,937 916,37398.92%75.90%
20180.0142% 787,758 25,900 813,658 955,44082.45%79.53%
20190.0135% 746,385 23,166 769,551 956,52078.03%80.23%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
Schedule of City's Proportionate Share
of Net Pension Liability
Public Employees Police and Fire Retirement Fund
Last Ten Years
City's
Proportionate
Share of the Plan Fiduciary
City's City's Net Pension Net Position
Proportion of Proportionate Liability as a
the Net Share of the (Asset) as a Percentage of
For Fiscal Pension Net Pension Percentage of the Total
Year Ended Liability Liability City's Covered its Covered Pension
June 30,(Asset)(Asset) PayrollPayroll Liability
20150.0570%$ 647,653$ 505,160128.21%86.61%
20160.0540% 2,167,114 518,580417.89%63.88%
20170.0540% 729,064 554,975131.37%85.43%
20180.0581% 614,057 612,154100.31%88.84%
20190.0559% 587,566 576,684101.89%89.26%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
See notes to required supplementary information.82
City of St. Joseph
Schedule of City Contributions -
General Employees Retirement Fund
Last Ten Years
Contributions
in Relation to Contributions
Fiscal Year Statutorily the Statutorily Contribution as a Percentage
Ending Required Required Deficiency City's Covered of Covered
December 31,ContributionContributions(Excess)PayrollPayroll
2015$ 57,804$ 57,804$ -$ 770,7207.50%
2016 66,294 66,294 - 883,9207.50%
2017 69,820 69,820 - 930,9337.50%
2018 71,452 71,452 - 952,6937.50%
2019 76,798 76,798 - 1,023,9737.50%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
Schedule of City Contributions -
Public Employees Police and Fire Retirement Fund
Last Ten Years
Contributions
in Relation to Contributions
Fiscal Year Statutorily the Statutorily Contribution as a Percentage
Ending Required Required Deficiency City's Covered of Covered
December 31,ContributionContributions(Excess)PayrollPayroll
2015$ 85,925$ 85,925$ -$ 530,40116.20%
2016 89,587 89,587 - 553,006 16.20%
2017 93,325 93,325 - 576,080 16.20%
2018 97,377 97,377 - 601,093 16.20%
2019 106,850 106,850 - 630,383 16.95%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
See notes to required supplementary information.83
City of St. Joseph
Schedule of Changes in Net Pension Liability
and Related Ratios - Fire Relief Association
Measurement Date
20152016
Total Pension Liability (TPL)
Service cost$ 20,898$ 25,691
Interest 29,709 35,786
Differenced between expected and actual experience - (29,935)
Changes of assumptions 55,033 56,691
Changes of benefit terms 31,883 -
Benefit payments, including refunds, or member contributions (41,168) (49,000)
Net change in total pension liability 96,355 39,233
Beginning of year 475,033 571,388
End of Year$ 571,388$ 610,621
Plan Fiduciary Net Pension (FNP)
Contributions - employer$ 52,164$ 63,111
Net investment income (41,979) 68,585
Benefit payments, including refunds of member contributions (41,168) (49,000)
Administrative expense (8,121) (7,724)
Net change in plan fiduciary net position (39,104) 74,972
Beginning of year 740,099 700,995
End of year$ 700,995$ 775,967
Net pension liability (NPL)$ (129,607)$ (165,346)
Plan fiduciary net position as a percentage of the total
pension liability122.7%127.1%
Covered employee payrolln/an/a
Net pension liability as a percentage of covered payrolln/an/a
The City implemented the Provisions of Governmental Accounting Standards Board Statement No. 68 for the year ended December 31,
2015. The schedules within the Required Supplementary Information section required a ten year presentation, but does not require
retroactive reporting. Information prior to 2015 is not available. Additional years will be reported as they become available.
See notes to required supplementary information.
84
Measurement Date
201720182019
$ 25,641$ 27,172$ 28,180
33,188 32,052 32,323
- (35,760) -
4,299 8,441 -
- - 28,541
(118,151) - -
(55,023) 31,905 89,044
610,621 555,598 587,503
$ 555,598$ 587,503$ 676,547
$ 58,310$ 56,565$ 58,653
77,946 (50,418) 118,020
(118,151) - -
(8,546) (7,582) (9,020)
9,559 (1,435) 167,653
775,967 785,526 784,091
$ 785,526$ 784,091$ 951,744
$ (229,928)$ (196,588)$ (275,197)
141.4%133.5%140.7%
n/an/an/a
n/an/an/a
85
City of St. Joseph
Schedule of Employer Contributions
and Non-Employer Contributing
Entities - Fire Relief Association
20152016
Employer
Statutorily determined contribution (SDC)$ -$ -
Contribution in relation to the SDC 3,000 3,000
Contribution deficiency (excess)$ (3,000)$ (3,000)
Non-employer
2% aid$ 52,164$ 60,111
Covered employee payrolln/an/a
Contributions as a percentage of covered employee payrolln/an/a
The Association implemented the Provisions of Governmental Accounting Standards Board Statement No. 68 for the year ended December
31, 2015. The schedules within the Required Supplementary Information section required a ten year presentation, but does not require
retroactive reporting. Information prior to 2015 is not available. Additional years will be reported as they become available.
See notes to required supplementary information.
86
201720182019
$ -$ -$ -
3,000 3,000 3,000
$ (3,000)$ (3,000)$ (3,000)
$ 55,310$ 53,565$ 55,653
n/an/an/a
n/an/an/a
87
City of St. Joseph
Notes to Required Supplementary Information
GENERAL EMPLOYEES FUND
2019 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2017 to MP-2018.
Changes in Plan Provisions
The employer supplemental contribution was changed prospectively, decreasing from $31.0
prospectively, requiring $16.0 million due per year through 2031.
2018 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2015 to MP-2017.
The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per
year thereafter to 1.25% per year.
Changes in Plan Provisions
The augmentation adjustment in early retirement factors is eliminated over a five-year period
starting July 1, 2019, resulting in actuarial equivalence after June 30, 2024.
Interest credited on member contributions decreased from 4.00% to 3.00%, beginning July 1,
2018.
Deferred augmentation was changed to 0.00%, effective January 1, 2019. Augmentation that
has already accrued for deferred members will still apply.
Contribution stabilizer provisions were repealed.
Postretirement benefit increases were changed from 1.00% per year with a provision to
increase to 2.50% upon attainment of 90.00% funding ratio to 50.00% of the Social Security
Cost of Living Adjustment, not less than 1.00% and not more than 1.50%, beginning
January 1, 2019.
For retirements on or after January 1, 2024, the first benefit increase is delayed until the retiree
reaches normal retirement age; does not apply to Rule of 90 retirees, disability benefit
recipients, or survivors.
Actuarial equivalent factors were updated to reflect revised mortality and interest assumptions.
2017 Changes
Changes in Actuarial Assumptions
The CSA loads were changed from 0.8% for active members and 60% for vested and non-
vested deferred members. The revised CSA loads are now 0.0% for active member liability,
15% for vested deferred member liability and 3% for non-vested deferred member liability.
The assumed post-retirement benefit increase rate was changed from 1.0% per year for all
years to 1.0% per year through 2044 and 2.5% per year thereafter.
Changes in Plan Provisions
in 2017 and 2018, and $6,000,000 thereafter.
88
City of St. Joseph
Notes to Required Supplementary Information
2017 Changes (Continued)
Changes in Plan Provisions (Continued)
The Employer Supplemental Contribution for the Minneapolis Employees Retirement Fund
contribution changed from $16,000,000 to $6,000,000 in calendar years 2019 to 2031.
2016 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2035 and 2.5% per year thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate
was changed from 7.9% to 7.5%.
Other assumptions were changed pursuant to the experience study dated June 30, 2015. The
assumed future salary increases, payroll growth, the inflation was decreased by 0.25% to
3.25% for payroll growth and 2.50% for inflation.
2015 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2030 and 2.5% per year thereafter to 1.0% per year through 2035 and 2.5% per year
thereafter.
Changes in Plan Provisions
On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the
General Employees Fund, which increased the total pension liability by $1.1 billion and
increased the fiduciary plan net position by $892 million. Upon consolidation, state and
employer contributions were revised
the special funding situation definition, was due September 2015.
89
City of St. Joseph
Notes to Required Supplementary Information
POLICE AND FIRE FUND
2019 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2017 to MP-2018.
2018 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2016 to MP-2017.
Changes in Plan Provisions
Postretirement benefit increases were changed to 1.00% for all years, with no trigger.
An end date of July 1, 2048 was added to the existing $9.0 million state contribution.
New annual state aid will equal $4.5 million in fiscal years 2019 and 2020, and $9.0 million
thereafter until the plan reaches 100% funding, or July 1, 2048, if earlier.
Member contributions were changed from 10.80% to 11.30% of pay, effective January 1,
2019 and 11.80% of pay, effective January 1, 2020.
Employer contributions were changed from 16.20% to 16.95% of pay, effective January 1,
2019 and 17.70% of pay, effective January 1, 2020.
Interest credited on member contributions decreased from 4.00% to 3.00%, beginning July 1,
2018.
Deferred augmentation was changed to 0.00%, effective January 1, 2019. Augmentation that
has already accrued for deferred members will still apply.
Actuarial equivalent factors were updated to reflect revised mortality and interest
assumptions.
2017 Changes
Changes in Actuarial Assumptions
Assumed salary increases were changed as recommended in the June 30, 2016 experience
study. The net effect is proposed rates that average 0.34% lower than the previous rates.
Assumed rates of retirement were changed, resulting in fewer retirements.
The CSA load was 30% for vested and non-vested deferred members. The CSA has been
changed to 33% for vested members and 2% for non-vested members.
The base mortality table for healthy annuitants was changed from the RP-2000 fully
generational table to the RP-2014 fully generational table (with a base year of 2006), with
male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from
Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed
from the RP-2000 disabled mortality table to the mortality tables assumed for healthy
retirees.
Assumed termination rates were decreased to 3% for the first three years of service. Rates
beyond the select period of three years were adjusted, resulting in more expected terminations
overall.
Assumed percentage of married female members was decreased from 65% to 60%.
90
City of St. Joseph
Notes to Required Supplementary Information
POLICE AND FIRE FUND (CONTINUED)
2017 Changes (Continued)
Changes in Actuarial Assumptions (Continued)
Assumed age difference was changed from separate assumptions for male members (wives
assumed to be three years younger) and female members (husbands assumed to be four years
older) to the assumption that males are two years older than females.
The assumed percentage of female members electing Joint and Survivor annuities was
increased.
The assumed post-retirement benefit increase rate was changed from 1% for all years to 1%
per year through 2064 and 2.5% thereafter.
The single discount rate was changed from 5.6% per annum to 7.5% per annum.
2016 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2037 and 2.5% thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate
changed from 7.9% to 5.6%.
The single discount rate changed from 7.90% to 5.60%.
The assumed future salary increases, payroll growth, and inflation were decreased by 0.25%
to 3.25% for payroll growth and 2.50% for inflation.
2015 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through
2030 and 2.5% per year thereafter to 1.0% per year through 2037 and 2.5% per year
thereafter.
Changes in Plan Provisions
The post-retirement benefit increase to be paid after attainment of the 90% funding threshold
was changed, from inflation up to 2.5%, to a fixed rate of 2.5%.
91
(THIS PAGE LEFT BLANK INTENTIONALLY)
92
SUPPLEMENTARY INFORMATION
93
City of St. Joseph
Schedule of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2019
Variance with
Original and Actual
Final Budget -
Final BudgetAmounts
Over (Under)
Revenues
Property taxes$ 1,424,710$ 1,421,090$ (3,620)
Miscellaneous taxes 14,170 10,276 (3,894)
Special assessments 4,000 3,558 (442)
Franchise fees 137,725 134,704 (3,021)
Licenses and permits 223,840 255,953 32,113
Intergovernmental revenue
Local government aid 994,435 994,435 -
PERA aid 1,540 1,541 1
Fire aid 52,000 58,303 6,303
Police aid 68,500 88,076 19,576
Federal grants 8,000 2,392 (5,608)
State grants 56,900 61,175 4,275
Other grants and aids 26,300 24,585 (1,715)
Total intergovernmental revenue 1,207,675 1,230,507 22,832
Charges for services
General government 35,725 40,044 4,319
Public safety 274,580 278,011 3,431
Public works 4,170 4,023 (147)
Culture and recreation 67,555 83,969 16,414
Total charges for services 382,030 406,047 24,017
Fines and forfeitures 60,000 52,289 (7,711)
Miscellaneous revenues
Investment income 25,000 101,017 76,017
Contributions and donations 3,850 4,632 782
Other 39,200 91,527 52,327
Total miscellaneous revenues 68,050 197,176 129,126
Total revenues 3,522,200 3,711,600 189,400
Expenditures
General government
Mayor and council 85,610 78,726 (6,884)
Administrative and finance 550,655 530,056 (20,599)
Other general government 223,960 206,619 (17,341)
Capital outlay 12,110 19,768 7,658
Total general government 872,335 835,169 (37,166)
94
City of St. Joseph
Schedule of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2019
Variance with
Original and Actual
Final Budget -
Final BudgetAmounts
Over (Under)
Expenditures
Public safety
Police
Current$ 1,209,280$ 1,125,025$ (84,255)
Fire
Current 388,130 402,422 14,292
Capital outlay 72,050 1,983 (70,067)
Total fire 460,180 404,405 (55,775)
Other
Current 98,290 98,152 (138)
Total public safety 1,767,750 1,627,582 (140,168)
Public works
Streets and highways
Street maintenance and storm sewers 274,680 286,892 12,212
Snow and ice removal 126,635 160,566 33,931
Street engineering 35,000 38,883 3,883
Capital outlay 93,250 80,930 (12,320)
Total public works 529,565 567,271 37,706
Culture and recreation
Current 354,750 397,204 42,454
Capital outlay - 1,936 1,936
Total culture and recreation 354,750 399,140 44,390
Total expenditures 3,524,400 3,429,162 (95,238)
Excess of revenues over
(under) expenditures
(2,200) 282,438 284,638
Other Financing Sources (Uses)
Insurance recoveries 2,000 3,428 1,428
Sale of property 200 - (200)
Transfers in 56,705 56,640 (65)
Transfers out - (150,000) (150,000)
Total other financing sources (uses) 58,905 (89,932) (148,837)
Net change in fund balances$ 56,705 192,506$ 135,801
Fund Balances
Beginning of year2,385,922
End of year$ 2,578,428
95
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2019
Special Revenue
Economic TIF 2-1 TIF 2-3
Development Millstream TIF 2-2 St. Bayou
Authority Shops and Joseph Meat Blues/Alley
(150)Lofts (157)Market (158)Flat (159)
Assets
Cash and investments$ 29,584$ 30,040$ 702$ 363
Taxes receivable - delinquent 2,090 - - -
Special assessments receivable
Delinquent - - - -
Deferred - - - -
Accounts receivable - - - -
Interest receivable 160 102 3 2
Due from other funds 10,300 - - -
Due from other governments 5,589 - - 41
Notes receivable - - - -
Total assets$ 47,723$ 30,142$ 705$ 406
Liabilities
Accounts payable$ 4,728$ -$ -$ -
Due to other funds - - 500 9,800
Salaries and benefits payable 205 - - -
Total liabilities 4,933 - 500 9,800
Deferred Inflows of Resources
Unavailable revenue - property taxes 2,090 - - -
Unavailable revenue - special assessments - - - -
Unavailable revenue - notes receivable - - - -
2,090 - - -
Total deferred inflows of resources
Fund Balances
Restricted - 30,142 205 -
Committed 40,700 - - -
Assigned - - - -
Unassigned - - - (9,394)
Total fund balances 40,700 30,142 205 (9,394)
Total liabilities, deferred inflows
of resources, and fund balances$ 47,723$ 30,142$ 705$ 406
96
Special Revenue
TIF 3-1 TIF 4-1
Central Fortitude
Minnesota Senior Park Charitable
Credit Union Housing Dedication Gambling Lodging Tax Revolving Deed Housing
(152)(153)(205)(215)(220)Loan (250)(225)
$ 3,131$ 6,229$ 102,282$ 2,181$ 34,283$ 219,626$ 32,938
- - - - - - -
- - - - - - -
- - - - - - -
- - 29 - 382 - -
7 20 416 8 121 1,003 122
- - - - - - -
- - 161 - - - -
- - - - - 52,500 -
$ 3,138$ 6,249$ 102,888$ 2,189$ 34,786$ 273,129$ 33,060
$ -$ -$ -$ -$ -$ -$ -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - 51,374 -
- - - - - 51,374 -
3,138 6,249 102,888 2,189 34,786 33,571 33,060
- - - - - 188,184 -
- - - - - - -
- - - - - - -
3,138 6,249 102,888 2,189 34,786 221,755 33,060
$ 3,138$ 6,249$ 102,888$ 2,189$ 34,786$ 273,129$ 33,060
97
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2019
Debt Service
G.O. G.O.
Improvement G.O. Improvement G.O.
Bonds of Improvement Bonds of Improvement
2005B/2010B Bonds of 2011A/2006C Bonds of
(333)2013A (348)(338)2010B (345)
Assets
Cash and investments$ 74,070$ 67,484$ 54,926$ 126,503
Taxes receivable - delinquent 670 247 939 108
Special assessments receivable
Delinquent - - 1,564 775
Deferred 70,313 30,181 72,981 81,703
Accounts receivable - - - -
Interest receivable 503 317 249 542
Due from other funds - - - -
Due from other governments 356 285 491 54
Notes receivable - - - -
Total assets$ 145,912$ 98,514$ 131,150$ 209,685
Liabilities
Accounts payable$ 77$ 77$ 77$ 77
Due to other funds - - - -
Salaries and benefits payable - - - -
Total liabilities 77 77 77 77
Deferred Inflows of Resources
Unavailable revenue - property taxes 670 247 939 108
Unavailable revenue - special assessments 70,313 30,181 74,545 82,478
Unavailable revenue - notes receivable - - - -
70,983 30,428 75,484 82,586
Total deferred inflows of resources
Fund Balances
Restricted 74,852 68,009 55,589 127,022
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total fund balances 74,852 68,009 55,589 127,022
Total liabilities, deferred inflows
of resources, and fund balances$ 145,912$ 98,514$ 131,150$ 209,685
98
Debt Service
G.O.
Certificates of G.O. G.O. G.O. G.O. Tax G.O. Capital G.O.
Indebtedness Improvement Improvement Certificates of Abatement Improvement Improvement
of 2011A Bonds of Bonds of Indebtedness Bonds of Plan Bonds of Bonds of
(346)2014A (350)2015A (351)2015A (352)2015B (353)2016A (301)2016B (304)
$ 16$ 164,910$ 115,334$ 810$ 37,504$ 48,607$ 266,661
335 1,547 1,213 2,489 - 4,594 72
- 1,993 - - - - -
- 88,645 110,256 - - - 608,136
- - - - - - -
34 790 576 187 393 261 530
- - - - - - -
182 801 552 1,326 - 2,404 45
- - - - - - -
$ 567 $ 258,686$ 227,931$ 4,812$ 37,897$ 55,866$ 875,444
$ 77$ 77$ 77$ 77$ 77$ -$ 77
550 - - - - - -
- - - - - - -
627 77 77 77 77 - 77
335 1,547 1,213 2,489 - 4,594 72
- 90,638 110,256 - - - 608,136
- - - - - - -
335 92,185 111,469 2,489 - 4,594 608,208
- 166,424 116,385 2,246 37,820 51,272 267,159
- - - - - - -
- - - - - - -
(395) - - - - - -
(395) 166,424 116,385 2,246 37,820 51,272 267,159
$ 567 $ 258,686$ 227,931$ 4,812$ 37,897$ 55,866$ 875,444
99
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2019
Debt Service
Capital G.O. 2018A G.O.
Improvement Improvement Equipment Debt Service Improvement
Bonds of Bonds of Certificate Relief Fund Bonds of
2017A (303)2017B (305)(306)(390)2019A (307)
Assets
Cash and investments$ 93,871$ 36,858$ 1,396$ 688,072$ 142,742
Taxes receivable - delinquent - 233 821 329 -
Special assessments receivable
Delinquent - 725 - 77 -
Deferred - 67,302 - 113,955 547,882
Accounts receivable - - - - 1,394
Interest receivable 716 191 240 - 1,501
Due from other funds - - - - -
Due from other governments - 1,192 507 19 1,732
Notes receivable 262,163 - - - -
Total assets$ 356,750$ 106,501$ 2,964$ 802,452$ 695,251
Liabilities
Accounts payable$ 77$ 77$ 77$ -$ 77
Due to other funds - - - - -
Salaries and benefits payable - - - - -
Total liabilities 77 77 77 - 77
Deferred Inflows of Resources
Unavailable revenue - property taxes - 233 821 329 -
Unavailable revenue - special assessments - 68,027 - 114,032 547,882
Unavailable revenue - notes receivable 260,964 - - - -
260,964 68,260 821 114,361 547,882
Total deferred inflows of resources
Fund Balances
Restricted 95,709 38,164 2,066 - 147,292
Committed - - - - -
Assigned - - - 688,091 -
Unassigned - - - - -
Total fund balances 95,709 38,164 2,066 688,091 147,292
Total liabilities, deferred inflows
of resources, and fund balances$ 356,750$ 106,501$ 2,964$ 802,452$ 695,251
100
Debt ServiceCapital Projects
G.O. Jacob 2018
Industrial Wetterling Equipment General Total
Park Bonds of Recreation Certificate Capital Water Access Sewer Access Governmental
2019A (308)Center (402)(406)Outlay (490)Fund (501)Fund (502)Funds
$ 14,401$ 3,094$ 41,283$ 529,844$ 479,294$ 28,214$ 3,477,253
- - - - - - 15,687
- - - - - - 5,134
- - - - - - 1,791,354
- - - - - - 1,805
1,293 11 - - 2,019 490 12,807
- - - - - - 10,300
- - - 1,120 - - 16,857
- - - - - - 314,663
$ 15,694$ 3,105$ 41,283$ 530,964$ 481,313$ 28,704$ 5,645,860
$ 77$ -$ 3,100$ -$ -$ -$ 8,983
- - - - - - 10,850
- - - - - - 205
77 - 3,100 - - - 20,038
- - - - - - 15,687
- - - - - - 1,796,488
- - - - - - 312,338
- - - - - - 2,124,513
15,617 - - - - - 1,511,854
- - - - - - 228,884
- 3,105 38,183 530,964 481,313 28,704 1,770,360
- - - - - - (9,789)
15,617 3,105 38,183 530,964 481,313 28,704 3,501,309
$ 15,694$ 3,105$ 41,283$ 530,964$ 481,313$ 28,704$ 5,645,860
101
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2019
Special Revenue
TIF 2-1
Economic Millstream TIF 2-2TIF 2-3 Bayou
Development Shops and St. Joseph Meat Blues/Alley
Authority (150)Lofts (157)Market (158)Flat (159)
Revenues
Property taxes$ 106,971$ -$ -$ -
Tax increments - 43,192 4,830 290
Lodging taxes - - - -
Special assessments - - - -
Intergovernmental 100,247 - - -
Charges for services 500 - - -
Miscellaneous
Investment income 1,745 1,114 34 26
Contributions and donations - - - -
Revolving loan repayments - - - -
Other - - - -
Total revenues 209,463 44,306 4,864 316
Expenditures
Current
Public safety - - - -
Culture and recreation - - - -
Economic development 175,755 39,931 4,657 1,188
Debt service
Principal - - - -
Interest and other charges - - - -
Capital outlay
General government - - - -
Public safety - - - -
Public works - - - -
Culture and recreation - - - -
Economic development 374 - - -
Total expenditures 176,129 39,931 4,657 1,188
Excess of revenues over
(under) expenditures
33,334 4,375 207 (872)
Other Financing Sources (Uses)
Sale of property - - - -
Bonds issued - - - -
Transfers in 13,628 - - -
Transfers out (67,153) - - -
Total other financing sources (uses) (53,525) - - -
Net change in fund balances (20,191) 4,375 207 (872)
Fund Balances
Beginning of year 60,891 25,767 (2) (8,522)
End of year$ 40,700$ 30,142$ 205$ (9,394)
102
Special Revenue
TIF 3-1 Central TIF 4-1
Minnesota Fortitude Park Charitable
Credit Union Senior Housing Dedication Gambling Lodging Tax Revolving Deed Housing
(152)(153)(205)(215)(220)Loan (250)(225)
$ -$ -$ 20,000$ -$ -$ -$ -
44,162 47,847 - - - - -
- - - - 15,584 - -
- - - - - - -
- - - - - - -
- - 16,585 - - - -
81 215 4,544 85 1,317 8,103 1,335
- - 159 - - - -
- - - - - 1,387 -
- - - - 825 - 15,466
44,243 48,062 41,288 85 17,726 9,490 16,801
- - - - - - -
- - 5,767 - - - -
40,804 44,214 - - 13,992 52,710 18,750
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - 44,390 - - - -
- - - - - - -
40,804 44,214 50,157 - 13,992 52,710 18,750
3,439 3,848 (8,869) 85 3,734 (43,220) (1,949)
- - - - - - -
- - - - - - -
- - - - - 52,840 -
- (2,139) - - - - -
- (2,139) - - - 52,840 -
3,439 1,709 (8,869) 85 3,734 9,620 (1,949)
(301) 4,540 111,757 2,104 31,052 212,135 35,009
$ 3,138$ 6,249$ 102,888$ 2,189$ 34,786$ 221,755$ 33,060
103
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2019
Debt Service
G.O. G.O.
Improvement G.O. Improvement G.O.
Bonds of Improvement Bonds of Improvement
2005B/2010B Bonds of 2011A/2006C Bonds of
(333)2013A (348)(338)2010B (345)
Revenues
Property taxes$ 39,591$ 14,833$ 54,496$ 5,955
Tax increments----
Lodging taxes----
Special assessments38,2699,59941,75617,470
Intergovernmental----
Charges for services----
Miscellaneous
Investment income5,4923,4602,7185,919
Contributions and donations----
Revolving loan repayments----
Other----
Total revenues83,35227,89298,97029,344
Expenditures
Current
Public safety----
Culture and recreation----
Economic development----
Debt service
Principal135,00040,000135,00055,000
Interest and other charges6,4907,1469,10711,683
Capital outlay
General government----
Public safety----
Public works----
Culture and recreation----
Economic development----
Total expenditures141,49047,146144,10766,683
Excess of revenues over
(under) expenditures
(58,138)(19,254)(45,137)(37,339)
Other Financing Sources (Uses)
Sale of property----
Bonds issued----
Transfers in--18,00013,250
Transfers out----
Total other financing sources (uses)--18,00013,250
Net change in fund balances(58,138)(19,254)(27,137)(24,089)
Fund Balances
Beginning of year132,99087,26382,726151,111
End of year$ 74,852$ 68,009$ 55,589$ 127,022
104
Debt Service
G.O. G.O. G.O. G.O. G.O. Tax G.O. Capital G.O.
Certificates of Improvement Improvement Certificates of Abatement Improvement Improvement
Indebtedness of Bonds of Bonds of Indebtedness Bonds of Plan Bonds of Bonds of
2011A (346)2014A (350)2015A (351)2015A (352)2015B (353)2016A (301)2016B (304)
$ 20,236$ 89,114$ 14,618$ 34,407$ -$ 267,177$ 4,928
-------
-------
-16,85628,474---22,344
------213,607
21,757------
3718,6326,2862,0374,2902,8515,789
-------
-------
-------
42,364114,60249,37836,4444,290270,028246,668
-------
-------
-------
40,000115,00060,00035,000115,000180,00050,000
2,83747,21210,1271,30240,01289,64313,426
-------
-------
------2,714
-------
-------
42,837162,21270,12736,302155,012269,64366,140
(473)(47,610)(20,749)142(150,722)385180,528
-------
-------
----160,000-20,000
-------
----160,000-20,000
(473)(47,610)(20,749)1429,278385200,528
78214,034137,1342,10428,54250,88766,631
$ (395)$ 166,424$ 116,385$ 2,246$ 37,820$ 51,272$ 267,159
105
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2019
Debt Service
Capital G.O. 2018A G.O.
Improvement Improvement Equipment Debt Service Improvement
Bonds of Bonds of Certificate Relief Fund Bonds of
2017A (303)2017B (305)(306)(390)2019A (307)
Revenues
Property taxes$ -$ 14,812$ 56,179$ 1,053$ -
Tax increments-----
Lodging taxes-----
Special assessments-11,779-11,113127,780
Intergovernmental-----
Charges for services-----
Miscellaneous
Investment income4,5432,0852,621-16,390
Contributions and donations---11,180-
Revolving loan repayments-----
Other37,145--4,0001,757
Total revenues41,68828,67658,80027,346145,927
Expenditures
Current
Public safety---1,398-
Culture and recreation-----
Economic development-----
Debt service
Principal42,00035,00050,000--
Interest and other charges8,5888,3067,127-17,823
Capital outlay
General government-----
Public safety---28,004-
Public works-----
Culture and recreation-----
Economic development-----
Total expenditures50,58843,30657,12729,40217,823
Excess of revenues over
(under) expenditures
(8,900)(14,630)1,673(2,056)128,104
Other Financing Sources (uses)
Sale of property-----
Bonds issued----19,188
Transfers in---150,000-
Transfers out-----
Total other financing sources (uses)---150,00019,188
Net change in fund balances(8,900)(14,630)1,673147,944147,292
Fund Balances
Beginning of year104,60952,794393540,147-
End of year$ 95,709$ 38,164$ 2,066$ 688,091$ 147,292
106
Debt ServiceCapital Projects
Jacob 2018
G.O. Industrial Wetterling Equipment Total Other
Park Bonds of Recreation Certificate General Capital Water Access Sewer Access Governmental
2019A (308)Center (402)(406)Outlay (490)Fund (501)Fund (502)Funds
$ -$-$-$ 153,925$ -$-$ 898,295
------140,321
------15,584
------325,440
------313,854
----268,83594,073401,750
14,124116--22,0495,355133,727
-511----11,850
------1,387
2,528-----61,721
16,652627-153,925290,88499,4282,303,929
------1,398
---19,268--25,035
------392,001
------1,087,000
28,160-----308,989
--9,1231,575--10,698
---9,659--37,663
--5,1913,252--11,157
--12,7593,252--60,401
------374
28,160-27,07337,006--1,934,716
(11,508)627(27,073)116,919290,88499,428369,213
---4,000--4,000
27,125-----46,313
------427,718
----(225,000)(162,000)(456,292)
27,125--4,000(225,000)(162,000)21,739
15,617627(27,073)120,91965,884(62,572)390,952
-2,47865,256410,045415,42991,2763,110,357
$ 15,617$ 3,105$ 38,183$ 530,964$ 481,313$ 28,704$ 3,501,309
107
(THIS PAGE LEFT BLANK INTENIONALLY)
108
Report on Internal Control overFinancial 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 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, thebusiness-type activities, each major fund,and the aggregate remaining fund information of
theCity of St.Joseph,Minnesota, as of and for the year ended December 31, 2019,and the related notes
to financial statements, which collectively comprise theCity's basic financial statements, and have
issued our report thereon dated April 22,2020.
Internal ControloverFinancial Reporting
In planning and performing our audit of the financial statements, we considered theCity'sinternal
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 theCity'sinternal control.Accordingly, we
do not express an opinion on the effectiveness of theCity'sinternal 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.
Our considerationof 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, as described in the
accompanying Schedule of Finding and Response on Internal Control that we consider to be a material
weakness, listed as audit finding 2019-001.
109
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City'sfinancial statements are free from
material misstatement, we performed tests of its compliance with certain provisionsof laws, regulations,
contractsand 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'sResponse to Findings
The City's response to the findingidentified in our audit isdescribed in the accompanying Schedule of
Finding and Response on Internal Control.The City'sresponse 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 resultsof 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
withGovernment Auditing Standardsin considering the City's internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
St. Cloud, Minnesota
April 22,2020
110
MinnesotaLegal Compliance
Independent Auditor's Report
Honorable Mayor andMembers
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 thestandards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements ofthegovernmental
activities, thebusiness-type activities, each major fund,and the aggregate remaining fund information of
theCity of St.Joseph, Minnesota,as of and for the year ended December 31, 2019,and the related notes
to financial statements,which collectively comprise the City's basic financial statements, and have
issued our report thereon dated April 22,2020.
In connection with our audit, nothing came to our attention that caused us to believe that the City failed
to comply with the provisions of the contracting and bidding, deposits and investments, conflicts of
interest, public indebtedness, claims and disbursements, miscellaneous provisions, and tax increment
financing sections of the Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State
Auditor pursuant to Minnesota Statutes§ 6.65.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.
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this communication is not
suitable for any other purpose.
St. Cloud, Minnesota
April 22,2020
111
City of St. Joseph
Schedule of Finding and Response on
Internal Control
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING
Material Weakness
Audit Finding 2019-001 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 Deputy Clerk 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.
Cash Disbursements
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 Technician 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. The Finance Director
does review payroll reports, time off balances, and calculated 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 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.
112
City of St. Joseph
Schedule of Finding and Response on
Internal Control
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING (CONTINUED)
Material Weakness (Continued)
Audit Finding 2019-001 Improve Segregation of Accounting Duties (Continued)
Cash Reconciliation and Access
The Finance Director performs the above noted responsibilities, while also reconciling cash,
and generating manual journal entries.
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.
113
City of St. Joseph
Communications Letter
December 31, 2019
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
Required Communication 4
Financial Analysis 8
Emerging Issue 22
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 governmental activities,
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, 2019, 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 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.
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
have not been identified. In addition, because of inherent limitations in internal control, including the
possibility of management override of controls, misstatements due to error, or fraud may occur and not
be detected by such controls. However, as discussed below, we identified a certain deficiency in internal
control that we consider to be a material weakness.
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 over financial reporting, 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 reasonable possibility exists when the likelihood of an event
occurring is either reasonably possible or probable as defined as follows:
Reasonably possible. The chance of the future event or events occurring is more than remote but
less than likely.
Probable. The future event or events are likely to occur.
The material weakness identified is stated within this letter.
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.
1
The accompanying memorandumalsoincludes financial analysis provided asa 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 22,2020,on such statements.
This communication is intended solely for the information and use of the CityCouncil,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 22,2020
2
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 Deputy Clerk or City Administrator enter 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.
Cash Disbursements
The Finance Director also is an authorized signer and has access to the Mayor's electronic signature.
The City 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. Department heads review their listing for accuracy.
Payroll
The Finance Technician 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 Finance Director does
review payroll reports, time off balances and the calculated 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.
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.
3
City of St. Joseph
Required Communication
We have audited the financial statements of the governmental activities, business-type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2019. Professional standards require that we advise you of the following matters related
to our audit.
Our Responsibility in Relation to the Financial Statement Audit
As communicated in our engagement letter, our responsibility, as described by professional standards, is
to form and express opinions about whether the financial statements prepared by management with your
oversight are presented fairly, in all material respects, in accordance with accounting principles
generally accepted in the United States of America. Our audit of the financial statements does not
relieve you or management of its respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the financial statements are free of material
misstatement. An audit of financial statements includes consideration of internal control over financial
reporting as a basis for designing 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 over financial
reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the
purpose of determining our audit procedures and not to provide any assurance concerning such internal
control.
We are also responsible for communicating significant matters related to the audit that are, in our
professional judgement, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures for the purpose of identifying other matters to
communicate to you.
Generally accepted accounting principles provide for certain required supplementary information (RSI)
to supplement the basic financial statements. Our responsibility with respect to the RSI, which
supplements the basic audit financial statements, is to apply certain limited procedures in accordance
with generally accepted auditing standards. However, the RSI was not audited and, because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance,
we do not express an opinion or provide any assurance on the RSI.
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.
Our Responsibility in Relation to Government Auditing Standards
As communicated in our engagement letter, 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 grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts. However,
the objective of our tests was not to provide an opinion on compliance with such provisions.
4
City of St. Joseph
Required Communication
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to
you.
Compliance with All Ethics Requirements Regarding Independence
The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied
with all relevant ethical requirements regarding independence.
Qualitative Aspects of Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the
significant accounting policies adopted by the City is included in the notes to financial statements. There
have been no initial selection of accounting policies and no changes to significant accounting policies or
their application during 2019. No matters have come to our attention that would require us, under
professional standards, to inform you about (1) the methods used to account for significant unusual
transactions and (2) the effect of significant accounting policies in controversial or emerging areas for
which there is a lack of authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's current judgements. Those judgements are normally based on 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 markedly from management's current
judgements. 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 Pension Liability, Deferred Outflows of Resources Related to Pensions and Deferred Inflows
of Resources Related to Pensions These balances are based on an allocation by the pension
plans using estimates based on contributions.
We evaluated the key factors and assumptions used to develop the accounting estimates and determined
that they are reasonable in relation to the financial statements taken as a whole.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive
because of their significance to financial statement users. The financial statement disclosures are neutral,
consistent, and clear.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of
the audit.
5
City of St. Joseph
Required Communication
Uncorrected and Corrected Misstatements
For the purposes of this communication, professional standards require us to accumulate all known
and likely misstatements identified during the audit, other than those that we believe are trivial, and
communicate them to the appropriate level of management. Further, professional standards require
us to also communicate the effects of uncorrected misstatements related to prior periods on the
relevant classes of transactions, account balances or disclosures, and the financial statements as a
whole.
We identified the following uncorrected misstatement of the financial statements. Management has
determined its effect is immaterial, both individually and in the aggregate, to the financial statements
taken as a whole.
Prepaid expenditures
In addition, professional standards require us to communicate to you all material, corrected
misstatements that were brought to the attention of management as a result of our audit procedures.
None of the misstatements detected as a result of audit procedures and corrected by management were
material, either individually or in the aggregate, to the financial statements taken as a whole.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a
matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or
auditing matter, which could be significant to the City's financial statements or the auditor's report.
No such disagreements arose during the course of our audit.
Representations Requested from Management
We have requested certain written representations from management, which are included in the
management representation letter.
Management's Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters. Management has informed us that, and to our knowledge, there were no
consultations with other accountants regarding auditing and accounting matters.
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of
matters, including the application of accounting principles and auditing standards, operating conditions
affecting the City, and operating plans and strategies that may affect the risks of material misstatement.
None of the matters discussed resulted in a condition to our retention as the City's auditor.
Other Information in Documents Containing Audited Financial Statements
We applied certain limited procedures to the RSI that supplements the basic financial statements. Our
procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
6
City of St. Joseph
Required Communication
Other Information in Documents Containing Audited Financial Statements (Continued)
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.
7
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.
TAX CAPACITY, LEVY, AND RATES
The certified levy increased more than the taxable tax capacity increased in 2018 causing the tax rate to
increase.
Tax Capacity, Levy, and Rates
$4,500,000100%
99.61%
99.66%
99.00%
98.38%
98.51%
90%
$3,851,786
$4,000,000
80%
$3,565,731
$3,342,661
$3,379,730
$3,272,269
$3,500,000
70%
60%
$3,000,000
60.84%
61.46%
59.26%
50%
55.01%
52.70%
$2,500,000
40%
$2,343,285
30%
$2,000,000
$2,191,595
$2,002,920
20%
$1,838,805
$1,500,000
$1,704,320
10%
$1,000,0000%
20152016201720182019
Taxable Tax CapacityCertified Tax LevyTax RateCollection Rate
.
8
City of St. Joseph
Financial Analysis
GENERAL FUND
For the year ended December 31, 2019, General Fund revenues exceeded expenditures by $282,438. In
addition to this, $3,428 of insurance recoveries, transfer out of $150,000 to other funds and transfers in
of $56,640 from other funds resulted in an increase in the General Fund balance of $192,506. Of the
City's General Fund balance at December 31, 2019, $946,519 was assigned for specific expenditures,
such as the fire department, elections, and a City structure/facility study. The City also has $9 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
$1,631,900 represents approximately five months of 2019 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.
General Fund Balance
$3,000,000
$9
$25,712
$24,560
$23,479
$2,500,000
5,051
26,567
34,370
$321,091
$77
$267,501
$295,972
$2,000,000
20,366
$288,493
$150,544
$625,428
$1,500,000
$620,425
$576,622
$557,885
$514,060
$1,631,900
$1,439,299
$1,468,385
$1,449,363
$1,315,805
$1,000,000
$500,000
$-
20152016201720182019
UnassignedAssigned for Fire FundAssigned for Other PurposesRestrictedNonspendable
9
City of St. Joseph
Financial Analysis
GENERAL FUND (CONTINUED)
General Fund
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
20152016201720182019
Total Revenues
$2,927,909$3,206,688$3,258,037$3,527,345$3,711,600
Total Expenditures
$2,682,512$2,848,467$3,029,246$3,220,573$3,429,162
Fund Balance2,000,8522,361,9392,355,8232,385,9222,578,428
During the year ended December 31, 2019, the City's General Fund revenues increased $184,255, or
5.2%, from 2018, while expenditures increased by $208,589, or 6.5%. 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 $192,506 from 2018 to 2019. Fund balance has increased
$577,576 or 28.9% since 2015.
10
City of St. Joseph
Financial Analysis
GENERAL FUND REVENUES
20152016201720182019
Taxes$ 1,107,058$ 1,083,067$ 1,125,765$ 1,291,758$ 1,431,366
Special assessments 3,590 3,740 9,127 5,341 3,558
Franchise fees 124,283 126,817 129,242 131,212 134,704
Licenses and permits 152,158 270,780 356,990 357,138 255,953
Intergovernmental 1,107,840 1,212,746 1,133,362 1,227,716 1,230,507
Charges for services 270,508 345,321 376,946 396,183 406,047
Fines and forfeitures 50,489 46,747 55,474 58,620 52,289
Miscellaneous 111,983 117,470 71,131 59,377 197,176
Total Revenues$ 2,927,909$ 3,206,688$ 3,258,037$ 3,527,345$ 3,711,600
As discussed earlier, the City's revenue increased $184,255 from 2018 to 2019. The most significant
variance was an increase in miscellaneous revenues of $137,799. This increase was due to an increase in
in investment income due to better market rate and receiving $50,000 for a conduit debt issuance fee.
Property tax revenues increased $139,608 from 2018, due primarily to the City increasing the amount
levied. Licenses and permits decreased $101,185 from 2018 due to a decrease in overall building
permits issued from 2018. Other revenues stayed consistent with the prior year.
Total revenues have grown $783,691 since 2015, an increase of 26.8%. The largest variances between
the types of revenue over the five-year period have been the increases in property taxes, charges for
services, intergovernmental revenues, and licenses and permits.
The pie charts on the following page show the General Fund sources of revenue for 2019 and 2018 as a
percentage of total revenues. The allocation of sources of revenue fluctuates minimally from year-to-
year. Intergovernmental revenue and Taxes account for the two largest components of revenues, each
making up 33% and 38% of the total. The total of these two categories accounts for approximately 71%
of General Fund revenues for both 2019 and 2018.
11
City of St. Joseph
Financial Analysis
GENERAL FUND REVENUES (CONTINUED)
2018 General Fund Revenues
Licenses and
Intergovernmental
permits
35%
10%
Franchise fees
4%
Special Assesments
Less than 1%
Charges for
services
Taxes
11%
36%
Fines and
Miscellaneous
forfeitures
2%
2%
12
City of St. Joseph
Financial Analysis
GENERAL FUND EXPENDITURES
20152016201720182019
General government$ 582,258$ 617,764$ 749,008$ 741,374$ 815,401
Public safety 1,376,624 1,459,196 1,537,183 1,606,132 1,625,599
Public works 329,004 353,421 342,806 440,811 486,341
Culture and recreation 264,168 317,839 270,555 331,861 397,204
Capital outlay 130,458 100,247 129,694 100,395 104,617
Total Expenditures$ 2,682,512$ 2,848,467$ 3,029,246$ 3,220,573$ 3,429,162
As discussed earlier, General Fund expenditures increased $208,589, or 6.5%, from 2018 to 2019. The
most significant increases in expenditures occurred in general government, public works, and culture
and recreation. General government increased $74,027 due to an increase in wages and the severance
payment for the City Administrator who retired in 2019. Public works expenditures increased $45,530,
snow plowing made up the largest component of this increase, with the annexation of the township,
there was more plowing to be done. Culture and recreation increased $65,343 due to an increase in
utility costs related to Millstream Park shelter and an increase in wages. All other expenses remained
consistent with the prior year.
The pie charts on the following page show the General Fund expenditures by function for 2019 and
2018 as a percentage of total expenditures. The allocation of expenditures by function was fairly
consistent from 2018 to 2019. Public safety remains the largest component of General Fund
expenditures, representing 47% and 50% of total expenditures for 2019 and 2018, respectively.
13
City of St. Joseph
Financial Analysis
GENERAL FUND EXPENDITURES (CONTINUED)
2019 General Fund Expenditures
Public safety
47%
Public works
14%
General
government
Culture and
24%
recreation
12%
Capital outlay
3%
2018 General Fund Expenditures
Public safety
50%
Public works
14%
General
Culture and
government
recreation
23%Capital outlay
10%
3%
14
City of St. Joseph
Financial Analysis
GENERAL FUND BUDGET
The table below illustrates the General Fund budget and actual for 2019 revenues and expenditures by
function.
Variance
With Final
Original and
Budget -
Actual
Amounts
Final Budget
Over (under)
Revenues
Taxes$ 1,438,880$ 1,431,366$ (7,514)
Special assessments 4,000 3,558 (442)
Franchise fees 137,725 134,704 (3,021)
Licenses and permits 223,840 255,953 32,113
Intergovernmental 1,207,675 1,230,507 22,832
Charges for services 382,030 406,047 24,017
Fines and forfeitures 60,000 52,289 (7,711)
Miscellaneous 68,050 197,176 129,126
Total revenues 3,522,200 3,711,600 189,400
Expenditures
General government 860,225 815,401 (44,824)
Public safety 1,695,700 1,625,599 (70,101)
Public works 436,315 486,341 50,026
Culture and recreation 354,750 397,204 42,454
Capital outlay 177,410 104,617 (72,793)
Total expenditures 3,524,400 3,429,162 (95,238)
Excess of receipts over
(under) disbursements
(2,200) 282,438 284,638
Other Financing Sources (Uses)
Insurance recoveries 2,000 3,428 1,428
Sale of property 200 - (200)
Transfers in 56,705 56,640 (65)
Transfers out - (150,000) (150,000)
Total other financing sources
58,905 (89,932) (148,837)
Net change in fund balance$ 56,705$ 192,506$ 135,801
15
City of St. Joseph
Financial Analysis
GENERAL FUND BUDGET (CONTINUED)
General Fund revenues were over budget by $189,400 or 5.4% in 2019. The area with the largest budget
variance was miscellaneous revenues, which exceeded budget by $125,232. Miscellaneous revenues
were over budget due to budgeting conservatively for investment income and not budgeting for the
receipt of conduit debt fees. Other budgeted revenues were on budget.
Capital outlay expenditures were under budget by $72,793. This was primarily due to the City setting
aside funds for future equipment purchases. Public safety expenditures were under budget $70,101. This
budget variance was due to the City budgeting for the hiring of a sergeant and implementing a wage
study, both of which did not happen in 2019. Additionally, health insurance was under budget due to
conservative budgeting.
Public works was over budget by $50,026, mainly due to an increase in snow removal costs. This budget
variance was primarily due to the heavy snow fall in March and April, as well as being responsible for
snow removal for recently annexed property.
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.
16
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS
Water Fund
The Water Fund showed operating income in all five years presented. Operating revenues decreased
$29,060, or 2.8%, from 2018 due to a slight decrease in usage. Operating expenses decreased $34,680,
or 4.0%, from 2018 to 2019, due to less repairs and supplies needed in during the year.
Operations produced operating income of $158,015, which is the second highest in the five years
presented. With the exclusion of $432,706 in depreciation expense, the Fund experienced operating
income of $590,721. 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 100% of depreciation expense.
In addition to the operating revenues and expenses of the Water Fund, there were net non-operating
income of $15,104, which is comprised of property taxes and other income, offset by interest expense on
the outstanding bond debt. The operating and non-operating activities netted with capital contributions
and transfers resulted in an increase in net position of $1,188,443 to $10,149,563 at
December 31, 2019. The cash and investments balance at December 31, 2019, totaled $821,108, an
increase of $219,089. A large portion of this increase was attributed to transfers in from other funds.
WaterFund
$1,100,000
$900,000
$700,000
$500,000
$300,000
$100,000
20152016201720182019
Operating Revenues
$770,889$883,601$968,823$1,030,342$1,001,282
Operating Expenses
762,423782,057791,779877,947843,267
Operating Income with Depreciation8,466101,544177,044152,395158,015
Operating Income without Depreciation413,747513,809594,056588,720590,721
17
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Sanitary Sewer Fund
Operating revenues increased $5,201, or 0.4%, from 2018 to 2019, while operating expenses increased
$49,132, or 5.2%. Revenues were consistent with the prior year. Expenses on the other hand increased
primarily due to an increase in contracted services with the City of St. Cloud. This increase was due to
additional costs related to infiltration and inflow.
The Sewer Fund produced operating income for the fourth consecutive year. 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 100% of depreciation expense for four consecutive years.
The graph below indicates the Sewer Fund did generate operating income each year when depreciation
expense is not considered, indicated by the orange bar.
In addition to the operating revenues and expenses of the Sewer Fund, there were net non-operating
expenses of $104,275, which is mainly due to $138,137 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 $808,599 to $9,869,463 at December 31, 2019. The cash balance at
December 31, 2019, totaled $247,584, an increase of $14,594.
Sanitary Sewer Fund
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
$(200,000)
20152016201720182019
Operating Revenues$840,148$997,206$1,271,765$1,387,894$1,393,095
Operating Expenses
848,367886,810959,148942,953992,085
Operating Income (Loss) with Depreciation(8,219)110,396312,617444,941401,010
Operating Income without Depreciation
433,404563,309794,023937,945894,443
18
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, with the exception of 2016. Operating revenues
increased $16,519, or 5.9%, while operating expenses increased $11,144, or 3.6%, from 2018 to 2019.
The increase in revenues was due to an increase in rates and total customers in 2019. This increase in
expenses was a result of an increase in refuse fees. These changes resulted in an operating loss of
$21,585 for 2019. The Fund produced an operating loss of $15,079 when depreciation is not factored in.
The cash balance decreased $8,592 in 2019 and totaled $235,896 at December 31, 2019.
Refuse Fund
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$-
$(50,000)
20152016201720182019
Operating Revenues
$284,585$286,603$288,151$280,981$297,500
Operating Expenses
287,877282,280289,557307,941319,085
Operating Income (Loss) with Depreciation(3,292)4,323(1,406)(26,960)(21,585)
Operating Income (Loss) without Depreciation
3,31410,9295,200(20,454)(15,079)
19
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Storm Water Fund
The Storm Water Fund showed operating losses in all five years presented. Operating revenues
increased $86,746, or 107.5%, from 2018 to 2019, due to the City increasing rates. Operating expenses
decreased $11,684, or 5.6% due to less repairs needed during the year.
The Storm Water Fund produced an operating loss of $31,172 with depreciation and an operating
income of $77,696 without depreciation expense. The operations of the Storm Water Fund did not cover
the depreciation expense. The Storm Water Fund also had nonoperating revenues of $11,373, capital
contributions totaling $807,560, and a transfer out totaling $24,230. Fund activity resulted in an increase
in net position of $763,531. The cash balance increased $66,246 in 2019 and totaled $318,239 at
December 31, 2019.
We recommend the City continue to monitor rates as well as operating expenses to ensure the Fund's
profitability in the future.
Storm Water Fund
$250,000
$200,000
$150,000
$100,000
$50,000
$-
$(50,000)
$(100,000)
$(150,000)
20152016201720182019
Operating Revenues
$98,133$99,212$127,167$80,710$167,456
Operating Expenses
180,681178,189169,389210,302198,628
Operating (Loss) with Depreciation
(82,548)(78,977)(42,222)(129,592)(31,172)
Operating Income (Loss) without Depreciation
15,21123,78662,991(23,778)77,696
20
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 an operating income for the second consecutive year and for the
third time in the five years presented. Operating revenues increased $3,909, from 2018 to 2019; due to
rate increases and increase in the number of units being charged while operating expenses decreased
$14,763, or 20.8%, due to more repairs and equipment purchases in the prior year.
The Street Light Utility Fund produced operating income of $24,407. The fund also reported non-
operating income including investment income, special assessments, and other income totaling $1,860,
which resulted in an increase in net position of $26,267. The cash balance increased $25,346 in 2019
and totaled $60,389 at December 31, 2019.
We recommend the City continue to monitor rates as well as operating expenses to ensure the Fund's
profitability in the future.
Street Light Utility
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$-
$(10,000)
20152016201720182019
Operating Revenues
$60,564$60,550$61,359$76,625$80,534
Operating Expenses
53,75163,32764,86670,89056,127
Operating Income (Loss)
6,813(2,777)(3,507)5,73524,407
21
City of St. Joseph
Emerging Issue
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 update includes:
Accounting Standard Update GASB Statement No. 87 Leases GASB has issued GASB
Statement No. 87 relating to accounting and financial reporting for leases. This new statement
establishes a single model for lease accounting based on the principle that leases are financing of
the right to use an underlying asset.
The following is an extensive summary of the current update. 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. 87 LEASES
The objective of this Statement is to better meet the information needs of financial statement users by
improving accounting and financial reporting for leases by governments. This Statement increases the
tion of certain lease assets and
liabilities for leases that previously were classified as operating leases and recognized as inflows of
resources or outflows of resources based on the payment provisions of the contract. It establishes a
single model for lease accounting based on the foundational principle that leases are financings of the
right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability
and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a
deferred inflow of resources, thereby enhancing the relevance and consistency of information about
A lease is defined as a contract that conveys control of the right to use ano
(the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like
transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any
contract that meets this definition should be accounted for under the leases guidance, unless specifically
excluded in this Statement.
A short-term lease is defined as a lease that, at the commencement of the lease term, has a maximum
possible term under the lease contract of 12 months (or less), including any options to extend, regardless
of their probability of being exercised. Lessees and lessors should recognize short-term lease payments
as outflows of resources or inflows of resources, respectively, based on the payment provisions of the
lease contract.
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City of St. Joseph
Emerging Issue
ACCOUNTING STANDARD UPDATE GASB STATEMENT NO. 87 LEASES
(CONTINUED)
A lessee should recognize a lease liability and a lease asset at the commencement of the lease term,
unless the lease is a short-term lease or it transfers ownership of the underlying asset. The lease liability
should be measured at the present value of payments expected to be made during the lease term (less any
lease incentives). The lease asset should be measured at the amount of the initial measurement of the
lease liability, plus any payments made to the lessor at or before the commencement of the lease term
and certain direct costs. A lessee should reduce the lease liability as payments are made and recognize
an outflow of resources (for example, expense) for interest on the liability. The lessee should amortize
the lease asset in a systematic and rational manner over the shorter of the lease term or the useful life of
the underlying asset. The notes to financial statements should include a description of leasing
arrangements, the amount of lease assets recognized, and a schedule of future lease payments to be
made.
A lessor should recognize a lease receivable and a deferred inflow of resources at the commencement of
the lease term, with certain exceptions for leases of assets held as investments, certain regulated leases,
short-term leases, and leases that transfer ownership of the underlying asset. A lessor should not
derecognize the asset underlying the lease. The lease receivable should be measured at the present value
of lease payments expected to be received during the lease term. The deferred inflow of resources
should be measured at the value of the lease receivable plus any payments received at or before the
commencement of the lease term that relate to future periods. A lessor should recognize interest revenue
on the lease receivable and an inflow of resources (for example, revenue) from the deferred inflows of
resources in a systematic and rational manner over the term of the lease. The notes to financial
statements should include a description of leasing arrangements and the total amount of inflows of
resources recognized from leases.
GASB Statement No. 87 is effective for reporting periods beginning after December 15, 2019. Earlier
application is encouraged.
Information provided above was obtained from www.gasb.org.
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