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HomeMy WebLinkAbout1995 Audit Report · t ~'·._.....""l / - -'. .: -~- CITY OF ST. JOSEPH, MINNESOTA Stearns County AUDITED FINANCIAL STATEMENTS As of December 31,1995 CITY OF ST. JOSEPH, MINNESOTA TABLE OF CONTENTS ELECTED OFFICIALS AND ADMINISTRATION .. . . . . . . . . . . . . . . . . . . . . . . . . 1 INDEPENDENT AUDITORS' REPORT ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 GENERAL PURPOSE FINANCIAL STATEMENTS - Combined Balance Sheet - All Fund Types and Account Groups. . . . . . . . . . . . . . 3 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental Fund Types. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General and Special Revenue Fund Types . . . . . . . . . . . . . . 5 Combined Statement of Revenues, Expenses and Changes in Retained Earnings - All Proprietary Fund Types ................................. 6 Combined Statement of Cash Flows - All Proprietary Fund Types ............ 7 Notes to the Financial Statements ...................................... 8 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS - General Fund - Comparative Balance Sheets ....................................... 35 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual .............................................. 36 Special Revenue Fund - Combining Balance Sheet ......................................... 42 Combining Statement of Revenues, Expenditures and Changes in Fund Balance .., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Debt Service Funds - Combining Balance Sheet ......................................... 44 Combining Statement of Revenues, Expenditures and Changes in Fund Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Enterprise Funds - Combining Balance Sheet ......................................... 46 Combining Statement of Revenues, Expenses and Changes in Retained Earnings .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Combining Statement of Cash Flows ................................ 48 Statement of General Long-Term Debt '" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SUPPLEMENTARY SCHEDULE- Schedule of Sources and Uses of Public Funds for Municipal Development District No.1, A Tax Increment Financing District ....................... 50 CITY OF ST. JOSEPH, MINNESOTA TABLE OF CONTENTS (Continued) REPORT ON THE INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITIl'fG STANDARDS .......... 51 REPORT ON COMPLIANCE BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND MINNESOTA STATUTES .. . ....... . . . ....... . .. ... . .... ........ .,. . . .... . . . . . . . . 53 FINDINGS ON COMPLIANCE WITH MINNESOTA STATUTES ............. 55 CORRECTIVE ACTION PLANNED BY THE CITY IN ORDER TO RESOLVE CURRENT YEAR AUDIT FINDINGS ................................... 56 CITY OF ST. JOSEPH, MINNESOTA ELECTED OFFICIALS AND ADMINISTRATION December 31, 1995 Term City Council Position Expires Donald Reber Mayor December 31, 1996 Cory Ehlert Councilmember December 31, 1998 Ken Hiemenz Councilmember December 31, 1996 Bob Loso Councilmember December 31, 1998 Ross Rieke Councilmember December 31, 1996 Administration Rachel Stapleton City Clerk! Treasurer/ Administrator Appointed Judy Weyrens Deputy Clerk Appointed 1 Alvin M. Kern Duane N. DeWenter Loren M. Viere Gerald A. Stover g:K/ Kern, DeWenter, Vi ere, Ltd. Keith W. Julson Dwayne B. Dockendorf Certified Public Accountants David H. Hinnenkamp INDEPENDENT AUDITORS' REPORT March 7, 1996 Honorable Mayor and City Council City of St. Joseph St. Joseph, Minnesota We have audited the general purpose financial statements of the City of St. Joseph, Minnesota as of and for the year ended December 31, 1995, as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and government auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of St. Joseph, Minnesota, as of December 31, 1995, and the results of its operations and cash flows of its proprietary fund type for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The combining and individual fund financial statements and supplementary schedule listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of City of St. Joseph, Minnesota. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. k/JM~/~/~, J KERN, DEWENTER, VIERE, L TO. 2 220 Park Avenue South PO. Box 1304 Sf. Cloud, MN 56302 320-251-7010 FAX 320-251-1784 CITY OF ST. JOSEPH, MINNESOTA COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS December 3 1, 1995 Governmental Fund Types Special Debt ASSETS AND OTHER DEBiTS General Revenue Service ASSETS: Cash and Investments (Including Cash Equivalents) $ 1,116,815 $ 28,619 $ 1,087,139 Investments 0 0 0 Taxes Receivable - Delinquent 6,327 0 821 Special Assessments Receivable - Deferred 41,274 0 500,849 Delinquent 146 0 814 Accounts Receivable 4,044 0 9,250 Interest Receivable 15,442 0 0 Due from Other Governmental Units 62,829 0 528 Loans Receivable 7,220 0 0 Fixed Assets - Net 0 0 0 OTHER DEBITS: Amount Available in Debt Service Funds 0 0 0 Amount to be Provided from Special Assessments 0 0 0 Amount to be Provided for Compensated Absences Payable 0 0 0 Amount to be Provided for Retirement of General Long-Term Debt 0 0 0 TOTAL ASSETS AND OTHER DEBITS $ 1 ,254,097 $ 28,619 $ 1 ,599,40 1 LIABILITIES, EQUITY AND OTHER CREDITS LIABiLITIES: Accrued Liabilities $ 50,820 $ 0 $ 250 Due to Other Governmental Units 1,785 0 0 Contracts Payable 0 0 0 Deferred Revenue 47,747 0 502,484 Compensated Absences Payable 38,198 0 0 Capital Lease Obligation 0 0 0 Bonds Payable 0 0 0 Total Liabilities 138,550 0 502,734 EQUITY AND OTHER CREDITS: Investment in General Fixed Assets 0 0 0 Contributed Capital 0 0 0 Retained Earnings (Deficit) 0 0 0 Fund Balance - Reserved 299,014 0 1,096,667 Unreserved - Designated 561,121 0 0 Undesignated _~255,412 _~__ 28,6J~_ Total Equity and Other Credits ~Il5,547 28,619 1,096,667 ---- TOTAL LIABILITIES, EQUITY AND OTHER CREDITS $ __ 1,254,097 $ _:?8,619 $ 1,599,40 I ---- ----- The notes to the financial statements are an integral part of this statement. Proprietary Fund Types Account Groups General General Totals Fixed Long-Term (Memorandum Only) Enterprise Assets Debt 1995 1994 $ 381,861 $ 0 $ 0 $ 2,614,434 $ 2,683,368 99,192 0 0 99,192 156,007 0 0 0 7,148 4,695 0 0 0 542,123 584,640 0 0 0 960 1,936 68,219 0 0 81,513 200,889 0 0 0 15,442 13,279 0 0 0 63,357 129,844 0 0 0 7,220 7,220 3,568,434 1,448,058 0 5,016,492 4,748,268 0 0 1,096,667 1,096,667 1,117,126 0 0 501,663 501,663 538,554 0 0 40,412 40,412 34,621 0 0 216,670 216,670 314,015 $ 4,117,706 $ 1,448,058 $ 1,855,412 $ 10,303,293 $ 10,534,462 $ 45,850 $ 0 $ 0 $ 96,920 $ 153,980 10,888 0 0 12,673 17,482 0 0 0 0 35,561 0 0 0 550,231 591,271 14,201 0 40,412 92,811 74,825 0 0 0 0 4,695 0 0 1,815,000 1,815,000 1,965,000 70,939 0 1,855,412 2,567,635 2,842,814 0 1,448,058 0 1,448,058 1,219,934 4,137,239 0 0 4,137,239 4,137,239 (90,472) 0 0 (90,472) (79,697) 0 0 0 1,395,681 1,503,881 0 0 0 561,121 606,016 0 0 0 284,031 304,275 4,046,767 1,448,058 0 7,735,658 7,691,648 $ 4,117,706 $ 1,448,058 $ 1,855,412 $ 10,303,293 $ 10,534,462 3 CITY OF ST. JOSEPH, MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENOITURES, ANO CHANGES IN FUNO BALANCE - ALL GOVERNMENTAL FUND TYPES Year Ended December 31, 1995 Governmental Fund Types Special Debt General Revenue Service REVENUES: General Property Taxes $ 190,672 $ 0 $ 26,335 Special Assessments 25,961 0 77,625 Licenses and Permits 46,684 0 0 Intergovernmental 530,764 0 0 Charges for Services 137,782 0 0 Fines 62,732 0 0 Miscellaneous 114,425 2,995 120,989 Total Revenues 1,109,020 2,995 224,949 EXPENDITURES: Current - General Government 221,659 0 0 Public Safety 646,644 1,240 0 Public Works 239,451 0 0 Culture and Recreation 135,034 0 0 Miscellaneous 56 0 0 Capital Outlay 0 0 0 Oebt Service 0 0 266,219 Total Expenditures 1,242,844 1,240 266,219 EXCESS OF REVENUES OVER (UNDER) EXPENOITURES (133,824) 1,755 (41,270) FUND BALANCE - January 1 1,171,371 104,864 1,137,937 RESIDUAL EQUITY TRANSFERS 78,000 (78,000) 0 FUND BALANCE - December 31 $ 1,115,547 $ 28,619 $ 1 ,096,667 The notes to the financial statements are an integral part of this statement. Totals (Memorandum Only) 1995 1994 $ 217,007 $ 174,370 103,586 128,123 46,684 56,920 530,764 570,772 137,782 109,689 62,732 54,239 238,409 256,262 1,336,964 1,350,375 221,659 302,619 647,884 410,969 239,451 311,791 135,034 112,150 56 4,151 0 100,144 266,219 271,088 1,510,303 1,512,912 (173,339) (162,537) 2,414,172 2,576,709 0 0 $ 2,240,833 $ 2,414,172 4 CITY OF ST. JOSEPH, MINNESOTA COMBINEO STATEMENT OF REVENUES, EXPENDITURES ANO CHANGES IN FUNO BALANCE - BUDGET AND ACTUAL - GENERAL ANO SPECIAL REVENUE FUND TYPES Year Ended December 31, 1995 General Fund Over (Under) Budget Actual Budget REVENUES: General Property Taxes $ 196,772 $ 190,672 $ (6,100) Special Assessments 20,262 25,961 5,699 Licenses and Permits 38,175 46,684 8,509 Intergovernmental 503,158 530,764 27,606 Charges for Services 129,393 137,782 8,389 Fines 43,300 62,732 19,432 Miscellaneous 36,200 114,425 78,225 Total Revenues 967,260 1,109,020 141,760 EXPENOITURES: Current - General Government 232,893 221,659 (11,234) Public Safety 502,190 646,644 144,454 Public Works 299,069 239,451 (59,618) Culture and Recreation 111,723 135,034 23,311 Miscellaneous 900 56 (844) Total Expenditures 1,146,775 1,242,844 96,069 REVENUES OVER (UNDER) EXPENOITURES $ (179,515) (133,824) $ 45,691 FUNO BALANCE - January 1, 1995 1,171,371 RESIOUAL EQUITY TRANSFER 78,000 FUND BALANCE - December 31, 1995 $ 1,115,547 The notes to the financial statements are an integral part of this statement. Totals Special Revenue Funds (Memorandum Only) Over Over (Under) (Under) Budget Actual Budget Budget Actual Budget $ 0 $ 0 $ 0 $ 196,772 $ 190,672 $ (6,100) 0 0 0 20,262 25,961 5,699 0 0 0 38,175 46,684 8,509 0 0 0 503,158 530,764 27,606 0 0 0 129,393 137,782 8,389 0 0 0 43,300 62,732 19,432 2,200 2,995 795 38,400 117,420 79,020 2,200 2,995 795 969,460 1,112,015 142,555 0 0 0 232,893 221,659 (11,234) 1,558 1,240 (318) 503,748 647,884 144,136 0 0 0 299,069 239,451 (59,618) 0 0 0 111,723 135,034 23,311 0 0 0 900 56 (844) 1,558 1,240 (318) 1,148,333 1,244,084 95,751 $ 642 1,755 $ 1,113 $ (178,873) (132,069) $ 46,804 104,864 1,276,235 (78,000) 0 $ 28,619 $ 1,144,166 5 CITY OF ST. JOSEPH, MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES Year Ended December 31, 1995 With Comparative Totals for the Year Ended December 31, 1994 Totals 1995 1994 OPERATING REVENUES: Charges for Services $ 389,768 $ 371,801 OPERATING EXPENSES: Salaries and Related Taxes and Benefits 83,410 78,378 Utilities 21,503 20,363 Supplies 15,421 13,958 Sewer Use Rental 61 , 124 63,236 Postage 845 1,367 Repairs and Maintenance 8,542 4,266 Professional Fees 35,180 13,040 Fees and Tests 8,700 9,246 Dues and Subscriptions 256 275 Refuse Disposal 69,649 70,614 Depreciation 106,767 85,936 Insurance 14,687 8,730 Miscellaneous 905 545 Total Operating Expenses 426,989 369,9~ OPERATING INCOME (LOSS) (37,221) 1,847 NON-OPERATING REVENUES: Interest 26,246 13,032 Other Revenues 200 150 Total Non-Operating Revenues 26,446 13,182 NET INCOME (LOSS) (10,775) 15,029 RETAINED EARNINGS (DEFICIT) - January 1 (79,697) (94,726) RETAINED EARNINGS (DEFICIT) - December 31 $ (90,472) $ (79,697) The notes to the financial statements are an integral part of this statement. 6 CITY OF ST. JOSEPH, MINNESOTA COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES Year Ended December 31, 1995 With Comparative Totals for the Year Ended December 31, 1994 Totals 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Operating Income (Loss) $ (37,221) $ 1,847 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation 106,767 85,936 Other Nonoperating Revenues 200 150 Change in Assets and Liabilities: Decrease (Increase) in Accounts Receivable 30,013 (33,688) Increase in Accrued Liabilities 33,321 1,984 Increase in Due to Other Governmental Units 4,087 44 Increase (Decrease) in Compensated Absences Payable 2,252 (182) Total Adjustments 176,640 54,244 Net Cash Provided by Operating Activities 139,419 56,091 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital Expenditures (146,867) (5,001) Repayment of Contributed Capital 0 (3,725) Net Cash Used for Capital and Related Financing Activities (146,867) (8,726) CASH FLOWS FROM INVESTING ACTIVITIES: Interest on Investments 26,246 13,032 Net Sale (Purchase) of Investments 56,815 (156,007) Net Cash Used for Investing Activities 83,061 (142,975) Net Increase (Decrease) in Cash and Cash Equivalents 75,613 (95,610) Cash and Cash Equivalents, January 1 306,248 401,858 Cash and Cash Equivalents, December 31 $ 381,861 $ 306,248 The notes to the financial statements are an integral part of this statement. 7 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of St. Joseph, Minnesota, has a mayor-council form of government. A mayor and four council members are elected by the voters of the City for two-year and four-year terms, respectively. The accounting policies of the City of St. Joseph conform to generally accepted accounting principles. A. Financial Reporting Entity In accordance with GASB Statement No. 14, The Financial Reporting Entity, the financial statements present the City and its component units. The City includes all funds, account groups, organizations, institution~, agencies, departments, and offices that are not legally separate from such. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the financial statements of the City because of the significance of their operational or financial relationships with the City. The City is considered financially accountable for a component unit 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, the St. Joseph Fire Relief Association has been defined in accordance with GASB Statement No. 14 and is presented in this report as follows: Related Organization - The St. Joseph Fire Relief Association is organized as a nonprofit organization, legally separate from the City, by its members to provide pension and other benefits to such members in accordance with Minnesota Statutes. Its Board of Trustees is appointed by the membership of the Association and not by the City Council. All funding is conducted in accordance with Minnesota Statutes, whereby state aid flows to the Association, tax levies are determined by the Association and are only reviewed by the City, and the Association pays benefits directly to its members. The Association may certify tax levies to Stearns County directly if the City does not carry out this function. Because the Association is fiscally independent of the City, the financial statements ofthe Association have not been included within the City's reporting entity. (See Note 3 for disclosures relating to the pension plan operated by the Association.) 8 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Fund Accounting The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which expending activities are controlled. The various funds are grouped, in the financial statements in this report, into five generic fund types and two broad fund categories, described below. Governmental Funds The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. The City has two Special Revenue Funds. Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. The City has five Debt Service Funds. Proprietary Funds Ente:cprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises--where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The City maintains Refuse, Water and Sewer Enterprise Funds. 9 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Fixed Assets and Long-Term Liabilities The accounting and reporting treatment applied to the fixed assets and long-term liabilities associated with a fund are determined by its measurement focus. All governmental funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of available spendable resources during a period. Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, including roads, curbs and gutters, streets and sidewalks, are not capitalized by the City. No depreciation has been provided on general fixed assets. All fixed assets are valued at their historical cost or estimated historical cost if actual historical cost is not available. Donated fixed assets are valued at their estimated fair value on the date donated. Long-term liabilities expected to be financed from governmental funds are accounted for in the General Long-Term Debt Account Group, not in the governmental funds. The two account groups are not "funds". They are concerned only with the measurement of financial position. They are not involved with measurement of results of operations. Because of their spending measurement focus, expenditure recognition for governmental fund types is limited to exclude amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. They are instead reported as liabilities in the General Long-Term Debt Account Group. All proprietary funds are accounted for on a flow of economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with the funds' activity are included on their balance sheets. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. 10 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Fixed Assets and Long-Term Liabilities (Continued) Depreciation of all exhaustible fixed assets used by proprietary funds is charged as an expense against their operations. Accumulated depreciation is reported on proprietary fund balance sheets. Depreciation has been provided over the assets' estimated useful lives, which range from five to fifty years, using the straight-line method. D. Basis of Accounting Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. All governmental funds are accounted for using the modified accrual basis of accounting, in which revenues are recognized when they become measurable and available as net current assets. The more significant revenues which have been accrued are intergovernmental revenues and interest earnings. Expenditures are generally recognized in the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include sick pay and principal and interest on general long-term debt, which are recognized when due. All proprietary funds are accounted for using the accrual basis of accounting; revenues are recognized when they are earned and expenses are recognized when they are incurred. E. Budgetary Data The City Council adopts an annual budget. The amounts shown in the financial statements as "budget" represent the original budgeted amount and all revisions made during the year. The City follows these procedures in establishing the budgetary data reflected in the financial statements. 1. In August of each year, the City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 11 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E. Budgetary Data (Continued) 2. Public hearings are conducted to obtain taxpayer comment. 3. Prior to December 31, the budget is legally enacted through passage of a resolution. 4. Formal budgetary integration is employed as a management control device during the year for the General and Special Revenue Funds. . Formal budgetary integration is not employed for Debt Service Funds because effective budgetary control is alternatively achieved through general obligation bond indenture provisions. Budgetary control for Capital Projects Funds is accomplished through the use of project controls. 5. The Budgets for the General and Special Revenue Funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). F. Encumbrances Encumbrances represent outstanding purchase orders and unfulfilled commitments that are issued to outside vendors and budgeted in the current year but do not include amounts that are set up as liabilities, amounts for personal services to be performed by City employees and purchase orders applicable to the subsequent year's budget. As of December 31, 1995, no outstanding encumbrances existed. G. Cash and Investments (Including Cash Equivalents) (See Note 3) Cash balances from all funds are combined and invested to the extent available in authorized investments. Earnings from such investments are allocated to the respective funds on the basis of applicable cash balance participation by each fund. Investments are carried at cost which approximates market. Any premiums or discounts are amortized over the maturity of the investment. F or purposes of the Statement of Cash Flows of proprietary fund types, cash equivalents are defined as short-term, highly liquid investments that are both: a. readily convertible to known amounts of cash, or b. so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. 12 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Cash and Investments (Including Cash Equivalents) (See Note 3) (Continued) The City's policy considers cash equivalents to be those that meet the above criteria and have original maturities of three months or less. H. Taxes Receivable Delinquent taxes receivable represent the past six years of uncollected tax levies. 1. Special Assessments Receivable Delinquent special assessments represent the past six years of uncollected special assessments. Deferred special assessments represent the principal portion of those assessments to property owners for improvements made by the City. These assessments are made at various times by City resolution and are collectible over periods ranging from ten to thirty years and bear annual interest of 8 percent to 11.5 percent and are to be received in 1996 and years thereafter. J. Deferred Revenue Deferred revenue represents delinquent taxes and deferred and delinquent assessments receivable. This revenue is deferred until it is measurable and available as net current assets. K. Compensated Absences The City compensates employees who leave City service in good standing for all earned, unused vacation. In addition, employees are compensated for unused sick leave (up to a maximum of90 days) at 50% of the current regular rate of pay, provided the City's notice of termination policy has been complied with. 13 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) L. Fund Equity Fund equity is divided into sections as follows: - Contributed capital represents fixed assets purchased by other funds and contributed to the enterprise funds. - Investment in General Fixed Assets represents the City's equity in general fixed assets. - Retained earnings of enterprise funds are subdivided as follows: The reserved account represents the portion of retained earnings set aside for specific purposes. Unreserved retained earnings is available for expending in future periods. - Fund balance accounts are subdivided as follows: Reserved accounts indicate the portion of fund balance which has been reserved for a specific purpose. Unreserved, designated accounts indicate the portion of fund balance which has been designated for a specific purpose. The unreserved, undesignated account is the portion of fund balance which is available for budgeting and expending in future periods. M. Revenues. Expenditures and Expenses 1. Revenues Property taxes and special assessment principal and interest are recognized as revenue when measurable and available. Portions of taxes paid by the State in the form of HAC A and other tax credits are included in intergovernmental revenue. Intergovernmental revenues are reported under the legal and contractual requirements of the individual programs. 14 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Revenues. Expenditures and Expenses (Continued) 1. Revenues (Continued) Licenses and permits, charges for services, fines and forfeits, and miscellaneous revenues (except investment earnings) are recorded as revenues when received in cash because they are generally not measurable until then. Investment earnings are recorded when earned because they are measurable and available. 2. Property Tax Collection Calendar The City levies its property tax for the subsequent year during the month of December. The property tax is recorded as revenue when it becomes measurable and available. Steams County is the collecting agency for the levy and remits the collections to the City three times a year. Taxes not collected as of December 31 each year are shown as delinquent taxes receivable. December 28 is the last day the City can certify a tax levy to the County Auditor for collection the following year. The County Auditor makes up 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 turns over a list oftaxes and special assessments to be collected on each parcel of property to the County Treasurer in January of each year. The County Treasurer collects all taxes, and all special assessments, except as noted above. The County Treasurer is required to mail copies of all personal property tax statements by April 15 , and copies of all real estate tax statements by April 15, of each year. 15 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Revenues. Expenditures and Expenses (Continued) 2. Property Tax Collection Calendar (Continued) Property owners are required to pay one-half of their real estate taxes due by May 15 and the balance by October 15. If taxes due May 15 are not paid on time, a penalty of3% is assessed on homesteaded property, and 7% on non-homesteaded property. An additional 1 % penalty is added each month the taxes remain unpaid, until October 15. If the taxes due May 15 are not paid by October 15, a 2% penalty per month is added to homesteaded property and 4% per month to non-homesteaded property until January 1. If the taxes are not paid by January 1, further penalties are added. Penalties and interest apply to both taxes and special assessments. There are some exceptions to the above penalties, but they are not material. Within 30 days after the tax settlement date, the County Treasurer is required to pay 70% of the estimated collections of taxes and special assessments to the City Treasurer. The County Treasurer must pay the balance to the City Treasurer within 60 days after settlement, provided that after 45 days interest accrues at the rate of 8% per annum. 3. Expenditures Expenditure recognition for governmental fund types includes only amounts represented by current liabilities. Since noncurrent liabilities do not affect net current assets, they are not recognized as governmental fund expenditures or fund liabilities. They are reported as liabilities in the General Long-Term Debt Account Group. 4. Expenses Enterprise funds recognize expenses when they are incurred. N. Interfund Transactions Quasi-external transactions are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for expenditures or expenses initially made from it that are properly applicable to another fund are recorded as expenditures or expenses in the fund that is reimbursed. 16 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) N. Interfund Transactions (Continued) All other interfund transactions, except quasi-external and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers. O. Total Columns on General Purpose Statements Total columns on the general purpose financial statements are captioned "memorandum only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or cash flows in conformity with generally accepted accounting principles. Interfund eliminations have not been made in the aggregation of these data. P. Comparative Data Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the City's financial position and operations. However, prior year totals by fund type have not been presented in each of the statements since their inclusion would make the statements unduly complex and difficult to read. NOTE 2 - STEWARDSHIP. COMPLIANCE AND ACCOUNTABILITY A. Fund Deficits The following fund has deficit retained earnings at December 31, 1995: Enterprise Fund - Sewer $ 292,448 This deficit will be eliminated by future user charges. 17 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 2 - STEWARDSHIP. COMPLIANCE AND ACCOUNTABILITY (Continued) B. Expenditures in Excess of Appropriations Expenditures exceeded appropriations in the following fund for the year ended December 31, 1995: Expenditures Appropriations General $ 1,242,844 $ 1,146,775 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. Assets 1. Cash and Investments (Including Cash Equivalents) Cash balances of the City's funds are combined (pooled) and invested to the extent available in various investments authorized by Minnesota State Statutes. Each fund's portion of this pool (or pools) is displayed on the financial statements as "cash and investments (including cash equivalents)." For purposes ofidentifying risk of investing public funds, the balances and related restrictions are summarized below: a. Deposits - Minnesota Statutes require that all deposits with financial institutions must be collateralized in an amount equal to 110% of deposits in excess of FDIC insurance (140% if collateralized with notes secured by first mortgages). Category 1 - Deposits covered by Federal Depository Insurance (FDIC) and those deposits collateralized with securities held by the City or by its agent in the City's name. Category 3 - Deposits which are not insured or collateralized. Category Bank Carrying 1 -.L 3 Balance Amount Bank Accounts $ 312,100 $ 0 $ 0 $ 312,100 $ 285,630 Certificates of Deposit 939,953 0 10,047 950,000 950,000 Repurchase Agreement 0 Jl 50.000 50.000 50.000 Total Deposits $ 1.252.053 $ 0 $ 60.047 $ 1.312.1 00 $ 1 ,285.630 18 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) A. Assets (Continued) 1. Cash and Investments (Including Cash Equivalents) (Continued) b. Investments - Minnesota State Statutes authorize the City to invest in obligations of the U.S. Treasury, agencies, and instrumentalities, shares of investment companies whose only investments are in the forementioned 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. Investments held by the City at year end classified as to credit risk are as follows: Category 1 - Insured or registered, or securities held by the City's agent in the City's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the City's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty or by its trust department or agent but not in the City's name. Category Carrying Market 1 ...L -L Amount Value U.S. Government and Federal Agency Notes and Bonds $ 714,839 $ 0 $ 0 $ 714,839 $ 714,839 Negotiable Certificates of Deposit 706,824 0 0 706,824 706,824 Brokered Money Market 6.113 --º --º 6.113 6.113 Total Investments $ 1.427.776 $ 0 $ 0 1,427,776 1,427,776 Total Deposits (See Note 3 A.1.a.) 1,285,630 1,285,630 Petty Cash 220 220 Total Cash and Investments (Including Cash Equivalents) $ 2.713.626 $ 2.713.626 19 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) A. Assets (Continued) 1. Cash and Investments (Including Cash Equivalents) (Continued) b. Investments - (Continued) The carrying amount is classified on the combined balance sheet as follows: Carrying Amount Cash and Investments (Including Cash Equivalents) $ 2,614,434 Investments 99 .192 Total $ 2.713.626 2. Due from Other Governmental Units The following is a summary of due from other governmental units at December 31, 1995: State of Stearns St. Joseph Minnesota County Township Total General Fund - Property Taxes $ 0 $ 49,471 $ 0 $ 49,471 Federal Grants 5,907 0 0 5,907 New Fire Hall Costs ~ 0 7.451 7.451 Total General Fund 5,907 49,471 7,451 62,829 Debt Service Funds - G.O. Bonds of 1986- Property Taxes ~ 528 ~ 528 Total $ 5.907 $ 49.999 $ 7.451 $ 63.357 20 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) A. Assets (Continued) 3. Fixed Assets A summary of changes in general fixed assets follows: Balance Balance 1-1-95 Additions Disposals 12-31-95 Land $ 167,426 $ 0 $ 0 $ 167,426 v Buildings 253,185 5,519 0 258,704/ Improvements Other than Buildings 119,165 36,719 0 155,884./ Machinery and Equipment 358,140 230,154 (61,950) 526,344 v Office Furniture 56,887 2,646 0 59,533 v' Motor Vehic1es 104,857 0 0 104,857 v Other Equipment 160.274 15.036 0 175.310 / Total $ 1.219.934 $ 290.074 $(61.950) $ 1.448.058 A summary of Enterprise Fund fixed assets at December 31, 1995, is as follows: Water Sewer Fund Fund Total Land and Land Improvements $ 12,996 $ 4,940 $ 17,936 Treatment Plant and Lines 779,895 1,874,045 2,653,940 Buildings 0 517,983 517,983 Water Storage Facility 1,207,017 0 1,207,017 Machinery and Equipment 34.969 131.351 166.320 Total Cost 2,034,877 2,528,319 4,563,196 Less: Accumulated Depreciation (255.526) (739.236) (994.762) Net Fixed Assets $ 1.779.351 $ 1.789.083 $ 3.568.434 21 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities 1. Defined Benefit Pension Plans - Statewide a. Plan Description All full-time and certain part-time employees of the City ofSt. Joseph are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees . Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost-sharing multiple-employer retirement plans. These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated members are covered by Social Security and Basic members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. The payroll for employees covered by PERF and PEPFF for the year ended December 31, 1995 was $ 195,695 and $ 178,381, respectively; the City's total payroll was $ 439,151. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service. Two methods are used to compute benefits for Coordinated and Basic Plan members. The retiring member receives the higher of step-rate benefit accrual formula (Method 1) or a level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2 percent of average salary for each of the first 10 years of service and 2.5 percent for each remaining year. For a Coordinated Plan member, the annuity accrual rate is 1 percent of average salary for each of the first 10 years and 1.5 percent for each remaining year. Using Method 2, the annuity accrual rate is 2.5 percent of average salary for Basic Plan members and 1.5 percent for Coordinated Plan members. For PEPFF members, the annuity accrual rate is 2.65 percent for each year of service. For PERF members whose annuity is calculated using Method 1, and for all PEPFF members, a full annuity is available when age plus years of service equal 90. A reduced retirement annuity is also available to eligible members seeking early retirement. 22 CITY OF ST. JOSEPH, MINNESOTA i NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 1. Defined Benefit Pension Plans - Statewide (Continued) a. Plan Description (Continued) There are different types of annuities available to members upon retirement. A normal annuity is a lifetime annuity that ceases upon the death of the retiree. No survivor annuity is payable. There are also various types of joint and survivor annuity options available which will reduce the monthly normal annuity amount, because the annuity is payable over joint lives. Members may also leave their contributions in the fund upon termination of public service, in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not yet receiving them are bound by the provisions in effect at the time they terminated their public service. b. Contributions Required and Contributions Made Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. The City makes annual contributions to the pension plans equal to the amount required by State statutes. According to Minnesota Statutes Chapter 356.215, Subd. 4(g), the date of full funding required for the PERF and PEPFF is the year 2020. As part of the annual actuarial valuation, PERA's actuary determines the sufficiency of the statutory contribution rates towards meeting the required full funding deadline. The actuary compares the actual contribution rate to a "required" contribution rate. The required contribution rate consists of (a) normal costs based on entry age normal cost methods, (b) a supplemental contribution for amortizing any unfunded actuarial accrued liability by the date required for full funding, and (c) an allowance for administrative expenses. Current combined statutory contribution rates and actuarially required contribution rates for the plans are as follows: Statutory Rates Required Employees Employer Rates * PERF (Basic and Coordinated) 4.31% 4.60% 9.76% PEPFF 7.60% 11.40% 19.00% * The recommended rates scheduled above represent the required rates for fiscal year 1995 contributions as reported in the July 1, 1994, actuarial valuation reports. 23 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 1. Defined Benefit Pension Plans - Statewide (Continued) b. Contributions Required and Contributions Made (Continued) Total contributions made by the City during fiscal year 1995 were: Percentage of Amounts Covered Payroll Employees Employer Employees Employer PERF $ 9,906 $ 10,491 4.23% 4.48% PEPFF 13.557 20.335 7.60% 11.40% Totals $ 23.463 $ 30.826 The City's contribution for the year ended December 31, 1995 to the PERF represented .008 percent of total contributions required of all participating entities. For the PEPFF, contributions for the year ended December 31, 1995, represented .060 percent of total contributions required of all participating entities. c. Funding Status and Progress 1. Pension Benefit Obligation The "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure is the actuarial present value of credited projected benefits and is intended to help users assess PERA's funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among Public Employees Retirement Systems and participating employers. The measure is independent of the actuarial funding method used to determine required contributions, which is discussed in Note B.l.b. PERA does not make separate measurements of assets and pension benefit obligation for individual employers. 24 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 1. Defined Benefit Pension Plans - Statewide (Continued) c. Funding Status and Progress (Continued) 1. Pension Benefit Obligation (Continued) The pension benefit obligations as of June 30, 1995, are shown below: (In Thousands) PERF PEPFF Total Pension Benefit Obligation $ 5,994,492 $ 1,113,225 Net Assets Available for Benefits, at Cost (Market Values for PERF = $ 5,266,688; PEPFF = $ 1,445,345) 5.074.357 1.356.179 Unfunded (Assets in Excess of) Pension Benefit Obligation $ 920.135 $ (242.954) The pension benefit obligation was determined as part of an actuarial valuation at July 1, 1995. For the PERF, significant actuarial assumptions used in the calculation of the pension benefit obligation include (a) a rate of return on the investment of present and future assets of 8.5 percent per year, compounded annually, prior to retirement, and 5 percent per year, compounded annually, following retirement; (b) projected salary increases taken from an age-related table which incorporates a 5 percent base inflation on assumption; c) payroll growth at 6 percent per year, consisting of 5 percent for inflation and 1 percent due to growth in group size; (d) post-retirement benefit increases that are accounted for by the 5 percent rate of return assumption following retirement; and (e) mortality rates based on the 1983 Group Annuity Mortality Table set forward one year for retired members and set back five years for each active member. 25 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 1. Defined Benefit Pension Plans - Statewide (Continued) c. Funding Status and Progress (Continued) 1. Pension Benefit Obligation (Continued) Actuarial assumptions used in the calculation of the PEPFF include (a) a rate of return on the investment of present and future assets of 8.5 percent per year, compounded annually, prior to retirement, and 5 percent per year, compounded annually, following retirement; (b) projected salary increases of 6.5 percent per year, compounded annually, attributable to the.effects of inflation; (c) post- retirement increases that are accounted for by the 5 percent rate of return assumption following retirement; and (d) mortality rates based on the 1971 Group Annuity Mortality Table projected to 1984 for males and females. 2. Changes in Actuarial Assumptions and Methods Since the July 1, 1994 actuarial valuation, there were no changes in actuarial assumptions of the PERF and the PEPFF which impacted funding costs. Potential changes in the actuarial assumptions used for the PEPFF may be made in the future. Results of an experience study for the fund during the four-year period ending June 30, 1994, disclosed (a) retirees are living longer; (b) the expected active member death rate is declining; (c) the trend toward earlier retirement continues; and (d) the pattern of salary increases varies substantially by ages, with a strong merit and seniority component evident at the younger ages. Based on these results, PERA will soon consider revising the actuarial assump- tions for retirement age, mortality, payroll growth, and individual salary increases. These changes, if adopted within fiscal year 1996, will significantly impact the July 1, 1996 actuarial valuation of the PEPFF. 3. Changes in Benefit Provisions The 1995 legislative session did not include any benefit improvements which would impact funding costs for the PERF and the PEPFF. 26 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 1. Defined Benefit Pension Plans - Statewide (Continued) d. Ten-Year Historical Trend Information Ten-year historical trend information is presented in PERA's Comprehensive Annual Financial Report for the year ended June 30, 1995. This information is useful in assessing the pension plan's accumulation of sufficient assets to pay pension benefits as they become due. e. Related Party Investments As of June 30, 1995, and for the fiscal year then ended, PERA held no securities issued by the City or other related parties. 2. Defined Contribution Lump Sum Service Pension Plan - Volunteer Fire Relief Association a. Plan Description The City contributes to the St. Joseph Fire Department Relief Association ("Association"), a single-employer public employee retirement system that acts as a common investment and administrator for the City's firefighters. Volunteer firefighters of the City are members of the St. Joseph Fire Department Relief Association. Members are eligible for service pensions and disability pensions at a pro-rate amount after 20 years of service and after arriving at age 50. Pension benefits are determined by multiplying the accrued liability, as set forth in Minnesota Statute 69.772, Subdivision 2, by the ratio of the lump sum service pension amount provided in the bylaws of the Association to a service pension of $ 100 per year of service. As of December 31, 1994, the bylaws provided an amount of $ 950 per year of service. The bylaws do not provide for early vesting. These benefit provisions and all other requirements are consistent with enabling state statutes. 27 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 2. Defined Contribution Lump Sum Service Pension Plan - Volunteer Fire Relief Association (Continued) a. Plan Description (Continued) The City levies property taxes at the discretion of and for the benefit of the fire relief association and passes through state aids allocated to the plan, all in accordance with enabling state statutes. b. Related Party Investments During 1994 and as of December 31, 1994, the association held no securities issued by the City or other related parties. c. Funding Status and Progress The amount shown below as the "pension benefit obligation" is computed in accordance with Minnesota Statutes using the formula as explained above. Pension Benefit Obligation $ 314,282 Net A~ts Available for Benefits at Market 380.244 (Assets in Excess of) Pension Benefit Obligation, as of December 31, 1994 $ (65.962) As of the issuance of this report, amounts for December 31, 1995, were not available. d. Contributions Required and Contributions Made Financial requirements of the relief association are determined in accordance with Minnesota Statutes as follows: Normal Cost for Next Year (Increase in Pension Benefit Obligation) Plus: Estimated Expenses for Next Year and 10% of Any Deficits Less: Anticipated Income Next Year and 10% of Any Surplus Total contributions to the association in 1995 were $ 14,120. 28 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 3. Defined Contribution - Statewide The City provides pension benefits for its elected local government officials through a defined contribution plan administered by the Public Employees Retirement Association (PERA). The Public Employees Defined Contribution Plan (PEDCP) is a multi-employer deferred compensation plan. Elected officials who are covered by a public or private pension plan because of their employment are not eligible to participate in the PEDCP. Plan benefits depend solely on amounts contributed to the plan plus investment earnings. Minnesota Statutes, Chapter 353D.03 requires that both the elected local government official and the City contribute an amount equal to 5% of the elected local government official's salary. There is no vesting period required to receive benefits in the PEDCP. The City's total payroll in the year 1995 was $ 439,151. The City's contributions were calculated using the base salary amount of $ 10,800. Both the City and the elected local government official made the required 5% contribution, amounting to $ 540 from each source, or $ 1,080 in total. As of June 30, 1995, and for the fiscal year then ended, PERA held no securities issued by the City or other related parties. 4. Deferred Revenue Deferred revenue at December 31, 1995, consisted of: Debt General Service Total Taxes Receivable - Delinquent $ 6,327 $ 821 $ 7,148 Assessments Receivable - Deferred 41,274 500,849 542,123 Delinquent 146 814 960 Total $ 47.747 $ 502.484 $ 550.231 29 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 5. Bonds Payable The following is a summary of bond transactions for the year ended December 31, 1995: General Obligation General Special Obligation Assessment Revenue Total Bonds Payable - January 1, 1995 $ 1,520,000 $ 445,000 $ 1,965,000 Bonds Retired (120.000) (30.000) (150.000) Bonds Payable - December 31, 1995 $ 1.400.000 $ 415.000 $ 1,815.000 Bonds outstanding at December 31, 1995, comprise the following issues: General Obligation Special Assessment Bonds: $ 1,400,000 General Obligation Improvement Bonds of 1986 due in annual installments of$ 65,000 through December 31, 2001, interest at 5.25 to 7.75 percent $ 390,000 $ 200,000 General Obligation Improvement Bonds of 1992 due in annual installments of$ 10,000 to $ 20,000 through December 1,2007, interest at 4.60 to 6.40 percent 180,000 $ 365,000 General Obligation Improvement Bonds of 1992 - Series B due in annual installments of$ 15,000 to $ 35,000 through December 1,2008, interest at 4.50 to 6.60 percent 335,000 $ 550,000 General Obligation Improvement Bonds of 1993 due in annual installments of $ 25,000 to $ 50,000 through December 1,2008, interest at 3.00 to 5.30 percent 495.000 Total General Obligation Special Assessment Bonds 1,400,000 30 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 5. Bonds Payable (Continued) General Obligation Revenue Bonds: $ 475,000 General Obligation Water Revenue Bonds of 1992 due in annual installments of$ 30,000 to $ 50,000 through December 1,2005, interest at 4.00 to 6.00 percent $ 415.000 Total Bonds Payable $ 1.815.000 The annual requirements to amortize all bonded debt outstanding as of December 31, 1995, including interest payments of$ 678,893 are: General Obligation General Year Ending Special Obligation December 31. Assessment Revenue Total 1996 $ 209,685 $ 52,717 $ 262,402 1997 202,195 56,397 258,592 1998 194,505 54,753 249,258 1999 196,630 58,003 254,633 2000 188,125 55,923 244,048 2001-2005 634,945 277,660 912,605 2006-2008 312.355 0 312.355 Totals $ 1.938.440 $ 555.453 $ 2.493.893 31 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) C. Fund Equity Fund equity balances are c1assifiedas follows to reflect the limitations and restrictions of the respective funds: 1. Fund Balance a. Reserved Fund Balance - Reserved fund balance is comprised of the following: General Debt Service Fund Fund Total Reserved for Fire $ 246,978 $ 0 $ 246,978 Reserved for Street Maintenance 58,196 0 58,196 Reserved for Police (6,160) 0 (6,160) Reserved for Debt Service 0 1.096.667 1.096.667 Total $ 299.014 $ 1.096.667 $ 1.395.681 b. Unreserved fund balance is comprised of the following: Special General Revenue Total Designated for Capital Expenditures $ 136,376 $ 0 $ 136,376 Designated for Debt Service 174,745 0 174,745 Designated for Working Capital 250,000 0 250,000 Undesignated 255.412 28.619 284.031 Total Unreserved $ 816.533 $ 28.619 $845.152 Fund Balance 2. Contributed Capital Contributed capital in the Enterprise Funds represents fixed assets which were purchased by other funds and transferred to the Enterprise Funds. Contributed capital for the years ended December 31, 1995 and 1994, are as follows: 32 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) C. Fund Equity (Continued) 2. Contributed Capital (Continued) Water Sewer Fund Fund Total $ 1.624.338 $ 2.512.901 $ 4.137.239 NOTE 4 - SEGMENT INFORMATION FOR ENTERPRISE FUNDS The City maintains three Enterprise Funds which provide refuse, water and sewer services. Segment information for the year ended December 31, 1995, is: Refuse Water Sewer Fund Fund Fund Total Operating Revenues $ 91,542 $ 120,741 $ 177,485 $ 389,768 Depreciation 0 37,869 68,898 106,767 Operating Income (Loss) 17,805 (41,446) (13,580) (37,221 ) Net Income (Loss) 19,748 (37,092) 6,569 (10,775) Contributed Capital 0 1,624,338 2,512,901 4,137,239 Fixed Assets - Additions 0 131,750 15,117 146,867 Net Working Capital 51,373 (4,410) 431,370 478,333 Total Assets 57,125 1,820,891 2,239,690 4,117,706 Total Equity 51,373 1,774,941 2,220,453 4,046,767 33 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 1995 (Continued) NOTE 5 - TAX INCREMENT DISTRICT The City of St. Joseph is the administering authority for the following tax increment financing district: 1. Name of District: Tax Increment District No.1 Type of District: Economic Development Authorizing Law: Minnesota Statutes Sections 469.124 to 469.179 Established: December 15, 1994 Duration of District: No later than November 14,2005 Original Tax Capacity $ 12,177 Current Net Tax Capacity 14.804 Captured Tax Capacity Retained by the City $ 2.627 Tax increments will be used to finance a loan payable to DBL Labs, Inc., in the amount of $ 81,270. The loan has an eleven year maximum term with a net interest cost rate of 8 percent. Payments will be funded utilizing a "pay-as-you-go" concept in which payments to DBL Labs, Inc., will be made only upon remittance of tax increments to the City of St. Joseph from Stearns County. NOTE 6 - COMMITMENTS The City has entered into a contract for the construction of a new fire hall, as follows: Oisbursed Project Through Proiect Authorization December 31. 1995 Commitment Hagemeister and Mack, Architects, Inc. $ 45,250 $ 1,500 $ 43,750 34 ~ COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS CITY OF ST. JOSEPH, MINNESOTA THE GENERAL FUND The General Fund accounts for all revenues and expenditures of a governmental unit which are not accounted for in other funds, and it is usually the largest and most important accounting activity for state and local governments. It normally receives a greater variety and number of taxes and other general revenues than any other fund. This fund has flowing into it such revenues as general property taxes, licenses and permits, fines and penalties, rents, charges for current services, state-shared taxes, and interest earnings. The fund's resources also fmance a wider range of activities than any other fund. Most of the current operations of governmental units will be financed from this fund. CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND COMPARATIVE BALANCE SHEETS December 31 1995 1994 ASSETS Cash and Investments $ 1,116,815 $ 1,250,883 Taxes Receivable - Delinquent 6,327 4,527 Special Assessments Receivable - Deferred 41,274 47,844 Delinquent 146 178 Accounts Receivable 4,044 32,657 Interest Receivable 15,442 13,279 Due from Other Governmental Units 62,829 47,418 Loans Receivable 7,220 7,220 TOTAL ASSETS $ 1,254,097 $ 1 ,404,006 LIABILITIES AND FUND BALANCE Liabilities: Accrued Liabilities $ 50,820 $ 141,150 Due to Other Governmental Units 1,785 10,681 Deferred Revenue 47,747 52,549 Compensated Absences Payable 38,198 28,255 Total Liabilities 138,550 232,635 Fund Balance: Reserved 299,014 365,944 Unreserved - Designated 561,121 606,016 Undesignated 255,412 199,411 Total Fund Balance 1,115,547 1,171,371 TOTAL LIABILITIES AND FUND BALANCE $ 1 ,254,097 $ 1 ,404,006 35 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 1995 Over (Under) Budget Actual Budget REVENUES: General Property Tax $ 196,772 $ 190,672 $ (6,100) Special Assessments 20,262 25,961 5,699 Licenses and Permits 38,175 46,684 8,509 Intergovernmental - Federal Grants 0 14,465 14,465 State - Local Government Aid 393,510 393,510 0 HACA 64,948 65,914 966 Police Aid 27,000 30,153 3,153 Fire Aid 14,300 15,995 1,695 County Grants 3,400 10,727 7,327 Total Intergovernmental 503,158 530,764 27,606 . Charges for Services - General Government 9,950 9,168 (782) Public Safety - Fire 116,243 119,143 2,900 Culture and Recreation 3,200 _~~,471 6,271 Total Charges for Services 129,393 137,782 8,389 Fines 43,300 62,732 19,432 Miscellaneous - Sale of Surplus Property 0 18,800 18,800 Interest 28,200 57,767 29,567 Refunds and Reimbursements 3,000 7,033 4,033 Contributions 5,000 30,825 25,825 Total Miscellaneous 36,200 114,425 _78,22~ TOTAL REVENUES 967,260 1, I 09,020 141,760 36 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 1995 (Continued) Over (Under) Budget Actual Budget EXPENDITURES: General Government: Mayor and Council - Salaries and Benefits $ 19,199 $ 21,201 $ 2,002 Supplies 500 113 (387) Travel and Conferences 2,575 1,546 (1,029) Advertising 1,750 770 (980) Insurance 600 882 282 Dues and Subscriptions 10,000 14,490 4,490 Other 650 895 245 Legislative Committees - Legislative Bodies 3,000 2,775 (225) Other 500 1,225 725 Elections - Salaries and Benefits 0 26 26 Supplies 100 0 (100) Professional Services 200 0 (200) Other 600 0 (600) Assessing - Salaries and Benefits 8,398 9,288 890 Supplies 150 73 (77) Travel and Conferences 100 85 (15) Other 175 23 (152) Administration - Salaries and Benefits 63,357 63,429 72 Supplies and Maintenance 7,600 4,222 (3,378) Telephone 3,500 1,891 (1,609) Travel and Conferences 800 481 (319) Insurance 1,200 1,734 534 Capital Expenditures 9,980 2,370 (7,610) Other 3,100 2,275 (825) Accounting - Salaries and Benefits 38,513 38,386 (127) Supplies 1,300 1,414 114 Travel and Conferences 400 0 (400) Other 275 598 323 Independent Auditing - Services and Charges 6,800 7,085 285 37 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET ANO ACTUAL Year Ended December 31, 1995 (Continued) Over (Under) Budget Actual Budget EXPENDITURES: (Continued) General Government: (Continued) Legal - Services and Charges $ 15,000 $ 9,857 $ (5,143) Planning and Zoning- Annexation Fee 800 122 (678) Consolidation Study 5,000 777 (4,223) Star City Program 9,885 6,826 (3,059) General Government Buildings - Salaries and Benefits 1,701 510 (1,191) Supplies and Maintenance 1,670 1,803 133 Professional Services 1,600 2,096 496 Insurance 1,865 2,743 878 Utilities 7, 1 00 6,485 (615) Capital Expenditures 2,000 10,561 8,561 Other 950 2,602 _____..1ß52 Total General Government 232,893 221,659 (11,234) Public Safety: Police - Salaries and Benefits 214,208 240,364 26,156 Supplies and Maintenance 3,800 8,012 4,212 Professional Services 27,400 33,057 5,657 Travel and Conferences 500 260 (240) Insurance 3,500 5,534 2,034 Advertising 600 446 (154) Capital Expenditures 10,800 356 (10,444) Other 1,050 1,616 566 Fire Protection - Salaries and Benefits 12,930 5,697 (7,233) Supplies and Maintenance 18,362 4,960 (13,402) Professional Services 2,109 64 (2,045) Travel and Conferences 4,000 4,486 486 Fire Protection 67,425 67,167 (258) Insurance 10,500 16,30 I 5,801 Utilities 6,094 3,352 (2,742) State Aid Reimbursement 15,900 15,995 95 Pension Relief Fund 17,940 14,120 (3,820) Capital Expenditures 47,936 199,298 151,362 Other 4,405 1,699 (2,706) 38 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES ANO CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 1995 (Continued) Over (Under) Budget Actual Budget EXPENDITURES: (Continued) Public Safety: (Continued) Building Inspection - Supplies $ 200 $ 4 $ (196) Professional Services 9,200 6,910 (2,290) Other 2,400 2,163 (237) Communication Service - Supplies and Maintenance 500 182 (318) Telephone 3,000 3,952 952 Capital Expenditures 561 0 (561) Automotive Service - Supplies and Maintenance 7,600 9,137 1,537 Motor Vehicles 6,020 720 (5,300) Emergency Management Service - Professional Services 400 335 (65) Travel 200 0 (200) Capital Expenditures 1,500 0 (1,500) Other 100 0 (100) Animal Control - Supplies 100 50 (50) Professional Services 500 407 (93) Other 450 0 (450) Total Public Safety 502,190 646,644 144,454 Public Works: Ordinance and Enforcement - Salaries and Benefits 290 0 (290) Professional Services 300 4,132 3,832 Other 500 0 (500) Street Maintenance - Salaries and Benefits 63,335 70,725 7,390 Supplies and Maintenance 10,345 11,846 1,501 Travel and Conferences 210 35 (175) Insurance 6,000 8,326 2,326 Utilities 4,170 2,894 (1,276) Capital Expenditures 141,798 87,857 (53,941 ) Other 515 516 1 39 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 1995 (Continued) Over (Under) Budget Actual Budget EXPENDITURES: (Continued) Public Works: (Continued) Ice and Snow Removal - Salaries and Benefits $ 9,643 $ 10,998 $ 1,355 Supplies and Maintenance 5,650 4,090 (1,560) Capital Expenditures 3,433 0 (3,433) Other 0 1,050 1,050 Engineering - Professional Services 20,000 11,094 (8,906) Street Lighting - Supplies and Maintenance 425 0 (425) Utilities 24,000 20,190 (3,810) Capital Expenditures 3,000 0 (3,000) Street Cleaning - Salaries and Benefits 3,140 3,548 408 Supplies and Maintenance 2,050 1,949 (101) Other 265 201 (64) Total Public Works 299,069 239,451 (59,618) Culture and Recreation: Participant Recreation - Salaries and Benefits 95 8,755 8,660 Supplies and Maintenance 1,075 1,016 (59) Professional Services 5,500 4,040 (1,460) Insurance 550 809 259 Advertising 200 11 (189) Ball Park and Skating Rink - Salaries and Benefits 2,520 2,478 (42) Supplies and Maintenance 825 21 (804) Utilities 1,320 762 (558) Capital Expenditures 2,039 342 (1,697) Maintenance Shop - Supplies and Maintenance 2,675 1,964 (711 ) Utilities 1,665 1,644 (21) Other 1,664 0 (1,664) 40 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 1995 (Continued) Over (Under) Budget Actual Budget EXPENDITURES: (Continued) Culture and Recreation: (Continued) Park Areas - Salaries and Benefits $ 26,880 $ 28,753 $ 1,873 Supplies and Maintenance 9,275 6,787 (2,488) Insurance 600 1,874 1,274 Utilities 2,025 2,740 715 Capital Expenditures 50,040 71,034 20,994 Other 375 130 (245) Shade Tree Disease Control - Supplies and Maintenance 50 11 (39) Travel and Conferences 200 66 (134) Other 100 0 (100) Community Support - Insurance 300 441 141 Other 1,750 -~~~ (394) Total Culture and Recreation 111,723 135,034 23,311 Miscellaneous: Other 900 56 (844) ~. TOTAL EXPENDITURES 1,146,775 1,242,844 ,/ 96,069 REVENUES OVER (UNDER) EXPENDITURES $ (179,515) (133,824) $ 45,691 FUND BALANCE - January 1 1,171,371 RESIDUAL EQUITY TRANSFER 78,000 FUND BALANCE - December 31 $ 1,11~47 41 CITY OF ST. JOSEPH, MINNESOTA SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for revenues derived from specific taxes or other earmarked revenue sources. They are usually required by statute, charter provision, or local ordinance to finance particular functions or activities of government. CITY OF ST. JOSEPH, MINNESOTA SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET December 31, 1995 With Comparative Totals for December 31, 1994 Recreation DARE Totals Center Program 1995 1994 ASSETS Cash and Investments $ 26,692 $ 1,927 $ 28,619 $ 34,874 Accounts Receivable 0 0 0 70,000 TOTAL ASSETS $ 26,692 $ 1,927 $ 28,619 $ 104,874 LIABILITIES AND FUND BALANCE Liabilities: Accrued Liabilities $ 0 $ 0 $ 0 $ 10 Fund Balance: Unreserved - Undesignated 26,692 1,927 28,619 104,864 TOTAL LIABILITIES AND FUND BALANCE $ 26,692 $ 1,927 $ 28,619 $ 104,874 42 CITY OF ST. JOSEPH, MINNESOTA SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31, 1995 With Comparative Totals for the Year Ended December 31, 1994 Recreation DARE Minnesota Totals Center Program Beautification 1995 1994 REVENUES: Miscellaneous - Interest $ 1,457 $ 0 $ 0 $ 1,457 $ 728 Contributions 0 1,538 0 1,53ª- 1,536 Total Revenues 1,457 1,538 0 2,995 2,264 EXPENDITURES: Public Safety - Salaries and Benefits 0 303 0 303 1 I 1 Supplies 0 937 0 937 271 Other 0 0 0 0 25 .....----- Total Expenditures 0 1,240 0 1,240 407 EXCESS OF REVENUES OVER EXPENDITURES 1,457 298 0 1,755 1,857 FUND BALANCE - January 1 25,235 1,629 78,000 104,864 103,007 RESIDUAL EQUITY TRANSFER 0 0 (78,000) (78,000) 0 ----------- FUND BALANCE - December 31 $ 26,692 $ 1,927 $ 0 $ 28,619_ $ 104,864 -- 43 CITY OF ST. JOSEPH, MINNESOTA DEBT SERVICE FUNDS Debt Service Funds are created to account for the payment of interest and principal on long-term, general obligation debt other than debt issued for and serviced primarily by a governmental enterprise. CITY OF ST. JOSEPH, MINNESOTA DEBT SERVICE FUNOS COMBINING BALANCE SHEET December 31, 1995 With Comparative Totals for December 31, 1994 General General General Obligation Obligation Obligation Water Improvement Improvement Revenue Bonds Bonds Bonds of1986 ofl992 of 1992 ASSETS Cash and Investments $ 705,907 $ 38,555 $ 38,254 Taxes Receivable - Delinquent 0 243 0 Special Assessments Receivable - Deferred 79,200 52,192 0 Delinquent 275 0 0 Accounts Receivable 0 0 0 Due from Other Governmental Units 528 0 0 TOTAL ASSETS $ 785,910 $ _ 90,990 $ 38,254 LIABILITIES AND FUND BALANCE Liabilities: Accrued Liabilities $ 250 $ 0 $ 0 Deferred Revenue 79,475 52,435 0 Total Liabilities 79,725 52,435 0 Fund Balance: Reserved for Debt Service 706,185 38,555 38,254 TOTAL LIABILITIES AND FUND BALANCE $ 785,910 $ 90,990 $ 38,254 General General Obligation Obligation Improvement Improvement Bonds Bonds Totals of 1992-B of 1993 1995 1994 $ 149,162 $ 155,261 $ 1,087,139 $ 1,055,781 0 578 821 168 228,112 141,345 500,849 536,796 0 539 814 1,758 0 9,250 9,250 0 0 0 528 82,426 $ 377,274 $ 306,973 $ 1,599,401 $ 1,676,929 $ 0 $ 0 $ 250 $ 270 228,112 142,462 502,484 538,722 228,112 142,462 502,734 538,992 149,162 164,511 1,096,667 1,137,937 $ 377,274 $ 306,973 $ 1,599,401 $ 1,676,929 44 CITY OF ST. JOSEPH, MINNESOTA OEBT SERVICE FUNOS COMBINING STATEMENT OF REVENUES, EXPENOITURES ANO CHANGES IN FUNO BALANCE Year Ended Oecember 31, 1995 With Comparative Totals for the Year Ended Oecember 31, 1994 General General General Obligation Obligation Obligation Water Improvement Improvement Revenue Bonds Bonds Bonds of1986 of1992 of 1992 REVENUES: General Property Taxes $ 0 $ 7,915 $ 0 Special Assessments 26,633 3,261 0 Miscellaneous - Interest 42,396 2,495 2,344 Other 4,800 0 25,000 Total Revenues 73,829 13,671 27,344 EXPENDITURES: Miscellaneous 0 0 0 Oebt Service - Bond Principal 65,000 10,000 30,000 Bond Interest and Fiscal Charges 35,213 11,256 23,978 Total Expenditures 100,213 21,256 - 53,978 EXCESS OF REVENUES OVER (UNOER) EXPENDITURES (26,384) (7,585) (26,634) FUND BALANCE - January 1 732,569 46,140 64,888 RESIDUAL EQUITY TRANSFERS 0 0 0 FUNO BALANCE - December 31 $ 706,185 $ 38,555 $ 38,254 General General Obligation Obligation Improvement Improvement Bonds Bonds Totals of 1992-B of 1993 1995 1994 $ 0 $ 18,420 $ 26,335 $ 6,831 29,583 18,148 77,625 106,954 8,075 9,529 64,839 26,075 12,800 13,550 56,150 104,085 50,458 59,647 224,949 243,945 0 0 0 2,153 15,000 30,000 150,000 145,000 21,032 24,740 116,219 126,088 36,032 54,740 266,219 273,241 14,426 4,907 (41,270) (29,296) 134,736 159,604 1,137,937 953,754 0 0 0 213,479 $ 149,162 $ 164,511 $ 1,096,667 $ 1,137,937 45 CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNDS Enterprise Funds are established to account for the financing of self-supporting activities of governmental units which render services on a user charge basis to the general public. The most universal type of governmental enterprise is the public utility engaged in the provision of such basic services as water, electricity, and natural gas. Sanitary sewer systems financed by user charges have also assumed the status of public utility operations in many urban areas, and many cities have combined water and sewer systems under the same management. CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNOS COMBINING BALANCE SHEET Oecember 31, 1995 With Comparative Totals for December 31, 1994 Refuse Water Sewer Fund Fund Fund ASSETS Current Assets: Cash and Cash Equivalents $ 41,948 $ 11 ,122 $ 328,791 Investments 0 12,236 86,956 Accounts Receivable 15,177 18,182 34,860 Total Current Assets 57,125 41,540 450,607 Fixed Assets: Land and Land Improvements 0 12,996 4,940 Treatment Plant and Lines 0 779,895 1,874,045 Buildings 0 0 517,983 Water Storage Facility 0 1,207,017 0 Machinery and Equipment 0 34,969 131,351 0 2,034,877 2,528,319 Less: Accumulated Oepreciation 0 (255,526) (739,236) Net Fixed Assets 0 1,779,351 1,789,083 TOTAL ASSETS $ 57,125 $ 1 ,820,891 $ 2,239,690 LIABILITIES AND FUNO EQUITY Current Liabilities: Accrued Liabilities $ 5,752 $ 36,872 $ 3,226 Due to Other Governmental Units 0 354 10,534 Compensated Absences Payable 0 8,724 5,477 Total Current Liabilities 5,752 45,950 19,237 Fund Equity: Contributed Capital 0 1,624,338 2,512,901 Retained Earnings - Unreserved (Deficit) 51,373 150,603 (292,448) Total Fund Equity 51,373 1,774,941 2,220,453 TOTAL LIABILITIES ANO FUNO EQUITY $ 57,125 $ 1,820,891 $ 2,239,690 Totals 1995 1994 $ 381,861 $ 306,248 99,192 156,007 68,219 98,232 549,272 560,487 17,936 17,936 2,653,940 2,522,190 517,983 517,983 1,207,017 1,207,017 166,320 151,203 4,563,196 4,416,329 (994,762) (887,995) 3,568,434 3,528,334 $ 4,117,706 $ 4,088,821 $ 45,850 $ 12,529 10,888 6,801 14,201 11,949 70,939 31,279 4,137,239 4,137,239 (90,472) (79,697) 4,046,767 4,057,542 $ 4,117,706 $ 4,088,821 46 CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS Year Ended December 31, 1995 With Comparative Totals for the Year Ended December 31, 1994 Refuse Water Sewer Fund Fund Fund OPERATING REVENUES: Charges for Services $ 91,542 $ 120,741 $ 177,485 OPERATING EXPENSES: Salaries and Related Taxes and Benefits 1,735 46,581 35,094 Utilities 0 15,328 6,175 Supplies 413 10,403 4,605 Sewer Use Rental 0 0 61 , 124 Postage 272 301 272 Repairs and Maintenance 176 7,582 784 Professional Fees 240 32,038 2,902 Fees and Tests 260 5,592 2,848 Dues and Subscriptions 0 241 15 Refuse Disposal 68,623 0 1,026 Depreciation 0 37,869 68,898 Insurance 1,618 5,928 7,141 Miscellaneous 400 324 181 Total Operating Expenses 73,737 162,187 191,065 OPERATING INCOME (LOSS) 17,805 (41,446) (13,580) NON-OPERATING REVENUES: Interest 1,764 4,333 20,149 Other Revenues 179 21 0 Total Non-Operating Revenues 1,943 4,354 20,149 NET INCOME (LOSS) 19,748 (37,092) 6,569 RETAINED EARNINGS (DEFICIT) - January 1 31,625 187,695 (299,017) RETAINED EARNINGS (DEFICIT) - December 31 $ 51 ,373 $ 150,603 $ (292,448) Totals 1995 1994 $ 389,768 $ 371,801 83,410 78,378 21,503 20,363 15,421 13,958 61,124 63,236 845 1,367 8,542 4,266 35,180 13,040 8,700 9,246 256 275 69,649 70,614 106,767 85,936 14,687 8,730 905 545 426,989 369,954 (37,221) 1,847 26,246 13,032 200 150 26,446 13,182 (10,775) 15,029 (79,697) (94,726) $ (90,472) $ (79,697) 47 CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNOS COMBINING STATEMENT OF CASH FLOWS Year Ended Oecember 31, 1995 With Comparative Totals for the Year Ended Oecember 31, 1994 Refuse Water Sewer Fund Fund Fund CASH FLOWS FROM OPERATING ACTIVITIES: Operating Income (Loss) $ 17,805 $ (41,446) $ (13,580) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Oepreciation 0 37,869 68,898 Other Non-Operating Revenues 179 21 0 Change in Assets and Liabilities: Decrease (Increase) in Accounts Receivable 1,154 15,601 13,258 Increase (Oecrease) in Accrued Liabilities (145) 32,346 1,120 Increase (Decrease) in Due to Other Governmental Units (23) (325) 4,435 Increase (Oecrease) in Compensated Absences Payable 0 1,826 426 Total Adjustments 1,165 87,338 88,137 Net Cash Provided by Operating Activities 18,970 45,892 74,557 CASH FLOWS FROM CAP IT AL ANO RELA TEO FINANCING ACTIVITIES: Capital Expenditures 0 (131,750) (15,117) Repayment of Contributed Capital 0 0 0 Net Cash Used by Capital and Related Financing Activities 0 (131,750) (15, 11 7) CASH FLOWS FROM INVESTING ACTIVITIES: Interest on Investments 1,764 4,333 20,149 Net Sale (Purchase) of Investments 7,339 22,984 26,492 Net Cash Provided (Used) by Investing Activities 9,103 27,317 46,641 Net Increase (Oecrease) in Cash and Cash Equivalents 28,073 (58,541) 106,081 Cash and Cash Equivalents, January 1 13,875 69,663 222,710 Cash and Cash Equivalents, Oecember 31 $ 41 ,948 $ 11 , 122 $ 328,791 Totals 1995 1994 $ (37,221 ) $ 1,847 106,767 85,936 200 150 30,013 (33,688) 33,321 1,984 4,087 44 2,252 (182) 176,640 54,244 139,419 56,091 (146,867) (5,001) 0 (3,725) (146,867) (8,726) 26,246 13,032 56,815 (156,007) 83,061 (142,975) 75,613 (95,610) 306,248 401,858 $ 381,861 $ 306,248 48 CITY OF ST. JOSEPH, MINNESOTA STATEMENT OF GENERAL LONG-TERM DEBT December 31, 1995 1995 1994 AMOUNT AVAILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEBT: Amount Available in Debt Service Funds $ 1,096,667 $ 1,117,126 Amount to be Provided fÌ'om Special Assessments 501,663 538,554 Amount to be Provided for Compensated Absences Payable 40,412 34,621 Amount to be Provided for Retirement of General Long-Term Debt 216,670 314,015 TOTAL AVAILABLE AND TO BE PROVIDED $ 1,855,412 $ 2,004,316 GENERAL LONG-TERM DEBT: Compensated Absences Payable $ 40,412 $ 34,621 Capital Lease Obligation 0 4,695 Bonds Payable 1,815,000 1,965,000 TOTAL GENERAL LONG-TERM DEBT $ 1,855,412 $ 2,004,316 49 SUPPLEMENTARY SCHEDULES CITY OF ST. JOSEPH, MINNESOTA SCHEDULE OF SOURCES AND USES OF PUBLIC FUNDS FOR MUNICIPAL DEVELOPMENT DISTRICT NO. 1 - TAX INCREMENT FINANCING DISTRICT NO. 1 December 31, 1995 Accounted Original for in Current Amount Budget Prior Years Year Remaining SOURCES OF FUNDS: Tax Increments $ 128,395 $ 0 $ 0 $ 128,395 Note Proceeds 81,270 0 0 81,270 Total Sources of Funds 209,665 0 0 209,665 USES OF FUNDS: Site Excavation 20,000 0 0 20,000 Utility Improvements 20,000 0 0 20,000 Site Improvements 10,000 0 0 10,000 Professional Services - City Engineer Consultant 10,000 0 0 10,000 Legal Expense 3,000 0 0 3,000 Planning Consultant - Steams County HRA 3,500 0 0 3,500 Contingencies 1,000 0 0 1,000 Administrative Expenses- General Administration 1,470 0 0 1,470 Miscellaneous 500 0 0 500 Debt Service - Principal 81,270 0 0 81,270 Interest 34,286 0 0 34,286 Finance Costs- Capitalized Interest 11,800 0 0 11,800 Other Construction 12,839 0 0 12,839 Total Uses of Funds 209,665 0 0 209,665 DISTRICT BALANCE $ 0 $ 0 $ 0 $ 0 50 CITY OF ST JOSEPH, MINNESOTA REPORT ON THE INTERNAL CONTROL STRUCTURE BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS March 7, 1996 Honorable Mayor and City Council City of St. Joseph St. Joseph, Minnesota We have audited the general purpose [mancial statements of the City ofSt. Joseph, Minnesota, as of and for the year ended December 31, 1995, and have issued our report thereon dated March 7, 1996. We conducted our audit in accordance with generally accepted auditing standards and 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 general purpose financial statements are free of material misstatement. In planning and performing our audit of the general purpose financial statements of the City of St. Joseph, Minnesota, for the year ended December 31, 1995, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure. The management ofthe City of St. Joseph, Minnesota, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. 51 For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: cash receipts, cash disbursements, cash and investment balances, receivables, payables, payrolls, other assets and liabilities and general ledger. For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk. We noted a certain matter involving the internal control structure and its operation that we consider to be a reportable condition under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the City's ability to record, process, summarize, and report financial data consistent with the assertions of management in the general purpose financial statements. 1. The City does not have adequate segregation of accounting duties due to a limited number of office employees. Management has determined that this weakness is not practical to correct. 2. See Findings on Compliance with Minnesota Statutes. A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe the reportable condition described above is not a material weakness. We also noted other matters involving the internal control structure and its operation that we have reported to the management of the City of St. Joseph, Minnesota, in a separate letter dated March 7, 1996. This report is intended for the information of management and the City Council. However, this report is a matter of public record and its distribution is not limited. A:e;n,~ 1/~/.JId. KERN, DEWENTER, VIERE, LTD. 52 CITY OF ST JOSEPH, MINNESOTA REPORT ON COMPLIANCE BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS AND MINNESOTA STATUTES March 7, 1996 Honorable Mayor and City Council City ofSt. Joseph St. Joseph, Minnesota We have audited the general purpose financial statements of the City ofSt. Joseph, Minnesota, for the year ended December 31, 1995, and have issued our report thereon dated March 7, 1996. We conducted our audit in accordance with generally accepted auditing standards; Government Auditing Standards, issued by the Comptroller General of the United States; and the provisions of the Minnesota Legal Compliance Audit Guide for Local Government, promulgated by the Legal Compliance Task Force pursuant to Minnesota Statutes Sec. 6.65. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. General Purpose Financial Statements Compliance with laws, regulations, contracts, and grants applicable to the City of St. Joseph, Minnesota, is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our audit of the general purpose financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests indicate that, with respect to the items tested, the City of St. Joseph, Minnesota, complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the City had not complied, in all material respects, with those provisions. 53 Legal Compliance The Minnesota Legal Compliance Audit Guide for Local Government covers five main categories of compliance to be tested: contracting and bidding, deposits and investments, conflicts of interest, public indebtedness, and claims and disbursements. Our study included all of the listed categories and other statutes as we considered necessary under the circumstances. The results of our tests indicate that for the items tested the City complied with the material terms and conditions of applicable legal provisions, except as described in the accompanying Schedule of Findings on Compliance with Minnesota Statutes. Further, for the items not tested, based on our audit and the procedures referred to above, nothing came to our attention to indicate that the City had not complied with such legal provisions. This report is intended for the information of management and the City Council. However, this report is a matter of public record and its distribution is not limited. ~o/M~/~~ KERN, DEWENTER, VI ERE, LTD. 54 CITY OF ST. JOSEPH, MINNESOTA FINDINGS ON COMPLIANCE WITH MINNESOTA STATUTES Year Ended December 31, 1995 CURRENT YEAR FINDINGS Collateral Minnesota Statutes Sec. 118.01 and 118.10, provide that all deposits with financial institutions must be collateralized in an amount equal to 110% of deposits in excess of FDIC insurance. The deposits of the City at December 31, 1995 were unsecured as follows: 110% of Deposits Market Value of in Excess of FDIC Collateral at at December 31. 1995 December 31. 1995 Unsecured First State Bank of St. Joseph $ 1.278.310 $ 1.212.258 $ 66.052 To conform to state statutes, we recommend that the City negotiate current and future collateral with the aforementioned depository, and that the City's collateral for deposits be reviewed on a monthly basis. PRIOR YEAR FINDINGS None 55 CITY OF ST JOSEPH, MINNESOTA CORRECTIVE ACTION PLANNED BY THE CITY IN ORDER TO RESOLVE CURRENT YEAR AUDIT FINDINGS CURRENT YEAR FINDING: The City was not properly collateralized at December 31, 1995, in accordance with Minnesota Statutes Sec. 118.01 and 118.10. CORRECTIVE ACTION PLANNED: The City will monitor collateral to ensure proper collateralization. 56