HomeMy WebLinkAbout2005 Audit Report
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CITY OF ST. JOSEPH
Stearns County, Minnesota
Audited Financial Statements
For the Fiscal Year Ended December 31,2005
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CITY OF ST. JOSEPH
Stearns County, Minnesota
TABLE 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 of the 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 of the Revenues, Expenses and Changes in Net Assets-
B. T A'"
USlness- ype ctIvltIes..............................................................................................
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget
and Actual- General Fund ........ ........ ............... ................................... ............ .............
Statement of Net Assets - Proprietary Funds ..................................................................
Statement of Revenues, Expenses and Changes in Fund Net Assets-
Proprietary Funds..........................................................................................................
Statement of Cash Flows - 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-
N onmajor Governmental Funds..........................................................................................
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS.........................
REPORT ON LEGAL COMPLIANCE .................... ............................ ........ ....................
SCHEDULE OF FINDINGS ON LEGAL COMPLIANCE............................................
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Elected Officials
CITY OF ST. JOSEPH
Stearns County, Minnesota
ELECTED OFFICIALS AND ADMINISTRATION
December 31,2005
Richard Carlbom
Dale Wick
Ross Rieke
Al Rassier
Renee Symanietz
Administration
Judy Weyrens
Position
Mayor
Council Member
Council Member
Council Member
Council Member
City Clerk/Treasurer/Administrator
Term Expires
January 2007
January 2007
January 2007
January 2009
January 2009
Appointed
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KERN. DEWENTER'YIERE
INDEPENDENT AUDITORS' REPORT
March 17, 2006
Honorable Mayor and City Council
City ofSt. 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, 2005, 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 responsibility is
to express opinions 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 Auditing Standards, issued by
the Comptroller General of the United States. Those Standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable
basis for o-qr opinions.
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 ofthe City ofSt. Joseph, Minnesota, as
of December 31,2005, and the respective changes in financial position and cash flows, where
applicable, thereofthe and the budgetary comparison for the General Fund for the year then
ended in conformity with U.S. generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated
March 17,2006, 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 over financial reporting and compliance and the results of that testing, and not to provide
an opinion on the internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards and should
be considered in assessing the results of our audit.
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KERN.DEWENTER.YIERE
The Management's Discussion and Analysis, which follows this report letter, is not a required part
of the 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 opinion on
it.
Our audit was performed for the purpose of forming opinions on the financial statements that
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 of the City. Such information has been
subjected to the auditing procedures applied in our audit of the basic financial statements and, in
our opinion, is fairly stated in all material respects in relation to the basic financial statements
taken as a whole.
KuJl.,lX--Wen,tt/l, VUU, L-I-d.
KERN, DEWENTER, VIERE, LTD.
S1. Cloud, Minnesota
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2005
As management of the City of St. Joseph, we offer readers of the City of St. Joseph's financial
statements this narrative overview and analysis of the financial activities of the City of St. Joseph
for the fiscal year ended December 31, 2005.
Financial Hil!hlil!hts
. The assets of the City of St. Joseph exceeded its liabilities at the close of the most recent
fiscal year by $28,697,273. Of this amount, $8,535,436 may be used to meet government's
ongoing obligations to citizens and creditors.
. The government's total net assets increased by $5,219,241.
. As of the close ofthe current fiscal year, the City of St. Joseph's governmental funds
reported combined ending fund balances of$9,336,333, an increase of$4,488,899. Of this
total amount, $2,323,666 is available or designated for spending at the government's
discretion (unreserved fund balance).
. At the end ofthe current fiscal year, unreserved fund balance for the general fund was
$430,361 or 22% of total general fund expenditures.
. The City ofSt. Joseph's total debt increased by $8,442,260 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
basic financial statements. The City ofSt. Joseph's basic financial statements comprise three
components: I) 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 ofthe 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 of St. 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
changed during the most recent fiscal year. All changes in net assets are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2005
Both of the government-wide financial statements distinguish functions of the City ofSt. 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 ofthe City of
St. 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 of
St. Joseph include the water, wastewater, and hydroelectric utilities, parking system, refuse
service, municipal athletic complex and civic center operations.
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 three categories: governmental funds, proprietary funds, and
fiduciary 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 ofthe 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 over thirty 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, the tax
increment and improvement debt service funds, and the infrastructure management and
improvement construction capital projects funds, all of which are considered to be major funds.
Data from the other governmental funds are combined into a single, aggregated presentation.
Individual fund data for each of these non-major governmental funds is provided in the form of
combining statements elsewhere in this report.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2005
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.
The basic governmental fund financial statements can be found on pages 18-26 of this report.
Proprietary funds. The City of St. Joseph maintains proprietary funds. Enterprise funds are
used to report the same functions presented as business-type activities in the government-wide
financial statements. The City of 81. Joseph uses enterprise funds to account for its water,
wastewater, refuse and storm water.
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 of the City ofSt. 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 to
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 ofthis report.
Other information. The combining statements referred to earlier in connection with non-major
governmental funds and internal service funds can be found on pages 54-65 of this report.
Comparative data. While comparative data is not illustrated in this report, comments
throughout this narrative and overview will discuss significant changes from the prior year.
Government-Wide Financial Analvsis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. In the case ofthe City ofSt. Joseph, assets exceeded liabilities by $28,697,273 at the
close of the most recent fiscal year.
By far the largest portion ofthe 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
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2005
NET ASSETS
Governmental Business-Type
Activities Activities Total
2005 2004 2005 2004 2005 2004
Current and other assets 11,796,833 8,146,975 7,883,440 3,102,216 19,680,273 11,249,191
Capital assets 12,113,699 10,502,904 18,400,368 14,311,125 30,514,067 24,814,029
"
Total assets 23,910,532 18,649,879 26,283,808 17,413,341 50,194,340 36,063,220
Long-term liabilities 13,625,586 9,705,417 5,719,558 1,115,000 19,345,144 10,820,417
Other liabilities 2,011,059 2,043,940 140,864 204,084 2,151,923 2,248,024
Total liabilities 15,636,645 11,749,357 5,860,422 1,319,084 21,497,067 13,068,441
Net Assets
Invested in capital assets,
net of related debt 343,388 (558,870) 12,690,368 13,086,125 13,033,756 12,527,255
Restricted 7,128,081 6,109,681 7,128,081 6,109,681
Unrestricted 802,418 1,349,711 7,733,018 3,008,132 8,535,436 4,357,843
Total net assets 8,273,887 6,900,522 20,423,386 16,094,257 28,697,273 22,994,779
At the end of the current fiscal year, the City ofSt. 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 increased the City ofSt. Joseph's net assets
by $1,190,834 thereby accounting for 23% ofthe total growth in the net assets of the City of
St. Joseph. The most significant change in governmental net assets is due to the large increase in
capital assets under construction in progress. 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 St. Joseph's net assets by
$4,028,407 accounting for 77% of the total growth in the government's net assets. The water
utility, wastewater utility and trunk sewer contributed in the increase in net assets in the
proprietary funds. The largest portion of the net asset increase in the water and wastewater
utilities results from the capital asset additions from utility projects.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2005
CHANGE IN NET ASSETS
Governmental Business-Type
Activities Activities Total
2005 2004 2005 2004 2005 2004
Revenues
Program Revenues
Charges for services 735,851 635,128 1,737,063 1,309,687 2,472,914 1,944,815
Operating Grants and contributions 96,486 142,701 96,486 142,701
Capital Grants and contributions 3,166,187 1,419,972 2,434,848 484,751 5,601,035 1,904,723
General Revenues:
Property taxes 887,383 811,965 887,383 811,965
Tax Increments 87,923 67,020 87,923 67,020
State Aids 788,881 775,687 788,881 775,687
Unrestricted Investment Earnings 219,884 161,903 75,791 47,838 295,675 209,741
Gain on Sale of Capital Assets 143 2,731 143 2,731
Total Revenues 5,982,738 4,017,107 4,247,702 1,842,276 10,230,440 5,859,383
Expenses:
General Government 472,535 411,588 472,535 411,588
Public Safety 1,131,737 1,090,932 1,131,737 1,090,932
Public Works 1,309,210 934,425 1,309,210 934,425
Culture and Recreation 273,453 196,094 273,453 196,094
Economic Development 98,907 92,070 98,907 92,070
Capital Outlay 332,404 332,404
Interest on Long-Term Debt 556,595 495,352 556,595 495,352
Water 400,504 351,530 400,504 351,530
Sanitary Sewer 529,426 432,681 529,426 432,681
Refuse 67,967 152,996 67,967 152,996
Storm Sewer 170,865 39,792 170,865 39,792
Total Expenses 3,842,437 3,552,865 1,168,762 976,999 5,011,199 4,529,864
Increase in assets before transfers 2,140,301 464,242 3,078,940 865,277 5,219,241 1,329,519
Transfers (949,467) (492,534) 949,467 492,534
Change in net assets 1,190,834 (28,292) 4,028,407 1,357,811 5,219,241 1,329,519
Net assets - beginning, restated 7,083,053 6,928,814 16,394,979 14,736,446 23,478,032 21,665,260
Net assets - ending 8,273,887 6,900,522 20,423,386 16,094,257 28,697,273 22,994,779
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2005
EXPENSES AND PROGRAM REVENUES - GOVERNMENTAL ACTIVITIES
I 3,500,000.00
3,000,000.00
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
500,000.00
10 Revenue
III Expenditures
-c.;.;; .....---
General Public Safety Public Works Culture and Economic Interest on
Government Recreation Development Long-Term
Debt
REVENUES BY SOURCE - GOVERNMENTAL ACTIVITIES
Culture and
Recreation '\
2% \
General Government
/ 4%
Public Works
78%
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2005
EXPENSES AND PROGRAM REVENUES - BUSINESS-TYPE ACTIVITIES
10 Revenue . Expendiiure~ I
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
500,000.00
Water
Sanitary Sewer
Storm Water
Refuse
REVENUES BY SOURCE - BUSINESS-TYPE ACTIVITIES
Refuse
5%
Storm Water
12% l
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Water
(35%
Sanitary Sewer_____________
48%
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2005
Financial Analvsis 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 of St. 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 of the current fiscal year, the City of St. Joseph's governmental funds reported
combined ending fund balances of $9,336,333. Approximately 25% or $2,323,666 of this total
amount constitutes unreserved fund balance. While it is unreserved, $2,257,417 is designated to
assist with the purchase of capital projects, provide relief for debt service and to allow funds for
spending at the governrnent'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 of the City ofSt. Joseph. At the end of the current
fiscal year, unreserved fund balance of the general fund was $916,922. As a measure of the
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 45% of total general
fund expenditures.
The fund balance of the City ofSt. Joseph's general fund decreased by $335,739 during the
current fiscal year. The decrease in the general fund balance can be attributed to the transfer out
of designated funds for Capital Outlay. The City has acknowledged that major purchases must
be budgeted for over a period of time. Therefore, annually money is budget for specific capital
projects, both equipment and improvements, and set aside until the necessary funds are available.
During the fiscal year 2005, these funds where transferred to a Capital Projects Fund. In
reviewing the statements it can be noted that the City had an excess of expenditures over
revenues in the general fund in the amount of $46,594.
The excess is attributable to the rapid growth St. Joseph is experiencing. Budgeting for growth is
difficult and if the City did not have as much growth the general fund revenues would have
exceeded the expenditures.
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 - $4,974,716,
wastewater utility $1,010,691, Refuse - $307,640, Storm Sewer - $ 98,057. All of the
proprietary funds had increases in total net assets for the year.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2005
General Fund Bud2etarv Hi2hli2hts
The City approved the 2005 general fund budget leaving the tax capacity rate constant. The City
is consciously limiting spending so that the tax capacity rate in St. Joseph would remain constant
while still providing the needed services. Over the past five years St. Joseph has seen the tax
capacity rate vary by only 2% (both increase and decrease). Over that same period of time,
St. Joseph has experienced and average growth rate of 18%.
Capital Assets and Debt Administration .
Capital assets. The City ofSt. Joseph's investment in capital assets for its governmental and
business type activities as of December 31,2005, amounts to $30,514,067 (net of accumulated
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 construction
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 end.
These commitments are detailed on page 51 in the notes to the financial statements.
CAPITAL ASSETS
Governmental Business
Activities Activities Total
Land 346,258 282,882 629,140
Construction in Progress 1,119,723 2,048,385 3,168,108
Plant and Lines 18,428,931 18,428,931
Improvements 525,533 525,533
Buildings 2,300,892 517,983 2,818,875
Infrastructure 11,842,416 11,842,416
Machinery and Equipment 2,105,571 489,617 2,595,188
Accumulated Depreciation (6,126,694) (3,367,430) (9,494,124)
Total 12,113,699 18,400,368 30,514,067
Additional information on the City ofSt. Joseph's capital assets can be found in note 5 on pages
42-43 of this report.
Long-term debt. At the end of the current fiscal year, the City ofSt. Joseph had total bonded
debt outstanding of$20,615,000. Of this amount, $12,895,000 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 (i.e., certificate of participation).
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31,2005
OUTSTANDING DEBT (General Oblh!ation and Revenue Bonds)
Governmental
Activities
Business
Activities
Total
General Obligation
G.O. Special Assessments
Revenue Bonds
1,045,000
11,850,000
2,010,000
5,710,000
1,045,000
11,850,000
7,720,000
Total
14,905,000
5,710,000
20,615,000
The City ofSt. Joseph issued new bonded debt by $9,995,000 or 70 % during the current fiscal
year. The substantial increase is a result of the construction ofa 7.5 M Water Treatment Facility
and water mains. During 2005, the City issued the following bonds:
. $1,655,000 of General Obligation. These bonds were issued to finance public improvements
for a housing development.
. $3,100,000 of Taxable General Obligation, Special Assessment Bonds. These bonds were
issued to finance the installation of water and sewer service to annexed property.
. $645,000 of ED A Revenue Refunding bonds.
The City ofSt. Joseph maintained a "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 Bud2:ets and Rates
. While the housing market in general is beginning to regulate St. Joseph anticipates continued
growth in both residential and commercial. The construction of a new school (K-8) will spur
development adjacent to the school site as it is open space and a developer has already
preliminary platted a tract for 500+ homes.
. The City also anticipates commercial industrial development as a new Industrial Park will be
developed in 2006. In addition, a 3.0 M downtown project will start the downtown
redevelopment project.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2005
. Property tax reforms and budget deficits at the state level have significantly impacted
government aid payments made to the City. The Council continues to budget conservatively
while maintaining steady tax rates.
. The City is reviewing the fee structures for all licenses and permits and services to recover
appropriate costs in lieu of raising property taxes.
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.
14
(THIS PAGE LEFT BLANK INTENTIONALL Y)
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BASIC FINANCIAL STATEMENTS
15
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
STATEMENT OF NET ASSETS I
December 31,2005
Governmental Business-Type I
Activities Activities Total
ASSETS: I
Cash and Investments (Including Cash Equivalents) $ 7,416,681 $ 7,457,170 $ 14,873,851
Cash with Fiscal Agent 619,513 619,513
Delinquent Taxes Receivable 23,760 23,760 I
Accounts Receivable 92,325 333,731 426,056
Interest Receivable 30,553 27,920 58,473
Due from Other Governments 228,989 228,989
Special Assessments Receivable: I
Delinquent 72,822 72,822
Deferred 3,290,142 64,619 3,354,761
Notes Receivable 22,048 22,048 I
Capital Assets:
Land 346,258 282,882 629,140
Construction in Progress 1,119,723 2,048,385 3,168,108 I
Plant and Lines 18,428,931 18,428,931
Improvements 525,533 525,533
Buildings 2,300,892 517,983 2,818,875 I
Infrastructure 11,842,416 11,842,416
Machinery and Equipment 2,105,571 489,617 2,595,188
Less Accumulated Depreciation (6,126,694) (3,367,430) (9,494,124) I
Capital Assets (Net of Accumulated Depreciation) 12,113,699 18,400,368 30,514,067
Total Assets $ 23,910,532 $ 26,283,808 $ 50,194,340 I
LIABILITIES AND NET ASSETS:
Liabilities: I
Accounts and Contracts Payable $ 342,833 $ 52,033 $ 394,866
Accrued Salaries and Benefits Payable 49,357 10,471 59,828
Accrued Interest Payable 69,567 13,103 82,670 I
Other Liabilities:
Due Within One Year 1,549,302 65,257 1,614,559
Due in Mbre than One Year 13,625,586 5,719,558 19,345,144
Total Liabilities 15,636,645 5,860,422 21,497,067 I,
Net Assets:
Invested in Capital Assets, Net of Related Debt 343,388 12,690,368 13,033,756 I
Restricted for:
Debt Service 7,102,564 7,102,564
Other Purposes 25,517 25,517 I
Unrestricted 802,418 7,733,018 8,535,436
Total Net Assets 8,273,887 20,423,386 28,697,273
Total Liabilities and Net Assets $ 23,910,532 $ 26,283,808 $ 50,194,340 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
BALANCE SHEET-GOVERNMENTAL FUNDS I
December 31, 2005
Debt Service I
Fund Number 101 I I 321 I I 325 I I 328
G.O. G.O. G.O. I
Bonds of Improvement Improvement
General 1999 Bonds of 2002 Bonds of 2003
ASSETS: :1
Cash and Investments (Including Cash Equivalents) $ 948,737 $ 203,308 $ 657,716 $ 747,379
Cash with Fiscal Agent
Taxes Receivable - Delinquent 11 ,945 804 2,698 2,808
Special Assessments Receivable: I
Delinquent 7,521 21,248 40,372
Deferred 2,207 543,826 1,268,183 241,996
Accounts Receivable 68,825 I
Interest Receivable 5,569 763 2,593 3,323
Due from Other Governments 18,950 5,513 144,170 54,619
Notes Receivable I
Total Assets $ 1,056,233 $ 761,735 $ 2,096,608 $ 1,090,497
LIABILITIES AND FUND BALANCES: I
Liabilities:
Cash Overdraft $ $ $ $
Accounts and Contracts Payable 75,802 I
Accrued Salaries and Related Benefits 49,357
Deferred Revenue 14,152 552,151 1,292,129 285,176
Total Liabilities 139,311 552,151 1,292,129 285,176 I
Fund Balances:
Reserved:
Debt Service Funds 209,584 804,479 805,321 I
Capital Projects Funds
Special Revenue Funds
Unreserved: I
Designated:
General Fund 486,561
Capital Projects Funds I
Undesignated:
General Fund 430,361
Special Revenue Funds
Debt Service Funds I
Capital Projects Funds
Total Fund Balances 916,922 209,584 804,479 805,321
Total Liabilities and I
Fund Balances $ 1,056,233 $ 761,735 $ 2,096,608 $ 1,090,497
I
The Notes to the Financial Statements are an integral part of this statement. 18 I
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I:
II Debt Service Capital Projects
333 I I 433 l I 435 I I 501
I G.O. 295th/ Other Total
Improvement 103rd Street Northland Utility Governmental Governmental
Bonds of 2005B Improvements Heights Extension Funds Funds
I' $ 423,229 $ 668,382 $ 1,986,472 $ 1,340,335 $ 2,485,064 $ 9,460,622
619,513 619,513
5,505 23,760
I 3,681 72,822
965,381 268,549 3,290,142
I 50 23,500 92,375
4,095 5,028 14,210 35,581
5,737 228,989
22,048 22,048
I $ 1,392,705 $ 668,382 $ 1,986,472 $ 1,345,413 $ 3,447,807 $ 13,845,852
I
$ $ $ $ $ 703,606 $ 703,606
I 42,814 84,122 3,499 140,095 346,332
49,357
965,381 301,235 3,410,224
I, 965,381 42,814 84,122 3,499 1,144,936 4,509,519
I 427,324 2,153,699 4,400,407
625,568 1,902,350 58,825 2,586,743
25,517 25,517
I 486,561
I 1,341,914 428,942 1,770,856
430,361
240,763 240,763
I (18,553) (18,553)
(586,322) (586,322)
427,324 625,568 1,902,350 1,341,914 2,302,871 9,336,333
.1 $ 1,392,705 $ 668,382 $ 1,986,472 $ 1,345,413 $ 3,447,807 $ 13,845,852
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I 19
------- ------ --- ---
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 31,2005
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 current 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 Utility Extension Capital Projects Fund is proprietary in nature and, therefore,
included in the business-type activities in 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.
$ 9,336,333
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18,240,393
(6,126,694)
(14,905,000)
(114,034)
(155,854)
23,760
72,822
3,290,142
23,500
(1,341,914)
(69,567)
$ 8,273,887
20
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CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE STATEMENT
OF NET ASSETS - BUSINESS-TYPE ACTIVITIES
For the Year Ended December 31,2005
Total Fund Net Assets - Proprietary Funds
$ 19,081,472
Amounts reported for governmental activities in the Statement of Net Assets
are different because:
The Utility Extension Capital Projects Fund is proprietary in nature and
relates to water and sewer improvements for the applicable funds.
Therefore, it is included as a business-type activity.
1,341,914
$ 20,423,386
Total Net Assets - Business-Type Activities
The Notes to the Financial Statements are an integral part of this statement.
21
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I Capital Projects
433 I I 435 I I 501
295th/ Other Total
I 102nd Street Northland Utility Governmental Governmental
Improvements Heights Extension Funds Funds
I $ $ $ $ 368,154 $ 881,914
87,923 87,923
183,130 1,694,987
I 362,521
58,085 44,149 1,133,569
681,050 121,126 1,037,492
I 55,333
30,266 145,996 310,384
58,085 711,316 950,478 5,564,123
I 420,644
991,822
I 1,677 474,122
28,564 148,152
98,907 98,907
I 690,000 1,442,740
46,980 31,320 222,752 521,547
I 5,192
14,969
851,000 866,609 1,782 674,117 2,393,628
90 10,761
I 897,980 897,929 1,782 1,716,107 6,522,484
I (897,980) (839,844) 709,534 (765,629) (958,361)
143
I 1,570,262 2,865,115 879,885 5,400,000
31,620 31,620
(32,438) (32,438)
369,001 510,901
I (119,600) (40,078) (462,966)
1,537,824 2,896,735 (119,600) 1,208,808 5,447,260
639,844 2,056,891 589,934 443,179 4,488,899
I
(14,276) (154,541) 751,980 1,859,692 4,847,434
I $ 625,568 $ 1 ,902,350 $ 1,341,914 $ 2,302,871 $ 9,336,333
I 23
I
CITY OF ST. JOSEPH
Stearns County, Minnesota
I
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES TO
THE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDS
For the Year Ended December 31,2005
I
I
Total Net Change in Fund Balances - Governmental Funds
$ 4,488,899
Amounts reported for governmental activities in the Statement of Activities
are different because:
I
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
Capital Assets Transferred to Proprietary Funds
I
1,312,769
1,212,698
(1,090,200)
(7,003)
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Principal payments on long-term debt are recognized as expenditures
in the governmental funds but as an increase in net assets in the Statement
of Activities.
1,442,740
I
Compensated absences are recognized as paid in the governmental funds but
recognized as the expense is incurred in the Statement of Activities.
(61,995)
I
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.
I
(34,230)
I
Proceeds from long-term debt are recognized as another financing source in
the governmental funds but as a decrease in net assets in the Statement of
Activities.
(5,400,000)
I
Delinquent receivables will be collected in subsequent years, but are not available soon enough to
pay for the current period's expenditures and, therefore, are not revenues in the funds.
Delinquent Special Assessments
Delinquent Property Taxes
(156,245)
5,469
I
Certain revenues in the Statement of Activities that do not provide current financial resources
are not reported as revenues in the funds.
Deferred Special Assessments
Notes Receivable
I
78,866
(11,000)
I
The Utility Extension Capital Projects Fund is proprietary in nature and, therefore, is reported
with business-type activities.
(589,934)
$ 1,190,834
I
Change in Net Assets - Governmental Activities
I
The Notes to the Financial Statements are an integral part of this statement.
24
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I
I Total Net Income in Fund Net Assets - Proprietary Funds
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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, 2005
Amounts reported for governmental activities in the Statement of Activities
are different because:
Recognize current year activity from the Trunk Sewer Capital Projects Fund
with the business-type activities.
Change in Net Assets - Business-Type Activities
The Notes to the Financial Statements are an integral part ofthis statement.
$ 3,438,473
589,934
$ 4,028,407
25
I
CITY OF ST. JOSEPH I
Stearns County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND I
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL-GENERAL FUND
For the Year Ended December 31, 2005 I
Variance with
Final Budget - I
Original and Actual Positive
Final Budget Amounts (Negative )
REVENUES: I
Taxes $ 457,000 $ 446,402 $ (10,598)
Special Assessments 5,000 266 (4,734)
Licenses and Permits 266,335 362,521 96,186 I
Intergovernmental Revenue 850,355 825,611 (24,744)
Charges for Services 212,890 235,316 22,426
Fines and Forfeitures 65,500 55,333 (10,167)
Miscellaneous 41,200 63,408 22,208 I
Total Revenues 1,898,280 1,988,857 90,577
EXPENDITURES: I
Current:
General Government 388,211 420,644 (32,433)
Public Safety 934,266 991,822 (57,556) I
Public Works 255,940 472,445 (216,505)
Culture and Recreation 112,035 119,588 (7,553)
Capital Outlay; I
General Government 15,500 5,192 10,308
Public Safety 52,250 14,969 37,281
Public Works 85,000 120 84,880
Culture and Recreation 14,000 10,671 3,329 I
Total Expenditures 1,857,202 2,035,451 (178,249)
Excess of Revenues Over I
(Under) Expenditures 41,078 (46,594) (87,672)
OTHER FINANCING SOURCES (USES): I
Sale of Property 143 143
Transfers In 14,000 14,000
Transfers Out (2,500) (303,288) (300,788) I
Total Other Financing Sources (Uses) 11,500 (289,145) (300,645)
Excess of Revenues Over (Under) I
Expenditures and Other Financing
Sources (Uses) $ 52.578 (335,739) $ (388,317)
FUND BALANCES: I
Beginning of Year 1,252,661
End of Year $ 916,922 I
The Notes to the Financial Statements are an integral part of this statement. 26 I
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I Fund Number
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I
ASSETS:
Current Assets:
Cash and Investments
Special Assessments Receivable - Deferred
Accounts Receivable
Interest Receivable
Total Current Assets
I Noncurrent Assets:
Capital Assets:
Land
I Construction in Progress
Plant and Lines
Buildings
Machinery and Equipment
I Total Capital Assets
Less Accumulated Depreciation
Net Capital Assets
I
Total Assets
LIABILITIES AND NET ASSETS:
Current Liabilities:
I Accounts Payable
Accrued Salaries and Related Benefits
Interest Payable
I Long-Term Liabilities Due Within One Year
Total Current Liabilities
I
Noncurrent Liabilities:
Compensated Absences Payable
Bonds Payable
Less Amount Due Within One Year
Total Noncurrent Liabilities
Total Liabilities
I
I
Net Assets:
Invested in Capital Assets, Net of Related Debt
Unrestricted
Total Net Assets
I
Total Liabilities and Net Assets
I
I
CITY OF ST. JOSEPH
Stearns County, Minnesota
STATEMENT OF NET ASSETS -
PROPRIETARY FUNDS
December 31, 2005
I I 602 I I 603 I I
Sanitary
Sewer Refuse
Total
601
651
Storm
Water
Water
$ 4,980,265 $ 767,167 $ 287,100 $ 82,303 $ 6,116,835
64,619 64,619
53,565 224,796 39,875 15,445 333,681
18,682 2,824 1,077 309 22,892
5,052,512 1,059,406 328,052 98,057 6,538,027
277,941 4,941 282,882
1,159,525 675,946 212,914 2,048,385
7,510,163 7,597,876 3,320,892 18,428,931
517,983 517,983
86,564 403,053 489,617
9,034,193 9,199,799 3,533,806 21,767,798
(1,147,336) (1,897,271) (322,823) (3,367 ,430)
7,886,857 7,302,528 3,210,983 18,400,368
$ 12.939.369 $ 8.361,934 $ 328.052 $ 3.309,040 $ 24.938.395
$ 19,752 $ 16,461 $ 12,321 $ $ 48,534
5,720 3,749 1,002 10,471
10,982 2,121 13,103
40,161 25,096 65,257
76,615 47,427 13,323 137,365
41,342 26,384 7,089 74,815
5,170,000 540,000 5,710,000
(40,161) (25,096) (65,257)
5,171,181 541,288 7,089 5,719,558
5,247,796 588,715 20,412 5,856,923
2,716,857 6,762,528 3,210,983 12,690,368
4,974,716 1,010,691 307,640 98,057 6,391,104
7,691,573 7,773,219 307,640 3,309,040 19,081,472
$ 12.939.369 $ 8.361.934 $ 328.052 $ 3.309,040 $ 24,938.395
I The Notes to the Financial Statements are an integral part of this statement.
27
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I
CITY OF ST. JOSEPH I
Stearns County, Minnesota
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET ASSETS - PROPRIETARY FUNDS I
For the Year Ended December 31,2005
Fund Number 601 I I 602 I I 603 I I 651 I
Sanitary Storm
Water Sewer Refuse Water Totals
OPERATING REVENUES: I
Charges for Services $ 328,295 $ 406,144 $ 220,537 $ 49,852 $ 1,004,828
OPERATING EXPENSES:
Wages, Salaries and Compensation 123,549 91,329 30,223 245,101 I
Materials and Supplies 24,109 7,202 449 31,760
Sewer Use Rental 153,069 153,069
Utilities 18,534 14,162 15 32,711 I
Repairs and Maintenance 23,598 10,524 158 1,391 35,671
Insurance 5,000 8,459 13,459
Depreciation 154,316 206,359 66,418 427,093
Refuse Disposal 700 138,544 139,244 I
Professional Services 12,008 7,323 347 19,678
Miscellaneous 4,393 2,022 1,129 158 7,702
Total Operating Expenses 365,507 501,149 170,865 67 ,967 1,105,488
Operating Income (Loss) (37,212) (95,005) 49,672 (18,115) (100,660) I
NONOPERATING REVENUES (EXPENSES): I
Bond Interest and Fiscal Charges (34,997) (26,495) (61,492)
Investment Income 45,062 19,988 7,295 3,446 75,791
Other Revenue 20,558 361 20,919
Total Nonoperating Revenues (Expenses) 30,623 (6,146) 7,295 3,446 35,218 I
Income (Loss) before Contributions and Transfers (6,589) (101,151) 56,967 (14,669) (65,442)
Capital Contributions 1,531,892 1,406,593 613,365 3,551,850 I
Transfers In 47,200 47,200
Transfers Out (25,635) (69,500) (95,135)
Change in Net Assets 1,499,668 1,352,642 56,967 529,196 3,438,473 I
NET ASSETS:
Beginning of Year, as Previously Reported 6,074,155 6,339,786 250,673 2,652,028 15,316,642 I
Prior Period Adjustment 117,750 80,791 127,816 326,357
Beginning of Year, Restated 6,191,905 6,420,577 250,673 2,779,844 15,642,999 I
End of Year $ 7,691.573 $ 7,773,219 $ 307,640 $ 3,309,040 $ 19,081,472
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The Notes to the Financial Statements are an integral part ofthis statement. 28 I
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I CITY OF ST. JOSEPH
Stearns County, Minnesota
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
I For the Year Ended December 31, 2005
Fund Number 601 I I 602 I I 651 I I 651
I Sanitary Storm
Water Sewer Refuse Water Totals
CASH FLOWS - OPERATING EXPENSES:
I Receipts from Customers and Users $ 319,384 $ 369,053 $ 217,020 $ 34,407 $ 939,864
Payments to Suppliers (70,200) (200,738) (139,153) (1,549) (411,640)
Payments to Employees (108,097) (83,160) (28,099) (219,356)
Net Cash Flows - Operating Expenses 141,087 85,155 49,768 32,858 308,868
I CASH FLOWS - NONCAPIT AL FINANCING
ACTMTIES:
Other Miscellaneous Receipts 20,558 361 20,919
I Transfer from Other Funds 47,200 47,200
Transfer to Other Funds (25,635) (69,500) (95,135)
Net Cash Flows - Noncapital Financing Activities (5,077) 47,561 (69,500) (27,016)
I CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTMTIES:
Bond Issuance 4,595,000 4,595,000
Bond Principal Payments (85,000) (25,000) (110,000)
I Bond Interest and Fiscal Agent Fees (26,172) (26,563) (52,735)
Fixed Asset Acquisitions (652,877) (10,887) (663,764)
Net Cash Flows - Capital and Related
Financing Activities 3,830,951 (62,450) 3,768,501
I CASH FLOWS - INVESTING ACTMTIES:
Interest and Dividends 30,770 19,958 7,313 3,714 61,755
I Net Change in Cash and Cash Equivalents 3,997,731 90,224 57,081 (32,928) 4,112,108
Cash and Cash Equivalents, January I 982,534 676,943 230,019 115,231 2,004,727
I Cash and Cash Equivalents, December 31 $ 4,980,265 $ 767,167 $ 287,100 $ 82,303 $ 6,116,835
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH FLOWS - OPERATING ACTIVITIES:
I Operating Income (Loss) $ (37,212) $ (95,005) $ 49,672 $ (18,115) $ (100,660)
Adjustments to Reconcile Operating Income (Loss)
to Net Cash Flows - Operating Activities:
Depreciation Expense 154,316 206,359 66,418 427,093
I Accounts Receivable (8,911 ) (57,586) (3,517) (15,445) (85,459)
Special Assessments Receivable 20,495 20,495
Accounts Payable 17,442 2,723 1,489 21,654
Accrued Salaries and Related Benefits (25,890) (18,215) (4,965) (49,070)
I Compensated Absences 41,342 26,384 7,089 74,815
Total Adjustments 178,299 180,160 96 50,973 409,528
Net Cash Flows - Operating Activities $ 141,087 $ 85,155 $ 49,768 $ 32,858 $ 308,868
I NONCASH CAPITAL ACTIVITIES:
Capital Contributions $ I ,531 ,892 $ I ,406,593 $ $ 613,365 $ 3,551,850
I
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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 31,2005
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 ofthe 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 St. Joseph. The Authority is governed by a five member Board
appointed by the City Council. The EDA is included as a blended component unit of the City
because the EDA is financially accountable to the City, and the Authority provides services
almost entirely for the City. The St. Joseph EDA is presented as a Special Revenue Fund, the
EDA Public Project Revenue Bonds of2000 and 2005 Debt Service Fund and the Public
Project Revenue Bonds of 2003 Debt Service Fund. Separate financial statements are not
prepared for the St. Joseph EDA.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
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 in the Statement of Activities. Program revenues
include 1) charges to customers or applicants who purchase, use or directly benefit from goods,
services or privileges provided by a given function or segment and 2) grants and contributions
that are restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not properly included among program revenues are reported
instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary
fund financial statements. Revenues are recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized
as revenues in the year for which they are levied. Grants and similar items are recognized as
revenue as soon as all eligibility requirements imposed by the provider have been met.
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 ifthey are
collected within 60 days of the end of the current fiscal period. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments,
are recorded only when payment is due.
31
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
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 ofthe
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. Improvement Bonds of2005B Debt Service Fund - This Fund accounts for the
resources accumulated and payments made for principal and interest on this bond issue.
29Sth/l02nd Street Improvements Capital Projects Fund - This Fund accounts for the costs
associated with construction.
Northland Heights, Capital Projects Fund - This Fund accounts for the costs associated with
construction.
Utility Extension Capital Projects Fund - This Fund accounts for the costs associated with
the accumulation of water and sewer access fees that will be used for future water and sewer
capital extension.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Description of Funds: (Continued)
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.
Refuse Fund - This Fund accounts for the operations of the City's refuse utility.
Storm Water Fund - This Fund accounts for the operations ofthe City's storm water 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 (GASB). 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.
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 of the 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 1) 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.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with a proprietary fund's principal ongoing operations. The
principal operating revenues of the Sanitary Sewer Enterprise Fund, Water Enterprise Fund and
other proprietary funds are charges to customers for sales and services. Operating expenses for
enterprise funds include the cost of sales and services, administrative expenses and depreciation
on capital assets. All revenues and expenses not meeting this definition are reported as
nonoperating revenues and expenses.
33
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
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. Cash and Investments
The City's cash and cash equivalents are considered to be cash on hand, deposits and highly
liquid debt instruments purchased with original maturities of three months or less from the
date of acquisition. Investments are stated at fair value.
Minnesota Statutes require all deposits made by cities with financial institutions are
collateralized in an amount equal to 110% of deposits in excess of Federal Deposit Insurance
Corporation (FDIC) insurance.
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 ofthe highest quality with a maturity of no longer then 270 days and in the
Minnesota Municipal Investment PooL
The Minnesota Municipal Investment Pool is an external investment pool not registered with
the Securities Exchange Commission (SEC) that follows the same regulatory rules of the
SEC under Rule 2.a. 7. The fair value of the position in the pool is the same as the value of
the pool shares.
Custodial Credit Risk - Deposits: The City has an investment policy in place to address
custodial credit risk for deposits, stating that all deposits must be deposited with depositories
in good standing with FDIC or the National Credit Union Administration (NCUA). All
deposits shall be covered by FDIC or NCUA or collateralized at 110%.
Concentration of Credit Risk: The City's investment policy states the City will attempt to
diversify its investments according to type and maturity. The portfolio, as much as possible,
will contain both short-term and long-term investments. The City will attempt to match its
investments with anticipated cash flow requirements. Extended maturities may be utilized to
take advantage of higher yields. An attempt to keep the level of extended maturities near
35% ofthe total investments is desired; however, no more than 40% of the total investments
should extend beyond 5 years and in no circumstances should extend beyond 10 years.
The City's investment policy does not address interest rate risk or custodial credit risk for
investments.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES
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 1 and are recorded as
receivables by the City at that date. The property tax is recorded as revenue when it becomes
measurable and available. 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 half payment 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 govenunent-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 govenunental or business-type
activities columns in the govenunent-wide financial statements. Capital assets are defined by
the govenunent 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.
35
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
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 over
the following estimated useful lives:
Assets
Years
Buildings
Park Buildings
Building hnprovements
Street Construction
Street Overlay
Furniture
Light Vehic1es
Machinery and Equipment
Fire Trucks
Utility Distribution System
40
30
15
15
10
5
5
5-7
20
50
5. Compensated Absences
The City compensates employees who leave City service in good standing for all earned,
unused vacation. Employees can accrue up to 200 hours of vacation depending on years of
service. At the employees' anniversary date, the maximum amount of carryover is 80 hours.
In addition, employees are compensated for unused sick leave (up to a maximum of720
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
In the government-wide financial statements, and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the
applicable governmental activities, business-type activities or proprietary fund type Statement
of Net Assets.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
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 financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds
received, are reported as debt service expenditures.
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.
37
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNT ABILITY
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 Projects Funds is accomplished through the use
ofproject controls and formal appropriated budgets are not adopted.
7. Budgeted amounts are as originally adopted by the City Council. There were no
amendments for 2005. Budgeted expenditure appropriations lapse at year-end.
Encumbrances outstanding at year-end expire and outstanding purchase orders are canceled and
not reported in the financial statements.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
B. Deficit Fund Balance
The following funds had deficit fund balances at December 31, 2005:
NonmajorGovernmental Funds:
Special Revenue:
Lake W obegon Trail
City Beautification
Debt Service:
2004 Equipment Certificates
EDA Public Project Revenue Bonds of2000/2005
G.O. EDA Revenue Bonds of 2003
Capital Projects:
. Maintenance Facility
Cloverdale Area
$ 10,007
69,941
834
12,075
5,644
123,288
463,034
C. Excess of Expenditures Over Appropriations
Budgetary control for governmental funds is established by each fund's total appropriations.
Expenditures exceeded appropriations on the following funds for the year ending December 31,
2005.
Appropriations
Expenditures
General Fund
$ 1,857,202
$ 2,035,451
NOTE 3 - DEPOSITS AND INVESTMENTS
A. Deposits
Custodial Credit Risk - Deposits: Custodial credit risk is the risk that in the event of bank
failure, the City's deposits may not be returned to it. As of December 31, 2005, the City's bank
balance was not exposed to custodial credit risk because it was fully insured through the FDIC
and fully collateralized with securities held by the pledging financial institutions trust department
or agent and in the government's name. At December 31,2005, the City's deposits had a
carrying value as shown on the next page.
39
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 3 - DEPOSITS AND INVESTMENTS
A. Deposits (Continued)
-~--~-----'-'-l
8,978,487i
159,093 I
---~- I
~::~~j
220 I
ertificates of De osit
Che
Savings
M~~ey M~ket ~--J
Petty Cash !
--- -' 1---'"
____L______ I
TotalDe osits
$ 9,156,065
B. Investments
As of December 31,2005, the City had the following investments:
Brokered Certificates of Deposit $
Commercial Paper
Government Bonds
State and Local Government Securities
Brokered Money Market
Weighted
Fair Average Moody's
Value Maturity (Years) Rating
1,331,259 2.39 N/A
3,388,566 0.98 PI
914,041 5.34 N/A
619,513 N/A
83,920 N/A N/A
6,337,299
Total Investments $
Interest Rate Risk: The City was not exposed to interest rate risks due to the fact their
investments were not exposed to highly sensitive changes in interest rates.
Concentration of Credit Risk: As of December 31, 2005, the City's investments in General
Electric commercial paper (53.6%) and FHLMC (7.3%) exceeded 5% of the City's total
investment portfolio.
Custodial Credit Risk - Investments: For an investment, this is the risk in the event of the failure
of the counterparty, the City will not be able to recover the value of its investment or collateral
securities that are in the possession of an outside party. The City was not exposed to custodial
credit risk; all deposits and investments were insured or fully collateralized and were registered
in the name of the government.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
NOTE 3 - DEPOSITS AND INVESTMENTS
C. Deposits and Investments
The following is a summary of deposits and investments as of December 31, 2005:
Deposits (Note 3.A.)
Investments
$ 9,156,065
6,337,299
Total
$ 15,493,364
Deposits and investments are presented in the December 31,2005 basic financial statements as
follows:
Statement of Net Assets:
Cash and Investments
Cash with Fiscal Agent
$ 14,873,851
619,513
Total Deposits and Investments
$ 15,493,364
NOTE 4 - INTERFUND BALANCES AND TRANSFERS
The composition of inter fund transfers as of December 31, 2005, is as follows:
Transfer In:
G.O. G.O. Other
Bonds of Bonds of Governmental Sanitary
General 1999 2003 Funds Sewer Total
Transfer Out:
General $ $ $ $ 303,288 $ $ 303,288
Trunk Sewer 16,900 55,500 47,200 119,600
Other Governmental
Funds 40,078 40,078
Water 25,635 25,635
Storm Water 14,000 55,500 69,500
Total Transfers $ 14,000 $ 16,900 $ 111,000 $ 369,001 $ 47,200 $ 558,101
41
I
CITY OF ST. JOSEPH I
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS I
December 31,2005
NOTE 5 - CAPITAL ASSETS I
Capital asset activity for the year ended December 31, 2005 was as follows: I
Beginning Beginning Ending I
Amount Adjustments Balance Additions Reductions Balance
Governmental Activities:
Capital Assets not
being Depreciated: I
Land $ 346,258 $ $ 346,258 $ $ $ 346,258
Construction in Progress 3,014,703 152,160 3,166,863 944,131 2,991,271 1,119,723
Total Capital Assets I
not being Depreciated 3,360,961 152,160 3,513,121 944,131 2,991,271 1,465,981
Capital Assets being Depreciated:
Improvements 453,041 453,041 72,492 525,533 I
Buildings 2,300,892 2,300,892 2,300,892
Infrastructure 7,523,875 7,523,875 4,318,541 11,842,416
Machinery and Equipment 1,945,008 1,945,008 174,571 14,008 2,105,571
Total Capital Assets I
being Depreciated 12,222,816 12,222,816 4,565,604 14,008 16,774,412
Less Accumulated I
Depreciation for:
Improvements 220,579 220,579 49,180 269,759
Buildings 378,364 378,364 65,049 443,413
Infrastructure 3,509,294 3,509,294 766,626 4,275,920 I
Machinery and Equipment 972,636 (30,371 ) 942,265 209,345 14,008 1,137,602
Total Accumulated
Depreciation 5,080,873 (30,371) 5,050,502 1,090,200 14,008 6,126,694 I
Total Capital Assets being
Depreciated, Net 7,141,943 30,371 7,172,314 3,475,404 10,647,718
Governmental Activities Capital I
Assets, Net $ 10,502,904 $ 182,531 $ 10,685,435 $ 4,419,535 $ 2,991,271 $ 12,113,699
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 5 - CAPITAL ASSETS
Business-Type Activities:
Capital Assets not being Depreciated:
L~d $
Construction in Progress
Total Capital Assets not
being Depreciated
Capital Assets being Depreciated:
Buildings
Plant ~d Lines
Machinery and Equipment
Total Capital Assets
being Depreciated
Less Accumulated Depreciation for:
Buildings
Plant and Lines
Machinery and Equipment
Total Accumulated
Depreciation
Total Capital Assets being
Depreciated, Net
Beginning
Bal~ce
Beginning
Balance
Reductions
$
3,372,149
3,372,149
5,442
5,442
(5,442)
( 5,442)
Business-Type Activities
Capital Assets, Net $ 14,311,125 $ 326,357 $ 14,637,482 $ 7,135,035 $ 3,372,149
Depreciation expense was charged to functions/programs ofthe government as follows:
Governmental Activities:
General Government
Public Safety
Public Works
Culture and Recreation
Additions
Adjustments
17,937
3,476,106
$
$
$ 264,945
1,618,071
17,937
3,802,463
326,357
3,494,043
326,357
3,820,400
1,883,016
517,983 517,983
12,974,894 12,974,894 5,454,037
269,984 269,984 225,075
13,762,861 13,762,861 5,679,112
(453,235) (453,235) (25,899)
(2,326,945) (2,326,945) (374,790)
(165,599) (165,599) (26,404)
(2,945,779) (2,945,779) (427,093)
10,817,082 10,817,082 5,252,019
Total Depreciation Expense - Governmental Activities
Business-Type Activities:
Water
Sanitary Sewer
Storm Sewer
Total Depreciation Expense - Business-Type Activities
$ 43,206
100,507
831,357
115,130
$ 1,090,200
$
154,316
206,359
66,418
$
427,093
Ending
Balance
$ 282,882
2,048,385
2,331,267
517,983
18,428,931
489,617
19,436,531
(479,134)
(2,701,735)
(186,561 )
(3,367,430)
16,069,101
$ 18,400,368
43
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
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.
B. Components of Long-Term Liabilities
Issue Interest Original Final Principal Due Within
Date Rate Issue Maturity Outstanding One Year
Governmental Activities:
G.O. Bonds, Including Refunding Bonds:
G.O. Equipment Certificates of
Indebtedness of2002 01101/02 2.75%-4.20% $ 245,000 12/01/06 $ 65,000 $ 65,000
G.O. Refunding Bonds of2003 07/28/03 1.50%-4.40% 815,000 12/01/17 765,000 55,000
G.O. Certificates ofIndebtedness
of 2004 08/27/04 2.40%-3.25% 280,000 12/01/08 215,000 70,000
Total G.O. Bonds 1,045,000 190,000
G.O. Special Assessment Bonds:
G.O. Improvement Bonds of 1998 11101198 3.85%-5.00% 545,000 12/01/13 335,000 35,000
G.O. Improvement Bonds of 1999 10/01199 4.875%-5.20% 1,330,000 12/01114 905,000 80,000
G.O. Improvement Bonds of2001 09/01/01 3.00%-3.85% 810,000 12/01106 165,000 165,000
G.O. Improvement Bonds of2002 08/01102 2.00%-4.30% 4,700,000 12/01117 3,485,000 235,000
G.O. Bonds of 2003 08/01103 1.25%-2.65% 2,135,000 12/01108 1,210,000 395,000
G.O. Improvement Crossover
Refunding Bonds of2003 07/28/03 1.25%-3.15% 750,000 12/01111 520,000 120,000
G.O. Improvement Bonds of2004 07/29/04 2.15%-3.60% 590,000 12/01109 475,000 115,000
G.O. Improvement Bonds of2005B 03/01105 2.50%-4.40% 1,655,000 12/01/20 1,655,000 90,000
G.O. Improvement Bonds of2005C 09/01105 3.50% 3,100,000 12/01/10 3, I 00,000
Total G.O. Special
Assessment Bonds 11,850,000 1,235,000
Revenue Bonds:
EDA Public Revenue Bonds of2000 05101100 5.60%-6.60% 960,000 12/01/07 730,000 55,000
EDA Public Revenue Bonds of2003 04/01103 2.00%-4.90% 700,000 12/01118 635,000 35,000
EDA Revenue Refunding Bonds of 2005 03/01/05 2.75%-4.15% 645,000 12/01/15 645,000
Total Revenue Bonds 2,010,000 90,000
Loan Payable 114,034 28,017
Compensated Absences 155,854 6,285
Total Long-Term Liabilities,
Governmental Activities 15,174,888 1,549,302
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 6 - LONG-TERM DEBT
B. Components of Long-Term Liabilities (Continued)
Issue Interest Original Final Principal Due Within
Date Rate Issue Maturity Outstanding One Year
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 $ 540,000 $ 25,000
G.O. Water Revenue
Refunding Bonds of 2002 09/01/02 1.75%-4.80% 810,000 12/01/16 575,000 40,000
G.O. Water Revenue Bonds of2005 12/01/05 4.00%-4.25% 4,595,000 12/01/28 4,595,000
Total G.O. Revenue Bonds 5,710,000 65,000
Compensated Absences 74,815 257
Total Business-Type Activities 5,784,815 65,257
Total all Long-Term Liabilities $ 20,959,703 $ 1,614,559
Long-term bonded indebtedness listed above were issued to finance acquisition and construction
of capital facilities or to refinance (refund) previous bond issues.
c. Changes in Long-Term Liabilities
Long-term liability activity for the year ended December 31,2005 was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental Activities:
Bonds Payable:
General Obligation $ 1,220,000 $ $ 175,000 $ 1,045,000 $ 190,000
G.O. Special Assessment 8,250,000 4,755,000 1,155,000 11,850,000 1,235,000
Revenue Bonds 1,450,000 645,000 85,000 2,010,000 90,000
Total Bonds Payable 10,920,000 5,400,000 1,415,000 14,905,000 1,515,000
Loan Payable 141,774 27,740 114,034 28,017
Compensated Absences 93,859 121,379 59,384 155,854 6,285
235,633 121,379 87,124 269,888 34,302
Governmental Activities
Long-Term Liabilities 11,155,633 5,521,379 1,502,124 15,174,888 1,549,302
Business-Type Activities:
Bonds Payable:
G.O. Utility Revenue Bonds 1,225,000 4,595,000 110,000 5,710,000 65,000
Compensated Absences 51,201 40,110 16,496 74,815 257
Total Long-Term
Liabilities $ 12,43 1.834 $ 10,156,489 $ 1.628,620 $ 20,959.703 $ 1.614.559
The General Fund typically liquidates the liability related to compensated absences.
45
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 6 - LONG-TERM DEBT
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Year Governmental Activities
Ending G.O. Special Assessment Bonds Public Project Revenue Bonds
June 30, Principal Interest Principal Interest
2006 $ 1,235,000 . $ 408,792 $ 90,000 $ 72,270
2007 1,825,000 375,461 715,000 68,000
2008 1,870,000 323,357 110,000 47,178
2009 1,460,000 266,235 115,000 43,912
2010 1,380,000 217,590 120,000 40,223
2011-2015 2,730,000 618,035 680,000 129,761
2016-2020 1,350,000 131,557 180,000 17,900
Total $ 11,850,000 $ 2,341,027 $ 2,010,000 $ 419,244
Year Governmental Activities
Ending G.O. Government Activities Loan Payable
June 30, Principal Interest Principal Interest Total
2006 $ 190,000 $ 35,123 $ 28,017 $ 1,138 2,060,340
2007 120,000 29,540 28,298 857 3,162,156
2008 130,000 26,410 28,581 574 2,536,100
2009 60,000 22,597 29,138 289 1,997,171
2010 55,000 20,857 1,833,670
2011-2015 335,000 73,728 4,566,524
2016-2020 155,000 10,340 1,844,797
Total $ 1,045,000 $ 218,595 $ 114,034 $ 2,858 $ 18,000,758
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
NOTE 6 - LONG-TERM DEBT
D. Minimum Debt Payments (Continued)
Year Business-Type Activities
Ending Utility Revenue Bonds
June 30, Principal Interest Total
2006 $ 65,000 $ 238,844 $ 303,844
2007 65,000 236,619 301,619
2008 65,000 234,234 299,234
2009 75,000 231,769 306,769
2010 80,000 228,844 308,844
2011-2015 445,000 1,090,136 1,535,136
2016-2020 1,965,000 894,004 2,859,004
2021-2025 2,560,000 406,393 2,966,393
2026-2028 390,000 34,000 424,000
Total $ 5,710,000 $ 3,594,843 $ 9,304,843
E. Conduit Debt
Conduit debt obligations are certain limited obligation revenue bonds or similar debt instruments
issued for the express purpose of providing capital fmancing 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 ofthe 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 31,2005, the City's conduit debt consisted of the following:
Commercial Development Revenue Note
(Independence Center), Series 2001
$
534,308
Industrial Revenue Bonds (St. Joseph
Development, LLC), Series 2002
2,495,000
Total
$ 3,029,308
47
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 6 - LONG-TERM DEBT
F. Refunding Bonds
In 2005, refunding bonds in the amount of$ 645,000 were issued to refund the EDA Revenue
Bonds of2000. Proceeds were placed in escrow, along with City funds at the date ofsa1e. The
transaction generated cash savings of$ 48,858 and net present value cash flow savings of
$ 38,694.
NOTE 7 - RESERVED FUND BALANCES/NET ASSETS
Reserved/Designated Fund Equity
Fund equity balances are classified below to reflect the limitations and restrictions of the
respective funds.
A. Reserved Fund Balance
Reserved for
Debt Capital Note Tax
Service Acquisition Receivable fucrement Total
G.O. Bonds of1999 $ 209,584 $ $ $ $ 209,584
G.O. Bonds of2000 804,479 804,479
G.O. Improvement
Bonds of 2004 805,321 805,321
G.O. Improvement
Bonds of 2005B 427,324 427,324
295th/103rd Street
Improvements 625,568 625,568
Northland Heights 1,902,350 1,902,350
Nonmajor Governmental
Funds 2,153,699 58,825 22,048 3,469 2,238,041
Total $ 4,400,407 $ 2,586,743 $ 22,048 $ 3,469 $ 7,012,667
B. DesignatedlUndesignated Fund Balance
!!'tesignated
Capital J, Debt Working
Projects Service Capital Undesignated Total
General Fund $ 61,815 $ 174,746 $ 250,000 $ 430,361 $ 916,922
Utility Extension 1,341,914 1,341,914
Other Governmental
Funds 428,942 (363,886) 65,056
Total $ 1,832,671 $ 174,746 $ 250,000 $ 66,475 $ 2,323,892
48
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31,2005
NOTE 8 - RISK MANAGEMENT
The City purchases commercial insurance coverage through the League of Minnesota Cities
Insurance Trust with other cities in the state, which is a public entity risk pool currently operating
as a common risk management and insurance program. The City pays an annual premium to the
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 excess
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 2005 is estimated to be immaterial based on workers' compensation rates and
salaries for the year.
At December 31, 2005, there are no other claims liabilities reported in the Fund based on the
requirements of GASB 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 - STATE-WIDE
Public Employees' Retirement Association
A. Plan Description
All full-time and certain part-time employees of the City ofSt. 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 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.
49
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 9 - DEFINED BENEFIT PENSION PLANS - STATE-WIDE
Public Employees' Retirement Association (Continued)
A. Plan Description (Continued)
PERA provides retirement benefits as well as disability benefits to members, and benefits to
survivors upon death of eligible members. Benefits are established by state statute, and vest after
three years of credited service. The defined retirement benefits are based on a member's highest
average salary for any five successive years of allowable service, age and years of credit at
termination of service.
Two methods are used to compute benefits for 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.
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 required
supplementary information for PERF and PEPFF. That report may be obtained on the web at
www.mnpera.org.bywritingtoPERAat60EmpireDrive.Suite 200, 8t. Paul, Minnesota
55103-2088 or by calling (651) 296-7460 or (800) 652-9026.
50
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CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 9 - DEFINED BENEFIT PENSION PLANS - STATE-WIDE
Public Employees' Retirement Association (Continued)
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 %,
respectively, of their annual covered salary in 2005. Contribution rates in the Coordinated Plan
will increase in 2006 to 5.5%. PEPFF members were required to contribute 6.2% of their annual
covered salary in 2005. That rate will increase to 7.0% in 2006. PEPFF members are required to
contribute 6.2% of their annual covered salary. The City ofSt. Joseph is required to contribute
the following 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 the PERF for the years ending December 31, 2005, 2004 and 2003 were
$ 25,534, $ 20,915 and $ 20,396, respectively. The City's contributions to the PEPFF for the
years ending December 31, 2005, 2004 and 2003 were $ 33,854, $ 28,866 and $ 28,667,
respectively. The City's contributions were equal to the contractually required contributions for
each year as set by state statute.
NOTE 10 - COMMITMENTS
The City has entered into contracts for construction as follows:
Proj ect
Contract
Amount
Expended
through
12/31/05
Commitment
Hill Street/3rd Avenue SW Project
Cloverdale Area Improvements
Northland Heights
Well Treatment Plant
$ 780,967
429,240
1,679,093
5,764,933
$
$ 37,710
58,306
887,523
5,764,933
743,257
370,934
791,570
Total
$ 6,748,472
NOTE 11 - SUBSEQUENT EVENTS
In January of2006, the City issued 2006A G.O. Water Revenue Bonds totaling $ 3,575,000. The
City also approved Equipment Certificates of $ 250,000 in February 2006, but were not yet
issued as of the report date.
51
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2005
NOTE 12 - PRIOR PERIOD ADJUSTMENT
Prior period adjustments were recorded in the Water, Sanitary Sewer and Refuse Funds as well as
the governmental activity in the Statement of Activities to account for prior construction in
progress additions, as reported in Note 5.
NOTE 13 - RELATED PARTY TRANSACTION
The EDA has issued Public Project Revenue Bonds of2000, 2003 and 2005. 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 of the City.
NOTE 14 - CONTINGENCIESILITIGATION
The City has been named in a lawsuit regarding inadequate soil inspection, although the City
denies any responsibility or negligence. The potential loss by the City is in excess of $250,000.
52
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II 490
Total Total
I General Capital Nonmajor
Capital Projects Governmental
Improvements Funds Funds
I $ 429,387 $ 600,678 $ 2,485,064
619,513
5,505
I 3,681
268,549
I 23,500
14,210
5,737
22,048
I $ 429.387 $ 600,678 $ 3,447,807
I $ $ 563,209 $ 703,606
445 136,024 140,095
I 301,235
445 699,233 1,144,936
I 58,825 2,238,041
428,942 428,942 428,942
I (586,322) (364,112)
428,942 (98,555) 2,302,871
I $ 429.387 $ 600.678 $ 3,447,807
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CITY OF ST. JOSEPH I
Stearns County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS I
For the Year Ended December 31,2005
Special Revenue I
Fund Number 150 I I 155 I I 156 I I 205 I I 210
TIF 1-4 I
Economic TIF 1-3 St. Joseph Park Recreation
Development Bogert Development Dedication Center I
REVENUES:
Taxes:
Property $ $ $ $ $
Tax Increment 20,209 67,714 I
Special Assessments
Intergovernmental
Charges for Services 80,251 I
Miscellaneous 182 773 1,149
Total Revenues 182 20,209 67,714 81,024 1,149
EXPENDITURES: I
Current:
Public Works
Culture and Recreation 28,564
Economic Development 36,031 19,770 43,106 I
Debt Service:
Principal
Interest and Fiscal Charges I
Capital Outlay:
Public Works
Culture and Recreation
Total Expenditures 36,031 19,770 43,106 28,564 I
Excess of Revenues Over
(Under) Expenditures (35,849) 439 24,608 52,460 1,149
OTHER FINANCING SOURCES (USES): I
Bonds Issued
Bond Premium
Bond Discount I
Transfers In 44,000 156,082
Transfers Out
Total Other Financing Sources (Uses) 44,000 156,082 I
Net Change in Fund Balances 8,151 439 24,608 208,542 1,149
FUND BALANCES: I
Beginning of Year 8,612 3,030 3,942 41,242
End of Year $ 16,763 $ 3,469 $ 28,550 $ 208,542 $ 42,391
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I Debt Service Capital Projects
II II II
331 II 332 II 335 424 425 428 429
I East! West
Fire Hall MN Street Total
G.O. Refunding G.O. Refunding Northland Debt 2002 2003
Bonds of Bonds Heights/Trans Service Northland Street Street Maintenance
I 1997/2003 of 2003 Corridor Funds Phase Five Improvements Improvements Facility
$ 37,380 $ 46,766 $ $ 368,154 $ $ $ $
I 25,394 143,571
4,621 5,557 44,149
I 40,875 40,875
21,029 9,694 31 ,673 91,814 39,982
103,905 87 ,411 31 ,673 688,563 39,982
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I 50,000 115,000 690,000
68,405 14,818 222,752
I 14,298
I 118,405 129,818 912,752 14,298
(14,500) (42,407) 31,673 (224,189) 39,982 (14,298)
I 645,000 234,885 879,885
I 19,784
(226)
645,000 234,885 899,669 (226)
I 630,500 (42,407) 266,558 675,480 (226) 39,982 (14,298)
I 61 ,717 367,858 1,459,666 226 (30,039) 30,238 (123,288)
$ 692,217 $ 325,451 $ 266,558 $ 2,135,146 $ $ 9,943 $ 15,940 $ (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, 2005
Capital Projects I
Fund Number 430 II 431 Il 432 II 434 II 490
2004 Water General I
Northland Cloverdale Equipment Filtration Capital
Phase Eight Area Certificate Plant Improvements I
REVENUES:
Taxes:
Property $ $ $ $ $
Tax Increment I
Special Assessments 39,559
Intergovernmental
Charges for Services I
Miscellaneous (520)
Total Revenues 39,559 (520)
EXPENDITURES: I
Current:
Public Works 1,677
Culture and Recreation
Economic Development I
Debt Service:
Principal
Interest and Fiscal Charges I
Capital Outlay:
Public Works 7,688 419,399 128,095 104,637
Culture and Recreation
Total Expenditures 7,688 419,399 129,772 104,637 I
Excess of Revenues Over
(Under) Expenditures 31,871 (419,399) (130,292) (104,637)
OTHER FINANCING SOURCES (USES): I
Bond Proceeds
Bond Premium
Bond Discount I
Transfers In 25,635 123,500
Transfers Out (39,852)
Total Other Financing Sources (Uses) 25,635 83,648 I
Net Change in Fund Balances 31,871 (419,399) (130,292) 25,635 (20,989)
FUND BALANCES: I
Beginning of Year (4,008) (43,635) 135,371 (25,635) 449,931
End of Year $ 27.863 $ (463.034) $ 5.079 $ $ 428.942
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(I Total Total
Capital Governmental
Project Nonmajor
I Funds Funds
$ $ 368,154.
I 87,923
39,559 183,130
44,149
I 121,126
39,462 145,996
79,021 950,478
I 1,677 1,677
28,564
I 98,907
690,000
222,752
I 674,117 674,117
90
I 675,794 1,716,107
(596,773) (765,629)
I 879,885
I 149,135 369,001
(40,078) (40,078)
109,057 1 ,208,808
I (487,716) 443,179
I . 389,161 1 ,859,692
$ (98555) $ 2,302,871
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KDV
KERN'DEWENTER'YIERE
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
March 17, 2006
Honorable Mayor and City Council
City of St. Joseph
St. Joseph, Minnesota
We have audited the 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 31,2005, and have issued our
report thereon dated March 17,2006. 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 of the 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 of the internal control over financial reporting that, in our judgment, could
adversely affect the City's ability to initiate, record, process and report financial data consistent
with the assertions ofthe management in the financial statements. The reportable 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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KERN. DEWENTER.VIERE
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 of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, 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, City administration
and state and 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.
K.thA I Ot.w~~l/.A, Vuu.., Ud.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
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KDV
KERN'DEWENTER'YIERE
REPORT ON LEGAL COMPLIANCE
March 17, 2006
Honorable Mayor and City Council
City ofSt. Joseph
St. Joseph, Minnesota
We have audited the 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 31,2005, and have issued our
report thereon dated March 17,2006.
We conducted our audit in accordance with U.S. generally accepted auditing standards and the
provisions of the Minnesota Legal Compliance Audit Guide for Local Government, promulgated
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
necessary in the circumstances.
The Minnesota Legal Compliance Audit Guide for Local Government covers seven main
categories of compliance to be tested: contracting and bidding, deposits and investments,
conflicts of interest, public indebtedness, claims and disbursements, other provisions and tax
increment financing. Our study 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.
This report is intended solely for the information and use of the City Council, City administration
and the Office of the State Auditor, and is not intended to be, and should not be, used by anyone
other than these specified parties.
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 31,2005
CURRENT YEAR FINDING:
None.
PRIOR YEAR COMPLIANCE FINDING:
Park Dedication Fees must be in Special Revenue Fund
Minnesota Statutes 462.358 Subd. 2b 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 2005 audit, we noted the City created a Special Revenue Fund to account for these
fees and charges.
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