HomeMy WebLinkAbout2007 Audit ReportCITY OF ST. JOSEPH
Stearns County, Minnesota
Audited Financial Statements
For the Fiscal Year Ended December 3I, 2007
CITY OF ST. JOSEPH
Stearns County, Minnesota
TABLE OF CONTENTS
ELECTED OFFICIALS AND ADMINISTRATION ....................................................... 1
INDEPENDENT AUDITORS' REPORT ......................................................................... 2
MANAGEMENT'S DISCUSSION AND ANALYSIS ..................................................... 5
BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements:
Statement of Net Assets ................................................................................................... 18
Statement of Activities ..................................................................................................... 19
Fund Financial Statements:
Balance Sheet -Governmental Funds ............................................................................. 20
Reconciliation of the Balance Sheet to the Statement of Net Assets -
Governmental Funds ..................................................................................................... 22
Reconciliation of the Statement of Net Assets -Business-Type Activities .................... 23
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds ..................................................................................................... 24
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances to the Statement of Activities -Governmental Funds ......................... 26
Reconciliation of the Revenues, Expenses and Changes in Net Assets -
Business-Type Activities .............................................................................................. 27
Statement of Revenues, Expenditures and Changes in Fund Balances -Budget
and Actual -General Fund ........................................................................................... 28
Statement of Net Assets -Proprietary Funds .................................................................. 29
Statement of Revenues, Expenses and Changes in Fund Net Assets -
Proprietary Funds .......................................................................................................... 30
Statement of Cash Flows -Proprietary Funds ................................................................. 32
Notes to the Financial Statements .......................................................................................... 3 5
SUPPLEMENTARY INFORMATION:
Combining Balance Sheet - Nonmajor Governmental Funds ............................................... 58
Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Nonmajor Governmental Funds .......................................................................................... 64
Schedule of Revenues, Expenditures and Changes in Fund Balances -Budget and
Actual -Governmental Funds ............................................................................................ 72
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ......................... 75
REPORT ON LEGAL COMPLIANCE ............................................................................ 77
SCHEDULE OF FINDINGS AND RESPONSES ON LEGAL
COMPLIANCE AND INTERNAL CONTROL ............................................................ 78
CITY OF ST. JOSEPH
Stearns County, Minnesota
ELECTED OFFICIALS AND ADMINISTRATION
December 31, 2007
Elected Officials Position Term Expires
Alan Rassier Mayor * January 2009
Dale Wick Council Member January 2011
Rick Schultz Council Member January 2009
Steve Frank Council Member January 2011
Renee Symanietz Council Member January 2009
Administration
Judy Weyrens
Lori Bartlett
* Richard Carlbom
Administrator
Finance Director
Mayor
Appointed
Appointed
Resigned May 2007
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Expert advice. When you need it. `"'
INDEPENDENT AUDITORS' REPORT
May 22, 2008
Honorable Mayor and Members
of the City Council
City of St. Joseph
St. Joseph, Minnesota
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund and the aggregate remaining fund information of the
City of St. Joseph, Minnesota, as of and for the year ended December 31, 2007, 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 our audit provides a reasonable basis for
our 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 of the City of St. Joseph, Minnesota, as
of December 31, 2007, and the respective changes in financial position and cash flows, where
applicable, thereof the 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
May 22, 2008, 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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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
principally of inquiries of management regarding the methods of measurement and presentation
of the required supplementary information. However, we did not audit the information and
express no opinion on it.
Our audit was conducted 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 the 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.
KERN, DEWENTER, MERE, LTD.
St. Cloud, Minnesota
CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
As management of the City of St. Joseph, we offer readers of the City's financial statements this
narrative overview and analysis of the financial activities of the City for the fiscal year ended
December 31, 2007.
FINANCIAL HIGHLIGHTS
• The assets of the City exceeded its liabilities at the close of the most recent fiscal year by
$ 35,533,558. Of this amount, $ 99,739 maybe used to meet the City's ongoing obligations
to citizens and creditors (unrestricted net assets).
• The government's total net assets increased by $ 3,106,272.
• As of the close of the current fiscal year, the City's governmental funds reported combined
ending fund balances of $ 9,951,263, an increase of $ 35,038. The total amount is available
or designated for spending at the City's discretion (unreserved fund balance).
• At the end of the current fiscal year, unreserved fund balance for the General Fund was
$ 1,149,552, or 50%, of total General Fund expenditures.
• The City's total debt decreased by $ 407,570 during the current fiscal year.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements comprise three components: 1) government-
wide financial statements, 2) fund financial statements and 3) notes to the financial statements.
This report also contains other supplementary information in addition to the basic financial
statements themselves.
Government-Wide Financial Statements. The government-wide financial statements are
designed to provide readers with a broader overview of the City's finances, in a manner similar
to aprivate-sector business.
The Statement of Net Assets presents information on all of the City'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 is improving
or deteriorating.
The Statement of Activities presents information showing how the City'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).
CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
Both of the government-wide financial statements distinguish functions of the City that are
principally supported by taxes and intergovernmental revenues (governmental activities) from
other functions that are intended to recover all or a significant portion of their costs through user
fees and charges (business-type activities). The governmental activities of the City 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 include the water,
sanitary sewer, refuse service and storm water.
The government-wide financial statements include not only the City itself (known as the primary
government), but also a legally separate Economic Development Authority of St. Joseph.
Financial information for this component unit is blended in the financial information.
The government-wide financial statements can be found on pages 18-19 of this 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,
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 can be divided
into two categories: governmental funds and proprietary funds.
Governmental Funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements.
However, unlike the government-wide financial statements, governmental fund financial
statements focus on near-term inflows and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information maybe
useful in evaluating a city's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements.
By doing so, readers may better understand the long-term impact of the government's near-term
financing decisions. Both the governmental fund Balance Sheet and the governmental fund
Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to
facilitate this comparison between governmental funds and governmental activities.
The City maintains 35 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, 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 fore 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, 2007
The City adopts an annual appropriated budget for its General Fund. A budgetary comparison
statement has been provided for the General Fund (page 28) to demonstrate compliance with this
budget.
The basic governmental fund financial statements can be found on pages 20-28 of this report.
Proprietary Funds. The City maintains proprietary funds. Enterprise funds are used to report
the same fiznctions presented as business-type activities in the government-wide financial
statements. The City uses enterprise funds to account for its water, sanitary sewer, 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, sanitary sewer, refuse and storm water, all of which are considered to
be major funds of the City.
The basic proprietary fund financial statements can be found on pages 29-31 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 32-54 of this report.
Other Information. The combining statements referred to earlier in connection with nonmajor
governmental funds can be found on pages 56-67 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 ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. In the case of the City, assets exceeded liabilities by $ 35,533,558 at the close of the
most recent fiscal year.
By far the largest portion of the City'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 uses these capital assets to provide services to citizens;
consequently, these assets are not available for future spending. Although the City'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.
CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
NET ASSETS
Governmental Business-Type
Activities Activities Total
2007 2006 2007 2006 2007 2006
Current and Other Assets 15,167,051 14,131,329 4,977,161 6,558,370 20,144,212 20,689,699
Capital Assets 13,408,363 12,772,769 27,786,984 25,853,705 41,195,347 38,626,474
Total Assets 28,575,414 26,904,098 32,764,145 32,412,075 61,339,559 59,316,173
Long-term Liabilities 13,416,384 13,386,069 8,401,046 8,692,114 21,817,430 22,078,183
Other Liabilities 3,350,393 3,324,837 638,178 1,253,178 3,988,571 4,578,015
Total Liabilities 16,766,777 16,710,906 9,039,224 9,945,292 25,806,001 26,656,198
Net Assets
Invested in Capital Assets,
Net of Related Debt 5,367,809 (2,135,535) 19,049,984 16,903,705 24,417,793 14,768,170
Restricted 11,016,026 10,231,930 - - 11,016,026 10,231,930
Unrestricted (4,575,198) 2,096,797 4,674,937 5,563,078 99,739 7,659,875
Total Net Assets 11,808,637 10,193,192 23,724,921 22,466,783 35,533,558 32,659,975
An additional portion of the City's net assets (31%) represents resources that are subject to
external restrictions on how they maybe used. The remaining balance of unrestricted net assets,
$ 99,739, maybe used to meet the City's ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the City is able to report positive balances in all three
categories of net assets for the government as a whole, as well as for its separate business-type
activities.
The governmental activities had a deficit in investments in capital assets net of related debt for
the previous reporting years. The net asset category restricted shows a positive balance in the
government-type activities. The City changed how they reported the net assets available for debt
obligations from restricted to unrestricted net assets based on current GASB standards causing an
unrestricted net assets deficit in the governmental activities for 2007.
There was a 6% increase in the total net assets for the business-type activities due to the
construction of the new water filtration plant and the addition of wells near the plant. No
depreciation has been deducted for the new plant since the building; however, depreciation has
not been assigned as the construction was not completed until late 2007.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
Governmental Activities. Governmental activities increased the City's net assets by
$ 1,615,445 thereby accounting for 56% of the total growth in the net assets of the City. 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's net assets by
$ 1,258,138 accounting for 44% of the total growth in the City's net assets. The Water Utility,
Sanitary Sewer Utility, Storm Water Utility and Sewer Access Fund contributed in the increase
in net assets in the proprietary funds. The largest portion of the net asset increased in the storm
water utility as a result from storm water development fees for the Rivers Bend plat.
CHANGE IN NET ASSETS
Governmental Business-Type
Activities Activities Total
2007 2006 2007 2006 2007 2006
[tevenues:
Program Revenues:
Charges for Services 630,589 679,910 1,856,022 1,914,374 2,486,611 2,594,284
Operating Grants and Contributions 194,020 254,166 - - 194,020 254,166
Capital Grants and Contributions 3,063,898 3,985,801 281,685 95,000 3,345,583 4,080,801
3eneral Revenues:
Property Taxes 1,383,287 1,157,354 - - 1,383,288 1,157,354
Tax Increments 83,403 77,931 - - 83,403 77,931
Sales Tax 238,149 214,343 16,359 254,508 214,343
Franchise Fees 105,311 0 - - 105,311 -
State Aids 971,311 903,642 - - 971,311 903,642
Unrestricted Investment Earnings 484,595 399,995 241,876 377,434 726,471 399,995
Gain on Sale of Capital Assets 2,041 79,133 - - 2,041 79,133
Other General Revenues - 1,742 12,823 - 12,823 1,742
Total Revenues 7,156,604 7,754,017 2,408,765 2,386,808 8,859,749 8,859,749
Expenses:
General Government 631,795 712,204 - - 631,795 712,204
Public Safety 1,352,891 1,224,645 - - 1,352,891 1,224,645
Public Works 1,583,321 1,597,242 - - 1,583,321 1,597,242
Culture and Recreation 241,290 159,051 - - 241,290 159,051
Economic Development 120,852 109,574 - - 120,852 109,574
Interest on Long-Term Debt 745,477 691,170 - - 745,477 691,170
Water - - 845,148 797,280 845,148 797,280
Sanitary Sewer - - 589,352 525,754 589,352 525,754
StormWater - - 78,091 82,435 78,091 82,435
Refuse - - 270,880 278,768 270,880 278,768
Total Expenses 4
675,626 4,493,886 1,783,471 1,684,237 6,459,097 6,178,123
,
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
Governmental Business-Type
Activities Activities Total
2(107 2006 2007 2006 2007 2006
Increase in Net Assets before Transfers 2,480,979 3,260,131 625,294 702,571 3,106,272 3,962,702
Transfers (865,533) (1,340,826) 865,533 1,340,826 - -
Change in Net Assets 1,615,445 1,919,305 1,490,827 2,043,397 3,106,272 3,962,702
Net Assets -Beginning, restated 10,193,192 8,273,887 22,234,094 20,423,386 32,427,286 28,697,273
Net Assets -Ending 11,808,637 10,193,192 23,724,921 22,466,783 35,533,558 _32,659,975
EXPENSES AND PROGRAM REVENUES -GOVERNMENTAL ACTIVITIES
REVENUES BY SOURCE -GOVERNMENTAL ACTIVITIES
General
Government
1% Public Safety
9%
General Revenues
46%
Culture and Public Works
Recreation 44%
0%
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
EXPENSES AND PROGRAM REVENUES -BUSINESS-TYPE ACTIVITIES
REVENUES BY SOURCE -BUSINESS-TYPE ACTIVITIES
11
CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental Funds. The focus of the City'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's financing requirements. In particular, unreserved fund balance may serve as
a useful measure of a city's net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City's governmental funds reported combined ending
fund balances of $ 9,951,263. This amount constitutes unreserved fund balance. While it is
unreserved, $ 9,251,265 is designated to assist with the purchase of capital projects, provide
relief for debt service, and future working capital. The remaining amount of $ 699,998, or 7%,
constitutes unreserved, undesignated balances available for spending at the City's discretion.
The General Fund is the chief operating fund of the City. At the end of the current fiscal year,
unreserved fund balance of the General Fund was $ 1,149,552. As a measure of the General
Fund's liquidity, it may be useful to compare both unreserved fund balance to total fund
expenditures. Unreserved fund balance represents 50% of total General Fund expenditures.
The fund balance of the City's General Fund increased by $ 227,366 during the current fiscal
year. The City experienced considerable growth both residentially and commercially in previous
years. The growth resulted in an increase in taxable market value of 17% for the 2007 tax year.
With more growth the community demands more services. The City increased the General Fund
levy by 28% to meet the additional demands.
In reviewing the statements, it can be noted that the City had an excess of revenues over
expenditures in the general fund in the amount of $ 308,660. This excess can be attributed to the
foresight of the City in establishing a five year capital improvement plan. Of the $ 308,660
excess, almost half funds future improvements and equipment. The remaining excess is a
combination of increased permit revenue, police fines and a surplus from a closed bond issue.
The General Fund equity increased by less than the operational increase due to transfers between
funds.
Proprietary Funds. The City'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 - $ 1,302,630, sanitary
sewer utility - $ 1,080,156, refuse collection - $ 288,157, storm water utility - $ 315,290. All of
the proprietary funds with the exception of the refuse fund had increases in total net assets for the
year.
CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
GENERAL FUND BUDGETARY HIGHLIGHTS
The City approved the 2007 General Fund budget, increasing the tax capacity rate by
approximately 1.908%, similar to the previous year's budget. In the previous five years prior to
2006, the City has seen the tax capacity rate vary by only 2% (both increase and decrease). The
rapid growth created a need to add staff and equipment thereby increasing the tax capacity rate.
Even though the tax rate increased 1.908%, the City Council limited spending to keep the
increase to only that which was needed. Over that same period of time, the City has experienced
and average annual taxable market value growth of 18%.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. The City's investment in capital assets for its governmental and business-type
activities as of December 31, 2007, amounts to $ 24,417,793 (net of accumulated depreciation
and related debt). The 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 business-type activities is attributable to the construction of
a water filtration plant and the extension of water and sewer utilities in the Orderly Annexation
Area. The largest increase of capital assets in the governmental activities is in the infrastructure
and construction in progress for street reconstruction projects and residential development areas.
CAPITAL ASSETS
Land
Buildings
Infrastructure
Plant and Lines
Improvements
Machinery and Equipment
Construction in Progress
Total
Governmental Business
Activities Activities Total
346,258
2,402,545
12,883,928
497,048
2,352,398
377,882
1,306,704
19,306,694
513,676
724,140
3,709,249
12,883,928
19,306,694
497,048
2,866,074
2,659,281 10,423,850 13,183,131
$ 21,141,458 $ 31,928,806 $ 53,070,264
Additional information on the City of St. Joseph's capital assets can be found in note 5 on pages
46-47 of this report.
Long-Term Debt. At the end of the current fiscal year, the City had total bonded debt
outstanding of $ 24,630,000. Of this amount, $ 14,820,000 comprises debt backed by the full
faith and credit of the government. The remainder of the City's debt represents bonds secured
solely by specified revenue sources (i.e. utility revenue bonds).
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CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
OUTSTANDING DEBT (General Obligation and Revenue Bonds)
Governmental Bnsiness
Activities Activities Total
General Obligation $925,000 - $925,000
G.O. Special Assessments 13,895,000 - 13,895,000
Revenue Bonds 1,205,000 8,605,000 9,810,000
Total $16,025,000 $8,605,000 $24,630,000
The City issued new bonded debt of $ 3,855,000, or 16 %, of the total debt during the current
fiscal year for street improvements, storm water utility improvements and transportation studies.
During 2007, the City issued the following bonds:
• $ 2,875,000 of Taxable G.O. Special Assessment Bonds. These Bonds were issued to
reconstruct Jade Road, install water/sanitary sewer/storm water utilities to Jade Road, add
turn lanes and a bike path with lighting along County Road 121, mill and overlay the City's
east-side streets, reconstruct 8th Ave NE, install water/sanitary sewer/storm water utilities,
storm water improvements in Hollow Park, and transportation studies.
• $ 980,000 of Taxable G.O. Refunding Bonds. These Bonds were issued to refinance the
1998 Bonds for street improvements and utility improvements to 90th and 91St streets; and to
refinance the 1999 Bonds for Joseph Street improvements. The City opted to refinance the
1998 and 1999 Bonds for an interest savings of over $23,000.
The City paid down the bonded debt by $ 4,190,000 to end the year decreasing the bonded debt
by $ 335,000.
The City maintained a "BB+" rating from Moody's for G.O. 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.
Minnesota Statutes limit the amount of net G.O. debt a governmental entity may issue to 2% of
its taxable market value. Net general obligation debt is debt solely paid for, with limited
exceptions, by ad valorem taxes. The current debt limitation for the City is $ 6,711,238 which is
significantly in excess of the City's outstanding G.O. debt.
Additional information on the City's long-term debt can be found in note 6 on pages 48-51.
CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
While the housing market in general is slow, the City 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 new school is scheduled to open for the 2008-2009 school year.
The City also anticipates commerciaUindustrial development with the expansion of the Industrial
Park and planning initiatives for downtown revitalization. The first downtown project began
construction in 2007 with completion in 2008. The project consists of a commercial and
residential mixed-use facility. In early 2008, the City approved a development agreement for the
first phase of a CentraCare medical clinic located on the NE side of the industrial park. The
clinic will provide primary care services for all ages. The first phase will include a staff of seven
doctors and is anticipated to open in the fall of 2008.
The City has been in contact with a developer who proposed a senior housing addition adjacent
to the proposed downtown area. Construction for the senior housing addition is anticipated to be
completed in 2009.
Property tax reforms and budget deficits at the state level have significantly impacted
government aid payments made to the City. With declining aids and rapid growth, the City
Council was forced to increase the tax rate. At that same time, the City Council acknowledged
that substantial increase and affirmed that this would not be a common practice. The City
Council continues to budget conservatively while maintaining steady tax rates.
The City consistently reviews the fee structures for all licenses and permits and services to
recover appropriate costs in lieu of raising property taxes.
The City changed the rate structure for water and sewer to help cover not only the operating
costs but the depreciation as well. As can be seen from the statements, the new structure has had
a positive impact. The City will continue to monitor the rates to eventually cover depreciation
fully.
In 2008, the City approved switching from a manual water meter read system to a radio read
system. It is anticipated the radio read system will record water consumption at a higher
accuracy level resulting in a higher pumping versus billing ratio. The new system also converts
the water consumption in gallons versus the old system which read in cubic feet. The current
water rates will cover the cost to covert the meters to the new system.
15
CITY OF ST. JOSEPH
Stearns County, Minnesota
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2007
The City is part of the St. Cloud Wastewater System which provides sewer services to the six
area cities. The wastewater system is managed in part by the St. Cloud Area Wastewater
Advisory Committee (SCAWAC) of which each city has representation. SCAWAC has
identified the need to expand the treatment portion of the wastewater system and has been
working on the expansion needs for the past year. The improvements will consist of three phases
-design, construction and rehabilitation with an anticipated total cost of $ 51,000,000. In 2008,
the design phase will begin. Based on a joint agreement the City will be responsible for
$ 296,972 of phase one which is predominately engineering costs associated with the design.
During 2008, the City will begin discussing how the construction and rehabilitation costs will be
financed. In anticipation of the needed expansion, the City has been charging a sewer access fee
for all new connections to the wastewater system. These funds will be used, in part, to fund the
expansion. Based on cost estimates, the City will be responsible for approximately $ 5,000,000
for phase two and three.
All the factors were considered in preparing the City's budget and fee schedule for the 2007 and
future reporting years.
REQUESTS FOR INFORMATION
The financial report is designed to provide a general overview of the City'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
Finance Director, PO Box 668, 25 College Avenue North, St. Joseph, MN 56374.
CITY OF ST. JOSEPH
Stearns County, Minnesota
STATEMENT OF NET ASSETS
December 31, 2007
Governmental Business-Type
Activities Activities Total
ASSETS:
Cash and Investments
(Including Cash Equivalents) $ 8,444,385 $ 4,655,930 $ 13,100,315
Property Tax Receivable 59,113 - 59,113
Accounts Receivable 57,791 247,400 305,191
Interest Receivable 71,387 36,228 107,615
Due from Other Governments 105,024 704 105,728
Special Assessments Receivable:
Delinquent 83,797 - 83,797
Deferred 6,345,554 36,899 6,382,453
Capital Assets:
Land 346,258 377,882 724,140
Construction in Progress 2,659,281 10,423,850 13,083,131
Infrastructure 12,883,928 - 12,883,928
Buildings 2,402,545 1,306,704 3,709,249
Improvements 497,048 - 497,048
Machinery and Equipment 2,352,398 513,676 2,866,074
Plant and Lines - 19,306,694 19,306,694
Less Accumulated Depreciation (7,733,095) (4,141,822) (11,874,917)
Capital Assets (Net of Accumulated Depreciation) 13,408,363 27,786,984 41,195,347
Total Assets $ 28,575,414 $ 32,764,145 $ 61,339,559
LIABILITIES AND NET ASSETS
Liabilities:
Accounts Payable $ 71,682 $ 23,600 $ 95,282
Contracts Payable 280,993 115,937 396,930
Due to Other Governments 3,238 21,893 25,131
Salaries and Benefits Payable 57,615 17,512 75,127
Interest Payable 52,017 32,809 84,826
Bond Principal Payable:
Payable Within One Year 2,800,000 355,000 3,155,000
Payable After One Year 13,225,000 8,250,000 21,475,000
Notes Payable:
Payable Within One Year - 44,000 44,000
Payable After One Year - 88,000 88,000
Loan Payable:
Payable Within One Year 28,581 - 28,581
Payable After One Year 28,866 - 28,866
Compensated Absences Payable:
Payable Within One Year 56,267 27,427 83,694
Payable After One Year 162,518 63,046 225,564
Total Liabilities 16,766,777 9,039,224 25,806,001
Net Assets:
Invested in Capital Assets, Net of Related Debt 5,367,809 19,049,984 24,417,793
Restricted for:
Debt Service 10,965,085 - 10,965,085
Other Purposes 50,941 - 50,941
Unrestricted (4,575,198) 4,674,937 99,739
Total Net Assets 11,808,637 23,724,921 35,533,558
Total Liabilities and Net Assets $ 28,575,414 $ 32,764,145 $ 61,339,559
The Notes to the Financial Statements are an integral part of this statement. 1 g
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19
CITY OF ST. JOSEPH
Stearns County, Minnesota
BALANCE SHEET -GOVERNMENTAL FUNDS
December 31, 2007
Debt Service
2007 Street and
ASSETS:
Cash and Investments
(Including Cash Equivalents)
Taxes Receivable -Delinquent
Special Assessments Receivable:
Delinquent
Deferred
Accounts Receivable
Interest Receivable
Due from Other Funds
Due from Other Governments
Total Assets
LIABILITIES AND FUND BALANCES:
Liabilities:
Accounts Payable
Contracts Payable
Due to Other Funds
Due to Other Governments
Salaries and Benefits Payable
Deferred Revenue
Total Liabilities
Fund Balances:
Unreserved, Reported in:
General Fund -Designated
General Fund - Undesignated
Special Revenue - Undesignated
Debt Service -Designated
Debt Service - Undesignated
Capital Projects -Designated
Total Fund Balances
Total Liabilities and
Fund Balances
G.O. G.O. Storm Water
General Fund Improvement Improvement Improvements/
(101, 105, Bonds of 2002 Bonds of Transportation
106, 108) (325) 2005C (335) Studies (341)
$ 1,193,627 $ 676,330 $ 600,967 $ 625,994
35,749 1,939 1,962 -
510 4,702 - -
3,124 1,016,704 1,618,948 1,789,565
45,291 - - _
12,704 6,125 12,863 3,966
15,672 598 1,418 14,623
$ 1,306,677 $ 1,706,398 $ 2,236,158 $ 2,434,148
$ 56,889 $ - $ - $ _
3,238 - - _
57,615 - - _
39,383 1,023,345 1,620,910 1,789,565
157,125 1,023,345 1,620,910 1,789,565
1,038,149 - - _
111,403 - - _
- 683,053 615,248 644,583
1,149,552 683,053 615,248 644,583
$ 1,306,677 $ 1,706,398 $ 2,236,158 $ 2,434,14$
The Notes to the Financial Statements are an integral part of this statement. 20
Capital Projects
G.O.
Improvement Other Total
Bonds of 2007A Governmental Governmental
(441) Funds Funds
$ 826,250 $ 6,194,799 $ 10,117,967
- 19,463 59,113
- 78,585 83,797
- 1,917,213 6,345,554
- 12,500 57,791
- 50,851 86,509
- 127,010 127,010
- 72,713 105,024
$ 826,250 $ 8,473,134 $ 16,982,765
$ 1,234 $ 13,559 $ 71,682
97,288 183,705 280,993
- 127,010 127,010
- - 3,238
- - 57,615
- 2,017,761 6,490,964
98,522 2,342,035 7,031,502
- - 1,038,149
- - 111,403
- 643,790 643,790
- 2,625,137 4,568,021
- (55,195) (55,195)
727,728 2,917,367 3,645,095
727,728 6,131,099 9,951,263
$ 826,250 $ 8,473,134 $ 16,982,765
21
CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE BALANCE SHEET TO
THE STATEMENT OF NET ASSETS -GOVERNMENTAL FUNDS
December 31, 2007
Total Fund Balances -Governmental Funds $ 9,951,263
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 21 141 458
Less Accumulated Depreciation (7,733,095)
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 (16,025,000)
Loan Payable (57,447)
Compensated Absences Payable (218,785}
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 deferred in the funds.
Property Taxes 59,113
Special Assessments 83,797
Revenues in the Statement of Activities that do not provide current financial
resources are not reported as revenues in the funds.
Deferred Special Assessments 6,345,554
Notes Receivable 2,500
The Water Access and Sewer Access Capital Projects Funds are proprietary in nature
and, therefore, included in the business-type activities in the Statement of Net Assets. (1,688,704)
Governmental funds do not report a liability for accrued interest
due and payable. (52,017)
Total Net Assets -Governmental Activities $ 11,808,637
The Notes to the Financial Statements are an integral part of this statement. 22
CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE STATEMENT
OF NET ASSETS -BUSINESS-TYPE ACTIVITIES
December 31, 2007
Total Net Assets -Proprietary Funds $ 22,036,217
Amounts reported for governmental activities in the Statement of Net Assets
are different because:
The Water Access and Sewer Access Capital Projects Funds are proprietary in nature
and relates to water and sewer improvements for the applicable funds. Therefore,
it is included as a business-type activity. 1,688,704
Total Net Assets -Business-Type Activities $ 23,724,921
The Notes to the Financial Statements are an integral part of this statement. 23
CITY OF ST. JOSEPH
Stearns County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
Debt Service
REVENUES:
Property Taxes
Tax Increments
Sales Taxes
Special Assessments
Franchise Fees
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Miscellaneous:
Investment Income
Contributions and Donations
Other
Total Revenues
EXPENDITURES:
Current:
General Government
Public Safety
Public Works
Culture and Recreation
Economic Development
Debt Service:
Principal
Interest and Other Charges
Capital Outlay:
General Government
Public Safety
Public Works
Culture and Recreation
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
OTHER FINANCING SOURCES (USES):
Sale of Property
Bonds Issued
Refunding Bond Payment
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES:
Beginning of Year
End of Year
The Notes to the Financial Statements are an integral part of this statement.
2007 Street
and Storm
G.O. G.O. Water
General Fund Improvement Improvement Improvements/ i
(101, 105, Bonds of 2002 Bonds of Transportation
106, 108) (325) 2005C (335) Studies (341)
$ 810,886 $ 41,928 $ 46,280 $ -
222 - _ _
966 139,462 364,297 470,732
105,311 - _ _
267,305 - _ _
1,025,725 3,985 131,032 14,623
222,510 - - _
79,837 - _ _
66,703 37,632 78,425 48,259
16,256 - _ _
22,057 - - 3,699
2,617,778 223,007 620,034 537,313
579,533 - - _
1,221,600 - - _
343,321 - _ _
138,646 - - _
- 240,000 740,000 -
- 122,338 108,500 54,055
5,805 - _ _
20,213 - _ _
2,309,118 362,338 848,500 54,055
308,660 (139,331) (228,466) 483,258
2,041 - _ _
- - - 48,734
182,190 280,000 - 112,591
(265,525) (420,072) - _
(81,294) (140,072) - 161,325
227,366 (279,403} (228,466) 644,583
922,186 962,456 843,714 -
$ 1,149,552 $ 683,053 $ 615,248 $ 644,583
24
Capital Projects
G.O.
Improvement Other Total
Bonds of 2007A Governmental Governmental
(441) Funds Funds
$ - $ 445,539 $ 1,344,633
- 83,403 83,403
- 237,927 238,149
- 462,724 1,438,181
- - 105,311
- - 267,305
- 42,432 1,217,797
- 600,626 823,136
79,837
- 340,076 571,095
- 10,000 26,256
34,543 21,001 81,300
34,543 2,243,728 6,276,403
- - 579,533
- - 1,221,600
- - 343,321
- 4,396 143,042
- 120,852 120,852
- 1,888,570 2,868,570
44,371 415,193 744,457
- 11,642 17,447
- 10,945 31,158
1,930,990 875,495 2,806,485
- 81,116 81,116
1,975,361 3,408,209 8,957,581
(1,940,818) (1,164,481) (2,681,178)
- - 2,041
2,826,266 980,000 3,855,000
- (l,oos,ooo) (1,005,000)
- 3,159,669 3,734,450
(157,720) (3,026,958) (3,870,275)
2,668,546 107,711 2,716,216
727,728 (1,056,770) 35,038
- 7,187,869 9,916,225
727 728 $ 6 131 099 $ 9 951,263
2S
CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES TO THE STATEMENT
OF ACTIVITIES -GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
Total Net Change in Fund Balances -Governmental Funds $ 35,038
Amounts reported for governmental activities in the Statement of Activities are different because:
Capital. outlays are reported in governmental funds as expenditures. However, in the
Statement of Activities, the cost of those assets is allocated over the estimated useful lives
as depreciation expense.
Capital Outlays 1,224,151
Capital Contributions 502,206
Depreciation Expense (1,096,818)
Loss on Disposal 6,055
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. 2,868,570
Bonds were refunded during the year. The amount paid off with the new funding is reported in
the governmental funds as a use of financing. However, the payments are not expenditures
in the Statement of Activities, but rather a reduction in long-term liabilities in the Statement
of Net Assets. 1,005,000
Interest 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 use of current financial resources. In the Statement of Activities,
however, interest expense is recognized as the interest accrues, regardless of when it is due. (1,020)
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. (3,855,000)
Compensated absences are recognized as paid in the governmental funds but recognized as
the expense is incurred in the Statement of Activities. (58,991)
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 23,031
Delinquent Property Taxes 38,654
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 970,938
Notes Receivable (10,000)
The Water Access and Sewer Access Capital Projects Funds are proprietary in nature
and, therefore, is reported with business-type activities. (36,369)
Change in Net Assets -Governmental Activities $ 1,615 445
The Notes to the Financial Statements are an integral part of this statement. 26
CITY OF ST. JOSEPH
Stearns County, Minnesota
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS -BUSINESS-TYPE ACTIVITIES
For the Year Ended December 31, 2007
Total Net Change in Fund Net Assets -Proprietary Funds $ 1,454,458
Amounts reported for governmental activities in the Statement of Activities
are different because:
Recognized current year activity from the Water Access and Sewer Access Capital
Projects Funds with the business-type activities. 36,369
Change in Net Assets -Business-Type Activities $ 1,490,827
The Notes to the Financial Statements are an integral part of this statement. 27
CITY OF ST. JOSEPH
Stearns County, Minnesota
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL -GENERAL FUND
For the Year Ended December 31, 2007
REVENUES:
Property Taxes
Sales Taxes
Special Assessments
Franchise Fees
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Miscellaneous Revenues:
Investment Income
Contributions and Donations
Other
Total Revenues
EXPENDITURES:
Current:
General Government
Public Safety
Public Works
Culture and Recreation
Capital Outlay:
General Government
Public Safety
Public Works
Culture and Recreation
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
OTHER FINANCING SOURCES (USES):
Sale of Property
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES:
Beginning of Year
End of Year
Variance with
Original Final Actual Final Budget -
Budget Budget Amounts Over (Under)
$ 907,611 $ 907,611 $ 810,886 $ (96,725)
- - 222 222
2,000 2,000 966 (1,034)
93,000 93,000 105,311 12,311
224,400 224,400 267,305 42,905
886,234 951,234 1,025,725 74,491
46,700 224,796 222,510 (2,286)
26,500 26,500 79,837 53,337
42,000 48,000 66,703 18,703
- - 16,256 16,256
2,000 2,000 22,057 20,057
2,230,445 2,479,541 2,617,778 138,237
558,527 558,527 579,533 21,006
1,236,201 1,227,236 1,221,600 (5,636)
307,049 307,049 343,321 36,272
154,735 154,735 138,646 (16,089)
20,500 - 5,805 5,805
58,975 45,750 20,213 (25,537)
110,924 - -
27,980 - - -
2,474,891 2,293,297 2,309,118 15,821
(244,446) 186,244
308,660
122,416
24,000 24,000
24,000 24,000
$ (220,446) $ 210,244
2,041 2,041
182,190 158,190
(265,525) (265,525)
(81,294) (105,294)
227,366 $ 17,122
922,186
$ 1,149,552
The Notes to the Financial Statements are an integral part of this statement. 2g
CITY OF ST. JOSEPH
Stearns County, Minnesota
STATEMENT OF NET ASSETS -PROPRIETARY FUNDS
December 31, 2007
Sanitary Sewer Storm Water
Water (601) (602) Refuse (603) (651) Total
ASSETS:
Current Assets:
Cash and Investments
(Including Cash Equivalents) $ 1,420,353 $ 1,000,465 $ 266,815 $ 294,715 $ 2,982,348
Special Assessments Receivable:
Delinquent - - - - -
Deferred 10,543 23,504 1,633 1,219 36,899
Accounts Receivable 61,162 116,132 51,652 18,454 247,400
Interest Receivable 11,442 6,926 1,836 902 21,106
Due from Other Governments 704 - - - 704
Total Current Assets 1,504,204 1,147,027 321,936 315,290 3,288,457
Noncurrent Assets:
Capital Assets:
Land 372,941 4,941 - - 377,882
Buildings 688,721 617,983 - - 1,306,704
Plants and Lines 7,678,204 7,911,191 - 3,717,299 19,306,694
Machinery and Equipment 116,326 396,703 - 647 513,676
Construction in Progress 8,158,659 1,314,712 - 950,479 10,423,850
Total Capital Assets 17,014,851 10,245,530 - 4,668,425 31,928,806
Less Accumulated Depreciation (1,452,648) (2,224,405) - (464,769) (4,141,822)
Net Capital Assets 15,562,203 8,021,125 - 4,203,656 27,786,984
Total Assets $ 17,066,407 $ 9,168,152 $ 321,936 $ 4,518,946 $ 31,075,441
LIABILITIES AND NET ASSETS:
Current Liabilities:
Accounts Payable $ 3,659 $ 3,313 $ 16,628 $ - $ 23,600
Contracts Payable 115,937 - - - 115,937
Salaries and Benefits Payable 7,750 7,700 2,062 - 17,512
Interest Payable 30,835 1,974 - - 32,809
Due to Other Governments 2,372 12,863 6,658 - 21,893
Long-Term Liabilities Due Within One Year 387,106 38,106 1,215 - 426,427
Total Current Liabilities 547,659 63,956 26,563 - 638,178
Noncurrent Liabilities:
Compensated Absences 41,021 41,021 8,431 - 90,473
Notes Payable 132,000 - - - 132,000
Bonds Payable 8,115,000 490,000 - - 8,605,000
Less Amounts Due Within One Year (387,106) (38,106) (1,215) - (426,427)
Total Noncurrent Liabilities 7,900,915 492,915 7,216 - 8,401,046
Total Liabilities 8,448,574 556,871 33,779 - 9,039,224
Net Assets:
Investment in Capital Assets, Net
Related Debt 7,315,203 7,531,125 - 4,203,656 19,049,984
Unrestricted 1,302,630 1,080,156 288,157 315,290 2,986,233
Total Net Assets 8,617,833 8,611,281 288,157 4,518,946 22,036,217
Total Liabilities and Net Assets $ 17,066,407 $ 9,168,152 $ 321,936 $ 4,518,946 $ 31,075,441
The Notes to the Financial Statements are an integral part of this state ment. 29
CITY OF ST. JOSEPH
Stearns County, Minnesota
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN NET ASSETS -PROPRIETARY FUNDS
For the Year Ended December 31, 2007
OPERATING REVENUES:
Charges for Services
OPERATING EXPENSES:
Wages and Salaries
Sewer Use Rental
Materials and Supplies
Repairs and Maintenance
Professional Services
Insurance
Utilities
Depreciation
Refuse Disposal
Equipment
Miscellaneous
Total Operating Expenses
Operating Income (Loss)
NONOPERATING REVENUES (EXPENSES):
Investment Income
Loss on Disposal of Asset
Interest Expense
Other Income
Total Nonoperating Revenues (Expenses)
Income before Capital Contributions and Transfers
Capital Contributions
Transfers In
Transfers Out
Change in Net Assets
NET ASSETS:
Beginning of Year, As Previously Stated
Prior Period Adjustment
Beginning of Year, Restated
End of Year
The Notes to the Financial Statements are an integral part of this statement.
Sanitary
Water (601) Sewer (602) Refuse (603)
$ 436,324 $ 333,963 $ 257,484
154,953 137 938
> 55 305
>
- 166,914 -
37,597 8,562 969
31,728 14,910 6
17,798 12,035 2,495
8,853 10,300 -
52,324 18,849 -
179,676 190,421 -
159 875 210,202
1,979 216 -
9,833 3,682 1,903
494,900 564,702 270,880
(58,576) (230,739) (13,396)
86,204 48,703 12,270
(1,479) - -
(348,769) (24,650) -
34,897 - -
(229,147) 24,053 12,270
(287,723) (206,686) (1,126)
505,438 492,572 -
345,200 83,200 -
(50,000) (150,000) (13,500)
512,915 219,086 (14,626)
8,332,570 8,394,713 302,783
(227,652) (2,518) -
8,104,918 8,392,195 302,783
$ 8,617,833 $ 8,611,281 $ 288,157
30
Storm Water
(651) Total
$ 262,367 $ 1,290,138
- 348,196
- 166,914
- 47,128
1,388 48,032
1,400 33,728
- 19,153
- 71,173
74,475 444,572
- 211,236
432 2,627
396 15,814
78,091 1,408,573
184,276 (118,435)
8,199 155,376
- (1,479)
- (373,419)
- 34,897
8,199 (184,625)
192,475 (303,060)
623,683 1,621,693
- 428,400
(79,075) (292,575)
737,083 1,454,458
3,784,382 20,814,448
(2,519) (232,689)
3,781,863 20,581,759
$ 4,518,946 $ 22,036,217
31
CITY OF ST. JOSEPH
Stearns County, Minnesota
STATEMENT OF CASH FLOWS -PROPRIETARY FUNDS
For the Year Ended December 31, 2007
Sanitary Sewer
Water (601) (602) Refuse (603)
CASH FLOWS -OPERATING ACTIVITIES:
Receipts from Customers and Users $ 433,066 $ 481,667 $ 255,376
Payments to Suppliers (811,077) (236,819) (260,961)
Payments to Employees (166,281) (122,036) (54,009)
Net Cash Flows -Operating Activities (544,292) 122,812 (59,594)
CASH FLOWS - NONCAPITAL FINANCING ACTIVITIES:
Other Miscellaneous Receipts
Transfer from Other Funds
Transfer to Other Funds
Net Cash Flows - Noncapital Financing Activities
34,897
345,200
(50,000)
330,097
(364,000)
(345,859)
449
(804,892)
(1,514,302)
83,200 -
(150,000) (13,500)
(66,800) (13,500)
(25,000) -
(24,713) -
(5,386) -
(55,099) -
CASH FLOWS -CAPITAL AND RELATED
FINANCING ACTIVITIES:
Principal Paid on Debt
Interest Paid on Debt
Proceeds from Disposal of Capital Assets
Acquisition of Capital Assets
Net Cash Flows -Capital and Related Financing Activities
CASH FLOWS -INVESTING ACTNITIES:
Interest and Dividends Received
Net Change in Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS:
Beginning of Year
End of Year
RECONCILIATION OF OPERATING INCOME (LOSS)
TO NET CASH FLOWS -OPERATING ACTIVITIES:
Operating Income (Loss)
Adjustments to Reconcile Operating Income
(Loss) to Net Cash Flows -Operating Activities:
Depreciation Expense
Accounts Receivable
Special Assessments
Due from Other Governments
Accounts Payable
Salaries Payable
Compensated Absences Payable
Total Adjustments
Net Cash Flows -Operating Activities
NONCASH CAPITAL ACTIVITIES:
Capital Contributions
88,363 45,577 11,807
(1,640,134) 46,490 (61,287)
3,060,487 953,975 328,102
$ 1,420,353 $ 1,000,465 $ 266,815
$ (58,576) $ (230,739) $ (13,396)
179,676 190,421 -
(1,011) 125,862 (475)
(1,543) 21,081 (1,633)
(704) 761 -
(769,115) (13,339) (52,044)
696 2,751 627
(12,024) 13,151 669
(485,716) 353,551 (46,198)
$ (544,292) $ 122,812 $ (59,594)
$ 505,438 $ 492,572 $
The Notes to the Financial Statements are an integral part of this statement. 32
Storm Water
(651) Total
$ 262,486 $ 1,432,595
(8,733) (1,317,590)
- (342,326)
253,753 (227,321)
- 34,897
- 428,400
(79,075) (292,575)
(79,075) 170,722
- (389,000)
- (370,572)
- 449
(4,497) (814,775)
(4,497) (1,573,898)
7,998 153,745
178,179 (1,476,752)
116,536 4,459,100
$ 294,715 $ 2,982,348
$ 184,276 $ (118,435)
74,475 444,572
315 124,691
(196) 17,709
- 57
(5,117) (839,615)
- 4,074
- 1,796
69,477 (108,886)
$ 253,753 $ (227,321)
$ 623,683 $ 1,621,693
33
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of 5t. 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
City is considered to be financially accountable.
The financial statements present the City and its component units. The City includes all funds,
account groups, organizations, institutions, agencies, departments and offices that are not legally
separate from such. Component units are legally separate organizations for which the elected
officials of the City are financially accountable and are included within the basic financial
statements of the City because of the significance of their operational or financial relationships
with the City.
The City is considered financially accountable for a component unit if it appoints a voting
majority of the organization's governing body and it is able to impose its will on the organization
by significantly influencing the programs, projects, activities or level of services performed or
provided by the organization, or there is a potential for the organization to provide specific
financial benefits to or impose specific financial burdens on, the City.
As a result of applying the component unit definition criteria above, the City's component unit is
presented in this report as follows:
Blended Component Unit -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 St. Joseph EDA is governed by a five member board
appointed by the City Council. The St. Joseph EDA is included as a blended component unit
of the City because the St. Joseph EDA is financially accountable to the City and the
St. Joseph EDA provides services almost entirely for the City. The St. Joseph EDA is
presented as the Economic Development Authority Special Revenue Fund, the City Hall G.O.
EDA Refunding Bonds of 2005 Debt Service Fund and the G.O. Refunding Bonds of 2003
Debt Service Fund. Separate financial statements are not prepared for the St. Joseph EDA.
35
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
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 of the City. 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. Internally dedicated revenues are reported as general revenues
rather than program 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 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 City considers revenues to be available if they 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.
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
Property taxes, franchise taxes, licenses and interest associated with the current fiscal period are
all considered to be susceptible to accrual and so have been recognized as revenues of the
current fiscal period. Only the portion of special assessments receivable due within the current
fiscal period is considered to be susceptible to accrual as revenue of the current period. All
other revenue items are considered to be measurable and available only when cash is received
by the City.
Description of Funds:
Major Governmental Funds:
General Fund -This Fund is the City's primary operating fund. It accounts for all financial
resources of the general City, except those required to be accounted for in another fund.
G.O. Improvement Bonds of 2002 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 of 2005C Debt Service Fund -This Fund accounts for the
resources accumulated and payments made for principal and interest on this bond issue.
2007 Street and Storm Water Improvements/Transportation Studies 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 of 2007A Capital Projects Fund -This Fund accounts for the
proceeds of the G.O. Improvement Bonds of 2007A and the costs associated with this
specific capital project.
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 of the City's storm water utility.
37
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation
(Continued)
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 City 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 City's
sanitary sewer function and various other functions of the City. Elimination of these charges
would distort the direct costs and program revenues reported for the various functions
concerned.
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 Water Enterprise, Sanitary Sewer Enterprise, Refuse
Enterprise and Storm Water Enterprise 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.
When both restricted and unrestricted resources are available for use, it is the City'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.
38
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
1. Cash and Investments (Continued)
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies
and instrumentalities, shares of investment companies whose only investments are in the
aforementioned securities, obligations of the State of Minnesota or its municipalities,
bankers' acceptances, future contracts, repurchase and reverse repurchase agreements and
commercial paper of the highest quality with a maturity of no longer then 270 days and in the
Minnesota Municipal Investment Pool.
Custodial Credit Risk -Deposits: In the case of deposits, this is the risk that in the event of a
bank failure, the City's deposits may not be returned to it. The City has an investment policy
in place to address custodial credit risk for deposits, stating they will obtain collateral or bond
for all uninsured amounts on deposit. All deposits shall be covered by FDIC, NCUA or
collateralized at 110%.
Concentration of Credit Risk: Investments should be diversified to avoid incurring
unreasonable risks inherent in over investing in specific instruments, individual financial
institutions or maturities. The City's investment policy states the City will attempt to
diversify its investments according to type, issuer 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 maybe
utilized to take advantage of higher yields. No more than 40% of the total investments
should extend beyond five years and the weighted average maturity of the portfolio shall
never exceed five years.
Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will
not fulfill its obligations. Minnesota Statutes 118A.04 and 118A.05 limit investments that
are in the top two ratings issued by nationally recognized statistical rating organizations. The
City's investment policy limits the allowable investments in accordance with these Statutes.
Interest Rate Risk: The City should try to minimize the risk that arises from over investing in
specific instruments, individual financial institutions or maturities. The City's investment
policy states the investment portfolio will be structured so that securities mature to meet cash
flow requirements and avoiding the need to sell securities prior to maturity, investing in
short-term securities, investing in long-term securities if the market rate is favorable.
Custodial Credit Risk -Investments: For an investment, this is the risk that in the event of
the failure of the counterparty, the City will not be able to recover the value of its investments
or collateral securities that are in the possession of an outside party. The City's investment
policy addresses this risk and states that the City will permit investments only to the extent
that there is SIPC and excess SIPC coverage available.
39
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
2. Receivables and Payables
All trade and property tax receivables are shown at a gross amount since both are assessable
to the property taxes and are collectible upon the sale of the property.
The City levies its property tax for the subsequent year during the month of December.
December 28 is the last day the City can certify a tax levy to the County Auditor for
collection the following year. Such taxes become a lien on January 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. Stearns 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 of the payment due on May 15 and the second half of the payment due on
October 15. Taxes not collected as of December 31 each year are shown as delinquent taxes
receivable.
The County Auditor prepares the tax list for all taxable property in the City, applying the
applicable tax rate to the tax capacity of individual properties, to arrive at the actual tax for
each property. The County Auditor also collects all special assessments, except for certain
prepayments paid directly to the City.
The County Auditor submits the list of taxes and special assessments to be collected on each
parcel of property to the County Treasurer in January of each year.
3. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items in both government-wide and fund financial statements.
4. Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads,
sidewalks and similar items), are reported in the applicable governmental or business-type
activities columns in the government-wide financial statements. Capital assets are defined by
the City as assets with an initial, individual cost of more than $ 1,000 and an estimated useful
life in excess of three 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.
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.
40
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
4. Capital Assets (Continued)
Property, plant and equipment of the City are depreciated using the straight-line method over
the following estimated useful lives:
Assets Years
Buildings 40
Park Buildings 30
Building Improvements l5
Street Construction 15
Street Overlay 10
Furniture and Fixtures 5-10
Light Vehicles 5
Machinery and Equipment 3-7
Fire Trucks 20
Utility Distribution System 50
5. Compensated Absences
The City compensates employees who leave City service in good standing for all earned,
unused vacation. Employees can accrue up to 200 hours of vacation depending on years of
service. The maximum amount of carryover from year-to-year is 80 hours. In addition,
employees are compensated for unused sick leave (up to a maximum of 720 hours) at various
rates depending on the employee type, provided the City's notice of termination policy has
been complied with.
6. Long-Term Obligations
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.
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. Issuance costs, whether or not withheld from
the actual debt proceeds received, are reported as debt service expenditures.
41
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
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 accumulated 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 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.
NOTE 2 -STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
1. In August of each year, City staff submits to the City Council, a proposed operating
budget for the fiscal year commencing the following January 1. The operating budget
includes proposed expenditures and the means of financing them for the upcoming year.
2. Public hearings are conducted to obtain taxpayer comments.
3. The budget is legally enacted through passage of a resolution after obtaining taxpayer
comments.
4. Budgets for the General and Special Revenue Funds are adopted on a basis consistent
with U.S. generally accepted accounting principles.
42
CITY OF 5T. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 2 -STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information (Continued}
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
of project controls and formal appropriated budgets are not adopted.
7. Budgeted amounts are as originally adopted by the City Council. There were
amendments for 2007 to allocate funds for the Finance Director and to move the General
Fund's capital outlay budget to the General Capital Improvements Fund. 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.
B. Deficit Fund Balance
The following Funds had deficit fund balances at December 31, 2007:
Nonmajor Governmental Funds:
Special Revenue:
Lake Wobegon Trail
City Beautification
$ 10,007
48,941
Debt Service:
City Hall G.O. EDA Refunding Bonds of 2005 15,356
Maintenance Facility G.O. EDA Revenue Bonds of 2003 39,839
These deficits will be eliminated with future revenues or transfers from other funds.
43
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 2 -STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
C. Expenditures in Excess of Appropriations
Actual expenditures exceeded budgeted amounts in the following Funds:
Final Budget
General Fund $ 2,293,297
EDA 30,650
TIF 1-3 Borgert 19,705
Park Dedication -
TIF 2-1 Millstream Shop and Lofts -
NOTE 3 -DEPOSITS AND INVESTMENTS
A. Deposits
Actual
$ 2,309,118
38,070
23,414
82,076
5,236
Custodial Credit Risk -Deposits: As of December 31, 2007, 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 City's name. At December 31, 2007, the City's deposits had a carrying value as
shown below.
Certificates of Deposit
Checking
Savings
$ 10,031,291
470,139
49,005
Total $ 10,550,435
B. Investments
As of December 31, 2007, the City had the following investments:
Weighted Standard &
Fair Average Poor's
Value Maturity (Years) Rating
Brokered Certificates of Deposit $ 1,586,128 3.47 N/A
Government Bonds/Notes 920,128 4.27 AAA
Brokered Money Market 43,349 N/A N/A
Total $ 2,549,605
44
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 3 -DEPOSITS AND INVESTMENTS
B. Investments (Continued)
Credit Risk: As of December 31, 2007, the City's investments were rated as in the table on the previous
page.
Concentration of Credit Risk: As of December 31, 2007, the City's investments in FHLB
(5.9%), FHLMC (18.4%) and FNMA (11.8%) securities exceeded 5% of the City's total
investment portfolio.
C. Deposits and Investments
The following is a summary of deposits and investments as of December 31, 2007:
Deposits (Note 3.A.)
Investments (Note 3.B.)
Petty Cash
Total
$ 10,550,435
2,549,605
275
$ 13,100,315
Deposits and investments are presented in the December 31, 2007 basic financial statements as
follows:
Statement of Net Assets:
Cash and Investments $ 13,100,315
NOTE 4 - INTERFUND BALANCES AND TRANSFERS
The composition of interfund balances as of December 31, 2007 is as follows:
Receivable Fund
Other Governmental Funds
Payable Fund Amount
Other Governmental Funds $ 127,010
The due from/due to other funds balances represent borrowing to resolve deficit cash balances.
45
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 4 - INTERFUND BALANCES AND TRANSFERS
The composition of interfund transfers as of December 31, 2007 is as follows:
Transfer In
Transfer Out:
General
G.O. Improvement
Bonds of 2002
G.O. Improvement
Bonds of 2007A
Other Governmental
G.O. 2007 Street and Other
Storm Water
Lnprovements/
Improvement Transportation Governmental Sanitary
General Bonds of 2002 Studies Funds Water Sewer Total
$ - $ - $ 40,066 $ 225,459 $ - $ - $ 265,525
- - 420,072
- - 157,720
- - 420,072
- 157,720
Funds 168,690 100,000 38,450 2,291,418 345,200 83,200 3,026,958
Water - 40,000 - 10,000 - - 50,000
Sanitary Sewer - 140,000 - 10,000 - - 150,000
Refuse 13,500 - - - - - 13,500
Storm Water - 34,075 45,000 79,075
Total Transfers $ 182,190 $ 280,000 $ 112,591 $ 3,159,669 _$ 345,200 $ 83,200 $ 4.162,850
Transfers were made to close funds and provide resources for debt payments and planning projects
NOTE 5 -CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2007 was as follows:
Beginning Beginning Ending
Balance Adjustments Balance, Restated Increases Decreases Balance
Governmental Activities:
Capital Assets not being Depreciated:
Land $ 346,258 $ - $ 346,258 $ - $ - $ 346,258
Construction in Progress 2,317,379 - 2,317,379 1,038,650 696,748 2,659,281
Total Capital Assets
not being Depreciated 2,663,637 - 2,663,637 1,038,650 696,748 3,005,539
Capital Assets being Depreciated:
Improvements
Buildings
Infrastructure
Machinery and Equipment
Total Capital Assets
being Depreciated
Less Accumulated Depreciation for:
Improvements
Buildings
Infrastructure
Machinery and Equipment
Total Accumulated
Depreciation
Total Capital Assets being
Depreciated, Net
Governmental Activities Capital
Assets, Net
525,533 (88,927) 436,606 64,322 3,880 497,048
2,300,892 1,190 2,302,082 136,463 36,000 2,402,545 '
12,065,583 - 12,065,583 1,073,089 254,744 12,883,928
2,352,813 87,737 2,440,550 110,581 198,733 2,352,398
17,244,821 - 17,244,821 1,384,455 493,357 18,135,919
298,498 (82,796) 215,702 29,537 19,273 225,966
508,462 952 509,414 66,255 16,800 558,869
4,982,921 - 4,982,921 778,540 258,394 5,503,067
1,345,808 81,844 1,427,652 222,486 204,945 1,445,193
7,135,689 - 7,135,689 1,096,818 499,412 7,733,095
10,109,132 - 10,109,132 287,637 (6,055) 10,402,824
$12,772,769 $ $ 12,772,769 $1,326,287 $ 690,693 $13,408,363
46
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 5 -CAPITAL ASSETS
Beginning Beginning Ending
Balance Adjustments Balance, Restated Increases Decreases Balance
Business-Type Activities:
Capital Assets not being Depreciated:
Land $ 377,882 $ - $ 377,882 $ - $ - $ 377,882
Construction in Progress 9,501,732 49 133 9,452,599 2,093,875 1,122 6i 24 10,423,850
Total Capital Assets not
being Depreciated 9,879,614 49 133 9,830,481 2,093,875 1,122,624 _ 10,801,732
Capital Assets being Depreciated:
Buildings 517,983 788,721 1,306,704 - - 1,306,704
Plant and Lines 18,741,820 (788,721) 17,953,099 1,427,736 74,141 19,306,694
Machinery and Equipment 510,680 - 510,680 26,345 23,349 513,676 _
Total Capital Assets
being Depreciated 770
483
19 - 19,770,483 1,454,081 97,490 21,127,074
,
,
Less Accumulated Depreciation for:
Buildings 505,033 244,565 749,598 28,723 - 778,321
Plant and Lines 3,078,885 (244,565) 2,834,320 387,085 74,140 3,147,265
Machinery and Equipment 212,470 - 212,470 28,764 24,998 216,236
Total Accumulated
reciation
De 796
3
388 - 3,796,388 444,572 49,138 4,141,822
p ,
,
Total Capital Assets being
Depreciated, Net 15,974,095 - 15,974,095 1,009,509 (1,648) 16,985,252
Business-Type Activities
Capital Assets, Net $25,853,709 $ (49,1331 $ 25,804,576__ $3,103,384 $1.120,976 $27.786,984
Depreciation expense was charged to functions/programs of the City as follows:
Governmental Activities:
General Government
Public Safety
Public Works
Culture and Recreation
Total Depreciation Expense -Governmental Activities
Business-Type Activities:
Water
Sanitary Sewer
Storrn Sewer
Total Depreciation Expense -Business-Type Activities
$ 51,357
98,930
863,561
82,970
$ 1,096,818
$ 179,676
190,421
74,475
$ 444,572
47
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 6 -LONG-TERM DEBT
A. General Obligation Bonds
The City issues General Obligation (G.O.) Bonds to provide for financing improvement,
development and street improvement projects. Debt service is covered respectively by tax
increments and special assessments against benefited properties and contract revenue with any
shortfalls being paid from general taxes.
G.O. Bonds are direct obligations and pledge the full faith and credit of the City. These Bonds
generally are issued as 5 or 15 year Serial Bonds with equal debt service payments each year.
Revenue bonds are issued by the City where the City pledges income derived from the acquired
or constructed assets to pay debt service including access and trunk charges and utility user fees.
B. Components of Long-Term Liabilities
Issue Interest Original Final Principal Due Within
Date Rate Issue Maturity Outstanding One Year
Govemmental Activities:
G.O. Bonds, Including Refunding Bonds:
G.O. Refunding Bonds of 2003 07/28/03 1.5%-4.4% 815,000 (2/0]/17 $ 660,000 $ 55,000
G.O. Certificates of Indebtedness
of 2004 08/27/04 2.40%-3.25 % 280,000 12/01/08 75,000 75,000
G.O. Certificates of Indebtedness
of 2006 02/22/06 3.4%-3.6% 250,000 12/01/10 190,000 60,000
Total G.O. Bonds 925,000 190,000
G.O. Special Assessment Bonds:
G.O.ImprovementBondsof2002 08/01/02 2.0%-4.3% 4,700,000 12/01/17 3,010,000 250,000
G.O. Bonds of 2003 08/01/03 1.25%-2.65% 2,135,000 12/01/08 415,000 415,000
G.O.ImprovementCrossover
Refunding Bonds of 2003 07/28/03 1.25%-3.15% 750,000 12/01/11 280,000 100,000
G.O.ImprovementBondsof2004 07/29/04 2.15%-3.60% 590,000 12/01/09 245,000 120,000
G.O. Improvement Bonds of2005B 03/01/05 2.5%-4.4% 1,655,000 12/01/20 1,475,000 95,000
G.O.ImprovementBondsof2005C 09/01/05 3.5% 3,100,000 12/01/10 2,360,000 765,000
G.O. Improvement Bonds of 2006 06/13/06 4.00%-4.25% 2,375,000 12/01/08 2,255,000 125,000
G.O.ImprovementBondsof2007A 06/01/07 4.00%-4.13% 2,875,000 12/01/17 2,875,000 505,000
G.O.ImprovementCrossover
Refunding Bonds of 2007B 11/14/07 3.6%-3.9% 980,000 12/01/14 980,000 125,000
Total G.O. Special
Assessment Bonds 13,895,000 2;500,000
Revenue Bonds:
EDA Public Revenue Bonds of 2003 04/01/03 2.0%-4.9 % 700,000 12/01/18 560,000 40,000
EDA Revenue Refunding Bonds of 2005 03/01/05 2.75%-4.15% 645,000 12/01/15 645,000 70,000
Total Revenue Bonds 1,205,000 110,000
Loan Payable 57,447 28,581
Compensated Absences 218,785 56,267
Total bong-Term Liabilities,
Governmental Activities $ 16,301,232 $ 2,884,848
The City issued $ 980,000 of general obligation improvement bonds for a current refunding of
$ 1,005,000 of the general obligation bonds series 1998 and series 1999. Both issues were called
on December 1, 2007. The refunding was undertaken to reduce total future debt service
payments. The refunding resulted in an economic gain of $ 23,497 and a reduction of $ 68,535
in future debt service payments.
48
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
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 of 2001 10/O1/Ol 3.30%-S.l S% $ 640,000 12/01/21 $ 490,000 $ 25,000
G.O. Water Revenue
Refunding Bonds of 2002 09/01/02 1.75%-4.80% 810,000 ]2/01/16 495,000 40,000
G.O. Water Revenue Bonds of 2005 12/01/05 4.00%-4.25% 4,595,000 12/01/28 4,898,000 -
G.O. Water Revenue Bonds of 2006 01!12!06 3.50%-4.00% 3,575,000 02lO1J16 3,025,000 290,000
Total G.O. Revenue Bonds 8,605,000 355,000
Note Payable 05/01/06 4.00% 220,000 OS/10/10 132,000 44,000
Compensated Absences 90,473 27,427
Total Business-Type Activities 8,827,473 426,427
Total all Long-Term Liabilities $ 25,128,705 $ 3,311,275
Long-term bonded indebtedness listed on the previous page and above were issued to finance
acquisition and construction of capital facilities or to refinance (refund) pre vious bond issues.
C. Changes in Long-Term Liabilities
Long-term liability activity for the year ended December 31, 2007 was as follows:
Beginning Beginning Ending Due Within
Balance Adjustments Balance, Restated Additions Reductions Balance One Yeaz
Governmental Activities:
Bonds Payable:
General Obligation $ 1,108,000 $ - $ 1,105,000 $ - $ 180,000 $ 925,000 $ 190,000
G.O. Special Assesstnent 12,990,000 - 12,990,000 3,855,000 2,950,000 13,895,000 2,500,000
Revenue Bonds 1,920,000 - 1,920,000 - 715,000 1,205,000 110,000
Total Bonds Payable 16,015,000 - 16,015,000 3,855,000 3,845,000 16,025,000 2,800,000
Loan Payable 86,017 - 86,017 - 28,570 57,447 28,581
Compensated Absences 159,794 159,794 133,419 74,428 218,785 56,267
245,811 - 245,811 133,419 102,998 276,232 84,848
Governmental Activities
Long-Term Liabilities 16,260,811 - 16,260,811 3,988,419 3,947,998 16,301,232 2,884,848
Business-Type Activities:
Bonds Payable:
G.O. Utility Revenue Bonds 8,950,000 - 8,950,000 - 345,000 8,605,000 355,000
Note Payable:
Water Filtration Plant Land - 176,000 176,000 - 44,000 132,000 44,000
Compensated Absences 88,677 - 88,677 13,666 11,870 90,473 27,427
Business-Type Activities
Long-Term Liabilities 9,038,677 176,000 9,214,677 13,666 400,870 8,827,473 426,427
Total Long-Term
Liabilities $ 25,299,488 $ 176,000 $ 25,475,488 $ 4,002,088 $ 4,348,868 $ 25,128,705 $ 3,311,275
The General Fund typically liquidates the liability related to compensated absences.
49
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 6 -LONG-TERM DEBT
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Governmental Activities
Year Ended G.O. Special Assessment Bonds Public Project Revenue Bonds
June 30, Principal Interest Principal Interest
2008 $ 2,500,000 $ 520,904 $ 110,000 $ 47,178
2009 2,095,000 437,051 115,000 43,912
2010 2,025,000 364,688 120,000 40,223
2011 1,235,000 293,843 125,000 36,098
2012 1,195,000 246,808 135,000 31,498
2013-2017 3,665,000 700,088 535,000 76,880
2018 1,180,000 119,966 65,000 3,185
Total $ 13,895,000 $ 2,683,348 $ 1,205,000 $ 278,974
Governmental Activities
Year Ended G.O. Government Activities Loan Payable
June 30, Principal Interest Principal Interest Total
2008 $ 190,000 $ 33,130 $ 28,581 $ 574 $ 3,430,367
2009 125,000 27,278 28,866 289 2,872,396
2010 120,000 23,198 - - 2,693,109
2011 60,000 19,125 - - 1,769,066
2012 65,000 17,235 - - 1,690,541
2013-2017 365,000 47,708 - - 5,389,676
2018 - - - - 1,368,151
Total $ 925,000 $ 167,674 $ 57,447 $ 863 $ 19,213,306
Business-Type Activities
Year Ended Utility Revenue Bonds Note Payable
June 30, Principal Interest Principal Interest Total
2008 $ 355,000 $ 351,348 $ 44,000 $ 5,280 $ 755,628
2009 375,000 338,008 44,000 3,520 760,528
2010 390,000 323,833 44,000 1,760 759,593
2011 400,000 308,828 - - 708,828
2012 420,000 293,372 - - 713,372
2013-2017 2,295,000 1,197,971 - - 3,492,971
2018-2022 2,405,000 712,950 - - 3,117,950
2023-2027 1,825,000 210,188 - - 2,035,188
2028 140,000 5,950 - - 145,950
Total $ 8,605,000 $ 3,742,448 $ 132,000 $ 10,560 $ 12,490,008
50
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 6 -LONG-TERM DEBT
E. Conduit Debt
Conduit debt obligations are certain limited obligation revenue bonds or similar debt instruments
issued for the express purpose of providing capital financing for a specific third party. The City
has issued various revenue bonds to provide funding to private sector entities for projects deemed
to be in the public interest. Although these bonds bear the name of the City, the City has no
obligation for such debt. Accordingly, the bonds are not reported as liabilities in the financial
statements of the City.
As of December 31, 2007, the City's conduit debt consisted of the following:
Commercial Development Revenue Note
(Independence Center), Series 2001 $ 490,643
Industrial Revenue Bonds (St. Joseph
Development, LLC), Series 2002 2,105,000
Total $ 2,595,643
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. Designated/Undesignated Fund Balance
General Fund
G.O. Improvement Bonds of 2002
G.O. Improvement Bonds 2005C
2007 Street and Storm Water
Improvements/Transportation Studies
G.O. Improvement Bonds of 2007A
Other Governmental Funds
Total
Designated
Capital Debt Working
Projects Service Capital Undesignated Total
$ 263,149 $ 150,000 $625,000 $ 111,403 $1,149,552
- 683,053 - - 683,053
615,248 - - 615,248
644,583 - - 644,583
727,728 - - - 727,728
2,917,367 2,625,137 - 588,595 6,131,099
$3,908,244 $4,718,021 $625,000 $ 699,998 $9,951,263
51
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
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 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 2007 is estimated to be immaterial based on workers' compensation rates and
salaries for the year.
At December 31, 2007, there were 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 of St. Joseph are covered by defined
benefit plans administered by the Public Employees' Retirement Association of Minnesota
(PERA). PERA administers the Public Employees' Retirement Fund (PEKE) and the Public
Employees' Police and Fire Fund (PEPFF), which are cost-sharing, multiple-employer retirement
plans. These Plans are established and administered in accordance with Minnesota Statutes
Chapters 353 and 356.
PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated 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, firefighters and peace officers who
qualify for membership by statute are covered by the PEPFF.
52
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 9 -DEFINED BENEFIT PENSION PLANS -STATE-WIDE
Public Employees' Retirement Association (Continued)
A. Plan Description (Continued)
PEItA 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 PERA's Coordinated and Basic Plan members.
The retiring member receives the higher of astep-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 PEPFF and PERF 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
equa190. 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 for unreduced social security
benefits is 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 receiving them yet are bound by the provisions in effect at the time they last terminated
their public service.
PERA issues a publicly available financial report that includes financial statements and required
supplementary information for PERF and PEPFF. That report maybe obtained on the Internet at
www.mnpera.org, by writing to PERA at 60 Empire Drive, Suite 200, St. Paul, Minnesota
55103-2088 or by calling (651) 296-7460 or (800) 652-9026.
53
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
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 were required to contribute 9.10% and 5.75%,
respectively, of their annual covered salary in 2007. Contribution rates in the Coordinated Plan
will increase in 2008 to 6.0%. PEPFF members were required to contribute 7.8% of their annual
covered salary in 2007. That rate will increase to 8.6% in 2008. The City is required to
contribute the following percentages of annual covered payroll: 11.78% for Basic Plan PERF
members, 6.25% for Coordinated Plan PERF members and 11.7% for PEPFF members.
Employer contribution rates for the Coordinated Plan and PEPFF will increase to 6.5% and
12.9%, respectively, effective January 1, 2008. The City's contributions to the PERF for the
years ending December 31, 2007, 2006 and 2005 were $ 37,006, $ 29,879 and $ 25,534,
respectively. The City's contributions to the PEPFF for the years ending December 31, 2007,
2006 and 2005 were $ 49,371, $ 37,252 and $ 33,854, respectively. The City's contributions
were equal to the contractually required contributions for each year as set by state statute.
C. Defined Contribution Plan
The City provides pension benefits for its elected local government officials through a defined
contribution plan administered by the PERA. The Public Employees' Defined Contribution Plan
(PEDCP) is amulti-employer tax qualified plan under Section 401(a) of the Internal Revenue
Code and all contributions by or on behalf of employees are tax deferred until time of
withdrawal.
Plan benefits depend solely on amounts contributed to the plan plus investment earnings less
administrative expenses. Minnesota Statutes Chapter 353D.03 specifies the employee and the
employer contribution rates for those qualified personnel who elect to participate. An eligible
elected official who decides to participate contributes 5% of salary which is matched by the
elected official's employer. Employees who are paid for their services may elect to make
member contributions in an amount not to exceed the employer share. Employer and employee
contributions are combined and used to purchase shares in one or more of the seven accounts of
the Minnesota Supplemental Investment Fund. For administering the plan, PERA receives 2% of
employer contributions and twenty-five hundredths of one percent of the assets in each member's
account annually.
There is no vesting period required to receive benefits in the PEDCP. Both the City and the
elected local government officials made the required 5% contribution, amounting to $ 1,711 from
each source, or $ 3,422 in total. As of December 31, 2007 and for the fiscal year then ended,
PERA held no securities issued by the City or other related parties.
54
CITY OF ST. JOSEPH
Stearns County, Minnesota
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2007
NOTE 10 -COMMITMENTS
The City has entered into contracts for construction as follows:
Project
North Corridor and CSAH 2 Realignment
Field Street Corridor Study
Southwest Beltway Study
Northland Drive
2006 Street Improvements
Jade Road Improvements
East Side Improvements
Total
NOTE 11 -RELATED PARTY TRANSACTION
$ 716,681
The St. Joseph EDA has issued Public Project Revenue Bonds of 2003 and 2005. These Bonds
are to finance the City Hall and maintenance facility projects. Rental payments are due from the
City to the St. Joseph EDA. The City will own the projects upon completion of the rental
payments. Since. the St. Joseph 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 12 -PRIOR PERIOD ADJUSTMENT
Adjustments were necessary to correct prior year's unrecorded activity in the City's proprietary
funds. In the Water Fund the adjustment totaled $ 227,652; $ 225,000 of this adjustment was to
record the notes payable liability and the remainder was to correct the balance of capital assets
and accumulated depreciation. Both adjustments in the Sewer and Storm Water Funds, $ 2,518
and $ 2,519, respectively, were also to correct the balances of capital assets and accumulated
depreciation.
NOTE 13 -SUBSEQUENT EVENT
The City issued G.O. Certificates of Indebtedness, Series 2008A, on March 4, 2008. The
Certificates totaled $ 290,000 and carry rates of interest ranging from 3.1% to 3.5%.
Contract
Amount
Expended
through
12/31/07
Commitment
$ 383,172 $ 284,875 $ 98,297
331,189 197,105 134,084
44,625 7,208 37,417
165,540 80,270 85,270
1,554,692 1,544,605 10,087
1,499,741 1,232,888 266,853
-316,798 232,125 84,673
55
SUPPLEMENTARY INFORMATION
57
CITY OF ST. JOSEPH
Stearns County, Minnesota
COMBINING BALANCE SHEET -
NONMAJORGOVERNMENTAL FUNDS
December 31, 2007
Special Revenue
ASSETS:
Cash and Investments
(Including Cash Equivalents)
Taxes Receivable -Delinquent
Special Assessments Receivable:
Delinquent
Deferred
Accounts Receivable
Interest Receivable
Due from Other Funds
Due from Other Governments
Total Assets
LIABILITIES AND FUND BALANCES:
Liabilities:
Accounts Payable
Contracts Payable
Due to Other Funds
Deferred Revenue
Total Liabilities
Fund Balances:
Unreserved, Reported in:
Special Revenue - Undesignated
Debt Service -Designated
Debt Service - Undesignated
Capital Projects -Designated
Total Fund Balances
Total Liabilities and
Fund Balances
Economic TIF 1-4 TIF 2-1 State
Development TIF 1-3 5t. Joseph Millstream Collected
Authority Borgert Development Shops and Sales Tax
(150) (1S5) (1S6) Lofts(1S7) (200)
$ 30,982 $ 4,878 $ 39,644 $ 10,778 $ 398,283
390 60 3S4 77 2,100
- - - - 66,797
$ 31,372 $ 4,938 $ 39,998 $ 10,855 $ 467,180
$ 2,197 $ -
2,197 -
$ - $ 4,850 $ -
- 4,850 -
29,175 4,938 39,998 6,OOS 467,180
29,175 4,938 39,998 6,OOS 467,180
$ 31,372 $ 4,938 $ 39,998 $ 10,855 $ 467,180
S8
Special Revenue Debt Service
G.O.
Certificates
Park DARE Lake City of
Dedication Recreation Program Wobegon Beautificatio Revolving Indebtedness
(205) Center (210) (225) Trail (230) n (232) Loan (250) Total of 2004 (307)
$ 60,418 $ 45,914 $ 374 $ 3 $ 59 $ 50,121 $ 641,454 $ 6,319
- - - - - - - 3,155
- - - - 12,500 - 12,500 -
904 373 - - - 407 4,665 18
_ _ _ _ _ _ 66,797 937
$ 61,322 $ 46,287 $ 374 $ 3 $ 12,559 $ 50,528 $ 725,416 $ 10,429
$ 3,069 $ - $ - $ - $ - $ - $ 10,116 $ -
- - - 10,010 59,000 - 69,010 -
- - - - 2,500 - 2,500 3,155
3,069 - - 10,010 61,500 - 81,626 3,155
58,253 46,287 374 (10,007) (48,941) 50,528 643,790 -
_ _ _ _ - - - 7,274
58,253 46,287 374 (10,007) (48,941) 50,528 643,790 7,274
$ 61,322 $ 46,287 $ 374 $ 3 $ 12,559 $ 50,528 $ 725,416 $ 10,429
59
CITY OF ST. JOSEPH
Stearns County, Minnesota
COMBINING BALANCE SHEET -
NONMAJORGOVERNMENTAL FUNDS
December 31, 2007
Debt Service
ASSETS:
Cash and Investments
(Including Cash Equivalents)
Taxes Receivable -Delinquent
Special Assessments Receivable:
Delinquent
Deferred
Accounts Receivable
Interest Receivable
Due from Other Funds
Due from Other Governments
Total Assets
LIABILITIES AND FUND BALANCES:
Liabilities:
Accounts Payable
Contracts Payable
Due to Other Funds
Deferred Revenue
Total Liabilities
Fund Balances:
Unreserved, Reported in:
Special Revenue - Undesignated
Debt Service -Designated
Debt Service - Undesignated
Capital Projects -Designated
Total Fund Balances
Total Liabilities and
Fund Balances
G.O.
Improvement
Refunding
Bonds of 2007B
(320)
$ 414,768
121
15,634
411,835
3,556
31
Stearns
Electric City Hall
Cooperative G.O. EDA G.O. G.O.
Loan/ G.O. Refunding Improvements Improvement
Bonds of Bonds of Bonds of 2004 Bonds of
1999 (321) 2005 (322) (323) 2003 (328)
$ 30,932
1,240
584
357
$ 845,945 $ 33,113
$ 450 $ 184,621 $ 335,425
4,135 676 -
- - 48,956
- 15,928 21,553
- 1,952 4,339
1,194 203 -
$ 5,779 $ 203,380 $ 410,273
- - 17,000 - -
427,590 1,240 4,135 16,604 70,509
427,590 1,240 21,135 16,604 70,509
418,355 31,873 - 186,776 339,764
- - (15,356) - -
418,355 31,873 (15,356) 186,776 339,764
$ 845,945 $ 33,113 $ 5,779 $ 203,380 $ 410,273
60
Debt Service
Maintenance G.O.
Facility G.O. Improvement
EDA G.O. Crossover G.O. G.O. G.O.
Revenue Refunding Refunding Improvement Certificates of Improvement Debt Service
Bonds of Bonds of 2003 Bonds of 2003 Bonds of Indebtedness Bonds of Relief Fund
2003 (329) (331) (332) 2005B (333) of 2006 (337) 2006 (338) (390)
$ 406 $ 130,662 $ 180,854 $ 561,078 $ 5,517 $ 554,154 $ 60,516
2,584 1,756 1,070 790 2,204 1,732 -
- - 2,605 8,684 - 2,706 -
- - 55,800 768,716 - 633,943 9,438
- 1,011 1,912 7,555 15 8,947 1,175
- - - - - - 127,010
755 500 264 246 800 629 -
$ 3,745 $ 133,929 $ 242,505 $ 1,347,069 $ 8,536 $ 1,202,111 $ 198,139
$ - $ 1,750 $ - $ - $ - $ - $ -
41,000 - - - - - -
2,584 1,756 59,475 778,190 2,204 638,381 9,438
43,584 3,506 59,475 778,190 2,204 638,381 9,438
- 130,423
(39,839) -
183,030 568,879 6,332 563,730 188,701
(39,839) 130,423 183,030 568,879 6,332 563,730 188,701
$ 3,745 $ 133,929 $ 242,505 $ 1,347,069 $ 8,536 $ 1,202,111 $ 198,139
61
CITY OF ST. JOSEPH
Stearns County, Minnesota
COMBINING BALANCE SHEET -
NONMAJORGOVERNMENTAL FUNDS
December 31, 2007
Debt Service Capital Projects
Northland
Heights/ 2006 Street General Capital
Transportation Improvements Improvements
Total Studies (435) (438) (490)
ASSETS:
Cash and Investments
(Including Cash Equivalents) $ 2,465,702 $ 702,670 $ 436,557 $ 274,834
Taxes Receivable -Delinquent 19,463 - -
Special Assessments Receivable:
Delinquent 78,585 - - _
Deferred 1,917,213 - -
Accounts Receivable - - -
Interest Receivable 31,064 - -
Due from Other Funds 127,010 - - -
Due from Other Governments 5,916 - - -
Total Assets $ 4,644,953 $ 702,670 $ 436,557 $ 274,834
LIABILITIES AND FUND BALANCES:
Liabilities:
Accounts Payable $ 1,750 $ 767 $ 926 $ -
Contracts Payable - 87,989 95,716 -
Due to Other Funds 58,000 - - -
Deferred Revenue 2,015,261 - - -
Total Liabilities 2,075,011 88,756 96,642 -
Fund Balances:
Unreserved, Reported in:
Special Revenue - Undesignated - - - _
Debt Service -Designated 2,625,137 - -
Debt Service - Undesignated (55,195) - -
Capital Projects -Designated - 613,914 339,915 274,834
Total Fund Balances 2,569,942 613,914 339,915 274,834
Total Liabilities and
Fund Balances $ 4,644,953 $ 702,670 $ 436,557 $ 274,834
62
Capital Projects
Total
Water Access Sewer Access Governmental
Fund (501) Fund (502) Total Funds
$ 844,788 $ 828,794 $ 3,087,643 $ 6,194,799
- - - 19,463
- - - 78,585
- - - 1,917,213
- - - 12,500
7,061 8,061 15,122 50,851
- - - 127,010
- - - 72,713
$ 851,849 $ 836,855 $ 3,102,765 $ 8,473,134
$ - $ - $ 1,693 $ 13,559
- - 183,705 183,705
- - - 127,010
- - - 2,017,761
- - 185,398 2,342,035
- - - 643,790
- - - 2,625,137
- - - (55,195)
851,849 836,855 2,917,367 2,917,367
851,849 836,855 2,917,367 6,131,099
$ 851,849 $ 836,855 $ 3,102,765 $ 8,473,134
63
CITY OF ST. JOSEPH
Stearns County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 200'7
REVENUES:
Property Taxes
Tax Increments
Sales Taxes
Special Assessments
Intergovernmental
Charges for Services
Miscellaneous:
Investment Income
Contributions and Donations
Other
Total Revenues
EXPENDITURES:
Current:
Public Works
Culture and Recreation
Economic Development
Debt Service:
Principal
Interest and Other Charges
Capital Outlay:
General Government
Public Safety
Public Works
Culture and Recreation
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
OTHER FINANCING SOURCES (USES):
Bonds Issued
Refunding Bond Payment
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES:
Beginning of Year
End of Year
Special Revenue
Economic TIF 1-4 TIF 2-1
Development TIF 1-3 St. Joseph Millstream State Collected
Authority Borgert Development Shops and Sales Tax
(150) (155) (156) Lofts (157) (200)
- 23,970 59,433 - -
- - - - 237,927
3,904 126 903 241 12,081
- - - 11,000 -
3,904 24,096 60,336 11,241 250,008
38,070 23,414 54,132 5,236 -
38,070 23,414 54,132 5,236 -
(34,166) 682 6,204 6,005 250,008
- - - - 24,004
- - - - 24,004
(34,166) 682 6,204 6,005 274,012
63,341 4,256 33,794 - 193,168
$ 29,175 $ 4,938 $ 39,998 $ 6,005 $ 467,180
64
Revenue
Recreation DARE City
Park Dedication Center Program Lake Wobegon Beautification Revolving Loan
(20S) (210) (225) Trail (230) (232) (250) Total
- - - - - - 83,403
- - - - - - 237,927
4,811 2,107 - - - 2,303 26,476
- - - - 10,000 - 10,000
- - - - - - 11,000
4,811 2,107 - - 10,000 2,303 368,806
4,396
77,680
82,076
(77,265)
- - - - - 4,396
- - - - - 120,852
- - - - - 77,680
- - - - - 202,928
2,107 - - 10,000 2,303 165,878
- - - - - - 24,004
- - - - - - 24,004
(77,265) 2,107 - - 10,000 2,303 189,882
135,518 44,180 374 (10,007) (58,941) 48,225 453,908
$ 58,253 $ 46,287 $ 374 $ (10,007) $ (48,941) $ 50,528 $ 643,790
65
CITY OF ST. JOSEPH
Stearns County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
Debt Service
Stearns
G.O. Electric City Hall G.O.
G.O. G.O. Improvement Cooperative EDA
Certificates of Improvement Refunding Loan/ G.O. Refunding
Indebtedness Bonds of 1998 Bonds of Bonds of 1999 Bonds of 2005
of 2004 (307) (319) 2007B (320) (321) (322)
REVENUES:
Property Taxes $ 69,963 $ 2,215 $ 31 $ 26,644 $ 89,209
Tax Increments - - - _ _
Sales Taxes - - - _ _
Special Assessments - 21,004 - 92,997 -
Intergovernmental 6,656 212 - 2,532 8,478
Charges for Services - - - _ _
Miscellaneous:
Investment Income 586 7,824 9,640 11,867 24,363
Contributions and Donations - - - _ _
Other - - - _ _
Total Revenues 77,205 31,255 9,671 134,040 122,050
EXPENDITURES:
Current:
Public Works - - - _ _
Culture and Recreation - - - _ _
Economic Development - - - _ _
Debt Service:
Principal 70,000 35,000 - 113,570 675,000
Interest and Other Charges 4,468 14,620 22,775 42,030 67,674
Capital Outlay:
General Government - - - _ _
Public Safety - - - - _
Public Works - - - _ _
Culture and Recreation - - _ _ _
Total Expenditures 74,468 49,620 22,775 155,600 742,674
Excess of Revenues Over
(Under) Expenditures 2,737 (18,365) (13,104) (21,560) (620,624)
OTHER FINANCING SOURCES (USES):
Bonds Issued - 240,000 - 740,000 -
Refunding Bond Payment - (265,000) - (740,000) -
Transfers In 5,079 - 431,459 16,900 -
Transfers Out - (173,459) - (258,000) (403)
Total Other Financing Sources (Uses) 5,079 (198,459) 431,459 (241,100) (403)
Net Change in Fund Balances 7,816 (216,824) 418,355 (262,660) (621,027)
FUND BALANCES:
Beginning of Year (542) 216,824 - 294,533 605,671
End of Year $ 7,274 $ - $ 418,355 $ 31,873 $ (15,356)
66
Debt Service
G.O.
Maintenance Improvement
G.O. G.O. G.O. Facility G.O. Crossover
Improvements Improvement G.O. Certificate Improvement EDA Revenue G.O. Refunding Refunding
Bonds of 2004 Bonds of 2001 of Indebtedness Bonds of 2003 Bonds of 2003 Bonds of 2003 Bonds of 2003
(323) (324) of 2002 (327) (328) (329) (331) (332)
$ 15,146 $ - $ - $ - $ 56,167 $ 37,165 $ 19,717
1,900 1,449 - 9,791 - - 27,033
1,441 - - - 5,341 3,529 1,865
- - - - - 40,457 -
11,797 5,919 2,112 28,446 - 18,618 11,781
30,284 7,368 2,112 38,237 61,508 99,769 60,396
115,000 - - 400,000 40,000 50,000 120,000
12,145 - - 19,999 25,322 28,748 10,693
127,145 - - 419,999 65,322 78,748 130,693
(96,861) ?,368 2,112 (381,762) (3,814) 21,021 (70,297)
24,220 - - 100,000 91,711 7,778 -
- (129,985) (51,502) (45,607) (123,288) (7,778) -
24,220 (129,985) (51,502) 54,393 (31,577) - -
(72,641) (122,617) (49,390) (327,369) (35,391) 21,021 (70,297)
259,417 122,617 49,390 667,133 (4,448) 109,402 253,327
$ 186,776 $ - $ - $ 339,764 $ (39,839) $ 130,423 $ 183,030
67
CITY OF ST. JOSEPH
Stearns County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
Debt Service
REVENUES:
Property Taxes
Tax Increments
Sales Taxes
Special Assessments
Intergovernmental
Charges for Services
Miscellaneous:
Investment Income
Contributions and Donations
Other
Total Revenues
EXPENDITURES:
Current:
Public Works
Culture and Recreation
Economic Development
Debt Service:
Principal
Interest and Other Charges
Capital Outlay:
General Government
Public Safety
Public Works
Culture and Recreation
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
OTHER FINANCING SOURCES (USES):
Bonds Issued
Refunding Bond Payment
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES:
Beginning of Year
End of Year
8th Ave NE
G.O. G.O. G.O. G.O.
Improvement Certificates of Improvement [mprovement Debt Service
Bonds of 2005B Indebtedness Bonds of 2006 Bonds of 2007A Relief Fund
(333) of 2006 (337) (338) (340) (390)
$ 18,689 $ 61,932 $ 48,661 $ - $ -
138,688 - 169,862 - -
1,780 5,935 4,663 - -
43,019 184 49,785 - 1,159
202,176 68,051 272,971 - 1,159
90,000 60,000 120,000 - -
60,390 8,760 97,569 - -
150,390 68,760 217,569 - -
51,786 (709) 55,402 - 1,159
7,589 - 30,000 - 304,730
- - - (38,450) (117,188)
7,589 - 30,000 (38,450) 187,542
59,375 (709) 85,402 (38,450) 188,701
509,504 7,041 478,328 38,450 -
$ 568,879 $ 6,332 $ 563,730 $ - $ 188,701
68
Debt Service Capital Projects
2002 Street 2003 Street
Improvements Improvements Maintenance Northland Phase Cloverdale Area 2004 Equipment
Total (425) (428) Facility (429) Eight (430) (431) Certificate (432)
$ 445,539 $ - $ - $ - $ - $ - $ -
462,724 - - - - -
42,432 - - - - - -
40,457 - - - - - -
227,100 - - - - - -
- 10,001 - - - - -
1,218,252 10,001 - - - - -
1,888,570 - - - - - -
415,193 - - - - - -
- 400,426 - - - 2,375 -
2,303,763 400,426 - - - 2,375 -
(1,085,511) (390,425) - - - (2,375) -
980,000 - - - - -
(1,005,000) - - - - - -
1,019,466 420,072 45,607 123,288 - 502,711 -
(945,660) - - - (24,220) - (5,079)
48,806 420,072 45,607 123,288 (24,220) 502,711 (5,079)
(1,036,705) 29,647 45,607 123,288 (24,220) 500,336 (5,079)
3,606,647 (29,647) (45,607) (123,288) 24,220 (500,336) 5,079
$ 2,569,942 $ - $ - $ - $ - $ - $ -
69
CITY OF ST. JOSEPH
Stearns County, Minnesota
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2007
REVENUES:
Property Taxes
Tax Increments
Sales Taxes
Special Assessments
Intergovernmental
Charges for Services
Miscellaneous:
Investment Income
Contributions and Donations
Other
Total Revenues
EXPENDITURES:
Current:
Public Works
Culture and Recreation
Economic Development
Debt Service:
Principal
Interest and Other Charges
Capital Outlay:
General Government
Public Safety
Public Works
Culture and Recreation
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
OTHER FINANCING SOURCES (USES):
Bonds Issued
Refunding Bond Payment
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES:
Beginning of Year
End of Year
Capital Projects
295th/103rd Northland 2006
Street Heights/ Equipment 2006 Street
Improvements Transportation Certificates Improvements
(433) Studies (435) (437) (438)
$ - $ - $ - $ -
15,603 172,242 - 237,798
15,603 172,242 - 237,798
(15,603) (172,242) - (237,798)
- - 11,383 -
(510,300) - 11,383 -
(525,903) (172,242) 11,383 (237,798)
525,903 786,156 (11,383) 577,713
$ - $ 613,914 $ - $ 339,915
70
Capital Projects
EDA 8th Ave NE General Capital Total Other
Crossover Improvements Improvements Water Access Sewer Access Governmental
2005A (439) (440) (490) Fund (501) Fund (502) Total Funds
$ _ $ _ $ _ $ _ $ _ $ - $ 445,539
_ _ _ _ _ _ 83,403
_ _ _ _ - - 237,927
_ _ _ _ - - 462,724
_ _ _ _ _ - 42,432
_ _ - 355,114 205,055 560,169 600,626
_ _ - 44,616 41,884 86,500 340,076
_ _ _ _ _ _ 10,000
_ _ _ _ - 10,001 21,001
_ _ - 399,730 246,939 656,670 2,243,728
_ _ _ _ _ - 4,396
_ _ _ _ _ - 120,852
_ _ _ _ _ - 1,888,570
_ _ _ _ _ - 415,193
- - 11,642 - - 11,642 11,642
- - 10,945 - - .10,945 10,945
- - 47,051 - - 875,495 875,495
- - 3,436 - - 3,436 81,116
- - 73,074 - - 901,518 3,408,209
- - (73,074) 399,730 246,939 (244,848) (1,164,481)
_ _ _ _ _ - 980,000
_ _ _ _ _ - (1,005,000)
403 157,719 - - 855,016 2,116,199 3,159,669
- - (76,383) (1,200,216) (265,100) (2,081,298) (3,026,958)
403 157,719 (76,383) (1,200,216) 589,916 34,901 107,711
403 157,719 (149,457) (800,486) 836,855 (209,947) (1,056,770)
(403) (157,719) 424,291 1,652,335 - 3,127,314 7,187,869
~'' $ - $ - $ 274,834 $ 851,849 $ 836,855 $ 2,917,367 $ 6,131,099
71
CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL -GENERAL FUND
For the Year Ended December 31, 2007
REVENUES:
Property Taxes
Sales Taxes
Special Assessments
Franchise Fees
Licenses and Permits
Intergovernmental Revenue:
Local Government Aid
Market Value Credit
PERA Aid
Fire Aid
Police Aid
Federal Grants
State Grants
Other Grants and Aids
Total Intergovernmental Revenue
Charges for Services:
General Government
Public Safety
Park and Recreation
Total Charges for Services
Fines and Forfeitures
Miscellaneous Revenues:
Investment Income
Contributions and Donations
Other
Total Miscellaneous
Total Revenues
EXPENDITURES:
General Government:
Mayor and Council
Administrative and Finance
Other General Government
Capital Outlay
Total General Government
Variance with
Original Final Actual Final Budget -
Budget Budget Amounts Over (Under)
$ 907,611 $ 907,611 $ 810,886 $ (96,725)
- - 222 222
2,000 2,000 966 (1,034)
93,000 93,000 105,311 12,311
224,400 224,400 267,305 42,905
841,993
1,541
35,500
7,200
886,234
43,500
3,200
46,700
26,500
42,000
2,000
44,000
2,230,445
70,714
282,473
205,340
20,500
579,027
841,993
1,541
65,000
35,500
7,200
951,234
43,500
181,296
224,796
26,500
48,000
2,000
50,000
2,479,541
70,714
360,810
127,003
JJ O,JG/
841,993
76,951
1,541
42,230
39,714
10,481
12,815
1,025,725
31,612
185,848
5,050
222,510
79,837
66,703
16,256
22,057
105,016
2,617,778
79,570
352,641
147,322
5,805
585,338
76,951
(22,770)
4,214
10,481
5,615
74,491
(11,888)
4,552
5,050
(2,286)
53,337
18,703
16,256
20,057
55,016
125,926
8,856
(8,169)
20,319
s Rns
GV,O 1 1
72
CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL -GENERAL FUND
For the Year Ended December 31, 2007
EXPENDITURES:
Public Safety:
Police:
Current
Capital Outlay
Fire:
Current
Capital Outlay
Other:
Current
Capital Outlay
Total Public Safety
Public Works:
Streets and Highways:
Street Maintenance and Storm Sewers
Snow and Ice Removal
Street Engineering
Capital Outlay
Total Streets and Highways
Culture and Recreation:
Current
Capital Outlay
Total Expenditures
Excess of Revenues Over
(Under) Expenditures
OTHER FINANCING SOURCES (USES):
Sale of Property
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES:
Beginning of Year
End of Year
Original Final
Budget Budget
$ 701,800 $ 701,800
5,225 -
287,046 287,046
46,750 45,750
247,355 238,390
7,000 -
1,295,176 1,272,986
179,086 179,086
57,313 57,313
70,650 70,650
110,924 -
417,973 307,049
Variance with
Actual Final Budget -
Amounts Over (Under)
$ 750,078 $ 48,278
274,614
20,213
196,908
(12,432)
(25,537)
(41,482)
185,669
58,770
98,882
6,583
1,457
28,232
154,735 154,735 138,646 (16,089)
27,980 - - -
2,474,891 2,293,297 2,309,118 15,821
(244,446) 186,244 308,660 110,105
_ - 2,041 2,041
24,000 24,000 182,190 158,190
_ - (265,525) (265,525)
24,000 24,000 (81,294) (105,294)
$ (220,446) $ 210,244 227,366 $ 4,811
922,186
$ 1,149,552
73
I~DV
Expert advice. When you need it.'`"'
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
May 22, 2008
Honorable Mayor and Members
of the 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, 2007, and have issued our
report thereon dated May 22, 2008. 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 as a basis for designing our auditing procedures for the purpose of expressing an
opinion on the financial statements but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily identify all deficiencies in
internal control over financial reporting that might be significant deficiencies or material
weaknesses. However, as discussed on the following page, we identified certain deficiencies in
internal control over financial reporting that we consider to be significant deficiencies.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course or performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination
of control deficiencies, that adversely affects the City's ability to initiate, authorize, record,
process or report financial data reliably in accordance with the regulatory basis of accounting
such that there is more than a remote likelihood that a misstatement of the City's financial
statements that is more than inconsequential will not be detected by the City's internal control.
We consider the deficiencies described in the accompanying Schedule of Findings and Responses
on Legal Compliance and Internal Control as Audit Findings 06-01, 06-02, 06-03 and 07-01 to be
significant deficiencies in internal control over financial reporting.
75
I~DV
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the entity's internal control.
Our consideration of the internal control over financial reporting for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in the internal control that might be significant deficiencies and, accordingly, would not
necessarily disclose all significant deficiencies that are also considered to be material
weaknesses. We consider the deficiencies described in the accompanying Schedule of Findings
and Responses on Legal Compliance and Internal Control as Audit Findings 06-03 and 07-01 to
be material weaknesses in internal control over financial reporting.
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.
We noted certain additional matters that we reported to management of the City in a separate
letter dated May 22, 2008.
The City's response to the findings identified in our audit is described in the accompanying
Schedule of Findings and Responses on Legal Compliance and Internal Control. We did not
audit the City's response and, accordingly, we express no opinion on it.
This report is intended solely for the information and use of the City Council, management,
federal and state oversight awarding agencies and pass-through entities and is not intended to be
and should not be used by anyone other than these specified parties.
KERN, DEWENTER, MERE, LTD.
St. Cloud, Minnesota
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Expert advice. When you need it. `""
REPORT ON LEGAL COMPLIANCE
May 22, 2008
Honorable Mayor and Members
of the 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, 2007, and have issued our
report thereon dated May 22, 2008.
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, miscellaneous 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 complied with the material
terms and conditions of applicable legal provisions, except as described in the Schedule of
Findings and Responses on Legal Compliance and Internal Control.
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, MERE, LTD.
St. Cloud, Minnesota
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CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
Year Ended December 31, 2007
CURRENT YEAR INTERNAL CONTROL FINDINGS:
Material Weaknesses
Audit Finding 06-03 -Material Audit Adjustments
During the course of our engagement, we proposed material audit adjustments that would not
have been identified as a result of the City's existing internal controls and, therefore, could
have resulted in a material misstatement of the City's financial statements.
In order to ensure financial statements were free from material misstatement, audit
adjustments were required in the following areas:
• Bond proceeds in governmental funds were recorded net of issuance costs
• Long term compensated absence liability was recorded in the General Fund
City's Response
The City issued two bond issues in 2007 and inadvertently one of the bond issues was
recorded net versus gross.
The City was unaware of the change in interpretation on how to record a portion of the long-
term compensated absences in the fund financial statements. After reviewing GASB, the
City prepared an entry to correct the long-term compensated absences.
Audit Finding 07-O1-Prior Period Adjustments
Prior period adjustments were proposed by the client to correct prior financial statements.
The long-term liability balance in the Water Enterprise Fund as of December 31, 2006 was
not inclusive of notes payable related to the purchase of capital assets. There were other
various exclusions related to capital assets. Overall, the adjustment of $ 227,652 was
material to the government-wide presentation. There were also prior period adjustments to
the Sewer and Storm Water Enterprise Funds relating to the balance of capital assets and
accumulated depreciation. They totaled $ 2,518 and $ 2,519, respectively.
City's Response
The Finance Director discovered the land purchase for the new water filtration plant was
recorded incorrectly and proposed recording the prior period adjustment to correct the balances.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
December 31, 2007
CURRENT YEAR INTERNAL CONTROL FINDINGS:
Significant Deficiencies
Audit Finding 06-02 -Preparation of Financial Statements
As a function of the audit process, auditors are required to gain an understanding of the City's
internal control, including the financial reporting process.
The City does not have an internal control system designed to provide for the preparation of
the financial statements being audited. As auditors, we were requested to draft the financial
statements and accompanying Notes to the Financial Statements. This circumstance is not
unusual in an city of your size.
Even though all management decisions related to financial reporting are made by the City's
management and approval of the financial statements lies with management, it is the
responsibility of management and those charged with governance to make the decision
whether to accept the degree of risk associated with this condition because of cost or other
considerations.
City's Response
With a small office staff the City will continue to monitor the cost versus benefit analysis to
best use the resources of the City without compromising internal controls. As an alternative
control the Finance Director thoroughly reviewed the financial statements using the
Governmental Disclosure Checklist for compliance with U.S. generally accepted accounting
principles.
Audit Finding 06-O1-Lack of Internal Controls and Segregation of Accounting Duties
The City continued to evaluate and improve the segregation of accounting duties among City
staff during 2007, including hiring an additional finance employee. In order to have
appropriate segregation of accounting duties, the performance of the following duties would
need to be completed by a different employee: initiation and authorization of transactions,
recording and processing of transactions, reconciliation and reporting of transactions and
financial information, as well as custody of assets. Due in part to a limited number of office
personnel, some areas of internal control still remained without proper segregation of
accounting duties; as such, we report on the following processes:
Receipting
The Office Specialist receipts cash, reconciles the cash register, prepares the deposit and
brings the deposit to the bank.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
December 31, 2007
CURRENT YEAR INTERNAL CONTROL FINDINGS:
Significant Deficiencies (Continued)
Audit Finding 06-O1 -Lack of Internal Controls and Segregation of Accounting Duties
(Continued)
Utility Billing
The Utility Billing Clerk enters meter readings, calculates, reviews and mails the utility
bills, reconciles utility receipts and makes adjustments. It was also noted, adjustments are
not reviewed and approved.
We also recommend adjustments be reviewed and approved by the Finance Director.
Disbursements and Capital Assets
It was noted during our testing of disbursements, the City has several internal controls not
being followed, including signing off on purchase orders by the department heads and the
documentation of approval on the claims list by the Finance Director.
We recommend management continue to stress the importance of abiding by these
controls.
Reconciliations, Access and Journal Entries
In addition, a lack of segregation of accounting duties was noted, as the City
Administrator and Finance Director have access to the general ledger, the City's checks
and the Mayor's signature stamp. The City Administrator and the Finance Director are
authorized signers, as well. While we believe this access is necessary to efficiently
perform the financial duties required, this access allows them the ability to override any
controls that maybe in place.
Payroll
The Finance Technician processes payroll and reconciles payroll accruals, time off
balances and compensated absences. There was also no documentation of review of the
reconciliation by the Finance Director or review of the payroll journal entries by the City
Administrator. It was also noted, there is no documentation provided for vacation hours
taken by the City Administrator.
Due to the size of the staff necessary to perform the financial functions for the City, the above
observations are not uncommon for cities of similar size.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
December 31, 2007
CURRENT YEAR INTERNAL CONTROL FINDINGS:
Significant Deficiencies (Continued)
Audit Finding 06-01 -Lack of Internal Controls and Segregation of Accounting Duties
(Continued)
We recommend management, along with the City Council, evaluate risks related to the
deficiencies noted above and respond with corrections to mitigate these risks. In doing this,
management and the City Council must weigh the costs associated with adding more staff or
procedures to its operations.
City's Response
The City is currently reviewing their policies and procedures for the various accounting functions
to improve the internal controls for processing and documenting the work flow with the staffing
the City currently has. Many process changes have been made and will continue to be made
since hiring the Finance Director in June 2007. It is unlikely complete segregation will be
achieved due to the cost of hiring several additional staff.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
December 31, 2007
CURRENT YEAR LEGAL COMPLIANCE FINDINGS:
Audit Finding 07-02 -Adopt an Out of State Travel Policy
By January 1, 2006, the governing body of each statutory or home rule charter city, county,
school district, regional agency, or other political subdivision, except a town, must develop a
policy that controls travel outside the State of Minnesota for the applicable elected officials of the
relevant unit of government. The policy must be approved by a recorded vote and specify:
1. when travel outside the state is appropriate;
2. applicable expense limits and
3. procedures for approval of the travel.
The policy must be made available for public inspection upon request and reviewed annually
Subsequent changes to the policy must be approved by a recorded vote.
City's Response
The Finance Director and Finance Technician drafted a travel policy in October 2007 that
specifically addresses out of state travel. The formal City Council approval will be requested
once a complete policy book is established in early summer of 2008.
The City Council approves specific out of state training events on a case by case basis.
The City does have a current policy for travel and training reimbursements that followed
for these events.
Audit Finding 07-03 -Update Collateral Assignment Agreement
Minnesota Statutes 118A.03, subd. 4 requires that the written assignment shall recite that, upon
default, the financial institution shall release to the government entity on demand, free of
exchange or any other charges, the collateral pledged.
It was noted during our legal compliance audit, the City's collateral assignment agreement did
not require the release of collateral upon default.
We recommend that the City update its assignment agreement in order to be in compliance with
Minnesota Statutes.
City's Response
The Finance Director had the financial institution correct the assignment language to read upon
demand versus within three business days to receive funds upon default of the financial
institution.
82
CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
December 31, 2007
CURRENT YEAR LEGAL COMPLIANCE FINDINGS:
Audit Finding 07-04 -Delegation of Authority for Paying Certain Claims
Minnesota Statutes 412.271 Subd. 8 states a city council, at its discretion, may delegate its
authority to pay certain claims made against the city to a city administrative official. City
councils opting to delegate their authority to review claims before payment pursuant to this
subdivision shall have internal accounting and administrative control procedures to ensure the
proper disbursement of public funds. The procedures shall include regular and frequent review
of the city administrative officials' actions by the city council. A list of all claims paid under the
procedures established by the city council shall be presented to the city council for informational
purposes only at the next regularly scheduled meeting after payment of the claim. A city council
that delegates its authority to pay certain claims made against the city must adopt a resolution
authorizing a specified city administrative official to pay the claims that meet the standards and
procedures established by the city council.
The City had not delegated authority to the Finance Director to pay claims under the above
Statute.
City's Response
In 2008, a formal resolution will be presented to the City Council for approval meeting the statutory
requirements.
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CITY OF ST. JOSEPH
Stearns County, Minnesota
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
December 31, 2007
CURRENT YEAR LEGAL COMPLIANCE FINDINGS:
Audit Finding 07-OS -Establish Policy for Electronic Payment
Minnesota Statutes 471.381 provides the City establish policies and procedures to ensure the
validity of electronic approvals related to such transactions. Electronic approvals are the
electronic identifiers intended by the delegated City official to authenticate and validate the
transaction.
For the year ended December 31, 2007, the City did not have a policy in place to address the
above Statute. We recommend the City formulate a policy consistent with this Statute's
requirements.
City's Response
The Finance Director and Finance Technician are currently drafting a purchasing policy that
specifically addresses electronic payments. The formal City Council approval will be requested once
a complete policy book is established in early summer of 2008.
For all electronic payments, the processed payment report is printed and maintained with the
detail payment calculation and documentation. The City Council reviews and approves the
electronic payments at their next scheduled City Council meeting.
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