HomeMy WebLinkAbout2011 Audit Report CITY OF ST. JOSEPH
Stearns County, Minnesota
AUDITED FINANCIAL STATEMENTS
For the Year Ended December 31, 2011
CITY OF ST. JOSEPH
TABLE OF CONTENTS
ELECTED OFFICIALS AND ADMINISTRATION
................................................................... 1
INDEPENDENT AUDITOR’S REPORT
..................................................................................... 2
MANAGEMENT’S DISCUSSION AND ANALYSIS
.................................................................. 5
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Statement of Net Assets ......................................................................................................... 24
Statement of Activities ........................................................................................................... 25
Fund Financial Statements:
Balance Sheet – Governmental Funds ................................................................................... 26
Reconciliation of the Balance Sheet to the Statement of Net Assets –
Governmental Funds ............................................................................................................ 27
Statement of Revenues, Expenditures and Changes in Fund Balances –
Governmental Funds ............................................................................................................ 28
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund
Balances to the Statement of Activities – Governmental Funds ......................................... 29
Statement of Revenues, Expenditures and Changes in Fund Balances – Budget
and Actual – General Fund .................................................................................................. 30
Statement of Net Assets – Proprietary Funds ........................................................................ 31
Reconciliation of the Statement of Net Assets – Business-Type Activities .......................... 32
Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary
Funds .................................................................................................................................... 33
Reconciliation of the Statement of Revenues, Expenses and Changes in Net
Assets – Business-Type Activities ....................................................................................... 34
Statement of Cash Flows – Proprietary Funds ....................................................................... 35
Notes to the Financial Statements ................................................................................................ 37
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Funding Progress – Other Post Employment Benefits ............................................ 66
SUPPLEMENTARY INFORMATION
Combining Balance Sheet – Nonmajor Governmental Funds ................................................... 68
Combining Statement of Revenues, Expenditures and Changes in Fund Balances –
Nonmajor Governmental Funds ............................................................................................... 74
Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget
and Actual – Governmental Funds ........................................................................................... 81
CITY OF ST. JOSEPH
TABLE OF CONTENTS
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 ............................................................................... 83
REPORT ON LEGAL COMPLIANCE
........................................................................................ 85
SCHEDULE OF FINDINGS AND RESPONSES ON LEGAL COMPLIANCE AND
INTERNAL CONTROL
..............................................................................................................86
CITY OF ST. JOSEPH
ELECTED OFFICIALS AND ADMINISTRATION
December 31, 2011
Elected OfficialsPositionTerm Exires
p
Rick SchultzMayor January 2013
Robert LosoCouncil MemberJanuary 2013
Renee SmanietzCouncil MemberJanuar 2013
yy
Steve FranCouncil MemberJanuar 2015
ky
Dale WicCouncil MemberJanuar 2015
ky
Administration
Judy WeyrensCity AdministratorAppointed
Lori BartlettFinance DirectorAointed
pp
1
INDEPENDENT AUDITOR’S REPORT
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, 2011, 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,
2011, and the respective changes in financial position and where applicable, cash flows, thereof, and the
respective budgetary comparison for the General Fund for the year then ended in conformity with U.S.
generally accepted accounting principles.
The City has implemented Governmental Accounting Standards Board (GASB) Statement No. 54, Fund
Balance Reporting and Governmental Fund Type Definitions for the year ended December 31, 2011.
In accordance with Government Auditing Standards, we have also issued our report dated May 7, 2012,
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.
2
U.S. generally accepted accounting principles require that the Management’s Discussion and Analysis,
which follows this report letter and the Schedule of Funding Progress, be presented to supplement the
basic financial statements. Such information, although not a part of the basic financial statements, is
required by the GASB, who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with U.S.
generally accepted auditing standards, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s responses
to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an opinion or
provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s financial statements as a whole. 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 financial statements. The supplementary information is the responsibility of
management and was derived from and relate directly to, the underlying accounting and other records
used to prepare the financial statements. The information has been subjected to the auditing procedures
applied in the audit of the financial statements and certain additional procedures, including comparing
and reconciling such information directly to the underlying accounting and other records used to prepare
the financial statements or to the financial statements themselves, and other additional procedures in
accordance with U.S. generally accepted auditing standards. In our opinion, the information is fairly
stated, in all material respects in relation to the financial statements as a whole.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
May 7, 2012
3
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CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
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 year ended December 31,
2011.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2011 include the following:
The assets of the City exceeded its liabilities at the close of the most recent year by $ 32,281,676.
Of this amount, $ 4,231,756 may be used to meet government’s ongoing obligations to citizens and
creditors (unrestricted net assets).
The government’s total net assets decreased by $ 867,368 from 2010 to 2011. The decrease is due to
decreases in interest earnings, increases in compensated absence obligations, depreciation expense
much higher than capital asset additions and increases in improvement costs to the City of St. Cloud,
Minnesota for the wastewater distribution and treatment system.
As of the close of the current year, the City’s governmental funds reported combined ending fund
balances of $ 10,372,142, an increase of $ 1,407,080.Of this amount $ 1,032,115 is unassigned for
spending at the government’s discretion. The remaining balance of $ 9,340,027 is set aside for
specific future expenditures.
At the end of the current year, unassigned fund balance for the General Fund was $ 1,034,354, or
41.1% of total General Fund expenditures ($ 1,024,074, or 40.6%, excluding the Fire and PEG
Access funds).
The City’s total long-term debt increased by $ 4,226,504 during the current year. The increase was
due to debt issued to refund a bond in future years (advanced crossover bond) and issued four bonds
to pay for current project needs. The crossover refunding bond and the related general obligation
(G.O.) bond being refunded are both represented as current debt outstanding until the crossover date.
The City also issued a note payable with the City of St. Cloud for the reconstruction, expansion and
upgrades to the St. Cloud Wastewater Treatment Facility.
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 are comprised of 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 a private-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.
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CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
The Statement of Activities presents information showing how the government’s net assets changed
during the most recent 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
periods (e.g., uncollected taxes and earned but unused vacation leave).
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, culture and recreation and interest on long-term debt. The
business-type activities of the City include water, sanitary sewer, refuse and storm water services.
The government-wide financial statements include not only the City itself (known as the primary
government), but also a legally separate Economic Development Authority. Financial information for
this component unit is blended in the financial information.
The government-wide financial statements can be found on pages 24-25 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 year. Such information may be useful in evaluating a government’s near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental fund Balance Sheet and the governmental fund Statement of
Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this
comparison between governmental funds and government-wide governmental activities.
The City maintains 34 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 and improvement debt service funds, all of which
are considered to be major funds. Data from the other governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these non-major governmental funds is
provided in the form of combining statements elsewhere in this report.
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CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
The City adopts an annual appropriated budget for its General Fund.A budgetary comparison statement
has been provided for the General Fund (page 30) to demonstrate compliance with this budget.
The basic governmental fund financial statements can be found on pages 26-29 of this report.
Proprietary Funds.
The City maintains proprietary funds that are used to report the same functions
presented as business-type activities in the government-wide financial statements. The City uses
proprietary funds to account for its water, sanitary sewer, refuse and storm water activities.
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 31-35 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 37-63 of this report.
Other Information.
The combining statements referred to earlier in connection with non-major
governmental funds can be found on pages 68-80 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 $ 32,281,676 at the close of the most
recent 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) net accumulated depreciation, 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.
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CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
NET ASSETS
An additional portion of the City’s net assets (20.6%) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets, $ 4,231,756,
may be used to meet the City’s ongoing obligations to citizens and creditors.
At the end of the current 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 positive balances in all, but the unrestricted net assets.
The governmental activities total net asset balance decreased by 2.0% due to losses in state aid, capital
spending held to a minimum while asset depreciation increased, and increases in compensated absence
liability due to changes in policies on the accrual limits.
There was a 1.6% decrease in the total net assets for the business-type activities. The decrease is due to
the City paying the City of St. Cloud for improvements to the wastewater interceptor system and the St.
Cloud Wastewater Treatment Facility, and paying down the water filtration plant debt with fewer
connection fees that anticipated for the debt payments.
8
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
Governmental Activities.
Governmental activities reduced the City’s total net assets by $ 233,666.
The most significant change in governmental net assets is due to increases in accumulated depreciation
exceeding capital asset additions. The City reduced capital spending to offset reductions in state aids.
In addition, the City Council amended personnel policies and contracts allowing higher vacation and
sick leave accruals. In doing so, the compensated absence liability increased 4.90%. Interest earnings
are down from 2010, as a result of current economic conditions in the United States and reductions in
the cash balance. The City’s average rate of return decreased 0.28% and the cash and investment
balance decreased $ 155,738.
Business-Type Activities.
Business-type activities decreased the City’s net assets by $ 633,702
accounting for the 2.0% of the decrease in the City’s total net assets. While all the proprietary funds
contributed to the decrease in net assets, the largest part of the decrease is attributable to the Water and
Storm Water Funds.
The water utility (including the Water Access Charge [WAC] Fund) decreased by $ 249,914. The City
issued debt to construct a water filtration plant in 2005 with the main revenue source new connections or
WAC fees. The City collected more connection fees than was required for the debt payments in 2004-
2006. The carry-over balance of the earlier connection fees are covering the slower building years in
2007-2011. The building activity increased significantly in 2009 and 2011, but not to the same levels as
anticipated in 2005 when the water filtration plant debt was approved. The 2011 building activity
increased from 2010 with 55 new WAC connections; however, bond estimates anticipated 85
connections. The City Council approved rate increases and interest income from the Sales Tax Fund to
compensate for low building activity to pay for the water debts.
The storm water utility net assets decreased by $ 190,212. The City carried a delinquent special
assessment on a development for several years hoping to recapture the costs once the properties sold.
The properties are currently in foreclosure. The assessments fell off the assessment rolls due to the
length of time held at the County. The costs will be recaptured when the property is sold. In addition,
the City Council approved rate deductions for storm water charges to offset larger rate increases in the
Water Fund. The Storm Water Fund is carrying a net asset balance sufficient to cover the operations of
the Fund.
The change in net assets in the Sewer Fund also decreased significantly, but was offset by a prior period
adjustment to capitalize the design costs incurred in 2008 for the St. Cloud Wastewater Treatment
Facility improvements. Decreases in net assets are mainly due to paying down debt for the St. Cloud
projects. The City set aside connection fees (SAC fees) and a portion of the sewer usage revenue in
anticipation of the current significant sewer note payments to the City of St. Cloud.
The graphs and charts on the following pages summarize and graphically depict the changes in net assets
for the governmental and business-type activities.
9
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
CHANGE IN NET ASSETS
Governmental Business-Type
ActivitiesActivitiesTotal
201120102011201020112010
REVENUES:
Program Revenues:
Charges for Services529,040$ 486,720$ 1,797,137$ 1,551,549$ 2,326,177$ 2,038,269$
Operating Grants and
Contributions141,210 119,180 3,257 29,901 144,467 149,081
Capital Grants and
Contributions411,794 541,485 3,484 (422) 415,278 541,063
General Revenues:
Property Taxes 1,685,700 1,716,943 - - 1,685,700 1,716,943
Tax Increments105,063 100,133 - - 105,063 100,133
Sales Tax299,384 270,346 - - 299,384 270,346
Franchise Fees115,583 112,155 - - 115,583 112,155
State Aids646,692 646,692 - - 646,692 646,692
Unrestricted Investment Earnings132,473 159,899 64,303 51,262 196,776 211,161
Gain (Loss) on Sale of
Capital Assets(605) 55,820 - 95 (605) 55,915
Total Revenues4,066,334 4,209,373 1,868,181 1,632,385 5,934,515 5,841,758
EXPENSES:
General Government561,386 628,457 - - 561,386 628,457
Public Safety1,397,237 1,372,229 - - 1,397,237 1,372,229
Public Works1,494,965 1,507,012 - - 1,494,965 1,507,012
Culture and Recreation293,404 309,160 - - 293,404 309,160
Economic Development279,043 140,625 - - 279,043 140,625
Interest on Long-Term Debt403,266 460,663 - - 403,266 460,663
Water- - 1,024,719 1,031,791 1,024,719 1,031,791
Sanitary Sewer- - 802,282 843,166 802,282 843,166
Storm Water- - 305,660 162,833 305,660 162,833
Refuse- - 239,921 304,316 239,921 304,316
Total Expenses4,429,301 4,418,146 2,372,582 2,342,106 6,801,883 6,760,252
Decrease in Net Assets before
Transfers (362,967) (208,773) (504,401) (709,721) (867,368) (918,494)
Transfers129,301 (92,403) (129,301) 92,403 - -
Change in Net Assets(233,666) (301,176) (633,702) (617,318) (867,368) (918,494)
NET ASSETS:
Net Assets - Beginning11,730,450 12,031,626 21,121,622 21,738,940 32,852,072 33,770,566
Prior Perid Adjustment- - 296,972 - 296,972 -
Net Assets - Beginning Restated11,730,450 12,031,626 21,418,594 21,738,940 33,149,044 33,770,566
Ending11,496,784$ 11,730,450$ 20,784,892$ 21,121,622$ 32,281,676$ 32,852,072$
10
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
EXPENSES AND PROGRAM REVENUES - GOVERNMENTAL ACTIVITIES
1,600,000
1,400,000
Revenue
1,200,000
Expenditures
1,000,000
800,000
600,000
400,000
200,000
-
General GovernmentPublic SafetyPublic WorksCulture andEconomicInterest on Long-term
RecreationDevelopmentDebt
REVENUES BY SOURCE – GOVERNMENTAL ACTIVITIES
General Government
2%
Public Safety
14%
Public Works
9%
Culture and Recreation,
Economic Development
2%
General Revenues
73%
11
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
EXPENSES AND PROGRAM REVENUES – BUSINESS-TYPE ACTIVITIES
1,200,000
CITY OF ST. JOSEPH, MINNESOTA
Revenue
MANAGEMENT'S DISCUSSION AND ANALYSIS
Expenditures
December 31, 2005
1,000,000
EXPENSES AND PROGRAM REVENUES - BUSINESS-TYPE ACTIVITIES
800,000
600,000
400,000
200,000
-
WaterSanitary SewerRefuseStorm Water
REVENUES BY SOURCE – BUSINESS-TYPE ACTIVITIES
Sanitary Sewer
Water
34%
41%
General Revenues
4%
Refuse
16%
Storm Water
5%
12
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
FINANCIAL ANALYSIS OF THE CITY’S FUNDS AT THE FUND LEVEL
The financial performance of the City as a whole is reflected in its governmental funds as well. As the
City completed the year, its governmental funds reported a combined fund balance of $ 10,372,142, an
increase of $ 1,407,080 from 2010. Revenues for the City’s governmental funds were $ 5,064,203,
while total expenditures were $ 5,200,072. The excess of expenditures over revenues is due to the State
Legislature’s unilateral cuts in general state aids, decline in interest earnings and decrease in special
assessment revenue. Capital spending for general government increased as the City purchased the
property adjacent to City Hall for future expansion and completed repairs to the police garage. In 2009,
the City Council decided to postpone replacing a full-time police officer and cut capital spending to
adjust for state aid reductions. A full-time office employee left employment during 2011. The
employee was replaced with temporary staff at a much lower wage. Economic development spending
increased to encourage commercial development and expand the City’s tax base. The improvements
will result in future revenue benefits for the City.
In addition, building permit and related development revenue rose in 2011. The development activity in
2011 was higher than normal in comparison to the surrounding area and the United States.
Development activity for 2010 was consistent with the current economic conditions.
A summary of financial highlights for each major governmental fund follows.
General Fund
The General Fund is the chief operating fund of the City. At the end of the current year, unassigned
fund balance of the General Fund was $ 1,034,354. As a measure of the General Fund’s liquidity, it
may be useful to compare both unassigned fund balance to total fund expenditures. Unassigned fund
balance represents 41.1% of total General Fund expenditures, 40.6% (4.9 months working capital) after
removing the Fire Fund and PEG Access Fund. The City Council has a goal of 4 to 6 months of
working capital for the General Fund. Although the General Fund experienced reductions in special
assessment, investment income and fines and forfeitures, building permits and charges for services
increased substantially.
General Fund expenditures were lower than budgeted by $ 23,590. In anticipation of continued
legislative cuts to state aid, the City Council decided to not replace a full-time police officer and filled a
full-time office staff position with temporary workers. In addition, the City Council minimized capital
spending in all departments. The City Council allowed for some capital spending in 2010 and 2011 after
two years of freezing capital expenditures to prevent significant deterioration of city equipment and
infrastructure.
As a result of the prudent financial policies of the City, the General Fund remained stable.
The schedule on the following page presents a summary of General Fund revenues and expenditures.
13
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
General Fund Budgetary Highlights
Over the course of the year, the City amended the annual operating budget to move budgeted capital
expenditures to the General Capital Outlay Fund. This amendment is typically an annual revision to the
General Fund budget. Historically, the City has minimal budget amendments during the budget year.
Actual revenues were $ 106,373 more than expected due to increases in development fee
revenue, a one-time Callaway Street access charge for the College of St. Benedict’s student
housing and miscellaneous revenue. Property taxes were reduced by the Market Value
Homestead Credit (MVHC) provided by the state. The MVHC is $ 86,220 less than the loss of
property tax due to the state aid cuts. Local Government Aid (LGA) was also reduced by the
state. Even though the state reduced LGA and MVHC, other federal, state and local aids offset
the reductions.
Actual expenditures were $ 23,590 less than budget as a result imposing a hiring freeze,
monitoring engineering and legal services, minimizing training expenses and the Fire
Department’s decline in fire calls and capital spending.
14
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
G.O. Improvement Bonds of 2007A Debt Service Fund
This Debt Service Fund is used to pay the debt payments from the 2007A bond issue (2007 street
th
improvements for Jade Road, 8 Avenue and the East Side overlays and transportation studies). In
2011, the fund balance of this Fund decreased $ 111,873. This Debt Service Fund is partly funded by
developer special assessments. Several special assessments were prepaid in earlier years reducing the
special assessment collections in future years. The 2007A bonds have six years of payments remaining.
Proprietary Funds.
The City’s proprietary fund statements provide the same type of information found
in the government-wide financial statements, but in more detail. The unrestricted assets of the
proprietary funds decreased $ 613,539 overall. The following paragraphs provide a brief financial
overview of each major proprietary fund.
Water Enterprise Fund
The Water Fund is used to account for the operations of the City’s water utility. In 2011, the Water
Fund’s net assets decreased $ 249,914 due to paying down debt relating to the construction of the water
filtration plant and old water tower and making the interest payments. Included in the water bonds are
two long-term debts issued to fund the additional treatment capacity. The revenue stream for the debts
is a combination of water use fees, connection fees and trunk fees. The slow-down in development in
recent years has required the use of reserved connection and trunk fees from when development was at
its height, and transferring investment revenue from the Sales Tax Fund. The 2002 water debt was
refunded in 2009 to reduce the interest expense over the remaining life of the bonds. The City will save
$ 20,692 in interest expense. The refunded bond is paid for with water use fees. The 2005D Water
Revenue Debt will be refunded in 2012 for a savings of $ 366,766 in interest expense.
Sanitary Sewer Enterprise Fund
The Sanitary Sewer Fund is used to account for the operations of the City’s sanitary sewer utility. In
2011, the Sanitary Sewer Fund’s net assets decreased $ 271,756 (before accounting for a prior period
adjustment) due to decreases in sewer revenue charges and increases to depreciation and debt costs.
Contracted payments to the City of St. Cloud decreased in 2011 with final payments for emergency
interceptor repairs completed in August 2010. The City issued two sewer revenue notes to the City of
St. Cloud for interceptor projects to upgrade the Tri-City lift station and line several sewer mains. In
late 2009, the City of St. Cloud began construction to expand, rehabilitate and upgrade the St. Cloud
Wastewater Treatment Facility. The City incurred a $ 4.55 million Public Facilities Authority (PFA)
loan from the City of St. Cloud to pay their portion of the construction costs. The City capitalized the
St. Cloud Wastewater Treatment Facility improvements in 2011 including $ 296,972 design costs
incurred in 2008. In addition, The City issued a bond in 2011 and capitalized the improvements to
rehabilitate the Sauk River manhole feed from the St. Joseph forcemain into St. Cloud to reduce toxins
discharged into the wastewater treatment system.
15
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
Refuse Enterprise Fund
The Refuse Fund is used to account for the contract services to provide residential refuse service and to
operate a compost area. In 2011, the Refuse Fund’s net assets decreased $ 491. The charges for
services in the Refuse Fund increased $ 9,304 while operational expenses increased $ 1,344.
Operational expenses increased as a result of reimbursing the General Fund for maintenance personnel
and equipment time to operate the compost site. Compost fees were established to cover all operational
costs of the compost site. The compost fees increased in 2011 while the refuse fees remained the same.
Storm Water Enterprise Fund
The Storm Water Fund is used to account for the operations of the City’s storm water utility. In 2011,
the Storm Water fund’s net assets decreased $ 190,212. The Storm Water Fund had an operating loss of
$ 71,290, or $ 26,153 surplus after removing depreciation expense. The deficit is due to reducing storm
water fees to align with costs and covering 27% of depreciation. The City Council chose to reduce the
fees while still covering some depreciation. The decision was based on the Storm Water Fund having a
healthy net asset balance. The Storm Water Fund has not collected any development fees for the
previous three years.
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, 2011, amounts to $ 41,680,711 (net of accumulated depreciation). The investment
in capital assets includes land, intangible assets, buildings, improvements, machinery and equipment,
furniture and office equipment, infrastructure and construction in progress. Investment in capital assets,
net related debt increased $ 627,162. The increase is attributable to capital asset increases in
infrastructure and construction in progress for street reconstruction projects and residential development
areas as well as capitalizing the sewer rights for the City of St. Cloud sewer improvement projects. In
2011, the sewer rights for the construction of the St. Cloud Wastewater Treatment Facility was added.
th
The City began the 16 Avenue Street Improvement Project in 2011 to reconstruct the street and add
th
storm sewer infrastructure. The 16 Avenue street improvement project finished in 2011. The City
increased the overall debt relating to the capital assets by $ 2,867,369.
The table on the following page is a summary of the City’s capital assets.
16
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
CAPITAL ASSETS
Additional information on the City’s capital assets can be found in note 5 on pages 49-50 of this report.
Total depreciation expense for 2011 was $ 1,924,259.
Long-Term Debt.
At the end of the current year, the City had total net bonded debt outstanding of
$ 23,564,079. Of this amount, $ 10,583,543 comprises debt backed by the full faith and credit of the
government. The remainder of the City’s debt represents bonds and notes secured by specified revenue
sources (i.e. utility and lease revenue bonds). Other long-term debt includes compensated absences
payable and other post employment benefits.
An illustration of the City’s long-term debt is included in the table on the following page.
17
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
OUTSTANDING LONG-TERM DEBT
Percent
20112010Change
Governmental Activities:
G.O. Bonds1,675,014$ 1,267,938$ 32%
G.O. Special Revenue Bonds8,908,529 9,155,133 -3%
G.O. Revenue Bonds345,000 425,000 -19%
Compensated Absences Payable327,021 311,732 5%
Net Other Post Employment Benefits (OPEB)113,308 75,420 50%
Total Governmental Activities11,368,872$ 11,235,223$ 1%
Business-Type Activities:
G.O. Revenue Bonds7,378,464$ 7,545,665$ -2%
Notes Payable5,257,072 959,503 100%
Compensated Absences Payable112,760 112,385 0%
Net OPEB31,877 21,219 50%
Total Business-Type Activities12,780,173$ 8,638,772$ 48%
The City refunded an improvement bond and G.O. bond in 2011 to take advantage of lower interest
costs. The total savings from refunding the debts will be $ 176,469 over the life of the bonds. During
2011, the City issued the following debt:
$ 1,040,000 G.O. Crossover Refunding Bonds, Series 2011A to advance refund the 2006C G.O.
Improvement Bonds. Interest savings will be $ 140,270 over the remaining eight years of payments
following the cross-over date in 2013.
$ 430,000 G.O. Refunding Bonds, Series 2011A to refund the 2003 G.O. Refunding Bonds for the
community fire hall. Interest savings will be $ 36,199 over the remaining six years of payments of
the 2003 Bonds.
$ 390,000 G.O. Equipment Certificates, Series 2011A to purchase a new fire pumper truck. The
current pumper truck will be sold to the City of Elrosa, Minnesota in 2012.
$ 195,000 G.O. Bonds, Series 2011A to remodel and upgrade the police garage, City Hall and other
City buildings.
$ 225,000 G.O. Sewer Revenue bonds, Series 2011A to provide funding for The City’s portion of
the Sauk River forcemain and manhole reconfiguration.
$ 4,551,964 PFA note to provide funding to the City of St. Cloud to expand, upgrade and rehabilitate
the St. Cloud Wastewater Treatment Facility. The notes represent the City’s allocation of the project
expenses.
18
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
The City increased the net bonded debt and notes by $ 4,210,840 to end the year. In 2011, one debt was
paid in full.
The City maintained a bond rating to an “A1” rating from Moody’s for G.O. debt in 2011. According to
Moody’s municipal credit analysis, the City’s solid bond rating reflects the City’s financial operations
characterized by a strong management team and ample reserve levels. In addition, the institutional
presence of the College of Saint Benedict and the proximity to the City of St. Cloud lead into the rating
provided.
Minnesota Statutes limit the amount of net gene G.O. debt a governmental entity may issue to 3% of its
taxable market value. Net G.O. debt is debt solely paid for, with limited exceptions, by ad valorem
taxes. The current debt limitation for the City is $ 9,593,187 which significantly exceeds of the City’s
outstanding pure G.O. debt.
Additional information on the City’s long-term debt can be found in note 6 on pages 51-55.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City experienced a stable financial position at the end of 2011 despite reductions in state aids,
decreasing taxable market values and increases in St. Cloud sewer charges as evidenced by the tax rate,
reduction of bonded debt and General Fund reserves.
While the housing market for newly constructed homes has significantly declined, the City anticipates
continued growth in both residential and commercial. The construction of a new community 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 opened for the 2009-2010 school year. In
2010 a developer began platting phase 2 of the Rivers Bend development to build 12 patio homes, three
beginning construction in 2011. The City issued ten building permits for new homes in 2011.
The City also anticipates commercial/industrial development with the expansion of the Industrial Park
and planning initiatives for downtown revitalization. The first downtown project began construction in
2006 with completion in 2009. The project consists of a commercial and residential mixed-use facility
and is known as the Millstream Shops and Lofts. The residential and commercial units are fully
occupied with exception of the restaurant. The City entered into a Tax Increment Financing (TIF)
agreement to purchase restaurant equipment to assist in marketability for a prospective lessee.
In 2009 the Coborn’s PUD was approved which contained three commercial development sites. The
PUD is located on CSAH 75 and CR133, one of the major commerce corridors in St. Joseph.
CentraCare Medical Clinic, Coborn’s Superstore and Central MN Credit Union currently occupy the
development site. A recent market study of the St. Joseph area indicated that the trade area would
increase by 150% if a grocery store was added to the landscape of the City. The City has received
concrete leads for further commercial construction near this site including a fast food restaurant to build
and open in 2012.
19
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
Other developments include a Cone Castle drive-thru restaurant, a 128 bed student housing apartments
for the College of Saint Benedict, 3,002 square foot expansion to the St. Joseph Meat Market, and 3,500
square foot expansion of office space and cold storage to Precise Refrigeration. Cone Castle and the
College of Saint Benefict student housing will be completed for use in 2012.
In addition to new construction, the City experienced four commercial openings, filling vacant
properties in 2011 which includes: Chiropractic Connection, Minnesota Street Market Food
Cooperative, St. Joseph Laundromat and Computer Repair Unlimited.
The City Council has also identified an area near Interstate 94 (I-94) for future commercial development
and focused on planning the infrastructure expansion and land use during 2008-2009. Development
along the corridor is contingent upon Stearns County completing the realignment of County Road 2. It
is anticipated that construction of the street improvement will occur in 2012. The commerce potential at
the intersection of I-94 and CR 2 is an opportunity for the City to diversify its tax base.
The St. Joseph Economic Development Authority (EDA) is an active group promoting business interests
within the St. Joseph Community. The EDA continues to work with property owners to develop
industrial and commercial sites. The EDA is also working with the Comprehensive Economic
Development Strategy (CEDS) to attract businesses from around the country to the area and to provide
opportunity for possible federal grant funding.
Property tax reforms and budget deficits at the state level have significantly impacted government aid
payments made to the City. Further, the taxable market value on residential properties has decreased
slightly. The City Council continues to budget conservatively to maintain a steady tax rate. As the
Nation’s economic instability continues, the City is monitoring the federal and state legislation with the
impacts on the local government.
The City annually reviews the fee structures for all licenses and permits and services to recover
appropriate costs in lieu of raising property taxes.
The City’s rate structure for the utilities is established to help cover not only the operating costs but the
depreciation as well. Water and sanitary sewer is charged from the first gallon used with a separate line
charge to recover current and future capital replacements. This structure began in 2006 to promote
water conservation. Residential sewer rates are capped at the water used for the November/December
billing. The City monitors the rates annually so that the rates cover operation and depreciation. The City
has a long-term goal of covering depreciation fully through rates.
As previously stated, the City is part of the St. Cloud Wastewater System. 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, rehabilitate and upgrade the treatment
portion of the wastewater system and has been working on the expansion needs for the past couple
years. The improvements consist of three phases – design, construction and rehabilitation. The design
phase was completed in 2009 with each city paying cash for their portion of the design, respectively
St. Joseph paid $ 296,972 in 2008.
20
CITY OF ST. JOSEPH
MANAGEMENT’S DISCUSSION AND ANALYSIS
December 31, 2011
Late in 2009 the area cities agreed to move forward to bid the project and in January 2010 the project
was awarded to the lowest responsible bidder. As expected the bid results were less than the Engineer’s
estimate with a bid of $ 43.6 million. To reduce the overhead costs, the cities applied to the Minnesota
Public Finance Authority (PFA) to fund the construction and rehabilitation costs. The PFA agreed to
finance the project with a 20 year loan at an interest rate of 1.771%. The City’s payments began in 2010
to the City of St. Cloud. The City’s apportionment of the construction and rehabilitation phase is
$ 4,551,830. The payment structure for the first years will be variable as the payments will be based on
the actual capital outlay. Once the project is completed the annual payments will be stable. The phase
two and three costs include a 5% contingency (just under $ 2 million). If the contingency is not needed,
the additional draws will not be used for the PFA funding; therefore, the area cities will have a reduced
debt payment for the PFA loan. The PFA loan, along with the sewer rights to the treatment facility, was
added in 2011 on the City’s financial statements.
As part of the Wastewater Treatment System User Agreement with the City of St. Cloud, each city is
responsible for operation, repair and replacement costs for their portion of the St. Cloud Sewer
Interceptor System (SIS). The SIS includes lift stations and sewer mains. St. Cloud conducted a study
of the SIS in 2008 to determine the condition of the system. Several interceptors were found to be
failing or collapsing. St. Cloud initiated needed emergency repairs for the three interceptors used by the
City in 2008 and 2009. The City paid cash to St. Cloud through 2010 for the emergency repairs.
Further, St. Cloud upgraded the Tri-City Lift Station the end of 2009. St. Cloud, Waite Park and St.
Joseph share in the cost of the upgrade. St. Cloud also identified scheduled lining repairs on various
interceptors for 2009 and 2010. The repairs were placed on a schedule for construction with SIS phase 1
and 2 beginning in 2009 and SIS phase 3 in 2010.St. Cloud issued debt in 2009 and 2010 to cover the
lining repairs and upgrade the Tri-City Lift Station. Each area city was assigned a revenue note to pay
St. Cloud for their portion of the costs on a monthly basis for ten years.
Finally, the cities of St. Cloud and St. Joseph identified rapid corrosion of the sewer interceptors due to
high readings of hydrogen sulfide. After attempts to treat with chemicals, the cities determined the Sauk
River manhole should be reconstructed to reduce turbulence of the wastewater flow. The City issued a
ten-year G.O. sewer revenue note in the amount of $ 225,000 to pay their portion of the improvements.
All the factors were considered in preparing the City’s budget and fee schedule for the 2011 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 City’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,
P.O. Box 668, 25 College Avenue North, St. Joseph, Minnesota 56374.
21
(THIS PAGE LEFT BLANK INTENTIONALLY)
22
BASIC FINANCIAL STATEMENTS
23
CITY OF ST. JOSEPH
STATEMENT OF NET ASSETS
December 31, 2011
GovernmentalBusiness-Type
ActivitiesActivitiesTotal
ASSETS
Cash and Investments
(Including Cash Equivalents)7,075,480$ 2,067,396$ 9,142,876$
Cash with Fiscal Agent2,470,795 - 2,470,795
Property Tax Receivable56,837 - 56,837
Accounts Receivable43,798 311,263 355,061
Interest Receivable9,261 5,410 14,671
Due from Other Governments139,729 - 139,729
Notes Receivable44,017 - 44,017
Special Assessments Receivable:
Delinquent 22676,326 76,552
Deferred 13,2012,570,400 2,583,601
Prepaid Expenses15,903 -
15,903
Deferred Issuance Costs199,603 140,192
339,795
Capital Assets:
Land 377,882457,194 835,076
Easements 67,9155,820 73,735
Construction in Progress56,410 4,987,832 5,044,242
Buildings2,479,464 8,120,415 10,599,879
Infrastructure16,209,266 - 16,209,266
Improvements -607,487 607,487
Plant and Lines 21,195,993- 21,195,993
Machinery and Equipment2,743,443 605,590 3,349,033
Sewer Rights 2,844,253- 2,844,253
Less Accumulated Depreciation(12,256,586) (6,821,667) (19,078,253)
Capital Assets (Net of Accumulated Depreciation)10,302,498 31,378,213 41,680,711
$ 33,915,90123,004,647$ 56,920,548$
Total Assets
LIABILITIES AND NET ASSETS
Liabilities
Accounts Payable61,365$ 37,876$ 99,241$
Contracts Payable10,613 166,642 177,255
Due to Other Government 69,5716,959 76,530
s
8,37328,956 37,329
Salaries and Benefits Payable
68,37431,098 99,472
Interest Payable
Bond Principal Payable(Net):
Payable Within One Year2,590,000 450,000 3,040,000
Payable After One Year8,338,543 6,928,464 15,267,007
Notes Payable:
Payable Within One Year- 292,994 292,994
Payable After One Year- 4,964,078 4,964,078
Compensated Absences Payable:
Payable Within One Year20,279 6,286 26,565
Payable After One Year306,742 106,474 413,216
Net Other Post Employment Benefits (OPEB) Obligatio
n
31,877113,308 145,185
Total Liabilities11,507,863 13,131,009 24,638,872
Net Assets
18,746,4106,234,753 21,393,954
Invested in Capital Assets, Net of Related Debt
Restricted for:
-5,207,352 5,207,352
Debt Service
-1,448,614 1,448,614
Other Purposes
Unrestricted (1,393,935) 2,038,4824,231,756
Total Net Assets11,496,784 20,784,892 32,281,676
Total Liabilities and Net Assets23,004,647$ 33,915,901$ 56,920,548$
The Notes to the Financial Statements are an integral part of this statement.24
25
CITY OF ST. JOSEPH
BALANCE SHEET - GOVERNMENTAL FUNDS
December 31, 2011
Debt Service
G.O.
General Fund ImprovementOtherTotal
(101, 105, Bonds of GovernmentalGovernmental
108)2007A (341)FundsFunds
ASSETS
Cash and Investments 1,721,588$ 271,757$ 5,806,051$ 7,799,396$
Cash with Fiscal Agent -- 2,470,795 2,470,795
Taxes Receivable - Delinquent41,443 872 14,522 56,837
Special Assessments Receivable:
Delinquent 2493,296 72,781 76,326
Deferred2,532 547,884 2,019,984 2,570,400
Accounts Receivable43,088 - 710 43,798
Interest Receivable2,454 1,292 6,668 10,414
Due from Other Funds- - 2,300 2,300
Due from Other Government 6327,851 131,246 139,729
s
Notes Receivable1,000 - 43,017 44,017
Prepaid Expenses15,903 - - 15,903
Total Assets1,839,155$ 822,686$ 10,568,074$ 13,229,915$
LIABILITIES AND FUND BALANCES
Liabilities
Accounts Payable40,151$ -$ 21,214$ 61,365$
Contracts Payable- - 10,613 10,613
Due to Other Funds- - 2,300 2,300
Due to Other Governments6,959 - - 6,959
Salaries and Benefits Payable28,956 - - 28,956
Deferred Revenue48,271 549,005 2,150,304 2,747,580
Total Liabilities124,337 549,005 2,184,431 2,857,773
Fund Balances
Nonspendable15,903 - - 15,903
Restricted- 273,681 5,850,436 6,124,117
Committed -- 49,582 49,582
Assigned -664,561 2,485,864 3,150,425
Unassigne -1,034,354 (2,239) 1,032,115
d
Total Fund Balances1,714,818 273,681 8,383,643 10,372,142
Total Liabilities and
Fund Balances1,839,155$ 822,686$ 10,568,074$ 13,229,915$
The Notes to the Financial Statements are an integral part of this statement.26
CITY OF ST. JOSEPH
RECONCILIATION OF THE BALANCE SHEET TO
THE STATEMENT OF NET ASSETS - GOVERNMENTAL FUNDS
December 31, 2011
Total Fund Balances - Governmental Fund$10,372,142
s
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
22,559,084
Less Accumulated Depreciatio
(12,256,586)
n
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:
(10,928,543)
Bond Principal Payable, Net of Premiums and Discounts
199,603
Deferred Issuance Costs
(327,021)
Compensated Absences Payable
Net OPEB Obligatio(113,308)
n
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.
56,837
Property Taxes
76,326
Special Assessments
Other long-term assets are not available to pay for current expenditures and,
therefore, are deferred in the funds.
2,570,400
Deferred Special Assessments
44,017
Notes Receivable
The Water Access Capital Project Fund is proprietary in nature and, therefore,
(807)
included in the business-type activities in the Statement of Net Assets.
The Sewer Access Capital Project Fund is proprietary in nature and, therefore,
(724,262)
included in the business-type activities in the Statement of Net Assets.
Governmental funds do not report a liability for accrued interest
(31,098)
due and payable.
Total Net Assets - Governmental Activities
$11,496,784
The Notes to the Financial Statements are an integral part of this statement.27
CITY OF ST. JOSEPH
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the Year Ended December 31, 2011
Debt Service
G.O.
General Fund ImprovementOther Total
(101, 105, Bonds of GovernmentalGovernmental
108)2007A (341)FundsFunds
REVENUES
Property Taxes1,193,514$ 18,370$ 422,255$ 1,634,139$
Tax Increments- - 104,151 104,151
Sales Taxes(188) - 299,572 299,384
Special Assessments1,458 383,036 437,387 821,881
Franchise Fees115,583 - - 115,583
Licenses and Permits141,035 - - 141,035
Intergovernmental801,027 1,459 70,905 873,391
Charges for Services345,032 - 445,312 790,344
Fines and Forfeitures69,592 - - 69,592
Miscellaneous:
Investment Income29,550 15,656 86,799 132,005
Contributions and Donations29,328 - 600 29,928
Revolving Loan Repayments- - 4,338 4,338
Other47,647 - 785 48,432
Total Revenues2,773,578 418,521 1,872,104 5,064,203
EXPENDITURES
Current
General Government492,861 - - 492,861
Public Safety1,277,072 - - 1,277,072
Public Works374,154 - - 374,154
Culture and Recreation202,065 - 2,453 204,518
Economic Development- - 278,723 278,723
Debt Service
Principal- 510,000 1,070,000 1,580,000
Interest and Other Charges- 54,469 377,352 431,821
Capital Outlay
General Government46,587 - 133,213 179,800
Public Safety24,519 - 36,039 60,558
Public Works102,052 - 175,968 278,020
Culture and Recreation- - 42,545 42,545
Total Expenditures2,519,310 564,469 2,116,293 5,200,072
Excess of Revenues Over
(Under) Expenditures
(145,948)254,268 (244,189) (135,869)
OTHER FINANCING SOURCES (USES)
Sale of Property3,000 - - 3,000
Bonds Issued- - 585,000 585,000
Refunding Bonds Issued- - 1,470,000 1,470,000
Bond Premium- - 42,819 42,819
Refunding Bond Payment- - (430,000) (430,000)
Transfers In- 34,075 534,366 568,441
Transfers Out(207,325) - (488,986) (696,311)
Total Other Financing Sources (Uses)(204,325) 34,075 1,713,199 1,542,949
Net Change in Fund Balances49,943 (111,873) 1,469,010 1,407,080
FUND BALANCES
Beginning of Year
1,664,875385,554 6,914,633 8,965,062
End of Year
$ 273,6811,714,818$ 8,383,643$ 10,372,142$
The Notes to the Financial Statements are an integral part of this statement.28
CITY OF ST. JOSEPH
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, 2011
Total Net Change in Fund Balances - Governmental Fund$1,407,080
s
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.
402,252
Capital Outlays
(1,186,859)
Depreciation Expense
(3,605)
Loss on Disposal
(47,129)
Transferred to Proprietary Funds
Principal payments on long-term debt are recognized as expenditures in the governmental
1,580,000
funds but as an increase in net assets in the Statement of Activities.
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.430,000
Some expenses reported in the Statement of Activities do not require the use of current
financial resources and, therefore, are not reported as expenditures in governmental funds.
8,206
Accrued interest payable
(36,242)
Amortization of bond discounts, premiums and issuance charges
Proceeds from long-term debt are recognized as an other financing source in the governmental
(2,055,000)
funds but as a decrease in net assets in the Statement of Activities.
The governmental funds report the effect of issuance costs, premiums, discounts and
similar items when debt is first issued, whereas these amounts are deferred and amortized
13,772
in the Statement of Activities.
Compensated absences and OPEB payments are recognized as paid in the
(53,177)
governmental funds but recognized as the expense is incurred in the Statement of Activities.
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.
17,450
Delinquent Special Assessments
7,787
Delinquent Property Taxes
Certain revenues in the Statement of Activities that do not provide current financial resources
are not reported as revenues in the funds.
(657,832)
Deferred Special Assessments
18,302
Notes Receivable
The Water Access Capital Project Fund is proprietary in nature and, therefore, is reported
961
with business-type activites.
The Sewer Access Capital Project Fund is proprietary in nature and, therefore, is reported
(79,632)
with business-type activities.
Change in Net Assets - Governmental Activitie$(233,666)
s
The Notes to the Financial Statements are an integral part of this statement29
.
CITY OF ST. JOSEPH
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2011
Variance with
OriginalFinalActual
Final Budget -
BudgetBudgetAmounts
Over (Under)
REVENUES
Property Taxes1,301,530$ 1,301,530$ 1,193,514$ (108,016)$
Sales Taxes- - (188) (188)
Special Assessments2,000 2,000 1,458 (542)
Franchise Fees106,000 106,000 115,583 9,583
Licenses and Permit 93,67093,670 141,035 47,365
s
Intergovernmenta 820,335820,335 801,027 (19,308)
l
Charges for Services237,020 237,020 345,032 108,012
Fines and Forfeitures65,500 65,500 69,592 4,092
Miscellaneous Revenues:
Investment Incom 12,50012,500 29,550 17,050
e
Contributions and Donations16,100 16,100 29,328 13,228
Othe 12,55012,550 47,647 35,097
r
Total Revenues2,667,205 2,667,205 2,773,578 106,373
EXPENDITURES
Current
General Governmen 549,960549,960 492,861 (57,099)
t
Public Safet 1,310,5951,310,595 1,277,072 (33,523)
y
Public Works361,120 365,120 374,154 9,034
Culture and Recreatio 187,625187,625 202,065 14,440
n
Capital Outla
y
General Governmen 3,00010,000 46,587 43,587
t
Public Safet 46,60070,925 24,519 (22,081)
y
Public Works101,305 80,000 102,052 22,052
Culture and Recreatio -24,855 - -
n
Total Expenditures2,616,385 2,542,900 2,519,310 (23,590)
Excess of Revenues
Over Expenditures
124,30550,820 254,268 129,963
OTHER FINANCING SOURCES (USES)
Sale of Propert 250250 3,000 2,750
y
Transfers In14,000 14,000 - (14,000)
Transfers Out(83,840) (83,840) (207,325) (123,485)
Total Other Financing Sources (Uses)(69,590) (69,590) (204,325) (134,735)
et Change in Fund Balance$ 54,715(18,770)$ 49,943 (4,772)$
Ns
FUND BALANCES
Beinnin of Year
1,664,875
gg
End of Year
$1,714,818
The Notes to the Financial Statements are an integral part of this statement30
.
CITY OF ST. JOSEPH
STATEMENT OF NET ASSETS - PROPRIETARY FUND
S
December 31, 2011
Sanitary Sewer RefuseStorm Water
Water (601)(602)(603)(651)Total
ASSETS
Current Assets
Cash and Investments237,621$ 672,224$ 258,434$ 175,201$ 1,343,480$
Special Assessments Receivable:
Delinquen 58120 27 21 226
t
Deferre 41811,034 1,017 732 13,201
d
Accounts Receivable 151,83780,886 59,330 19,210 311,263
Interest Receivable2,548 834 417 458 4,257
Total Current Assets332,209 825,371 319,225 195,622 1,672,427
Noncurrent Assets
Deferred Issuance Costs105,725 34,467 - - 140,192
Capital Assets:
Lan 4,941372,941 - - 377,882
d
Easements- - - 67,915 67,915
Construction in Progress45,896 4,935,072 - 6,864 4,987,832
Buildings7,502,432 617,983 - - 8,120,415
Plants and Lines8,908,669 7,432,835 - 4,854,489 21,195,993
Machinery and Equipmen 421,127182,697 - 1,766 605,590
t
Sewer Rights- 2,844,253 - - 2,844,253
Total Capital Assets17,012,635 16,256,211 - 4,931,034 38,199,880
Less Accumulated Depreciation (3,071,308)(2,914,851) - (835,508) (6,821,667)
Net Capital Assets14,097,784 13,184,903 - 4,095,526 31,378,213
Total Noncurrent Assets14,203,509 13,219,370 - 4,095,526 31,518,405
Total Assets14,535,718$ 14,044,741$ 319,225$ 4,291,148$ 33,190,832$
LIABILITIES AND NET ASSET
S
Current Liabilities
Accounts Payable12,267$ 3,381$ 21,618$ 610$ 37,876$
Contracts Payable- 166,642 - - 166,642
Due to Other Government 65,6711,389 2,511 - 69,571
s
Salaries and Benefits Payable3,611 3,417 733 612 8,373
Interest Payable22,250 46,124 - - 68,374
Long-Term Liabilities Due
Within One Year 350,476397,482 535 787 749,280
Total Current Liabilities436,999 635,711 25,397 2,009 1,100,116
Noncurrent Liabilities
Compensated Absence 48,36048,360 8,412 7,628 112,760
s
Notes Payable- 5,257,072 - - 5,257,072
Bonds Payable, Ne 637,3236,741,141 - - 7,378,464
t
Net OPEB Obligatio 12,62515,465 1,894 1,893 31,877
n
Less Amounts Due Within One Yea (350,476)(397,482) (535) (787) (749,280)
r
Total Noncurrent Liabilities6,407,484 5,604,904 9,771 8,734 12,030,893
Total Liabilities6,844,483 6,240,615 35,168 10,743 13,131,009
Net Assets
Investment in Capital Assets, Net
Related Debt 7,290,5087,360,376 - 4,095,526 18,746,410
Unrestricted330,859 513,618 284,057 184,879 1,313,413
Total Net Assets7,691,235 7,804,126 284,057 4,280,405 20,059,823
Total Liabilities and Net Assets14,535,718$ 14,044,741$ 319,225$ 4,291,148$ 33,190,832$
The Notes to the Financial Statements are an integral part of this statement.31
CITY OF ST. JOSEPH
RECONCILIATION OF THE STATEMENT
OF NET ASSETS - BUSINESS-TYPE ACTIVITIES
December 31, 2011
Total Net Assets - Proprietary Funds20,059,823$
Amounts reported for business-type activities in the Statement of Net Assets
are different because:
The Water Access Capital Project Fund is proprietary in nature and
relates to water improvements for the applicable funds. Therefore,
807
it is included as a busines-type activity.
The Sewer Access Capital Project Fund is proprietary in nature and
relates to sewer improvements for the applicable funds. Therefore,
724,262
it is included as a business-type activity.
Total Net Assets - Business-Type Activities
$20,784,892
The Notes to the Financial Statements are an integral part of this statement.32
CITY OF ST. JOSEPH
STATEMENT OF REVENUES, EXPENSES AND CHANGES
IN NET ASSETS - PROPRIETARY FUNDS
For the Year Ended December 31, 2011
Sanitary Sewer Storm Water
Water (601)(602)Refuse (603)(651)Total
OPERATING REVENUES
Charges for Services502,359$ 494,160$ 298,909$ 100,093$ 1,395,521$
OPERATING EXPENSES
Wages and Salaries165,416 151,064 39,438 39,887 395,805
Materials and Supplies37,718 49,008 2,239 188 89,153
Repairs and Maintenance31,168 25,804 6,800 21,728 85,500
Professional Services25,457 29,926 2,919 9,535 67,837
Insurance17,686 5,429 - - 23,115
Utilities62,793 13,355 805 - 76,953
Depreciation385,175 254,782 - 97,443 737,400
Contracted Services- 151,332 252,862 - 404,194
Equipment419 419 - - 838
Miscellaneous8,185 1,589 597 2,602 12,973
Total Operating Expenses734,017 682,708 305,660 171,383 1,893,768
Operating Loss(231,658) (188,548) (6,751) (71,290) (498,247)
NONOPERATING REVENUES
(EXPENSES)
Investment Income30,581 9,566 5,064 5,574 50,785
Special Assessments1,172 460 946 735 3,313
Special Assessments Abated- - - (68,538) (68,538)
Interest Expense(278,074) (118,634) - - (396,708)
Amortization of Bond Premium6,098 4,678 - - 10,776
Amortization of Bond Costs(18,726) (5,618) - - (24,344)
Other Income27,693 4,220 250 - 32,163
Total Nonoperating Revenues
(Expenses)(231,256) (105,328) 6,260 (62,229) (392,553)
Loss before Capital
Contributions and Transfers(462,914) (293,876) (491) (133,519) (890,800)
Capital Grant1,714 1,714 - - 3,428
Capital Contributions23,286 23,206 - 637 47,129
Transfers In238,000 47,200 - - 285,200
Transfers Out(50,000) (50,000) - (57,330) (157,330)
Change in Net Assets(249,914) (271,756) (491) (190,212) (712,373)
NET ASSETS
Beinnin of Yea
ggr 7,778,9107,941,149 284,548 4,470,617 20,475,224
Prior Period Adustmen
jt 296,972- - - 296,972
Beinnin of Year, Restate
ggd 8,075,8827,941,149 284,548 4,470,617 20,772,196
End of Yea
$ 7,804,1267,691,235$ 284,057$ 4,280,405$ 20,059,823$
r
The Notes to the Financial Statements are an integral part of this statement.33
CITY OF ST. JOSEPH
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS - BUSINESS-TYPE ACTIVITIES
For the Year Ended December 31, 2011
Total Net Change in Fund Net Assets - Proprietary Funds(712,373)$
Amounts reported for business-type activities in the Statement of Activities
are different because:
Recognized current year activity from the Water Access Capital Project Fund
with the business-type activities.(961)
Recognized current year activity from the Sewer Access Capital Project Fund
with the business-type activities.79,632
Capital contributions to governmental activities (47,129)
Transfers in of capital assets from governmental activities 47,129
Change in Net Assets - Business-Type Activities (633,702)$
The Notes to the Financial Statements are an integral part of this statement.34
CITY OF ST. JOSEPH
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
For the Year Ended December 31, 2011
SanitaryStorm Water
Water (601)Sewer (602)Refuse (603)(651)Total
CASH FLOWS - OPERATING ACTIVITIES
Receipts from Customers and Users493,828$ 673,103$ 297,448$ 99,869$ 1,564,248$
Payments to Suppliers(173,872) (66,204) (265,918) (34,385) (540,379)
Payments to Employees(159,725) (145,702) (39,076) (38,683) (383,186)
Other Miscellaneous Receipts29,065 4,635 1,440 175 35,315
Net Cash Flows - Operating Activities189,296 465,832 (6,106) 26,976 675,998
CASH FLOWS - NONCAPITAL FINANCING
ACTIVITIES
Transfer from Other Funds238,000 47,200 - - 285,200
Transfer to Other Funds(50,000) (50,000) - (57,330) (157,330)
Net Cash Flows - Noncapital Financing 188,000 (2,800) - (57,330) 127,870
Activities
CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTIVITIES
Principal Paid on Debt(375,000) (140,440) - - (515,440)
Interest Paid on Debt(279,981) (80,239) - - (360,220)
Bond Payable Proceeds 225,000
225,000- - -
Acquisition of Capital Assets(6,864) (210,588) - (74,779) (292,231)
Net Cash Flows - Capital and Related (661,845) (206,267) - (74,779) (942,891)
Financing Activitis
CASH FLOWS - INVESTING ACTIVITIES
Interest and Dividends Received29,205 10,222 5,382 5,941 50,750
266,987(255,344) (724) (99,192) (88,273)
Net Change in Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS
405,237492,965 259,158 274,393 1,431,753
Beginning of Year
$ 672,224237,621$ 258,434$ 175,201$ 1,343,480$
End of Year
RECONCILIATION OF OPERATING
LOSS TO NET CASH FLOWS -
OPERATING ACTIVITIES
Operating Loss(231,658)$ (188,548)$ (6,751)$ (71,290)$ (498,247)$
Adjustments to Reconcile Operating Loss
to Net Cash Flows - Operating Activities:
Depreciation Expense385,175 254,782 - 97,443 737,400
4,68028,865 1,196 735
Other Income 35,476
Accounts Receivable(8,531) 178,943 (1,461) (224) 168,727
Special Assessments Receivable200 (45) 244 (560) (161)
Accounts Payable8,515 (541) 601 (332) 8,243
Contracts Payable- 166,642 - - 166,642
Due to Other Governmental Units1,039 44,557 (297) - 45,299
Salaries Payable499 1,119 100 (132) 1,586
Compensated Absences Payable21 21 (371) 704 375
Net OPEB Obligation
4,2225,171 633 632 10,658
Total Adjustments420,954 654,380 645 98,266 1,174,245
Net Cash Flows - Operating Activities189,296$ 465,832$ (6,106)$ 26,976$ 675,998$
NONCASH CAPITAL ACTIVITIES
Note Payable Issued to Acquire St. Cloud Sewer Rights-$ 4,427,512$ -$ -$ 4,427,512$
Capital Contributions from Governmental Funds23,286 23,206 - 637 47,129
Capital Grants1,714 1,714 - - 3,428
Special Assessments Abated- - - (68,538) (68,538)
Capital Asset Acquisitions from Note Payable- (4,427,512) - - (4,427,512)
Total Noncash Capital Activities25,000$ 24,920$ -$ 637$ (17,981)$
The Notes to the Financial Statements are an integral part of this statement.35
(THIS PAGE LEFT BLANK INTENTIONALLY)
36
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of St. Joseph is a statutory city governed by an elected mayor and four council members. The
accompanying financial statements present the government entities for which the government is
considered to be financially accountable.
The financial statements present the City and its component units. The City includes all funds, account
groups, organizations, institutions, agencies, departments and offices that are not legally separate from
such. Component units are legally separate organizations for which the elected officials of the City are
financially accountable and are included within the basic financial statements of the City because of the
significance of their operational or financial relationships with the City.
The City is considered financially accountable for a component unit if it appoints a voting majority of
the organization’s governing body and it is able to impose its will on the organization by significantly
influencing the programs, projects, activities or level of services performed or provided by the
organization, or there is a potential for the organization to provide specific financial benefits to or
impose specific financial burdens on, the City.
As a result of applying the component unit definition criteria above, certain organizations have been
defined and are presented in this report as follows:
Blended Component Unit – Reported as if they were part of the City.
Joint Ventures – The relationship of the City with the entity is disclosed.
For the categories above, the specific entities are 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. The St. Joseph EDA is governed by a five member board appointed by the City Council,
two members of which are City Council Members. 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, as the
City Council approves the budget as well as any expenditures over $ 1,000. 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 and the City Hall General Obligation (G.O.) EDA
Refunding Bonds of 2005A Debt Service Fund. Separate financial statements are not prepared for
the St. Joseph EDA.
37
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity (Continued)
2. Joint Ventures
The Central Minnesota Major Crime Investigation Unit is a group of local law enforcement officers
within the four county surrounding area that will be available to assist any of the participating
entities in the investigation and solution of major crimes. During 2011, the City contributed $ 4,454
to the organization. It is reported as a special revenue fund of the City of Sartell. Complete
financial statements can be obtained from: City of Sartell, P.O. Box 140, Sartell, Minnesota 56377.
The City of St. Cloud Human Rights Office is a joint venture between the cities of St. Cloud and
St. Joseph, which works to enhance the lives of the citizens of the communities. During 2011, the
City contributed $ 3,450 to the organization. It is reported as an agency fund of the City of
nd
St. Cloud. Complete financial statements can be obtained from: City of St. Cloud, 400 2 Street
South, St. Cloud, Minnesota 56301.
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.
38
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
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
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.
Property taxes, franchise taxes, licenses and interest associated with the current period are all
considered to be susceptible to accrual and so have been recognized as revenues of the current period.
Only the portion of special assessments receivable due within the current 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 2007A Debt Service Fund – This Fund accounts for the resources
accumulated and payments made for principal and interest on this bond issue.
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.
39
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
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 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 water, sanitary
sewer and storm water functions 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.
D. Assets, Liabilities and Net Assets or Equity
1. Cash and Investments
The City’s cash and cash equivalents are considered to be cash on hand, deposits and highly liquid
debt instruments purchased with original maturities of three months or less from the date of
acquisition. Investments are stated at fair value.
Minnesota Statutes require all deposits made by cities with financial institutions are collateralized in
an amount equal to 110% of deposits in excess of Federal Deposit Insurance Corporation (FDIC)
insurance.
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies and
instrumentalities, shares of investment companies whose only investments are in the aforementioned
securities, obligations of the State of Minnesota or its municipalities, bankers’ acceptances, future
contracts, repurchase and reverse repurchase agreements and commercial paper of the highest
quality with a maturity of no longer than 270 days and in the Minnesota Municipal Investment Pool.
40
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
1. Cash and Investments (Continued)
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 may be utilized to take advantage of higher yields. No more than
20% 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 the City will permit investments only to the extent that there is
Securities Investor Protection Corporation (SIPC) and excess SIPC coverage available.
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.
41
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
2. Receivables and Payables (Continued)
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 four 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 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. Prepaid items are reported
using the consumption method and recorded as expenditures at the time of consumption.
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
two years. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at estimated fair market value at the date of
donation.
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.
42
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
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 full year convention
method over the following estimated useful lives:
AssetsYears
Land Improvements5-20
Buildings30-40
Building Improvements15
Infrastructure10-50
Sewer Rights20-50
Furniture and Fixtures5-10
Vehicles5-20
Equipment3-7
Machinery5-7
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 100 hours or the amount of the current vacation
accrual rate. In addition, employees are compensated for unused sick leave (up to a maximum of
720 hours or 960 hours for LELS emplyees) at various rates depending on the employee type and
years of service, 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.
43
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
7. Fund Equity
a)Classification
In the fund financial statements, governmental funds report fund classifications that comprise a
hierarchy based primarily on the extent to which the City is bond to honor constraints on the
specific purpose for which amounts in those funds can be spent.
Nonspendable Fund Balance – These are amounts that cannot be spent because they are
not in spendable form as they are legally or contractually required to be maintained intact
and include amounts set aside for prepaid items.
Restricted Fund Balance – These are amounts that are restricted to specific purposes
either by a) constraints placed on the use of resources by creditors, grantors, contributors,
or laws or regulations of other governments or b) imposed by law through enabling
legislation.
Committed Fund Balance – These are amounts that can only be used for specific
purposes pursuant to constraints imposed by the City Council (highest level of decision
making authority) through resolution.
Assigned Fund Balance – These are amounts that are constrained by the City’s intent to
be used for specific purposes but are neither restricted nor committed. Assignments are
made by the City’s Finance Director based on the City Council’s direction.
Unassigned Fund Balance – These are residual amounts in the General Fund not reported
in any other classification. The General Fund is the only fund that can report a positive
unassigned fund balance. Other funds would report a negative unassigned fund balance
should the total of nonspendable, restricted, committed and assigned fund balances
exceed the total net resources of that fund.
When both restricted and unrestricted resources are available for use, it is the City’s policy to
first use restricted resources, and then use unrestricted resources as they are needed. When
committed, assigned and unassigned resources are available for use, it is the City’s policy to use
resources in the following order: committed, assigned and unassigned.
b)Minimum Fund Balance
The City’s target General Fund balance is to maintain working capital, a portion of the
unassigned balance, in the amount of four to six months of the next year’s budgeted expenditures
of the General Fund, excluding the fire department.
44
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Assets or Equity (Continued)
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. A reclassification of $ 3,587,209 between the net assets and unrestricted
net assets on the total column in the Statement of Net Assets to recognize the portion of debt
attributable to capital assets donated from governmental activities to business-type activities. 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. The restricted for other purposes restriction of net assets for
governmental activities of $ 1,448,614 includes $ 7,211 for tax incrementing financing, $ 1,297,613
in state collected sales tax restricted by enabling legislation, $ 72,760 in park dedication fees,
$ 51,738 restricted by donors for a future recreation center, $ 5,100 restricted by donors for future
projects and $ 14,192 in revolving loan funds restricted for EDA projects.
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 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 Fund, the Economic Development Authority Special Revenue Fund and
the Park Dedication Special Revenue Fund are adopted on a basis consistent with U.S. generally
accepted accounting principles.
5.Expenditures may not legally exceed budgeted appropriations at the department level. No fund’s
budget can be increased without City Council approval. The City Council may authorize
transfer of budgeted amounts between departments within any fund. Management may amend
budgets within a department level, so long as the total department budget is not changed.
45
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information (Continued)
6.Annual appropriated budgets are adopted during the year for the General and two 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. 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 a deficit fund balances at December 31, 2011.
Nonmajor Governmental Funds:
Special Revenue:
TIF 1-4 St. Joseph Development1,942$
TIF 2-2 St. Joseph Meat Market297
These deficits will be eliminated with future tax increment revenues.
C.Disbursements in Excess of Appropriations
Disbursements exceeded appropriations in the following Fund for the year ended December 31, 2011.
DisbursementsAppropriations
Nonmajor Governmental Fund:
Special Revenue:
Economic Development Authority106,112$ 83,990$
NOTE 3 – DEPOSITS AND INVESTMENTS
Cash balances of the City’s funds are combined (pooled) and invested to the extent available in various
investments authorized by Minnesota Statutes. Each fund’s portion of this pool (or pools) is displayed
in the financial statements as “cash and cash equivalents” or “investments”. For purposes of identifying
risk of investing public funds, the balances and related restrictions are summarized as follows.
46
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 3 – DEPOSITS AND INVESTMENTS
A. Deposits
Custodial Credit Risk – Deposits: As of December 31, 2011, the City’s bank balance was not exposed
to custodial credit risk because it was fully insured through the FDIC or NCUA and fully collateralized
with securities held by the pledging financial institutions trust department or agent and in the City’s
name. As of December 31, 2011, the City’s deposits had a carrying value as shown below.
Certificates of Deposit3,675,306$
Checking1,936,738
Savings1,635,012
Total7,247,056$
B. Investments
As of December 31, 2011, the City had the following investments:
Weighted Standard &
FairAverage Poor's
ValueMaturity (Years)Rating
Brokered Certificates of Deposit1,880,765$ 3.16N/A
Brokered Money Market14,780 N/AN/A
State and Local Government Securities2,470,795 N/AN/A
Total4,366,340$
Credit Risk: As of December 31, 2011, the City’s investments were rated as listed in the table above.
Concentration of Credit Risk: As of December 31 2011, the City’s investments in state and local
securities (56.6%) and the investment in a brokered certificate of deposit with Discover Bank, Delaware
(5.5%) exceeded 5% of the City’s total investment portfolio. Money market accounts are not subject to
concentration of credit risk.
C. Deposits and Investments
The following is a summary of deposits and investments as of December 31, 2011:
Deposits (Note 3.A.)7,247,056$
Investments (Note 3.B.)4,366,340
Petty Cash275
Total11,613,671$
47
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 3 – DEPOSITS AND INVESTMENTS
C. Deposits and Investments (Continued)
Deposits and investments are presented in the December 31, 2011 basic financial statements as follows:
Statement of Net Assets:
Cash and Investments9,142,876$
Cash with Fiscal Agents2,470,795
Total Deposits and Investments11,613,671$
NOTE 4 – INTERFUND BALANCES AND TRANSFERS
A. Interfund Balances
The composition of interfund balances as of December 31, 2011 is as follows:
Receivable FundPayable FundAmount
Other Governmental FundsOther Governmental Funds2,300$
The due from/due to other funds balances represent a loan made to cover tax increment financing (TIF)
consulting costs to establish the TIF district.
B. Transfers
The composition of interfund transfers as of December 31, 2011 is as follows:
Transfer In
G.O.
ImprovementOther
Bonds ofGovernmentalSanitary
2007AFundsWaterSewerTotal
Transfers Out:
General-$ 207,325$ -$ -$ 207,325$
Other Governmental
Funds- 203,786 238,000 47,200 488,986
Water- 50,000 - - 50,000
Sanitary Sewer- 50,000 - - 50,000
Storm Water34,075 23,255 - - 57,330
Total Transfers34,075$ 534,366$ 238,000$ 47,200$ 853,641$
Transfers were made to close funds and provide resources for debt payments and capital projects.
48
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 5 – CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2011 was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental Activities:
Capital Assets not being Depreciated:
Land346,258$ 110,936$ -$ 457,194$
Easements5,820 - - 5,820
Construction in Progress391,235 42,934 377,759 56,410
Total Capital Assets
not being Depreciated743,313 153,870 377,759 519,424
Capital Assets being Depreciated:
Buildings2,466,309 13,155 - 2,479,464
Infrastructure
453,83815,755,428 - 16,209,266
Improvements
3,125604,362 - 607,487
Machinery and Equipment2,706,735 108,894 72,186 2,743,443
Total Capital Assets
being Depreciated21,532,834 579,012 72,186 22,039,660
Less Accumulated Depreciation for:
Buildings777,892 62,277 - 840,169
Infrastructure
912,9538,175,319 - 9,088,272
Improvements -26,019
322,370 348,389
68,581185,610
Machinery and Equipment1,862,727 1,979,756
Total Accumulated
Depreciation 1,186,85911,138,308 68,581 12,256,586
Total Capital Assets being
(607,847)10,394,526 3,605 9,783,074
Depreciated, Net
Governmental Activities Capital
$ (453,977)11,137,839$ 381,364$ 10,302,498$
Assets, Net
49
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 5 – CAPITAL ASSETS
Beginning
BalanceEnding
RestatedIncreasesDecreasesBalance
Business-Type Activities:
Capital Assets not being Depreciated:
Land377,882$ -$ -$ 377,882$
Easements- 67,915 - 67,915
Construction in Progress515,146 4,651,828 179,142 4,987,832
Total Capital Assets
not being Depreciated893,028 4,719,743 179,142 5,433,629
Capital Assets being Depreciated:
Buildings8,120,415 - - 8,120,415
Plant and Lines
229,69920,966,294 - 21,195,993
Machinery and Equipment
-606,890 1,300 605,590
Sewer Rights2,844,253 - - 2,844,253
Total Capital Assets
being Depreciated32,537,852 229,699 1,300 32,766,251
Less Accumulated Depreciation for:
Buildings1,314,655 186,260 - 1,500,915
Plant and Lines 424,3093,822,451 - 4,246,760
Machinery and Equipment 1,30039,496
323,356 361,552
-87,335
Sewer Rights625,105 712,440
Total Accumulated
737,4006,085,567 1,300 6,821,667
Depreciation
Total Capital Assets being
(507,701)26,452,285 - 25,944,584
Depreciated, Net
Governmental Activities Capital
$ 4,212,04227,345,313$ 179,142$ 31,378,213$
Assets, Net
Depreciation expense was charged to functions/programs of the City as follows:
Governmental Activities:
General Government56,246$
Public Safety 86,257
Public Works975,701
Culture and Recreation68,335
Economic Development320
Total Depreciation Expense - Governmental Activities1,186,859$
Business-Type Activities:
Water$ 385,175
Sanitary Sewer 254,782
Storm Sewer 97,443
Total Depreciation Expense - Business-Type Activities737,400$
50
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 6 – LONG-TERM DEBT
A.G.O. Bonds
The City issues G.O. bonds to provide for financing improvement, development and street improvement
projects. Debt service is covered respectively by contract revenue, special assessments against benefited
properties, federal grants and lease 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 to 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
IssueInterestOriginalFinalPrincipalDue Within
DateRateIssueMaturityOutstandingOne Year
Governmental Activities:
G.O. Bonds, Including Refunding Bonds:
G.O. Certificates of Indebtedness
of 2008A04/03/083.10%-3.50%290,000$ 12/01/13120,000$ 60,000$
G.O. Capital Improvement Plan
Refunding Bonds 2009B09/03/091.10%-3.75%495,000 12/01/18395,000 55,000
G.O. Certificates of Indebtedness
of 2010A04/22/102.75%150,000 12/01/15120,000 30,000
G.O. Refunding Bonds of 2011A11/10/112.00%430,000 10/01/17430,000 70,000
G.O. Certificates of Indebtedness
of 2011A11/10/112.00%-2.40%390,000 10/01/21390,000 35,000
G.O. Capital Improvement Plan
Bonds of 2011A11/10/112.00%-2.40%195,000 10/01/21195,000 15,000
Total G.O. Bonds 265,0001,650,000
G.O. Special Assessment Bonds:
1,090,000
G.O. Improvement Bonds of 2005B03/24/052.50%-4.40%1,655,000 12/01/12 1,090,000
1,730,000
G.O. Improvement Bonds of 2006C06/13/064.00%-4.25%2,375,000 12/01/14 145,000
G.O. Improvement Bonds of 2007A07/25/074.00%-4.13%2,875,000 12/01/17845,000 500,000
G.O. Improvement Refunding
Bonds of 2007B11/14/073.60%-3.90%980,000 12/01/14425,000 150,000
G.O. Improvement Refunding
Bonds of 2009A03/19/091.25%-2.90%2,555,000 12/01/171,960,000 310,000
G.O. Improvement Refunding Bonds of 2010B09/28/102.00%-3.25%1,825,000 12/01/251,780,000 45,000
G.O. Improvement Crossover
Refunding Bonds of 2011A11/10/112.00%-2.40%1,040,000 10/01/211,040,000 -
Total G.O. Special
Assessment Bonds 2,240,0008,870,000
Public Project Revenue Bonds:
EDA Revenue Refunding Bonds of 2005A03/15/052.75%-4.15%645,000 12/01/15345,000 85,000
Unamortized Premiums/Discounts -63,543
327,021
Compensated Absences 20,279
Total Long-Term Liabilities,
Governmental Activities$ 2,610,27911,255,564$
51
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 6 – LONG-TERM DEBT
B. Components of Long-Term Liabilities (Continued)
IssueInterestOriginalFinalPrincipalDue Within
DateRateIssueMaturityOutstandingOne Year
Business-Type Activities:
G.O. Revenue Bonds:
G.O. Water Revenue Bonds of 2005D12/15/054.00%-4.25%4,595,000$ 12/01/284,595,000$ -$
G.O. Water Revenue Bonds of 2006A01/12/063.50%-4.00%3,575,000 12/01/161,805,000 335,000
G.O. Sewer Revenue Refunding
Bonds of 2009A
03/19/091.25%-3.85%455,000 12/01/21385,000 35,000
G.O. Water Revenue Refunding
Bonds of 2009C
10/20/091.0%-2.6%425,000 12/01/16315,000 60,000
G.O. Sewer Revenue Bonds of 2011A
11/10/112.00-2.40%225,000 10/01/21225,000 20,000
Total G.O. Revenue Bonds 450,0007,325,000
Notes Payable:
City of St. Cloud SIS
Phases 1 & 2 (2009B Bonds)10/26/092.0%-4.0%835,000 08/01/19680,000 75,000
City of St. Cloud SIS
Phase 3 (2010 Bonds)10/28/102.0%-2.5%180,000 08/01/20160,000 15,000
City of St. Cloud PFA Loan08/01/101.77%4,431,543 08/20/304,417,072 202,994
Total Notes Payable 292,9945,257,072
Unamortized Premium -53,464
Compensated Absences 6,286112,760
Total Business-Type Activities 749,28012,748,296
Total all Long-Term Liabilities$ 3,359,55924,003,860$
Long-term bonded indebtedness listed on the previous page and above were issued to finance
acquisition and construction of capital assets or to refinance (refund) previous bond issues.
The City issued the $ 1,825,000 of G.O. Improvement Bonds 2010B for an advanced refunding of
$ 1,035,000 of the G.O. Improvement Bonds 2005B. The issue will be called on December 1, 2012.
The refunding was undertaken to reduce total future debt service payments. The refunding resulted in a
net present value benefit of $ 40,472. The economic gain from the transaction was $ 46,031.
The City issued $ 430,000 of the G.O. Improvement Bonds 2011A for a refunding of the G.O.
Refunding Bonds 2003B. The refunding was undertaken to reduce total future debt service payments.
The refunding resulted in a net present value benefit of $ 32,900. The economic gain from the
transaction was $ 36,199.
The City issued $ 1,040,000 of the G.O. Improvement Bonds 2011A for a crossover refunding of the
G.O. Improvement Bonds 2006C. The issue will be called on December 1, 2013. The refunding was
undertaken to reduce total future debt service payments. The refunding resulted in a net present value
benefit of $ 77,442. The economic gain from the transaction was $ 140,270.
52
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 6 – LONG-TERM DEBT
C. Changes in Long-Term Liabilities
Long-term liability activity for the year December 31, 2011 was as follows:
ended
BeginningEnding
BalanceAdditionsReductionsBalance
Governmental Activities:
Bonds Payable:
General Obligation1,265,000$ 1,015,000$ 630,000$ 1,650,000$
G.O. Special Assessment Bonds9,130,000 1,040,000 1,300,000 8,870,000
Public Project Revenue Bonds425,000 - 80,000 345,000
Total Bonds Payable
2,055,00010,820,000 2,010,000 10,865,000
Unamortized Premiums/Discounts28,071 42,819 7,347 63,543
Compensated Absences311,732 178,036 162,747 327,021
Total Governmental
Activities
2,275,85511,159,803 2,180,094 11,255,564
Business-Type Activities:
Bonds Payable:
G.O. Utility Revenue Bonds7,510,000 225,000 410,000 7,325,000
Notes Payable:
City of St. Cloud Notes935,000 4,427,512 105,440 5,257,072
Unamortized Premiums
4,07160,168 10,775 53,464
Compensated Absences112,385 50,999 50,624 112,760
Total Business-Type
Activities8,617,553 4,707,582 576,839 12,748,296
Total Long-Term Liabilities19,777,356$ 6,983,437$ 2,756,933$ 24,003,860$
The General Fund typically liquidates the liability related to compensated absences.
53
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 6 – LONG-TERM DEBT
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Governmental Activities
G.O. Government ActivitiesG.O. Special Assessment Bonds
Year Ended
December 31,PrincipalInterestPrincipalInterest
2012265,000$ 37,642$ 2,240,000$ 281,295$
2013270,000 33,105 2,295,000 200,078
2014210,000 26,580 785,000 113,286
2015215,000 21,605 695,000 90,951
2016190,000 16,530 720,000 72,370
2017-2021500,000 28,230 1,895,000 145,886
2022-2025- - 240,000 19,375
Total1,650,000$ 163,692$ 8,870,000$ 923,241$
Governmental Activities
Public Project Revenue Bonds
Year Ended
December 31,PrincipalInterestTotal
201285,000$ 13,643$ 2,922,580$
201380,000 10,455 2,888,638
201490,000 7,335 1,232,201
201590,000 3,735 1,116,291
2016- - 998,900
2017-2021- - 2,569,116
2022-2025- - 259,375
Total345,000$ 35,168$ 11,987,101$
54
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 6 – LONG-TERM DEBT
D. Minimum Debt Payments (Continued)
Business-Type Activities
Utility Revenue BondsNotes Payable
Year Ended
December 31,PrincipalInterestPrincipalInterestTotal
2012450,000$ 284,124$ 292,994$ 102,002$ 1,129,120$
2013460,000 269,946 296,494 99,091 1,125,531
2014475,000 253,794 305,220 93,634 1,127,648
87,211
2015495,000 236,444 313,9461,132,601
80,572
2016515,000 218,369 327,6711,141,612
2017-20212,485,000 809,961 1,502,516 294,655 5,092,132
2022-20262,175,000 300,194 1,252,851 163,378 3,891,423
2027-2030270,000 17,425 965,380 48,437 1,301,242
Total7,325,000$ 2,390,257$ 5,257,072$ 968,980$ 15,941,309$
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, 2011, the City’s conduit debt consisted of the following:
Commercial Development Revenue Note
(Independence Center), Series 2001391,529$
Industrial Revenue Bonds (St. Joseph
Development, LLC), Series 20021,195,000
Total$1,586,529
55
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 7 – FUND BALANCE DETAIL
Reserved/Designated Fund Equity
Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective
funds.
G.O. Improvement
Nonmajor
Bonds of Governmental
General2007AFundTotal
Nonspendable:
Prepaid Expenses15,903$ -$ -$ 15,903$
Restricted:
Debt Service- 273,681 4,401,822 4,675,503
Tax Increments- - 7,211 7,211
State Collected Sales Tax Projects- - 1,297,613 1,297,613
Park Dedication Fees- - 72,760 72,760
Recreation Center- - 51,738 51,738
Chartitable Gambling- - 5,100 5,100
Revolving Loan- - 14,192 14,192
Total Restricted- 273,681 5,850,436 6,124,117
Committed:
Economic Development - - 49,582 49,582
Assigned:
Elections30,110 - - 30,110
City Structure/Facility Study18,883 - - 18,883
Fire Operations20,000 - - 20,000
Fire Debt Service200,000 - - 200,000
Fire Capital395,568 - - 395,568
Capital Outlay Reserves- - 2,144,987 2,144,987
Debt Service Relief- - 340,877 340,877
Total Assigned664,561 - 2,485,864 3,150,425
Unassigned1,034,354 - (2,239) 1,032,115
Total1,714,818$ 273,681$ 8,383,643$ 10,372,142$
56
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 8 – RISK MANAGEMENT
The City purchases commercial insurance coverage through the League of Minnesota Cities Insurance
Trust (LMCIT) 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 LMCIT for
its insurance coverage. The LMCIT is self-sustaining through commercial companies for excess claims.
The City is covered through the pool for any claims incurred but unreported, however, retains risk for
the deductible portion of its insurance policies. The 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 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
2011 is estimated to be immaterial based on workers’ compensation rates and salaries for the year.
At December 31, 2011, there were no other claims liabilities reported in the fund based on the
requirements of GASB Statement No. 10, which requires a liability for claims be reported if information
prior to the issuance of the financial statements indicates it is probable 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 are covered by defined benefit plans
administered by the Public Employees’ Retirement Association of Minnesota (PERA). PERA
administers the General Employees’ Retirement Fund (GERF) 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.
GERF members belong to either the Coordinated or Basic Plan. Coordinated Plan members are covered
by Social Security and Basic Plan members are not. All new members must participate in the
Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership are
covered by the PEPFF.
PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors
upon death of eligible members. Benefits are established by state statute and vest after three years of
credited service. The defined retirement benefits are based on a member’s highest average salary for
any five successive years of allowable service, age and years of credit at termination of service.
57
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 9 – DEFINED BENEFIT PENSION PLANS – STATE-WIDE
Public Employees’ Retirement Association (Continued)
A. Plan Description (Continued)
Two methods are used to compute benefits for PERA’s Coordinated and Basic Plan members. The
retiring member receives the higher of a step-rate benefit accrual formula (Method 1) or a level accrual
formula (Method 2). Under Method 1, the annuity accrual rate for a Basic Plan member is 2.2% of
average salary for each of the first 10 years of service and 2.7% for each remaining year. The annuity
accrual rate for a Coordinated Plan member is 1.2% of average salary for each of the first 10 years and
1.7% for each remaining year. Under Method 2, the annuity accrual rate is 2.7% of average salary for
Basic Plan members and 1.7% for Coordinated Plan members for each year of service. For PEPFF
members, the annuity accrual rate is 3.0% for each year of service. For all GERF and PEPFF members
hired prior to July 1, 1989, whose annuity is calculated using Method 1, a full annuity is available when
age plus years of service equal 90. Normal retirement age is 55 for PEPFF members and 65 for Basic
and Coordinated Plan members hired prior to July 1, 1989. Normal retirement age is the age for
unreduced Social Security benefits capped at 66 for Coordinated Plan members hired on or after July 1,
1989. A reduced retirement annuity is also available to eligible members seeking early retirement.
There are different types of annuities available to members upon retirement. A single-life annuity is a
lifetime annuity that ceases upon the death of the retiree – no survivor annuity is payable. There are also
various types of joint and survivor annuity options available which will be payable over joint lives.
Members may also leave their contributions in the Fund upon termination of public service in order to
qualify for a deferred annuity at retirement age. Refunds of contributions are available at any time to
members who leave public service, but before retirement benefits begin.
The benefit provisions stated in the previous paragraphs of this section are current provisions and apply
to active Plan participants. Vested, terminated employees who are entitled to benefits but are not yet
receiving them are bound by the provisions in effect at the time they last terminated their public service.
PERA issues a publicly available financial report that includes financial statements and required
supplementary information for GERF and PEPFF. That report may be obtained on the Internet at
www.mnpera.org, by writing to PERA at 60 Empire Drive, #200, St. Paul, Minnesota 55103-2088 or by
calling (651) 296-7460 or (800) 652-9026.
58
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
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. GERF Basic Plan members and
Coordinated Plan members were required to contribute 9.1% and 6.25%, respectively, of their annual
covered salary in 2011. PEPFF members were required to contribute 9.6% of their annual covered
salary in 2011. In 2011, the City was required to contribute the following percentages of annual covered
payroll: 11.78% for Basic Plan members, 7.25% for Coordinated Plan members and 14.4% for PEPFF
members. The City’s contributions to the Public Employees’ Retirement Fund for the years ending
December 31, 2011, 2010 and 2009 were $ 52,013, $ 50,562 and $ 46,555, respectively. The City’s
contributions to the PEPFF for the years ending December 31, 2011, 2010 and 2009 were $ 63,930,
$ 60,886 and $ 62,604, respectively. The City’s contributions were equal to the contractually required
contributions for each year as set by state statute.
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 a multi-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 plan provisions, including the
employee and 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. For ambulance service personnel, employer contributions are determined by
the employer and for salaried employees must be a fixed percentage of salary. Employer contributions
for volunteer personnel may be a unit value for each call or period of alert duty. 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 1% 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 $ 1,332 from each source, or
$ 2,664 in total. As of December 31, 2011 and for the year then ended, PERA held no securities issued
by the City or other related parties.
59
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 10 – POST EMPLOYMENT HEALTH CARE PLAN
A. Plan Description
The City provides a single-employer defined benefit health care plan to eligible retirees. The plan offers
medical coverage. Medical coverage is administered by BlueCross BlueShield. It is the City’s policy to
periodically review its medical coverage, and to obtain requests for proposals in order to provide the
most favorable benefits and premiums for City employees and retirees.
B. Funding Policy
Retirees contribute to the health care plan at the same rate as City employees. This results in the retirees
receiving an implicit rate subsidy. Contribution requirements are established by the City, based on the
contract terms with BlueCross BlueShield. The required contributions are based on projected pay-as-
you-go financing requirements. For 2011, the City contributed $ 6,889 to the plan. As of December 31,
2011, there was one retiree receiving health benefits from the City’s health plan.
C. Annual OPEB Cost and Net OPEB Obligation
The City’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC)
of the City, an amount actuarially determined in accordance with the parameters of GASB Statement
No. 45. The City prospectively implemented this Statement during the 2009 year. The ARC represents
a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and
amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The
table on the following page shows the components of the City’s annual OPEB cost of the year, the
amount actually contributed to the plan, and changes in the City’s net OPEB obligation to the plan.
ARC57,158$
Interest on Net OPEB Obligation3,866
Adjustment to ARC(5,589)
Annual OPEB Cost55,435
Contributions Made(6,869)
Increase in Net OPEB Obligation48,546
Net OPEB Obligation - Beginning of Yea96,639
r
Net OPEB Obligation - End of Yea$145,185
r
60
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 10 – POST EMPLOYMENT HEALTH CARE PLAN
C. Annual OPEB Cost and Net OPEB Obligation (Continued)
The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net
OPEB obligation for 2011 was as follows:
Percentage of
Annual OPEB Employer Annual OPEB Cost Net OPEB
Year EndedCostContributionContributedObigation
12/31/0957,158$ 10,555$ 18%46,603$
12/31/1056,327 6,291 11%96,639
12/31/1155,435 6,889 12%145,185
D. Funded Status and Funding Progress
As of January 1, 2009, the most recent actuarial valuation date, the City had no assets deposited to fund
the plan. The actuarial accrued liability for benefits was $ 345,319 and the actuarial value of assets was
$ 0, resulting in an unfunded actuarial accrued liability (UAAL) of $ 345,319. The covered payroll
(annual payroll of active employees covered by the plan) was $ 1,070,515, and the ratio of the UAAL to
the covered payroll was 32.3%.
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the
probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality and the health care cost trend. Amounts determined regarding the funded status
of the plan and the ARC of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
The Schedule of Funding Progress – Other Post Employment Benefits, presented as required
supplementary information following the Notes to the Financial Statements, presents multi-year trend
information about whether the actuarial value of plan assets is increasing or decreasing over time
relative to the actuarial accrued liabilities for benefits.
E. Actuarial Methods and Assumptions
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan members) and include the types of benefits provided at the
time of each valuation and the historical pattern of sharing of benefit costs between the employer and
plan members to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the
long-term perspective of the calculations.
61
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 10 – POST EMPLOYMENT HEALTH CARE PLAN
E. Actuarial Methods and Assumptions (Continued)
At the January 1, 2009 actuarial valuation date, the projected unit credit with 30 year amortization of the
unfunded liability method was used. The actuarial assumptions included a 4.0% discount rate. The City
currently does not plan to prefund for this benefit. At the actuarial valuation date, the annual health care
cost trend rate was calculated to be 10% initially, reduced incrementally to an ultimate rate of 5% after
10 years. The UAAL is being amortized as a level percentage of projected payroll on an open basis.
The remaining amortization period at December 31, 2011 was 27 years.
NOTE 11 – COMMITMENTS
The City has entered into contracts for construction as follows:
Expended
Contractthrough
ProjectAmount12/31/11Commitment
North Corridor and CSAH 2 Realignment383,172$ 339,628$ 43,544$
Sauk River Interceptor182,065 166,642 15,423
Total$ 58,967
NOTE 12 – RELATED PARTY TRANSACTION
The St. Joseph EDA has issued Public Project Revenue Bonds of 2005A. 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 13 – CHANGE IN ACCOUNTING PRINCIPLE
For the year ended December 31, 2011, the City has elected to implement GASB Statement No. 54,
Fund Balance Reporting and Governmental Fund Type Definitions.
NOTE 14 – SUBSEQUENT EVENT
The City has evaluated subsequent events through May 7, 2012, the date which the financial statements
were available to be issued. The City identified one subsequent event. On March 15, 2012, the City
Council approved the issuance G.O. Water Revenue Crossover Refunding Bonds, Series 2012A in the
amount of $ 4,860,000 to refund the G.O. Water Revenue Bonds, Series 2005D. The refunding will
result in an estimated net present value benefit of $ 366,766 and the estimated economic gain from the
transaction is $ 298,853.
62
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2011
NOTE 15 – PRIOR PERIOD ADJUSTMENT
A prior period adjustment was required to capitalize $ 296,972 of design costs paid to the City of
St. Cloud in 2008 for the wastewater treatment facility expansion project. The City holds a right to
sewer capacity in the City of St. Cloud’s sewer system. Prior to 2010, cities were not required to report
intangible assets such as this right to sewer capacity. In 2010, there was not significant construction
completed on the sewer expansion project, so the design costs were not capitalized. In 2011, the City
recorded its share of a Public Facilities Authority (PFA) note issued cover the cost of construction of the
sewer expansion, so the design costs were capitalized along with the construction costs to date.
63
(THIS PAGE LEFT BLANK INTENTIONALLY)
64
REQUIRED SUPPLEMENTARY INFORMATION
65
CITY OF ST. JOSEPH
SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS
December 31, 2011
ActuarialUAAL as a
ActuarialAccrued LiabilityUnfundedPercentage of
ActuarialValue of (AAL) -AALFunded CoveredCovered
ValuationAssetsEntry Age(UAAL)RatioPayrollPayroll
Date(a)(b)(b-a)(a/b)(c)((b-a)/c)
12/31/09-$ 345,319$ 345,319$ 0.0%1,070,515$ 32.3%
* This Schedule was implemented in 2009. The City has had one actuarial study complete to date
therefore, the Schedule contains only one year of data. See Note 10 in the Notes to the Financial
Statements for more details on this Schedule.
66
SUPPLEMENTARY INFORMATION
67
CITY OF ST. JOSEP
H
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2011
Special Revenue
EconomicTIF 1-4 St. TIF 2-1 TIF 2-2 St.
DevelopmentJosephMillstreamJoseph Meat
AuthorityDevelopmentShops and MarketState Collected
(150)(156)Lofts (157)(158)Sales Tax (200)
ASSETS
Cash and Investments 51,328$ 18$ 8,444$ 3$ 1,240,511$
Cash with Fiscal Agent- - - - -
Taxes Receivable - Delinquent- - - - -
Special Assessments Receivable:
Delinquent- - - - -
Deferred- - - - -
Accounts Receivable- - - - -
Interest Receivable34 40 10 - -
Due from Other Funds2,300 - - - -
Due from Other Governments- - 42 - 68,609
Notes Receivable- - - - -
Total Assets53,662$ 58$ 8,496$ 3$ 1,309,120$
LIABILITIES AND
FUND BALANCES
Liabilities
Accounts Payable4,080$ -$ 1,285$ -$ 11,507$
Contracts Payable- - - - -
Due to Other Funds- 2,000 - 300 -
Deferred Revenue- - - - -
Total Liabilities4,080 2,000 1,285 300 11,507
Fund Balances
Restricted- - 7,211 - 1,297,613
Committed49,582 - - - -
Assigned- - - - -
Unassigned- (1,942) - (297) -
Total Fund Balances49,582 (1,942) 7,211 (297) 1,297,613
Total Liabilities an
d
Fund Balances53,662$ 58$ 8,496$ 3$ 1,309,120$
68
Special RevenueDebt Service
G.O.
G.O. Crossover Improvement
ParkCharitableRefundingRefunding
DedicationRecreationGamblingRevolvingBonds of Bonds of
(205)Center (210)(215)Loan (250)Total2009A (318)2007B (320)
$ 52,27472,836$ 5,092$ 14,158$ 1,444,664$ 489,013$ 269,082$
-- - - - - -
-- - - - 2,177 270
-- - - - 2,899 483
-- - - - 685,967 147,273
-- - - - - -
8269 8 34 277 880 531
-- - - 2,300 - -
-- - - 68,651 587 6,246
-- - 43,017 43,017 - -
$ 52,35672,905$ 5,100$ 57,209$ 1,558,909$ 1,181,523$ 423,885$
$ 618145$ -$ -$ 17,635$ -$ -$
-- - - - - -
-- - - 2,300 - -
-- - 43,017 43,017 691,043 148,026
618145 - 43,017 62,952 691,043 148,026
51,73872,760 5,100 14,192 1,448,614 490,480 275,859
-- - - 49,582 - -
-- - - - - -
-- - - (2,239) - -
51,73872,760 5,100 14,192 1,495,957 490,480 275,859
$ 52,35672,905$ 5,100$ 57,209$ 1,558,909$ 1,181,523$ 423,885$
69
CITY OF ST. JOSEP
H
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2011
Debt Service
City Hall G.O.G.O.
G.O. EDA Fire Hall G.O. ImprovementImprovementG.O.
RefundingRefundingBonds of Bonds of Certificates of
Bonds of Bonds of 2005B/2010B2011A/2006CIndebtedness of
2005A (322)2003B (331)(333)(338)2008A (342)
ASSETS
Cash and Investments 5,443$ 126,537$ 452,838$ 276,887$ 8,944$
Cash with Fiscal Agent- - 1,002,063 1,468,732 -
Taxes Receivable - Delinquent3,171 1,048 509 1,926 2,036
Special Assessments Receivable:
Delinquent- - 66,914 2,485 -
Deferred- - 509,237 427,584 -
Accounts Receivable- - - - -
Interest Receivable27 234 821 1,087 27
Due from Other Funds- - - - -
Due from Other Governments195 66 1,239 32,600 136
Notes Receivable- - - - -
Total Assets8,836$ 127,885$ 2,033,621$ 2,211,301$ 11,143$
LIABILITIES AND
FUND BALANCES
Liabilities
Accounts Payable-$ 332$ -$ 805$ -$
Contracts Payable- - - - -
Due to Other Funds- - - - -
Deferred Revenue3,171 1,048 576,660 431,995 2,036
Total Liabilities3,171 1,380 576,660 432,800 2,036
Fund Balances
Restricted5,665 126,505 1,456,961 1,778,501 9,107
Committed- - - - -
Assigned- - - - -
Unassigned- - - - -
Total Fund Balances5,665 126,505 1,456,961 1,778,501 9,107
Total Liabilities an
d
Fund Balances8,836$ 127,885$ 2,033,621$ 2,211,301$ 11,143$
70
Debt Service
G.O.
Certificates
G.O. Capital ofG.O.G.O.G.O. Capital
ImprovementIndebtednessImprovementCertificates of ImprovementDebt Service
Plan Bonds of of 2010A Bonds of Indebtedness of Plan Bonds of Relief Fund
2009B (343)(344)2010B (345)2011A (346)2011A (347)(390)Total
$ 1,2483,825$ 235,564$ 4,197$ 5,604$ 339,854$ 2,219,036$
-- - - - - 2,470,795
5422,054 181 - - 608 14,522
-- - - - - 72,781
-- 232,186 - - 17,737 2,019,984
-- - - - - -
1012 446 95 46 1,022 5,238
-- - - - - -
63135 18,550 - - 1 59,818
-- - - - - -
$ 1,8636,026$ 486,927$ 4,292$ 5,650$ 359,222$ 6,862,174$
$ --$ -$ 298$ 140$ -$ 1,575$
-- 10,613 - - - 10,613
-- - - - - -
5422,054 232,367 - - 18,345 2,107,287
5422,054 242,980 298 140 18,345 2,119,475
1,3213,972 243,947 3,994 5,510 - 4,401,822
-- - - - - -
-- - - - 340,877 340,877
-- - - - - -
1,3213,972 243,947 3,994 5,510 340,877 4,742,699
$ 1,8636,026$ 486,927$ 4,292$ 5,650$ 359,222$ 6,862,174$
71
CITY OF ST. JOSEP
H
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2011
Capital Projects
City
NorthlandJade Road Hall/Police
Heights/StreetPumper Truck Garage Capital
TransportationImprovementsCertificateImprovements
Studies (435)(441)(446)(447)
ASSETS
Cash and Investments 274,071$ 365,338$ 383,406$ 173,333$
Cash with Fiscal Agent- - - -
Taxes Receivable - Delinquent- - - -
Special Assessments Receivable:
Delinquent- - - -
Deferred- - - -
Accounts Receivable- - - 710
Interest Receivable- - - -
Due from Other Funds- - - -
Due from Other Governments- 2,777 - -
Notes Receivable- - - -
Total Assets274,071$ 368,115$ 383,406$ 174,043$
LIABILITIES AND
FUND BALANCES
Liabilities
Accounts Payable1,046$ -$ -$ -$
Contracts Payable- - - -
Due to Other Funds- - - -
Deferred Revenue- - - -
Total Liabilities1,046 - - -
Fund Balances
Restricted- - - -
Committed- - - -
Assigned273,025 368,115 383,406 174,043
Unassigned- - - -
Total Fund Balances273,025 368,115 383,406 174,043
Total Liabilities an
d
Fund Balances274,071$ 368,115$ 383,406$ 174,043$
72
Capital Projects
GeneralTotal
Capital Outlay Water Access Sewer Access Governmental
(490)Fund (501)Fund (502)TotalFunds
$ 736222,287$ 723,180$ 2,142,351$ 5,806,051$
-- - - 2,470,795
-- - - 14,522
-- - - 72,781
-- - - 2,019,984
-- - 710 710
71- 1,082 1,153 6,668
-- - - 2,300
-- - 2,777 131,246
-- - - 43,017
$ 807222,287$ 724,262$ 2,146,991$ 10,568,074$
$ -958$ -$ 2,004$ 21,214$
-- - - 10,613
-- - - 2,300
-- - - 2,150,304
-958 - 2,004 2,184,431
-- - - 5,850,436
-- - - 49,582
807221,329 724,262 2,144,987 2,485,864
-- - - (2,239)
807221,329 724,262 2,144,987 8,383,643
$ 807222,287$ 724,262$ 2,146,991$ 10,568,074$
73
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2011
Special Revenue
EconomicTIF 1-4TIF 2-1 TIF 2-2 St.
DevelopmentSt. Joseph MillstreamJoseph Meat
AuthorityDevelopmentShops and Market
(150)(156)Lofts (157)(158)
REVENUE
S
Property Taxes-$ -$ -$ -$
Tax Increments- 66,385 37,766 -
Sales Taxes- - - -
Special Assessments- - - -
Intergovernmental -16,369 912 -
Charges for Service -- - -
s
Miscellaneous:
Investment Incom 622323 118 -
e
Contributions and Donations- - - -
Revolving Loan Repayments- - - -
Othe -- - -
r
Total Revenue 67,00716,692 38,796 -
s
EXPENDITURE
S
Current
Culture and Recreation- - - -
Economic Development 110,648106,112 35,611 297
Debt Service
Principal- - - -
Interest and Other Charges- - - -
Capital Outlay
General Governmen -- - -
t
Public Safety- - - -
Public Works- - - -
Culture and Recreation- - - -
Total Expenditures106,112 110,648 35,611 297
Excess of Revenues Over
(Under) Expenditures
(43,641)(89,420) 3,185 (297)
OTHER FINANCING SOURCES (USES
)
Bonds Issued -- - -
Refunding Bonds Issue -- - -
d
Bond Premium- - - -
Refunding Bond Payment- - - -
Transfers In133,840 - - -
Transfers Ou -- - -
t
Total Other Financing Sources (Uses)133,840 - - -
Net Change in Fund Balances44,420 (43,641) 3,185 (297)
FUND BALANCE
S
Beginning of Year
41,6995,162 4,026 -
End of Year
$ (1,942)49,582$ 7,211$ (297)$
74
Special Revenue
State Collected ParkCharitableCity Street
Sales Tax DedicationRecreationGamblingBeautificationRevolving Loan
(200)(205)Center (210)(215)(232)(250)Total
$ --$ -$ -$ -$ -$ -$
-- - - - - 104,151
-299,572 - - - - 299,572
-- - - - - -
-- - - - - 17,281
39,046- - - - - 39,046
749- 1,003 97 - 468 3,380
-- - - - - -
-- - - - 4,338 4,338
-- - - - 785 785
39,795299,572 1,003 97 - 5,591 468,553
1,786- 667 - - - 2,453
-- - - - 26,055 278,723
-- - - - - -
-- - - - - -
-110,936 - - - - 110,936
-- - - - - -
-- - - - - -
13924,342 - - - - 24,481
1,925135,278 667 - - 26,055 416,593
37,870164,294 336 97 - (20,464) 51,960
-- - - - - -
-- - - - - -
-- - - - - -
-- - - - - -
-- - - 48,441 - 182,281
-- - - - - -
-- - - 48,441 - 182,281
37,870164,294 336 97 48,441 (20,464) 234,241
34,8901,133,319 51,402 5,003 (48,441) 34,656 1,261,716
$ 72,7601,297,613$ 51,738$ 5,100$ -$ 14,192$ 1,495,957$
75
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2011
Debt Service
G.O.
G.O. Crossover ImprovementCity Hall G.O.
RefundingRefundingEDA Refunding Fire Hall G.O.
Bonds of Bonds of 2007B Bonds of 2005A Refunding Bonds
2009A (318)(320)(322)of 2003B (331)
REVENUE
S
Property Taxes64,907$ 7,782$ 86,934$ 30,696$
Tax Increments- - - -
Sales Taxes- - - -
Special Assessments145,946 68,227 - -
Intergovernmental 6205,181 6,932 2,372
Charges for Service -- - 36,813
s
Miscellaneous:
Investment Incom 6,44110,639 303 3,026
e
Contributions and Donations- - - -
Revolving Loan Repayments- - - -
Othe -- - -
r
Total Revenue 83,070226,673 94,169 72,907
s
EXPENDITURE
S
Current
Culture and Recreation- - - -
Economic Development -- - -
Debt Service
Principal300,000 145,000 80,000 60,000
Interest and Other Charges58,436 21,783 17,293 31,311
Capital Outlay
General Governmen -- - -
t
Public Safety- - - -
Public Works- - - -
Culture and Recreation- - - -
Total Expenditures358,436 166,783 97,293 91,311
Excess of Revenues Over
(Under) Expenditures
(83,713)(131,763) (3,124) (18,404)
OTHER FINANCING SOURCES (USES
)
Bonds Issued -- - -
Refunding Bonds Issue -- - 430,000
d
Bond Premium- - - 12,663
Refunding Bond Payment- - - (430,000)
Transfers In80,000 19,100 - -
Transfers Ou -- - -
t
Total Other Financing Sources (Uses)80,000 19,100 - 12,663
Net Change in Fund Balances(51,763) (64,613) (3,124) (5,741)
FUND BALANCE
S
Beginning of Year
340,472542,243 8,789 132,246
End of Year
$ 275,859490,480$ 5,665$ 126,505$
76
Debt Service
G.O.G.O.G.O.G.O.
ImprovementImprovementImprovementCertificates of G.O. Capital G.O.
CrossoverBonds of Bonds of IndebtednessImprovementCertificates of
Refunding Bonds 2005B/2010B2011A/2006Cof 2008A Plan Bonds of Indebtedness of
of 2003C (332)(333)(338)(342)2009B (343)2010A (344)
$ 14,62391$ 55,753$ 61,225$ 61,055$ 29,995$
-- - - - -
-- - - - -
49,34313,581 91,201 - - -
1,167- 4,451 4,889 4,874 2,408
-- - - - -
15,728979 14,635 293 111 74
-- - - - -
-- - - - -
-- - - - -
80,86114,651 166,040 66,407 66,040 32,477
-- - - - -
-- - - - -
100,00065,000 135,000 60,000 50,000 30,000
76,3132,048 106,612 6,300 12,285 4,125
-- - - - -
-- - - - -
-- - - - -
-- - - - -
176,31367,048 241,612 66,300 62,285 34,125
(95,452)(52,397) (75,572) 107 3,755 (1,648)
-- - - - -
-- 1,040,000 - - -
-- 19,050 - - -
-- - - - -
-- 30,000 - - -
-(15,674) - - - -
-(15,674) 1,089,050 - - -
(95,452)(68,071) 1,013,478 107 3,755 (1,648)
1,552,41368,071 765,023 9,000 217 2,969
$ 1,456,961-$ 1,778,501$ 9,107$ 3,972$ 1,321$
77
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2011
Debt Service
G.O.G.O.G.O. Capital
ImprovementCertificates of ImprovementDebt Service
Bonds of 2010B Indebtedness of Plan Bonds of Relief Fund
(345)2011A (346)2011A (347)(390)
REVENUE
S
Property Taxes9,073$ -$ -$ 121$
Tax Increments- - - -
Sales Taxes- - - -
Special Assessments65,741 - - 3,348
Intergovernmental -730 - 20,000
Charges for Service -- - -
s
Miscellaneous:
Investment Incom 1,1646,111 766 9,631
e
Contributions and Donations- - - -
Revolving Loan Repayments- - - -
Othe -- - -
r
Total Revenue 1,16481,655 766 33,100
s
EXPENDITURE
S
Current
Culture and Recreation- - - -
Economic Development -- - -
Debt Service
Principal45,000 - - -
Interest and Other Charges24,194 11,034 5,618 -
Capital Outlay
General Governmen -- - -
t
Public Safety- - - -
Public Works- - - -
Culture and Recreation- - - -
Total Expenditures69,194 11,034 5,618 -
Excess of Revenues Over
(Under) Expenditures
(9,870)12,461 (4,852) 33,100
OTHER FINANCING SOURCES (USES
)
Bonds Issued 6,537- 6,583 -
Refunding Bonds Issue -- - -
d
Bond Premium- 7,327 3,779 -
Refunding Bond Payment- - - -
Transfers In133,826 - - 15,674
Transfers Ou -- - (48,441)
t
Total Other Financing Sources (Uses)133,826 13,864 10,362 (32,767)
Net Change in Fund Balances146,287 3,994 5,510 333
FUND BALANCE
S
Beginning of Year
-97,660 - 340,544
End of Year
$ 3,994243,947$ 5,510$ 340,877$
78
Debt ServicCapital Projects
e
NorthlandJade Road 16th Avenue City Hall/Police
Heights/StreetStreetPumper Truck Garage Capital General
TransportationImprovementsImprovementsCertificateImprovementsCapital
TotalStudies (435)(441)(445)(446)(447)Outlay (490)
$ -422,255$ -$ -$ -$ -$ -$
-- - - - - -
-- - - - - -
-437,387 - - - - -
-53,624 - - - - -
-36,813 - - - - -
-69,901 - - - - -
-- - - - - 600
-- - - - - -
-- - - - - -
-1,019,980 - - - - 600
-- - - - - -
-- - - - - -
-1,070,000 - - - - -
-377,352 - - - - -
-- - - - 14,374 7,903
-- - - 57 - 35,982
11,611- 43,716 76,714 - - 43,927
-- - - - - 18,064
11,6111,447,352 43,716 76,714 57 14,374 105,876
(11,611)(427,372) (43,716) (76,714) (57) (14,374) (105,276)
-13,120 - - 383,463 188,417 -
-1,470,000 - - - - -
-42,819 - - - - -
-(430,000) - - - - -
-278,600 - - - - 73,485
-(64,115) - (120,571) - - -
-1,310,424 - (120,571) 383,463 188,417 73,485
(11,611)883,052 (43,716) (197,285) 383,406 174,043 (31,791)
284,6363,859,647 411,831 197,285 - - 253,120
$ 273,0254,742,699$ 368,115$ -$ 383,406$ 174,043$ 221,329$
79
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2011
Capital Projects
Total Other
Water Access Sewer Access Governmental
Fund (501)Fund (502)TotalFunds
REVENUE
S
Property Taxes-$ -$ -$ 422,255$
Tax Increments- - - 104,151
Sales Taxes- - - 299,572
Special Assessments- - - 437,387
Intergovernmental -- - 70,905
Charges for Service 133,089236,364 369,453 445,312
s
Miscellaneous:
Investment Incom 12,843675 13,518 86,799
e
Contributions and Donations- - 600 600
Revolving Loan Repayments- - - 4,338
Othe -- - 785
r
Total Revenue 145,932237,039 383,571 1,872,104
s
EXPENDITURE
S
Current
Culture and Recreation- - - 2,453
Economic Development -- - 278,723
Debt Service
Principal- - - 1,070,000
Interest and Other Charges- - - 377,352
Capital Outlay
General Governmen -- 22,277 133,213
t
Public Safety- - 36,039 36,039
Public Works- - 175,968 175,968
Culture and Recreation- - 18,064 42,545
Total Expenditures- - 252,348 2,116,293
Excess of Revenues Over
(Under) Expenditures
145,932237,039 131,223 (244,189)
OTHER FINANCING SOURCES (USES
)
Bonds Issued -- 571,880 585,000
Refunding Bonds Issue -- - 1,470,000
d
Bond Premium- - - 42,819
Refunding Bond Payment- - - (430,000)
Transfers In- - 73,485 534,366
Transfers Ou (66,300)(238,000) (424,871) (488,986)
t
Total Other Financing Sources (Uses)(238,000) (66,300) 220,494 1,713,199
Net Change in Fund Balances(961) 79,632 351,717 1,469,010
FUND BALANCE
S
Beginning of Year
644,6301,768 1,793,270 6,914,633
End of Year
$ 724,262807$ 2,144,987$ 8,383,643$
80
CITY OF ST. JOSEPH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2011
Variance with
OriginalFinalActual
Final Budget -
BudgetBudgetAmounts
Over (Under)
REVENUES
Property Taxe$ 1,301,5301,301,530$ 1,193,514$ (108,016)$
s
Sales Taxes- - (188) (188)
Special Assessments2,000 2,000 1,458 (542)
Franchise Fees106,000 106,000 115,583 9,583
Licenses and Permits93,670 93,670 141,035 47,365
Intergovernmental Revenue:
Local Government Aid702,345 702,345 645,151 (57,194)
Market Value Credit- - 8,691 8,691
PERA Aid1,540 1,540 1,541 1
Fire Ai 39,00039,000 37,877 (1,123)
d
Police Aid48,500 48,500 49,595 1,095
Federal Grants3,800 3,800 14,294 10,494
State Grants6,200 6,200 22,908 16,708
Other Grants and Aids18,950 18,950 20,970 2,020
Total Intergovernmental Revenue820,335 820,335 801,027 (19,308)
Charges for Services:
General Government26,325 26,325 17,890 (8,435)
Public Safety 201,695201,695 204,012 2,317
Public Works3,500 3,500 115,780 112,280
Culture and Recreation5,500 5,500 7,350 1,850
Total Charges for Services237,020 237,020 345,032 108,012
Fines and Forfeitures65,500 65,500 69,592 4,092
Miscellaneous Revenues:
Investment Income12,500 12,500 29,550 17,050
Contributions and Donations16,100 16,100 29,328 13,228
Other 12,55012,550 47,647 35,097
Total Miscellaneous Revenues41,150 41,150 106,525 65,375
Total Revenues2,667,205 2,667,205 2,773,578 106,373
EXPENDITURES
General Governmen
t
Mayor and Council74,840 74,840 60,245 (14,595)
Administrative and Finance353,190 353,190 328,767 (24,423)
Other General Government121,930 121,930 103,849 (18,081)
Capital Outla 3,00010,000 46,587 43,587
y
Total General Governmen 552,960559,960 539,448 (13,512)
t
81
CITY OF ST. JOSEPH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2011
Variance with
OriginalFinalActual
Final Budget -
BudgetBudgetAmounts
Over (Under)
EXPENDITURES
Public Safety
Police:
Current896,710$ 896,710$ 865,806$ (30,904)$
Capital Outlay -20,325 - -
Total Police917,035 896,710 865,806 (30,904)
Fire:
Current327,285 327,285 311,791 (15,494)
Capital Outla 46,60046,600 24,519 (22,081)
y
Total Fir 373,885373,885 336,310 (37,575)
e
Other:
Current86,600 86,600 99,475 12,875
Capital Outla -4,000 - -
y
Total Othe 86,60090,600 99,475 12,875
r
Total Public Safet 1,357,1951,381,520 1,301,591 (55,604)
y
Public Works
Streets and Highways:
Street Maintenance and Storm Sewers214,085 218,085 232,305 14,220
Snow and Ice Removal67,535 67,535 72,950 5,415
Street Engineering37,000 37,000 23,827 (13,173)
Street Lighting42,500 42,500 45,072 2,572
Capital Outla 80,000101,305 102,052 22,052
y
Total Public Works462,425 445,120 476,206 31,086
Culture and Recreation
Current187,625 187,625 202,065 14,440
Capital Outla -24,855 - -
y
Total Culture and Recreation212,480 187,625 202,065 14,440
Total Expenditures2,616,385 2,542,900 2,519,310 (23,590)
Excess of Revenues Over Expenditures
124,30550,820 254,268 129,963
OTHER FINANCING SOURCES (USES)
Sale of Property250 250 3,000 2,750
Transfers I 14,00014,000 - (14,000)
n
Transfers Out(83,840) (83,840) (207,325) (123,485)
Total Other Financing Sources (Uses)(69,590) (69,590) (204,325) (134,735)
et Change in Fund Balances(18,770)$ 54,715$ 49,943 (4,772)$
N
FUND BALANCES
Beginning of Year
1,664,875
End of Year
$ 1,714,818
82
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
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, 2011, and have issued our report thereon dated May 7, 2012.
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
The management of the City is responsible for establishing and maintaining effective 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
our opinions 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 the internal control over financial reporting was for the limited purpose described
in the preceding paragraph and was not designed to identify all deficiencies in internal control over
financial reporting that might be significant deficiencies or material weaknesses and, therefore, there can
be no assurance that all deficiencies, significant deficiencies or material weaknesses have been
identified. However, as described in the accompanying Schedule of Findings and Responses on Legal
Compliance and Internal Control, we identified a deficiency in internal control over financial reporting
that we consider to be a material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent or
detect misstatements on a timely basis. A material weakness is a deficiency, or combination of
deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of
the financial statements will not be prevented or detected and corrected on a timely basis. We consider
the deficiency described in the accompanying Schedule of Findings and Responses on Legal
Compliance and Internal Control to be a material weakness, listed as Audit Findings 06-01.
83
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 7, 2012.
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, VIERE, LTD.
St. Cloud, Minnesota
May 7, 2012
84
REPORT ON LEGAL COMPLIANCE
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, 2011, and have issued our report thereon dated May 7, 2012.
We conducted our audit in accordance with U.S. generally accepted auditing standards and the
provisions of the Minnesota Legal Compliance Audit Guide for Political Subdivisions, 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.
TheMinnesota Legal Compliance Audit Guide for Political Subdivisions covers seven 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.
This report is intended solely for the information and use of the City Council, City administration and
the Office of the State Auditor, and is not intended to be and should not be used by anyone other than
these specified parties.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
May 7, 2012
85
CITY OF ST. JOSEPH
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
December 31, 2011
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING:
Material Weakness:
Audit Finding 06-01 – Improve Segregation of Accounting Duties
Adequate segregation of accounting duties is in place when the four areas of a transaction have been
separated: authorization, custody, recording and reconciliation.
As part of this year’s audit, we reviewed the City’s documentation of its internal control over
significant areas including: cash receipts, cash disbursements, capital assets, payroll and utility
billing. We noted the City’s internal controls were weakened in 2011 with the elimination of the full
time office specialist position. Some of the areas in which we noticed a lack of segregation or an
overlap in duties are as follows:
Cash Receipts
The Office Specialist or City Administrator enters cash and checks into the point of sale system,
reconciles the entries and prepares the deposit. The Police Records Specialist records police
receipts, receives payments and reconciles the collections. The Finance Director or police take
deposits to the bank.
Cash Disbursements
The Finance Director approves some invoices for payment, enters invoices into the system
generates checks and a check register. The Finance Director also is an authorized signer and has
access to the Mayor’s electronic signature. The Administrator reviews and approves checks for
payment. At year-end, the Finance Director reconciles and records accounts and contracts
payable.
Capital Assets
The Finance Director records, processes, reconciles and posts journal entries related to capital
assets. The department heads review their listing for accuracy.
Payroll
The Finance Director enters employees’ time, processes and posts payroll, generates a payroll
report, distributes paystubs to employees, and posts the journal entries related to payroll. The
City Administrator approves payroll prior to payment.
86
CITY OF ST. JOSEPH
SCHEDULE OF FINDINGS AND RESPONSES ON
LEGAL COMPLIANCE AND INTERNAL CONTROL
December 31, 2011
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING:
Material Weakness: (Continued)
Audit Finding 06-01 – Improve Segregation of Accounting Duties (Continued)
Utility Billing
The Utility Billing Clerk enters new accounts into the utility billing system and uploads meter
readings via interfacing with electronic readers. The Utility Billing Clerk enters any rate
changes to the system. The Utility Billing Clerk can enter manual adjustments, calculates and
enters final bills, prints and mails utility bills, reconciles receipts to billed amounts and enters
receipts batches.
Cash Reconciliation and Access
The Finance Director performs the above noted responsibilities, while also reconciling cash and
generating manual journal entries.
City’s Response:
The City Council and City staff are aware of the limited personnel handling the City’s financial
matters. The processes and internal controls are reviewed frequently to look for ways to improve
internal controls. The department heads, City Administrator and City Council each have active roles
in monitoring the financial matters of the City to provided additional oversight. It is unlikely
complete segregation of accountings duties will be achieved due to the cost of hiring several
additional staff.
87