HomeMy WebLinkAbout2012 Audit ReportCITY OF ST. JOSEPH
Stearns County, Minnesota
AUDITED FINANCIAL STATEMENTS
For the Year Ended December 31, 2012
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 Position ....................................................................... ...............................
24
Statement of Activities ............................................................................ ...............................
25
Fund Financial Statements:
Balance Sheet — Governmental Funds .................................................... ...............................
26
Reconciliation of the Balance Sheet to the Statement of Net Position —
GovernmentalFunds ............................................................................. ...............................
27
Statement of Revenues, Expenditures and Changes in Fund Balances —
GovernmentalFunds ............................................................................. ...............................
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
andActual — General Fund ................................................................... ...............................
30
Statement of Net Position — Proprietary Funds ....................................... ...............................
31
Reconciliation of the Statement of Net Position — Business -Type Activities ........................
32
Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary
Funds..................................................................................................... ...............................
33
Reconciliation of the Statement of Revenues, Expenses and Changes in Net
Position — 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
Schedule of Revenues, Expenditures and Changes in Fund Balances — Budget
andActual — General Fund ........................................................................ ...............................
68
Combining Balance Sheet — Nonmaj or Governmental Funds ..................... ...............................
70
Combining Statement of Revenues, Expenditures and Changes in Fund Balances —
NonmajorGovernmental Funds ................................................................ ...............................
72
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 A UDITING STANDARDS ................................................ ............................... 83
REPORT ON LEGAL COMPLIANCE ......................................................... ............................... 85
SCHEDULE OF FINDINGS AND RESPONSES ON INTERNAL
CONTROL...................................................................................................... ............................... 86
CITY OF ST. JOSEPH
ELECTED OFFICIALS AND ADNIINISTRATION
December 31, 2012
Elected Officials
Position
Term Expires
Rick Schultz
Mayor
January 2015
Robert Loso
Council Member
January 2017
Renee Symanietz
Council Member
January 2017
Steve Frank
Council Member
January 2015
Dale Wick
Council Member
January 2015
Administration
Judy Weyrens
City Administrator
Appointed
Lori Bartlett
Finance Director
Appointed
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Expert advice. When you need it.5'
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Members
of the City Council
City of St. Joseph
St. Joseph, Minnesota
Report on the Financial Statements
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, 2012, and the related Notes to the Financial
statements, which collectively comprise the City's basic financial statements as listed in the Table of
Contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those Standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the City's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions.
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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,
2012, 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 accordance with
accounting principles generally accepted in the United States of America.
Implementation of GASB 63
As discussed in Note 13 to the financial statements, the City has adopted the provisions of the
Governmental Accounting Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of Resources and Net Position.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management's
Discussion and Analysis, which follows this report letter, and the Schedule of Funding Process on page
66 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 auditing standards generally accepted in the United States of America,
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.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City's basic financial statements. The supplementary information as identified
in the Table of Contents is presented for purposes of additional analysis and is not a required part of the
basic financial statements.
The Supplementary Information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or
to the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the information is fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
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Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 22, 2013
our consideration of the City's internal control over financial reporting and on 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 internal control over
financial reporting or on compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards in considering the City's internal control over financial reporting
and compliance.
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KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
April 22, 2013
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
As management of the City of St. Joseph, we offer readers of the City of St. Joseph's financial
statements this narrative overview and analysis of the financial activities of the City of St. Joseph
for the fiscal year ended December 31, 2012.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2012 include the following:
♦ The assets of the City of St. Joseph exceeded its liabilities at the close of the most recent
fiscal year by $ 31,447,979. Of this amount, $ 3,526,001 may be used to meet government's
ongoing obligations to citizens and creditors (unrestricted net position).
♦ The government's total net position decreased by $ 833,697 from 2011 to 2012. The
decrease is due to long -term debt payments, depreciation expense much higher than capital
asset additions, capital additions purchased made with reserved fund balances, and increases
in improvement costs to St. Cloud for the wastewater distribution and treatment system.
♦ As of the close of the current fiscal year, the City of St. Joseph's governmental funds
reported combined ending fund balances of $ 8,296,680, a decrease of $ 2,075,462. Of this
amount $ 1,145,820 is unassigned for spending at the government's discretion. The
remaining balance of $ 7,150,860 is set aside for specific future expenditures.
♦ At the end of the current fiscal year, unassigned fund balance for the general fund was
$ 1,146,290 or 42.83% of total general fund expenditures ($ 1,144,150 or 42.75% excluding
the fire and PEG Access funds).
♦ The City of St. Joseph's total long -term debt increased by $ 1,552,175 during the current
fiscal year. The increase was due to debt issued to refund a bond in future years (advanced
crossover bond). The crossover refunding bond and the related General Obligation Revenue
bond being refunded are both represented as current debt outstanding until the crossover date.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City of St. Joseph's
basic financial statements. The City of St. Joseph'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 of St. Joseph's finances, in a
manner similar to a private- sector business.
The Statement of Net Position presents information on all of the City of St. Joseph's assets and
liabilities, with the difference between the two reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the
City of St. Joseph's is improving or deteriorating.
5
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
The statement of activities presents information showing how the government's net position
changed during the most recent fiscal year. All changes in net position are reported as soon as
the underlying event giving rise to the change occurs, regardless of the timing of related cash
flows. Thus, revenues and expenses are reported in this statement for some items that will only
result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused
vacation leave).
Both of the government -wide financial statements distinguish functions of the City of St. Joseph
that are principally supported by taxes and intergovernmental revenues (governmental activities)
from other functions that are intended to recover all or a significant portion of their costs through
user fees and charges (business -type activities). The governmental activities of the City of
St. Joseph 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 of
St. Joseph include water, sanitary sewer, refuse and storm water services.
The government -wide financial statements include not only the City of St. Joseph itself (known
as the primary government), but also a legally separate Economic Development Authority.
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 of
St. Joseph, like other state and local governments, uses fund accounting to ensure and
demonstrate compliance with finance- related legal requirements. All of the funds of the City of
St. Joseph can be divided into two categories: governmental funds and proprietary funds.
Governmental Funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government -wide financial statements.
However, unlike the government -wide financial statements, governmental fund financial
statements focus on near -term inflows and outflows of spendable resources, as well as on
balances of spendable resources available at the end of the fiscal year. Such information may be
useful in evaluating a government's near -term financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government -wide financial statements.
By doing so, readers may better understand the long -term impact of the government's near -term
financing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures, and changes in fund balances provide a reconciliation to
facilitate this comparison between governmental funds and government -wide governmental
activities.
The City of St. Joseph maintains thirty-one 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 which is
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
considered to be a major fund. 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.
The City of St. Joseph adopts an annual appropriated budget for its general fund. A budgetary
comparison statement has been provided for the general fund (page 30) to demonstrate
compliance with this budget.
The basic governmental fund financial statements can be found on pages 26 -30 of this report.
Proprietary Funds. The City of St. Joseph maintains proprietary funds that are used to report
the same functions presented as business -type activities in the government -wide financial
statements. The City of St. Joseph 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 of St. Joseph.
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 -maj or
governmental funds can be found on pages 68 -82 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 position may serve over time as a useful indicator of a government's
financial position. In the case of the City of St. Joseph, assets exceeded liabilities by
$ 31,447,979 at the close of the most recent fiscal year.
By far the largest portion of the City of St. Joseph's net position reflects its net 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 of St. Joseph uses
these capital assets to provide services to citizens; consequently, these assets are not available for
future spending. Although the City of St. Joseph's investment in its capital assets is reported net
of related debt, it should be noted that the resources needed to repay this debt must be provided
from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
VA
NET POSITION
ASSETS:
Current and Other Assets
Capital Assets, Net
Total Assets
LIABILITIES:
Current Liabilities
Long -Term Liabilities
Total Liabilities
NET POSITION:
Invested in Capital Assets,
Net Related Debt
Restricted
Unrestricted
Total Net Position
6,355,773
CITY OF ST. JOSEPH
22,263,283
21,393,954
5,658,695
MANAGEMENT'S DISCUSSION AND
ANALYSIS
6,655,966
(679,843)
December 31, 2012
3,526,001
4,231,756
$ 11,334,625 $
Governmental Business -Type
$ 31,447,979
$ 32,281,676
Activities Activities
Total
2012
2011 2012
2011
2012
2011
$ 10,159,767
$ 12,702,149 $ 6,393,308 $
2,537,688
$ 16,553,075 $
15,239,837
10,171,931
10,302,498 30,843,880
31,378,213
41,015,811
41,680,711
20,331,698
23,004,647 37,237,188
33,915,901
57,568,886
56,920,548
2,875,520
2,749,270 934,770
1,100,116
3,810,290
3,849,386
6,121,543
8,758,593 16,189,064
12,030,893
22,310,607
20,789,486
8,997,063
11,507,863 17,123,834
13,131,009
26,120,897
24,638,872
6,355,773
6,234,753 18,836,755 18,746,410
22,263,283
21,393,954
5,658,695
6,655,966 - -
5,658,695
6,655,966
(679,843)
(1,393,935) 1,276,599 2,038,482
3,526,001
4,231,756
$ 11,334,625 $
11,496,784 $ 20,113,354 $ 20,784,892
$ 31,447,979
$ 32,281,676
An additional portion of the City of St. Joseph's net position (18 %) represents resources that are
subject to external restrictions on how they may be used. The remaining balance of unrestricted
net position, $ 596,756, may be used to meet the City's ongoing obligations to citizens and
creditors.
At the end of the current fiscal year, the City of St. Joseph is able to report positive balances in
all three categories of net position 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 position.
The governmental activities total net position balance decreased by 1.4% due to a reduction in
the tax levy, capital spending out of reserved funds, the City opting to postpone capital projects
and not issuing governmental bonds in 2012, and increases in compensated absence liability due
to changes in policies on the accrual limits and low employee turn-over.
There was a 3.2% decrease in the total net position for the business -type activities. The decrease
is due to the financial obligation of the City for St. Joseph proportionate share of the
improvements to the St. Cloud wastewater interceptor system and the wastewater treatment
facility, and paying down the water filtration plant debt with fewer connection fees that
anticipated for the debt payments. The City issued a crossover advanced refunding bond in the
N.
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
Water fund. The crossover date is December 1, 2014. Both the original and refunded bonds are
currently shown in the statements until the crossover date.
Governmental Activities. Governmental activities reduced the City of St. Joseph's total net
position by $ 162,159. The most significant change in governmental net position is due to
increases in accumulated depreciation far exceeding capital asset additions. The City increased
capital spending for equipment purchased from reserved funds, and capital projects with bond
issues postponed in 2012 to offset tax levy reductions and limited state aids. In addition, the
Council amended personnel contracts allowing higher sick leave accruals, the pending retirement
of the police chief requiring payout of compensated balances, and the City experienced little
employee turn -over resulting in accruals at higher amounts for long -term employees. In doing
so, the compensated absence liability increased 11.9 %. Finally, the 2005B street improvement
bonds were refunded with a crossover advanced refunding bond. The crossover date was
December 1, 2012 reducing the overall debt liability by $ 985,000.
Business -Type Activities. Business -type activities decreased the City of St. Joseph's net
position by $ 671,538 accounting for the 3.2% decrease in the City's total net position. While all
but the refuse fund contributed to the decrease in net position, the largest part of the decrease is
attributable to the water and sewer funds.
The Water Fund (including the Water Access Charge [WAC] fund) decreased by $ 302,152. The
City issued debt to construct three new wells in 2005 and a new water filtration plant in 2006
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 covered 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 and 2006 when the debts were approved. The 2012 building activity was slower with 12
new WAC connections; bond estimates anticipated 85 connections. To help compensate
unrealized revenue, the City Council approved increasing the water rates as well as allocated
interest income from the Sales Tax and Debt Service Relief funds to the water fund. The City
Council also approved a transfer from the Debt Service Relief fund to help fund the debt
payments.
The Sanitary Sewer Fund net position decreased by $ 165,660. The decrease in net position is
attributable to paying down debt for the St. Cloud projects and changes in the billing method
contract for the College and Monastery of St. Benedict. St. Joseph set aside connection fees
(SAC fees) and a portion of the sewer usage revenue in anticipation of the current significant
sewer note payments to St. Cloud. The SAC fee reserves will cover the debts through 2015.
New connection fees will add to the reserves and ability to pay future debt payments. St.
Benedict's is a contract user for sewer services in St. Joseph. A new sewer use agreement was
executed in June 2011. The original billing methodology was implement in 1986 and required
St. Benedict to pay 45% of eligible expenses of the operation of the sewer system. Both the City
and St. Benedict agreed to open the contract to facilitate a new billing system that would mirror
the charges paid by all other users (non - contract) of the St. Joseph Wastewater System. The City
bills non - contract users per gallon based on actual water meter readings. In addition to a usage
fee, all users are billed a line charge which captures the fixed costs of operating a wastewater
9
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
system. Since St. Benedict owns and operates their own water system, the City and St. Benedict
agreed to install sewer meters to measure the flow of wastewater as it enters the municipal
system and the City would then bill St. Benedict the same user fee per gallon as all residents. In
addition, St. Benedict agreed to pay the line charge that is billed to all residents. The 2011
agreement established a one year period of sewer use monitoring to identify the actual
percentage of use as compared to 45% charged in the previous sewer use agreement. After one
year, the sewer use percentage decreased to 31 %. The 14% difference, $ 77,985, for the 2010
sewer use billing was refunded to St. Benedict's in 2012 per the new agreement.
The change in net position in the Storm Water Fund also decreased significantly by $ 83,940.
The Council opted to maintain storm water usage rates to offset larger increases for water and
sewer usage rates. Without depreciation, the Storm Water Fund would have realized an increase
in the change in net position of $13,503. The storm water fund is covering approximately 13.8%
of depreciation. Eventually, Council plans to cover 100% of depreciation when the economic
conditions improve for overall rate increases.
10
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
The graphs and charts below and on the following pages summarize and graphically depict the
changes in net position for the governmental and business -type activities.
CHANGE IN NET POSITION
REVENUES:
Program Revenues:
Charges for Services
Operating Grants and
Contributions
Capital Grants and
Contributions
General Revenues:
Property Taxes
Tax Increments
Sales Tax
Franchise Fees
State Aids
Unrestricted Investment Earnings
Gain on Sale of Capital Assets
Total Revenues
EXPENSES:
General Government
Public Safety
Public Works
Culture and Recreation
Economic Development
Interest on Long -Term Debt
Water
Sanitary Sewer
Storm Water
Refuse
Total Expenses
Decrease in Net Position before
Tranfers
Transfers
Change in Net Position
NET POSITION:
Net Position - Beginning
Prior Period Adjustment
Net Position - Beginning Restated
Net Position - Ending
Governmental Activities
Business -Type Activities
Total
- 296,972
2012
2011
2012
2011
2012
2011
512,716
529,040
1,654,441
1,797,137
2,167,157
2,326,177
203,827
141,210
2,373
3,257
206,200
144,467
233,124
411,794
216
3,484
233,340
415,278
1,666,126
1,685,700
-
-
1,666,126
1,685,700
98,644
105,063
98,644
105,063
314,621
299,384
314,621
299,384
116,668
115,583
116,668
115,583
648,717
646,692
-
-
648,717
646,692
165,491
132,473
94,982
64,303
260,473
196,776
26,414
(605)
-
-
26,414
(605)
3,986,348
4,066,334
1,752,012
1,868,181
5,738,360
5,934,515
540,533
561,386
-
-
540,533
561,386
1,430,047
1,397,237
1,430,047
1,397,237
1,362,907
1,494,965
1,362,907
1,494,965
312,173
293,404
312,173
293,404
186,933
279,043
186,933
279,043
361,739
403,266
-
-
361,739
403,266
-
-
1,120,823
1,024,719
1,120,823
1,024,719
791,275
802,282
791,275
802,282
296,119
305,660
296,119
305,660
-
-
169,508
239,921
169,508
239,921
4,194,332
4,429,301
2,377,725
2,372,582
6,572,057
6,801,883
(207,984)
(362,967)
(625,713)
(504,401)
(833,697)
(867,368)
45,825
129,301
(45,825)
(129,301)
(162,159)
(233,666)
(671,538)
(633,702)
(833,697)
(867,368)
11,496,784 11,730,450 20,784,892 21,121,622
32,281,676 32,852,072
- - - 296,972
- 296,972
11,496,784 11,730,450 20,784,892 21,418,594
32,281,676 33,149,044
11,334,625 11,496,784 20,113,354 20,784,892
31,447,979 32,281,676
11
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
EXPENSES AND PROGRAM REVENUES — GOVERNMENTAL ACTIVITIES
�
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
General Govern mentPublic Safety Public Workl§,ulture and ReCFeaboomic Devdl rhbn Long -term Debt
REVENUES BY SOURCE — GOVERNMENTAL ACTIVITIES
General Revenues
76%
General Government
Public Safety
13%
is Works
5%
Culture and
Recreation, Economic
Development
2%
12
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
EXPENSES AND PROGRAM REVENUES — BUSINESS -TYPE ACTIVITIES
1,200, 000
1,000,000
800,000
600,000
400,000
200,000
Water Sanitary Sewer Refuse Storm Water
REVENUES BY SOURCE — BUSINESS -TYPE ACTIVITIES
Refuse _
18%
Sanitary Sewer
31%
Stnrm Water
Water
45%
13
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
FINANCIAL ANALYSIS OF THE CITY'S FUNDS AT THE FUND LEVEL
The financial performance of the City of St. Joseph 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 $ 8,296,680, a decrease of $ 2,075,462 from 2011. Revenues for the City's
governmental funds were $ 4,696,034, while total expenditures were $ 5,654,406. The excess of
expenditures over revenues is due to more development revenue received in 2011. Also, the City
received a one -time payment from the College of St. Benedicts for Callaway Street access when
the college developed their Centennial Commons area. Expenditures were higher in 2012 due to
a refunding debt payment for the 2005B street improvement bonds. Capital spending for public
safety and culture and recreation increased substantially as the City purchased fire trucks and
equipment; and incurred costs for the Country Road 2 trail extension, 2013 sidewalk
improvements design and community center research.
A summary of financial highlights for each major governmental fund follows.
General Fund
The General Fund is the chief operating fund of the City of St. Joseph. At the end of the current
fiscal year, unassigned fund balance of the general fund was $ 1,146,290. 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 42.8% of total general fund expenditures,
40.2% (5.75 months working capital) after removing the Fire fund and PEG Access fund. The
City Council has a goal to maintain the General Fund working capital fund balance equal to 4 -6
months of expenditures. Although the General fund experienced reductions in tax levies,
building permits and charges for services, the miscellaneous revenues increased $ 72,493 to help
maintain a healthy fund balance.
General fund expenditures were higher than budgeted by $ 231,040 and increased over 2011
expenditures by $ 156,905. In anticipation of Legislative limits 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 the past couple years. The increase in expenditures is mainly due to capital
purchases from assigned balances. The fire department replaced the pumper truck, rescue van,
ATV 6- wheeler and turnout gear. A combination of assigned funds, debt proceeds and the sale
of the old equipment were used to purchase the new equipment. In addition, the Council
approved researching options for a government center. An architect and construction manager
were hired to assist the City research locations and amenities. Part of the professional services
were spent from the facility study assigned fund balance in the general fund.
As a result of the prudent financial policies of the City, the General Fund remained stable.
The schedule on the next page presents a summary of General Fund revenues and expenditures
14
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
REVENUES:
Taxes
Special Assessment
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Miscellaneous
Total General Fund Revenue
EXPENDITURES:
General Government
Public Safety
Public Works
Culture and Recreation
Total General Fund Expenditures
December 31,
December 31,
Increase
Percent
2012
2011
(Decrease)
Change
$ 1,220,676
$ 1,308,909
$
(88,233)
-7%
845
1,458
(613)
-42%
138,631
141,035
(2,404)
-2%
775,313
801,027
(25,714)
-3%
268,653
345,032
(76,379)
-22%
62,065
69,592
(7,527)
-11%
179,018
106,525
72,493
68%
$ 2,645,201
$ 2,773,578
$
(128,377)
-5%
December 31,
December 31,
Increase
Percent
2012
2011
(Decrease)
Change
$ 518,442
$ 539,448
$
(21,006)
-4%
1,531,939
1,301,591
230,348
18%
400,626
476,206
(75,580)
-16%
225,208
202,065
23,143
11%
$ 2,676,215
$ 2,519,310
$
156,905
6%
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 and the Park Dedication 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 $ 214,456 more than expected due to increases in tax levies,
licenses and permits, charges for services, and miscellaneous revenue. Tax levies were
over budget due to collection of delinquent accounts. The City's licenses and permits
received were higher than budget for liquor licensing with the opening of Bello Cucina
restaurant, building permit revenue, and rental registration. The largest revenue over
budget came from the miscellaneous revenues. Investment income was $23,198 over
budget, contributions were $51,118 higher, and other income was $25,717 higher for a
total of $100,033 over budgeted amounts. In particular, the College of St. Benedict's
contributed $30,000 to the City ($15,000 higher than in previous years), a Principal
insurance stock was redeemed, and a large donation was received from several
organizations to build an electronic scoreboard in Memorial Park.
• Actual expenditures were $ 231,040 more than budget mainly due to capital spending out
of reserved accounts as indicated earlier. Also purchased and installed was the Memorial
Park electronic scoreboard.
15
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
Proprietary Funds. The City of St. Joseph's proprietary fund statements provide the same type
of information found in the government -wide financial statements, but in more detail. The net
position of the proprietary funds decreased $ 544,122 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 2012, the
Water fund's net position decreased $ 302,152 due to paying down debt relating to the
construction of the wells 6, 7, and 8, the second water filtration plant and construction of the
water tower. 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 and Debt Service Relief funds. The 2002 water debt was
refunded in 2009 to reduce the interest expense over the remaining life of the bonds. The City of
St. Joseph 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 with the 2012A crossover advanced
refunding debt on the December 1, 2014 call date 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 2012, the Sanitary Sewer fund's net position decreased $ 165,660 due to decreases in sewer
revenue charges and increases to depreciation and debt costs. As a contract user of the St. Cloud
Wastewater Treatment Facility, St. Joseph is obligated to pay a portion of the costs to maintain
the St. Cloud treatment facility and conveyance system. St. Joseph issued three notes with St.
Cloud for various conveyance and treatment facility projects. In addition, St. Joseph issued a
bond in 2011 to rehabilitate the Sauk River manhole feed from the St. Joseph forcemain into St.
Cloud to reduce toxins discharged into the wastewater treatment system. The City booked an
intangible asset to offset the debt liabilities. The large debt costs are partially paid for with
reserved sewer connection and trunk fees along with sewer usage rates. The sewer fund also has
an older debt to pay for treatment capacity at the St. Cloud treatment plant. In addition in 2012,
St. Benedict's was refunded $ 77,985 for 2010 sewer use charges as stated above in the Business
Activity section. The refund is shown as a decrease in sewer charges for services even though
actual usage and rates increased.
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 2012, the refuse fund's net position increased $ 7,630. The
operating revenues and expenses both decreased. The City contracts for refuse hauling.
Contracts are renewed every three years. Bids are very competitive with the number of refuse
haulers in the area. The last contract was awarded in late 2011 with no increase in charges. The
City was able to decrease some rates as a result. Compost rates are reviewed annually. Rates
were increased in 2012, but revenue came in less due to removing St. Wendel Township from the
system.
wo
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
Storm Water Enterprise Fund
The Storm Water fund is used to account for the operations of the City's storm water utility. In
2012, the Storm Water fund's net position decreased $ 83,940. The Storm Water fund had an
operating loss of $ 68,172 or, $ 29,179 surplus after removing depreciation expense. The deficit
is due to maintaining storm water fees without covering much depreciation. The City Council
chose to maintain the fees while still covering some depreciation to allow for larger increases in
other funds. The decision was based on the Storm Water fund having a healthy net position
balance. The Storm Water fund has not collected any development fees for the previous four
years.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City of St. Joseph's investment in capital assets for its governmental and business -type
activities as of December 31, 2012, amounts to $ 40,822,086 (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 $ 869,329. The increase is
attributable to capital asset increases in construction in progress for street reconstruction projects,
government center, 2013 sidewalk project and County Road 2 trail extension. Capital assets also
increased substantially in public safety for the fire equipment purchased in 2012 and also the
installation of the Memorial Park electronic scoreboard and construction of the archery range.
The debt and accumulated depreciation netted against the equipment are less than the equipment
disposed. The overall debt related to capital assets decreased $ 1,727,954.
The table on the next page is a summary of the City of St. Joseph's capital assets.
17
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
CAPITAL ASSETS
Additional information on the City of St. Joseph's capital assets can be found in note 5 on pages
49 -50 of this report. Total depreciation expense for 2012 was $1,914,510.
Long -Term Liabilities
At the end of the current fiscal year, the City of St. Joseph had total net bonded debt outstanding
of $ 25,116,254. Of this amount, $ 8,066,395 comprises debt backed by the full faith and credit
of the government. The remainder of the City of St. Joseph'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 liabilities is included in the table on the following page.
18
Governmental Activities
Business -Type Activities
Total
2012
2011
2012
2011
2012
2011
Land
$ 457,194
$ 457,194
$ 377,882
$ 377,882
$ 835,076 $
835,076
Easements
5,820
5,820
67,915
67,915
73,735
73,735
Construction in Progress
465,568
56,410
4,789,651
4,987,832
5,255,219
5,044,242
Improvements
637,001
607,487
-
-
637,001
607,487
Infrastructure
16,209,266
16,209,266
-
-
16,209,266
16,209,266
Buildings
2,479,464
2,479,464
8,120,415
8,120,415
10,599,879
10,599,879
Plant and Lines
-
-
21,195,993
21,195,993
21,195,993
21,195,993
Sewer Rights
-
-
3,057,013
2,844,253
3,057,013
2,844,253
Machinery and Equipment
3,024,213
2,743,443
605,590
605,590
3,629,803
3,349,033
Less: Accumulated
-
-
Depreciation
(13,106,605)
(12,256,586)
(7,564,294)
(6,821,667)
(20,670,899)
(19,078,253)
Total
$ 10,171,921
$ 10,302,498
$ 30,650,165
$ 31,378,213
$ 40,822,086 $
41,680,711
Additional information on the City of St. Joseph's capital assets can be found in note 5 on pages
49 -50 of this report. Total depreciation expense for 2012 was $1,914,510.
Long -Term Liabilities
At the end of the current fiscal year, the City of St. Joseph had total net bonded debt outstanding
of $ 25,116,254. Of this amount, $ 8,066,395 comprises debt backed by the full faith and credit
of the government. The remainder of the City of St. Joseph'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 liabilities is included in the table on the following page.
18
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
OUTSTANDING LONG -TERM LIABILITIES
Governmental Activities:
General Obligation Bonds
General Obligation Special Revenue Bonds
General Obligation Revenue Bonds
Compensated Absences Payable
Net Other Post Employment Benefits
Total Governmental Activities
Business -Type Activities:
General Obligation Revenue Bonds
Notes Payable
Compensated Absences Payable
Net Other Post Employment Benefits
Total Business -Type Activities
$ 8,829,759 $ 11,368,872 -22%
$ 11,809,290 $ 7,358,003 60%
4,980,569 5,277,533 100%
120,656 112,760 7%
39,939 31,877 25%
$ 16,950,454 $ 12,780,173 33%
The City of St. Joseph refunded a revenue bond in 2012 to take advantage of lower interest costs.
The total net present value savings from refunding the debt will be $ 296,037 over the life of the
bonds. During 2012, the City issued the following debt:
♦ $ 4,860,000 General Obligation Water Revenue Crossover Refunding bonds, series 2012A to
advance refund the 2005D general obligation water revenue bonds. Interest savings will be
$366,766 over the remaining fourteen years of payments following the crossover date in
2014.
The City paid down the net bonded debt by $ 2,602,148 on the governmental activities to end the
year. In 2012, one debt was paid in full with a crossover refunding. The business -type activities
saw an increase in bonded debt of $ 4,154,323 with the issuance of the 2012A water revenue
crossover refunding bonds. The reduction will be seen at the crossover date in 2014. Without
the refunding, business -type activities debt decreased $ 7585790.
The City of St. Joseph maintained a bond rating to an "A +" rating from Standard & Poor's for
the general obligation debt in 2012. According to Standard& Poor's municipal credit analysis,
the City's solid bond rating reflects the City's financial operations characterized by very strong
reserves, good income levels and moderate overall debt burden. In addition, the proximity to St.
Cloud, MN lead into the rating provided.
Minnesota state statutes limit the amount of net general obligation debt a governmental entity
may issue to 3% of its taxable market value. Net general obligation debt is debt solely paid for,
with limited exceptions, by ad valorem taxes. The current debt limitation for the
WE
Percent
2012
2011
Change
$ 1,405,068
$ 1,675,014
-16%
6,661,327
8,908,529
-25%
260,000
345,000
-25%
366,195
327,021
12%
137,169
113,308
21%
$ 8,829,759 $ 11,368,872 -22%
$ 11,809,290 $ 7,358,003 60%
4,980,569 5,277,533 100%
120,656 112,760 7%
39,939 31,877 25%
$ 16,950,454 $ 12,780,173 33%
The City of St. Joseph refunded a revenue bond in 2012 to take advantage of lower interest costs.
The total net present value savings from refunding the debt will be $ 296,037 over the life of the
bonds. During 2012, the City issued the following debt:
♦ $ 4,860,000 General Obligation Water Revenue Crossover Refunding bonds, series 2012A to
advance refund the 2005D general obligation water revenue bonds. Interest savings will be
$366,766 over the remaining fourteen years of payments following the crossover date in
2014.
The City paid down the net bonded debt by $ 2,602,148 on the governmental activities to end the
year. In 2012, one debt was paid in full with a crossover refunding. The business -type activities
saw an increase in bonded debt of $ 4,154,323 with the issuance of the 2012A water revenue
crossover refunding bonds. The reduction will be seen at the crossover date in 2014. Without
the refunding, business -type activities debt decreased $ 7585790.
The City of St. Joseph maintained a bond rating to an "A +" rating from Standard & Poor's for
the general obligation debt in 2012. According to Standard& Poor's municipal credit analysis,
the City's solid bond rating reflects the City's financial operations characterized by very strong
reserves, good income levels and moderate overall debt burden. In addition, the proximity to St.
Cloud, MN lead into the rating provided.
Minnesota state statutes limit the amount of net general obligation debt a governmental entity
may issue to 3% of its taxable market value. Net general obligation debt is debt solely paid for,
with limited exceptions, by ad valorem taxes. The current debt limitation for the
WE
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
City of St. Joseph is $ 8,110,581 which significantly exceeds of the City of St. Joseph's
outstanding pure general obligation debt.
Additional information on the St. Joseph's long -term liabilities can be found in note 6 on pages
51 -55.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The City of St. Joseph experienced a stable financial position at the end of 2012 despite
decreasing taxable market values, declining development, and increases in St. Cloud sewer
charges as evidenced by the tax rate, reduction of new bonded debt and General fund reserves.
While the housing market for newly constructed homes has significantly declined, the City of St.
Joseph 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. The City of St. Joseph issued eight building permits
for new homes in 2012.
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 and a new upscale Italian restaurant opened in 2012.
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
of St. Joseph would increase by 150% if a grocery store was added to the landscape of the City.
In 2012, McDonald's opened in the adjacent area.
Other developments include a 24 unit phase one senior development near downtown consisting
of cottage homes, twin homes, and an eight -plex assisted living unit; 10,000 sf fellowship hall to
the Church of St. Joseph; a 2,880 sf expansion of office space and storage to Auto Color and
Industrial Supply; and a seasonal fast food restaurant (Cone Castle). The Millstream Villages
senior development began construction on two cottage home permits and the eight -plex assisted
living unit in late 2012.
In addition to new construction, the City of St. Joseph experienced four commercial openings,
filling vacant properties in 2012 which includes: St. Joseph Auto Sales, Closet to Closet thrift
shop, Riff City Guitar & Music, and Midwest Auto Carriers, Inc.
The City Council has also identified an area near Interstate 94 for future commercial
development and focused on planning the infrastructure expansion and land use during 2008-
20
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
2009. Development along the corridor is expected with Stearns County completing the
realignment of County Road 2. The commerce potential at the intersection of I -94 and CR 2 is
an opportunity for St. Joseph to diversify its tax base. The City is working with land owners in
the area to plan for infrastructure expansion and look for potential developers.
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. In addition, the EDA is
working on a plan to identify and revitalize the downtown area to attract people to the area.
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 properties has
decreased slightly. The Council continues to budget conservatively to keep a slight increase in
the 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 stated above, the City of St. Joseph 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.
Late in 2009 the area Cities agreed to move forward to bid the project and in January 2011 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 %. St. Joseph's payments began in 2011 to the City of St. Cloud. St. Joseph'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
21
CITY OF ST. JOSEPH
MANAGEMENT'S DISCUSSION AND ANALYSIS
December 31, 2012
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 project is expected to be completed in late 2013.
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, collapsing or ready for repair. Emergency repairs were
paid for with cash in 2008 -2009. Repairs identified were paid for through debt by St. Cloud.
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. 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. In 2011 the cities of St.
Cloud and St. Joseph worked together to restructure the Sauk River interceptor and manhole to
reduce toxic levels of sulfur in the sewer mains. St. Joseph issued a ten year bond to cover their
portion of the project.
All the factors were considered in preparing the City of St. Joseph's budget and fee schedule for
the 2012 and future reporting years. As the City looks forward to 2013, the building season will
start strong with the US Corp of Engineers constructing a 40,000 square foot training center.
Three reserve units in Central MN are being combined and all the training will be completed in
St. Joseph, providing training for upwards of 200 military personal on given weekends. The St.
Joseph EDA is also working with a biomedical company that is anticipating locating in the
Industrial Park in 2013. Both of these developments will help boost the local economy.
The Mayor has taken an active role in legislative activities hoping to be part of a positive change
in the LGA Formula. Early projections of the revised LGA formula is positive for the City of St.
Joseph and will help gap the disparity in the tax system. The City continues to provide high
level services with over one third of the local tax base tax exempt. The City is committed to
leveling the tax rate and increasing the tax base in the community.
REQUESTS FOR INFORMATION
The financial report is designed to provide a general overview of the City of St. Joseph'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, PO Box 668, 25 College Avenue North, St. Joseph, MN
56374.
22
BASIC FINANCIAL STATEMENTS
23
CITY OF ST. JOSEPH
STATEMENT OF NET POSITION
December 31, 2012
Governmental
Business -Type
Activities
Activities
Total
ASSETS
Cash and Investments
(Including Cash Equivalents)
$ 6,151,831
$ 1,299,246
$ 7,451,077
Cash with Fiscal Agent
1,452,878
4,770,733
6,223,611
Property Tax Receivable
51,070
-
51,070
Accounts Receivable
85,266
306,129
391,395
Interest Receivable
6,319
4,832
11,151
Due from Other Governments
126,868
-
126,868
Notes Receivable
36,131
36,131
Special Assessments Receivable:
Delinquent
59,522
-
59,522
Deferred
2,018,240
12,368
2,030,608
Prepaid Expenses
16,058
-
16,058
Deferred Issuance Costs
155,584
193,715
349,299
Capital Assets:
Land
457,194
377,882
835,076
Easements
5,820
67,915
73,735
Construction in Progress
465,568
4,789,651
5,255,219
Buildings
2,479,464
8,120,415
10,599,879
Infrastructure
16,209,266
-
16,209,266
Improvements
637,001
-
637,001
Plant and Lines
-
21,195,993
21,195,993
Machinery and Equipment
3,024,213
605,590
3,629,803
Sewer Rights
-
3,057,013
3,057,013
Less Accumulated Depreciation
(13,106,605)
(7,564,294)
(20,670,899)
Capital Assets (Net of Accumulated Depreciation)
10,171,921
30,650,165
40,822,086
Total Assets
$ 20,331,688
$ 37,237,188
$ 57,568,876
LIABILITIES AND NET POSITION
Liabilities
Accounts Payable
$ 76,060
$ 40,072
$ 116,132
Contracts Payable
23,513
8,208
31,721
Due to Other Governments
4,404
50,724
55,128
Salaries and Benefits Payable
36,216
7,922
44,138
Interest Payable
27,111
66,454
93,565
Bond Principal Payable (Net):
Payable Within One Year
2,645,000
460,000
3,105,000
Payable After One Year
5,681,395
11,349,290
17,030,685
Notes Payable (Net):
Payable Within One Year
-
296,503
296,503
Payable After One Year
-
4,684,066
4,684,066
Compensated Absences Payable:
Payable Within One Year
63,216
4,887
68,103
Payable After One Year
302,979
115,769
418,748
Net Other Post Employment Benefits (OPEB) Obligation
137,169
39,939
177,108
Total Liabilities
8,997,063
17,123,834
26,120,897
Net Position
Net Investment in Capital Assets
6,355,773
18,836,755
22,263,283
Restricted for:
Debt Service
4,247,758
-
4,247,758
Other Purposes
1,410,937
-
1,410,937
Unrestricted
(679,843)
1,276,599
3,526,001
Total Net Position
11,334,625
20,113,354
31,447,979
Total Liabilities and Net Position
$ 20,331,688
$ 37,237,188
$ 57,568,876
The Notes to the Financial Statements are an integral part of this statement.
24
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CITY OF ST. JOSEPH
BALANCE SHEET - GOVERNMENTAL FUNDS
December 31, 2012
ASSETS
Cash and Investments
Cash with Fiscal Agent
Taxes Receivable - Delinquent
Special Assessments Receivable:
Delinquent
Deferred
Accounts Receivable
Interest Receivable
Due from Other Funds
Due from Other Governments
Notes Receivable
Prepaid Expenses
Total Assets
LIABILITIES AND FUND BALANCES
Liabilities
Accounts Payable
Contracts Payable
Due to Other Funds
Due to Other Governments
Salaries and Benefits Payable
Deferred Revenue
Total Liabilities
Fund Balances
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
Total Liabilities and
Fund Balances
General Fund
Other
Total
(101, 105,
Governmental
Governmental
108)
Funds
Funds
$ 1,657,337
$ 5,059,902
$ 6,717,239
-
1,452,878
1,452,878
35,754
15,316
51,070
4,934
54,588
59,522
1,493
2,016,747
2,018,240
76,951
39,595
116,546
2,061
5,223
7,284
-
500
500
53,622
73,246
126,868
-
36,131
36,131
16,058
-
16,058
$ 1,848,210 $ 8,754,126 $ 10,602,336
$ 60,135
$ 15,925
$ 76,060
-
23,513
23,513
-
500
500
4,404
-
4,404
36,216
-
36,216
42,181
2,122,782
2,164,963
142,936
2,162,720
2,305,656
16,058
-
16,058
9,079
4,646,886
4,655,965
-
77,651
77,651
533,847
1,867,339
2,401,186
1,146,290
(470)
1,145,820
1,705,274
6,591,406
8,296,680
$ 1,848,210 $ 8,754,126 $ 10,602,336
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 POSITION - GOVERNMENTAL FUNDS
December 31, 2012
Total Fund Balances - Governmental Funds $ 8,296,680
Amounts reported for governmental activities in the Statement of Net Position
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 23,278,526
Less Accumulated Depreciation (13,106,605)
Long -term liabilities, including bonds payable, are not due and payable in
the current period and, therefore, are not reported as liabilities in the funds.
Long -term liabilities at year -end consist of:
Bond Principal Payable, Net of Premiums and Discounts (8,326,395)
Deferred Issuance Costs 155,584
Compensated Absences Payable (366,195)
Net OPEB Obligation (137,169)
Delinquent receivables will be collected in subsequent years, but are not
available soon enough to pay for the current period's expenditures and,
therefore, are deferred in the funds.
Property Taxes 51,070
Special Assessments 59,522
Other long -term assets are not available to pay for current expenditures and,
therefore, are deferred in the funds.
Deferred Special Assessments 2,018,240
Notes Receivable 36,131
The Water Access Capital Project Fund is proprietary in nature and, therefore,
included in the business -type activities in the Statement of Net Position. (20,754)
The Sewer Access Capital Project Fund is proprietary in nature and, therefore,
included in the business -type activities in the Statement of Net Position. (576,899)
Governmental funds do not report a liability for accrued interest
due and payable. (27,111)
Total Net Position - Governmental Activities $ 11,334,625
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, 2012
EXPENDITURES
Current
General Government
General Fund
Other
Total
Public Safety
(101, 105,
Governmental
Governmental
Public Works
108)
Funds
Funds
REVENUES
211,578
1,907
213,485
Property Taxes
$ 1,104,034
$ 567,859
$ 1,671,893
Tax Increments
-
98,644
98,644
Sales Taxes
(26)
314,647
314,621
Special Assessments
845
729,686
730,531
Franchise Fees
116,668
-
116,668
Licenses and Permits
138,631
-
138,631
Intergovernmental
775,313
1,000
776,313
Charges for Services
268,653
208,644
477,297
Fines and Forfeitures
62,065
-
62,065
Miscellaneous:
2,676,215
2,978,191
5,654,406
Investment Income
42,198
110,988
153,186
Contributions and Donations
80,403
11,283
91,686
Revolving Loan Repayments
-
8,082
8,082
Other
56,417
-
56,417
Total Revenues
2,645,201
2,050,833
4,696,034
EXPENDITURES
Current
General Government
499,170
1,500
500,670
Public Safety
1,290,614
-
1,290,614
Public Works
353,298
254
353,552
Culture and Recreation
211,578
1,907
213,485
Economic Development
-
186,613
186,613
Debt Service
21,470
(1,138,560)
(1,117,090)
Principal
(9,544)
1,605,000
1,605,000
Interest and Other Charges
-
333,855
333,855
Capital Outlay
1,714,818
8,657,324
10,372,142
General Government
19,272
2,107
21,379
Public Safety
241,325
387,733
629,058
Public Works
47,328
26,308
73,636
Culture and Recreation
13,630
432,914
446,544
Total Expenditures
2,676,215
2,978,191
5,654,406
Excess of Revenues
Under Expenditures
(31,014)
(927,358)
(958,372)
OTHER FINANCING SOURCES (USES)
Insurance Recoveries
10,184
-
10,184
Sale of Property
84,056
8,745
92,801
Refunding Bond Payment
-
(985,000)
(985,000)
Transfers In
454,874
454,874
Transfers Out
(72,770)
(617,179)
(689,949)
Total Other Financing Sources (Uses)
21,470
(1,138,560)
(1,117,090)
Net Change in Fund Balances
(9,544)
(2,065,918)
(2,075,462)
FUND BALANCES
Beginning of Year
1,714,818
8,657,324
10,372,142
End of Year
$ 1,705,274
$ 6,591,406
$ 8,296,680
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, 2012
Total Net Change in Fund Balances - Governmental Funds $ (2,075,462)
Amounts reported for governmental activities in the Statement of Activities are different because:
Capital outlays are reported in governmental funds as expenditures. However, in the
Statement of Activities, the cost of those assets is allocated over the estimated useful lives
as depreciation expense.
Capital Outlays 1,107,693
Depreciation Expense (1,171,883)
Loss on Disposal (66,387)
Principal payments on long -term debt are recognized as expenditures in the governmental
funds but as an increase in net position in the Statement of Activities. 1,605,000
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 Position. 985,000
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.
Accrued interest payable 3,987
Amortization of bond discounts, premiums and issuance charges (31,871)
Compensated absences and OPEB payments are recognized as paid in the
governmental funds but recognized as the expense is incurred in the Statement of Activities. (63,035)
Delinquent receivables will be collected in subsequent years, but are not available soon enough
to pay for the current period's expenditures and, therefore, are not revenues in the funds.
Delinquent Special Assessments (16,804)
Delinquent Property Taxes (5,767)
Certain revenues in the Statement of Activities that do not provide current financial resources
are not reported as revenues in the funds.
Deferred Special Assessments (552,160)
Notes Receivable (7,886)
The Water Access Capital Project Fund is proprietary in nature and, therefore, is reported
with business -type activites. (19,947)
The Sewer Access Capital Project Fund is proprietary in nature and, therefore, is reported
with business -type activities. 147,363
Change in Net Position - Governmental Activities $ (162,159)
The Notes to the Financial Statements are an integral part of this statement. 29
CITY OF ST. JOSEPH
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2012
REVENUES
Property Taxes
Sales Taxes
Special Assessments
Franchise Fees
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Miscellaneous Revenues:
Investment Income
Contributions and Donations
Other
Total Revenues
EXPENDITURES
Current
General Government
Public Safety
Public Works
Culture and Recreation
Capital Outlay
General Government
Public Safety
Public Works
Culture and Recreation
Total Expenditures
Excess of Revenues
Over Expenditures
OTHER FINANCING SOURCES (USES)
Insurance Recoveries
Sale of Property
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES
Beginning of Year
End of Year
Original Final
Budget Budget
Variance with
Actual Final Budget -
Amounts Over (Under)
$ 1,092,685
$ 1,092,685
$ 1,104,034
$ 11,349
-
-
(26)
(26)
2,000
2,000
845
(1,155)
109,500
109,500
116,668
7,168
86,525
86,525
138,631
52,106
770,905
770,905
775,313
4,408
224,645
224,645
268,653
44,008
65,500
65,500
62,065
(3,435)
19,000
19,000
42,198
23,198
29,285
29,285
80,403
51,118
30,700
30,700
56,417
25,717
2,430,745
2,430,745
2,645,201
214,456
501,440
495,440
499,170
3,730
1,305,750
1,305,750
1,290,614
(15,136)
386,625
386,625
353,298
(33,327)
209,260
209,260
211,578
2,318
5,000
3,000
19,272
16,272
48,370
45,100
241,325
196,225
6,000
-
47,328
47,328
5,500
-
13,630
13,630
2,467,945
2,445,175
2,676,215
231,040
(37,200)
(14,430)
(31,014)
(16,584)
10,184
10,184
-
-
84,056
84,056
-
-
(72,770)
(72,770)
-
-
21,470
21,470
$ (37,200)
$ (14,430)
(9,544)
$ 4,886
1,714,818
$ 1,705,274
The Notes to the Financial Statements are an integral part of this statement. 30
CITY OF ST. JOSEPH
STATEMENT OF NET POSITION - PROPRIETARY FUNDS
December 31, 2012
LIABILITIES AND NET POSITION
Current Liabilities
Accounts Payable
$ 11,989
Sanitary Sewer
Refuse
Storm Water
$ 40,072
Contracts Payable
Water (601)
(602)
(603)
(651)
Total
ASSETS
2,239
45,524
2,961
-
50,724
Current Assets
3,681
2,968
582
691
7,922
Cash and Investments
$ 952
$ 275,957
$ 267,112
$ 189,817
$ 733,838
Cash with Fiscal Agent
4,770,733
-
-
-
4,770,733
Special Assessments Receivable:
406,949
353,452
611
378
761,390
Deferred
10,858
585
593
332
12,368
Accounts Receivable
90,845
106,309
58,226
19,469
274,849
Interest Receivable
2,749
522
345
251
3,867
Total Current Assets
4,876,137
383,373
326,276
209,869
5,795,655
Noncurrent Assets
11,248,454
560,836
-
-
11,809,290
Deferred Issuance Costs
165,361
28,354
-
-
193,715
Capital Assets:
(406,949)
(353,452)
(611)
(378)
(761,390)
Land
372,941
4,941
-
-
377,882
Easements
-
-
-
67,915
67,915
Construction in Progress
45,896
4,736,891
-
6,864
4,789,651
Buildings
7,502,432
617,983
-
-
8,120,415
Plants and Lines
8,908,669
7,432,835
-
4,854,489
21,195,993
Machinery and Equipment
182,697
421,127
-
1,766
605,590
Sewer Rights
-
3,057,013
-
-
3,057,013
Total Capital Assets
17,012,635
16,270,790
-
4,931,034
38,214,459
Less Accumulated Depreciation
(3,297,381)
(3,334,054)
-
(932,859)
(7,564,294)
Net Capital Assets
13,715,254
12,936,736
-
3,998,175
30,650,165
Total Noncurrent Assets
13,880,615
12,965,090
-
3,998,175
30,843,880
Total Assets
$ 18,756,752
$ 13,348,463
$ 326,276
$ 4,208,044
$ 36,639,535
LIABILITIES AND NET POSITION
Current Liabilities
Accounts Payable
$ 11,989
$ 7,847
$ 19,834
$ 402
$ 40,072
Contracts Payable
-
8,208
-
-
8,208
Due to Other Governments
2,239
45,524
2,961
-
50,724
Salaries and Benefits Payable
3,681
2,968
582
691
7,922
Interest Payable
30,078
36,376
-
-
66,454
Long -Term Liabilities Due
Within One Year
406,949
353,452
611
378
761,390
Total Current Liabilities
454,936
454,375
23,988
1,471
934,770
Noncurrent Liabilities
Compensated Absences
51,852
51,852
8,839
8,113
120,656
Notes Payable, Net
-
4,980,569
-
-
4,980,569
Bonds Payable, Net
11,248,454
560,836
-
-
11,809,290
Net OPEB Obligation
19,376
15,817
2,373
2,373
39,939
Less Amounts Due Within One Year
(406,949)
(353,452)
(611)
(378)
(761,390)
Total Noncurrent Liabilities
10,912,733
5,255,622
10,601
10,108
16,189,064
Total Liabilities
11,367,669
5,709,997
34,589
11,579
17,123,834
Net Position
Net Investment in Capital Assets
7,443,249
7,395,331
-
3,998,175
18,836,755
Unrestricted
(54,166)
243,135
291,687
198,290
678,946
Total Net Position
7,389,083
7,638,466
291,687
4,196,465
19,515,701
Total Liabilities and Net Position
$ 18,756,752
$ 13,348,463
$ 326,276
$ 4,208,044
$ 36,639,535
The Notes to the Financial Statements are an integral part of this statement. 31
CITY OF ST. JOSEPH
RECONCILIATION OF THE STATEMENT
OF NET POSITION - BUSINESS -TYPE ACTIVITIES
December 31, 2012
Total Net Position - Proprietary Funds $ 19,515,701
Amounts reported for business -type activities in the Statement of Net Position
are different because:
The Water Access Capital Project Fund is proprietary in nature and
relates to water improvements for the applicable funds. Therefore,
it is included as a busines -type activity. 20,754
The Sewer Access Capital Project Fund is proprietary in nature and
relates to sewer improvements for the applicable funds. Therefore,
it is included as a business -type activity. 576,899
Total Net Position - Business -Type Activities $ 20,113,354
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 POSITION - PROPRIETARY FUNDS
For the Year Ended December 31, 2012
OPERATING REVENUES
Charges for Services
OPERATING EXPENSES
Wages and Salaries
Materials and Supplies
Repairs and Maintenance
Professional Services
Insurance
Utilities
Depreciation
Contracted Services
Miscellaneous
Total Operating Expenses
Operating Loss
NONOPERATING REVENUES
(EXPENSES)
Investment Income
Special Assessments
Gain on Disposal of Asset
Interest Expense
Amortization of Bond Premium
Amortization of Bond Costs
Other Income
Total Nonoperating Revenues
(Expenses)
Loss before Capital
Contributions and Transfers
Transfers In
Transfers Out
Change in Net Position
NET POSITION
Beginning of Year
End of Year
The Notes to the Financial Statements are an integral part of this statement. 33
Sanitary
Refuse
Storm Water
Water (601)
Sewer (602)
(603)
(651)
Total
$ 626,360
$ 460,685
$ 294,998
$ 101,336
$ 1,483,379
173,263
153,965
41,346
41,346
409,920
59,117
37,123
2,376
196
98,812
40,200
27,803
6,279
18,788
93,070
24,887
19,204
2,931
10,210
57,232
17,873
5,187
-
-
23,060
53,761
14,151
794
-
68,706
382,530
262,746
-
97,351
742,627
-
160,447
237,966
-
398,413
6,809
588
4,427
1,617
13,441
758,440
681,214
296,119
169,508
1,905,281
(132,080)
(220,529)
(1,121)
(68,172)
(421,902)
52,313
10,687
7,071
5,145
75,216
939
563
735
337
2,574
15
-
-
-
15
(347,264)
(108,943)
-
-
(456,207)
10,800
4,995
-
-
15,795
(25,919)
(6,113)
-
-
(32,032)
31,619
4,780
945
-
37,344
(277,497)
(94,031)
8,751
5,482
(357,295)
(409,577)
(314,560)
7,630
(62,690)
(779,197)
155,425
196,900
-
-
352,325
(48,000)
(48,000)
-
(21,250)
(117,250)
(302,152)
(165,660)
7,630
(83,940)
(544,122)
7,691,235
7,804,126
284,057
4,280,405
20,059,823
$ 7,389,083
$ 7,638,466
$ 291,687
$ 4,196,465
$ 19,515,701
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 POSITION - BUSINESS -TYPE ACTIVITIES
For the Year Ended December 31, 2012
Total Net Change in Fund Net Position - Proprietary Funds $ (544,122)
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. 19,947
Recognized current year activity from the Sewer Access Capital Project Fund
with the business -type activities. (147,363)
Change in Net Position - Business -Type Activities $ (671,538)
The Notes to the Financial Statements are an integral part of this statement. 34
[$111 11'(1] 06`111Rfell DI W 01
STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS
For the Year Ended December 31, 2012
CASH FLOWS - NONCAPITAL FINANCING
ACTIVITIES
Transfer from Other Funds 155,425 196,900 352,325
Transfer to Other Funds (48,000) (48,000) (21,250) (117,250)
Net Cash Flows - Noncapital Financing 107,425 148,900 (21,250) 235,075
Activities
CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTIVITIES
Principal Paid on Debt
Interest Paid on Debt
Bond Payable Proceeds
Payment to Escrow Account
Proceeds from Disposal of Capital Assets
Acquisition of Capital Assets
Net Cash Flows - Capital and Related
Financing Activitis
CASH FLOWS - INVESTING ACTIVITIES
Interest and Dividends Received
Net Change in Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS
Beginning of Year
End of Year
RECONCILIATION OF OPERATING
LOSS TO NET CASH FLOWS -
OPERATING ACTIVITIES
Operating Loss
Adjustments to Reconcile Operating Loss
to Net Cash Flows - Operating Activities:
Depreciation Expense
Other Income
Accounts Receivable
Special Assessments Receivable
Accounts Payable
Contracts Payable
Due to Other Governmental Units
Salaries Payable
Compensated Absences Payable
Net OPEB Obligation
Total Adjustments
Net Cash Flows - Operating Activities
(395,000)
(347,995)
Sanitary
Refuse
Storm Water
(371,878)
(118,691)
Water (601)
Sewer (602)
(603)
(651)
Total
CASH FLOWS - OPERATING ACTIVITIES
337
4,860,000
(4,770,733)
45,528
1,104
Receipts from Customers and Users
$ 616,401
$ 506,213
$ 296,102
$ 101,077
$ 1,519,793
Payments to Suppliers
(202,075)
(438,618)
(256,107)
(31,019)
(927,819)
Payments to Employees
(165,790)
(147,730)
(40,591)
(40,302)
(394,413)
Other Miscellaneous Receipts
32,854
5,234
2,131
758
40,977
Net Cash Flows - Operating Activities
281,390
(74,901)
1,535
30,514
238,538
CASH FLOWS - NONCAPITAL FINANCING
ACTIVITIES
Transfer from Other Funds 155,425 196,900 352,325
Transfer to Other Funds (48,000) (48,000) (21,250) (117,250)
Net Cash Flows - Noncapital Financing 107,425 148,900 (21,250) 235,075
Activities
CASH FLOWS - CAPITAL AND RELATED
FINANCING ACTIVITIES
Principal Paid on Debt
Interest Paid on Debt
Bond Payable Proceeds
Payment to Escrow Account
Proceeds from Disposal of Capital Assets
Acquisition of Capital Assets
Net Cash Flows - Capital and Related
Financing Activitis
CASH FLOWS - INVESTING ACTIVITIES
Interest and Dividends Received
Net Change in Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS
Beginning of Year
End of Year
RECONCILIATION OF OPERATING
LOSS TO NET CASH FLOWS -
OPERATING ACTIVITIES
Operating Loss
Adjustments to Reconcile Operating Loss
to Net Cash Flows - Operating Activities:
Depreciation Expense
Other Income
Accounts Receivable
Special Assessments Receivable
Accounts Payable
Contracts Payable
Due to Other Governmental Units
Salaries Payable
Compensated Absences Payable
Net OPEB Obligation
Total Adjustments
Net Cash Flows - Operating Activities
(395,000)
(347,995)
$ (1,121)
$ (68,172)
(742,995)
(371,878)
(118,691)
-
97,351
(490,569)
4,860,000
5,343
1,680
337
4,860,000
(4,770,733)
45,528
1,104
(259)
(4,770,733)
15
(109)
451
421
15
-
(14,579)
(1,784)
(208)
(14,579)
(677,596)
(481,265)
-
-
(1,158,861)
850
(20,147)
450
-
(18,847)
52,112
10,999
7,143
5,352
75,606
(236,669)
(396,267)
8,678
14,616
(609,642)
237,621
672,224
258,434
175,201
1,343,480
$ 952
$ 275,957
$ 267,112
$ 189,817
$ 733,838
$ (132,080)
$ (220,529)
$ (1,121)
$ (68,172)
$ (421,902)
382,530
262,746
-
97,351
742,627
32,558
5,343
1,680
337
39,918
(9,959)
45,528
1,104
(259)
36,414
296
(109)
451
421
1,059
(278)
4,466
(1,784)
(208)
2,196
-
(158,434)
-
-
(158,434)
850
(20,147)
450
-
(18,847)
70
(449)
(151)
79
(451)
3,492
3,492
427
485
7,896
3,911
3,192
479
480
8,062
413,470
145,628
2,656
98,686
660,440
$ 281,390
$ (74,901)
$ 1,535
$ 30,514
$ 238,538
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, 2012
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The City of St. Joseph (the "City ") 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, 2012
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 2012, the City contributed $ 4,969
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 2012, the
City contributed $ 4,311 to the organization. It is reported as an agency fund of the City of
St. Cloud. Complete financial statements can be obtained from: City of St. Cloud, 400 2nd Street
South, St. Cloud, Minnesota 56301.
B. Government -Wide and Fund Financial Statements
The government -wide financial statements (i.e., the Statement of Net Position 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.
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
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.
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, 2012
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)
As a general rule, the effect of interfund activity has been eliminated from the government -wide
financial statements. Exceptions to this general rule are charges between the City's water, sanitary
sewer, refuse 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 Position 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.
M
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
1. Cash and Investments (Continued)
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 I I8A.04 and 1 18A.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.
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.
41
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
2. Receivables and Payables (Continued)
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.
Property, plant and equipment of the City are depreciated using the straight -line full year convention
method over the following estimated useful lives:
Assets Years
Land Improvements
5 -20
Buildings
30 -40
Building Improvements
15
Infrastructure
10 -50
Sewer Rights
20 -50
Furniture and Fixtures
5 -10
Vehicles
5 -20
Equipment
3 -7
Machinery
5 -7
42
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
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 and AFSCME employees) 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 Position.
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.
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.
43
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
7. Fund Equity
a) Classification (Continued)
• 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.
8. Net Position
Net position represents the difference between assets and liabilities in the government -wide financial
statements. Net investment in capital assets 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 $ 2,929,245 between the net position and unrestricted net
position on the total column in the Statement of Net Position to recognize the portion of debt
attributable to capital assets donated from governmental activities to business -type activities. Net
position is 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 position for
governmental activities of $ 1,410,937 includes $ 10,844 for tax incrementing financing, $ 1,264,825
in state collected sales tax restricted by enabling legislation, $ 70,811 in park dedication fees,
$ 27,368 restricted by donors for a future recreation center, $ 5,239 restricted by donors for future
projects, $ 22,771 in revolving loan funds restricted for EDA projects and $ 9,079 of restricted PEG
access fees.
,
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
D. Assets, Liabilities and Net Position or Equity (Continued)
9. Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenditures /expenses during the reporting period. Actual results could differ from those estimates.
NOTE 2 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
L 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 and the Economic Development Authority Special Revenue Fund
are adopted on a basis consistent with accounting principles generally accepted in the United
States of America.
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.
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.
45
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 2 — STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
B. Deficit Fund Balance
The following Fund had a deficit fund balances at December 31, 2012.
Nonmajor Governmental Funds:
Special Revenue:
TIF 2 -2 St. Joseph Meat Market
These deficits will be eliminated with future tax increment revenues.
C. Disbursements in Excess of Appropriations
$ 470
Disbursements exceeded appropriations in the following Fund for the year ended December 31, 2012.
General Fund
Nonmajor Governmental Fund:
Special Revenue:
Economic Development Authority
NOTE 3 — DEPOSITS AND INVESTMENTS
Disbursements Appropriations
$ 2,676,215 $ 2,445,175
93,114 70,725
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.
Custodial Credit Risk — Deposits: As of December 31, 2012, 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, 2012, the City's deposits had a carrying value as shown below.
Certificates of Deposit
Checking
Savings
Total
$ 1,098,678
1,385,506
3,046,674
$ 5,530,858
M
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 3 — DEPOSITS AND INVESTMENTS
B. Investments
As of December 31, 2012, the City had the following investments:
Weighted
Fair Average
Value Maturity (Years)
Standard &
Poor's
Rating
Brokered Certificates of Deposit
$ 1,908,358
2.18
N/A
Brokered Money Market
11,586
N/A
N/A
State and Local Government Securities
6,223,611
1.68
N/A
Total
$ 8,143,555
Credit Risk: As of December 31, 2012, the City's investments were rated as listed in the table above.
Concentration of Credit Risk: As of December 312012, the City's investment in state and local
government securities (76.4 %) and the investment in a brokered certificate of a deposit with GO Capital
Financial Inc., Utah (3.1 %) 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, 2012:
Deposits (Note 3.A.)
Investments (Note 3.13.)
Petty Cash
Total
$ 5,530,858
8,143,555
275
$ 13,674,688
Deposits and investments are presented in the December 31, 2012 basic financial statements as follows:
Statement of Net Position:
Cash and Investments $ 7,451,077
Cash with Fiscal Agents 6,223,611
Total Deposits and Investments $ 13,674,688
47
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 4 — INTERFUND BALANCES AND TRANSFERS
A. Interfund Balances
The composition of interfund balances as of December 31, 2012 is as follows:
Receivable Fund Payable Fund Amount
Other Governmental Funds Other Governmental Funds $ 500
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, 2012 is as follows:
Transfer In
Water
Sanitary Sewer
Water
Other Governmental Funds
Other Governmental Funds
Other Governmental Funds
Other Governmental Funds
Other Governmental Funds
Other Governmental Funds
Other Governmental Funds
Other Governmental Funds
Transfer Out
Other Governmental Funds
Other Governmental Funds
Other Governmental Funds
Other Governmental Funds
General Fund
General Fund
General Fund
Other Governmental Funds
Description
Annual transfer for bond payment $
Annual transfer for bond payment
Additional funds needed for water
bond payments
Close fund
Transfer unspent capital budget
Transfer unspent capital budget
Annual transfer for Coborn's
abatement payment
Annual transfer for bond payment
Amount
69,000
196,900
86,425
249,854
6,000
16,770
50,000
15,000
Water Annual transfer for bond payment 48,000
Sanitary Sewer Annual transfer for bond payment 48,000
Storm Water Annual transfer for bond payment 21,250
$ 807,199
.•
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 5 — CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2012 was as follows:
Governmental Activities:
Capital Assets not being Depreciated:
Land
Easements
Construction in Progress
Total Capital Assets
not being Depreciated
Capital Assets being Depreciated:
Buildings
Infrastructure
Improvements
Machinery and Equipment
Total Capital Assets
being Depreciated
Less Accumulated Depreciation for:
Buildings
Infrastructure
Improvements
Machinery and Equipment
Total Accumulated
Depreciation
Total Capital Assets being
Depreciated, Net
Governmental Activities Capital
Assets, Net
Beginning
Ending
Balance
Increases
Decreases
Balance
$ 457,194
$ -
$ -
$ 457,194
5,820
-
-
5,820
56,410
409,158
-
465,568
519,424
409,158
-
928,582
2,479,464
-
-
2,479,464
16,209,266
-
-
16,209,266
607,487
29,514
-
637,001
2,743,443
669,021
388,251
3,024,213
22,039,660
698,535
388,251
22,349,944
840,169
62,140
-
902,309
9,088,272
878,940
-
9,967,212
348,389
27,839
-
376,228
1,979,756
202,964
321,864
1,860,856
12,256,586
1,171,883
321,864
13,106,605
9,783,074
(473,348)
66,387
9,243,339
$ 10,302,498
$ (64,190)
$ 66,387
$ 10,171,921
.•
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 5 — CAPITAL ASSETS
Business -Type Activities:
Capital Assets not being Depreciated:
Land
Easements
Construction in Progress
Total Capital Assets
not being Depreciated
Capital Assets being Depreciated:
Buildings
Plant and Lines
Machinery and Equipment
Sewer Rights
Total Capital Assets
being Depreciated
Less Accumulated Depreciation for:
Buildings
Plant and Lines
Machinery and Equipment
Sewer Rights
Total Accumulated
Depreciation
Total Capital Assets being
Depreciated, Net
Business -Type Activities Captial
Beginning
$ 377,882 $ -
67,915 -
4,987,832 -
5,433,629 -
8,120,415 -
21,195,993 -
605,590 -
2,844,253 212,760
32,766,251 212,760
1,500,915
184,260
4,246,760
424,309
361,552
36,085
712,440
97,973
6,821,667
742,627
25,944,584 (529,867)
Ending
$ - $ 377,882
- 67,915
198,181 4,789,651
198,181 5,235,448
- 8,120,415
- 21,195,993
- 605,590
- 3,057,013
32,979,011
- 1,685,175
- 4,671,069
- 397,637
- 810,413
- 7,564,294
- 25,414,717
Assets, Net $ 31,378,213 $ (529,867) $ 198,181 $ 30,650,165
Depreciation expense was charged to functions /programs of the City as follows:
Governmental Activities:
General Government $ 54,052
Public Safety 103,976
Public Works 938,142
Culture and Recreation 75,393
Economic Development 320
Total Depreciation Expense - Governmental Activities $ 1,171,883
Business -Type Activities
Water $ 382,530
Sanitary Sewer 262,746
Storm Sewer 97,351
Total Depreciation Expense - Business -Type Activities $ 742,627
50
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
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
Governmental Activities:
G.O. Bonds, Including Refunding Bonds:
G.O. Certificates of Indebtedness
of 2008A
G.O. Capital Improvement Plan
Refunding Bonds 2009B
G.O. Certificates of Indebtedness
of 2010A
G.O. Refunding Bonds of 2011A
G.O. Certificates of Indebtedness
of 2011A
G.O. Capital Improvement Plan
Bonds of 2011A
Total G.O. Bonds
G.O. Special Assessment Bonds:
G.O. Improvement Bonds of 2006C
G.O. Improvement Bonds of 2007A
G.O. Improvement Refunding
Bonds of 2007B
G.O. Improvement Crossover Refunding
Bonds of 2009A
G.O. Improvement Refunding Bonds of 2010B
G.O. Improvement Refunding Bonds of 2010B
G.O. Improvement Crossover
Refunding Bonds of 2011A
Total G.O. Special
Assessment Bonds
Public Project Revenue Bonds:
FDA Revenue Refunding Bonds of 2005A
Unamortized Premiums/Discounts
Compensated Absences
Total Long -Term Liabilities,
Governmental Activities
Issue
Interest
Original
Final
Principal
Due Within
Date
Rate
Issue
Maturity
Outstanding
One Year
04/03/08
3.10 % -3.50%
$ 290,000
12/01/13
$ 60,000
$ 60,000
09/03/09
1.10 % -3.75%
495,000
12/01/18
340,000
55,000
04/22/10
2.75%
150,000
12/01/15
90,000
30,000
11 /10 /11
2.00%
430,000
10/01/17
360,000
70,000
11 /10 /11
2.00 % -2.40%
390,000
10/01/21
355,000
35,000
11 /10 /11
2.00 % -2.40%
195,000
10/01/21
180,000
20,000
1,385,000
270,000
06/13/06
4.00 % -4.25%
2,375,000
12/01/13
1,585,000
1,585,000
07/25/07
4.00 % -4.13%
2,875,000
12/01/17
345,000
65,000
11/14/07
3.60 % -3.90%
980,000
12/01/14
275,000
160,000
03/19/09
1.25 % -2.90%
2,555,000
12/01/17
1,650,000
315,000
09/28/10
2.00 % -3.25%
1,035,000
12/01/20
1,035,000
125,000
09/28/10
2.00 % -3.25%
790,000
12/01/25
700,000
45,000
11 /10 /11
2.00 % -2.40%
1,040,000
10/01/21
1,040,000
-
6,630,000
2,295,000
03/15/05
2.75 % -4.15%
645,000
12/01/15
260,000
80,000
51,395
-
366,195
63,216
$ 8,6925590
$ 257085216
51
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 6 — LONG -TERM DEBT
C. Components of Long -Term Liabilities (Continued)
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 $ 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.
The City issued $ 4,860,000 of the G.O. Improvement Bonds 2012A for a crossover refunding of the
G.O. Improvement Bonds 2005D. The issue will be called on December 1, 2014. The refunding was
undertaken to reduce total future debt service payments. The refunding resulted in a net present value
benefit of $ 298,853. The economic gain from the transaction was $ 366,766.
52
Issue
Interest
Original
Final
Principal
Due Within
Date
Rate
Issue
Maturity
Outstanding
One Year
Business -Type Activities:
G.O. Revenue Bonds:
G.O. Water Revenue Bonds of 2005D
12/15/05
4.00 % -4.25%
$ 4,595,000
12/01/14
$ 4,595,000
$
G.O. Water Revenue Bonds of 2006A
01/12/06
3.50 % -4.00%
3,575,000
12/01/16
1,470,000
345,000
G.O. Sewer Revenue Crossover Refunding
Bonds of 2009A
03/19/09
1.25 % -3.85%
455,000
12/01/21
350,000
35,000
G.O. Water Revenue Refunding
Bonds of 2009C
10/20/09
1.0 % -2.6%
425,000
12/01/16
255,000
60,000
G.O. Sewer Revenue Bonds of 2011A
11 /10 /11
2.00 -2.40%
225,000
10/01/21
205,000
20,000
G.O. Water Revenue Crossover Refunding
Bonds of 20l2A
04/19/12
1.00 -2.85%
4,860,000
12/01/28
4,860,000
-
Total G.O. Revenue Bonds
11,735,000
460,000
Notes Payable:
City of St. Cloud SIS
Phases 1 & 2 (2009B Bonds)
10/26/09
2.0 % -4.0%
835,000
08/01/19
605,000
75,000
City of St. Cloud SIS
Phase 3 (2010 Bonds)
10/28/10
2.0 % -2.5%
180,000
08/01/20
145,000
15,000
City of St. Cloud PFA Loan
08/01/10
1.77%
4,431,543
08/20/30
4,214,077
206,503
Total Notes Payable
4,964,077
296,503
Unamortized Premium
90,782
-
Compensated Absences
120,656
4,887
Total Business -Type Activities
16,910,515
761,390
Total all Long -Term Liabilities
$ 25,603,105
$ 3,469,606
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 $ 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.
The City issued $ 4,860,000 of the G.O. Improvement Bonds 2012A for a crossover refunding of the
G.O. Improvement Bonds 2005D. The issue will be called on December 1, 2014. The refunding was
undertaken to reduce total future debt service payments. The refunding resulted in a net present value
benefit of $ 298,853. The economic gain from the transaction was $ 366,766.
52
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 6 — LONG -TERM DEBT
C. Changes in Long -Term Liabilities
Long -term liability activity for the year ended December 31, 2012 was as follows:
Governmental Activities:
Bonds Payable:
General Obligation
G.O. Special Assessment Bonds
Public Project Revenue Bonds
Total Bonds Payable
Unamortized Premiums/Discounts
Compensated Absences
Total Governmental
Activities
Business -Type Activities:
Bonds Payable:
G.O. Utility Revenue Bonds
Notes Payable:
City of St. Cloud Notes
Unamortized Premiums
Compensated Absences
Total Business -Type
Activities
Beginning
4,860,000
Ending
Balance Additions
Reductions
Balance
$ 1,650,000 $ -
$ 265,000
$ 1,385,000
8,870,000 -
2,240,000
6,630,000
345,000 -
85,000
260,000
10,865,000 -
2,590,000
8,275,000
63,543 -
12,148
51,395
327,021 201,636
162,462
366,195
11,255,564 201,636
2,764,610
8,692,590
7,325,000
4,860,000
450,000
11,735,000
5,257,072
-
292,995
4,964,077
53,464
53,113
15,795
90,782
112,760
51,812
43,916
120,656
12,748,296
4,707,582
576,839
16,910,515
Total Long -Term Liabilities $ 24,003,860 $ 6,983,437 $ 2,756,933 $ 25,603,105
The General Fund typically liquidates the liability related to compensated absences.
53
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 6 - LONG -TERM DEBT
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long -term liabilities
Total $ 1,385,000 $ 126,050 $ 6,630,000 $ 641,947
Governmental Activities
Year Ended
December 31,
2013
2014
2015
2016
2017
2018 -2022
2023 -2025
Public Project Revenue Bonds
Principal Interest
$ 80,000 $ 10,455
90,000
90,000
7,335
3,735
Total
$ 2,888,638
1,232,201
1,116,291
998,900
995,156
1,636,358
196,978
Total $ 260,000 $ 21,525 $ 9,064,522
54
Governmental Activities
Year Ended
G.O. Government Activities
G.O. Special Assessment Bonds
December 31,
Principal
Interest
Principal
Interest
2013
$ 270,000
$ 33,105
$ 2,295,000
$ 200,078
2014
210,000
26,580
785,000
113,286
2015
215,000
21,605
695,000
90,951
2016
190,000
16,530
720,000
72,370
2017
195,000
12,180
735,000
52,976
2018 -2022
305,000
16,050
1,215,000
100,308
2023 -2025
-
-
185,000
11,978
Total $ 1,385,000 $ 126,050 $ 6,630,000 $ 641,947
Governmental Activities
Year Ended
December 31,
2013
2014
2015
2016
2017
2018 -2022
2023 -2025
Public Project Revenue Bonds
Principal Interest
$ 80,000 $ 10,455
90,000
90,000
7,335
3,735
Total
$ 2,888,638
1,232,201
1,116,291
998,900
995,156
1,636,358
196,978
Total $ 260,000 $ 21,525 $ 9,064,522
54
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 6 - LONG -TERM DEBT
D. Minimum Debt Payments (Continued)
The amortization schedule for the 2010 PFA Note includes the entire remaining Note liability of
$ 4,333,123, including $ 119,046 that has not yet been drawn. The remaining balance on this Note is
expected to be drawn in 2013.
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, 2012, the City's conduit debt consisted of the following:
Commercial Development Revenue Note
(Independence Center), Series 2001
Industrial Revenue Bonds (St. Joseph
Development, LLC), Series 2002
Total
$ 362,156
915,000
$ 1,277,156
55
Business -Type Activities
Year Ended
Utility Revenue Bonds
Notes Payable
December 31,
Principal
Interest
Principal
Interest
Total
2012
$ 460,000
$ 377,954
$ 296,503 $
93,130
$ 1,227,587
2013
5,070,000
361,801
305,157
93,632
5,830,590
2014
550,000
155,308
313,916
87,211
1,106,435
2015
570,000
136,683
327,674
80,572
1,114,929
2016
520,000
117,263
331,537
73,617
1,042,417
2018 -2022
2,670,000
416,150
1,412,923
262,429
4,761,502
2023 -2027
1,780,000
124,763
1,274,933
141,184
3,320,880
2028 -2030
115,000
3,278
820,480
29,232
967,990
Total
$ 11,735,000
$ 1,693,200
$ 5,083,123 $
861,007
$ 19,372,330
The amortization schedule for the 2010 PFA Note includes the entire remaining Note liability of
$ 4,333,123, including $ 119,046 that has not yet been drawn. The remaining balance on this Note is
expected to be drawn in 2013.
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, 2012, the City's conduit debt consisted of the following:
Commercial Development Revenue Note
(Independence Center), Series 2001
Industrial Revenue Bonds (St. Joseph
Development, LLC), Series 2002
Total
$ 362,156
915,000
$ 1,277,156
55
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 7 — FUND BALANCE
Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective
funds.
Nonspendable:
Prepaid Expenses
Restricted:
PEG Access Fees
Debt Service
Tax Increments
State Collected Sales Tax Projects
Park Dedication Fees
Recreation Center
Chartitable Gambling
Revolving Loan
Total Restricted
Committed:
Economic Development
Assigned:
Elections
City Structure/Facility Study
Fire Operations
Fire Debt Service
Fire Capital
Capital Outlay Reserves
Debt Service Relief
Total Assigned
Unassigned
Total
Nonmajor
Governmental
General Fund Total
$ 16,058 $ -
$ 16,058
9,079 -
9,079
- 3,245,028
3,245,028
- 10,844
10,844
- 1,264,825
1,264,825
- 70,811
70,811
- 27,368
27,368
- 5,239
5,239
- 22,771
22,771
9,079 4,646,886
4,655,965
- 77,651 77,651
25,427
-
25,427
7,021
-
7,021
20,000
-
20,000
200,000
-
200,000
281,399
-
281,399
-
1,358,480
1,358,480
-
508,859
508,859
533,847
1,867,339
2,401,186
1,146,290
(470)
1,145,820
$ 1,705,274 $ 6,591,406 $ 8,296,680
56
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
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
2012 is estimated to be immaterial based on workers' compensation rates and salaries for the year.
At December 31, 2012, 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, 2012
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, 9200, St. Paul, Minnesota 55103 -2088 or by
calling (651) 296 -7460 or (800) 652 -9026.
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
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 2012. PEPFF members were required to contribute 9.6% of their annual covered salary
in 2012. In 2012, 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, 2012, 2011 and 2010 were $ 51,941, $ 52,013 and $ 50,562, respectively. The City's
contributions to the PEPFF for the years ending December 31, 2012, 2011 and 2010 were $ 66,427,
$ 63,930 and $ 60,886, 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 $ 1,323 from each source, or
$ 2,646 in total. As of December 31, 2012 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, 2012
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 B1ueCross B1ueShield. 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 B1ueCross BlueShield. The required contributions are based on projected pay -as-
you-go financing requirements. For 2012, the City contributed $ 865 to the plan. As of December 31,
2012, 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.
ARC
Interest on Net OPEB Obligation
Adjustment to ARC
Annual OPEB Cost
Contributions Made
Increase in Net OPEB
Net OPEB Obligation
Net OPEB Obligation
$ 35,377
5,807
(8,396)
32,788
865
Obligation 31,923
- Beginning of Year 1455185
- End of Year $ 177,108
•1
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
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 2012, 2011 and 2010 was as follows:
D. Funded Status and Funding Progress
As of January 1, 2012, the most recent actuarial valuation date, the City had no assets deposited to fund
the plan. The actuarial accrued liability for benefits was $ 239,852 and the actuarial value of assets was
$ 0, resulting in an unfunded actuarial accrued liability (UAAL) of $ 239,852. The covered payroll
(annual payroll of active employees covered by the plan) was $ 1,386,050, and the ratio of the UAAL to
the covered payroll was 17.3 %.
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
Percentage of
Annual OPEB
Employer
Annual OPEB Cost
Net OPEB
Year Ended
Cost
Contribution
Contributed
Obigation
12/31/10
$ 56,327
$ 6,291
11%
$ 96,639
12/31/11
55,435
6,889
12%
145,185
12/31/12
32,788
865
3%
177,108
D. Funded Status and Funding Progress
As of January 1, 2012, the most recent actuarial valuation date, the City had no assets deposited to fund
the plan. The actuarial accrued liability for benefits was $ 239,852 and the actuarial value of assets was
$ 0, resulting in an unfunded actuarial accrued liability (UAAL) of $ 239,852. The covered payroll
(annual payroll of active employees covered by the plan) was $ 1,386,050, and the ratio of the UAAL to
the covered payroll was 17.3 %.
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, 2012
NOTE 10 — POST EMPLOYMENT HEALTH CARE PLAN
E. Actuarial Methods and Assumptions (Continued)
At the January 1, 2012 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, 2012 was 26 years.
NOTE 11— COMMITMENTS
The City has entered into contracts for construction as follows:
Proj ect
County Road 2 Trail Extension
Sauk River Interceptor
Total
Expended
Contract through
Amount 12/31/12 Commitment
$ 346,442 $ 241,792 $ 104,650
182,053 170,685 11,368
NOTE 12 — RELATED PARTY TRANSACTION
$ 116,018
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, 2012, the City implemented GASB Statement No. 63. This action
resulted in the establishment of categories outside of assets and liabilities titled deferred outflows and
deferred inflows. The Statement also retitled Net Assets as Net Position.
NOTE 14 — SUBSEQUENT EVENT
The City has evaluated subsequent events through April 22, 2013, the date which the financial
statements were available to be issued.
62
CITY OF ST. JOSEPH
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2012
NOTE 15 — GASB STATEMENTS ISSUED BUT NOT YET IMPLEMENTED
GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. The Statement
establishes standards of financial reporting for deferred outflows and deferred inflows as established by
GASB Statement No. 63. This statement will also eliminate the recognition of deferred charges
associated with bond issuances.
GASB Statement No. 68 replaces the requirements of Statement No. 27, Accounting for Pensions by
State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to
governments that provide pensions through pension plans administered as trusts or similar arrangements
that meet certain criteria. Statement 68 requires governments providing defined benefit pensions to
recognize their long -term obligation for pension benefits as a liability for the first time, and to more
comprehensively and comparably measure the annual costs of pension benefits.
63
(THIS PAGE LEFT BLANK INTENTIONALLY)
.E
REQUIRED SUPPLEMENTARY INFORMATION
65
CITY OF ST. JOSEPH
SCHEDULE OF FUNDING PROGRESS - OTHER POST EMPLOYMENT BENEFITS
December 31, 2012
* This Schedule was implemented in 2009. The City has had two actuarial studies complete to date;
therefore, the Schedule contains only two years of data. See Note 10 in the Notes to the Financial
Statements for more details on this Schedule.
Tel
Actuarial
UAAL as a
Actuarial
Accrued Liability
Unfunded
Percentage of
Actuarial
Value of
(AAL) -
AAL
Funded
Covered
Covered
Valuation
Assets
Entry Age
(UAAL)
Ratio
Payroll
Payroll
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%
12/31/12
-
239,852
239,852
0.0%
1,386,050
17.3%
* This Schedule was implemented in 2009. The City has had two actuarial studies complete to date;
therefore, the Schedule contains only two years of data. See Note 10 in the Notes to the Financial
Statements for more details on this Schedule.
Tel
SUPPLEMENTARY INFORMATION
67
CITY OF ST. JOSEPH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2012
REVENUES
Property Taxes
Sales Taxes
Special Assessments
Franchise Fees
Licenses and Permits
Intergovernmental Revenue:
Local Government Aid
PERA Aid
Fire Aid
Police Aid
Federal Grants
State Grants
Other Grants and Aids
Total Intergovernmental Revenue
Charges for Services:
General Government
Public Safety
Public Works
Culture and Recreation
Total Charges for Services
Fines and Forfeitures
Miscellaneous Revenues:
Investment Income
Contributions and Donations
Other
Total Miscellaneous Revenues
Total Revenues
EXPENDITURES
General Government
Mayor and Council
Administrative and Finance
Other General Government
Capital Outlay
Total General Government
Original
Final
Actual
Budget
Budget
Amounts
$ 1,092,685
$ 1,092,685
$ 1,104,034
-
-
(26)
2,000
2,000
845
109,500
109,500
116,668
86,525
86,525
138,631
645,150
645,150
645,151
1,540
1,540
1,541
39,000
39,000
41,397
53,500
53,500
47,965
5,800
5,800
11,488
7,165
7,165
8,205
18,750
18,750
19,566
770,905
770,905
775,313
Variance with
Final Budget -
Over (Under)
$ 11,349
(26)
(1,155)
7,168
52,106
1
1
2,397
(5,535)
5,688
1,040
30,425
30,425
60,877
30,452
185,145
185,145
194,586
9,441
3,325
3,325
3,372
47
5,750
5,750
9,818
4,068
224,645
224,645
268,653
44,008
65,500
65,500
62,065
(3,435)
19,000
19,000
42,198
23,198
29,285
29,285
80,403
51,118
30,700
30,700
56,417
25,717
78,985
78,985
179,018
100,033
2,430,745
2,430,745
2,645,201
214,456
65,400
65,400
68,769
3,369
321,885
321,885
309,002
(12,883)
114,155
108,155
121,399
13,244
5,000
3,000
19,272
16,272
506,440
498,440
518,442
20,002
68
CITY OF ST. JOSEPH
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES -
BUDGET AND ACTUAL - GENERAL FUND
For the Year Ended December 31, 2012
EXPENDITURES
Public Safety
Police:
Current
Capital Outlay
Total Police
Fire:
Current
Capital Outlay
Total Fire
Other:
Current
Capital Outlay
Total Other
Total Public Safety
Public Works
Streets and Highways:
Street Maintenance and Storm Sewers
Snow and Ice Removal
Street Engineering
Street Lighting
Capital Outlay
Total Public Works
Culture and Recreation
Current
Capital Outlay
Total Culture and Recreation
Total Expenditures
Excess of Revenues Over Expenditures
OTHER FINANCING SOURCES (USES)
Insurance Recoveries
Sale of Property
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balances
FUND BALANCES
Beginning of Year
End of Year
$ 1,705,274
69
Variance with
Original
Final
Actual
Final Budget -
Budget
Budget
Amounts
Over (Under)
$ 886,830
$ 886,830
$ 871,839
$ (14,991)
1,270
-
-
-
888,100
886,830
871,839
(14,991)
324,470
324,470
321,400
(3,070)
45,100
45,100
241,325
196,225
369,570
369,570
562,725
193,155
94,450
94,450
97,375
2,925
2,000
-
-
-
96,450
94,450
97,375
2,925
1,354,120
1,350,850
1,531,939
181,089
213,180
213,180
220,922
7,742
92,445
92,445
56,318
(36,127)
35,000
35,000
24,378
(10,622)
46,000
46,000
51,680
5,680
6,000
-
47,328
47,328
392,625
386,625
400,626
14,001
209,260
209,260
211,578
2,318
5,500
-
13,630
13,630
214,760
209,260
225,208
15,948
2,467,945
2,445,175
2,676,215
231,040
(37,200)
(14,430)
(31,014)
(16,584)
-
-
10,184
10,184
-
-
84,056
84,056
-
-
(72,770)
(72,770)
-
-
21,470
21,470
$ (37,200)
$ (14,430)
(9,544)
$ 4,886
$ 1,705,274
69
CITY OF ST. JOSEPH
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2012
Special Revenue
70
Economic
TIF 2 -1
TIF 2 -2 St.
Development
Millstream
Joseph Meat
Authority
Shops and
Market
State Collected
(150)
Lofts (157)
(158)
Sales Tax (200)
ASSETS
Cash and Investments
$ 79,526
$ 10,832
$ 30
$ 1,215,123
Cash with Fiscal Agent
-
-
-
-
Taxes Receivable - Delinquent
893
Special Assessments Receivable:
Delinquent
-
Deferred
Accounts Receivable
-
-
Interest Receivable
76
12
Due from Other Funds
500
-
-
Due from Other Governments
351
67,378
Notes Receivable
-
-
-
-
Total Assets
$ 81,346
$ 10,844
$ 30
$ 1,282,501
LIABILITIES AND
FUND BALANCES
Liabilities
Accounts Payable
$ 2,802
$
$
$ 4,776
Contracts Payable
-
-
12,900
Due to Other Funds
-
500
-
Deferred Revenue
893
-
-
Total Liabilities
3,695
500
17,676
Fund Balances
Restricted
-
10,844
-
1,264,825
Committed
77,651
-
-
Assigned
-
-
Unassigned
-
-
(470)
-
Total Fund Balances
77,651
10,844
(470)
1,264,825
Total Liabilities and
Fund Balances
$ 81,346
$ 10,844
$ 30
$ 1,282,501
70
Special Revenue
Debt Service
$ 64 $ $ $ $ 7,642 $ $
- 12,900
500
- 36,131 37,024 589,637 100,201
64 36,131 58,066 589,637 100,201
70,811 27,368 5,239 22,771 1,401,858 436,792 198,075
- - - - 77,651 - -
- - - - (470) - -
70,811 27,368 5,239 22,771 1,479,039 436,792 198,075
$ 70,875 $ 27,368 $ 5,239 $ 58,902 $ 1,537,105 $ 1,026,429 $ 298,276
71
G.O.
G.O. Crossover
Improvement
Park
Charitable
Refunding
Refunding
Dedication
Recreation
Gambling
Revolving
Bonds of
Bonds of
(205)
Center (210)
(215)
Loan (250)
Total
2009A (318)
2007B (320)
$ 70,749
$ 27,309
$ 5,232
$ 22,747
$ 1,431,548
$ 434,665
$ 197,679
893
2,074
258
-
3,717
765
-
-
583,846
99,178
32
-
-
-
32
-
-
94
59
7
24
272
674
354
-
-
-
-
500
-
-
-
67,729
1,453
42
-
-
-
36,131
36,131
-
-
$ 70,875
$ 27,368
$ 5,239
$ 58,902
$ 1,537,105
$ 1,026,429
$ 298,276
$ 64 $ $ $ $ 7,642 $ $
- 12,900
500
- 36,131 37,024 589,637 100,201
64 36,131 58,066 589,637 100,201
70,811 27,368 5,239 22,771 1,401,858 436,792 198,075
- - - - 77,651 - -
- - - - (470) - -
70,811 27,368 5,239 22,771 1,479,039 436,792 198,075
$ 70,875 $ 27,368 $ 5,239 $ 58,902 $ 1,537,105 $ 1,026,429 $ 298,276
71
CITY OF ST. JOSEPH
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2012
72
Debt Service
City Hall
G.O.
G.O.
G.O. FDA
Fire Hall G.O.
Improvement
Improvement
G.O.
Refunding
Refunding
Bonds of
Bonds of
Improvement
Bonds of
Bonds of
2005B/2010B
2011A/2006C
Bonds of
2005A (322)
2003B (33 1)
(333)
(338)
2007A (34 1)
ASSETS
Cash and Investments
$ 849
$ 119,430
$ 376,177
$ 244,076
$ 140,707
Cash with Fiscal Agent
-
-
-
1,452,878
-
Taxes Receivable - Delinquent
2,883
954
474
1,724
486
Special Assessments Receivable:
Delinquent
-
-
49,565
541
-
Deferred
520,155
386,274
192,964
Accounts Receivable
-
-
-
-
-
Interest Receivable
20
174
583
396
873
Due from Other Funds
-
-
-
-
-
Due from Other Governments
469
156
1,286
983
5
Notes Receivable
-
-
-
-
-
Total Assets
$ 4,221
$ 120,714
$ 948,240
$ 2,086,872
$ 335,035
LIABILITIES AND
FUND BALANCES
Liabilities
Accounts Payable
$
$
$
$
$
Contracts Payable
Due to Other Funds
Deferred Revenue
2,883
954
570,194
388,539
193,450
Total Liabilities
2,883
954
570,194
388,539
193,450
Fund Balances
Restricted
1,338
119,760
378,046
1,698,333
141,585
Committed
-
-
-
-
-
Assigned
Unassigned
-
-
-
-
-
Total Fund Balances
1,338
119,760
378,046
1,698,333
141,585
Total Liabilities and
Fund Balances
$ 4,221
$ 120,714
$ 948,240
$ 2,086,872
$ 335,035
72
Debt Service
$ $
G.O.
$ - $
- $
$
$
G.O.
Certificates
10,613
10,613
Certificates of
G.O. Capital
of
G.O.
G.O.
G.O. Capital
15,917
2,085,758
Indebtedness
Improvement
Indebtedness
Improvement
Certificates of
Improvement
Debt Service
2,096,371
of 2008A
Plan Bonds of
of 2010A
Bonds of
Indebtedness of
Plan Bonds of
Relief Fund
12,574
(342)
2009B (343)
(344)
2010B (345)
2011A (346)
2011A (347)
(390)
Total
$ 12,216
$ 4,272
$ 2,397
$ 245,516
$ 1,103
$ 14,173
$ 508,859
$ 2,302,119
-
-
-
-
-
-
-
1,452,878
1,894
1,921
657
213
189
291
405
14,423
-
-
-
-
-
-
-
54,588
218,818
15,512
2,016,747
24
14
7
334
289
244
3,986
334
333
172
95
74
115
5,517
$ 14,468
$ 6,540
$ 3,233
$ 464,976
$ 1,655
$ 14,823
$ 524,776
$ 5,850,258
$ $
$
$ - $
- $
$
$
10,613
10,613
1,894
1,921
657
219,031
189
291
15,917
2,085,758
1,894
1,921
657
229,644
189
291
15,917
2,096,371
12,574
4,619
2,576
235,332
1,466
14,532
-
3,245,028
508,859
508,859
12,574
4,619
2,576
235,332
1,466
14,532
508,859
3,753,887
$ 14,468 $
6,540
$ 3,233
$ 464,976 $
1,655 $
14,823
$ 524,776
$ 5,850,258
73
CITY OF ST. JOSEPH
COMBINING BALANCE SHEET -
NONMAJOR GOVERNMENTAL FUNDS
December 31, 2012
74
Capital Projects
City
Jade Road
Hall/Police
Street
Garage Capital
General
Improvements
Improvements
Capital
Outlay
Water Access
Sewer Access
(441)
(447)
(490)
Fund (50 1)
Fund (502)
ASSETS
Cash and Investments
$
366,959
$ 174,043
$
219,825
$
27
$ 565,381
Cash with Fiscal Agent
-
-
-
-
-
Taxes Receivable - Delinquent
Special Assessments Receivable:
Delinquent
Deferred
-
-
-
Accounts Receivable
8,283
20,700
10,580
Interest Receivable
-
27
938
Due from Other Funds
-
-
Due from Other Governments
Notes Receivable
-
-
-
-
-
Total Assets
$
366,959
$ 174,043
$
228,108
$
20,754
$ 576,899
LIABILITIES AND
FUND BALANCES
Liabilities
Accounts Payable
$
$
$
8,283
$
$
Contracts Payable
-
Due to Other Funds
Deferred Revenue
-
Total Liabilities
8,283
Fund Balances
Restricted
-
Committed
-
-
-
-
-
Assigned
366,959
174,043
219,825
20,754
576,899
Unassigned
-
-
-
-
-
Total Fund Balances
366,959
174,043
219,825
20,754
576,899
Total Liabilities and
Fund Balances
$
366,959
$ 174,043
$
228,108
$
20,754
$ 576,899
74
Total
Governmental
$ 1,326,235 $ 5,059,902
- 1,452,878
15,316
54,588
2,016,747
39,563 39,595
965 5,223
- 500
73,246
- 36,131
$ 1,366,763 $ 8,754,126
$ 8,283 $ 15,925
- 23,513
500
- 2,122,782
8,283 2,162,720
4,646,886
- 77,651
1,358,480 1,867,339
- (470)
1,358,480 6,591,406
$ 1,366,763 $ 8,754,126
75
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2012
Special Revenue
76
Economic
TIF 1 -4
TIF 2 -1
TIF 2 -2 St.
Development
St. Joseph
Millstream
Joseph Meat
Authority
Development
Shops and
Market
(150)
(156)
Lofts (157)
(158)
REVENUES
Property Taxes
$ 69,634
$ -
$ -
$ -
Tax Increments
-
61,202
37,442
-
Sales Taxes
-
-
-
-
Special Assessments
-
-
-
-
Intergovernmental
-
-
-
-
Charges for Services
-
-
-
-
Miscellaneous:
Investment Income
1,549
2
255
-
Contributions and Donations
-
-
-
-
Revolving Loan Repayments
-
-
-
-
Total Revenues
71,183
61,204
37,697
-
EXPENDITURES
Current
General Government
-
-
-
-
Public Works
-
-
-
Culture and Recreation
-
-
-
-
Economic Development
93,114
59,262
34,064
173
Debt Service
Principal
-
-
-
-
Interest and Other Charges
-
-
-
Capital Outlay
General Government
-
-
-
Public Safety
-
-
-
Public Works
-
-
-
Culture and Recreation
-
-
-
-
Total Expenditures
93,114
59,262
34,064
173
Excess of Revenues Over
(Under) Expenditures
(21,931)
1,942
3,633
(173)
OTHER FINANCING SOURCES (USES)
Sale of Property
-
-
-
-
Refunding Bond Payment
-
-
-
Transfers In
50,000
-
Transfers Out
-
-
Total Other Financing Sources (Uses)
50,000
-
-
-
Net Change in Fund Balances
28,069
1,942
3,633
(173)
FUND BALANCES
Beginning of Year
49,582
(1,942)
7,211
(297)
End of Year
$ 77,651
$ -
$ 10,844
$ (470)
76
Special Revenue
State Collected
Park
Charitable
Sales Tax
Dedication
Recreation
Gambling
Revolving Loan
(200)
(205)
Center (210)
(215)
(250)
Total
$
$ -
$ -
$ -
$ -
$ 69,634
-
-
-
-
98,644
314,647
-
-
-
314,647
23,545
-
-
23,545
-
1,916
1,219
139
497
5,577
-
-
-
-
8,082
8,082
314,647
25,461
1,219
139
8,579
520,129
-
1,907
-
-
-
1,907
-
-
-
186,613
347,435
31,503
25,589
-
-
404,527
347,435
33,410
25,589
-
-
593,047
(32,788)
(7,949) (24,370) 139 8,579 (72,918)
6,000 56,000
6,000 - - 56,000
(32,788) (1,949) (24,370) 139 8,579 (16,918)
1,297,613 72,760 51,738 5,100 14,192 1,495,957
$ 1,264,825 $ 70,811 $ 27,368 $ 5,239 $ 22,771 $ 1,479,039
77
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2012
78
Debt Service
G.O.
G.O. Crossover
hnprovement
City Hall G.O.
Refunding
Refunding
EDA Refunding
Fire Hall G.O.
Bonds of
Bonds of 200713
Bonds of 2005A
Refunding Bonds
2009A (318)
(320)
(322)
of 2003B (331)
REVENUES
Property Taxes
$ 74,145
$ 8,516
$ 94,336
$ 31,431
Tax Increments
-
-
-
-
Sales Taxes
-
-
-
-
Special Assessments
142,157
58,207
-
-
Intergovernmental
-
-
-
-
Charges for Services
-
-
-
36,142
Miscellaneous:
Investment Income
13,797
7,263
404
3,567
Contributions and Donations
-
-
-
-
Revolving Loan Repayments
-
-
-
-
Total Revenues
230,099
73,986
94,740
71,140
EXPENDITURES
Current
General Government
-
-
-
-
Public Works
-
-
-
-
Culture and Recreation
-
-
-
-
Economic Development
-
-
-
-
Debt Service
Principal
310,000
150,000
85,000
70,000
Interest and Other Charges
53,787
16,770
14,067
7,885
Capital Outlay
General Government
-
-
-
-
Public Safety
-
-
-
-
Public Works
-
-
-
-
Culture and Recreation
-
-
-
-
Total Expenditures
363,787
166,770
99,067
77,885
Excess of Revenues
Under Expenditures
(133,688)
(92,784)
(4,327)
(6,745)
OTHER FINANCING SOURCES (USES)
Sale of Property
-
-
-
-
Refunding Bond Payment
-
-
-
-
Transfers In
80,000
15,000
-
-
Transfers Out
-
-
-
-
Total Other Financing Sources (Uses)
80,000
15,000
-
-
Net Change in Fund Balances
(53,688)
(77,784)
(4,327)
(6,745)
FUND BALANCES
Beginning of Year
490,480
275,859
5,665
126,505
End ofYear
$ 436,792
$ 198,075
$ 1,338
$ 119,760
78
Debt Service
G.O.
G.O.
500,000
G.O.
55,000
30,000
Improvement
Improvement
G.O.
Certificates of
G.O. Capital
G.O.
Bonds of
Bonds of
Improvement
Indebtedness
Improvement
Certificates of
2005B/2010B
2011A/2006C
Bonds of
of 2008A
Plan Bonds of
Indebtedness of
(333)
(338)
2007A (341)
(342)
2009B (343)
2010A (344)
$ 16,044
$ 56,231
$ 388
$ 67,176
$ 66,966
$ 34,404
50,149
68,082
383,697
-
-
-
11,934
8,116
17,888
491
291
151
78,127
132,429
401,973
67,667
67,257
34,555
105,000
145,000
500,000
60,000
55,000
30,000
67,042
91,597
34,069
4,200
11,610
3,300
172,042
236,597
534,069
12,574 $
66,610
2,576
64,200
33,300
(93,915)
(104,168)
(132,096)
3,467
647
1,255
(985,000) - -
- 24,000 -
(1,078,915)
(80,168)
(132,096)
3,467
647
1,255
1,456,961
1,778,501
273,681
9,107
3,972
1,321
$ 378,046
$ 1,698,333
$ 141,585 $
12,574 $
4,619 $
2,576
79
CITY OF ST. JOSEPH
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
NONMAJOR GOVERNMENTAL FUNDS
For the Year Ended December 31, 2012
Debt Service
80
G.O.
G.O.
G.O. Capital
hnprovement
Certificates of
hnprovement
Debt Service
Bonds of 201013
Indebtedness of
Plan Bonds of
Relief Fund
(345)
2011A (346)
2011A (347)
(390)
REVENUES
Property Taxes
$ 10,964
$ 14,702
$ 22,718
$ 204
Tax Increments
-
-
-
-
Sales Taxes
-
-
-
-
Special Assessments
24,045
-
-
3,349
Intergovernmental
-
-
-
1,000
Charges for Services
-
15,239
-
-
Miscellaneous:
Investment Income
6,835
9,919
4,989
-
Contributions and Donations
-
-
-
-
Revolving Loan Repayments
-
-
-
-
Total Revenues
41,844
39,860
27,707
4,553
EXPENDITURES
Current
General Government
-
-
-
-
Public Works
254
-
-
-
Culture and Recreation
-
-
-
-
Economic Development
-
-
-
-
Debt Service
Principal
45,000
35,000
15,000
-
Interest and Other Charges
18,455
7,388
3,685
-
Capital Outlay
General Government
-
-
-
-
Public Safety
-
-
-
-
Public Works
-
-
-
-
Culture and Recreation
-
-
-
-
Total Expenditures
63,709
42,388
18,685
-
Excess of Revenues Over
(Under) Expenditures
(21,865)
(2,528)
9,022
4,553
OTHER FINANCING SOURCES (USES)
Sale of Property
-
-
-
Ref ending Bond Payment
-
-
-
Transfers In
13,250
-
249,854
Transfers Out
-
-
(86,425)
Total Other Financing Sources (Uses)
13,250
-
163,429
Net Change in Fund Balances
(8,615)
(2,528)
9,022
167,982
FUND BALANCES
Beginning of Year
243,947
3,994
5,510
340,877
End of Year
$ 235,332
$ 1,466
$ 14,532
$ 508,859
80
Debt Service Capital Projects
81
Northland
Jade Road
City Hall/Police
Heights/
Street
Pumper Truck
Garage Capital
General
Transportation
Improvements
Certificate
Improvements
Capital
Total
Studies (435)
(441)
(446)
(447)
Outlay (490)
$ 498,225
$
729,686
-
-
-
-
-
1,000
-
-
-
-
-
51,381
-
-
-
-
-
85,645
-
-
-
-
-
-
-
-
-
-
11,283
1,365,937
-
-
-
-
11,283
-
-
-
-
-
1,500
254
-
-
-
-
-
1,605,000
-
-
-
-
333,855
-
-
-
-
-
-
-
-
2,107
-
-
383,406
-
4,327
-
23,171
1,156
-
-
1,981
-
-
-
-
-
28,387
1,939,109
23,171
1,156
383,406
-
38,302
(573,172)
(23,171)
(1,156)
(383,406)
-
(27,019)
-
-
-
-
8,745
(985,000)
-
-
-
-
382,104
-
-
16,770
(86,425)
(249,854)
-
(689,321)
(249,854)
25,515
(1,262,493)
(273,025)
(1,156)
(383,406)
-
(1,504)
5,016,380
273,025
368,115
383,406
174,043
221,329
$ 3,753,887
$ -
$ 366,959
$
$ 174,043
$ 219,825
81
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
EXPENDITURES
Current
General Government
-
-
1,500
Total Other
Public Works
Water Access
Sewer Access
-
Governmental
Culture and Recreation
Fund (50 1)
Fund (502)
Total
Funds
REVENUES
-
-
-
186,613
Property Taxes
$ -
$ -
$ -
$ 567,859
Tax Increments
-
-
-
98,644
Sales Taxes
-
-
-
314,647
Special Assessments
-
-
-
729,686
Intergovernmental
-
-
-
1,000
Charges for Services
88,398
45,320
133,718
208,644
Miscellaneous:
-
-
26,308
26,308
Investment Income
549
19,217
19,766
110,988
Contributions and Donations
-
-
11,283
11,283
Revolving Loan Repayments
-
-
-
8,082
Total Revenues
88,947
64,537
164,767
2,050,833
EXPENDITURES
Current
General Government
-
-
1,500
1,500
Public Works
-
-
-
254
Culture and Recreation
-
-
-
1,907
Economic Development
-
-
-
186,613
Debt Service
Principal
-
-
-
1,605,000
Interest and Other Charges
-
-
-
333,855
Capital Outlay
General Government
-
-
2,107
2,107
Public Safety
-
-
387,733
387,733
Public Works
-
-
26,308
26,308
Culture and Recreation
-
-
28,387
432,914
Total Expenditures
-
-
446,035
2,978,191
Excess of Revenues Over
(Under) Expenditures
88,947
64,537
(281,268)
(927,358)
OTHER FINANCING SOURCES (USES)
Sale of Property
-
-
8,745
8,745
Refunding Bond Payment
-
-
-
(985,000)
Transfers In
-
-
16,770
454,874
Transfers Out
(69,000)
(211,900)
(530,754)
(617,179)
Total Other Financing Sources (Uses)
(69,000)
(211,900)
(505,239)
(1,138,560)
Net Change in Fund Balances
19,947
(147,363)
(786,507)
(2,065,918)
FUND BALANCES
Beginning of Year
807
724,262
2,144,987
8,657,324
End of Year
$ 20,754
$ 576,899
$ 1,358,480
$ 6,591,406
82
Y DV
Expert advice. When you need it.5'
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 A UDITING STANDARDS
Honorable Mayor and Members
of the City Council
City of St. Joseph
St. Joseph, Minnesota
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, 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, 2012 and the related notes
to the financial statements, which collectively comprise City's basic financial statements, and have
issued our report thereon dated April 22, 2013.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City's internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of City's internal control. Accordingly, we do not
express an opinion on the effectiveness of City's internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were
not identified. However, as described in the accompanying Schedule of Findings and Responses on
Internal Control, we identified certain deficiencies in internal control that we consider to be material
weaknesses.
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 and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the entity's 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 Internal Control to be a material weakness, listed as Audit Finding 06 -01.
KD-V
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free from
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 or other matters that are required to be
reported under Government Auditing Standards.
City's Response to Findings
The City's response to the finding identified in our audit is described in the accompanying Schedule of
Findings and Responses on Internal Control. The City's response was not subjected to the auditing
procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the result of that testing, and not to provide an opinion on the effectiveness of the City's
internal control or on compliance. This report is an integral part of an audit performed in accordance
with Government Auditing Standards in considering the City's internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
/�� I pe-buxv 41 V,-t-� W.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
April 22, 2013
• ,
Y DV
Expert advice. When you need it.5'
REPORT ON LEGAL COMPLIANCE
Honorable Mayor and Members
of the City Council
City of St. Joseph
St. Joseph, Minnesota
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller general of the United States, 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, 2012, which collectively
comprise the City's basic financial statements and have issued our report thereon dated April 22, 2013.
The Minnesota Legal Compliance Audit Guide for Political Subdivisions, promulgated by the State
Auditor pursuant to Minnesota Statutes Section 6.65 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 audit considered all of the
listed categories.
In connection with our audit, nothing came to our attention that caused us to believe that the City of St.
Joseph, Minnesota, failed to comply with the provisions of the Minnesota Legal Compliance Audit
Guide for Political Subdivisions. However, our audit was not directed primarily toward obtaining
knowledge of such noncompliance. Accordingly, had we performed additional procedures, other matters
may have come to our attention regarding the City's noncompliance with the above referenced
provisions.
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this communication is not
suitable for any other purpose.
KERN, DEWENTER, VIERE, LTD.
St. Cloud, Minnesota
April 22, 2013
CITY OF ST. JOSEPH
SCHEDULE OF FINDINGS AND RESPONSES ON
INTERNAL CONTROL
December 31, 2012
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 changes made to the full time
office specialist position to a part time position and then to a full time position with temporary
workers. 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 employee's time, processes and posts payroll, generates a payroll
report, distributes paystubs to employees, and posts the journal entries related to payroll. In
addition, this same employee reconciles payroll accruals and time off balances. The City
Administrator does review payroll reports and time off balances and calculates compensated
absences balances for the audit.
CITY OF ST. JOSEPH
SCHEDULE OF FINDINGS AND RESPONSES ON
INTERNAL CONTROL
December 31, 2012
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.