HomeMy WebLinkAbout2004 Audit Report
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CITY OF ST. JOSEPH
Stearns County, Minnesota
Audited Financial Statements
For the Fiscal Year Ended December 31, 2004
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CITY OF ST. JOSEPH
Stearns County, Minnesota
T ABLE OF CONTENTS
ELECTED OFFICIALS AND ADMINISTRATION.......................................................
INDEPENDENT AUDITORS' REPORT .............. .......... ..... ........ .... ......... .... ...... ....... ......
MANAGEMENT'S DISCUSSION AND ANALySIS......................................................
BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements:
Statement of Net Assets. ....... ... .......... ....... .............. ..... ...... .......... ........ ............. ..... ..........
Statement of Activities.............. ....... ............ '" ................ ........ ............... ................. .........
Fund Financial Statements:
Balance Sheet - Governmental Funds .... ........ '" ..... ............... ..... .....................................
Reconciliation of the Balance Sheet to the Statement of Net Assets-
Governmental Funds.................................... .................................................................
Reconciliation ofthe Statement of Net Assets - Business-Type Activities ....................
Statement of Revenues, Expenditures and Changes in Fund Balances-
Governmental Funds.....................................................................................................
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances to the Statement of Activities - Governmental Funds .........................
Reconciliation ofthe Revenues, Expenses and Changes in Net Assets -
Business-Type Activities........................................................................ ......................
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget
and Actual - General Fund.... ................................... ......... ............... ..... ....... ................
Combining Statement of Net Assets - Proprietary Funds ...............................................
Statement of Revenues, Expenses and Changes in Fund Net Assets-
Proprietary Funds................................. .........................................................................
Statement of Cash Flows - Other Proprietary Funds ......................................................
Notes to the Financial Statements.. ......... ...... ....................... ..... ..... ........... ................. ....... .....
SUPPLEMENTARY INFORMATION:
Combining Balance Sheet - Nonmajor Governmental Funds...............................................
Combining Statement of Revenues, Expenditures and Changes in Fund Balances-
Nonmajor Governmental Funds...... .... ........................ ............... ....... ..... ..................... ........
Combining Statement of Net Assets - Other Proprietary Funds ...........................................
Combining Statement of Revenues, Expenses and Changes in Net Assets - Other
Proprietary Funds................................................................................................................
Combining Statement of Cash Flows - Other Proprietary Funds .........................................
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS .........................
AUDITORS' REPORT ON LEGAL COMPLIANCE.....................................................
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE.............................................
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CITY OF ST. JOSEPH
Stearns County, Minnesota
ELECTED OFFICIALS AND ADMINISTRATION
December 31,2004
Elected Officials Position Term Expires
Larry Hosch Mayor January 2005
Dale Wick Council Member January 200]
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Al Rassier Council Member January 2005
Gary Utsch Council Member January 2005
Ross Rieke Council Member January 2007
Administration
Judy Weyrens
City Clerk/Treasurer/Administrator
Appointed I
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KERN. DEWENTER.VIERE
INDEPENDENT AUDITORS' REPORT
May 9, 2005
Honorable Mayor and City Council
City of St. Joseph
St. Joseph, Minnesota
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund and the aggregate remaining fund information of the
City of St. Joseph, Minnesota, as of and for the year ended December 31, 2004, which
collectively comprise the City's basic financial statements as listed in the Table of Contents.
These financial statements are the responsibility of the City's management. Our responsibilityiis
to express an opinion on these financial statements based on our audit. \
We conducted our audit in accordance with u.s. generally accepted auditing standards and the!
standards applicable to financial audits contained in Government AuditingStandards, issued by
the Comptroller General ofthe 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 evaluatinig
the overall financial statement presentation. We believe that our audit provides a reasonable \
basis for our opinions. !.
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In our opinion, the financial statements referred to above present fairly, in all material respects,',
the respective financial position of the governmental activities, the business-type activities, each
major fund and the aggregate remaining fund information of the City ofSt. Joseph, Minnesota,
as of December 31,2004, and the respective changes in financial position and cash flows, where
applicable, and the budgetary comparison for the General Fund for the year then ended in
conformity with U.S. generally accepted accounting principles.
As described in Note I.D.IO, the City has implemented a new financial reporting model, as
required by the provisions of GASB Statement No. 34, Basic Financial Statements - and
Management's Discussion and Analysis -for State and Local Governments, as of December 31~
2004.
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KERN'DEWENTER.VIERE
In accordance with Government Auditing Standards, we have also issued our report dated May 9,
2005, on our consideration of the City's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of internal control oyer
financial reporting and compliance and the results of that testing, and not to provide an opinio~ on
the internal control over financial reporting or on compliance. That report is an integral part df an
audit performed in accordance with Government Auditing Standards and should be considere~ in
assessing the results of our audit. '
The Management's Discussion and Analysis, which follows this letter, is not a required part ofthe
basic financial statements but is supplementary information required by U.S. generally accepted
accounting principles. We have applied certain limited procedures, which consisted primarilY,of
management inquiries regarding the methods of measurement and presentation of the '.
supplementary information. However, we did not audit the information and express no opiniop on
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Our audit was performed for the purpose of forming an opinion on the financial statements tha:~
collectively comprise the City's basic financial statements. The accompanying supplementary
information identified in the Table of Contents is presented for purposes of additional analysis
and is not a required part of the basic financial statements ofthe City. Such additional
information has been subjected to the auditing procedures applied in our audit ofthe basic .
financial statements and, in our opinion, is fairly stated in all material respects in relation to th~
basic financial statements taken as a whole. \
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K.v\. It, I)e hie rt-- t VL I II U/Ll, L +c/
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
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(THIS PAGE LEFT BLANK INTENTIONALLY.)
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CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2004
As management of the City ofSt. Joseph, we offer readers of the City of St. Joseph's financia~
statements this narrative overview and analysis of the financial activities of the City of St. Jos~ph
for the fiscal year ended December 31, 2004. i
Financial Highlights
. The assets of the City of St. Joseph exceeded its liabilities at the close ofthe most recent
fiscal year by $22,994,779. Of this amount, $4,357,843 may be used to meet government's
ongoing obligations to citizens and creditors.
. The government's total net assets increased by $1,329,519.
. As ofthe close ofthe current fiscal year, the City ofSt. Joseph's governmental funds
reported combined ending fund balances of $4,847,434 a decrease of$1,568,157. Of this
total amount, $2,195,550 is available or designated for spending at the government's
discretion (unreserved fund balance).
. At the end ofthe current fiscal year, unreserved undesignated fund balance for the general
fund was $766,100 or 42% percent of total general fund expenditures.
. The City of St. Joseph's total debt decreased by $1,838,938 during the current fiscal year.
Overview of the Financial Statements ,
This discussion and analysis is intended to serve as an introduction to the City ofSt. Joseph's I
basic financial statements. The City ofSt. Joseph's basic financial statements comprise three i
components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes
to the financial statements. This report also contains other supplementary information in
addition to the basic financial statements themselves.
Government-wide financial statements. The government-wide financial statements are
designed to provide readers with a broader overview of the City ofSt. Joseph's finances, in a
manner similar to a private-sector business.
The statement of net assets presents information on all of the City ofSt. Joseph's assets and
liabilities, with the difference between the two reported as net assets. Over time, increases or
decreases in net assets may serve as a useful indicator of whether the financial position of the
City of St. Joseph's is improving or deteriorating.
The statement of activities presents information showing how the government's net assets i
changed during the most recent fiscal year. All changes in net assets are reported as soon as tqe
underlying event giving rise to the change occurs, regardless of the timing of related cash flow~.
Thus, revenues and expenses are reported in this statement for some items that will only result lin
cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leavk).
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CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2004
Both ofthe government-wide financial statements distinguish functions of the City of St. Joseph
that are principally supported by taxes and intergovernmental revenues (governmental activities)
from other functions that are intended to recover all or a significant portion of their costs through
user fees and charges (business-type activities). The governmental activities of the City ofSt.
Joseph include general government, public safety, public works, economic development, interest
on long-term debt, and culture and recreation. The business-type activities of the City ofSt.
Joseph include the water, sanitary sewer, storm water and refuse services.
The government-wide financial statements include not only the City of St. Joseph itself (known
as the primary government), but also a legally separate Economic Development Authority of St.
Joseph. Financial information for this component unit is within the financial information.
The government-wide financial statements can be found on pages 16-17 ofthis report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain
control over resources that have been segregated for specific activities or objectives. The City of
St. Joseph, like other state and local governments, uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. All of the funds of the City of
St. Joseph can be divided into two categories: governmental funds and proprietary funds.
Governmental funds.. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information may be
useful in evaluating a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the government's near-term
financing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues" expenditures, and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
The City of St. Joseph maintains thirty-three individual governmental funds. Information is
presented separately in the governmental fund balance sheet and in the governmental fund
statement of revenues, expenditures, and changes in fund balances for the general fund, G.O.
Bonds of 1999, G.O. Bonds of 2002, G.O. Improvement Bonds of2003 and G.O. Refunding
Bonds of 1997/2003, all of which are considered to be major funds. Data from the other twenty-
eight governmental funds are combined into a single, aggregated presentation. Individual fund
data for each ofthese non-major governmental funds is provided in the form of combining
statements elsewhere in this report.
The City of St. Joseph adopts an annual appropriated budget for its general fund. A budgetary
comparison statement has been provided for the general fund (page 26) to demonstrate
compliance with this budget.
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CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2004
The basic governmental fund financial statements can be found on pages 18-26 of this report.
Proprietary funds. The City of S1. Joseph maintains proprietary funds. Enterprise funds are i
used to report the same functions presented as business-type activities in the government-wid~
financial statements. The City ofSt. Joseph uses enterprise funds to account for its water, I
sanitary sewer, refuse and storm water. i
Proprietary funds provide the same type of information as the government-wide financial
statements, only in more detail. The proprietary fund financial statements provide separate
information for the water, wastewater, refuse and storm water, all of which are considered to be
major funds ofthe City of 81. Joseph.
The basic proprietary fund financial statements can be found on pages 27-29 of this report.
Notes to the financial statements. The notes provide additional information that is essential. 0
a full understanding of the data provided in the government-wide and fund financial statements.
The notes to the financial statements can be found on pages 30-52 of this report.
Other information. The combining statements referred to earlier in connection with non-majpr
governmental funds and proprietary funds can be found on pages 54-68 of this report. .
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Comparative data. Because this is the first year of presenting the City's financial statements I
under the new standard, comparison ofthe prior year is not possible. In subsequent years, this
section will discuss and analyze significant differences.
Government-Wide Financial Analvsis
As noted earlier, net assets may serve over time as a useful indicator of a government' s financ~a1
position. In the case ofthe City of S1. Joseph, assets exceeded liabilities by $22,994,779 at th~
close of the most recent fiscal year. .
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By far the largest portion of the City ofSt. Joseph's net assets reflects its investment in capital!!
assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire !
those assets that is still outstanding. The City of St. Joseph uses these capital assets to provide'
services to citizens; consequently, these assets are not available for future spending. Although
the City ofSt. Joseph's investment in its capital assets is reported net of related debt, it should be
noted that the resources needed to repay this debt must be provided from other sources, since the
capital assets themselves cannot be used to liquidate these liabilities. .
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CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2004
Total assets
NET ASSETS
Governmental Business-Type
Activities Activities Total
8,146,975 3,102,216 11,249,191
10,502,904 14,311,125 24,814,029
18,649,879 17,413,341 36,063,220
9,705,417 1,115,000 10,820,417
2,043,938 204,084 2,248,022
11,749,357 1,319,084 13,068,441
Capital and other assets
Capital assets
Long-term liabilities
Other liabilities
Total liabilities
Net Assets
Invested in capital assets,
net of related debt
Restricted
Unrestricted
(558,870)
6,109,681
1,349,711
13,086,125
3,008,132
12,527,255
6,109,681
4,357,843
6,900,522
16,094,257
22,994,779
Total net assets
At the end of the current fiscal year, the City of S1. Joseph is able to report positive balances in
all three categories of net assets, both for the government as a whole, as well as for its separate
governmental and business-type activities.
Governmental activities. Governmental activities decreased the City ofS1. Joseph's net assets
by $28,292 thereby accounting for -0.4 percent ofthe total growth in the net assets of the City of
S1. Joseph. The most significant change in governmental net assets is due to the large increase in
capital assets under construction in progress during 2004. Under full accrual accounting, current
year infrastructure capital outlay, which was funded during the year, will be expended over its
useful life.
Business-type activities. Business-type activities increased the City of S1. Joseph's net assets by
$1,357,811 accounting for 8.4 percent of the total growth in the government's net assets. The
water utility, storm water utility and sanitary sewer contributed in the increase in net assets in the
proprietary funds. The largest portion of the net asset increase in the water and sanitary sewer
utilities results from the capital asset additions from utility projects.
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I CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
I December 31,2004
I CHANGES IN NET ASSETS
Governmental Business-Type
I Activities Activities Tot~1
Revenues ,
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I Program Revenues I
Charges for services $ 635,128 1,309,687 $ 1,94~,815
Operating Grants and contributions 142,701 142,701
I Capital Grants and contributions 1,419,972 484,751 1,904,723
General Revenues:
I Property taxes 811,965 81i1,965
Tax Increments 67,020 ,
6V,020
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State Aids 775,687 77p,687
I Unrestricted Investment Earnings 161,903 47,838 209,741
Gain on Sale of Capital Assets 2,731 2,731
Total Revenues 4,017,107 1,842,276 5,859,383
I Expenses:
I General Government 411,588 415,588
Public Safety 1,090,932 1,09, ,932
Public Works 934,425 I
93~,425
I Culture and Recreation 196,094 196,094
Economic Development 92,070 92,070
I Capital Outlay 332,404 332,404
Interest on Long-Term Debt 495,352 49f,352
Water 351,530 35~,530
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Sanitary Sewer 432,681 43!2,681
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Refuse 152,996 152,996
I Storm Water 39,792 39,792
Total Expenses 3,552,865 976,999 4,529,864
I Increase in assets before transfers 464,242 865,277 1,329,519
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Transfers (492,534) 492,534 I
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Change in net assets (28,292) 1,357,811 1,329,519
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Net assets - 1/1/04 restated 6,928,814 14,736,446 21,665,260
I Net assets 12/31/04 $ 6,900,522 $ 16,094,257 $22,994,779
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CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2004
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EXPENSES AND PROGRAM REVENUES - GOVERNMENTAL ACTIVITIES
1,200,000
1,000,000
800,000
600,000
400,000
200,000
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General Public Safety Public Works Culture and Economic Capital Outlay
Government Recreation Development
Interest on
Long-Term Debt
REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES
Unrestricted
Investment Earnings-
4%
Gain on Sale of
Capital Assets 0%
Charges for services
17%
Operating Grants and
contributions 2%
Tax Increments 2%
Capital Grants and
contributions 36%
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1,200,000
1,000,000
CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2004
EXPENSES AND PROGRAM REVENUES - BUSINESS-TYPE ACTIVITIES
600,000
800,000 .
400,000
200,000
Water
Sanitary Sewer
Other Non Major Funds
REVENUES BY SOURCE - BUSINESS-TYPE ACTIVITIES
Unrestricted
Investment Earnings
3%
Charges for Services
71%
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CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2004
Financial Analysis of the Government's Funds
As noted earlier, the City of St. Joseph uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements.
Governmental funds. The focus of the City ofSt. Joseph's governmental funds is to provide
information on near-term inflows, outflows, and balances of spendable resources. Such
information is useful in assessing the City of St. Joseph's financing requirements. In particular,
unreserved fund balance may serve as a useful measure of a government's net resources
available for spending at the end of the fiscal year.
As of the end ofthe current fiscal year, the City ofSt. Joseph's governmental funds reported
combined ending fund balances of $4,847,434. Approximately 45% or $2,195,550 of this total
amount constitutes unreserved fund balance. While it is unreserved, $1,367,746 is designated to
assist with the purchase of capital projects and to allow funds for spending at the government's
discretion. The remainder of fund balance is reserved to indicate that it is not available for new
spending because it has already been committed 1) for payments for loans and capital leases and
to pay debt service.
The general fund is the chief operating fund ofthe City of St. Joseph. At the end of the current
fiscal year, unreservt:d fund balance of the general fund was $1,252,661. As a measure ofthe
general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund
balance to total fund expenditures. Unreserved fund balance represents 68 percent of total
general fund expenditures.
The fund balance ofthe City ofSt. Joseph's general fund increased by $45,339 during the
current fiscal year. The City of St. Joseph has been experiencing rapid growth over the past two
years. Budgeting the fees for growth is difficult and if the City did not have as much growth the
general fund would have seen a decrease. This decrease would have been attributable to a
reduction in Local Government Aid (LGA) payments from the State of Minnesota. After
establishing the budget in 2003, the City experienced a $ 120,000 reduction in local government
aid. For St. Joseph, that amount has had lasting affects. The City Council implemented
spending controls which are still in place today.
Proprietary funds. The City of St. Joseph's proprietary funds provide the same type of
information found in the government-wide financial statements, but in more detail.
The unrestricted assets in the respective proprietary funds are water utility - $995,501, sanitary
sewer utility $ 894,170, Other Proprietary - $366,481. All of the proprietary funds had increases
in total net assets for the year.
General Fund Bud2etarv Hb!hlh!hts
The City approved the 2004 general fund budget without levying back the lost LGA and
consciously limiting spending so that the tax capacity rate in St. Joseph would remain constant
will still providing the needed services.
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CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2004
Capital Assets and Debt Administration
Capital assets. The City ofSt. Joseph's investment in capital assets for its governmental and I,
business type activities as of December 31,2004, amounts to $24,814,029 (net of accumulated II
depreciation). This investment in capital assets includes land, buildings, improvements, '\'
machinery and equipment, furniture and office equipment, infrastructure, and construction in ,
progress. Most of the increase in the governmental activities is attributable to street constructiqn
and infrastructure improvements. The increase in business type activities occurred due to the
extension of water and sewer utilities in the Orderly Annexation Area.
The City has a significant level of outstanding commitments for capital expenditures at year en4.
These commitments are detailed on page 52 in the notes to the financial statements.
CAPITAL ASSETS (Net of Depreciation)
Governmental Business
Activities Activities Total
Land $ 346,258 $ 17,937 $ 364,195
Buildings 1,922,528 64,748 1,987,276
Infrastructure 4,014,581 4,014,581
Improvements 232,462 10,647,949 10,880,411
Machinery and equipment 972,372 104,385 1,076,757
Construction in Progress-Land 3,014,703 3,476,106 6,490,809
Total $ 10,502,904 $ 14,311,125 $ 24,814,029
Additional information on the City ofSt. Joseph's capital assets can be found in note 5 on pages
42-44 of this report.
Long-term debt. At the end of the current fiscal year, the City of St. Joseph had total bonded
debt outstanding of$12,145,000 of this amount, $9,470,000 comprises debt backed by the full
faith and credit of the government. The remainder of the City of St. Joseph's debt represents
bonds secured solely by specified revenue sources.
OUTSTANDING DEBT (General Oblifation and Revenue Bonds)
Governmental Business
Activities Activities Total
General Obligation $ 1,220,000 $ 1,220,000
G.O. Special Assessments 8,250,000 8,250,000
Revenue Bonds 1,450,000 1,225,000 2,675,000
Total $ 10,920,000 $ 1,225,000 $ 12,145,000
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CITY OF ST. JOSEPH, MINNESOTA
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2004
The City ofSt. Joseph's total bonded debt decreased by $870,000 or 6.7% during the current
fiscal year. During 2004, the City issued the following bonds:
. $280,000 of General Obligation. These bonds were issued to finance public capital
purchases.
. $590,000 of Taxable General Obligation, Special Assessment Bonds. These bonds were
finance a housing development.
The City of St. Joseph maintained an "BB+" rating from Moody's for general obligation debt.
According to Moody's Municipal credit report, the City's solid bond rating is due to a stable and
diverse local economy which continues to expand, and the City's conservatively managed
financial operations.
Additional information on the City ofSt. Joseph's long-term debt can be found in note 6 on
pages 44-48.
Economic Factors and Next Year's Bud2ets and Rates
. St. Joseph continues to see new construction growth, not only in residential, but also in
commercial construction with record or near record levels reached each month.
. Property tax reforms and budget deficits at the state level have significantly impacted
government aid payments made to the City.
. The City is reviewing the fee structures for all licenses and permits and services to recover
appropriate costs in lieu of raising property taxes.
. The City's investment earnings have been reduced significantly over the past few years due
to the dramatically lower interest rates.
Requests for Information
The financial report is designed to provide a general overview of the City ofSt. Joseph's
finances for all those with an interest in the government's finances. Questions concerning any of
the information provided in this report or requests for additional financial information should be
addressed to the City Administrator, 25 College Avenue North, St. Joseph, MN 56374.
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I
BASIC FINANCIAL STATEMENTS
15
I
CITY OF ST. JOSEPH I
Stearns County, Minnesota
STATEMENT OF NET ASSETS I
December 31,2004
Governmental Business-Type I
Activities Activities Total
ASSETS: I
Cash and Investments (Including Cash Equivalents) $ 4,069,556 $ 2,746,330 $ 6,815,886
Delinquent Taxes Receivable 18,291 18,291
Accounts Receivable 84,271 258,422 342,693 I
Interest Receivable 21,314 12,350 33,664
Due from Other Governments 448,425 448,425
Special Assessments Receivable: I
Delinquent 3,211,276 3,211,276
Deferred 229,067 85,114 314,181
Notes Receivable 64,775 64,775 I
Capital Assets:
Land 346,258 17,937 364,195
Construction in Progress 3,014,703 3,476,106 6,490,809 I
Plant and Lines 12,974,894 12,974,894
Improvements 453,041 453,041
Buildings 2,300,892 517,983 2,818,875 I
Infrastructure 7,523,875 7,523,875
Machinery and Equipment 1,945,008 269,984 2,214,992
Less Accumulated Depreciation (5,080,873) (2,945,779) (8,026,652) I
Capital Assets (Net of Accumulated Depreciation) 10,502,904 14,311,125 24,814,029
Total Assets $ 18,649,879 $ 17,413,341 $ 36.063.220 I
LIABILITIES AND NET ASSETS:
Liabilities:
Accounts and Contracts Payable $ 503,087 $ 30,197 $ 533,284 I
Accrued Salaries and Bendits Payable 55,300 59,541 114,841
Accrued Interest Payable 35,337 4,346 39,683 I
Other Liabilities:
Due Within One Year 1,450,216 110,000 1,560,216
Due in More than One Year 9,705,417 1,115,000 10,820,417
Total Liabilities 11,749,357 1,319,084 13,068,441 I
Net Assets:
Invested in Capital Assets, Net of Related Debt (558,870) 13,086,125 12,527,255 I
Restricted for:
Debt Service 6,079,406 6,079,406
Other Purposes 30,275 30,275 I
Unrestricted 1,349,711 3,008,132 4,357,843
Total Net Assets 6,900,522 16,094,257 22,994,779
Total Liabilities and Net Assets $ 18,649,879 $ 17,413,341 $ 36,063,220 I
The Notes to the Financial Statements are an integral part of this statement. 16 I
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17
I
CITY OF ST. JOSEPH I
Stearns County, Minnesota
BALANCESHEET-GOVERNMENTALFUNDS I
December 31, 2004
Debt Service I
I I I I
101 321 325
G.O. G.O. I
Bonds of Bonds of
General 1999 2002
ASSETS: I
Cash and Investments $ 1,315,507 $ 196,878 $ 747,202
Taxes Receivable - Delinquent 8,373 670 1,962
Special Assessments Receivabk I
Delinquent 1,974 18,898
Deferred 2,660 634,079 1,492,515
AccOlmts Receivable 71,275 I
Interest Receivable 9,895 462 2,844
Due from Other Govenunents 27,300 5,447 10,001
Notes Receivable
Total Assets $ 1,435,010 $ 839,510 S 2,273,422 I
LIABILITIES AND FUND BALANCES: I
Liabilities:
Cash Overdraft $ $ S
Accounts and Contracts Payable 116,016 I
Accrued Salaries and Related Benefits 55,300
Deferred Revenue 11,033 636,723 1,513,375
Total Liabilities 182,349 636,723 1,513,375 I
Fund Balances:
Reserved: I
Debt Service Funds 202,787 760,047
Special Revenue Fund
Unreserved: I
Designated:
General Fund 486,561
Capital Project Funds I
Undesignated:
General Fund 766,100
Special Revenue Funds
Debt Service Funds I
Capital Project Funds
Total Fund Balances 1,252,661 202,787 760,047
Total Liabilities and I
Fund Balances $ 1,435,010 $ 839,510 S 2,273,422
I
The Notes to the Financial Statements are an integral part ofthis statement. 18 II
I
I
I
I Debt Service
I 328 I I 331
I G.O. G.O. Other Total
Improvement Reflmding Bonds Governmental Govennnental
Bonds of 2003 of 199712003 Flillds Flillds
I $ $ 60,830 $ 3,029,248 $ 5,349,665
2,808 1,081 3,397 18,291
I 207,892 303 229,067
678,549 403,473 3,211,276
'I 23,196 94,471
400 11,207 24,808
301,995 487 103,195 448,425
64,775 64,775
I $ 1,191,244 $ 62,798 $ 3,638,794 $ 9,440,778
I
$ 112,917 $ $ 425,589 $ 538,506
I 390,388 506,404
55,300
889,249 1,081 441,673 3,493,134
I 1,002,166 1,081 1,257,650 4,593,344
I 189,078 61,717 1,407,980 2,621,609
30,275 30,275
I 486,561
1,367,746 1,367,746
I 766,100
(19,410) (19,410)
'I (10,025) (10,025)
(395,422) (395,422)
189,078 61,717 2,381,144 4,847,434
I $ 1, 191 ,244 $ 62,798 $ 3,638,794 $ 9,440,778
I
19
I
CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE BALANCE SHEET TO
THE STATEMENT OF NET ASSETS - GOVERNMENTAL FUNDS
For the Year Ended December 31,2004
Total Fund Balances - Governmental Funds
Amounts reported for governmental activities in the Statement of Net Assets
are different because:
Capital assets used in governmental activities are not financial resources
and therefore are not reported as assets in governmental funds.
Cost of Capital Assets
Less Accumulated Depreciation
Long-term liabilities, including bonds payable, are not due and payable in
the current period and therefore are not reported as liabilities in the funds.
Long-term liabilities at year-end consist of:
Bond Principal Payable
Loan Payable
Compensated Absences Payable
Delinquent receivables will be collected this year, but are not
available soon enough to pay for the current period's expenditures and
therefore are deferred in the funds.
Delinquent Property Taxes
Delinquent Special Assessments
Deferred receivables are not available to pay for current expenditures
and therefore are deferred in the funds.
Deferred Special Assessments Receivable
Notes Receivable
The Trunk Sewer Capital Project Fund is proprietary in nature and therefore
included in the business-type activities on the Statement of Net Assets.
Governmental funds do not report a liability for accrued interest until due
and payable.
Total Net Assets - Governmental Activities
The Notes to the Financial Statements are an integral part of this statement.
$ 4,847,434
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I
15,583,777
(5,080,873)
(10,920,000)
(141,774)
(93,859)
18,291
229,067
3,211,276
34,500
(751,980)
(35,337)
$ 6,900,522
20
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I
Total Fund Net Assets - Business-Type Activities (Restated)
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I
CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE STATEMENT
OF NET ASSETS - BUSINESS-TYPE ACTIVITIES
For the Year Ended December 31, 2004
Amounts reported for governmental activities in the Statement of Net Assets
are different because:
$ 15,342,277
!
!
The Trunk Sewer Capital Project Fund is proprietary in naure and
relates to water and sewer improvements for the applicable funds.
Therefore, it is included as a business-type activity.
751,980
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i
I
$ 16,094,257
Total Net Assets - Business-Type Activities
The Notes to the Financial Statements are an integral part of this statement.
21
I
CITY OF ST. JOSEPH I
Stearns County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND I
CHANGES IN FUNDBALANCES-GOVERNMENTALFUNDS
For the Year Ended December 31,2004
Debt Service I
101 1I 321 II 325 I
G.O. Bonds of G. O. Bonds of
General 1999 2002 I
REVENUES:
Taxes:
Property $ 398,307 $ 26,380 $ 38,204 I
Tax Increment
Special Assessments 351 154,124 260,975
Licenses and Permits 249,222
Intergovernmental 853,682 3,436 5,063 I
Charges for Services 320,339
Fines and Forfeitures 65,070
Miscellaneous 66,553 3,947 24,115 I
Total Revenues 1,953,524 187,887 328,357
EXPENDITURES: I
Current:
General Government 358,823
Public Safety 980,315
Public Works 355,848 I
Culture and Recreation 113,020
Economic Development
Debt Service: I
Principal 102,194 405,000
Interest and Fiscal Charges 54,863 146,437
Capital Outlay 34,589 I
Total Expenditures 1,842,595 157,057 551,437
Excess of Revenues Over
(Under) Expenditures 110,929 30,830 (223,080) I
OTHER FINANCING SOURCES (USES):
Sale of Property 2,731 I
Bonds Issued
Transfers In 37,500 16,900
Transfers Out (105,821) I
Total Other Financing Sources (Uses) (65,590) 16,900
Net Change in Fund Balances 45,339 47,730 (223,080)
I
FUND BALANCES:
Beginning of Year 1,207,322 155,057 983,127
Ending of Year $ 1,252,661 $ 202,787 $ 760,047 I
The Notes to the Financial Statements are an integral part of this statement. 22 I
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I
I
I Debt Service
.1 328 f t 331
G.O. G.O. Refunding Other Total
Improvement Bonds of Governmental Governmental
Bonds of2003 1997/2003 Funds Funds
I
$ 48,525 $ 83,443 $ 214,471 $ 809,330
I 67,020 67,020
342,914 440,062 1,198,426
249,222
I 6,386 5,178 142,528 1,016,273
504,955 825,294
65,070
I 10,593 34,917 67,594 207,719
408,418 123,538 1,436,630 4,438,354
I 358,823
980,315
I 33,465 389,313
113,020
92,070 92,070
I 685,000 995,000 450,000 2,637,194
55,973 85,420 168,631 511,324
1,768,194 1,802,783
I 740,973 1,080,420 2,512,360 6,884,842
I (332,555) (956,882) (1,075,730) (2,446,488)
I 2,731
870,000 870,000
105,821 160,221
(48,800) (154,621)
I 927,021 878,331
(332,555) (956,882) (148,709) (1,568,157)
I 521,633 1,018,599 2,529,853 6,415,591
I $ 189,078 $ 61,717 $ 2,381,144 $ 4,847,434
23
I
CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO
THE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2004
Total Net Change in Fund Balances - Governmental Funds
Amounts reported for governmental activities in the Statement of Activities
are different because:
Governmental funds report capital outlays as expenditures. However,
in the Statement of Activities the cost of those assets is allocated over
their estimated useful lives and reported as depreciation expense.
Capital Outlays
Donated Capital Assets
Depreciation Expense
Principal payments on long-term debt are recognized as expenditures
in the governmental funds but as an increase in net assets on the Statement
of Activities.
Compensated absences are recognized as paid in the governmental funds but
recognized as the expense is incurred in the Statement of Activities.
Interest payments on long-term debt in the Statement of Activities differs from
the amount reported in the governmental funds because interest is recognized
as an expenditure in the funds when it is due, and thus requires the use of current
resources. In the Statement of Activities, however, interest expense is recognized
as the interest accrues, regardless of when it is due.
Proceeds from long-term debt are recognized as another financing source in
the governmental funds but as a decrease in net assets on the Statement of
Activities.
Delinquent receivables will be collected this year, but are not available soon enough to
pay for the current period's expenditures and therefore are not revenues in the funds.
Delinquent Special Assessments
Delinquent Property Taxes
Certain revenues in the Statl~ment of Activities that do not provide current financial resources
are not reported as revenues in the funds.
Deferred Special Assessments
Notes Receivable
The Trunk Sewer Capital Projects Fund is proprietary in nature and therefore is reported
with business-type activities.
Change in Net Assets - Governmental Activities
The Notes to the Financial Statements are an integral part ofthis statement.
$ (1,568,157)
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I
I
I
I
I
I
I
I
I
I
I
I
I
931,796
482,111
(758,313)
2,637,194
(33,255)
15,972
(870,000)
201,984
2,635
(624,621)
(13,033)
(432,605)
$ (28,292)
24
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I
I
I
I
I Total Net Income in Fond Net Assets - Bnsiness-Type Activities
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I
I
I
I
I
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I
I
I
I
CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE REVENUES, EXPENSES AND
CHANGES IN NET ASSETS - BUSINESS-TYPE ACTIVITIES
For the Year Ended December 31, 2004
Amounts reported for governmental activities in the Statement of Activities
are different because:
Recognize current year activity from the Trunk Sewer Capital Project Fund
with the business-type activities.
Change in Net Assets - Business-Type Activities
The Notes to the Financial Statements are an integral part of this statement.
$ 925,206
i
I
I
I
432,605
$ I,B57,811
I
25
I
CITY OF ST. JOSEPH I
Stearns County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND I
CHANGES IN FUND BALANCES -
BUDGETANDACTUAL-GENERALFUND
For the Year Ended December 31, 2004 I
Variance with I
Final Budget -
Original and Actual Positive
Final Budget Amounts (N egative) I
REVENUES:
Taxes $ 360,068 $ 398,307 $ 38,239
Special Assessments 5,000 351 (4,649) I
Licenses and Permits 211,785 249,222 37,437
Intergovernmental Revenue 832,812 853,682 20,870
Charges for Services 206,505 320,339 113,834 I
Fines and Forfeitures 85,100 65,070 (20,030)
Miscellaneous 56,800 66,553 9,753
Total Revenues 1,758,070 1,953,524 195,454 I
EXPENDITURES:
Current: I
General Government 334,688 358,823 (24,135)
Public Safety 842,190 980,315 (138,125) I
Public Works 288,492 355,848 (67,356)
Culture and Recreation 95,880 113,020 (17,140)
Capital Outlay 159,600 34,589 125,011 I
Total Expenditures 1,720,850 1,842,595 (121,745)
Excess of Revenues Over Expenditures 37,220 110,929 73,709 I
OTHER FINANCING SOURCES (USES):
Sale of Property 2,731 2,731 I
Transfers In 14,000 37,500 23,500
Transfers Out (7,720) (105,821) (98,101)
Total Other Financing Sources (Uses) 6,280 (65,590) (71,870) I
Excess of Revenues Over Expenditures
and Other Financial Sources (Uses) $ 43,500 45,339 $ 1,839 I
FUND BALANCES:
Beginning of Year 1,207,322 I
Ending of Year $ 1,252,661
I
The Notes to the Financial Statements are an integral part of this statement. 26 I
I
I CITY OF ST. JOSEPH
Stearns County, Minnesota
I COMBINING STATEMENT OF NET ASSETS-
PROPRIETARY FUNDS
December 31, 2004
I 601 II 602
I Other
Sanitary Proprietary
Water Sewer Funds Total
ASSETS:
I Current Assets:
Cash and Investments $ 982,534 $ 676,943 $ 345,250 $ ~,004,727
Special Assessments Receivable - Deferred 85,114 i 85,114
!
I Accounts Receivable 44,654 167,210 36,358 i 248,222
Interest Receivable 4,390 2,794 1,672 8,856
Total Current Assets 1,031,578 932,061 383,280 2,346,919
I Noncurrent Assets:
Capital Assets:
I Land 12,996 4,941 j 17,937
,
Construction in Progress 1,299,736 1,373,360 803,010 ~,476,106
Plant and Lines 5,358,013 5,627,266 1,989,615 11,974,894
I
Buildings 517,983 i 517,983
I Machinery and Equipment 86,564 183,420 269,984
Total Capital Assets 6,757,309 7,706,970 2,792,625 17,256,904
Less Accumulated Depreciation (993,020) (1,696,354) (256,405) (2,945,779)
I Net Capital Assets 5,764,289 6,010,616 2,536,220 14,311,125
,
Total Assets $ 6,795,867 $ 6,942,677 $ 2,919,500 $ 16,658,044
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LIABILITIES AND NET ASSETS:
Current Liabilities:
I Accounts Payable $ 2,310 $ 13,738 $ 10,832 $ 26,880
Accrued Salaries and Related Benefits 31,610 21,964 5,967 59,541
Interest Payable 2,157 2,189 4,346
Long-Term Liabilities Due with One Year 85,000 25,000 110,000
I Total Current Liabilities 121,077 62,891 16,799 200,767
Noncurrent Liabilities:
I Bonds Payable 660,000 565,000 :1,225,000
Less Amount Due within One Year (85,000) (25,000) i (110,000)
Total Noncurrent Liabilities 575,000 540,000 1,115,000
I Total Liabilities 696,077 602,891 16,799 1,315,767
Net Assets:
I Invested in Capital Assets, Net of Related Debt 5,104,289 5,445,616 2,536,220 113,086,125
Unrestricted 995,501 894,170 366,481 i2,256,152
Total Net Assets 6,099,790 6,339,786 2,902,701 ]5,342,277
I Total Liabilities and Net Assets $ 6,795,867 $ 6,942,677 $ 2,919,500 $ 16,658,044
The Notes to the Financial Statements are an integral part ofthis statement. 27
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
STATEMENT OF REVENUES, EXPENSES AND I
CHANGES IN NET ASSETS - PROPRIETARY FUNDS
For the Year Ended December 31, 2004
~ I , I
601 602
Other I
Sanitary Proprietary
Water Sewer Funds Totals
OPERATING REVENUES: I
Charges for Services $ 275,567 $ 308,754 $ 233,365 $ 817,686
OPERATING EXPENSES: I
Wages, Salaries and Compensation 102,122 74,991 37,296 214,409
Materials and Supplies 33,773 6,986 5,977 46,736
Sewer Use Rental 143,426 143,426 I
Utilities 20,542 13,641 179 34,362
Repairs and Maintenance 21,064 6,151 100 27,315
Insurance 5,000 9,383 14,383
Depreciation 108,398 144,656 39,792 292,846 I
Refuse Disposal 107,672 107,672
Professional Services 26,161 2,866 335 29,362
Miscellaneous 4,420 855 1,437 6,712 I
Total Operating Expenses 321,480 402,955 192,788 917,223
Operating Income (Loss) (45,913) (94,201) 40,577 (99,537) I
NONOPERATING REVENUES (EXPENSES):
Bond Interest and Fiscal Charges (30,050) (29,577) (59,627) I
Investment Income 23,473 16,188 8,177 47,838
Other Revenue 18,947 18,947
Total Nonoperating Revenues (Expenses) 12,370 (13,389) 8,177 7,158 I
Income (Loss) Before Contributions and Transfers (33,543) (107,590) 48,754 (92,379)
Capital Contributions 283,554 386,713 352,918 1,023,185 I
Transfers In 23,400 23,400
Transfers Out (29,000) (29,000)
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Change in Net Assets 250,011 302,523 372,672 925,206
Net Assets - January 1, as Previously Reported 4,462,633 4,588,842 306,935 9,358,410 I
Prior Period Adjustment 1,387,146 1,448,421 2,223,094 5,058,661
Net Assets, January 1, as Restated 5,849,779 6,037,263 2,530,029 14,417,071 I
Net Assets - December 31 $ 6,099,790 $ 6,339,786 $ 2.902.701 $ 15.342.277 I
The Notes to the Financial Statements are an integral part of this statement. 28 I
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I CITY OF ST. JOSEPH
Stearns County, Minnesota
I STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
For the Year Ended December 31, 2004
I 601 II 602
Other
Sanitary Proprietary i
I Water Sewer Funds 110tals
CASH FLOWS - OPERATING ACTIVITIES: ,
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Receipts from Customers and Users $ 266,652 $ 243,573 $ 229,202 $ !739,427
I Payments to Suppliers (116,738) (175,145) (105,622) (397,505)
Payments to Employees (94,717) (70,830) (35,994) (201,541)
Net Cash Flows - Operating Activities 55,197 (2,402) 87,586 140,381
I CASH FLOWS - NONCAPIT AL FINANCING ACTIVITIES:
Transfer from Other Funds 23,400 . 23,400
Transfer to Other Funds (29,000) ~
I Net Cash Flows - Noncapital Financing Activities 23,400 (29,000) I (5,600)
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CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTIVITIES:
I Bond Principal Payments (80,000) (25,000) (105,000)
Bond Interest and Fiscal Agent Fees (27,893) (27,388) (55,281)
Other Miscellaneous Receipts 18,947 18,947
I Net Cash Flows - Capital and Related Financing Activities (88,946) (52,388) 1041,334)
CASH FLOWS - INVESTING ACTIVITIES: I
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Interest and Dividends 23,694 16,020 7,816 i 47,530
I Net Change in Cash and Cash Equivalents (10,055) (15,370) 66,402 40,977
I Cash and Cash Equivalents, January 1 992,589 692,313 278,848 1,963,750
Cash and Cash Equivalents, December 31 $ 982,534 $ 676,943 $ 345,250 $ 2,004,727
I RECONCILIATION OF OPERATING INCOME I
(LOSS) TO NET CASH FLOWS - OPERATING
ACTIVITIES:
I Operating Income (Loss) $ (45,913) $ (94,201 ) $ 40,577 $ (99,537)
Adjustments to Reconcile Operating Income (Loss)
to Net Cash Flows - Operating Activities:
I Depreciation Expense 108,398 144,656 39,792 292,846
Accounts Receivable (8,915) (84,354) (4,163) (97,432)
Special Assessments Receivable 19,173 19,173
Accounts Payable (5,778) 8,163 10,078 12,463
I Accrued Salaries and Related Benefits 7,405 4,161 1,302 12,868
Total Adjustments 101,110 91,799 47,009 239,918
Net Cash Flows - Operating Activities $ 55,197 $ (2,402) $ 87,586 $ 140,381
I NONCASH CAPITAL ACTIVITIES:
Capital Contribtuions $ 283,554 $ 386,713 $ 352,918 $ 1,023,185
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I The Notes to the Financial Statements are an integral part of this statement. 29
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of St. Joseph is a statutory city governed by an elected mayor and four council
members. The accompanying financial statements present the government entities for which the
government is considered to be financially accountable.
The financial statements present the City and its component units. The City includes all funds,
account groups, organizations, institutions, agencies, departments and offices that are not legally
separate from such. Component units are legally separate organizations for which the elected
officials of the City are financially accountable and are included within the basic financial
statements of the City because of the significance of their operational or financial relationships
with the City.
The City is considered financially accountable for a component unit if it appoints a voting
majority of the organization's governing body and it is able to impose its will on the organization
by significantly influencing the programs, projects, activities or level of services performed or
provided by the organization, or there is a potential for the organization to provide specific
financial benefits to or impose specific financial burdens on, the City.
As a result of applying the component unit definition criteria above, the City of St. Joseph's
component unit is presented in this report as follows:
Blended Component Units - Reported as if they were part of the City
For the category above, the specific entity is identified as follows:
1. Blended Component Unit:
The St. Joseph Economic Development Authority (EDA) was organized for the purpose of
preserving and creating jobs, enhancing the tax base and promoting the general welfare of
the people of the City of 81. Joseph. The Authority is governed by a five member Board
appointed by the City Council. The EDA is included as a blended component unit ofthe
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 Special Revenue
Fund and the EDA Public Project Revenue Bonds of 2000 Debt Service Fund. Separate
financial statements are not prepared for the EDA.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
B. Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net Assets and the Statement
of Activities) report information on all of the nonfiduciary activities ofthe City. For the most
part, the effect of interfund activity has been removed from these Statements. Governmental
activities, which normally are supported by taxes and intergovernmental revenues, are reported
separately from business-type activities, which rely to a significant extent on fees and charges
for support.
The Statement of Activities demonstrates the degree to which the direct expenses of a given
function or segment is offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Interest on general long-term debt is
considered an indirect expense and is reported separately on the Statement of Activities. I
Program revenues include 1) charges to customers or applicants who purchase, use or directly i
benefit from goods, services or privileges provided by a given function or segment and 2) grants
and contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not properly included among program
revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Majpr
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduci~
fund financial statements. Revenues are recorded when earned and expenses are recorded wh~n a
liability is incurred, regardless of the timing of related cash flows. Property taxes are recogni~ed
as revenues in the year for which they are levied. Grants and similar items are recognized as i
revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the:
current period. For this purpose, the government considers revenues to be available if they are
collected within 60 days of the end of the current fiscal period. Expenditures generally are I
recorded when a liability is incurred, as under accrual accounting. However, debt service i
expenditures, as well as expenditures related to compensated absences and claims and '
judgments, are recorded only when payment is due.
31
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are
all considered to be susceptible to accrual and so have been recognized as revenues of the
current fiscal period. Only the portion of special assessments receivable due within the current
fiscal period is considered to be susceptible to accrual as revenue of the current period. All
other revenue items are considered to be measurable and available only when cash is received
by the government.
Description of Funds:
Major Governmental Funds:
General Fund - This Fund is the government's primary operating fund. It accounts for all
financial resources of the general government, except those required to be accounted for in
another fund.
G.O. Bonds of 1999, Debt Service Fund - This Fund accounts for the resources accumulated
and payments made for principal and interest on this bond issue.
G.O. Improvement Bonds of2002, Debt Service Fund - This Fund accounts for the resources
accumulated and payments made for principal and interest on this bond issue.
G.O. Improvement Bonds of2003, Debt Service Fund - This Fund accounts for the resources
accumulated and payments made for principal and interest on this bond issue.
G.O. Refunding Bonds of 1997/2003, Debt Service Fund - This Fund accounts for the
resources accumulated and payments made for principal and interest on this bond issue.
Major Proprietary Funds:
Water Fund - This Fund accounts for the operations of the City's water utility.
Sanitary Sewer Fund - This Fund accounts for the operations of the City's sanitary sewer
utility.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989,
generally are followed in both the government-wide and proprietary fund financial statements to
the extent that those standards do not conflict with or contradict guidance of the Governmental
Accounting Standards Board. Governments also have the option of following subsequent
private-sector guidance for their business-type activities and enterprise funds, subject to this
same limitation. The government has elected not to follow subsequent private-sector guidance.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
As a general rule, the effect of interfund activity has been eliminated from the government-
wide financial statements. Exceptions to this general rule are charges between the
government's sanitary sewer function and various other functions ofthe government.
Elimination of these charges would distort the direct costs and program revenues reported for
the various functions concerned.
Amounts reported as program revenues include I) charges to customers or applicants for goods,
services or privileges provided, 2) operating grants and contributions and 3) capital grants and
contributions, including special assessments. Internally dedicated resources are reported as .
general revenues rather than as program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. !
Op~rat~ng revenu~s and exp.enses.generally ~esu1t from pro~id~ng servic.esand pr~ducing and I
dehvenng goods III connectIOn wIth a propnetary fund's pnncIpal ongomg operatIOns. The i
principal operating revenues of the Sanitary Sewer Enterprise Fund, Water Enterprise Fund an4
other proprietary funds are charges to customers for sales and services. Operating expenses fot
enterprise funds include the cost of sales and services, administrative expenses and depreciation
on capital assets. All revenues and expenses not meeting this definition are reported as
nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the government's
policy to use restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities and Net Assets or Equity
1. Deposits and Investments
The government's cash and cash equivalents are considered to be cash on hand, demand
deposits and short-term investments with original maturities of three months or less from tp.e
date of acquisition. I
!
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies
and instrumentalities, shares of investment companies whose only investments are in the
aforementioned securities, obligations of the State of Minnesota or its municipalities,
bankers' acceptances, future contracts, repurchase and reverse repurchase agreements and
commercial paper of the highest quality with a maturity of no longer than 270 days and in !the
Minnesota Municipal Investment Pool.
Investments for the government are reported at fair value.
33
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
2. Receivables and Payables
All trade and property tax receivables are shown at a gross amount since both are assessable
to the property taxes and are collectible upon the sale of the property.
The City levies its property tax for the subsequent year during the month of December.
December 28 is the last day the City can certify a tax levy to the County Auditor for
collection the following year. Such taxes become a lien on January I and are recorded as
receivables by the City at that date. 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. The tax levy notice is mailed in March with the
first half payment due on May 15 and the second halfpayment is due on October 15. Taxes
not collected as of December 31 each year are shown as delinquent taxes receivable.
The County Auditor prepares the tax list for all taxable property in the City, applying the
applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for
each property. The County Auditor also collects all special assessments, except for certain
prepayments paid directly to the City.
The County Auditor submits the list of taxes and special assessments to be collected on each
parcel of property to the County Treasurer in January of each year.
3. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government-wide and fund financial statements.
4. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads,
sidewalks and similar items), are reported in the applicable governmental or business-type
activities columns in the government-wide financial statements. Capital assets are defined
by the government as assets with an initial, individual cost of more than $ 1,000 and an
estimated useful life in excess of two years. Such assets are recorded at historical cost or
estimated historical cost if purchased or constructed. Donated capital assets are recorded at
estimated fair market value at the date of donation.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
4. Capital Assets (Continued)
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets lives are not capitalized.
Property, plant and equipment of the City are depreciated using the straight-line method ov~r
the following estimated useful lives: .
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Assets Years j
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Buildings 40
Park Buildings 30
Building Improvements 15
Street Construction 15
Street Overlay 10
Furniture 5
Light Vehic1es 5
Machinery and Equipment 5-7
Fire Trucks 20
Utility Distribution System 50
5. Compensated Absences
The City compensates employees who leave City service in good standing for all earned, I
unused vacation. Employees can accrue up to 200 hours of vacation depending on years o;f
service. At the employees' anniversary date, the maximum amount of carryover is 80 hou!s.
In addition, employees are compensated for unused sick leave (up to a maximum of 720 '
hours) at various rates depending on the employee type, provided the City's notice of
termination policy has been complied with.
6. Long-Term Obligations
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In the government-wide financial statements, and proprietary fund types in the fund finan~ial
statements, long-term debt and other long-term obligations are reported as liabilities in th~
applicable governmental activities, business-type activities or proprietary fund type .
Statement of Net Assets.
35
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
6. Long-Term Obligations (Continued)
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are
reported as other 1'inancing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds
received, are reported as debt service expenditures.
7. Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally restricted by outside parties for
use for a specific purpose. Designations of fund balance represent tentative management
plans that are subject to change.
8. Net Assets
Net assets represent the difference between assets and liabilities in the government-wide
financial statements. Net assets invested in capital assets, net of related debt consists of
capital assets, net of accumulation depreciation, reduced by the outstanding balance of any
long-term debt used to build or acquire the capital assets. Net assets are reported as
restricted in the government-wide financial statement when there are limitations on their use
through external restrictions imposed by creditors, grantors or laws or regulations of other
governments.
9. Use of Estimates
The preparation of the basic financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenditures/expenses during the reporting period. Actual results could differ from those
estimates.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
10. Changes in Accounting Principles
For the year ended December 31, 2004, the City has implemented GASB Statement No. 341
Basic Financial Statements - and Management's Discussion and Analysis -for State Loca~
Governments. GASB Statement No. 34 creates new basic financial statements for reporting
on the City's financial activities. The financial statements now include government-wide .
financial statements prepared on the accrual basis of accounting, and fund financial
statements which present information for individual major funds rather than by fund type
which had been the mode of presentation in previously issued financial statements.
Nonrnajor funds are presented in total in one column in the fund financial statements.
The implementation of GASB Statement No. 34 caused the opening fund balance at
December 31, 2003 to be restated in terms of "net assets" as follows.
Total Restated Fund Balance, Governmental Funds
$ 6,415,591
Add Cost of Capital Assets
Less Accumulated Depreciation
Less Compensated Absences
Less Long-Term Debt:
Bond Principal
Loans Payable
Accrued Interest Payable
Add Deferred Revenues
Less Fund Balance for Business-Type Fund:
Trunk Sewer Fund
14,241,1120
(4,393,810)
(60,:604)
(12,660)000)
(168J968)
(51,309)
3,926,169
(319~375)
$ 6,928~814
Net Assets at December 31, 2003
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Add Governmental Funds:
Trunk Sewer Fund
319,375
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
10. Changes in Accounting Principles (Continued)
The implementation of GASB Statement No. 34 also caused the net asset amount to change
for business-type funds:
Total Restated Equity, Business-Type Funds at December 31,2003
$ 9,358,410
Net Assets at December 31,2003
$ 9,677,785
NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
1. In August of each year, City staff submits to the City Council a proposed operating
budget for the fiscal year commencing the following January 1. The operating budget
includes proposed expenditures and the means of financing them for the upcoming year.
2. Public hearings are conducted to obtain taxpayer comments.
3. The budget is legally enacted through passage of a resolution after obtaining taxpayer
comments.
4. Budgets for the General and Special Revenue Funds are adopted on a basis consistent
with U.S. generally accepted accounting principles.
5. Expenditures may not legally exceed budgeted appropriations at the department level.
No fund's budget can be increased without City Council approval. The City Council may
authorize transfer of budgeted amounts between departments within any fund.
6. Annual appropriated budgets are adopted during the year for the General and Special
Revenue Funds. Annual appropriated budgets are not adopted for Debt Service Funds
because effective budgetary control is alternatively achieved through bond indenture
provisions. Budgetary control for Capital Project Funds is accomplished through the use
of project controls and formal appropriated budgets are not adopted.
7. Budgeted amounts are as originally adopted by the City Council. There were no
amendments for 2004. Budgeted expenditure appropriations lapse at year-end.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2004
NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information (Continued)
I
Encumbrances outstanding at year-end expire and outstanding purchase orders are canceled and
not reported in the financial statements.
B. Deficit Fund BaJance
The following funds had deficit fund balances at December 31,2004:
Nonmajor Governmental Funds:
Special Revenue:
Lake W obegon Trail
City Beautification
Debt Service:
EDA Public Project Revenue Bonds of2000
Capital Projects:
2002 Street Improvements
Maintenance Facility
Northland Phase Eight
Cloverdale Area
295th/103rd Street Improvements
Water Filtration Plant
Northland Heights
$ 9,917
80,941
10,025
30,039
123,288
4,008
43,635
14,276
25,635
154,541
NOTE 3 - DEPOSITS AND INVESTMENTS
A. Deposits
In accordance with applicable Minnesota Statutes, the City maintains deposits a depository
banks authorized by the City's Council.
Minnesota Statutes require that all deposits be protected by federal deposit insurance, corporate
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surety bond or collateral. The market value of collateral pledged must equal 11 0% of the i
deposits not covered by federal deposit insurance or corporate surety bonds. !
At year-end, the City's carrying amount of deposits was $ 4,872,326 and the bank balance wa~
$ 5,164,446. At December 31, 2004, all deposits for the City were insured or collateralized by
securities held by the City's agent in the City's name.
39
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2004
NOTE 3 - DEPOSITS AND INVESTMENTS
B. Investments
The City's investments are categorized in the following table to give an indication of the level of
risk assumed at year-end.
Category 1 - Includes investments that are insured or registered or for which the securities
are held by the City or its agent in the City's name.
Category 2 - Includes uninsured and unregistered investments for which the securities are
held by the counterparty's trust department or agent in the City's name.
Category 3 - Includes uninsured and unregistered investments for which the securities are
held by the counterparty or by its trust department or agent but not in the City's
name.
At year-end, the govemment's investment balances were as follows:
1
Category
2
Carrying
Fair Value
3
U.S. Government Bonds
Negotiable Certificates of Deposit
$ 869,026
1,061,907
$
$
$ 869,026
1,061,907
Total
$ 1,930,933
$
1,930,933
$
Not Subject to Categorization:
Brokered Money Market
Petty Cash
Deposits
12,307
320
4,872,326
Total Deposits and Investments
$ 6,815,886
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 3 - DEPOSITS AND INVESTMENTS
B. Investments (Continued)
Deposits and investments are presented in the December 31, 2004 basic financial statements as
follows:
Statement of Net Assets:
Cash and Investments
$ 6,815,886
NOTE 4 - INTERFUND BALANCES AND TRANSFERS
A. Interfund Transfers
The composition of interfund transfers as of December 31, 2004 is as follows:
Transfer In:
G.O. Other
Bonds of Governmental Sanitary
General 1999 Funds Sewer Total
Transfer Out:
General $ $ $ 105,821 $ ~ 105,821
Other Governmental I
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Funds 8,500 16,900 23,400 48,800
Other Proprietary Funds 29,000 29,000
Total Transfers $ 37,500 $ 16,900 $ 105,821 $ 23 ,400 $ 183,621
The above transfers were made for the following reasons: debt service payments, budgeted
transfers and operating transfers.
41
Beginning
Amount
Adjustments
Beginning
Balance,
Restated
Additions
Reductions
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Ending I
Balance
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 5 - CAPITAL ASSETS
Capital asset activity for the year ended December 31,2004 was as follows:
Governmental Activities:
Capital Assets not 346,2581
being Depreciated:
Land $ 125,455 $ 220,803 $ 346,258 $ S $
Construction in Progress 1,867,016 1,867,016 1,147,687 3,014,703
Total Capital Assets 3,360,961 I
not being Depreciakd 125,455 2,087,819 2,213,274 1,147,687 --
Capital Assets being Depreciated:
Improvements 438,822 5,444 444,266 8,775 453,041 I
Buildings 1,634,133 500,546 2,134,679 166,213 2,300,892
Infrastructure 7,523,875 7,523,875 7,523,875
Machinery and Equipment 1,948,262 (23,236) 1,925,026 91,232 _71,250 1,945,008
Total Capital Assets 12,222,8161
being Depreciated 4,021,217 8,006,629 12,027,846 266,220 71,250
Less Accumulated
Depreciation for:
Improvements 190,898 190,898 29,681 220,5791
Buildings 313,316 313,316 65,048 378,364
Infrastructure 3,030,571 3,030,571 478,723 3,509,294
Machinery and Equipment 859,025 859,025 184,861 71,250 972,6361
Total Accumulated
Depreciation 4,393,810 4,393,810 758,313 71,250 5,080,873
Total Capital Assets, being 7,141,9431
Depreciated, Net 4,021,217 3,612,819 7,634,036 ( 492,093) --
Governmental Activities Capital
Assets, Net $ 4,146,672 $ 5,700,638 $ 9,847,310 S 655.594 S S 10.502,9041
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 5 - CAPITAL ASSETS
Beginning
Beginning Balance, Ending
Balance Adjustments Restated Additions Reductions Balance
Business-Type Activities:
Capital Assets not being Depreciated:
Land $ 17,937 $ $ 17,937 $ $ $ 17,937
Construction in Progress 2,452,921 2,452,921 1,023,185 3,476,106
Total Capital Assets, not
being Depreciated 17,937 2,452,921 2,470,858 1,023,185 3,494,043
Capital Assets being Depreciated:
Buildings 517,983 517,983 517,983
Plant and Lines 9,820,275 3,154,619 12,974,894 12,974,894
Machinery and Equipment 276,432 (6,448) 269,984 269,984
Total Capital Assets,
being Depreciated 10,614,690 3,148,171 13,762,861 13,762,861
Less Accumulated Depreciation for:
Buildings (427,336) (427,336) (25,899) (453,235)
Plant and Lines (1,512,877) (557,053) (2,069,930) (257,015) (2,326,945)
Machinery and Equipment (170,289) 14,622 (155,667) (9,932) (165,599)
Total Accumulated
Depreciation (2, II 0,502) (542,431 ) (2,652,933) (292,846) (2,945,779)
Total Capital Assets, being
Depreciated, Net 8,504,188 2,605,740 11,109,928 (292,846) 10,817,082
Business-Type Activities
Capital Assets, Net $ 8,522,125 $ 5,058,661 $ 13,580,786 $ 730,339 $ $ 14,311,125
43
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 5 - CAPITAL ASSETS
Depreciation expense was charged to functions/programs of the government as follows:
Governmental Activities:
General Government
Public Safety
Public Works
Culture and Recreation
$ 38,159
98,502
543,622
78,030
Total Depreciation Expense - Governmental Activities
$ 758,313
Business-Type Activities:
Water
Sanitary Sewer
Storm Sewer
S 108,398
144,656
39,792
Total Depreciation Expense - Business-Type Activities
$ 292,846
NOTE 6 - LONG-TERM DEBT
A. General Obligation Bonds
The City issues General Obligation (G.O.) Bonds to provide for financing tax increment projects
and street improvements. Debt service is covered respectively by tax increments and special
assessments against benefited properties with any shortfalls being paid from general taxes.
G.O. Bonds are direct obligations and pledge the full faith and credit of the government. These
Bonds generally are issued as 15 year Serial Bonds with equal debt service payments each year.
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I CITY OF ST. JOSEPH
I Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
I
NOTE 6 - LONG-TERM DEBT
I B. Components of Long-Term Liabilities
Issue Interest Original Final Principal Due Within
I Date Rate Issue Maturity Outstanding One Year
Governmental Activities:
G.O. Bonds, Including Refunding Bonds:
I G.O. Equipment Certificates of
Indebtedness of 2002 01/01/02 2.75%-4.20% $ 245,000 12/01/06 $ 125,000 $ 60,000
G.O. Refunding Bonds of2003 07/28/03 1.50%-4.40% 815,000 12/01/17 815,000 50,000
G.O. Certificates ofIndebtedness
I of 2004 08/27/04 2.40%-3.25% 280,000 12/01/08 280,0001 115,000
Total G.O. Bonds I
1,220,0001 225,000
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I G.O. Special Assessment Bonds:
G.O. Improvement Bonds of 1998 11/01/98 3.85%-5.00% 545,000 12/01/13 370,000 35,000
G.O. Improvement Bonds of 1999 1 % 1/99 4.875%-5.20% 1,330,000 12/01/14 985,000 80,000
G.O. Improvement Bonds of2001 09/01/0 I 3.00%-3.85% 810,000 12/01/06 330,000 165,000
I G.O. Improvement Bonds of2002 08/01/02 2.00%-4.30% 4,700,000 12/01/17 3,890,000 405,000
G.O. Bonds of2003 08/01/03 1.25%-2.65% 2,135,000 12/01/08 1,450,000 240,000
G.O. Improvement Crossover
Refunding Bonds of2003 07/28/03 1.25%-3.15% 750,000 12/0 I /II I 115,000
635,009
I G.O. Improvement Bonds of2004 07/29/04 2.15%-3.60% 590,000 12/01/09 590,00Q 65,000
Total G.O. Special !
Assessment Bonds 8,250,000 1,105,000
I Revenue Bonds:
EDA Public Revenue Bonds of 2000 05/01/00 5.60%-6.60% 960,000 12/01115 780,000 50,000
EDA Public Revenue Bonds of2003 04/01/03 2.00%-4.90% 700,000 12/01/18 670,00~ 35,000
I Total Revenue Bonds 1 ,450,00~ 85,000
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Loan Payable 141,77+ 27,193
I Compensated Absences 93,859 8,023
Total Long-Term Liabilities,
Governmental Activities 11,155,633 1,450,216
I Business-Type Activities:
G.O. Revenue Bonds:
G.O. Sewer Revenue Bonds of2001 10/01/01 3.30%-5.15% 640,000 12/01/21 565,00P 25,000
G.O. Water Revenue
I Refunding Bonds of 2002 09/01/02 1.75%-4.80% 810,000 12/01/16 660,OQO 85,000
Total Business-Type I
Activities 1,225,OQO 110,000
I Total all Long-Term Liabilities $ 12,380,633 $ 1,560,216
I Long-term bonded indebtedness listed above were issued to finance acquisition and construction
of capital facilities or to refinance (refund) previous bond issues.
I 45
Governmental Actvitites:
Bonds Payable:
General Obligation
G.O. Special Assessment
Revenue Bonds
Total Bonds Payable
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 6 - LONG- TJi:RM DEBT
C. Changes in Long.-Term Liabilities
Long-term liability activity for the year ended December 31, 2004, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
$ 1,995,000 $ 280,000 $ 1,055,000 S 1,220,000 $ 225,000
9,135,000 590,000 1,475,000 8,250,000 1,155,000
1,530,000 80,000 1,450,000 85,000
12,660,000 870,000 2,610,000 10,920,000 1,465,000
168,967 27,193 141,774 27,193
60,604 33,255 93,859 8,023
229,571 33,255 27,193 235,633 35,216
12,889,571 903,255 2,637,193 11,155,633 1,450,216
Loan Payable
Compensated Absences
Governmental Activities
Long-Te:rm Liabilities
Business-Type Activities:
Bonds Payable:
G.O. Utility Revenue Bonds
Business-Type Activity
Long-Term Liabilities
1,330,000
105,000
1,225,000
110,000
1,330,000
105,000
1,225,000
110,000
Total Long-Term
Liabilities
$ 14,219,571
$ 903,255 $ 2,742,193 S 12,380.633
$ 1,560,216
The General Fund typically liquidates the liability related to compensated absences.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 6-LONG-TERMDEBT
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Year
Ending
June 30,
Governmental Activities I
G.O. Special Assessment Bonds Public Project Rev~nue Bonds
Principal Interest Principal I Interest
2005
2006
2007
2008
2009
2010-2014
2015-2019
2020-2021
$ 1,155,000 $ 281,699 $ 110,000
1,145,000 252,319 65,000
995,000 221,238 65,000
1,010,000 193,439 65,000
580,000 162,117 75,000
2,335,000 510,338 425,000
1,030,000 88,383 330,000
90,000
$ 8,250,000 $ 1 ,709,533 $ 1,225,000
$
52,736
49,701
47,476
45,090
42,625
163,300
63,805
6,952
471,685
$
Year Governmental Activities
Ending G.O. Government Activities Loan paY~ble
June 30, Principal Interest
Principal . Interest
2005 $ 175,000 $ 42,472 $ 27,740 $ 1,415
2006 190,000 35,123 28,017 1,138
2007 120,000 29,540 28,298 857
2008 130,000 26,410 28,581 574
2009 60,000 22,598 29,138 289
2010-2014 315,000 84,765
2015-2019 230,000 20,160
2020-2021
$ 1 ,220,000 $ 261,068 $ 141,774 $ 4,273
47
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 6 - LONG-TERM DEBT
D. Minimum Debt Payments (Continued)
Year
Ending
June 30,
Business-Type Activities
Utility Revenue Bonds
Principal Interest
2005
2006
2007
2008
2009
2010-2014
2015-2019
2020-2021
$ 110,000
65,000
65,000
65,000
75,000
425,000
330,000
90,000
$ 1,225,000
$ 52,735
49,701
47,475
45,091
42,625
163,300
63,805
6,953
$ 471 ,685
E. Conduit Debt
Conduit debt obligations are certain limited obligation revenue bonds or similar debt instruments
issued for the express purpose of providing capital financing for a specific third party. The City
has issued various revenue bonds to provide funding to private sector entities for projects
deemed to be in the public interest. Although these bonds bear the name of the City, the City has
no obligation for such debt. Accordingly, the bonds are not reported as liabilities in the financial
statements of the City.
As of December 31, 2004, the City's conduit debt consisted of the following:
Commercial Development Revenue Note
(Independence Center), Series 2001
$
605,000
Industrial Revenue Bonds (St. Joseph
Development, LLC), Series 2002
2,755,000
Total
$ 3.360,000
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2004
NOTE 7-FUND BALANCE
Reserved/Designated Fund Equity
Fund equity balances are classified below to reflect the limitations and restrictions ofthe
respective funds.
A. Reserved/Designated Fund Balance
Reserved/designated fund balance is comprised ofthe following components:
G.O. General Nonmajor r
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General G.O. G.O. Improvement Refunding Governmental
Fund Bonds of 1999 Bonds of2002 Bonds of2003 Bonds of2003 Funds Total
Reserved for:
Debt Service $ $ 202,787 $ 760,047 $ 189,078 $ 61,717 $ 1,407,980 $ 2,621,609
Note Receivable 30,275 30,275
Unreserved:
Designated: 1,367,7~6
Capital Projects 61,816 1,429,562
Debt Service 174,745 1- 174,745
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Working Capital 250,000 250,000
Undesignated 766,100 (424,857) 341,243
Total Fund
Balance $ I ,252,661 $ 202,787 $ 760,047 $ 189,078 $ 61,717 $ 2,381,144 $ 4,847,434
NOTE 8 - RISK MANAGEMENT
i
The City purchases commercial insurance coverage through the League of Minnesota Cities I
Insurance Trust with other cities in the state, which is a public entity risk pool currently operatipg
as a common risk management and insurance program. The City pays an annual premium to th'e
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, but retains risk for the deductible portion of its insurance
policies. The amount of these deductibles is considered immaterial to the financial statements..
There were no significant reductions in insurance from the previous year or settlements in exc~ss
of insurance coverage for any of the past three fiscal years. .
The City's workers' compensation insurance policy is retrospectively rated. With this type of ·
policy, final premiums are determined after loss experience is known. The amount of premium
adjustment for 2004 is estimated to be immaterial based on workers' compensation rates and
salaries for the year.
49
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 8 - RISK MANAGEMENT
At December 31, 2004, there are no other claims liabilities reported in the Fund based on the
requirements of Governmental Accounting Standards Board Statement No. 10, which requires
that a liability for claims be reported if information prior to the issuance of the financial
statements indicates that it is probable that a liability has been incurred at the date of the
financial statements and the amount of the loss can be reasonably estimated.
NOTE 9 - DEFINED BENEFIT PENSION PLANS - STATEWIDE
Public Employees' Retirement Association
A. Plan Descriptio)]
All full-time and certain part-time employees of the 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 Funds (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 and firefighters 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 termination 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 formula (Method 1) or a
level accrual formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan
member is 2.2% of average salary for each of the first 10 years of service and 2.7% for each
remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2% of average
salary for each of the first 10 years and 1.7% for each remaining year. Under Method 2, the
annuity accrual rate is 2.7% of average salary for Basic Plan members and 1.7% for Coordinated
Plan members for each year of service. For PEPFF members, the annuity accrual rate is 3.0%
for each year of service. For all PERF and PEPFF members hired prior to July 1, 1989, whose
annuity is calculated using Method 1, a full annuity is available when age plus years of service
equal 90. Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated
Plan members hired prior to July 1, 1989. Normal retirement age is the age for unreduced social
security benefits capped at 66 for Coordinated Plan members hired on or after July 1, 1989. A
reduced retirement annuity is also available to eligible members seeking early retirement.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2004
NOTE 9 - DEFINED BENEFIT PENSION PLANS - STATEWIDE
Public Employees' Retirement Association (Continued)
A. Plan Description (Continued)
There are different types of annuities available to members upon retirement. A single-life
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
be payable over joint lives. Members may also leave their contributions in the fund upon
termination of public service in order to qualify for a deferred annuity at retirement age.
Refunds of contributions are available at any time to members who leave public service, but
before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions
and apply to active Plan participants. Vested, terminated employees who are entitled to benefits
but are not yet receiving them, are bound by the provisions in effect at the time they last
terminated their public service.
PERA issues a publicly available financial report that includes financial statements and requirE)d
supplementary information for PERF and PEPFF. That report may be obtained on the web at i
www.mnpera.org.bywritingtoPERAat60EmpireDrive.Suite200.St.Paul.MN 55I03-20~8
or by calling (651) 296-7460 or (800) 652-9026. I
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 9.1 % and 5.1 %, i
respectively, of their annual covered salary. PEPFF members are required to contribute 6.2% pf
their annual covered salary. The City ofSt. Joseph is required to contribute the following i
percentages of annual covered payroll: 11.78% for Basic Plan PERF members, 5.53% for
Coordinated Plan PERF members and 9.3% for PEPFF members. The City's contributions to Ithe
Public Employees Retirement Fund for the years ending December 31, 2004, 2003 and 2002
were $ 20,915, $ 20,396 and $ 20,462, respectively. The City's contributions to the Public
Employee's Police and Fire Fund for the years ending December 31, 2004, 2003 and 2002 were
$ 28,866, $ 28,667 and $ 26,783, respectively. The City's contributions were equal to the .
contractually required contributions for each year as set by state statute.
51
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2004
NOTE 10- COMMITMENTS
The City has entered into contracts for construction as follows:
Project
Project
Authorization
Expended
through
12/31/04
Commitment
South East Utilities
East Baker Street Lift Station
Liberty Pointe
Northland Plat VII
Northland Plat VIII
Callaway Street Improvement
16th Avenue Improvement
$ 367,498
166,505
1,148,069
332,086
311,642
213,440
56,063
$ 357,747
162,534
1,161,853
324,147
269,396
199,531
47,760
$
9,751
3,971
(13,784)
7,939
42,246
13,909
8,303
NOTE 11 - SUBSEQUENT EVENTS
In March of2005, the City issued 2005B General Obligation Improvement Bonds totaling
$ 1,655,000 and 2005A Public Project Revenue Crossover Refunding Bonds totaling $ 645,000.
NOTE 12 - PRIOR ][>ERIOD ADJUSTMENT
Prior period adjustments of$ 1,387,146, $ 1,448,421 and $ 2,223,094 are shown respectively in
the Water, Sanitary Sewer and Stormwater Funds to adjust the beginning capital asset and
related depreciation amounts.
NOTE 13 - RELAT]~D PARTY TRANSACTION
The EDA has issued Public Project Revenue Bonds of2000 and 2003. These Bonds are to
finance the City Hall and maintenance facility projects. Rental payments are due from the City
to the EDA. The City will own the projects upon completion of the rental payments. Since the
EDA is reported as a blended component unit of the City, the lease transactions are not reported.
The debt and projects are recorded as though part ofthe City.
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SUPPLEMENTARY INFORMATION
53
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
COMBINING BALANCE SHEET - I
NON MAJOR GOVERNMENTAL FUNDS
December 31, 2004
Special Revenue I
150 I I 155 II 156 I I 210 II 225
TIF 1-4 I
Economic TIF 1-3 St. Joseph Recreation DARE
Development Borgert Development Center Program I
ASSETS:
Cash and Investments $ 8,612 $ 12,390 $ 3,942 $ 41,059 $ 374
Taxes Receivable - Delinquent I
Special Assessments Receivable:
Delinquent
Deferred I
Accounts Receivable
Interest Receivable 183
Due from Other Governments
Notes Receivable I
Total Assets $ 8,612 $ 12,390 $ 3,942 $ 41,242 $ 374
LIABILITIES AND FUND BALANCES: I
Cash Overdraft $ $ $ $ $
Accounts and Contracts Payable 9,360
Deferred Revenue I
Total Liabilities 9,360
Fund Balances: I
Reserved
Unreserved:
Designated
Undesignated 8,612 3,030 3,942 41,242 374 I
Total Fund Balances 8,612 3,030 3,942 41,242 374
Total Liabilities and I
Fund Balances $ 8,612 $ 12,390 $ 3,942 $ 41.242 $ 374
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I Special Revenue Debt Service
I 230 II 232 II 250 319 II 322 II 323
I Total
Special EDA Public
Lake Wobegon City Revolving Revenue G.O. Bonds Project Revenue 2004
I Trail Beautification Loan Funds of 1998 Bonds of 2000 Improvements
$ $ $ 14,185 $ 80,562 $ 246,774 $ $ 376,974
I 171 2,156
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I 127,193 116,399 !
12,996 12,996 - j
63 246 1,046 1,682 !
100,000 100,000 243 1,279
I 34,500 30,275 64,775
$ 112,996 $ 34,500 $ 44,523 $ 258,579 $ 375,481 $ 3,435 $ 495,055
I $ 122,913 $ 80,941 $ $ 203,854 $ $ 11,304 $ - i
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9,360 -j
I 34,500 34,500 127,418 2,156 116,399i
122,913 115,441 247,714 127,418 13,460 116,399)
I 30,275 30,275 248,063 378,656
I (9,917) (80,941) 14,248 (19,410) (10,025)
(9,917) (80,941 ) 44,523 10,865 248,063 (10,025) 378,65~
I $ 112,996 $ 34,500 $ 44,523 $ 258,579 $ 375,481 $ 3,435 $ 495,055
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
COMBINING BALANCE SHEET - I
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2004
Debt Service I
324 I I 327 I I 329 I I 332 II 333
G.O. G.O. G.O. Improvement I
Certificate of EDA Revenue Crossover
G.O. Indebtedness Bonds Refunding 2005
Bonds of2001 of 2002 of 2003 of 2003 Improvements I
ASSETS:
Cash and Investments $ 407,363 $ 2,212 $ 521 $ 365,741 $
Taxes Receivable - Delinquent 1,070 I
Special Assessment Receivable:
Delinquent 249
Deferred 45,245 114,636 I
Accounts Receivable
Interest Receivable 2,171 1,580
Due from Other Governments 530 600 537 6
Notes Receivable I
Total Assets $ 454,779 $ 2,742 $ 1,121 $ 483,813 $ 6
LIABILITIES AND FUND BALANCES: I
Cash Overdraft $ $ $ $ S
Accounts and Contracts Payable
Deferred Revenue 45,245 115,955 I
Total Liabilities 45,245 115,955
Fund Balances: I
Reserved 409,534 2,742 1,121 367,858 6
Unreserved:
Designated
Undesignated I
Total Fund Balances 409,534 2,742 1,121 367,858 6
Total Liabilities and I
Fund Balances $ 454,779 $ 2,742 $ 1,121 $ 483,813 $ 6
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CITY OF ST. JOSEPH
Stearns County, Minnesota
COMBINING BALANCE SHEET -
NON MAJOR GOVERNMENTAL FUNDS
December 31, 2004
Capital Projects
432 I , 433 II 434 I I 435 I I 490
2004 295th/ Water General
Equipment 1 03rd Street Filtration Northland Capital
Certificate Improvements Plant Heights Improvements
ASSETS:
Cash and Investments $ 220,547 $ $ $ $ 466,368
Taxes Receivable - Delinquent
Special Assessment Receivable:
Delinquent
Deferred
Accounts Receivable
Interest Receivable 988
Due from Other Governments
Notes Receivable
Total Assets $ 221,535 $ $ $ $ 466,368
LIABILITIES AND FUND BALANCES:
Cash Overdraft $ $ 13,958 $ 20,547 S 2,240 S
Accounts and Contracts Payable 86,164 318 5,088 152,301 16,437
Deferred Revenue
Total Liabilities 86,164 14,276 25,635 154,541 16,437
Fund Balances:
Reserved
Unreserved:
Designated 135,371 449,931
Undesignated (14,276) (25,635) (154,541)
Total Fund Balances 135,371 (14,276) (25,635) (154,541 ) 449,931
Total Liabilities and
Fund Balances $ 221,535 $ $ $ $ 466,368
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - I
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31,2004
Special Revenue I
150 I I 155 I I 156 I I 210 I
TIF 1-4
Economic TIF 1-3 St. Joseph Recreation I
Development Bogert Development Center
REVENUES:
Taxes:
Property $ $ $ $ I
Tax Increment 19,706 47,314
Special Assessments
Intergovemmental I
Charges for Services
Miscellaneous 90 954
Total Revenues 90 19,706 47,314 954 I
EXPENDITURES:
Current:
Public Works I
Economic Development 30,433 18,924 42,713
Debt Service:
Principal I
Interest and Fiscal Charges
Capital Outlay
Total Expenditures 30,433 18,924 42,713 I
Excess of Revenues Over
(Under) Expenditures (30,343) 782 4,601 954
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OTHER FINANCING SOURCES (USES):
Bonds Issued
Transfers In 34,500 I
Transfers Out
Total Other Financing Sources (Uses) 34,500
Net Change in Fund Balances 4,157 782 4,601 954 I
Fund Balances - Beginning 4,455 2,248 (659) 40,288 I
Fund Balances - Ending $ 8,612 $ 3,030 $ 3.942 $ 41.242
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- I
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2004
Debt Service I
323 II 324 I ) 327 f l 329 I
G.O. Certificate G.O. EDA
2004 G.O. of Indebtedness Revenue Bonds I
Improvements Bonds of2001 of 2002 of2003
REVENUES:
Taxes:
Property $ $ $ 38,013 $ 48,524 I
Tax Increment
Special Assessments 384,769 10,121
Intergovernmental 4,948 6,386 I
Charges for Services
Miscellaneous 2,691 15,220 2,142 512
Total Revenues 387,460 25,341 45,103 55,422 I
EXPENDITURES:
Curren t:
Public Works I
Economic Development
Debt Service:
Principal 160,000 60,000 30,000 I
Interest and Fiscal Charges 8,804 18,058 7,230 27,742
Capital Outlay
Total Expenditures 8,804 178,058 67,230 57,742 I
Excess of Revenues Over
(Under) Expenditures 378,656 (152,717) (22,127) (2,320)
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OTHER FINANCING SOURCES (USES):
Bonds Issued 17,608
Transfers In 19,558 I
Transfers Out
Total Other Financing Sources (Uses) 17,608 19,558
Net Change in Fund Balances 378,656 (135,109) (2,569) (2,320) I
Fund Balances - Beginning 544,643 5,311 3,441 I
Fund Balances - Ending $ 378,656 $ 409,534 $ 2,742 $ 1,121
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I Debt Service Capital Projects
II 332 I ~ 333 424 II 425 I ~ 428 I l 429
G.O. Total
G.O. Refunding Improvement Debt 2002 2003
I Bonds Bonds Service Northland Street Street Maintenance
of 2003 ot 2005 Funds Phase Five Improvements Improvements F'acility
I $ 36,435 $ $ 214,471 $ $ $ $
26,516 6 440,062
I 4,856 28,093 1,439
8,883 35,763 226
I 76,690 6 718,389 226 1,439
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I 115,000 450,000
16,255 149,154
328,245 318,537 5,852
I 131,255 599,154 328,245 318,537 5,852
(54,565) 6 119,235 226 (326,806) (318,537) (5,852)
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17,608
I 19,558
37,166
I (54,565) 6 156,401 226 (326,806) (318,537) (5,852)
I 422,423 1,241,554 296,767 348,775 (117,436)
$ 367,858 $ 6 $ 1 ,397,955 $ 226 $ (30,039) $ 30,238 $ (123,288)
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - I
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2004
Capital Projects I
430 II 431 II 432 , ~ 433 II 434 I
2004 295th/ Water
Northland Cloverdale Equipment 102nd Street Filtration I
Phase Eight Area Certificate Improvements Plant
REVENUES:
Taxes:
Property $ $ $ $ $ I
Tax Increment
Special Assessments
Intergovernmental I
Charges for Services
Miscellaneous 3,293
Total Revenues 3,293 I
EXPENDITURES:
Current:
Public Works 33,465 I
Economic Development
Debt Service:
Principal I
Interest and Fiscal Charges 13,989 5,488
Capital Outlay 493,484 40,520 108,969 14,276 25,635
Total Expenditures 507,473 40,520 147,922 14,276 25,635 I
Excess of Revenues Over
(Under) Expenditures (507,473) (40,520) (144,629) (14,276) (25,635) I
OTHER FINANCING SOURCES (USES):
Bond Proceeds 509,392 280,000
Transfers In I
Transfers Out
Total Other Financing Sources (Uses) 509,392 280,000
Net Change in Fund Balances 1,919 (40,520) 135,371 (14,276) (25,635) I
Fund Balances - Beginning (5,927) (3,115) I
Fund Balances - Ending $ (4,008) $ (43,635) $ 135,371 $ (14,276) $ (25.635)
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I Capital Projects
II 435 I I 490 I I 501
Total Total
General Capital Governmental
Northland Capital Trunk Project Nonmajor
I Heights Improvements Sewer Funds Funds
I $ $ $ $ $ 214,471
67,020
440,062
I 1,439 142,528
47,374 457,581 504,955 504,955
(4,000) 15,473 14,992 67,594
I 43,374 473,054 521,386 1,436,630
I 33,465 33,465
92,070
I 450,000
19,477 168,631
154,541 44,255 149 1,534,463 1,768,194
I 154,541 44,255 149 1,587,405 2,512,360
(154,541) (881 ) 472,905 (1,066,019) (1,075,730)
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789,392 870,000
I 51,763 51,763 105,821
(8,500) (40,300) (48,800) (48,800)
43,263 (40,300) 792,355 927,021
I (154,541) 42,382 432,605 (273,664) (148,709)
407,549 319,375 1,245,988 2,529,853
I $ (154,541) $ 449 ,931 $ 751,980 $ 972,324 $ 2,381,144
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
COMBINING STATEMENT OF NET ASSETS- I
OTHER PROPRIETARY FUNDS
December 31, 2004 I
603 I I 651 I
Storm
Refuse Water Total
ASSETS: I
Current Assets:
Cash and fuvestments (Including I
Cash Equivalents) $ 230,019 $ 115,231 $ 345,250
Accounts Receivable 36,358 36,358
futerest Receivable 1,095 577 1,672 I
Total Current Assets 267,472 115,808 383,280
Noncurrent Assets: I
Capital Assets:
fufrastructure/Lines 1,989,615 1,989,615
Construction in Progress 803,010 803,010 I
Less Accumulated Depreciation (256,405) (256,405)
Net Capital Assets 2,536,220 2,536,220
Total Assets $ 267,472 $ 2,652,028 $ 2,919,500 I
LIABILITIES AND NET ASSETS: I
Current Liabilities:
Accounts Payable $ 10,832 $ $ 10,832 I
Accrued Salaries and Related Benefits 5,967 5,967
Total Liabilities 16,799 16,799
Net Assets: I
fuvested in Capital Assets, Net of Related Debt 2,536,220 2,536,220
Umestricted 250,673 115,808 366,481 I
Total Net Assets 250,673 2,652,028 2,902,701
Total Liabilities and Net Assets $ 267,472 $ 2,652,028 $ 2,919,500 I
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The Notes to the Financial Statements are an integral part of this statement. 66 I
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I CITY OF ST. JOSEPH
Stearns County, Minnesota
I COMBINING STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET ASSETS -
I OTHER PROPRIETARY FUNDS
For the Year Ended December 31,2004
I 603 II 651
I Storm
Refuse Water T ~tals
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OPERATING REVENUES: I
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I Charges for Services $ 188,097 $ 45,268 $ 233,365
OPERATING EXPENSES:
I Wages, Salaries and Compensation 37,296 37,296
Materials and Supplies 5,977 5,977
Utilities 179 179
I Repairs and Maintenance 100 100
Depreciation 39,792 I 39,792
Refuse Disposal 107,672 107,672
I Professional Services 335 335
Miscellaneous 1,437 1,437
I Total Operating Expenses 152,996 39,792 192,788
Operating Income 35,101 5,476 40,577
I NONOPERATING REVENUES (EXPENSE):
Investment Income 5,495 2,682 8,177
I Net Income Before Contributions 40,596 8,158 48,754
I Capital Contributions 352,918 352,918
Transfers Out (15,000) (14,000) (29,000)
I Net Income 25,596 347,076 372,672
Net Assets - January 1, as Previously Reported 225,077 81,858 306,935
I Prior Period Adjustment 2,223,094 2,223,094
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I Net Assets - January 1, as Restated 225,077 2,304,952 ~,530,029
Net Assets - December 31 $ 250,673 $ 2,652,028 $ 2,902,701
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I The Notes to the Financial Statements are an integral part of this statement. 67
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
COMBINING STATEMENT OF CASH FLOWS - OTHER PROPRIETARY FUNDS I
For the Year Ended December 31,2004
603 II 651 I
Refuse Stormwater Totals I
CASH FLOWS - OPERA TWG ACTIVITIES:
Receipts from Customers and Users $ 183,934 $ 45,268 $ 229,202
Payments to Suppliers (105,622) (105,622) I
Payments to Employees (35,994) (35,994)
Net Cash Flows - Operating Activities 42,318 45,268 87,586
CASH FLOWS - NONCAPITAL I
FINANCING ACTIVITIES: I
Transfer to Other Funds (15,000) (14,000) (29,000)
CASH FLOWS - INVESTING ACTIVITIES: I
Interest and Dividends 5,318 2,498 7,816
Net Change in Cash and Cash Equivalents 32,636 33,766 66,402 I
Cash and Cash Equivalents, January 1 197,383 81,465 278,848
Cash and Cash Equivalents, December 31 $ 230,019 $ 115,231 $ 345,250 I
RECONCILIATION OF OPERATING INCOME I
TO NET CASH FLOWS - OPERATING ACTIVITIES:
Operating Income $ 35,101 $ 5,476 $ 40,577
Adjustments to Reconcile Operating Income I
to Net Cash Flows - Operating Activities:
Depreciation Expense 39,792 39,792 I
Accounts Receivable (4,163) (4,163)
Accounts Payable 10,078 10,078
Accrued Salaries and Related Benefits 1,302 1,302 I
Total Adjustments 7,217 39,792 47,009
Net Cash Flows - Operating Activities $ 42,318 $ 45,268 $ 87,586
NONCASH CAPITAL ACTIVITIES: I
Capital Contributions $ $ 352,918 $ 352,918
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The Notes to the Financial Statements are an integral part of this statement. 68 I
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KDV
KE RN. DEWE NTE R. VI E RE
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
May 9, 2005
Honorable Mayor and City Council
City of St. Joseph
8t. Joseph, Minnesota
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We have audited the financial statements of the City of S1. Joseph, Minnesota, as of and for th~
year ended December 31, 2004, and have issued our report thereon dated May 9, 2005. We.
conducted our audit in accordance with U.S. generally accepted auditing standards and the
standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General ofthe United States.
INTERNAL CONTROL OVER FINANCIAL REPORTING
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 an opinion on the internal control over
financial reporting. However, we noted a certain matter involving the internal control over
financial reporting and its operation that we consider to be a reportable condition. Reportable
conditions involve matters coming to our attention relating to significant deficiencies in the
design or operation ofthe internal control over financial reporting that, in our judgment, coul~
adversely affect the City's ability to record, process, summarize and report financial data i
consistent with the assertions of the management in the financial statements. The reportable I
condition is described as follows: .
. The City does not have adequate segregation of accounting duties due to a limited
number of office employees. Management has determined that this weakness is not
practical to correct.
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KE RN. DEWENTER.VI ERE
A material weakness is a reportable 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 caused by error or fraud 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 normal course of performing their assigned functions. Our consideration of the
internal control over financial 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 weaknesses. However, we do not
believe the reportable condition described on the previous page is a material weakness.
COMPLIANCE AND OTHER MATTERS
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 oflaws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit and, accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the City Council, management,
federal awarding agencies and pass-through entities and is not intended to be, and should not be,
used by anyone other than these specified parties.
11-t/). lL, /)-e fAIt:- t L- t vS I V UA-E, L f- d .
KERN, DEWENTER, VIERE, LTD.
81. Cloud, Minnesota
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KERN. DEWENTER.VIERE
AUDITORS' REPORT ON LEGAL COMPLIANCE
May 9,2005
Honorable Mayor and City Council
City of S1. Joseph
S1. Joseph, Minnesota
We have audited the financial statements of the City of S1. Joseph, Minnesota, as of and for the
year ended December 31, 2004, and have issued our report thereon dated May 9, 2005.
We conducted our audit in accordance with u.s. generally accepted auditing standards and the i
provisions ofthe Minnesota Legal Compliance Audit Guide for Local Government, promulgat~d
by the State Auditor pursuant to Minnesota Statutes Sec. 6.65. Accordingly, the audit included,
such tests of the accounting records and such other auditing procedures as we considered i
necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Government covers six main categories
of compliance to be tested: contracting and bidding, deposits and investments, conflicts of
interest, public indebtedness, claims and disbursements and miscellaneous provisions. Our st~dy
included all of the listed categories.
The results of our tests indicate that for the items tested, the City of St. Joseph, Minnesota,
complied with the material terms and conditions of applicable legal provisions, except as
described in the Schedule of Findings on Legal Compliance.
This report is intended solely for the information and use of the City Council, management an(l
the Office of the State Auditor, and is not intended to be, and should not be, used by anyone
other than these specified parties.
I<-l/\.ll , D~We Jil_tzA I L/~U', L+d.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
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CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE
Year Ended December 31,2004
CURRENT YEAR COMPLIANCE FINDING:
Park Dedication Fees must be in Special Revenue Fund
Minnesota Statute 462.358 Subd. states "any cash payments received (in lieu of dedication) shall
be placed in a special fund by the municipality used only for the purposes for which the money
was obtained, and may not be used for ongoing operation or maintenance." Applying this
description, any fees received for park dedication must be accounted for in a separate fund, so as
to avoid those fees being spent on the ongoing operation of the city.
During our audit, we noted the City allows fees in lieu of dedication. However, these fees are
deposited and accounted for in the General Fund and a Capital Project Fund. To be in ..
compliance with Minnesota Statute 462.358 Subd. 2b., we recommend the City set up a Special
Revenue Fund to account for these fees.
PRIOR YEAR COMPLIANCE FINDING:
Issuance of Administrative Tickets
Minnesota Statute 169.022 provides that cities are to refrain from establishing administrative
penalties for traffic regulation, including speeding, DWI, missing plates or tabs, not wearing
seatbelts and other similar state traffic offenses. During our audit, we noted the City currently
has a resolution authorizing the issuance of administrative penalties. The City has not yet issued
any tickets relating to these administrative penalties. During 2004, the City rescinded the
resolution.
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