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Home My WebLink About2000 Audit Report CITY OF ST. JOSEPH, MINNESOTA Stearns County AUDITED FINANCIAL STATEMENTS As of December 31, 2000 CITY OF ST. JOSEPH, MINNESOTA TABLE OF CONTENTS ELECTED OFFICIALS AND ADMINISTRATION ..................................................... 1 INDEPENDENT AUDITORS' REPORT... .............. ..... ..................................... .... ........ 2 GENERAL PURPOSE FINANCIAL STATEMENTS - Combined Balance Sheet - All Fund Types and Account Groups............................. 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................................................................................ 31 Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and ActuaL........... ............ .......................... ....... ...... ............................... 32 Special Revenue Fund - Combining Balance Sheet..................... .......... ..... .... .................................... ........ 38 Combining Statement of Revenues, Expenditures and Changes in Fund Balance.. .................. ............ .......... ....................... ................. .............. ..... 39 Debt Service Funds - Combining Balance Sheet.............. .................... ............................ ................ ...... 40 Combining Statement of Revenues, Expenditures and Changes in Fund Balance.............................................................................................................. . 41 Capital Proj ect Funds - Combining Balance Sheet......... ........ .... .... ....... ...... .... .... .... ..... ....... ... ..... ... .... ....... 42 Combining Statement of Revenues, Expenditures and Changes in Fund Balance.............................................................................................................. . 43 Enterprise Funds - Combining Balance Sheet... ................ ......... ........ ............................. ................... 44 Combining Statement of Revenues, Expenses and Changes in Retained Earnings .. .... ... ......... ..... .................... ... ............ ........ ...... .......... ... .... ...... ..... .... ..... 45 Combining Statement of Cash Flows ............ .......... ...... ........... ...... ............ ......... 46 Statement of General Long-Term Debt ........ ............. ........... ......... ......... ........ ........... 47 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF THE GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT AUDITING STANDARDS.. .................. ................................... 48 AUDITORS' REPORT ON LEGAL COMPLIANCE .................................................... 50 FINDINGS AND CORRECTIVE ACTION PLANS ON COMPLIANCE WITH MINNESOTA STATUTES AND INTERNAL CONTROLS ......................................... 51 CITY OF ST. JOSEPH, MINNESOTA ELECTED OFFICIALS AND ADMINISTRATION December 31, 2000 Term City Council Position Expires Ken Hiemenz Mayor January 4,2001 Cory Ehlert Councilmember January 6,2003 Bob Loso Councilmember January 6, 2003 Mary Niedenfuer Councilmember January 4,2001 Ken Twit Councilmember January 4,2001 Administration Judy Weyrens City Clerk/ , Treasurer/ Administrator Appointed 1 ß~ Kern, DeWenter, Viere, Ltd. Certified Public Accountants INDEPENDENT AUDITORS' REPORT May 10,2001 Honorable Mayor and City Council City of St. Joseph St. Joseph, Minnesota We have audited the accompanying general purpose financial statements of the City of St. Joseph, Minnesota, as of and for the year ended December 31, 2000, as listed in the table of contents. These general purpose financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 S1. Joseph, Minnesota, as of December 31, 2000, and the results of its operations and the cash flows of its proprietary fund types, for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated May 10, 2001 on our consideration ofthe City of S1. Joseph's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. This report is an integral part of a Government Auditing Standards audit, and in considering the results of the audit, this report should be read along with the auditor's report on the financial statements. 7100 Northland Circle No.¡ Suite 119 220 Park Avenue South p.o. Box 1304 Minneapolis¡ MN 55428-1500 St. Cloud¡ MN 56302 2 763-537-3011 · Fax: 763-537-9682 320-251-7010 · Fax: 320-251-1784 www.kdv.com Our audit was performed for the purpose of forming an opinion on the general purpose financial statements ofthe City taken as a whole. The combining and individual fund financial statements listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of City of St. Joseph, Minnesota. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. /{ ~ \.. &W¿,A-- TtÂ. . t/~. /-.fd. Kern, DeWenter, Viere Ltd. St. Cloud, Minnesota 3 CITY OF ST. JOSEPH, MINNESOTA COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS December 31, 2000 Governmental Fund Types Special Debt Capital ASSETS AND OTHER DEBITS General Revenue Service Projects ASSETS: Cash and Investments (Including Cash Equivalents) $ 1,447,215 $ 36,058 $ 1,948,229 $ 212,406 Taxes Receivable - Delinquent 5,036 0 2,065 0 Special Assessments Receivable - Deferred 18,988 0 1,470,170 163,117 Delinquent 208 0 3,091 0 Accounts Receivable 6,094 0 7,017 0 Notes Receivable 30,000 0 0 0 Interest Receivable 31,442 779 41,312 4,495 Due from Other Governmental Units 199,096 0 58,458 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 General Long- Tenn Debt 0 0 0 0 TOTAL ASSETS AND OTHER DEBITS $ 1,738,079 $ 36,837 $ 3,530,342 $ 380,018 LIABILITIES, EQUITY AND OTHER CREDITS LIABILITIES: Cash Overdraft $ 0 $ 0 $ 0 $ 265,414 Accrued Liabilities 102,791 0 0 60,319 Due to Other Governmental Units 0 0 0 0 Contracts Payable 0 0 0 23,079 Deferred Revenue 24,232 0 1,475,326 163,117 Compensated Absences Payable 19,029 0 0 0 Bonds Payable 0 0 0 0 Loans Payable 0 0 0 0 Total Liabilities 146,052 0 1,475,326 511,929 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 30,000 0 2,055,016 0 Unreserved - Designated 903,044 0 0 0 Undesignated (Deficit) 658,983 36,837 0 (131,911) Total Equity and Other Credits 1,592,027 36,837 2,055,016 (131,911) TOTAL LIABILITIES, EQUITY AND OTHER CREDITS $ 1,738,079 $ 36,837 $ 3,530,342 $ 380,018 The notes to the financial statements are an integral part of this statement. Proprietary Fund Types Account Groups General General Totals Fixed Long- Tenn (Memorandum Only) Enterprise Assets Debt 2000 1999 $ 918,114 $ 0 $ 0 $ 4,562,022 $ 4,378,840 0 0 0 7,101 5,363 0 0 0 1,652,275 1,935,739 0 0 0 3,299 899 177,690 0 0 190,801 161,420 0 0 0 30,000 50,000 20,608 0 0 98,636 57,459 0 0 0 257,554 131,032 4,448,300 3,515,497 0 7,963,797 7,282,501 0 0 2,055,016 2,055,016 1,802,436 0 0 1,473,261 1,473,261 1,896,329 0 0 51,754 51,754 52,231 0 0 2,971,465 2,971,465 2,161,235 $ 5,564,712 $ 3,515,497 $ 6,551,496 $ 21,316,981 $ 19,915,484 $ 0 $ 0 $ 0 $ 265,414 $ 203,622 40,820 0 0 203,930 203,900 17,117 0 0 17,117 8,215 0 0 0 23,079 0 0 0 0 1,662,675 1,942,001 28,215 0 51,754 98,998 111 ,692 0 0 6,250,000 6,250,000 5,860,000 0 0 249,742 249,742 0 86,152 0 6,551,496 8,770,955 8,329,430 0 3,515,497 0 3,515,497 2,712,031 5,519,572 0 0 5,519,572 5,519,572 (41,012) 0 0 (41,012) (72,226) 0 0 0 2,085,016 1,852,436 0 0 0 903,044 1,172,015 0 0 0 563,909 402,226 5,478,560 3,515,497 0 12,546,026 11,586,054 $ 5,564,712 $ 3,515,497 $ 6,551,496 $ 21,316,981 $ 19,915,484 4 CITY OF ST. JOSEPH, MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES Year Ended December 31, 2000 Governmental Fund Types Special Debt General Revenue Service REVENUES: General Property Taxes $ 374,003 $ 0 $ 154,845 Special Assessments 24,880 0 423,297 Licenses and Permits 73,607 0 0 Intergovemmenta1 617,422 0 62,701 Charges for Services 158,914 0 0 Fines 85,003 0 0 Miscellaneous 207,031 2,393 235,587 Total Revenues 1,540,860 2,393 876,430 EXPENDITURES: Current - General Government 266,496 92 0 Public Safety 725,973 0 0 Public Works 233,305 0 0 Culture and Recreation 152,835 0 0 Economic Development 65,292 0 0 Miscellaneous 1,600 0 0 Capital Outlay 0 0 0 Debt Service 0 0 957,060 Total Expenditures 1,445,501 92 957,060 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 95,359 2,301 (80,630) OTHER FINANCING SOURCES (USES): Operating Transfers In 0 0 276,000 Operating Transfers Out (231,000) 0 0 Proceeds from Loans 0 0 0 Proceeds from the Sale of Bonds 0 0 61,750 Total Other Financing Sources (Uses) (231,000) 0 337,750 EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES AND OTHER FINANCING USES (135,641) 2,301 257,120 FUND BALANCE - January 1 1,727,668 34,536 1,802,436 RESIDUAL EQUITY TRANSFER 0 0 (4,540) FUND BALANCE - December 31 $ 1.592,027 $ 36,837 $ 2,055,016 The notes to the financial statements are an integral part of this statement. Totals Capital (Memorandum Only) Projects 2000 1999 $ 0 $ 528,848 $ 479,915 0 448,177 261,962 0 73,607 82,156 0 680,123 678,564 0 158,914 155,600 0 85,003 60,964 3,288 448,299 488,925 3,288 2,422,971 2,208,086 0 266,588 238,591 0 725,973 743,769 0 233,305 152,677 0 152,835 221,931 0 65,292 59,362 0 1,600 1,061 1,157,346 1,157,346 1,630,872 0 957,060 525,707 1,157,346 3,559,999 3,573,970 (1,154,058) (1,137,028) (1,365,884) 0 276,000 318,676 0 (231,000) (278,676) 276,136 276,136 0 879,434 941,184 1,299,599 1,155,570 1,262,320 1,339,599 1,512 125,292 (26,285) (137,963) 3,426,677 3,452,962 4,540 0 0 $ (131 ,911) $ 3,551,969 $ 3,426,677 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, 2000 General Fund Over (Under) Budget Actual Budget REVENUES: General Property Taxes $ 368,465 $ 374,003 $ 5,538 Special Assessments 39,000 24,880 (14,120) Licenses and Pennits 60,400 73,607 13,207 Intergovernmental 605,913 617,422 11,509 Charges for Services 160,113 158,914 (1,199) Fines 66,150 85,003 18,853 Miscellaneous 67,000 207,031 140,031 Total Revenues 1,367,041 1,540,860 173,819 EXPENDITURES: Current - General Government 266,217 266,496 279 Public Safety 670,524 725,973 55,449 Public Works 230,703 233,305 2,602 Culture and Recreation 140,707 152,835 12,128 Economic Development 62,516 65,292 2,776 Miscellaneous 500 1,600 1,100 Total Expenditures 1,371,167 1,445,501 74,334 REVENUES OVER (UNDER) EXPENDITURES (4,126) 95,359 99,485 OTHER FINANCING SOURCES (USES): Operating Transfers 0 (231,000) (231,000) EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES $ (4,126) (135,641) $ (131,515) FUND BALANCE - January 1 1,727,668 FUND BALANCE - December 31 $ 1,592,027 The notes to the financial statements are an integral part of this statement. Special Revenue Funds Over (Under) Budget Actual Budget $ 0 $ 0 $ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,393 2,393 0 2,393 2,393 0 92 92 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 92 92 0 2,301 2,301 0 0 0 $ 0 2,301 $ 2,301 34,536 $ 36,837 6 CITY OF ST. JOSEPH, MINNESOTA COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - ALL PROPRIETARY FUND TYPES Year Ended December 31, 2000 With Comparative Totals for the Year Ended December 31, 1999 Totals 2000 1999 OPERATING REVENUES: Charges for Services $ 541,715 $ 527,299 OPERATING EXPENSES: Salaries and Benefits 126,903 136,308 Utilities 27,218 24,217 Supplies 13,440 16,275 Sewer Use Rental 125,470 98,046 Postage 1,249 1,201 Repairs and Maintenance 7 13,607 Professional Fees 19,506 3,651 Fees and Tests 8,438 16,730 Dues and Subscriptions 690 451 Refuse Disposal 89,101 95,228 Depreciation 125,139 122,431 Insurance 8,015 8,138 Miscellaneous 2,737 2,565 Total Operating Expenses 547,913 538,848 OPERATING LOSS (6,198) (11,549) NON-OPERATING REVENUES: Investment Income 64,611 27,147 Other Revenues 17,801 18,848 Total Non-Operating Revenues 82,412 45,995 INCOME BEFORE OPERATING TRANSFERS 76,214 34,446 Operating Transfers Out (45,000) (40,000) NET INCOME (LOSS) 31,214 (5,554) RETAINED EARNINGS (DEFICIT) - January 1 (72,226) (66,672) RETAINED EARNINGS (DEFICIT) - December 31 $ (41,012) $ (72,226) The notes to the financial statements are an integral part of this statement. 7 CITY OF ST. JOSEPH, MINNESOTA COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES Year Ended December 31, 2000 With Comparative Totals for the Year Ended December 31, 1999 Totals 2000 1999 CASH FLOWS FROM OPERATING ACTMTIES: Operating Loss $ (6,198) $ (11,549) Adjustments to Reconcile Operating Loss to Net Cash Provided by Operating Activities: Depreciation 125,139 122,431 Other Non-operating Revenues 17,801 18,848 Change in Assets and Liabilities: (Increase) in Accounts Receivable (26,756) (43,684) Increase (Decrease) in Accrued Liabilities (82,614) 101,490 Increase in Due to Other Governmental Units 8,902 708 Increase (Decrease) in Compensated Absences Payable (8,891) 18,200 Total Adjustments 33,581 217,993 Net Cash Provided by Operating Activities 27,383 206,444 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating Transfers to Other Funds (45,000) (40,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital Acquisitions (2,969) (88,686) CASH FLOWS FROM INVESTING ACTIVITIES: Investment Income 55,591 29,206 Net Increase in Cash and Cash Equivalents 35,005 106,964 Cash and Cash Equivalents, January 1 883,109 776,145 Cash and Cash Equivalents, December 31 $ 918,114 $ 883,109 The notes to the financial statements are an integral part of this statement. 8 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of St. Joseph, Minnesota, has a mayor-council form of government. A mayor and four council members are elected by the voters of the City for two-year and four-year tenns, respectively. The accounting policies of the City conform to accounting principles generally accepted in the United States of America 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 (F ASB) 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 F ASBs, APBs and ARBs issued after November 30, 1989. The following is a summary of the City's more significant accounting policies. A. Financial Reporting Entity In accordance with GASB Statement No. 14, The Financial Reporting Entity, the financial statements present the City and its component units. The City includes all funds, account groups, organizations, 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 perfonned 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 City of St. Joseph's component unit is presented in this report as follows: Blended Component Unit - The St. Joseph Economic Development Authority (EDA) was organized for the purpose of preserving and creating jobs, enhancing the tax base, and promoting the general welfare of the people of the City of St. Joseph. The Authority is governed by a five member board appointed by the City Council. The EDA is included as a blended component unit of the City because the EDA is financially accountable to the City, and the Authority provides services almost entirely for the City. The St. Joseph EDA is presented as a department in the City's general fund, the City Hall Project Capital Project Fund and the EDA Public Project Revenue Bonds of2000 Debt Service fund. Separate financial statements are not prepared for the EDA. 9 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Fund Accounting The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which expending activities are controlled. The various funds are grouped, in the financial statements in this report, into five generic fund types and two broad fund categories, described below. Governmental Funds The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital proj ects) that are legally restricted to expenditures for specified purposes. Debt Service Funds are used to account for the accumulation of resources for, and the payment of, generallong-term debt principal, interest, and related costs. Capital Prolects 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). 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, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus. 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. 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. The two account groups, General Fixed Assets and General Long-Term Debt, are not "funds". They are concerned only with the measurement of financial position. They are not involved with measurement of results of operations. 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. 11 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus. Fixed Assets. and Long-Term Liabilities (Continued) 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 ofthe asset constructed. Capital assets constructed in governmental funds for proprietary funds are recorded as contributed capital. 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 31,2000 and 1999 is $ 125,139 and $ 122,431, 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 ofthe measurement focus applied. All governmental funds are accounted for using the modified accrual basis of accounting, in which revenues are recognized when they become measurable and available as net current assets. The more significant revenues which have been accrued are intergovernmental revenues and interest earnings. Expenditures are generally recognized in the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include sick pay and principal and interest on general long-term debt, which are recognized when due. All proprietary funds are accounted for using the accrual basis of accounting; revenues are recognized when they are earned and expenses are recognized when they are incurred. E. Budgetary Data The City Council adopts an annual budget. The amounts shown in the financial statements as "budget" represent the original budgeted amount and all revisions made during the year. The City follows these procedures in establishing the budgetary data reflected in the financial statements. 12 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) E, Budgetary Data (Continued) 1. In August of each year, the City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following January 1. The operating budget includes proposed expenditures and the means of financing them for the upcommg year. 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 accounting principles generally accepted in the United States of America. 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 31,2000, 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 fair value. For purposes of the statement of cash flows, the City considers all short-term, highly liquid investments with original maturity dates of three months or less from the date of purchase to be cash equivalents. In addition, cash invested in the City's cash management pool is considered to be cash equivalents. Based on this policy, the total cash and investments of the proprietary funds are considered to be cash equivalents. 13 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 of7 percent to 8 percent and are to be received in 2001 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 of720 hours) at 50% ofthe current regular rate of pay, provided the City's notice oftermination policy has been complied with. 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 available for expending in future periods. 14 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) L. Fund Equity (Continued) - 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 fonn of HAC A and other tax credits are included in intergovernmental revenue. Intergovernmental revenues are reported under the legal and contractual requirements of the individual programs. Licenses and pennits, 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. December 28 is the last day the City can certify a tax levy to the County Auditor for collection the following year. The property tax is recorded as revenue when it becomes measurable and available. Steams County is the collecting agency for the levy and remits the collections to the City three times a year. Taxes not collected as of December 31 each year are shown as delinquent taxes receivable. 15 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) M. Revenues, Expenditures and Expenses (Continued) 2. Property Tax Collection Calendar (Continued) The County Auditor creates 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 the 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 all personal property tax statements by April 15, and copies of all real estate tax statements by April 15, of each year. Property owners are required to pay one-half of their real estate taxes due by May 15 and the balance by October 15. Iftaxes due May 15 are not paid on time, a penalty of3% is assessed on homesteaded property, and 7% on non-homesteaded property. An additional 1 % penalty is added each month the taxes remain unpaid, until October 15. Ifthe 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. 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. 16 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. O. Total Columns on General Purpose Statements Total columns on the general purpose fmancial 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 confol111ity with accounting principles generally accepted in the United States of America. 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 confol111ity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 17 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 2 - STEWARDSHIP. COMPLIANCE AND ACCOUNTABILITY A. Fund Deficits The following funds have deficit fund balance/retained earnings at December 31,2000: Capital Projects Funds- 1999 Street Improvements $ (260,037) County Road 121 (11,115) Enterprise Fund - Sewer (332,054) These deficits will be eliminated by future revenues, user charges or transfers from other funds. B. Expenditures in Excess of Approµriations Expenditures exceeded appropriations in the following funds for the year ended December 31,2000: Expenditures Appropriation General Fund $ 1,445,501 $ 1,371,167 Special Revenue Funds: DARE Program 92 0 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. Assets 1. Cash and Investments (Including Cash Equivalents) Cash balances ofthe City's funds are combined (pooled) and invested to the extent available in various investments authorized by Minnesota Statutes. Each fund's portion ofthis 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. 18 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) A. Assets (Continued) 1. Cash and Investments (Including Cash Equivalents) (Continued) a. Deposits - (Continued) 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; or those deposits where collateral assignment has not been perfected. Category Bank Carrying 1 2 3 Balance Amount -- Bank Accounts $ 238,144 $ 0 $ 0 $ 238,144 $ 457,634 Certificates of Deposit 1,227,619 0 0 1,227,619 1,227,619 -- Total Deposits $ 1,465,763 $ 0 $ 0 $ 1,465,763 $ 1,685,253 -- -- b. Investments - Minnesota Statutes authorize the City to invest in obligations of the U.S. Treasury, agencies, and instrumentalities, shares of investment companies whose only investments are in the forementioned securities, obligations of the State of Minnesota or its municipalities, bankers' acceptances, future contracts, repurchase and reverse repurchase agreements, and commercial paper of the highest quality with a maturity of no longer than 270 days. Investments held by the City at year end classified as to credit risk are as follows: Category 1 - Insured or registered, or securities held by the City's agent in the City's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the City's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty or by its trust department or agent but not in the City's name. 19 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 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 1 2 3 Fair Value U.S. Government and - - Federal Agency Notes and Bonds $ 1,037,592 $0 $0 $ 1,037,592 Repurchase Agreements 100,000 0 0 100,000 Negotiable Certificates of Deposit 1,459,494 0 0 1,459,478 - - Total Investments $ 2,597,086 $0 $0 2,597,070 Unclassified as to Risk: Money Market Mutual Funds 14,065 Total Deposits (See Note 3 A.l.a.) 1,685,253 Petty Cash 220 Total Cash and Investments (Including Cash Equivalents) $ 4,296,608 Cash and investment balances are presented in the general purpose financial statements as follows: Cash and Investments (Including Cash Equivalents) $ 4,562,022 Cash Overdraft (265,414) Total $ 4,296,608 20 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 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 31,2000: City of St. Joseph Stearns Waite Park Township County Total General Fund - Fines $ 0 $ 0 $ 6,732 $ 6,732 Property Taxes/Special Assessments 0 0 189,019 189,019 Miscellaneous 2,426 919 0 3,345 Total General Fund 2,426 919 195,751 199,096 Debt Service Funds - G.O. Improvement Bonds of 1993 - Property Taxes/Special Assessments 0 0 663 663 G.O. Improvement Bonds of 1998 - Property Taxes/Special Assessments 0 0 9,509 9,509 G.O. Improvement Bonds of 1999 - Property Taxes/Special Assessments 0 0 48,286 48,286 Total Debt Service 0 0 58,458 58,458 Total $ 2,426 $ 919 $ 254,209 $ 257,554 21 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) A. Assets (Continued) 3. Fixed Assets A summary of changes in general fixed assets follows: Balance Balance 1-1-99 Additions Disposals 12-31-00 Land $ 167,569 $ 51,475 $ (55,000) $ 164,044 Buildings 947,186 758,985 0 1,706,171 Improvements Other than Buildings 333,852 30,146 0 363,998 Machinery and Equipment 720,998 15,514 0 736,512 Office Furniture 96,743 6,156 (1,673) 101,226 Motor Vehic1es 211,337 0 0 211,337 Other Equipment 234,346 4,384 (6,521) 232,209 Total $ 2,712,031 $ 866,660 $ (63,194) $ 3,515,497 A summary of Enterprise Fund fixed assets at December 31, 2000, is as follows: Water Sewer Fund Fund Total Land and Land Improvements $ 12,996 $ 4,940 $ 17,936 Treatment Plant and Lines 1,937,720 2,073,069 4,010,789 Buildings 0 517,983 517,983 Water Storage Facility 1,236,542 0 1,236,542 Machinery and Equipment 81,389 179,138 260,527 Total Cost 3,268,647 2,775,130 6,043,777 Less: Accumulated Depreciation (507,058) (1,088,419) (1,595,477) Net Fixed Assets $ 2,761,589 $ 1,686,711 $ 4,448,300 22 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities 1. Defined Benefit Pension Plans - Statewide A. Plan Description All full-time and certain part-time employees ofthe City of St. Joseph are covered by defined benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) and the Public Employees Police and Fire Fund (PEPFF) which are cost- sharing, multiple-employer retirement plans. These plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, fire- fighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to surVivors upon death of eligible members. Benefits are established by State Statute, and vest after 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 tennination of service. Two methods are used to compute benefits for PERF's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual fonnula (Method 1) or a level accrual fonnula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first 10 years and 1.7 percent for each remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0 percent for each year of service. For all PEPFF members and for PERF members whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. A reduce retirement annuity is also available to eligible members seeking early retirement. 23 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 1. Defined Benefit Pension Plans - Statewide (Continued) A. Plan Description (Continued) There are different types of annuities available to members upon retirement. A normal annuity is a lifetime annuity that ceases upon the death of the retiree--no survivor annuity is payable. There are also various types of joint and survivor annuity options available which will reduce the monthly normal annuity amount, because the annuity is payable over joint lives. Members may also leave their contributions in the fund upon termination of public service in order to qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to members who leave public service, but before retirement benefits begin. The benefit provisions stated in the previous paragraphs of this section are current provisions and apply to active plan participants. Vested, terminated employees who are entitled to benefits but are not receiving them yet are bound by the provisions in effect at the time they last terminated their public service. PERA issues a publicly available financial report that includes financial statements and required supplementary information for PERF and PEPFF. That report may be obtained by writing to PERA, 514 St. Peter Street #200, St. Paul, Minnesota, 55102 or by calling (651) 296-7460 or 1-800-652-9026. B. Funding Policy Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the state legislature. The City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 8.75 percent and 4.75 percent, respectively, of their annual covered salary. PEPFF members are required to contribute 6.20 percent oftheir annual covered salary. The City of St. Joseph is required to contribute the following percentages of annual covered payroll: 11.43 percent for Basic Plan PERF members, 5.18 percent for Coordinated Plan PERF members, and 9.30 percent for PEPFF members. The City's contributions to the Public Employees Retirement Fund for the years ending December 31,2000, 1999, and 1998 were $ 17,887, $ 15,286, and $ 11,820, respectively. The City's contributions to the Public Employees Police and Fire Fund for the years ending December 31, 2000,1999, and 1998 were $ 23,975, $ 24,295, and $ 26,954, respectively. The City's contributions were equal to the contractually required contributions for each year as set by state statute. 24 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 2. Defined Contribution - Statewide The City provides pension benefits for its elected local government officials through a defined contribution plan administered by the Public Employees Retirement Association (PERA). The Public Employees Defined Contribution Plan (PEDCP) is a multi-employer deferred compensation plan. Elected officials who are covered by a public or private pension plan because of their employment are not eligible to participate in the PEDCP. Plan benefits depend solely on amounts contributed to the plan plus investment earnings. Minnesota Statutes, Chapter 353D.03 requires that both the elected local government official and the City contribute an amount equal to 5% of the elected local government official's salary. There is no vesting period required to receive benefits in the PEDCP. The City's total payroll in the year 2000 was $ 728,416. The City's contributions were calculated using the base salary amount of $ 20,300. Both the City and the elected local government official made the required 5% contribution, amounting to $ 1,015 from each source, or $ 2,030 in total. 3. Deferred Revenue Deferred revenue at December 31, 2000, consisted of: Debt Capital General Service Projects Total Taxes Receivable - Delinquent $ 5,036 $ 2,065 $ 0 $ 7,101 Special Assessments Receivable - Deferred 18,988 1,470,170 163,117 1,652,275 Delinquent 208 3,091 0 3,299 Total $ 24.232 $ 1,475,326 $ 163,117 $ 1,662,675 25 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 4. Bonds Payable The following is a summary of bond transactions for the year ended December 31, 2000: General Obligation General General Special Obligation Obligation Assessment Revenue Revenue Total Bonds Payable - January 1,2000 $ 1,165,000 $ 3,700,000 $ 995,000 $ 0 $5,860,000 Bonds Issued 0 0 0 960,000 960,000 Bonds Retired (40,000) (465,000) (65,000) 0 (570,000) Bonds Payable - December 31, 2000 $ 1,125,000 $ 3,235,000 $ 930,000 $ 960,000 $6,250,000 Bonds outstanding at December 31, 2000, comprise the following issues: General Obligation Bonds: $ 1,235,000 General Obligation Bonds of 1997 due in annual installments of$ 35,000 to $ 100,000 through December 1, 2017, interest at 4.00 to 5.15 percent $ 1,125,000 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 120,000 $ 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 335,000 26 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 (Continued) NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 4. Bonds Payable (Continued) General Obligation Special Assessment Bonds: (Continued) $ 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 $ 1,020,000 $ 545,000 General Obligation Improvement Bonds of 1998 due in annual installments of$ 25,000 to $ 50,000 through December 1,2013, interest at 3.85 to 5.00 percent 495,000 $ 1,330,000 General Obligation Improvement Bonds of 1999 due in annual installments of$ 65,000 to $ 125,000 through December 1, 2014, interest at 4.875 to 5.20 percent 1,265,000 Total General Obligation Special Assessment Bonds 3,235,000 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 235,000 $ 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 695,000 Total General Obligation Revenue Bonds 930,000 Revenue Bonds: $ 960,000 EDA Public Project Revenue Bonds of2000 due in annual installments of$ 40,000 to $ 95,000 through December 1,2015, interest at 5.60 to 6.60 percent 960,000 TOTAL BONDS PAYABLE $ 6,250,000 The annual requirements to amortize all bonded debt outstanding as of December 31, 2000, including interest payments of$ 3,155,609 are: 27 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) B. Liabilities (Continued) 4. Bonds Payable (Continued) General Obligation General Year Ending General Special Obligation December 31, Obligation Assessment Revenue Revenue Total 2001 $ 99,835 $ 415,932 $ 123,418 $ 99,240 $ 738,425 2002 103,055 419,289 119,672 102,000 744,016 2003 100,985 431,739 115,835 99,435 747,994 2004 103,870 423,311 121,905 101,825 750,911 2005 101,470 423,895 117,345 98,900 741,610 Thereafter 1,253,590 2,638,405 781,120 1,009,538 5,682,653 Totals $1,762,805 $ 4,752,571 $1,379,295 $ 1,510,938 $ 9,405,609 5. Loans Payable The following is a summary of loan transactions for the year ended December 31, 2000: Stearns Electric Loans Payable - January 1, 2000 $ 0 Loans Issued 276,136 Loans Retired (26,394) Loans Payable - December 31, 2000 $ 249,742 The annual requirements to amortize all loans outstanding as of December 31,2000, including interest payments of$ 12,653 are: 2001 $ 29,155 2002 29,155 2003 29,155 2004 29,155 2005 29,155 2006-2009 116,620 Totals $ 262,395 28 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 NOTE 3 - DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS (Continued) C. Fund Equity Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective funds: 1. Fund Balance a. Reserved Fund Balance is comprised of the following: General Debt Service Total Notes Receivable $ 30,000 $ 0 $ 30,000 Debt Service 0 2,055,016 2,055,016 Total $ 30,000 $ 2,055,016 $ 2,085,016 b. Umeserved fund balance is comprised of the following: Special Capital General Revenue Projects Total Designated for Fire $ 508,107 $ 0 $ 0 $ 508,107 Designated for Fire Hall 1,814 0 0 1,814 Designated for Capital Expenditures (31,622) 0 0 (31,622) , Designated for Debt Service 174,745 0 0 174,745 Designated for Working Capital 250,000 0 0 250,000 Undesignated 658,983 36,837 (131,911) 563,909 Total Unreserved Fund Balance $ 1,562,027 $ 36,837 $ (131,911) $ 1,466,953 2. Contributed Capital Contributed capital in the Enterprise Funds represents fixed assets which were purchased by other funds and transferred to the Enterprise Funds. Contributed capital is as follows: Balance, December 31, 1999 $ 5,519,572 Capital Contributed in 2000 0 Balance, December 31, 2000 $ 5,519,572 29 CITY OF ST. JOSEPH, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS December 31, 2000 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, 2000, is: Refuse Water Sewer Fund Fund Fund Total Operating Revenues $ 125,586 $ 177,945 $ 238,184 $ 541,715 Depreciation 0 53,468 71,671 125,139 Operating Income (Loss) 21,709 24,933 (52,840) (6,198) Operating Transfers Out (10,000) (35,000) 0 (45,000) Net Income 19,901 21,497 (10,184) 31 ,214 Contributed Capital 0 2,807,647 2,711,925 5,519,572 Fixed Assets - Acquisitions 0 7,219 0 7,219 Net Working Capital 126,244 210,856 693,160 1,030,260 Total Assets 136,022 2,999,240 2,429,450 5,564,712 Debt Outstanding 0 930,000 0 930,000 Total Equity 126,244 2,972,445 2,379,871 5,478,560 NOTE 5 - RISK MANAGEMENT The City is exposed to various risk ofloss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. In order to protect against these risks of loss, the City purchases commercial insurance through the League of Minnesota Cities Insurance Trust, a public entity risk pool. This pool currently operates common risk management and insurance programs for municipal entities. The City pays an annual premium to the League for its insurance coverage. The League of Minnesota Cities Insurance Trust is self-sustaining through commercial companies for excess claims. The City is covered through the pool for any claims incurred but unreported, however, retains risk for the deductible portion of its insurance policies. The amounts ofthese deductibles are considered immaterial to the financial statements. The City's workers compensation insurance policy is retrospectively rated. With this type of policy, final premiums are determined after loss experience, workers compensation rates and salaries for the year are known. The final premium adjustment was recorded in the year the adjustment was made. During the year ended December 31, 2000, there were no significant reductions in insurance coverage from the prior year. Settled claims have not exceeded the City's commercial coverage in any of the past three years. 30 CITY OF ST. JOSEPH, MINNESOTA THE GENERAL FUND The General Fund accounts for all revenues and expenditures of a governmental unit which are not accounted for in other funds, and it is usually the largest and most important accounting activity for state and local governments. It normally receives a greater variety and number of taxes and other general revenues than any other fund. This fund has flowing into it such revenues as general property taxes, licenses and permits, fines and penalties, rents, charges for current services, state aids, 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 ftom this fund. CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND CaMP ARA TIVE BALANCE SHEETS December 31 2000 1999 ASSETS Cash and Investments $ 1,447,215 $ 1,633,821 Taxes Receivable - Delinquent 5,036 3,880 Special Assessments Receivable - Deferred 18,988 40,200 Delinquent 208 109 Accounts Receivable 6,094 4,339 Notes Receivable 30,000 50,000 Interest Receivable 31,442 21,458 Due from Other Governmental Units 199,096 111 ,003 TOTAL ASSETS $ 1,738,079 $ 1,864,810 LIABILITIES AND FUND BALANCE Liabilities: Accrued Liabilities $ 102,791 $ 70,598 Deferred Revenue 24,232 44,189 Compensated Absences Payable 19,029 22,355 Total Liabilities 146,052 137,142 Fund Balance: Reserved for Notes Receivable 30,000 50,000 Unreserved - Designated 903,044 1,172,015 Undesignated 658,983 505,653 Total Fund Balance 1,592,027 1,727,668 TOTAL LIABILITIES AND FUND BALANCE $ 1,738,079 $ 1,864,810 31 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2000 (With Comparative Actual Totals for the Year Ended December 31, 1999) 2000 1999 Over (Under) Budget Actual Budget Actual REVENUES: General Property Tax $ 368,465 $ 371,327 $ 2,862 $ 346,028 Tax Increments 0 2,676 2,676 0 Special Assessments 39,000 24,880 (14,120) 24,594 Licenses and Pennits 60,400 73,607 13,207 82,156 Intergovernmental - Federal Grants 17,000 3,345 (13,655) 9,878 State - Local Government Aid 491,326 492,663 1,337 468,668 HACA 60,827 60,827 0 62,041 Local Perfonnance Aid 5,419 0 (5,419) 5,419 Police Aid 3,000 24,318 21,318 28,929 Fire Aid 21,500 25,047 3,547 23,462 Other 1,541 4,765 3,224 1,541 County Grants 5,300 6,457 1,157 5,577 Total Intergovernmental 605,913 617,422 11,509 605,515 Charges for Services - General Government 13,110 10,766 (2,344) 3,652 Public Safety - Fire 132,903 133,326 423 139,328 Culture and Recreation 14,100 14,822 722 12,620 Total Charges for Services 160,113 158,914 (1,199) 155,600 Fines 66,150 85,003 18,853 60,964 Miscellaneous - Sale of Surplus Property 0 50,823 50,823 200,163 Invesnnentlncome 56,000 88,379 32,379 44,545 Refunds and Reimbursements 11,000 31,516 20,516 17,088 Contributions 0 36,313 36,313 25,068 Total Miscellaneous 67,000 207,031 140,031 286,864 Total Revenues 1,367,041 1,540,860 173,819 1,561,721 32 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2000 (With Comparative Actual Totals for the Year Ended December 31, 1999) (Continued) 2000 1999 Over (Under) Budget Actual Budget Actual EXPENDITURES: General Government: Mayor and Council - Salaries and Benefits $ 27,591 $ 22,894 $ (4,697) $ 24,264 Supplies 300 0 (300) 236 Travel and Conferences 2,800 1,011 (1,789) 2,398 Advertising 0 64 64 174 Insurance 550 1,000 450 450 Dues and Subscriptions 9,155 5,699 (3,456) 9,390 Other 200 4 (196) 41 Legislative Committees - Legislative Bodies 4,800 2,780 (2,020) 4,292 Other 2,000 13,045 11,045 2,132 Elections - Supplies 800 244 (556) 175 Professional Services 5,200 8,319 3,119 2,006 Other 2,400 1,355 (1,045) 530 Assessing - Salaries and Benefits 10,228 9,967 (261) 9,745 Supplies 150 59 (91) 0 Travel and Conferences 100 0 (100) 120 Other 325 235 (90) 214 Administration - Salaries and Benefits 74,117 76,588 2,471 67,579 Supplies and Maintenance 8,550 6,646 (1,904) 6,835 Professional Services 200 55 (145) 13,795 Telephone 2,500 1,406 (1,094) 1,549 Travel and Conferences 3,700 2,347 (1,353) 812 Insurance 1,900 1,700 (200) 2,200 Capital Expenditures 3,550 3,489 (61) 3,209 Other 2,600 2,339 (261 ) 2,362 Accounting - Salaries and Benefits 46,540 44,668 (1,872) 38,847 Supplies 1,450 1,777 327 1,921 Travel and Conferences 500 434 (66) 68 Other 1,450 770 (680) 488 Independent Auditing - Services and Charges 8,000 7,860 (140) 10,889 Legal- Services and Charges 12,000 10,721 (1,279) 13,348 33 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2000 (With Comparative Actual Totals for the Year Ended December 31, 1999) (Continued) 2000 1999 Over (Under) Budget Actual Budget Actual EXPENDITURES: (Continued) General Government: (Continued) Planning and Zoning - Annexation Fee $ 500 $ 253 $ (247) $ 280 Property Tax Sharing 0 8,932 8,932 0 Joint Planning 500 109 (391) 0 General Government Buildings - Salaries and Benefits 2,461 1,958 (503) 704 Supplies and Maintenance 5,600 2,988 (2,612) 2,993 Professional Services 1,750 2,149 399 1,449 Telephone 950 812 (138) 525 Insurance 1,200 1,400 200 1,200 Utilities 10,700 11,491 791 7,455 Other 2,000 2,454 454 974 Cable Access 6,900 6,474 (426) 2,942 Total General Government 266,217 266,496 279 238,591 Public Safety: Police - Salaries and Benefits 342,649 370,252 27,603 317,877 Supplies and Maintenance 9,300 9,270 (30) 8,509 Professional Services 30,800 35,225 4,425 29,497 Travel and Conferences 500 2,757 2,257 518 Insurance 4,500 5,708 1,208 4,410 Advertising 200 126 (74) 1,446 Capital Expenditures 2,750 3,708 958 8,479 Other 1,400 1,230 (170) 1,227 Fire Protection - Salaries and Benefits 52,403 42,660 (9,743) 25,375 Supplies and Maintenance 15,800 12,769 (3,031) 12,177 Professional Services 1,500 44,562 43,062 56,870 Travel and Conferences 3,750 2,074 (1,676) 2,4 79 Fire Protection 47,072 51,340 4,268 15,773 Insurance 15,000 13,100 (1,900) 13,896 Utilities and Telephone 8,550 7,993 (557) 7,252 State Aid Reimbursement 25,000 30,084 5,084 23,462 Training 3,800 3,334 (466) 3,081 Capital Expenditures 38,000 23,799 (14,201) 138,953 Other 5,600 1,755 (3,845) 1 ,440 Building Inspection - Supplies 200 117 (83) 116 Professional Services 22,200 31,340 9,140 34,817 Other 4,600 3,863 (737) 4,166 34 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2000 (With Comparative Actual Totals for the Year Ended December 31, 1999) (Continued) 2000 1999 Over (Under) Budget Actual Budget Actual EXPENDITURES: (Continued) Public Safety: (Continued) Communication Service - Supplies and Maintenance $ 850 $ 1,234 $ 384 $ 371 Telephone 5,500 5,049 (451 ) 4,188 Capital Expenditures 500 952 452 0 Automotive Service - Supplies and Maintenance 13,000 20,852 7,852 12,924 Motor Vehic1es 12,000 0 (12,000) 13,000 Emergency Management Service - Professional Services 300 0 (300) 477 Capital Expenditures 400 335 (65) 0 Other 1,200 0 (1,200) 0 Animal Control - Supplies 100 0 (100) 0 Professional Services 1,000 485 ( 515) 648 Other 100 0 (100) 145 Total Public Safety 670,524 725,973 55,449 743,573 Public Works: Ordinance Enforcement - Professional Services 0 0 0 552 Street Maintenance - Salaries and Benefits 78,642 81,392 2,750 59,526 Supplies and Maintenance 15,600 9,568 (6,032) 14,162 Professional Services 100 0 (100) 40 Travel and Conferences 250 20 (230) 98 Insurance 6,000 5,274 (726) 6,104 Utilities and Telephone 4,500 3,138 (1,362) 3,242 Capital Expenditures 29,400 25,902 (3,498) 2,331 Other 1,030 614 (416) 218 Industrial Development - Professional Services 6,000 9 (5,991) 2,923 Ice and Snow Removal - Salaries and Benefits 23,777 21,564 (2,213) 13,458 Supplies and Maintenance 14,600 16,469 1,869 7,877 Capital Expenditures 1,000 0 (1,000) 0 Other 3,000 1,005 (1,995) 0 35 CITY OF ST. .JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2000 (With Comparative Actual Totals for the Year Ended December 31, 1999) (Continued) 2000 1999 Over (Under) Budget Actual Budget Actual EXPENDITURES: (Continued) Public Works: (Continued) Engineering - Professional Services $ 10,000 $ 37,644 $ 27,644 $ 8,967 Street Lighting - Supplies and Maintenance 500 0 (500) 87 Utilities 27,700 23,317 (4,383) 25,142 Capital Expenditures 1,500 1,250 1,704 2,310 Street Cleaning - Salaries and Benefits 4,004 5,126 1,122 4,084 Supplies and Maintenance 2,500 933 (1,567) 1,476 Travel and Conferences 100 80 (31) 80 Other 500 0 ' (500) 0 Total Public Works 230,703 233,305 2,602 152,677 Culture and Recreation: Participant Recreation - Salaries and Benefits 10,088 9,799 (289) 8,919 Supplies and Maintenance 900 6,213 5,313 973 Professional Services 2,000 2,407 407 4,089 Insurance 600 500 (100) 600 Advertising 50 257 207 41 Other 1,220 77 (1,143) 407 Ball Park and Skating Rink - Salaries and Benefits 2,046 8,134 6,088 8,184 Supplies and Maintenance 900 278 (622) 481 Rentals 100 0 0 69 Utilities 750 560 (190) 640 Capital Expenditures 4,000 21,431 17,431 0 Maintenance Shop - Supplies and Maintenance 3,475 1,264 (2,211 ) 3,303 Telephone 1,000 1,414 414 949 Utilities 950 1,440 490 1,065 Other 100 0 (100) 0 Park Areas - Salaries and Benefits 44,503 52,569 8,066 44,918 Supplies and Maintenance 12,250 12,699 449 11,056 Telephone 200 329 129 196 Insurance 1,200 1,200 0 1,200 Utilities 1,000 1,005 5 936 Capital Expenditures 43,275 22,159 (21,116) 52,896 Other 2,625 1,818 (807) 2,942 36 CITY OF ST. JOSEPH, MINNESOTA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Year Ended December 31, 2000 (With Comparative Actual Totals for the Year Ended December 31, 1999) (Continued) 2000 1999 Over (Under) Budget Actual Budget Actual EXPENDITURES: (Continued) Culture and Recreation: (Continued) Shade Tree Disease Control - Supplies and Maintenance $ 75 $ 0 $ (75) $ 0 Travel and Conferences 100 150 50 35 Community Support - Insurance 300 300 0 300 Other 7,000 6,832 (168) 3,732 Total Culture and Recreation 140,707 152,835 12,128 147,931 Economic Development Authority: Salaries and Benefits 46,716 46,902 186 41,631 Supplies 500 130 (370) 488 Telephone 1,200 1,273 73 823 Travel and Conferences 1,500 1,869 369 895 Professional Services 2,500 6,915 4,415 5,750 Capital Expenditures 400 186 (214) 744 Other 9,700 8,017 (1,683) 9,031 Total Economic Development 62,516 65,292 2,776 59,362 Miscellaneous: Other 500 1,600 1,100 1,061 Total Expenditures 1,371,167 1,445,501 74,334 1,343,195 REVENUES OVER (UNDER) EXPENDITURES (4,126) 95,359 99,485 218,526 OTHER FINANCING USES: Operating Transfers In (Out) 0 (231,000) (231,000) (15,000) EXCESS OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES $ (4,126) (135,641) $ (131,515) 203,526 FUND BALANCE - January 1 1,727,668 1,524,142 FUND BALANCE - December 31 $ 1,592,027 $ 1,727,668 37 CITY OF ST. JOSEPH, MINNESOTA SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for revenues derived :trom 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 COMBllITNGBALANCESHEET December 31, 2000 With Comparative Totals for December 31, 1999 Recreation DARE Center Program ASSETS Cash and Investments $ 34,399 $ 1,351 Interest Receivable 744 29 Total Assets $ 35,143 $ 1,380 LIABILITIES AND FUND BALANCE Fund Balance: Umeserved - Undesignated $ 35,143 $ 1,380 Lake Wobegon Totals Trail 2000 1999 $ 308 $ 36,058 $ 34,108 6 779 428 $ 314 $ 36,837 $ 34,536 $ 314 $ 36,837 $ 34,536 38 CITY OF ST. JOSEPH, MINNESOTA SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31, 2000 With Comparative Totals for the Year Ended December 31, 1999 Recreation DARE Lake W obegon Center Program Trail REVENUES: Miscellaneous - Investment Income $ 2,343 $ 29 $ 21 Contributions 0 0 0 Total Revenues 2,343 29 21 EXPENDITURES: Supplies and Maintenance 0 92 0 Reimbursements 0 0 0 Total Expenditures 0 92 0 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 2,343 (63) 21 OTHER FINANCING SOURCES: Operating Transfers In 0 0 0 EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES 2,343 (63) 21 FUND BALANCE - January 1 32,800 1,443 293 FUND BALANCE - December 31 $ 35,143 $ 1,380 $ 314 Totals 2000 1999 $ 2,393 $ 1,112 0 20 2,393 1,132 92 196 0 74,000 92 74,196 2,301 (73,064) 0 15,000 2,301 (58,064) 34,536 92,600 $ 36,837 $ 34,536 39 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 COMBnITNGBALANCESHEET December 31, 2000 With Comparative Totals for December 31, 1999 General General General Obligation General Obligation Obligation Water Obligation Water Improvement Revenue Improvement Revenue Bonds Bonds Bonds Bonds of1992 of 1992 of1993 of 1996 ASSETS Cash and Investments $ 45,170 $ 24,129 $ 167,130 $ 445,297 Taxes Receivable - Delinquent 126 0 296 0 Special Assessments Receivable - Deferred 15,419 0 46,258 0 Delinquent 0 0 0 0 Accounts Receivable 0 2,691 0 4,326 Interest Receivable 1,075 522 3,613 8,871 Due from Other Governmental Units 0 0 663 0 TOTAL ASSETS $ 61,790 $ 27,342 $ 217,960 $ 458,494 LIABILITIES AND FUND BALANCE Liabilities: Deferred Revenue $ 15,545 $ 0 $ 46,554 $ 0 Fund Balance: Reserved for Debt Service 46,245 27,342 171,406 458,494 TOTAL LIABILITIES AND FUND BALANCE $ 61,790 $ 27,342 $ 217,960 $ 458,494 EDA General Public Obligation General General General Project Improvement Obligation Obligation Obligation Revenue Bonds Bonds Bonds Bonds Bonds Totals of1996 of1997 of1998 of 1999 of2000 2000 1999 $ 659,260 $ 192,460 $ 193,342 $ 189,311 $ 32,130 $ 1,948,229 $ 1,753,253 581 659 90 313 0 2,065 1,483 162,121 0 253,590 992,782 0 1,470,170 1,895,539 1,031 0 301 1,759 0 3,091 790 0 0 0 0 0 7,017 6,147 14,759 3,589 4,180 4,008 695 41,312 23,007 0 0 9,509 48,286 0 58,458 20,029 $ 837,752 $ 196,708 $ 461,012 $ 1 ,236,459 $ 32,825 $ 3,530,342 $ 3,700,248 $ 163,733 $ 659 $ 253,981 $ 994,854 $ 0 $ 1,475,326 $ 1,897,812 674,019 196,049 207,031 241,605 32,825 2,055,016 1,802,436 $ 837,752 $ 196,708 $ 461 ,012 $ 1 ,236,459 $ 32,825 $ 3,530,342 $ 3,700,248 40 CITY OF ST. JOSEPH, l\ITì\'JI.'ESOTA DEBT SERVICE FUNDS CŒvffiINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31, 2000 With Comparative Totals for the Year Ended December 31, 1999 General General General Obligation General General Obligation Obligation Water Obligation Obligation Water Improvement Revenue Improvement Improvement Revenue Bonds Bonds Bonds Bonds Bonds of1992 ofl992 of 1992-B of 1993 of1996 REVENUES: General Property Taxes $ 8,973 $ ° $ ° $ 20,959 $ ° Special Assessments 2,961 ° 28,541 8,864 ° Intergovernmental ° ° ° ° ° Miscellaneous - Investment Income 3,094 3,215 10,240 12,703 28,690 Other ° 51,083 7,100 ° 20,714 Total Revenues 15,028 54,298 45,881 42,526 49,404 EXPENDITURES: Debt Service - Bond Principal 15,000 40,000 255,000 35,000 25,000 Bond Interest and Fiscal Charges 8,405 15,923 18,430 18,565 40,855 Total Expenditures 23,405 55,923 273,430 53,565 65,855 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (8,377) (1,625) (227,549) (11,039) (16,451) OTHER FINANCING SOURCES: Operating Transfers In ° ° ° ° 45,000 Proceeds ITom the Sale of Bonds ° ° ° ° ° Total Other Financing Sources ° ° ° ° 45,000 EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES (8,377) (1,625) (227,549) (11,039) 28,549 FUND BALANCE - January 1 44,622 28,967 242,089 182,445 429,945 RESIDUAL EQUITY TRANSFER 10,000 ° (14,540) ° ° FUND BALANCE - December 31 $ 46,245 $ 27.342 $ ° S 171,406 S 458,494 EDA General Public Obligation General General General Project Improvement Obligation Obligation Obligation Revenue Bonds Bonds Bonds Bonds Bonds Totals of1996 of 1997 of1998 of1999 of2000 2000 1999 $ 42,111 $ 50,106 $ 7,354 $ 25,342 $ 0 $ 154,845 $ 133,887 35,799 0 68,354 278,778 0 423,297 237,368 0 62,701 0 0 0 62,701 73,049 48,784 12,297 12,456 24,516 695 156,690 55,527 0 0 '0 0 0 78,897 89,629 126,694 125,104 88,164 328,636 695 876,430 589,460 70,000 40,000 25,000 91,394 0 596,394 255,000 58,965 62,305 24,013 83,585 29,620 360,666 270,707 128,965 102,305 49,013 174,979 29,620 957,060 525,707 (2,271 ) 22,799 39,151 153,657 (28,925) (80,630) 63,753 231,000 0 0 0 0 276,000 40,000 0 0 0 0 61,750 61,750 53,327 231,000 0 0 0 61,750 337,750 93,327 228,729 22,799 39,151 153,657 32,825 257,120 157,080 445,290 173,250 167,880 87,948 0 1,802,436 1,584,699 0 0 0 0 0 (4,540) 60,657 $ 674,019 $ 196,049 $ 207,031 $ 241,605 $ 32,825 $ 2,055,016 $ 1,802,436 41 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 govenunental unit except those financed by enterprise funds. CITY OF ST. JOSEPH, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET December 31,2000 With Comparative Totals for December 31,1999 1999 Street City Hall County Trunk Totals Improvements Project Road 121 Sewer 2000 1999 ASSETS Cash and Investments $ 0 $ 117,037 $ 0 $ 95,369 $ 212,406 $ 74,549 Interest Receivable 0 2,531 0 1,964 4,495 978 Special Assessments Receivable Deferred 0 0 0 163,117 163,117 0 TOTAL ASSETS $ 0 $ 119,568 $ 0 $ 260,450 $ 380,018 $ 75,527 LIABILITIES AND FUND BALANCE Liabilities: Cash Overdraft $ 254,534 $ ° $ 10,880 $ 0 $ 265,414 $ 203,622 Accrued Liabilities 5,503 54,581 235 ° 60,319 9,868 Contracts Payable ° 23,079 ° 0 23,079 ° Deferred Revenue ° 0 ° 163,117 163,117 ° Total Liabilities 260,037 77,660 11,115 163,117 511,929 213,490 Fund Balance (Deficit): Unreserved - Undesignated (260,037) 41,908 (11,115) 97,333 (131,911) (137,963) Total Fund Balance (Deficit) (260,037) 41,908 (11,115) 97,333 (131,911) (137,963) TOTAL LIABILITIES AND FUND BALANCE $ 0 $ 119,568 $ 0 $ 260,450 $ 380,018 $ 75,527 42 CITY OF ST. JOSEPH, MINNESOTA CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31, 2000 With Comparative Totals for the Year Ended December 31, 1999 1999 Street City Hall County Improvements Project Road 121 REVENUES: Charges for Services $ 0 $ 0 $ 0 Miscellaneous - Investment Income (23,841) 10,098 (235) Other 0 0 0 Total Revenues (23,841) 10,098 (235) EXPENDITURES: Capital Outlay - Construction Costs 300,096 836,645 10,880 Other 0 9,725 0 Total Expenditures 300,096 846,370 10,880 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (323,937) (836,272) (11,115) OTHER FINANCING SOURCES (USES): Operating Transfers In 0 0 0 Operating Transfers Out 0 0 0 Loan Proceeds 276,136 0 0 Proceeds from the Sale of Bonds 0 879,434 0 Total Other Financing Sources (Uses) 276,136 879,434 0 EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (47,801) 43,162 (11,115) FUND BALANCE (DEFICIT) - January 1 (212,236) (1,254) 0 RESIDUAL EQUITY TRANSFER 0 0 0 FUND BALANCE (DEFICIT) - December 31 $ (260,037) $ 41,908 $ (11,115) Trunk Totals Sewer 2000 1999 $ 11,600 $ 11,600 $ 42,206 5,666 (8,312) 9,183 0 0 4,384 17,266 3,288 55,773 0 1,147,621 1,385,732 0 9,725 245,140 0 1,157,346 1,630,872 17,266 (1,154,058) (1,575,099) 0 0 263,676 0 0 (263,676) 0 276,136 0 0 879,434 1,246,272 0 1,155,570 1,246,272 17,266 1 ,512 (328,827) 75,527 (137,963) 251,521 4,540 4,540 (60,657) $ 97,333 $ (131,911) $ (137,963) 43 CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNDS Enterprise Funds are established to account for the financing of self-supporting activities of governmental units which render services on a user charge basis to the general public. The most universal type of governmental enterprise is the public utility engaged in the provision of such basic services as water, electricity, and natural gas. Sanitary sewer systems financed by user charges have also assumed the status of public utility operations in many urban areas, and many cities have combined water and sewer systems under the same management. CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNDS COMB~GBALANCESHEET December 31, 2000 With Comparative Totals for December 31, 1999 Refuse Water Sewer Fund Fund Fund ASSETS Current Assets: Cash and Cash Equivalents $ 107,737 $ 203,682 $ 606,695 Accounts Receivable 25,956 28,808 122,926 Interest Receivable 2,329 5,161 13,118 Total Current Assets 136,022 237,651 742,739 Fixed Assets: Land and Land Improvements 0 12,996 4,940 Treatment Plant and Lines 0 1,937,720 2,073,069 Buildings 0 0 517,983 Water Storage Facility 0 1,236,542 0 Machinery and Equipment 0 81,389 179,138 0 3,268,647 2,775,130 Less: Accumulated Depreciation 0 (507,058) (1,088,419) Net Fixed Assets 0 2,761,589 1,686,711 TOTAL ASSETS $ 136,022 $ 2,999,240 $ 2,429,450 LIABILITIES AND FUND EQUITY Current Liabilities: Accrued Liabilities $ 8,029 $ 11,076 $ 21,715 Due to Other Governmental Units 0 0 17,117 Compensated Absences Payable 1,749 15,719 10,747 Total Current Liabilities 9,778 26,795 49,579 Fund Equity: Contributed Capital 0 2,807,647 2,711,925 Retained Earnings - Umeserved (Deficit) 126,244 164,798 (332,054) Total Fund Equity 126,244 2,972,445 2,379,871 TOTAL LIABILITIES AND FUND EQUITY $ 136,022 $ 2,999 ,240 $ 2,429,450 Totals 2000 1999 $ 918,114 $ 883,109 177,690 150,934 20,608 11,588 1,116,412 1,045,631 17,936 17,936 4,010,789 4,004,975 517,983 517,983 1,236,542 1,236,542 260,527 263,372 6,043,777 6,040,808 (1,595,477) (1,470,338) 4,448,300 4,570,470 $ 5,564,712 $ 5,616,101 $ 40,820 $ 123,434 17,117 8,215 28,215 37,106 86,152 168,755 5,519,572 5,519,572 (41,012) (72,226) 5,478,560 5,447,346 $ 5,564,712 $ 5,616,101 44 CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS Year Ended December 31, 2000 With Comparative Totals for the Year Ended December 31, 1999 Refuse Water Sewer Fund Fund Fund OPERATING REVENUES: Charges for Services $ 125,586 $ 177,945 $ 238,1.84 OPERATING EXPENSES: Salaries and Benefits 12,993 61,920 51,990 Utilities 0 19,330 7,888 Supplies 375 6,325 6,740 Sewer Use Rental 0 0 125,470 Postage 396 457 396 Repairs and Maintenance 0 (1,378) 1,385 Professional Fees 1,186 250 18,070 Fees and Tests 213 6,117 2,108 Dues and Subscriptions 0 499 191 Refuse Disposal 88,494 0 607 Depreciation 0 53,468 71,671 Insurance 0 3,807 4,208 Miscellaneous 220 2,217 300 Total Operating Expenses 103,877 153,012 291,024 OPERATING INCOME (LOSS) 21,709 24,933 (52,840) NON-OPERATING REVENUES: Investment Income 7,472 14,483 42,656 Other Revenues 720 17,081 0 Total Non-Operating Revenues 8,192 31,564 42,656 INCOME (LOSS) BEFORE OPERATING TRANSFER 29,901 56,497 (10,184) Operating Transfer Out (10,000) (35,000) 0 NET INCOME (LOSS) 19,901 21,497 (10,184) RETAINED EARNINGS (DEFICIT) - January 1 106,343 143,301 (321,870) RETAINED EARNINGS (DEFICIT) - December 31 $ 126,244 $ 164,798 $ (332,054) Totals 2000 1999 $ 541,715 $ 527,299 126,903 136,308 27,218 24,217 13 ,440 16,275 125,470 98,046 1,249 1,201 7 13,607 19,506 3,651 8,438 16,730 690 451 89,101 95,228 125,139 122,431 8,015 8,138 2,737 2,565 547,913 538,848 (6,198) (11,549) 64,611 27,147 17,801 18,848 82,412 45,995 76,214 34,446 (45,000) (40,000) 31 ,214 (5,554) (72,226) (66,672) $ (41,012) $ (72,226) 45 CITY OF ST. JOSEPH, MINNESOTA ENTERPRISE FUNDS COMB~GSTATEMENTOFCASHFLOWS Year Ended December 31, 2000 With Comparative Totals for the Year Ended December 31, 1999 Refuse Water Sewer Fund Fund Fund CASH FLOWS FROM OPERATING ACTIVITIES: Operating Income (Loss) $ 21,709 $ 24,933 $ (52,840) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by Operating Activities: Depreciation 0 53,468 71,671 Other Non-Operating Revenues 720 17,081 0 Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivable (3,268) (243) (23,245) Increase (Decrease) in Accrued Liabilities (165) (50,699) (31,750) Increase (Decrease) in Due to Other Governmental Units 0 0 8,902 Increase (Decrease) in Compensated Absences Payable (193) (4,841) (3,857) Total Adjustments (2,906) 14,766 21,721 Net Cash Provided by Operating Activities 18,803 39,699 (31,119) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating Transfer to Other Fund (10,000) (35,000) 0 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Capital Acquisitions 0 (7,219) 4,250 CASH FLOWS FROM INVESTING ACTIVITIES: Investment Income 6,358 11,872 37,361 Net Increase in Cash and Cash Equivalents 15,161 9,352 10,492 Cash and Cash Equivalents, January 1 92,576 194,330 596,203 Cash and Cash Equivalents, December 31 $ 107,737 $ 203,682 $ 606,695 Totals 2000 1999 $ (6,198) $ (11,549) 125,139 122,431 17,801 18,848 (26,756) (43,684) (82,614) 101,490 8,902 708 (8,891) 18,200 33,581 217,993 27,383 206,444 (45,000) (40,000) (2,969) (88,686) 55,591 29,206 35,005 106,964 883,109 776,145 $ 918,114 $ 883,109 46 CITY OF ST. JOSEPH, MINNESOTA STATEMENT OF GENERAL LONG-TERM DEBT December 31, 2000 2000 1999 AMOUNT A V AILABLE AND TO BE PROVIDED FOR THE PAYMENT OF GENERAL LONG-TERM DEBT: Amount Available in Debt Service Funds $ 2,055,016 $ 1,802,436 Amount to be Provided from Special Assessments 1,473,261 1,896,329 Amount to be Provided for Compensated Absences Payable 51,754 52,231 Amount to be Provided for Retirement of General Long- Tenn Debt 2,971,465 2,161,235 TOTAL A V AILABLE AND TO BE PROVIDED $ 6,551,496 $ 5,912,231 GENERAL LONG-TERM DEBT: Compensated Absences Payable $ 51,754 $ 52,231 Bonds Payable 6,250,000 5,860,000 Loans Payable 249,742 0 TOTAL GENERAL LONG-TERM DEBT $ 6,551,496 $ 5,912,231 47 CITY OF ST. JOSEPH, MINNESOTA REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS May 10,2001 Honorable Mayor and City Council City of St. Joseph St. Joseph, Minnesota We have audited the financial statements of City of St. Joseph, Minnesota as of and for the year ended December 31, 2000, and have issued our report thereon dated May 10, 2001. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States. Compliance As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance that are required to be reported under Government Auditing Standards and which are described in the accompanying Schedule of Findings and Corrective Action Plans on Compliance with Minnesota Statutes and Internal Controls. Internal Control Over Financial Reµorting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting 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 financial statements. Reportable conditions are described in the accompanying Schedule of Findings and Corrective Action Plans on Compliance with Minnesota Statutes and Internal Controls. 48 A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the nonnal course of perfonning their assigned functions. Our consideration of the internal control over [mancial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weakness. However, we do not believe the reportable conditions described are material weaknesses. We also noted other matters involving the internal control over financial reporting that we have reported to the management of the City ofSt. Joseph, Minnesota in a separate letter dated May 10, 2001. This report is intended solely for the infonnation and use of the City's Administration, City Council, and state and federal awarding and oversight agencies, and is not intended to be, and should not be, used by anyone other than those specified parties. KolA-ILl &-MJL-t.vJ¡ Vu..-u, L+eI. Kern, DeWenter, Viere Ltd. 81. Cloud, Minnesota 49 CITY OF ST. JOSEPH, MINNESOTA AUDITORS' REPORT ON LEGAL COMPLIANCE May 10, 2001 Honorable Mayor and City Council City of St. Joseph St. Joseph, Minnesota We have audited the financial statements of the City of St. Joseph as of and for the year ended December 31, 2000 and have issued our report thereon dated May 10, 2001. We conducted our audit in accordance with auditing standards generally accepted in the United States of AmeIica and the provisions ofthe Minnesota Legal Compliance Audit Guide for Local Government, promulgated by the Legal Compliance Task Force pursuant to Minnesota Statutes Section 6.65. Accordingly, the audit included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. 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. The results of our tests indicate that for the items tested, the City of St. Joseph complied with the material terms and conditions of applicable legal provisions, except as described in the Schedule of Findings and Corrective Action Plans on compliance with Minnesota Statutes. This report is intended solely for the information and use of the City's Administration, City Council, and state and federal awarding and oversight agencies, and is not intended to be, and should not be, used by anyone other than those specified parties. ;{ -V\. I. ~ ì:x:We",-t~, U~. L...fd . Kern, DeW enter, Viere, Ltd. St. Cloud, Minnesota 50 CITY OF ST. JOSEPH, MINNESOTA FINDINGS AND CORRECTIVE ACTION PLANS ON COMPLIANCE WITH MINNESOTA STATUTES AND INTERNAL CONTROLS Year Ended December 31, 2000 CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING: The City does not have adequate segregation of duties due to a limited number of office employees. CORRECTIVE ACTION PLAN (CAP): 1. Explanation of Disagreement with Audit Finding There is no disagreement with the audit finding. 2. Actions Planned in Response to Finding City Council will review current segregation of duties to determine if further segregation is possible. 3. Official Responsible for Ensuring CAP Larry Hosch, Mayor, is the official responsible for ensuring corrective action of the deficiency. 4. Planned Completion Date for CAP The planned completion date for the CAP is December 31, 2001. 5. Plan to Monitor Completion of CAP The City Council will be monitoring this corrective action plan. 51 CITY OF ST. JOSEPH, MINNESOTA FINDINGS AND CORRECTIVE ACTION PLANS ON COMPLIANCE WITH MINNESOTA STATUTES AND INTERNAL CONTROLS Year Ended December 31, 2000 (Continued) CURRENT AND PRIOR YEAR STATE STATUTE FINDING: Minnesota Statutes Sec. 118.005A provide that all government units are to designate, on an annual basis, an official depository or have the board designate authority to the treasurer or executive director to exercise the powers of the board in designating an official depository for funds. The designation is to be documented within the City's minutes. The City of St. Joseph did not properly designate depositories as official depositories for the City's funds. CORRECTIVE ACTION PLAN (CAP): 1. Explanation ofDisa~eement with Audit Finding There is no disagreement with the audit finding. 2. Actions Planned in Response to Finding City Council will review requirements to ensure compliance with Minnesota Statutes. 3. Official Responsible for Ensuring CAP Larry Hosch, Mayor, is the official responsible for ensuring corrective action of the deficiency. 4. Planned Completion Date for CAP The planned completion date for the CAP is immediately. 5. Plan to Monitor Completion of CAP The City Council will be monitoring this corrective action plan. 52 CITY OF ST. JOSEPH, MINNESOTA FINDINGS AND CORRECTIVE ACTION PLANS ON COMPLIANCE WITH MINNESOTA STATUTES AND INTERNAL CONTROLS Year Ended December 31, 2000 ( Continued) CURRENT YEAR STATE STATUTE FINDING: Minnesota State Statutes 574.26 requires that contractors doing public work pledge a perfonnance bond in an amount not less than the contract price if the contract is greater than $ 10,000. During 2000, the City failed to obtain perfonnance bonds on two different projects. CORRECTNE ACTION PLAN (CAP): 1. Explanation of Disagreement with Audit Finding There is no disagreement with the audit finding. 2. Actions Planned in Response to Finding City Council will review requirements to ensure compliance with Minnesota Statutes. 3. Official Responsible for Ensuring CAP Larry Hosch, Mayor, is the official responsible for ensuring corrective action of the deficiency. 4. Planned Completion Date for CAP The planned completion date for the CAP is immediately. 5. Plan to Monitor Completion of CAP The City Council will be monitoring this corrective action plan. 53 CITY OF ST. JOSEPH, MINNESOTA FINDINGS AND CORRECTIVE ACTION PLANS ON COMPLIANCE WITH MINNESOTA STATUTES AND INTERNAL CONTROLS Year Ended December 31, 2000 (Continued) PRIOR YEAR STATE STATUTE FINDING: Minnesota Statutes Sec. 412.271, subd. 1 requires all disbursements made by the City be made on orders drawn by the mayor and clerk upon the treasurer. The City's Fire Department maintains a checking account which issues checks without the signatures of the mayor and clerk. CORRECTIVE ACTION TAKEN: The separate checking account was closed. 54