HomeMy WebLinkAbout1996 Audit ReportCITY OF ST. JOSEPH, MINNESOTA
Stearns County
AUDITED FINANCIAL STATEMENTS
As of
December 31,1996
CITY OF ST. JOSEPH, MINNESOTA
TABLE OF CONTENTS
ELECTED OFFICIALS AND ADMINISTRATION ......................... .
INDEPENDENT AUDITORS' REPORT ................................... 2
GENERAL PURPOSE FINANCIAL STATEMENTS -
Combined Balance Sheet -All Fund Types and Account Groups .............. 4
Combined Statement of Revenues, Expenditures and Changes in Fund Balance -
All Governmental Fund Types ........................................ 5
Combined Statement of Revenues, Expenditures and Changes in Fund Balance -
Budget and Actual -General and Special Revenue Fund Types .............. 6
Combined Statement of Revenues, Expenses and Changes in Retained
Earnings -All Proprietary Fund Types ................................. 7
Combined Statement of Cash Flows -All Proprietary Fund Types ............ 8
Notes to the Financial Statements ...................................... 9
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS -
General Fund -
Comparative Balance Sheets ....................................... 36
Statement of Revenues, Expenditures and Changes in Fund Balance -
Budgetand Actual .............................................. 37
Special Revenue Fund -
Combining Balance Sheet ......................................... 43
Combining Statement of Revenues, Expenditures and Changes in
Fund Balance .................................................. 44
Debt Service Funds -
CombiningBalance Sheet ......................................... 45
Combining Statement of Revenues, Expenditures and Changes in Fund
Balance ....................................................... 46
Capital Project Funds -
Combining Balance Sheet ......................................... 47
Combining Statement of Revenues, Expenditures and Changes in Fund
Balance ....................................................... 48
Enterprise Funds -
CombiningBalance Sheet ......................................... 49
Combining Statement of Revenues, Expenses and Changes in Retained
Earnings ...................................................... 50
Combining Statement of Cash Flows ................................ 51
Statement of General Long-Term Debt .................................. 52
SUPPLEMENTARY SCHEDULE -
Schedule of Sources and Uses of Public Funds for Municipal Development
District No. 1, A Tax Increment Financing District ....................... 53
CITY OF ST. JOSEPH, MINNESOTA
TABLE OF CONTENTS
(Continued)
COMPLIANCE WITH MINNESOTA STATUTES AND REQUIREMENTS
APPLICABLE TO FEDERAL PROGRAMS -
Schedule of Federal Financial Assistance ................................ 54
Report on the Internal Control Structure Based on an Audit of the General
Purpose Financial Statements Performed in Accordance with Government
Auditing Standards ................................................. 55
Single Audit Report on the Internal Control Structure Used in Administering
Federal Financial Assistance Programs ................................. 57
Single Audit Report on Compliance with the General Requirements Applicable
to Federal Financial Assistance Programs ............................... 61
Single Audit Report on Compliance with Specific Requirements Applicable to
Nonmajor Federal Financial Assistance Program Transactions .............. 63
Report on Compliance Based on an Audit of the General Purpose Financial
Statements Performed in Accordance with Government Auditing Standards and
Minnesota Statutes ................................................. 64
Findings on Compliance with Minnesota Statutes and Requirements Applicable
to Federal Financial Assistance Programs ............................... 66
Corrective Action Taken by the City in Order to Resolve Prior Year Minnesota
Statute Findings ................................................... 67
CITY OF ST. JOSEPH, MINNESOTA
ELECTED OFFICIALS AND ADMI1~tISTRATION
December 31, 1996
City Council Position
Donald Reber Mayor
Cory Ehlert Councilmember
Ken Hiemenz Councilmember
Bob Loso Councilmember
Ross Rieke Councilmember
Administration
Rachel Stapleton
Judy Weyrens
City Clerk/
Treasurer/
Administrator
Deputy Clerk
Term
Expires
December 31, 1996
December 31, 1998
December 31, 1996
December 31, 1998
December 31, 1996
Appointed
Appointed
Alvin M. Kern
Duane N. DeWenter
Loren M. Viere
Gerald A. Stover
Kern, DeWenter, Viere, Ltd Keith W. Jolson
^ Dwayne 8. Dockendorf
David H Hinnenkamp
Certified Public Accountants Christopher P. Shorba
INDEPENDENT AUDITORS' REPORT
March 7, 1997
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, 1996, 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,
1996, 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.
In accordance with Government Auditing Standards, we have also issued a report dated March 7,
1997 on our consideration of the City's internal control structure and a report dated March 7,
1997 on the City's compliance with laws and regulations.
220 Park Avenue South P.O. Box 1304 St. Cloud, MN 56302
320-251-7010 FAX 320-251-1784
City of St. Joseph
March 7, 1997
Page 2
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,
supplementary schedule and schedule of federal financial assistance listed in the table of contents
axe 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.
KERN, DEWENTER, VIERS, LTD.
3
CITY OF ST. JOSEPH, MINNESOTA
COMBINED BALANCE SHEET -
ALL FUND TYPES AND ACCOUNT GROUPS
December 31, 1996
Governmental Fund Types
Special Debt Capital
ASSETS AND OTHER DEBITS General Revenue Service Projects
ASSETS:
Cash and Investments (Including Cash
Equivalents) $ 1,299,028 $ 29,739 $ 900,977 $ 183,638
Investments 0 0 0 0
Taxes Receivable -
Delinquent 5,028 0 547 0
Special Assessments Receivable -
Deferred 112,442 0 647,295 0
Delinquent 428 0 1,594 0
Accounts Receivable 11,468 0 6,280 0
Interest Receivable 19,084 0 0 0
Due from Other Governmental Units 42,442 0 7,808 0
Loans Receivable 0 0 0 0
Fixed Assets -Net 0 0 0 0
OTHER DEBITS:
Amount Available in Debt Service Funds 0 0 0 0 '
Amount to be Provided from Special ',
Assessments 0 0 0 0
Amount to be Provided for Compensated
Absences Payable 0 0 0 0
Amount to be Provided for Retirement of i
General Long-Term Debt 0 0 0 0
TOTAL ASSETS AND OTHER DEBITS $ 1,489,920 $ 29,739 $ 1,564,501 $ 183,638 I
LIABILITIES, EQUITY AND OTHER CREDITS
LIABILITIES:
Cash Overdraft $ 0 $ 0 $ 0 $ 1,235
Accrued Liabilities 65,779 0 0 34,287
Due to Other Governmental Units 0 0 0 0
Contracts Payable 0 0 0 76,604
Deferred Revenue 117,898 0 649,436 0
Compensated Absences Payable 42,088 0 0 0
Bonds Payable 0 0 0 0
Total Liabilities 225,765 0 649,436 112,126
EQUITY AND OTHER CREDITS:
Investment in General Fixed Assets 0 0 0 0
Contributed Capital 0 0 0 0
Retained Earnings (Deficit) 0 0 0 0
Fund Balance -
Reserved 0 0 915,065 0
Unreserved -
Designated 929,574 0 0 71,512
Undesignated 334,581 29,739 0 0
Total Equity and Other Credits 1,264,155 29,739 915,065 71,512
TOTAL LIABILITIES, EQUITY
AND OTHER CREDITS $ 1,489,920 $ 29,739 $ 1,564,501 $ 183,638
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 1996 1995
$ 526,956 $ 0 $ 0 $ 2,940,338 $ 2,614,434
0 0 0 0 99,192
0 0 0 5,575 7,148
0 0 0 759,737 542,123
0 0 0 2,022 960
102,386 0 0 120,134 81,513
0 0 0 19,084 15,442
0 0 0 50,250 63,357
0 0 0 0 7,220
4,151,101 1,568,027 0 5,719,128 5,016,492
0 0 915,065 915,065 1,096,667
0 0 648,889 648,889 501,663
0 0 49,757 49,757 40,412
0 0 1,831,046 1,831,046 216,670
$ 4,780,443 $ 1,568,027 $ 3,444,757 $ 13,061,025 $ 10,303,293
$ 0 $ 0 $ 0 $ 1,235 $ 0
16,739 0 0 116,805 96,920
6,267 0 0 6,267 12,673
0 0 0 76,604 0
0 0 0 767,334 550,231
16,248 0 49,757 108,093 92,811
0 0 3,395,000 3,395,000 1,815,000
39,254 0 3,444,757 4,471,338 2,567,635
0 1,568,027 0 1,568,027 1,448,058
4,829,414 0 0 4,829,414 4,137,239
(88,225) 0 0 (88,225) (90,472)
0 0 0 915,065 1,096,667
0 0 0 1,001,086 866,295
0 0 0 364,320 277,871
4,741,189 1,568,027 0 8,589,687 7,735,658
$ 4,780,443 $ 1,568,027 $ 3,444,757 $ 13,061,025 $ 10,303,293
4
CITY OF ST. JOSEPH, MINNESOTA
COMBINED STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES 1N FUND BALANCE -ALL GOVERNMENTAL FUND TYPES
Year Ended December 31, 1996
REVENUES:
General Property Taxes
Special Assessments
Licenses and Permits
Intergovernmental
Charges for Services
Fines
Miscellaneous
Total Revenues
EXPENDITURES
Current -
General Government
Public Safety
Public Works
Culture and Recreation
Miscellaneous
Capital Outlay
Debt Service
Total Expenditures
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES
OTHER FINANCING SOURCES (USES):
Capital Lease
Operating Transfers In
Operating Transfers Out
Proceeds From the Sale of Bonds
Total Other Financing Sources (Uses)
EXCESS OF REVENUES AND OTHER
FINANCING SOURCES OVER (UNDER)
EXPENDITURES AND OTHER USES
FUND BALANCE -January 1
FUND BALANCE -December 31
_ Governmental Fund Types
Special __
Debt
General Revenue Service
$ 244,767 $ 0 $ 28,184
28,140 0 232,157
49,009 0 0
557,436 0 0
195,174 0 0
63,240 0 0
78,909 1,120 136,243
1,216,675 1,120 396,584
243,716 0 0
527,948 0 0
217,400 0 0
106,625 0 0
57 0 2,231
0 0 0
0 0 653,545
1,095,746 0 655,776
120,929 1,120 (259,192)
27,679 0 0
0 0 38,829
0 0 (28,829)
0 0 67,590
27,679 0 77,590
148,608 1,120 (181,602)
1,115,547 28,619 1,096,667
$ 1,264,155 $ 29,739 $ 915,065
The notes to the financial statements are an integral part of this statement.
Totals
Capital (Memorandum Only)
Projects 1996 1995
$ 0 $ 272,951 $ 217,007
0 260,297 103,586
0 49,009 46,684
137,199 694,635 530,764
0 195,174 137,782
0 63,240 62,732
_ 27,493 243,765 238,409
164,692 1,779,071 1,336,964
0 243,716 ' 221,659
0 527,948 ~ 647,884
0 217,400/ 239,451
0 106,625 ~ 135,034
0 2,288 56
2,052,630 2,052,630 0
_ 0 653,545 266,219
2,052,630 3,804,152 1,510,303
(1,887,938) (2,025,081) (173,339)
0 27,679 0
0 38,829 0
0 (28,829) 0
_ 1,959,450 2,027,040 0
1,959,450 2,064,719 0
71,512 39,638 (173,339)
0 2,240,833 2,414,172
$ 71,512 $ 2,280,471 $ 2,240,833
5
CITY OF ST. JOSEPH, MINNESOTA
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE -BUDGET AND ACTUAL -
GENERAL AND SPECIAL REVENUE FUND TYPES
Year Ended December 31, 1996
General Fund
(Under)
Budget Actual Budget
REVENUES:
General Property Taxes $ 246,472 $ 244,767 $ (1,705)
Special Assessments 25,000 28,140 3,140
Licenses and Permits 38,250 49,009 10,759
Intergovernmental 495,371 557,436 62,065
Charges for Services 187,099 195,174 8,075
Fines 54,100 63,240 9,140
Miscellaneous 33,500 78,909 45,409
Total Revenues 1,079,792 1,216,b75 136,883
EXPENDITURES:
Current -
General Government 250,909 243,716 (7,193)
Public Safety 556,419 527,948 (28,471)
Public Works 246,847 217,400 (29,447)
Culture and Recreation 95,908 106,625 10,717
Miscellaneous 900 57 (843)
Total Expenditures 1,150,983 1,095,746 (55,237)
REVENUES OVER (UNDER) EXPENDITURES (71,191) 120,929 192,120
OTHER FINANCING SOURCES:
Capital Lease 0 27,679 27,679
EXCESS OF REVENUES AND OTHER
FINANCING SOURCES OVER (UNDER)
EXPENDITURES AND OTHER USES $ (71,191) 148,608 $ 219,799
FUND BALANCE -January 1 1,115,547
FUND BALANCE -December 31 $ 1,264,155
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 $ 246,472 $ 244,767 $ (1,705)
0 0 0 25,000 28,140 3,140
0 0 0 38,250 49,009 10,759
0 0 0 495,371 557,436 62,065
0 0 0 187,099 195,174 8,075
0 0 0 54,100 63,240 9,140
0 1,120 1,120 33,500 80,029 46,529
0 1,120 1,120 1,079,792 1,217,795 138,003
0 0 0 250,909 243,716 (7,193)
0 0 0 556,419 527,948 (28,471)
0 0 0 246,847 217,400 (29,447)
0 0 0 95,908 106,625 10,717
0 0 0 900 57 {843)
0 0 0 1,150,983 1,095,746 (55,237)
0 1,120 1,120 (71,191) 122,049 193,240
0 0 0 0 27,679 27,679
$ 0 1,120 $ 1,120 $ (71,191) 149,728 $ 220,919
28,619 1,144,166
$ 29,739 $ 1,293,894
6
CITY OF ST. JOSEPH, MINNESOTA
COMBINED STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN RETAINED EARNINGS -ALL PROPRIETARY FUND TYPES
Year Ended December 31, 1996
With Comparative Totals for the Year Ended December 31, 1995
Totals
1996 1995
OPERATING REVENUES:
Charges for Services $ 410,477 $ 389,768
OPERATING EXPENSES:
Salaries and Related Taxes and Benefits 98,258 83,410
Utilities 21,300 21,503
Supplies 19,565 15,421
Sewer Use Rental 82,025 61,124
Postage 1,352 845
Repairs and Maintenance 3,986 8,542
Professional Fees 2,047 35,180
Fees and Tests 9,114 8,700
Dues and Subscriptions 501 256
Refuse Disposal 69,943 69,649
Depreciation 109,508 106,767
Insurance 5,000 14,687
Miscellaneous 227 905
Total Operating Expenses 422,826 426,989
OPERATING LOSS (12,349) (37,221)
NON-OPERATING REVENUES:
Interest 23,073 26,246
Other Revenues 1,523 200
Total Non-Operating Revenues 24,596 26,446
INCOME (LOSS) BEFORE OPERATING TRANSFERS 12,247 (10,775)
Operating Transfers Out (10,000) 0
NET INCOME (LOSS) 2,247 (10,775)
RETAINED EARNINGS (DEFICIT) -January 1 (90,472)
RETAINED EARNINGS (DEFICIT) -December 31 $ (88,225)
The notes to the financial statements are an integral part of this statement.
(79,697)
$ (90,472)
7
CITY OF ST. JOSEPH, MINNESOTA
COMBINED STATEMENT OF CASH FLOWS -
ALL PROPRIETARY FUND TYPES
Year Ended December 31, 1996
With Comparative Totals for the Year Ended December 31, 1995
Totals
1996 _
1995
__
CASH FLOWS FROM OPERATING ACTIVITIES: _ _
Operating Loss $ (12,349) $ (37,221)
Adjustments to Reconcile Operating Income (Loss) to
Net Cash Provided by Operating Activities:
Depreciation 109,508 106,767
Other Non-operating Revenues 1,523 200
Change in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (34,167) 30,013
Increase (Decrease) in Accrued Liabilities (29,111) 33,321
Increase (Decrease) in Due to Other Governmental Units (4,621) 4,087
Increase in Compensated Absences Payable 2,047 2,252
Total Adjustments 45,179 176,640
Net Cash Provided by Operating Activities 32,830 139,419
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Operating Transfers to Other Funds (10,000) 0
CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES:
Capital Expenditures 0 (146,867)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest on Investments 23,073 26,246
Net Sale of Investments 99,192 56,815
Net Cash Provided by Investing Activities 122,265 83,061
Net Increase in Cash and Cash Equivalents 145,095 75,613
Cash and Cash Equivalents, January 1 381,861 306,248
Cash and Cash Equivalents, December 31 $ 526,956 $ 381,861
Schedule of Noncash Capital Activities:
Contributed Capital
$ 692,175 $ _ 0
The notes to the financial statements are an integral part of this statement.
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of St. Joseph, Minnesota, has amayor-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 conform to generally accepted accounting principles as
applicable to governments. With respect to proprietary activities, the City has adopted GASB
No. 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental
Entities that use Proprietary Fund Accounting." The City has elected to apply all applicable
GASB pronouncements as well as Financial Accounting Standards Board (FASB)
pronouncements, Accounting Principles Board (APB) Opinions and Accounting Research
Bulletins (ARB), issued on or before November 30, 1989 unless those pronouncements conflict
with or contradict GASB pronouncements. In addition, the City has elected not to apply FASBs,
APBs and ARBs issued after November 30, 1989. The following is a summary of the City's
more significant accounting policies.
A. Financial Reporting Entit
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, institutions, agencies, departments, and offices that are not legally
separate from such. Component units are legally separate organizations for which the elected
officials of the City are financially accountable and are included within the financial
statements of the City because of the significance of their operational or financial
relationships with the City.
The City is considered financially accountable for a component unit 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 of the 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.)
9
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
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 ofself-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 six
Debt Service Funds.
Capital Projects Funds are used to account for financial resources to be used for the
acquisition or construction of major capital facilities (other than those financed by
enterprise funds). The City has three Capital Projects Funds.
Proprietary Funds
Enterprise Funds are used to account for operations (a) that are financed and operated in a
manner similar to private business enterprises--where the intent of the governing body is
that the costs (expenses, including depreciation) of providing goods or services to the
general public on a continuing basis be financed or recovered through user charges; or
(b) where the governing body has decided that periodic 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.
10
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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.
Major outlays for capital assets and improvements are capitalized in proprietary funds as
projects are constructed. Interest incurred during the construction phase of proprietary fund
fixed assets is reflected in the capitalized value of the asset constructed. Capital assets
constricted in governmental funds for proprietary fiends are recorded as contributed capital.
11
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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. Depreciation expense for the
years ended December 31, 1996 and 1995 is $ 109,508 and $ 106,767, respectively.
D. Basis of Accounting
Basis of accounting refers to when revenues and expenditures or expenses are recognized in
the accounts and reported in the financial statements. Basis of accounting relates to the
timing of the measurement made, regardless of the measurement focus applied.
All governmental funds are accounted for using the modified accrual basis of accounting, in
which revenues are recognized when they become measurable and available as net current
assets.
The more significant revenues which have been accrued are intergovernmental revenues and
interest earnings.
Expenditures are generally recognized in the modified accrual basis of accounting when the
related fund liability is incurred. Exceptions to this general rule include sick pay and
principal and interest on 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. Buduetary 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.
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.
12
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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, 1996, 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 market
value.
For 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.
13
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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.
I. 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 1997 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 of 90 days) at 50% of the current regular rate of pay, provided the City's notice of
termination policy has been complied with.
14
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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 HACA
and other tax credits are included in intergovernmental revenue.
Intergovernmental revenues are reported under the legal and contractual requirements of
the individual programs.
15
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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.
Stearns County is the collecting agency for the levy and remits the collections to the City
three times a year. Taxes not collected as of December 31 each year are shown as
delinquent taxes receivable.
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 of taxes and special assessments to be collected on
each parcel of property to the County Treasurer in January of each year.
The County Treasurer collects all taxes, and all special assessments, except as noted
above. The County Treasurer is required to mail copies of alI personal property tax
statements by April 15, and copies of all real estate tax statements by April 15, of each
year.
16
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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 of 3% is assessed on homesteaded
property, and 7% on non-homesteaded property. An additional 1% penalty is added each
month the taxes remain unpaid, until October 15. If the taxes due May 15 are not paid by
October 15, a 2% penalty per month is added to homesteaded property and 4% per month
to non-homesteaded property until January 1.
If the taxes are not paid by January 1, further penalties are added. Penalties and interest
apply to both taxes and special assessments. There are some exceptions to the above
penalties, but they are not material.
Within 30 days after the tax settlement date, the County Treasurer is required to pay 70%
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.
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.
17
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
Comparative data have been restated to reflect reclassifications.
Q. Use of Estimates
The preparation of general purpose financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenditures/expenses during the reporting period. Actual results could differ from those
estimates.
NOTE 2 -STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY
A. Fund Deficits
The following funds have deficit fund balance/retained earnings at December 31, 1996:
Capital Projects Fund -
Fire Hall Improvements
Enterprise Fund -
Sewer
1,235
297,653
These deficits will be eliminated by future revenues/user charges.
18
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 3 -DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS
A. Assets
1. Cash and Investments (IncludingCash 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 of identifying risk of investing
public funds, the balances and related restrictions are summarized below:
a. Deposits -Minnesota Statutes require that all deposits with financial institutions must
be collateralized in an amount equal to 110% of deposits in excess of FDIC insurance
(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 2 -Collateralized with securities held by the pledging institutions trust
department or agent in the District's name.
Category 3 -Deposits which are not insured or collateralized.
Category Bank Carrying
1 2 3 Balance Amount
Bank Accounts $ 676,944 $ 0 $ 0 $ 676,944 $ 657,527
Certificates of
Deposit 700,000 0 0 700,000 700.000
Total Deposits $ 1 376,944 $ 0 $ 0 $ 1,376,944 $ 1 357,527
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 I -Insured or registered, or securities held by the City's agent in the City's
name.
19
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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)
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 2 3 Amount Value
U.S. Government and
Federal Agency Notes
and Bonds $ 999,680 $ 0 $ 0 $ 999,680 $ 999,680
Negotiable Certificates
of Deposit 527,001 0 0 527,001 527,001
Brokered Money Market 54.675 0 0 54,675 54675
Total Investments $ 1,581,356 $ 0 $ 0 1,581,356 1,581,356
Total Deposits (See
Note 3 A.l.a.) 1,357,527 1,357,527
Petty Cash 220 220
Total Cash and Investments
(Including Cash Equivalents) $ 2,939,103_ $ 2,939,103
The carrying amount is classified on the combined balance sheet as follows:
Carrying
Amount
Cash and Investments (Including Cash
Equivalents) $ 2,940,338
Cash Overdraft 1 235)
Total $ 2,939,103
20
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 3 -DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
A. Assets (Continued)
2. Due from Other Governmental Units
The following is a summary of due from other governmental units at December 31, 1996:
State of Stearns
Minnesota County Total
General Fund -
Property Taxes $ 0 $ 35,567 $ 35,567
Federal Grants 6.875 0 6.875
Total General Fund 6,875 35,567 42,442
Debt Service Funds -
G.O. Bonds of 1986 -
Property Taxes 0 7,808 7.808
Total $ 6,875 $ 43.375 $ 50.250
3. Fixed Assets
A summary of changes in general fixed assets follows:
Land
Buildings
Improvements Other than
Buildings
Machinery and Equipment
Office Furniture
Motor Vehicles
Other Equipment
Total
Balance Balance
1-1-96 Additions Disposals 12-31-96
$ 167,426 $ 0 $ 0 $ 167,426
258,704 30,208 0 288,912
155,884 33,299 0 189,183
526,344 49,023 (23,705) 551,662
59,533 2,268 (169) 61,632
104,857 22,608 0 127,465
175.310 6.437 0 181.747
$ 1,448,058 $ 143.843 $(23,874) $ 1.568,027
21
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 3 -DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
A. Assets (Continued)
3. Fixed Assets (Continued)
A summary of Enterprise Fund fixed assets at December 31, 1996, is as follows:
Land and Land Improvements
Treatment Plant and Lines
Buildings
Water Storage Facility
Machinery and Equipment
Construction in Progress
Total Cost
Less: Accumulated Depreciation
Net Fixed Assets
B. Liabilities
1. Defined Benefit Pension Plans -Statewide
a. Plan Description
Water Sewer
Fund Fund Total
$ 12,996
804,544
0
1,236,543
34,969
63 8.000
2,727,052
295 430)
$ 4,940
1,874,045
517,983
0
131,351
0
2,528,319
808 840)
$ 17,936
2,678,589
517,983
1,236,543
166,320
638.000
5,255,371
(1 104,270)
$ 2,431,622 $ 1.719,479 $ 4,151,101
All full-time and certain part-time employees of the City of St. 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 (PEKE) 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, 1996 was $ 223,849 and $ 201,044, respectively; the City's total
payroll was $ 520,250.
22
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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)
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 ofstep-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.
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.
23
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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
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 July 1, 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
Employyees Employer Rates*
PERF (Basic and Coordinated)
PEPFF
4.3% 4.6% 9.6%
7.6% 11.4% 19.0%
* The recommended rates scheduled above represent the required rates for fiscal
year 1996 contributions as reported in the July 1, 1995, actuarial valuation reports.
Total contributions made by the City during fiscal year 1996 were:
Percentage of
Amounts Covered Payroll
Employees Employer Employees Employer
PERF $ 9,469 $ 10,028 4.23% 4.48%
PEPFF 15,280 22,919 7.60 11.40%
Totals $ 24,749 S 32,947
24
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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)
The City's contribution for the year ended December 31, 1996 to the PERF
represented .008 percent of total contributions required of all participating entities.
For the PEPFF, contributions for the year ended December 31, 1996, represented .064
percent of total contributions required of all participating entities.
c. Funding Status and Progress
1. Pension Benefit Oblie a~; tion
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.
The pension benefit obligations as of June 30, 1996, are shown below:
Total Pension Benefit Obligation
Net Assets Available for Benefits,
at Cost (Market Values for PERF =
$ 5,954,697; PEPFF = $ 1,713,687)
Unfunded (Assets in Excess of) Pension
Benefit Obligation
jIn ThousandsZ
PERT PEPFF
$ 6,608,646
5,702.248
$ 1,243,429
1.592,671
$ 906.398 $ 349 242
25
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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 Proe ess (Continued)
1. Pension Benefit Obligation (Continued)
The pension benefit obligation was determined as part of an actuarial valuation at
July 1, 1996.
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.
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, 1995 actuarial valuation, there were no changes in actuarial
assumptions of the PERF and the PEPFF which impacted fielding costs.
26
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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 Pro_ress (Continued)
2. Changes in Actuarial Assumptions and Methods (Continued)
Potential changes in the actuarial assumptions used for the PEPFF maybe 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 1997, will significantly impact the
July 1, 1997 actuarial valuation of the PEPFF.
3. Changes in Benefit Provisions
The 1996 legislative session did not include any benefit improvements which
would impact funding costs for the PERF and the PEPFF.
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, 1996. 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, 1996, and for the fiscal year then ended, PERA held no securities
issued by the City or other related parties.
27
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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
a. Plan Description
The City contributes to the St. Joseph Fire Department Relief Association
("Association"), asingle-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, 1995, 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.
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 1995 and as of December 31, 1995, 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.
28
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(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)
c. Funding Status and Progress (Continued)
Pension Benefit Obligation $ 410,872
Net Assets Available for Benefits at Market (391.656)
Unfunded Pension Benefit Obligation,
as of December 31, 1995 ~ 19,216
As of the issuance of this report, amounts for December 31, 1996, 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 1996 were $ 21,001.
3. Defined Contribution -Statewide
The City provides pension benefits for its elected local government officials tlu-ough a
defined contribution plan administered by the Public Employees Retirement Association
(PERA). The Public Employees Defined Contribution Plan (PEDCP) is amulti-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.
29
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 3 -DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
B. Liabilities (Continued)
3. Defined Contribution -Statewide (Continued)
The City's total payroll in the year 1996 was $ 520,250. The City's contributions were
calculated using the base salary amount of $ 12,360. Both the City and the elected local
government official made the required 5% contribution, amounting to $ 618 from each
source, or $ 1,236 in total.
As of June 30, 1996, 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, 1996, consisted of:
Debt
General Service Total
Taxes Receivable -
Delinquent $ 5,028 $ 547 $ 5,575
Assessments Receivable -
Deferred 112,442 647,295 759,737
Delinquent 428 1,594 2,022
Total $ 117.898 $ 649.436 $ 767.334
5. Bonds Payable
The following is a summary of bond transactions for the year ended December 31, 1996:
General
Obligation General
Special Obligation
Assessment Revenue Total
Bonds Payable
January 1, 1996 $ 1,400,000 $ 415,000 $ 1,815,000
Bonds Issued 1,280,000 780,000 2,060,000
Bonds Retired 450 000) 3_( 0.000) 48~ 0,000)
Bonds Payable -
December 31, 1996 $ 2,230.000 S 1.165.000 $ 3.395,000
30
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 3 -DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
B. Liabilities (Continued)
5. Bonds Payable (Continued)
Bonds outstanding at December 31, 1996, comprise the following issues:
General Obligation Special Assessment Bonds:
$ 200,000 General Obligation Improvement Bonds of
1992 due in annual installments of $ 10,000 to $ 20,000
through December 1, 2007, interest at 4.60 to 6.40 percent $ 170,000
$ 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 315,000
$ 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 465,000
$ 1,280,000 General Obligation Improvement Bonds of 1996
due in annual installments of $ 60,000 to $ 120,000 through
December 1, 2011; interest at 4.30 to 5.90 percent 1x280,000
Total General Obligation Special Assessment Bonds 2,230,000
General Obligation Revenue Bonds:
$ 475,000 General Obligation Water Revenue Bonds of 1992
due in annual installments of $ 30,000 to $ 50,000 through
December 1, 2005, interest at 4.00 to 6.00 percent 385,000
$ 780,000 General Obligation Water Revenue Bonds of 1996
due in annual installments of $ 20,000 to $ 70,000 through
December 1, 2016; interest at 4.30 to 6.00 percent 780,000
Total General Obligation Revenue Bonds 1,165,000
TOTAL BONDS PAYABLE $ 3.395.000
31
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 3 -DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
B. Liabilities (Continued)
5. Bonds Pa,~ble (Continued)
The annual requirements to amortize all bonded debt outstanding as of December 31,
1996, including interest payments of $ 1,697,703 are:
General
Obligation
Year Ending Special
December 31, Assessment
General
Obligation
Revenue Total
1997 $ 239,760 $ 119,973 $ 359,733
1998 239,430 117,467 356,897
1999 243,570 119,798 363,368
2000 242,015 121,777 363,792
2001 240,025 123,418 363,443
2002-2006 1,197,260 542,512 1,739,772
2007-2011 832,333 351,065 1,183,398
2012 and Beyond 0 362,300 362.300
Totals $ 3,234,393 $ 1,858,310 $ 5,092.703
6. Capital Lease
The City entered into a lease agreement during 1996 as lessee for financing the
acquisition of a skid loader. The agreement requires monthly payments of $ 346 a month
through November, 1999. The future minimum lease obligations as of December 31,
1996 follows:
Year Ended December 31
1997 S 4,153
1998 4,153
1999 3.807
Total Minimum Lease Payments 12,113
Less: Amount Representing Interest (1.629)
Present Value of Minimum
Lease Payments S 10.484
32
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 3 -DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued)
C. Fund EquitX
Fund equity balances are classified as follows to reflect the limitations and restrictions of the
respective funds:
1. Fund Balance
a. Reserved Fund Balance -
Reserved fund balance of $ 915,065 represents amounts legally reserved for future
debt service payments.
b. Unreserved fund balance is comprised of the following:
Special Capital
General Revenue Projects Total
Designated for Fire $ 363,528 $ 0 $ 0 $ 363,528
Designated for Fire Hall 4,925 0 0 4,925
Designated for Capital
Expenditures 136,376 0 71,512 207,888
Designated for Debt Service 174,745 0 0 174,745
Designated for Working Capital 250,000 0 0 250,000
Undesignated 334,581 29.739 0 364,320
Total Unreserved $ 1,264,155 $ 29.739 $ 71,512 $ 1 365,406
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 Fun ds. Contributed capital is as follows:
Balance, December 31, 1995 $ 4,137,239
Capital Contributed in 1996 692,175
Balance, December 31, 1996 $ 4.829.414
33
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
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, 1996, is:
Refuse Water Sewer
Fund Fund Fund Total
Operating Revenues $ 91,552 $ 129,413 $ 189,512 $ 410,477
Depreciation 0 39,904 69,604 109,508
Operating Income (Loss) 19,740 (8,399) (23,690) (12,349)
Operating Transfers Out 10,000 0 0 10,000
Net Income (Loss) 12,283 (4,831) (5,205) 2,247
Contributed Capital 0 2,316,513 2,512,901 4,829,414
Fixed Assets -
Contributed Additions 0 692,175 0 692,175
Net Working Capital 63,656 30,663 495,769 590,088
Total Assets 69,504 2,479,135 2,231,804 4,780,443
Total Equity 63,656 2,462,285 2,215,248 4,741,189
NOTE 5 -TAX INCREMENT DISTRICT
The City of St. Joseph is the administering authority for the following tax increment financing
district:
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
The City of St. Joseph has received $ 3,079 in tax increments through December 31, 1996. The
City believes a refund of the increments to the County will be necessary in the future due to
unexpected events. The tax increment plan requires certain improvements be made by
December 15, 1998. As of December 31, 1996, no improvements have been made.
34
CITY OF ST. JOSEPH, MINNESOTA
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1996
(Continued)
NOTE 6 -COMMITMENTS
The City has entered into con
Vendor and Project
Hagemeister and Mack,
Architects, Inc. -Fire Hall
tracts for certain projects, as follows:
Expended
Project Through
Authorization December 31 1996 Commitment
$ 45,250 $ 29,892 $ 15,358
Mid-Minnesota Concrete and
Excavating -
East Minnesota Street
Improvements of 1996 1,132,199 1,103,345 28,854
NOTE 7 - SUBSEQUENT EVENT
On February 20, 1997, the City approved to issue $ 1,235,000 General Obligation Improvement
Bonds for the purpose of constructing a fire hall with St. Joseph Township.
35
CITY OF ST. JOSEPH, MINNESOTA
THE GENERAL FUND
The General Fund accounts for all revenues and expenditures of a govercunental 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 finance a
wider range of activities than any other fund. Most of the current operations of governmental
units will be financed from this fund.
CITY OF ST. JOSEPI3, MINNESOTA
GENERAL FUND
COMPARATIVE BALANCE SHEETS
ASSETS
Cash and Investments
Taxes Receivable -
Delinquent
Special Assessments Receivable -
Deferred
Delinquent
Accounts Receivable
Interest Receivable
Due from Other Governmental Units
Loans Receivable
TOTAL ASSETS
LIABILITIES AND FUND BALANCE
Liabilities:
Accrued Liabilities
Due to Other Governmental Units
Deferred Revenue
Compensated Absences Payable
Total Liabilities
Fund Balance:
Unreserved -
Designated
Undesignated
Total Fund Balance
TOTAL LIABILITIES AND FUND BALANCE
December 31
1996 1995
__
$ 1,299,028 $ 1,116,815
5,028 6,327
112,442 41,274
428 146
11,468 4,044
19,084 15,442
42,442 62,829
0 7,220
$ 1,489,920 $ 1,254,097
$ 65,779 $ 50,820
0 1,785
117,898 47,747
42,088 38,198
225,765 138,550
929,574 866,295
334,581 249,252
1,264,155 1,115,547
$ 1,489,920 $ 1,254,097
36
CITY OF ST. JOSEPH, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE -BUDGET AND ACTUAL
Year Ended December 31, 1996
Budget Actual
REVENUES:
General Property Tax $ 246,472 $ 241,688
Tax Increments 0 3,079
Special Assessments 25,000 28,140
Licenses and Permits 38,250 49,009
Intergovernmental -
Federal Grants 0 35,501
State -
Local Government Aid 408,623 408,623
HACA 64,948 61,329
Police Aid 3,600 26,682
Fire Aid 14,300 21,001
County Grants 3,900 4,300
Total Intergovernmental 495,371 557,436
Charges for Services -
General Government 7,350 15,441
Public Safety -Fire 166,549 166,935
Culture and Recreation 13,200 12,798
Total Charges for Services 187,099 195,174
Fines 54,100 63,240
Miscellaneous -
Sale of Surplus Property 8,500 300
Interest 19,000 43,418
Refunds and Reimbursements 1,000 10,607
Contributions 5,000 24,584
Total Miscellaneous 33,500 78,909
TOTAL REVENUES 1,079,792 1,216,67
Over
(Under)
Budget
$ (4,784)
3,079
3,140
10,759
35,501
0
(3,619)
23,082
6,701
8,091
386
(402)
8,075
9,140
(8,200)
24,418
9,607
19,584
45,409
136,883
37
CITY OF ST. JOSEPH, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE -BUDGET AND ACTUAL
Year Ended December 31, 1996
(Continued)
Over
(Under)
Budget Actual Budget _
EXPENDITURES:
General Government:
Mayor and Council -
Salaries and Benefits $ 19,199 $ 18,944 $ (2SS)
Supplies 650 182 (468)
Travel and Conferences 2,S7S 1,348 (1,227)
Advertising 1,750 731 ,r,~ (1,019)
~`'
Insurance 600 1,OS0 450
~~,
Dues and Subscriptions 14,000 15,265 1,265
Other 3S0 732 382
Legislative Committees -
'~ ~ ~
Legislative Bodies 3,200 2,41 S (78S)
Other 2,500 1,71~~
,~~,'~ (785)
Elections - ~
Salaries and Benefits 2,153 3,691 1,538
Supplies 200 113 (87)
Professional Services 2,500 3,SS8 1,OS8
Other 3,200 2,850 (350)
Assessing -
Salaries and Benefits 9,152 8,980 (172)
Supplies 1S0 0 (1S0)
'~
Travel and Conferences 100 9S ticl~'4
(S)
Other 22S 160 (6S)
Administration -
Salaries and Benefits 67,638 68,806 1,168
Supplies and Maintenance 8,200 3,394 (4,806)
Professional Services 0 77S 77S
Telephone 3,500 2,607 (893)
Travel and Conferences 800 781 (19)
Insurance 1,200 1,660 460
Capital Expenditures 8,635 2,226 (6,409)
Other 3,250 2,120 (1,130)
Accounting -
Salaries and Benefits 40,529 43,673 3,144
Supplies 1,600 1,844 244
Travel and Conferences 400 396 (4)
Other 600 926 326
Independent Auditing -
Services and Charges 7,500 7,000 (S00)
38
CITY OF ST. JOSEPH, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE -BUDGET AND ACTUAL
Year Ended December 31, 1996
(Continued)
EXPENDITURES: (Continued)
General Government: (Continued)
Legal -
Services and Charges
Planning and Zoning -
Annexation Fee
Consolidation Study
Star City Program
General Government Buildings -
Salaries and Benefits
Supplies and Maintenance
Professional Services
Insurance
Utilities
Capital Expenditures
Other
Total General Government
Public Safety:
Police -
Salaries and Benefits
Supplies and Maintenance
Professional Services
Travel and Conferences
Insurance
Advertising
Capital Expenditures
Other
Fire Protection -
Salaries and Benefits
Supplies and Maintenance
Professional Services
Travel and Conferences
Fire Protection
Insurance
Utilities
State Aid Reimbursement
Pension Relief Fund
Capital Expenditures
Other
Over
(Under)
Budget Actual Budget
$ 15,000 $ 11,043 $ (3,957)
500 215 (285)
2,000 2,607 607
7,000 3,348 (3,652)
563 94 (469)
2,700 1,209 (1,491)
1,700 1,661 (39)
1,540 1,200 (340)
8,600 6,677 (1,923)
4,000 16,871 12,871
950 754 (196)
250,909 243,716 (7,193)
225,516 262,867 37,351
5,150 7,451 2,301
28,400 26,032 (2,368)
600 1,234 634
2,750 5,000 2,250
650 57 (593)
2,596 595 (2,001)
1,350 946 (404)
11,614 5,952 (5,662)
20,475 7,875 (12,600)
3,700 5,398 1,698
5,500 4,444 (1,056)
99,722 90,017 (9,705)
14,000 10,050 (3,950)
6,350 3,223 (3,127)
17,400 21,001 3,601
6,710 6,498 (212)
50,250 6,470 (43,780)
6,350 1,945 (4,405)
39
CITY OF ST. JOSEPH, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE -BUDGET AND ACTUAL
Year Ended December 31, 1996
(Continued)
Over
(Under)
Budget Actual Budget
EXPENDITURES: (Continued) _
_ __
Public Safety: (Continued)
Building Inspection -
Supplies $ 200 $ 140 $ (60)
Professional Services 12,200 18,353 6,153
Other 5,100 2,219 (2,881)
r
/ Communication Service -
Supplies and Maintenance S00 364 (136)
Telephone 4,500 5,019 S 19
Capital Expenditures 1,361 2,200 839
f,~Automotive Service -
Supplies and Maintenance 8,000 10,788 2,788
Motor Vehicles 13,800 20,408 6,608
Emergency Management Service -
Professional Services 400 338 (62)
Travel 200 0 (200)
Other SO 0 (SO)
Animal Control -
Supplies 12S 46 (79)
Professional Services 7S0 1,018 268
Other _ 1S0 0 (1S0)
Total Public Safety SS6,419 527,948 (28,471)
Public Works:
Ordinance and Enforcement -
Salaries and Benefits 290 0 (290)
Professional Services 300 64 (236)
Other S00 0 (S00)
Street Maintenance -
Salaries and Benefits 64,781 63,267 (1,S 14)
Supplies and Maintenance 13,300 21,328 8,028
Professional Services 50,000 2,880 (47,120)
Travel and Conferences 200 60 (140)
Insurance 6,000 6,000 0
Utilities 4,775 3,289 (1,486)
Capital Expenditures 30,S9S 32,691 2,096
Other SSS 647 92
40
CITY OF ST. JOSEPH, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE -BUDGET AND ACTUAL
Year Ended December 31, 1996
(Continued)
Over
(Under)
Budget Actual Budget
EXPENDITURES: (Continued)
Public Works: (Continued)
,~"industrial Development -
Professional Services $ 0 $ 7,224 $ 7,224
Ice and Snow Removal -
Salaries and Benefits 11,213 26,691 15,478
Supplies and Maintenance 10,400 13,108 2,708
Capital Expenditures 3,700 0 (3,700)
Other 650 1,020 370
Engineering -
Professional Services 15,000 12,346 (2,654)
Street Lighting -
Supplies and Maintenance 475 0 (475)
Utilities 25,000 20,419 (4,581)
Capital Expenditures 3,308 3,307 (1)
Street Cleaning -
Salaries and Benefits 3,140 1,343 (1,797)
Supplies and Maintenance 2,400 1,520 (880)
Other 265 196 (69)
Total Public Works 246,847 217,400 (29,447)
Culture and Recreation:
Participant Recreation -
Salaries and Benefits 8,510 10,798 2,288
Supplies and Maintenance 1,400 1,398 (2)
Professional Services 0 3,062 3,062
Insurance 550 0 (550)
Advertising 400 0 (400)
Other 1,000 1,040 40
Ball Park and Skating Rink -
Salaries and Benefits 2,690 2,356 (334)
Supplies and Maintenance 600 368 (232)
Professional Services 0 1,555 1,555
Utilities 1,330 612 (718)
Capital Expenditures 3,065 16,347 13,282
Maintenance Shop -
Supplies and Maintenance 2,575 2,707 132
Utilities 1,950 1,491 (459)
Other 150 0 (150)
41
CITY OF ST. JOSEPH, MINNESOTA
GENERAL FUND
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE -BUDGET AND ACTUAL
Year Ended December 31, 1996
(Continued)
Budget Actual
EXPENDITURES: (Continued)
Culture and Recreation: (Continued)
Park Areas -
Salaries and Benefits $ 29,254 $ 28,725
Supplies and Maintenance 9,850 14,053
Insurance 1,000 1,000
Utilities 2,325 3,795
Capital Expenditures 26,204 15,830
Other 500 73
Shade Tree Disease Control -
Supplies and Maintenance 75 0
Travel and Conferences 220 0
Other 110 0
Community Support -
Insurance 300 15
Other 1,850 1,400
Total Culture and Recreation 95,908 106,625
Miscellaneous:
Other 900 5 7
TOTAL EXPENDITURES 1,150,983 1,095,746
REVENUES OVER (UNDER) EXPENDITURES (71,191) 120,929
OTHER FINANCING SOURCES:
Capital Lease 0 27,679
EXCESS OF REVENUES AND OTHER
FINANCING SOURCES OVER
(UNDER) EXPENDITURES $ (71,191) 148,608
FUND BALANCE -January 1 1,115,47
FUND BALANCE -December 31 $ _ 1,264,1>j
Over
(Under)
Budget
$ (529)
4,203
0
1,470
(10,374)
(427)
(75)
(220)
(110)
(285)
(450)
10,717
(843)
(55,237)
192,120
27,679
$ 219,799
42
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, 1996
With Comparative Totals for December 31, 1995
Recreation DARE _ _ Totals _ __
Center Program 1996 1995
- --- -- --- -
ASSETS
Cash and Investments $ 27,812 $ 1,927 $ 29,739 $ 28,619
FUND BALANCE
Fund Balance:
Unreserved -
Undesignated $ 27,812 $ 1,927 $ 29,739 $ 28,619
43
CITY OF ST. JOSEPH, MINNESOTA
SPECIAL REVENUE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
Year Ended December 31, 1996
With Comparative Totals for the Year Ended December 31, 1995
Recreation DARE Totals
Center Program 1996 1995
REVENUES:
Miscellaneous -
Interest $ 1,120 $ 0 $ 1,120 $ 1,457
Contributions 0 0 0 1,53 8
Total Revenues 1,120 0 1,120 2,995
EXPENDITURES:
Public Safety -
Salaries and Benefits 0 0 0 303
Supplies 0 0 0 937
Total Expenditures 0 0 0 1,240
EXCESS OF REVENUES OVER
EXPENDITURES 1,120 0 1,120 1,755
FUND BALANCE -January 1 26,692 1,927 28,619 104,864
RESIDUAL EQUITY TRANSFER 0 0 0 (78,000)
FUND BALANCE -December 31 $ 27,812 $ 1,927 $ 29,739 $ 28,619
44
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 FUNDS
COMBINING BALANCE SHEET
December 31, 1996
With Comparative Totals for December 31, 1995
General
ASSETS
Cash and Investments
Taxes Receivable -
Delinquent
Special Assessments Receivable -
Deferred
Delinquent
Accounts Receivable
Due from Other Governmental Units
TOTAL ASSETS
LIABILITIES AND FUND BALANCE
Liabilities:
Accrued Liabilities
Deferred Revenue
Total Liabilities
Fund Balance:
Reserved for Debt Service
TOTAL LIABILITIES AND
FUND BALANCE
General Obligation General
Obligation Water Obligation
Improvement Revenue Improvement
Bonds Bonds Bonds
of 1992 of 1992 of 1992-B
$ 32,871 $ 30,190 $ 170,307
153 0 0
48,762 0 217,403
0 0 0
0 2,635 0
0 0 0
$ 81,786 $ 32,825 $ 387,710
$ 0 $ 0 $ 0
48,915 0 217,403
48,915 0 217,403
32,871 32,825 170,307
$ 81,786 $ 32,825 $ 387,710
General
General Obligation General
Obligation Water Obligation
Improvement Revenue Improvement
Bonds Bonds Bonds Totals
of 1993 of 1996 of 1996 1996 1995
$ 153,733 $ 329,656 $ 184,220 $ 900,977 $ 1,087,139
394 0 0 547 821
122,658 0 258,472 647,295 500,849
1,594 0 0 1,594 814
0 3,645 0 6,280 9,250
7,808 0 0 7,808 528
$ 286,187 $ 333,301 $ 442,692 $ 1,564,501 $ 1,599,401
$ 0 $ 0 $ 0 $ 0 $ 250
124,646 0 258,472 649,436 502,484
124,646 0 258,472 649,436 502,734
161,541 333,301 184,220 915,065 1,096,667
$ 286,187 $ 333,301 $ 442,692 $ 1,564,501 $ 1,599,401
45
CITY OF ST. JOSEPH, MINNESOTA
DEBT SERVICE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
Year Ended December 31, 1996
With Comparative Totals for the Year Ended December 31, 1995
General
General General Obligation
Obligation Obligation Water
Improvement Improvement Revenue
Bonds Bonds Bonds
of 1986 of 1992 of 1992
REVENUES:
General Property Taxes $ 0 $ 8,068 $ 0
Special Assessments 19,990 5,396 0
Miscellaneous -
Interest 28,826 1,627 1,897
Other 0 0 45,391
Total Revenues 48,816 15,091 47,288
EXPENDITURES:
Miscellaneous 61 0 0
Debt Service -
Bond Principal 390,000 10,000 30,000
Bond Interest and Fiscal Charges 30,161 10,775 22,717
Total Expenditures 420,222 20,775 52,717
EXCESS OF REVENUES OVER (UNDER)
EXPENDITURES (371,406) (5,684) (5,429)
OTHER FINANCING SOURCES AND USES:
Operating Transfers In 0 0 0
Operating Transfers Out (28,829) 0 0
Proceeds From the Sale of Bonds 0 0 0
Total Other Financing Sources (Uses) (28,829) 0 0
EXCESS OF REVENUES AND OTHER
FINANCING SOURCES OVER (UNDER)
EXPENDITURES AND OTHER FINANCING
USES (400,235) (5,684) (5,429)
FUND BALANCE -January 1 706,185 38,555 38,254
RESIDUAL EQUITY TRANSFER _ (305,950) 0 0
FUND BALANCE -December 31 $ 0 $ 32,871 $ 32,825
General
General General Obligation General
Obligation Obligation Water Obligation
Improvement Improvement Revenue Improvement
Bonds Bonds Bonds Bonds Totals
of 1992-B of 1993 of 1996 of 1996 1996 1995
$ 0 $ 20,116 $ 0 $ 0 $ 28,184 $ 26,335
28,958 25,921 0 151,892 232,157 77,625
6,907 6,853 3,213 6,819 56,142 64,83'9
25,600 0 9,110 0 80,101 56,1'0
61,465 52,890 12,323 158,711 396,584 224,949
0 2,170 0 0 2,231 ~% 0
20,000 30,000 0 0 480,000 150,000
20,320 23,690 23,801 42,081 173,545 116,219
40,320 55,860 23,801 42,081 655,776 266,219
21,145 (2,970) (11,478) 116,630 (259,192) (41,27'0)
0 0 38,829 0 38,829 0
0 0 0 0 (28,829) 0
0 0 0 67,590 67,590 0
0 0 38,829 67,590 77,590 0
21,145 (2,970) 27,351 184,220 (181,602) (41,270)
149,162 164,511 0 0 1,096,667 1,137,937
0 0 305,950 0 0 0
$ 170,307 $ 161,541 $ 333,301 $ 184,220 $ 915,065 $ 1,096,667
46
CITY OF ST. JOSEPH, MINNESOTA
CAPITAL PROJECTS FUNDS
Capital Projects Funds are created to account for all resources used for the acquisition of capital
facilities by a governmental unit except those financed by enterprise funds.
CITY OF ST. JOSEPH, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING BALANCE SHEET
December 31, 1996
With Comparative Totals for December 31, 1995
ASSETS
Cash and Investments
LIABILITIES AND FUND BALANCE
Liabilities:
Cash Overdraft
Accrued Liabilities
Contracts Payable
Total Liabilities
Fund Balance (Deficit):
Unreserved -
Designated for Capital
Improvements
TOTAL LIABILITIES
AND FUND BALANCE
Water East Minnesota
Filtration Street
Improvements Improvements
of 1996 of 1996
$ 142,322 $ 41,316
0
21,207
65,571
86,778
« <~~
0
13,080
11,033
24,113
17,203
Fire Hall
Improvement
Project
$ 0
1,235
0
0
1,235
(1,235)
$ 142,322 $ 41,316 $ 0
Totals
1996
$ 183,638
1,235 $ 0
34,287 0
76,604 0
112,126 0
71,512
$ 183,638 $ 0
4'7
CITY OF ST. JOSEPH, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
Year Ended December 31, 1996
With Comparative Totals for the Year Ended December 31, 1995
REVENUES:
Intergovernmental -
County Grants/Aids
Miscellaneous -
Interest
Total Revenues
EXPENDITURES:
Capital Outlay -
Construction Costs
Other
Total Expenditures
EXCESS OF REVENUES (UNDER)
EXPENDITURES
OTHER FINANCING SOURCES:
Proceeds from the Sale of Bonds
EXCESS OF REVENUES AND OTHER
FINANCING SOURCES OVER (UNDER)
EXPENDITURES
FUND BALANCE -January 1
FUND BALANCE (DEFICIT) -December 31
Water
Filtration
Improvements
of 1996
East Minnesota
Street
Improvements
of 1996
Fire Hall
Improvement
Project
$ 0 $ 137,199 $ 0
8,160 19,333 0
8,160 156,532 0
708,736 1,316,009 0
11,400 15,250 1,235
720,136 1,331,259 1,235
(711,976) (1,174,727) (1,235)
767,520 1,191,930 0
55,544 17,203 (1,235)
0 0 0
$ 55,544 $ 17,203 $ (1,235)
Totals
1996 1995
$ 137,199 $ 0
~l r/ Al~~l /~
2,024,745 0
27,885 0
2,052,630 0
(1,887,938) 0
1,959,450 0
71,512 0
$ 71,512 $ 0
48
CITY OF ST. JOSEPH, MINNESOTA
ENTERPRISE FUNDS
Enterprise Funds are established to account for the financing ofself-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 FUNDS
COMBINING BALANCE SHEET
December 31, 1996
With Comparative Totals for December 31, 1995
ASSETS
Current Assets:
Cash and Cash Equivalents
Investments
Accounts Receivable
Total Current Assets
Fixed Assets:
Land and Land Improvements
Treatment Plant and Lines
Buildings
Water Storage Facility
Machinery and Equipment
Construction in Progress
Less: Accumulated Depreciation
Net Fixed Assets
TOTAL ASSETS
LIABILITIES AND FUND EQUITY
Current Liabilities:
Accrued Liabilities
Due to Other Governmental Units
Compensated Absences Payable
Total Current Liabilities
Fund Equity:
Contributed Capital
Retained Earnings -
Unreserved (Deficit)
Total Fund Equity
Refuse Water
Fund Fund
$ 51,995
0
17,509
69,504
$ 25,299
0
22,214
47,513
0
0
0
0
0
0
0
0
n
12,996
804,544
0
1,236,543
34,969
638,000
2,727,052
(295,430)
2,431,622
Sewer
Fund
$ 449,662
0
62,663
512,325
4,940
1,874,045
517,983
0
131,351
0
2,528,319
(808,840)
1,719,479
$ 69,504 $ 2,479,135 $ 2,231,804
$ 5,848 $ 6,382 $ 4,509
0 0 6,267
0 10,468 5,780
5,848 16,850 16,556
0
~~ ~S~
VJ,VJV
2,316,513
145,772
2,462,285
2,512,901
(297,653)
2,215,248
TOTAL LIABILITIES AND
FUND EQUITY $ _ 69,504 $ 2,479,135 $ 2,231,804
Totals
1996 1995
$ 526,956 $ 381,861
0 99,192
102,386 68,219
629,342 549,272
17,936 17,936
2,678,589 2,653,940
517,983 517,983
1,236,543 1,207,017
166,320 166,320
63 8,000 0
5,255,371 4,563,196
(1,104,270) (994,762)
4,151,101 3,568,434
$ 4,780,443 $ 4,117,706
$ 16,739 $ 45,850
6,267 10,888
16,248 14,201
39,254 70,939
4,829,414
(88,225)
4,741,189
4,137,239
(90,472)
4,046,767
$ 4,780,443 $ 4,117,706
49
CITY OF ST. JOSEPH, MINNESOTA
ENTERPRISE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN RETAINED EARNINGS
Year Ended December 31, 1996
With Comparative Totals for the Year Ended December 31, 1995
OPERATING REVENUES:
Charges for Services
OPERATING EXPENSES:
Salaries and Related Taxes and
Benefits
Utilities
Supplies
Sewer Use Rental
Postage
Repairs and Maintenance
Professional Fees
Fees and Tests
Dues and Subscriptions
Refuse Disposal
Depreciation
Insurance
Miscellaneous
Total Operating Expenses
OPERATING INCOME (LOSS)
NON-OPERATING REVENUES
Interest
Other Revenues
Total Non-Operating Revenues
INCOME (LOSS} BEFORE OPERATING TRANSFERS
Operating Transfers Out
NET INCOME (LOSS)
RETAINED EARNINGS (DEFICIT) -January 1
RETAINED EARNINGS (DEFICIT) -December 31
Refuse Water Sewer
$ 91,882 $ 129,413 $ 189,512
1,888 59,392 36,978
0 14,261 7,039
378 11,436 7,751
0 0 82,025
374 474 804
0 1,314 2,672
0 1,913 134
280 6,018 2,846
0 388 113
68,922 0 1,021
0 39,904 69,604
0 2,500 2,500
0 212 iS
71,812 137,812 213,202
19,740 (8,399) (23,690)
2,183 2,405 18,485
360 1,163 0
2,543 3,568 18,485
22,283 (4,831) (8,208)
(10,000) 0 0
12,283 (4,831) (8,208)
51,373 150,603 (292,448)
$ 63,656 $ 145,772 $ (297,653)
Totals
1996 1995
$ 410,477 $ 389,768
98,258 83,410
21,300 21,503
19,565 15,421
82,025 61,124
1,352 845
3,986 8,542
2,047 35,180
9,114 8,700
501 256
69,943 69,649
109,508 106,767
5,000 14,687
227 905
422,826 426,989
(12,349) (37,221)
23,073 26,246
1,523 200
24,596 26,446
12,247 (10,775)
(10,000) 0
2,247 (10,775)
(90,472) (79,697)
$ 88 225 $ (90,472)
50
CITY OF ST. JOSEPH, MINNESOTA
ENTERPRISE FUNDS
COMBINING STATEMENT OF CASH FLOWS
Year Ended December 31, 1996
With Comparative Totals for the Year Ended December 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Operating Income (Loss)
Adjustments to Reconcile Operating Income
(Loss) to Net Cash Provided by Operating
Activities:
Depreciation
Other Non-Operating Revenues
Change in Assets and Liabilities:
(Increase) Decrease in Accounts
Receivable
Increase (Decrease) in Accrued
Liabilities
Increase (Decrease) in Due to Other
Governmental Units
Increase in Compensated
Absences Payable
Total Adjustments
Net Cash Provided (Used) by Operating Activities
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES:
Operating Transfers to Other Funds
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Capital Expenditures
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest on Investments
Net Sale of Investments
Net Cash Provided by Investing Activities
Net Increase in Cash and Cash Equivalents
Refuse Water Sewer
Fund Fund Fund
$ 19,740 $ (8,399) $ (23,690)
0 39,904 69,604
360 1,163 0
(2,332) (4,032) (27,803)
96 (30,490) 1,283
0 (354) (4,267)
0 1,744 303
(1,876) 7,935 39,120
17,864 (464) 15,430
{ 10, 000) 0 0
0 0 0
2,183 2,405 18,485
0 12,236 86,956
2,183 14,641 105,441
10,047 14,177 120,871
Cash and Cash Equivalents, January 1 41,948 11,122
Cash and Cash Equivalents, December 31 $ 51,995 $ 25,299
328,791
$ 449,662
Totals
1996. 1995
$ (12,349) $ (37,221)
109,508
1,523
(34,167)
(29,111)
(4,621)
2,047
45,179
32,830
(10,000)
0
23,073
99,192
122,265
145,095
381,861
$ 526,956
106,767
200
30,013
33,321
4,087
2,252
176,640
139,419
0
(146,867)
26,246
56,815
83,061
75,613
306,248
$ 381,861
51
CITY OF ST. JOSEPH, MINNESOTA
STATEMENT OF GENERAL LONG-TERM DEBT
December 31, 1996
AMOUNT AVAILABLE AND TO BE PROVIDED FOR
THE PAYMENT OF GENERAL LONG-TERM DEBT:
Amount Available in Debt Service Funds
Amount to be Provided from Special Assessments
Amount to be Provided for Compensated Absences Payable
Amount to be Provided for Retirement of General Long-Term
Debt
TOTAL AVAILABLE AND TO BE PROVIDED
GENERAL LONG-TERM DEBT:
Compensated Absences Payable
Bonds Payable
TOTAL GENERAL LONG-TERM DEBT
1996 1995
$ 915,065 $ 1,096,667
648,889 501,663
49,757 40,412
1,831,046
$ 3,444,757
216,670
$ 1,855,412
$ 49,757
3,395,000
$ 3,444,757
$ 40,412
1,815,000
$ 1,855,412
52
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, 1996
Original
Budget
SOURCES OF FUNDS:
Tax Increments $ 128,395
Note Proceeds 81,270
Total Sources of Funds 209,665
USES OF FUNDS:
Site Excavation
Utility Improvements
Site Improvements
Professional Services -
City Engineer Consultant
Legal Expense
Planning Consultant -
Stearns County HRA
Contingencies
Administrative Expenses -
General Administration
Miscellaneous
Debt Service -
Principal
Interest
Finance Costs -
Capitalized Interest
Other Construction
Total Uses of Funds
DISTRICT BALANCE `,
* See Note 5
20,000
20,000
10,000
10,000
3,000
3,500
1,000
1,470
500
81,270
34,286
11,800
12,839
209,665
0
Accounted
for in Current
Prior Years Year
0 $ 3,079
0 0
0 3,079
Amount
Remaining*
$ 125,316
81,270
206,586
0 0 20,000
0 0 20,000
0 0 10,000
0 0 10,000
0 0 3,000
0 0 3,500
0 0 1,000
0 0 1,470
0 0 500
0 0 81,270
0 0 34,286
0 0 11,800
0 0 12,839
_
0 0 209,665
0 $ 3,079 $ (3,079)
53
CITY OF ST. JOSEPH, MINNESOTA
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
Year Ended December 31, 1996
Federal Assistance
Number and Administering Proposed Project Audit Report
Funding Source Department Grant Name Time Period This Period
CFDA No. 20.600 Minnesota Department Safe and Sober October 1995 to January 1, 1996 to
U.S. Department of Public Safety September 1996 December 31, 1996
of Transportation
CFDA No. 16.726 Minnesota Cops Fast March 1995 to January 1, 1996 to
U.S. Department of Department of March 1998 December 31, 1996
Justice Public Safety
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, 1997
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, 1996, and have issued our report thereon dated March 7,
1997.
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.
The management of the 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 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.
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, 1996, we obtained an understanding of
the internal control structure. With respect to the internal control structure, 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 in order to determine our auditing procedures
for the purpose of expressing our opinion on the general purpose financial statements and not to
provide an opinion on the internal control structure. Accordingly, we do not express such an
opinion.
55
We noted certain matters involving the internal control structure and its operation that we
consider to be reportable conditions 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.
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.
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 have also noted other matters involving the internal control structure and its operation that
we have reported to the management of City of St. Joseph, Minnesota, in a separate letter dated
March 7, 1997.
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.
,~ ~ ~ U~ ~~
FERN, DEWENTER, VIERS, LTD.
S6
CITY OF ST. JOSEPH, MINNESOTA
SINGLE AUDIT REPORT ON THE INTERNAL CONTROL
STRUCTURE USED IN ADMINISTERING FEDERAL
FINANCIAL ASSISTANCE PROGRAMS
March 7, 1997
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, 1996, and have issued our report thereon dated March 7,
1997.
We conducted our audits in accordance with generally accepted auditing standards; Government
Auditing Standards, issued by the Comptroller General of the United States; and Office of
Management and Budget (OMB) Circular A-128, Audits of State and Local Governments.
Those standards and OMB Circular A-128 require that we plan and perform the audits to obtain
reasonable assurance about whether the general purpose financial statements are free of material
misstatement.
In planning and performing our audits for the year ended December 31, 1996, we considered the
City's internal control structure in order to determine our auditing procedures for the purpose of
expressing our opinions on the City's general purpose financial statements and to report on the
internal control structure in accordance with OMB Circular A-128. This report addresses our
consideration of internal control structure policies and procedures relevant to compliance with
requirements applicable to federal financial assistance programs. We have addressed policies
and procedures relevant to our audit of the general purpose financial statements in a separate
report dated March 7, 1997.
57
The management of the 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, 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, and that federal financial assistance programs are managed in compliance with
applicable laws and regulations. Because of inherent limitations in any internal control structure,
errors, irregularities, or instances of noncompliance 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.
For the purpose of this report, we have classified the significant internal control structure policies
and procedures used in administering federal financial assistance programs in the following
categories:
ACCOUNTING CONTROLS:
Activity Cycles -
Treasury or financing
Revenuelreceipts
Purchases/disbursements
External financial reporting
Payroll/personnel
Financial Statement Captions -
Cash and Investments (Including Cash Equivalents)
Receivables
Inventory
Fixed assets
Payables and Accrued liabilities
Debt
Fund equity
Accounting Applications -
Billings
Cash receipts
Purchasing and receiving
Cash disbursements
Payroll
Inventory control
Fixed assets
General ledger
58
ADDITIONAL CONTROLS USED IN ADMINISTERING FEDERAL PROGRAMS:
General Requirements -
Political activity
Davis-Bacon Act
Civil rights
Cash management
Federal financial reports
Allowable costs/cost principles
Drug-free workplace
Administrative requirements
Specific Requirements -
Types of services allowed or unallowed
Matching, level of effort, or earmarking
Special reporting requirements
Special tests and provisions
Claims for advances and reimbursements
Amounts claimed or used for matching
For all of the internal control structure categories listed above, we obtained an understanding of
the design of relevant policies and procedures and determined whether they have been placed in
operation, and we assessed control risk.
During the year ended December 31, 1996, the City of St. Joseph, Minnesota, had no major
programs and expended 70 percent of its total federal financial assistance under the following
nonmajor federal financial assistance program: Cops Fast.
We performed tests of controls, as required by OMB Circular A-128, to evaluate the
effectiveness of the design and operation of internal control structure policies and procedures that
we have considered relevant to preventing or detecting material noncompliance with specific
requirements, general requirements, and requirements governing claims for advances and
reimbursements and amounts claimed or used for matching that are applicable to the
aforementioned nonmajor program. Our procedures were less in scope than would be necessary
to render an opinion on these internal control structure policies and procedures. Accordingly, we
do not express such an opinion.
We noted certain matters involving the internal control structure and its operation that we
consider to be reportable conditions 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 administer federal financial assis-
tance programs in accordance with applicable laws and regulations.
59
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.
A material weakness is a reportable condition in which the design or operation of one or more of
the internal control structure elements does not reduce to a relatively low level the risk that
noncompliance with laws and regulations that would be material to a federal financial assistance
program 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 policies and procedures used in administering
federal financial assistance 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.
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.
KERN, DEWENTER, VIERS, LTD.
60
CITY OF ST. JOSEPH, MINNESOTA
SINGLE AUDIT REPORT ON COMPLIANCE WITH
THE GENERAL REQUIREMENTS APPLICABLE TO
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
March 7, 1997
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, 1996, and have issued our report thereon dated March 7,
1997.
We have applied procedures to test the City's compliance with the following requirements
applicable to its federal financial assistance programs, which are identified in the Schedule of
Federal Financial Assistance for the year ended December 31, 1996.
General Requirements -
Political Activity
Davis-Bacon Act
Civil Rights
Cash Management
Federal Financial Reports
Allowable Costs/Cost Principles
Drug-Free Workplace
Administrative Requirements
Our procedures were limited to the applicable procedures described in the Office of Management
and Budget's Compliance Supplement for Single Audits of State and Local Governments. Our
procedures were substantially less in scope than an audit, the objective of which is the expression
of an opinion on the City of St. Joseph, Minnesota's compliance with the requirements listed in
the preceding paragraph. Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no material instances of
noncompliance with the requirements listed in the second paragraph of this report. With respect
to items not tested, nothing came to our attention that caused us to believe that City of St. Joseph,
Minnesota, had not complied, in all material respects, with those requirements. Also, the results
of our procedures did not disclose any immaterial instances of noncompliance with those
requirements.
61
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.
KERN, DEWENTER, VIERS, LTD.
62
CITY OF ST. JOSEPH, MINNESOTA
SINGLE AUDIT REPORT ON COMPLIANCE WITH SPECIFIC
REQUIREMENTS APPLICABLE TO NONMAJOR FEDERAL
FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS
March 7, 1997
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, 1996, and have issued our report thereon dated March 7,
1997.
In connection with our audit of the general purpose financial statements of the City of St. Joseph,
Minnesota, and with our consideration of the City's internal control structure used to administer
federal financial assistance programs, as required by Office of Management and Budget Circular
A-128, "Audits of State and Local Governments," we selected certain transactions applicable to
the nonmajor federal financial assistance program for the year ended December 31, 1996. As
required by OMB Circular A-128, we have performed auditing procedures to test compliance
with the requirements governing types of services allowed or unallowed; eligibility; matching,
level of effort, or earmarking; special tests and provisions; reporting; claims for advances and
reimbursements and amounts claimed or used for matching that are applicable to those
transactions. Our procedures were substantially less in scope than an audit, the objective of
which is the expression of an opinion on the City's compliance with these requirements.
Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no material instances of
noncompliance with the requirements listed in the preceding paragraph. With respect to items
not tested, nothing came to our attention that caused us to believe that the City of St. Joseph,
Minnesota, had not complied, in all material respects, with those requirements.
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.
KERN, DEWENTER, MERE, LTD.
63
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, 1997
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,
for the year ended December 31, 1996, and have issued our report thereon dated March 7, 1997.
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 Leal 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 disclosed no instances of noncompliance that are required to be reported
herein under Government Auditing Standards.
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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. 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.
KERN, DEWENTER, VIERS, LTD.
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CITY OF ST. JOSEPH, MINNESOTA
FINDINGS ON COMPLIANCE WITH MINNESOTA STATUTES
AND REQUIREMENTS APPLICABLE TO FEDERAL
FINANCIAL ASSISTANCE PROGRAMS
Year Ended December 31, 1996
CURRENT YEAR FINDINGS
None
PRIOR 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 recommended the City negotiate current and future collateral
with the aforementioned depository and the City's collateral for deposits be reviewed on a
monthly basis.
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CITY OF ST JOSEPH, MINNESOTA
CORRECTIVE ACTION TAKEN BY THE CITY IN
ORDER TO RESOLVE PRIOR YEAR AUDIT FINDINGS
PRIOR 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 TAKEN: The City monitored collateral on a regular basis to ensure
collateral was sufficient.
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