HomeMy WebLinkAbout2016 Audit Report
City of St. Joseph
Stearns County, Minnesota
Financial Statements
December 31, 2016
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
Governmental Funds 27
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds 28
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
Balances to the Statement of Activities Governmental Funds 29
Statement of Revenues, Expenditures, and Changes in Fund Balance Budget
and Actual 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 Financial Statements 37
Required Supplementary Information
Schedule of Funding Progress Other Post Employment Benefits 76
Schedule of City's Proportionate Share of Net Pension Liability General
Employees Retirement Fund 77
Schedule of City's Proportionate Share of Net Pension Liability Public
Employees Police and Fire Retirement Fund 77
Schedule of City Contributions General Employees Retirement Fund 78
Schedule of City Contributions Public Employees Police and Fire
Retirement Fund 78
Schedule of Changes in the Net Pension Liability and Related Ratios
Fire Relief Association 79
Schedule of City Contributions and Non Employer Contributing Entities
Fire Relief Association 80
Notes to Required Supplementary Information 81
City of St. Joseph
Table of Contents
Supplementary Information
Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget
and Actual General Fund 84
Combining Balance Sheet Nonmajor Governmental Funds 86
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds 92
Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards 99
Report on Legal Compliance 101
Schedule of Finding and Response on Internal Control 102
City of St. Joseph
Elected Officials and Administration
December 31, 2016
Elected OfficialsPositionTerm Expires
Rick SchultzMayor January 2017
Robert LosoCouncil MemberJanuary 2017
Renee SymanietzCouncil MemberJanuary 2017
Dale WickCouncil MemberJanuary 2019
Matt KillamCouncil MemberJanuary 2019
Administration
Judy WeyrensCity AdministratorAppointed
Lori BartlettFinance DirectorAppointed
1
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, 2016, and the
related notes to 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
City'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.
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Auditor's Responsibility (Continued)
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to in the first paragraph 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, 2016, and the respective changes in
financial position and, where applicable, cash flows thereof, and the budgetary comparison
for the General Fund for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
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 Required
Supplementary Information as listed in the Table of Contents be presented to supplement the
basic financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board (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 of St. Joseph's basic financial statements. The combining and
individual nonmajor fund financial statements are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
3
Other Matters (Continued)
Other Information (Continued)
The combining and individual nonmajor fund financial statements are the responsibility of
management and were 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 combining and individual nonmajor fund financial statements are fairly
stated, in all material respects, in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
April 20, 2017, on our consideration of the City of St. Joseph'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 of St. Joseph's
internal control over financial reporting and compliance.
St. Cloud, Minnesota
April 20, 2017
4
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
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, 2016.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2016 include the following:
The assets and deferred outflows of resources of the City of St. Joseph exceeded its liabilities and
deferred inflows of resources at the close of the most recent fiscal year by $32,205,933. Of this
amount, $1,824,280 may be used to meet government's ongoing obligations to citizens and creditors
(unrestricted net position).
The government's total net position increased by $2,810,571 from 2015 to 2016. The increase is due
contributed capital received for the Minnesota Street West turn-back from Stearns County, increased
utility rates, significant development activity, and unspent bond proceeds.
As of the close of the current fiscal year, the City of St. Joseph's governmental funds reported
combined ending fund balances of $7,881,491, an increase of $2,155,114. Of this amount
$1,402,200 is unassigned for spending at the government's discretion. The remaining balance of
$6,479,291 is set aside for specific future expenditures.
At the end of the current fiscal year, unassigned fund balance for the general fund was $1,439,299 or
51% of total general fund expenditures ($1,073,039 or 58% excluding the fire and PEG Access
funds).
The City of St. Joseph's total long-term debt increased by $2,974,806 during the current fiscal year.
The City had two debts paid in full in 2016 and incurred two new debts. The largest debt issued was
to construct the government center.
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 deferred
outflows of resources and liabilities and deferred inflows of resources, with the difference between them
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.
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).
5
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
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, storm water and street light utility 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 38 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, Government Center Capital Project
Fund and Field Street Improvement Capital Project Fund which are considered to be major funds. Data
from the other governmental funds are combined into a single, aggregated presentation. Individual fund
data for each of these non-major governmental funds is provided in the form of combining statements
elsewhere in this report.
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 26-39 of this report.
6
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
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, storm water, and street
light utility 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, storm water and street light utility, 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
financial statements can be found on pages 37-74 of this report.
Other Information. The combining statements referred to earlier in connection with non-major
governmental funds can be found on pages 86-98 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 $32,205,933 at the close of
the most recent fiscal year.
By far the largest portion of the City of St. Joseph's net position reflects its investment in capital assets
(e.g., land, buildings, machinery, and equipment) net accumulated depreciation, less any related debt
used to acquire those assets that is still outstanding. The City of St. Joseph uses these capital assets to
provide services to citizens; consequently, these assets are not available for future spending. Although
the City of St. Joseph's investment in its capital assets is reported net of related debt, it should be noted
that the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
7
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
NET POSITION
GovernmentalBusiness-Type
ActivitiesActivitiesTotal
201620152016201520162015
ASSETS:
Current and Other Assets$ 10,084,991$ 7,994,562$ 1,092,948$ 893,303$ 11,177,939$ 8,887,865
Capital Assets, Net 16,434,381 12,072,185 32,307,757 32,642,113 48,742,138 44,714,298
Total Assets 26,519,372 20,066,747 33,400,705 33,535,416 59,920,077 53,602,163
DEFERRED OUTFLOWS
OF RESOURCES:
Deferred Outflows of Resources
Related to Pensions 2,018,645 339,470 135,738 33,738 2,154,383 373,208
Total Deferred Outflows 2,018,645 339,470 135,738 33,738 2,154,383 373,208
LIABILITIES:
Current Liabilities 2,034,698 1,640,535 1,329,746 1,358,124 3,364,444 2,998,659
Long-Term Liabilities 14,543,892 9,084,972 11,334,423 12,096,018 25,878,315 21,180,990
Total Liabilities 16,578,590 10,725,507 12,664,169 13,454,142 29,242,759 24,179,649
DEFERRED INFLOWS
OF RESOURCES:
Deferred Inflows of Resources
Related to Lease Receivables 202,925 231,089 - - 202,925 231,089
Deferred Inflows of Resources
Related to Pensions 387,397 146,834 35,446 22,437 422,843 169,271
Total Deferred Inflows 590,322 377,923 35,446 22,437 625,768 400,360
NET POSITION:
Net Investment in Capital Assets 7,603,491 6,427,207 20,427,682 19,907,165 25,878,291 23,972,202
Restricted 4,503,362 3,904,337 - - 4,503,362 3,904,337
Unrestricted (737,748) (1,028,757) 409,146 185,410 1,824,280 1,518,823
Total Net Position$ 11,369,105$ 9,302,787$ 20,836,828$ 20,092,575$ 32,205,933$ 29,395,362
An additional portion of the City of St. Joseph's net position (14%) represents resources that are subject
to external restrictions on how they may be used. The remaining balance of unrestricted net position is a
surplus of $1,824,280, a deficit of $328,602 after removing the unrestricted portion of governmental
debt for enterprise assets. The deficit is the result of realizing a portion of the Minnesota employee's
pension liability. Without the net pension liability, the unrestricted net position would be a surplus of
$2,934,645.
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.
8
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
The governmental activities change in net position balance increased by 22%. The City's governmental
operational activity was strong. Development activity was a key factory. The change would have been
greater without recording pension expense as required by GASB 68 to recognize a pension liability for
the City's portion of contributions to the Public Employees Retirement Association of Minnesota
(PERA). The City and employees are effected by funding law changes as a result of PERA's funding
performance each year. A net pension liability was recorded for $2,936,834 in the governmental
activities.
There was a 4% increase (5% increase excluding net pension liability) in the total net position for the
business-type activities. The increase is due to paying down bonds, increase utility rates and improved
development fees collected. The full value of the assets are netted against the bonds payable. The water
fund had two bonds paid off in 2016 providing a higher value in capital assets. Also, construction in
progress includes assets contributed from governmental funds improving the business-type net position.
Governmental Activities. Governmental activities improved the City of St. Joseph's total net position
by $2,066,318. The most significant factor for the increase was the contribution of Minnesota Street
West from Stearns County. In addition, state aid in the amount of $1,438,537 was received to cover a
portion of the costs related to street projects. Another reason for the increase is the significant
development fees collected including building permit revenue of $210,446.
Business-Type Activities. Business-type activities increased the City of St. Joseph's net position by
$744,253. The largest contributors were the water and sewer funds. The water and sewer funds are
combined with the water access (WAC) and sewer access (SAC) funds in the Government-Wide
financial statements. The WAC/SAC is intended to charge new development a proportional fee for the
asset that they will be utilizing. The connection fees totaled $504,121 for 2016. In addition, city council
increased water and sewer rates (25% and 84%, respectively) to help cover the water and sewer debt
costs. The sewer fund received transfers from governmental activities to pay debts also.
The graphs and charts below and on the following pages summarize and graphically depict the changes
in net position for the governmental and business-type activities.
9
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
CHANGE IN NET POSITION
Governmental ActivitiesBusiness-Type ActivitiesTotal
201620152016201520162015
REVENUES:
Program Revenues:
Charges for Services$ 760,364 $ 602,611 $ 2,888,146 $ 2,254,780$ 3,648,510 $ 2,857,391
Operating Grants and
Contributions 232,268 326,678 1,313 6,873 233,581 333,551
Capital Grants and
Contributions 3,187,179 409,469 495 12,104 3,187,674 421,573
General Revenues:
Property Taxes 1,774,928 1,685,639 73,407 44,656 1,848,335 1,730,295
Tax Increments 42,507 41,385 - - 42,507 41,385
Sales Tax 432,227 405,859 - - 432,227 405,859
Franchise Fees 126,817 124,283 - - 126,817 124,283
Lodging Tax 8,046 - - - 8,046 -
State Aids 921,207 910,488 - - 921,207 910,488
Unrestricted Investment Earnings 93,662 76,419 25,094 36,799 118,756 113,218
Gain on Sale of Capital Assets - - - 2,810 - 2,810
Total Revenues 7,579,205 4,582,831 2,988,455 2,358,022 10,567,660 6,940,853
EXPENSES:
General Government 704,096 641,393 - - 704,096 641,393
Public Safety 1,912,915 1,547,886 - - 1,912,915 1,547,886
Public Works 1,573,836 1,278,903 - - 1,573,836 1,278,903
Economic Development 207,508 358,378 - - 207,508 358,378
Culture and Recreation 495,630 439,504 - - 495,630 439,504
Interest on Long-Term Debt 386,233 287,934 - - 386,233 287,934
Water - - 915,505 912,963 915,505 912,963
Sanitary Sewer - - 1,037,570 1,001,928 1,037,570 1,001,928
Storm Water - - 282,280 180,681 282,280 180,681
Refuse - - 178,189 287,877 178,189 287,877
Street Light Utility - - 63,327 53,751 63,327 53,751
Total Expenses 5,280,218 4,553,998 2,476,871 2,437,200 7,757,089 6,991,198
Decrease in Net Position before
Tranfers 2,298,987 28,833 511,584 (79,178) 2,810,571 (50,345)
Transfers (232,669) (139,306) 232,669 139,306 - -
Change in Net Position 2,066,318 (110,473) 744,253 60,128 2,810,571 (50,345)
NET POSITION:
Net Position - Beginning 9,302,787 10,151,205 20,092,575 20,262,205 29,395,362 30,413,410
Change in Accounting Principle - (737,945) - (229,758) - (967,703)
Net Position - Beginning Restated 9,302,787 9,413,260 20,092,575 20,032,447 29,395,362 29,445,707
Net Position - Ending$ 11,369,105 $ 9,302,787 $ 20,836,828 $ 20,092,575$ 32,205,933 $ 29,395,362
10
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
EXPENSES AND PROGRAM REVENUES GOVERNMENTAL ACTIVITIES
REVENUES BY SOURCE GOVERNMENTAL ACTIVITIES
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City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
EXPENSES AND PROGRAM REVENUES BUSINESS-TYPE ACTIVITIES
1,400,000
Revenue
Expenditures
1,200,000
1,000,000
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SewerUtility
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12
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
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
$7,881,491, an increase of $2,155,114 from 2015. Revenues for the City's governmental funds were
$7,102,100, while total expenditures were $9,664,684. The excess of expenditures over revenues is
mainly attributed to the City constructing the government center. To facilitate the construction of the
building, the City issued capital improvement bonds. The City also plans to sell the previous city hall
with proceeds going towards the government center construction costs. Bond proceeds and sale of
surplus property are other financing sources not reported in the above operating numbers above. In
addition to the government center, the City of St Joseph issued special assessment bonds to construct the
first phase of Field Street. Construction began fall 2016. The City received Municipal State Aid for a
portion of the construction costs along with the bond issue. Much of the project expenditures will be
incurred in 2017. The Field Street Fund realized an increase in fund balance of $1,233,489.
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 $1,439,299. 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 51% of total general fund expenditures, 58% (seven months
working capital) after removing the Fire and PEG Access fund. The City Council has adopted a financial
policy which includes a goal to maintain the General Fund working capital fund balance equal to four to
six months of expenditures. The excess unassigned fund balance can be attributed to development
related receipts. The City experienced an increase in construction projects in 2016 resulting in permit
and plan review fees in excess of budgeted amounts. In addition, Stearns County contributed $95,000 to
the City of St. Joseph to cover future maintenance costs for Minnesota Street West which was turned
over to the City in 2016.
General Fund expenditures were less than budgeted by $70,413 and over 2015 expenditures by
$165,955. The City of St. Joseph sets funds aside for the street maintenance plan. The street
maintenance plan expenditures fluctuate each year, increasing in 2016. Spring 2014 was one of the
snowiest periods on record for Central Minnesota. The Council added to the ice and snow removal
budget for 2015 and 2016. The 2016 winter was warmer and dryer; thus, the City was under-budget in
streets and allowing time for other projects. Engineering expenditures were over budget as the city
council approved studies to consider solar garden proposals, preliminary development concepts for both
commercial and industrial development, Minnesota Street West turn-back, MSAS mileage updates,
ARCON parkland contribution, and general services. In addition, the City budgets funds annually for
capital equipment under their five-year Capital Equipment Plan. Fire capital outlay shows $66,522 under
budget as a result of setting aside funds for future capital purchases. The parks and recreation
operational expenditures are over budget mainly due to staff time spent in the culture and community
center. The 2016 reporting year reflects the first full year of owning the community center. With little
history, the budget was slightly off. While the staff time exceeded budget in culture and recreation, other
departments realized savings in staff time.
As a result of the prudent financial policies of the City, the General Fund remained stable.
13
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
The schedule below presents a summary of General Fund revenues and expenditures.
December 31,December 31,IncreasePercent
20162015(Decrease)Change
REVENUES:
Taxes$ 1,209,884$ 1,231,341 $ (21,457)-2%
Special Assessment 3,740 3,590 1504%
Licenses and Permits 270,780 152,158 118,62278%
Intergovernmental 1,212,746 1,107,840 104,9069%
Charges for Services 345,321 270,508 74,81328%
Fines and Forfeitures 46,747 50,489 (3,742)-7%
Miscellaneous 117,470 111,983 5,4875%
Total General Fund Revenue$ 3,206,688$ 2,927,909 $ 278,77910%
December 31,December 31,IncreasePercent
20162015(Decrease)Change
EXPENDITURES:
General Government$ 623,771$ 595,071 $ 28,7005%
Public Safety 1,471,657 1,416,039 55,6184%
Public Works 433,200 396,766 36,4349%
Culture and Recreation 319,839 274,636 45,20316%
Total General Fund Expenditures$ 2,848,467$ 2,682,512 $ 165,9556%
General Fund Budgetary Highlights
Over the course of the year, the City did not amend the annual operating budget. Historically, the City
has minimal budget amendments during the budget year.
Actual revenues were $353,393 more than expected mainly due to development related revenues,
state aids, Stearns County aids and miscellaneous. Tax delinquencies were down and a few
foreclosed properties sold increasing the tax collections.
14
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
Actual expenditures were $70,413 less than budget. To help minimize fluctuations in the budget,
the City budgets family insurance coverage for the majority of the employees even though some
elect single and some do not elect coverage. The City will be faced with a number of retirements
in the next five (5) years and along with that comes the payment of unused accumulated benefit
hours. Therefore, the savings between budget to actual is transferred into a retirement reserve
account for payment of unused benefit hours. In addition, budgeting for the highest insurance
cost alleviates budget spikes when employees change from single to family or a new employee is
hired with family insurance and the employee they are replacing was at the single rate. The City
established and adopted a five-year capital equipment plan (CEP). During the budget process the
CEP is reviewed and the Council prioritizes which projects/equipment will be funded and funds
are set aside each year for equipment purchases until the useful life of the equipment is reached.
Due to the large expenditures associated with some of the needed equipment such as a street
sweeper and fire truck, fluctuations in budget to actual are realized. Some years will show
expenditures lower than budget, some over budget in the year's larger pieces are purchased. In
2016, the Public Works staff spent more time in culture and recreation (as described earlier).
Engineering costs were over budget as many project and development proposals surfaced the
past couple years. When projects move forward, the engineer costs are reimbursed from the
project funding.
Government Center Capital Project Fund
The Government Center capital project fund was established in 2016 for the construction of the
Government Center. The Government Center includes the police department, administrative and
financial services, planning and building, council chambers, and a multi-purpose community room. The
Government Center was constructed on the western end of the community center land. The year-end
assigned fund balance was $468,238.
Field Street Improvement Capital Project Fund
The Field Street Improvement Capital Project Fund was established in 2016 to construct the first phase
th
of the City's east/west Collector Street extending from County Road 121 to 7 Avenue SE. Minnesota
State Aid in the amount of $1,438,537 was received to cover a portion of the cost. Construction is
expected to be substantially completed by fall 2017. The year-end assigned fund balance was
$1,233,489.
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 unrestricted net
position of the proprietary funds increased $208,428 overall. The paragraphs on the following pages
provide a brief financial overview of each major proprietary fund that supported in the increase.
15
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
Water Enterprise Fund
The Water Fund is used to account for the operations of the City's water utility. In 2016, the Water
Fund's net position increased $419,334. Before transfers and capital contributions, the net position
would show an increase of $112,782. The net position includes depreciation of $412,265. The water
operating revenues are covering over 100% of the depreciation. Bonded debt payments in the water fund
totaled $687,193. Debt payments are covered by water rates, debt levy and transfers from WAC fees.
Water rates have been and are projected to continue to be incrementally increased to cover operational
costs as well as any water related debt. As the City was facing large rate increases and projected future
projects that would require funding, the City hired a consultant to review the water rates and provide a
five (5) to ten (10) year perspective. After reviewing the consultant report and verifying potential
projects requiring funding, the council approved a 25% increase in water rates for 2016 to reduce the
dependency on debt levies and transfers from other funds to cover operational and non-operational
expenses. Since the rate increases are based on projected growth and operational costs, it is anticipated
that the rates will increase approximately 5% in the future years. The actual increase will be based on
the annual review of growth and operational costs.
Sanitary Sewer Enterprise Fund
The Sanitary Sewer Fund is used to account for the operations of the City's sanitary sewer utility. In
2016, the Sanitary Sewer Fund's net position increased $336,555, a decrease before capital contributions
and transfers of $36,129. 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 five notes with St. Cloud for various conveyance and treatment facility
projects. In addition, St. Joseph issued bonds to rehabilitate the Sauk River manhole feed from the
St. Joseph force main into St. Cloud, rehabilitate St. Joseph's Main lift station and sewer mains under
CSAH 75, and purchased capacity in the St. Cloud Treatment Plant. The large debt costs are partially
funded with reserved SAC fees, trunk fees and sewer usage rates. The development fees have been
moderate prior to 2016. The City of St. Joseph experienced a larger increase in connection fees to assist
in paying debts. As stated above in the water fund, the City hired a consultant to review the sewer rates
to conduct the same analysis as for water. That is, reviewing current operational expenses, debt and
future projects. After reviewing the consultant report, the council approved 16% (spring) and 59% (fall)
increases in sewer rates for 2016. For future the next three years, the report suggests 19% rate increases
to assist with debt payments. Operational revenues are covering 100% of the $452,913 depreciation.
Refuse Enterprise Fund
The Refuse Fund is used to account for the contract services to provide residential refuse, recycling, and
compost services. The Refuse Fund has a net position balance increased $7,250. Council opted to
maintain refuse and compost rates to allow for larger increases in other utility funds. The current rates
are covering the contracted expenses.
Storm Water Enterprise Fund
The Storm Water Fund is used to account for the operations of the City's storm water utility. In 2016, the
Storm Water Fund's net position decreased $31,680. The storm water fund had an operating loss of
$78,977 or, $23,786 surplus after removing depreciation expense. The deficit is consistent with previous
years and expected with the decision to maintain storm water rates. 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 fund having a healthy net position balance. The Storm Water Fund has not collected
any development fees for the previous five years.
16
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
Street Light Utility Enterprise Fund
The Street Light Utility Fund is used to account for the operations of the City's street lighting. In 2013,
the City Council voted to create a street light utility fee to pay for operations of the street lights,
removing the expenditure from the general fund levy. The street light user fee allows the City to capture
revenue from tax exempt properties to help pay for the service provided to them. The City of St. Joseph
is somewhat unique in that over 36% of the City property is classified as tax exempt. To be fair to all
users benefiting from street lighting, the city council determined a user fee was a more equitable method
to charge for street lighting. The net position change of the Street Light Utility Fund was a decrease of
$2,514 at December 31, 2016.
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, 2016, amounts to $48,742,138 (net of accumulated depreciation), an increase of
$4,027,840. The investment in capital assets includes land, intangible assets, buildings, improvements,
machinery and equipment, furniture and office equipment, infrastructure, and construction in progress.
Net investment in capital assets increased $1,906,089. The increase is attributable to capital asset
construction in progress for the street improvements and government center. The assets disposed were
much smaller than the value of the improvements added. In addition, construction in progress is not
depreciated until the asset is fully constructed and operational. The overall debt related to capital assets
increased $3,001,146. The City of St. Joseph issued two debts in 2016 for street improvements and the
government center. The bond issues were more than what was paid off in 2016 mainly from the
government center bonds.
The table below is a summary of the City of St. Joseph's capital assets.
CAPITAL ASSETS
Governmental ActivitiesBusiness-Type ActivitiesTotal
201620152016201520162015
Land$ 874,133$ 561,194$ 377,882$ 377,882$ 1,252,015$ 939,076
Easements 175,873 25,664 67,915 67,915 243,788 93,579
Construction in Progress 4,633,084 1,760,591 714,700 1,154,199 5,347,784 2,914,790
Improvements 1,356,427 1,237,728 - - 1,356,427 1,237,728
Infrastructure 18,830,234 16,613,244 - - 18,830,234 16,613,244
Buildings 4,746,527 4,746,527 8,797,686 8,797,686 13,544,213 13,544,213
Plant and Lines - - 23,679,159 22,599,469 23,679,159 22,599,469
Sewer Rights - - 8,569,212 8,569,212 8,569,212 8,569,212
Machinery and Equipment 3,468,207 3,343,262 787,554 787,554 4,255,761 4,130,816
Less: Accumulated
Depreciation (17,650,104) (16,216,025) (10,686,351) (9,711,804) (28,336,455) (25,927,829)
Total$ 16,434,381$ 12,072,185$ 32,307,757$ 32,642,113$ 48,742,138$ 44,714,298
Additional information on the City of St. Joseph's capital assets can be found in Note 5 on pages 50-51
of this report. Total depreciation expense for 2016 was $2,570,938.
17
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
Long-Term Liabilities
At the end of the current fiscal year, the City of St. Joseph had total net bonded debt outstanding of
$24,356,922. Of this amount, $12,476,847 comprises debt backed by the full faith and credit of the
government. The remainder of the City of St. Joseph's debt represents bonds and notes secured by
specified revenue sources (i.e. utility bonds). Other long-term debt includes compensated absences
payable, net pension liabilities and other post-employment benefits.
An illustration of the City's long-term liabilities is included in the table below.
OUTSTANDING LONG-TERM LIABILITIES
Percent
20162015Change
Governmental Activities:
General Obligation Bonds$ 5,083,650$ 1,029,157394%
General Obligation Special Assessment Bonds 5,630,929 5,731,903-2%
General Obligation Abatement Bonds 1,762,268 1,859,691100%
Compensated Absences Payable 402,186 428,803-6%
Net Other Post Employment Benefits 209,053 195,1977%
Net Pension Liability 2,936,834 1,113,073100%
Total Governmental Activities$ 16,024,920$ 10,357,82455%
Business-Type Activities:
General Obligation Revenue Bonds$ 7,285,026$ 8,005,087-9%
Notes Payable 4,595,049 4,729,861100%
Compensated Absences Payable 130,782 130,5820%
Net Other Post Employment Benefits 61,124 57,2277%
Net Pension Liability 326,413 249,768100%
Total Business-Type Activities$ 12,398,394$ 13,172,525-6%
The City of St. Joseph issued $4,275,000 General Obligation Capital Improvement Bonds, Series 2016A
in July 2016. The bond issue funds the Government Center construction. In addition, the City issued
$740,000 General Obligation Improvement Bonds, Series 2016B in November 2016 to fund phase one
of Field Street. The City of St. Joseph also issued a Public Facilities Note with the City of St. Cloud for
Main Lift Station improvements in the amount of $226,568.
The City increased the net bonded debt by $3,856,096 in the governmental activities to end the year. The
business-type activities realized a decrease in bonded debt of $720,061 and an increase of 134,812 in
St. Cloud notes payables. In 2016, two water bonds were paid in full reducing bonded debt in business-
type activities.
18
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
The City of St. Joseph maintained their bond rating AA-/Stable from Standard & Poor's for the general
obligation debts issued in 2016. According to Standard & Poor's municipal credit analysis, rating action
is based on the City's adequate economy, reflected by its improved projected per capita effective buying
income. The City's solid bond rating reflects the City's financial operations characterized by strong
management with good financial policies and practices, adequate budgetary performance, very strong
budgetary flexibility and liquidity, strong institutional framework, and weak debt and contingent liability
position. Although a large debt liability, the report sites they positively factored the City's rapid debt
amortization (74.1% within the next ten years). The City's proximity to the St. Cloud metro area factors
positively for the City of St. Joseph.
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 City of St. Joseph is $8,491,335
which significantly exceeds of the City of St. Joseph's outstanding pure general obligation debt of
$750,000.
Additional information on the St. Joseph's long-term liabilities can be found in Note 6 on pages 52-56.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The City of St. Joseph experienced an improved financial position at the end of 2016. After many years
of declining market values and slow development the City realized significant development. The taxable
market value increased 3.08% and 1.77% the past two years. Development the past year was
encouraging. As a result of improved conditions, the City has been able to keep a stable tax rate while
maintaining service levels.
While the housing market for newly constructed homes has significantly declined since 2008, the City of
St. Joseph experienced growth in both the residential and commercial market. In 2016, the City issued
14 single family housing permits. This is near twice as many as the year before. Nationally the housing
market is improving. In the City of St. Joseph, two developers expanded their current single family
housing developments to provide 34 new lots in three subdivisions. St. Joseph was in need of vacant lots
for single family homes as the inventory for residential lots was very limited. St. Joseph is fortunate to
have a very low foreclosure rate. In fact, homes that become available for sale do not stay on the market
for an extended period of time.
In addition to single family residential construction, the City approved plans for two senior multi-family
developments. The first project is entitled Country Manor Senior Living Campus and is a multi-phased
development to include various types of housing for those residents 55 and older. The project required
financial assistance; therefore, the City of St. Joseph and Independent School District 742 agreed to the
utilization of Tax Abatement. The campus includes a combination of patio homes, memory care,
independent living apartments and commercial services such as a chapel, beauty salon, rehabilitation
center and bistro/restaurant. When fully developed the site will accommodate approximately 200 living
units. Phase one of the Country Manor campus is expected to be completed in fall 2017. The second
project is entitled Fortitude Senior housing consisting of a multifamily structure containing 47 living
units, serving those 55 and older, providing for aging in place. Residents receive services based on
individual needs. Like Country Manor, the project proved to have a financial gap requiring financial
assistance from the City. Therefore, the City Council approved the utilization of Tax Increment
Financing. It is anticipated that occupancy will begin mid-2017.
19
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
In 2013 the City of St. Joseph was awarded a $600,000 Minnesota Small Cities Development Program
(SCDP) housing rehabilitation grant to correct deficiencies of older, low to moderate income homes in
St. Joseph. A qualified homeowner in the targeted area can receive up to a $35,000 0% forgivable seven
year loan to upgrade their home's roofing, exterior, or interior health and safety items that improve
energy efficiency. The homeowner's match is 10-15% of the construction costs. The grant award was
available through 2016. The program assisted 29 families improve their living conditions for a total of
$519,812 in upgrades.
The City also anticipates commercial/industrial development with the expansion of the Industrial Park,
development to the west along Interstate 94, 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. All units
are occupied. In 2014 city council approved another redevelopment TIF to add a mixed use facility in
downtown. The project is entitled 24 College North (formerly known as Bayou Blues and Alley Flats).
The proposed development will include two floors of residential living units, office space, and
restaurant. The Alley Flats consists of a four-unit two-story condominium living space, complete with
roof top decks.
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 (including grocery and liquor stores) 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 late 2012, McDonald's opened in the adjacent area. The City also anticipates an O'Reilly's auto
parts store to be constructed in mid-2017.
The City is also experiencing new growth in the industrial park. Scenic Specialties landscape business
rehabilitated a century-old barn on their site to create a rustic events center named Rolling Ridge Event
Center. Weddings, corporate gatherings, family gatherings can rent the facility for their event. There are
few options in the Central Minnesota area for a rustic event center. The first wedding was held in
October 2015. The City also approved construction plans for building expansions in the industrial park.
Other developments include a Kwik Trip convenience store to replace a closed restaurant/bar, athletic
fields for the College of St. Benedicts, Casey's General Store building addition and Holiday convenience
store remodel. The College of St. Benedicts presented plans to create a Welcome Center and
Administration Building renovating three buildings previously owned by the Monastery of St. Benedict.
Early indicators for 2017 suggest that St. Joseph will continue to see increased growth. Kwik Trip has
submitted plans to construct a second convenience store with an emphasis to serve diesel fuel. The
proposed site is adjacent to CR 75, in near proximity to the East Industrial Park. Early conversations
with Country Manor Senior Campus indicate that they may start a second phase of the senior
development. Additional growth opportunities include: Rivers Bend Plat 3 (twelve single family
townhome lots), potential townhouse development located on the east side near the proposed Kwik Trip,
and the possible creation of shovel ready industrial lots. The completion of the Field Street project will
provide additional development land that is ready for residential or mixed development.
20
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
The City of St. Joseph is in the process of updating the Comprehensive Plan. In fact, the Plan is being
completely re-written. Through the public engagement process, the new plan will identify ideas for
future growth and identify opportunities. In 2017, the Community Center Task Force group will
complete their study and formalize a recommendation for the City Council as to a building concept plan
for the Community Center. As stated earlier, the City purchased the former Colts Academy building
from ISD 742 to create a community center. Initial concept plans for the Community Center include the
addition of gym space and conversion of the existing space for items such as Historical Society, Food
Shelf, activity rooms for youth and seniors and banquet facilities.
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 fluctuations at the state level have significantly impacted government
aid payments made to the City since the 2008 Great Recession. Further, the taxable market value on
properties has just started to come back the past three years. The Council continues to budget
conservatively to keep minimal increases 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 are charged from the first gallon used with a separate line
charge to recover current and future capital replacements. This rate structure began in 2006 to promote
water conservation. Residential sewer rates are capped at the water used for the November/December
billing. The City hired Carl Brown Consulting in 2015 to review the water and sanitary sewer funds
current and future financial health. Mr. Brown determined the current rates were not sufficient to meet
the financial needs of the utilities. He recommended at a minimum a 30% increase in water rates and
24% increase in sewer rates. At these minimum rate increases, further increases will be needed the next
couple years before the funds would stabilize. The amount of increase will depend somewhat on the
growth of the City. As development occurs additional access fees are collected offsetting some of the
need for increased usage fees. The council agreed to moderate rate increases in 2016. The City's long-
term goal is for each fund to cover operations, including depreciation, and debt payments through
consumer rates and development fees.
All the factors were considered in preparing the City of St. Joseph's budget and fee schedule for 2016
and future reporting years. The budget for 2017 was prepared knowing the following projects were
anticipated or already in the construction phase: construction of the government center and the first
phase of Field Street will be substantially completed, improvements to downtown alleys will start, the
Millstream Park pavilion replacement will move forward, the Wobegon Trail extension to St. Cloud and
the final phase of the County Road 2 trail construction will proceed, and a dog park may be constructed
in Millstream Park.
21
City of St. Joseph
Stearns County, Minnesota
Management's Discussion and Analysis
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,
75 Callaway Street East, St. Joseph, MN 56374.
22
BASIC FINANCIAL STATEMENTS
23
City of St. Joseph
Statement of Net Position
December 31, 2016
Governmental Business-Type
ActivitiesActivitiesTotal
Assets
Cash and investments (including cash equivalents)$ 8,152,902$ 641,065$ 8,793,967
Property tax receivable 12,852 393 13,245
Accounts receivable 52,945 447,079 500,024
Interest receivable 9,342 3,911 13,253
Due from other governments 114,700 427 115,127
Due from other funds (internal balances) 30,000 (30,000) -
Notes receivable 47,438 - 47,438
Lease receivable 202,925 - 202,925
Special assessments receivable
Delinquent 5,419 605 6,024
Deferred 1,267,643 29,468 1,297,111
Prepaid items 23,479 -
23,479
Net pension asset 165,346 -
165,346
Capital assets
Land 874,133 377,882 1,252,015
Easements 175,873 67,915 243,788
Construction in progress 4,633,084 714,700 5,347,784
Buildings 4,746,527 8,797,686 13,544,213
Infrastructure 18,830,234 - 18,830,234
Improvements 1,356,427 - 1,356,427
Plant and lines - 23,679,159 23,679,159
Machinery and equipment 3,468,207 787,554 4,255,761
-
Sewer rights 8,569,212 8,569,212
Less accumulated depreciation (17,650,104) (10,686,351) (28,336,455)
Capital assets (net of accumulated depreciation) 16,434,381 32,307,757 48,742,138
26,519,372 33,400,705 59,920,077
Total assets
Deferred outflows of resources
2,018,645 135,738 2,154,383
Deferred outflows of resources related to pensions
$ 28,538,017$ 33,536,443$ 62,074,460
Total assets and deferred outflows of resources
Liabilities
Liabilities
Accounts payable$ 142,282$ 83,399$ 225,681
Contracts payable 266,478 - 266,478
Due to other governments 9,721 115,592 125,313
108,152 12,029 120,181
Salaries and benefits payable
27,037 54,755 81,792
Interest payable
Bond principal payable (net)
Payable within one year 1,425,000 670,000 2,095,000
Payable after one year 11,051,847 6,615,026 17,666,873
Notes payable (net)
Payable within one year - 378,943 378,943
Payable after one year - 4,216,106 4,216,106
Compensated absences payable
Payable within one year 56,028 15,028 71,056
Payable after one year 346,158 115,754 461,912
Net other post employment benefits (OPEB) obligation
209,053 61,124 270,177
Net pension liability
2,936,834 326,413 3,263,247
Total liabilities 16,578,590 12,664,169 29,242,759
Deferred inflows of resources
202,925 - 202,925
Deferred inflows of resources related to lease receivables
387,397 35,446 422,843
Deferred inflows of resources related to pensions
Total deferred inflows of resources 590,322 35,446 625,768
Net position
7,603,491 20,427,682 25,878,291
Net investment in capital assets
Restricted for
Capital projects
521,943 - 521,943
2,198,004 - 2,198,004
Debt service
1,783,415 - 1,783,415
Other purposes
Unrestricted (737,748) 409,146 1,824,280
Total net position 11,369,105 20,836,828 32,205,933
Total liabilities, deferred inflows of resources, and net position$ 28,538,017$ 33,536,443$ 62,074,460
See notes to financial statements.24
-
5,1358,046
(2,758)
42,507
(60,881)(78,938)
273,803215,841413,083432,227126,817921,207118,756
(549,225)(133,490)(386,233)(687,324)
1,221,9151,848,3353,497,8952,810,571
Total
(1,192,493) (1,100,407)
29,395,36232,205,933
$
$
------------
5,135
(2,758)
73,40725,094
(78,938)
273,803215,841413,083413,083232,669331,170744,253
20,092,57520,836,828
Activities
Business-Type
$
$
Net (Expense) Revenue
and Changes in Net Position
------
8,046
42,50793,662
(60,881)
432,227126,817921,207
(549,225) (133,490)(386,233)(232,669)
1,221,9151,774,9283,166,7252,066,3189,302,787
(1,192,493)(1,100,407)(1,100,407)
11,369,105
Activities
Governmental
$
$
------
495 495
7,000
33,677
372,950
2,773,5523,187,1793,187,674
Capital Grants
$
$
and Contributions
--
3919
674 398 183
5,325 1,313
16,97567,425
142,543232,268233,581
$
$
Operating Grants
and Contributions
Program Revenues
City of St. Joseph
-
Statement of Activities
6,593
22,19956,47499,21260,550
Year Ended December 31, 2016130,896544,202760,364287,232
1,188,1391,253,0132,888,1463,648,510
Services
Charges for
$
$
63,327
Total general revenues and transfers
704,096207,508495,630386,233915,505282,280178,189
1,912,9151,573,8365,280,2181,037,5702,476,8717,757,089
Property taxesTax incrementsSales taxesLodging taxesFranchise feesState aidsUnrestricted investment earnings
Expenses
$ $
General revenuesTransfersChange in net positionNet position - beginningNet position - ending
Total governmental activitiesTotal business-type activitiesTotal governmental and business-type activities
See notes to financial statements.
General governmentPublic safetyPublic worksEconomic developmentCulture and recreationInterest on long-term debtWaterSanitary sewerRefuseStorm waterStreet light utility
25
Functions/ProgramsGovernmental activitiesBusiness-type activities
City of St. Joseph
Balance Sheet - Governmental Funds
Year Ended December 31, 2016
Capital Projects
2016 Field
General Fund Street Other Total
(101, 102, Government Improvements Governmental Governmental
105, 108)Center (401)(404)FundsFunds
Assets
Cash and investments$ 2,455,725 $ 663,618 $ 1,292,725$ 3,803,321$ 8,215,389
Taxes receivable - delinquent 7,987 - - 4,865 12,852
Special assessments receivable
Delinquent - - - 5,419 5,419
Deferred 2,520 - - 1,265,123 1,267,643
Accounts receivable 39,150 - - 13,795 52,945
Interest receivable 3,566 - - 5,992 9,558
Due from other funds 700 - - 41,649 42,349
Due from other governments 10,693 7,000 - 97,007 114,700
Notes receivable - - - 47,438 47,438
Lease receivable 202,925 - - - 202,925
Prepaid items 23,479 - - - 23,479
Total assets$ 2,746,745 $ 670,618 $ 1,292,725$ 5,284,609$ 9,994,697
Liabilities
Accounts payable$ 54,651$ 39,558$ 33,358 $ 61,276$ 188,843
Contracts payable - 162,822 25,878 77,778 266,478
Due to other funds - - - 12,349 12,349
Due to other governments 9,721 - - - 9,721
Salaries and benefits payable 107,002 - - 1,150 108,152
Total liabilities 171,374 202,380 59,236 152,553 585,543
Deferred Inflows of Resources
Unavailable revenue - property taxes 7,987 - - 4,865 12,852
Unavailable revenue - special assessments 2,520 - - 1,270,542 1,273,062
Unavailable revenue - notes receivable - - - 38,824 38,824
Unavailable revenue - leases receivable 202,925 - - - 202,925
213,432 - - 1,314,231 1,527,663
Total deferred inflows of resources
Fund Balances
Nonspendable 23,479 - - - 23,479
Restricted 26,567 - - 2,852,689 2,879,256
Committed - - - 133,380 133,380
Assigned 872,594 468,238 1,233,489 868,855 3,443,176
Unassigned 1,439,299 - - (37,099) 1,402,200
Total fund balances 2,361,939 468,238 1,233,489 3,817,825 7,881,491
Total liabilities, deferred inflows
of resources, and fund balances$ 2,746,745 $ 670,618 $ 1,292,725$ 5,284,609$ 9,994,697
See notes to financial statements. 26
City of St. Joseph
Reconciliation of the Balance Sheet to
The Statement of Net Position - Governmental Funds
Year Ended December 31, 2016
Total fund balances - governmental funds$ 7,881,491
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
34,084,485
Less accumulated depreciation
(17,650,104)
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
(12,476,847)
Bond principal payable, net of premiums and discounts
(402,186)
Compensated absences payable
Net OPEB obligation (209,053)
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.
12,852
Property taxes
5,419
Special assessments
Other long-term assets are not available to pay for current expenditures and,
therefore, are deferred in the funds.
1,267,643
Deferred special assessments
38,824
Notes receivable
Deferred outflows of resources and deferred inflows of resources are
created as a result of various differences related to pensions that are
not recognized in the governmental funds.
Deferred inflows of resources related to pensions (387,397)
Deferred outflows of resources related to pensions 2,018,645
Fire relief net pension asset 165,346
Net pension liability (2,936,834)
The water access capital project fund is proprietary in nature and, therefore,
(41,099)
included in the business-type activities in the Statement of Net Position.
The sewer access capital project fund is proprietary in nature and, therefore,
24,957
included in the business-type activities in the Statement of Net Position.
Governmental funds do not report a liability for accrued interest
(27,037)
due and payable.
Total net position - governmental activities$ 11,369,105
See notes to financial statements. 27
City of St. Joseph
Statement of Revenues, Expenditures, and
Changes in Fund Balances - Governmental Funds
Year Ended December 31, 2016
Capital Projects
2016 Field
General Fund Street Other Total
(101, 102, Government Improvements Governmental Governmental
105, 108)Center (401)(404)FundsFunds
Revenues
Property taxes$ 1,083,060$ -$ -$ 706,382$ 1,789,442
Tax increments - - - 42,507 42,507
Sales taxes 7 - - 432,220 432,227
Lodging taxes - - - 8,046 8,046
Special assessments 3,740 - - 422,127 425,867
Franchise fees 126,817 - - - 126,817
Licenses and permits 270,780 - - - 270,780
Intergovernmental 1,212,746 7,000 1,438,537 74,659 2,732,942
Charges for services 345,321 - - 621,377 966,698
Fines and forfeitures 46,747 - - - 46,747
Miscellaneous
Investment income 22,861 - - 40,122 62,983
Contributions and donations 27,360 - - 80,850 108,210
Revolving loan repayments - - - 21,585 21,585
Other 67,249 - - - 67,249
Total revenues 3,206,688 7,000 1,438,537 2,449,875 7,102,100
Expenditures
Current
General government 617,764 - - - 617,764
Public safety 1,459,196 - - - 1,459,196
Public works 353,421 - - - 353,421
Culture and recreation 317,839 - - 6,127 323,966
Economic development - - - 187,700 187,700
Debt service
Principal - - - 1,205,000 1,205,000
Interest and other charges - - - 416,776 416,776
Capital outlay
General government 6,007 2,486,925 - 16,582 2,509,514
Public safety 12,461 1,320,330 - 81,674 1,414,465
Public works 79,779 - 916,594 171,480 1,167,853
Culture and recreation 2,000 - - 6,728 8,728
Economic development - - - 301 301
Total expenditures 2,848,467 3,807,255 916,594 2,092,368 9,664,684
Excess of revenues over
(under) expenditures
358,221 (3,800,255) 521,943 357,507 (2,562,584)
Other Financing Sources (Uses)
Sale of property 1 - - 7,015 7,016
Bonds issued - 4,219,900 711,546 83,554 5,015,000
Bond premium - - - 61,767 61,767
Transfers in 2,865 84,042 - 451,179 538,086
Transfers out - (35,449) - (868,722) (904,171)
Total other financing sources (uses) 2,866 4,268,493 711,546 (265,207) 4,717,698
Net change in fund balances 361,087 468,238 1,233,489 92,300 2,155,114
Fund Balances
Beginning of year2,000,852 - - 3,725,525 5,726,377
End of year$ 2,361,939$ 468,238$ 1,233,489$ 3,817,825$ 7,881,491
See notes to financial statements. 28
City of St. Joseph
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances to the Statement
of Activities - Governmental Funds
Year Ended December 31, 2016
Total net change in fund balances - governmental funds$ 2,155,114
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.
5,082,868
Capital outlays
1,235,564
Capital contributions
(1,596,391)
Depreciation expense
(3,061)
Loss on disposal
(356,784)
Transferred to proprietary funds
Principal payments on long-term debt are recognized as expenditures in the governmental
1,205,000
funds but as an increase in net position in the Statement of Activities.
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.
14,872
Accrued interest payable
15,671
Amortization of bond discounts, premiums and issuance charges
Proceeds from long-term debt are recognized as an other financing source in the governmental
(5,015,000)
funds but as a decrease in net position in the Statement of Activities.
The governmental funds report the effect of premiums, discounts and
similar items when debt is first issued, whereas these amounts are deferred and amortized
(61,767)
in the Statement of Activities.
Compensated absences and OPEB payments are recognized as paid in the
12,761
governmental funds but recognized as the expense is incurred in the Statement of Activities.
Delinquent receivables will be collected in subsequent years, but are not available soon enough
to pay for the current period's expenditures and, therefore, are not revenues in the funds.
(11,840)
Delinquent special assessments
(14,514)
Delinquent property taxes
Certain revenues in the Statement of Activities that do not provide current financial resources
are not reported as revenues in the funds.
(211,465)
Deferred special assessments
(19,992)
Notes receivable
Governmental funds recognized pension contributions as expenditures at the
time of payment whereas the Statement of Activities factors in items related to
pensions on a full accrual perspective.
(354,270)
Pension expense
4,860
State aid related to pension expense
The water access capital project fund is proprietary in nature and, therefore, is reported
(40,904)
with business-type activities.
The sewer access capital project fund is proprietary in nature and, therefore, is reported
25,596
with business-type activities.
Change in net position - governmental activities$ 2,066,318
See notes to financial statements.29
City of St. Joseph
Statement of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2016
Variance with
Original and Actual
Final Budget -
Final BudgetAmounts
Over (Under)
Revenues
Property taxes$ 1,062,065$ 1,083,060$ 20,995
Sales taxes - 7 7
Special assessments 3,000 3,740 740
Franchise fees 127,180 126,817 (363)
Licenses and permits 142,870 270,780 127,910
Intergovernmental 1,089,360 1,212,746 123,386
Charges for services 303,715 345,321 41,606
Fines and forfeitures 41,000 46,747 5,747
Miscellaneous revenues
Investment income 31,000 22,861 (8,139)
Contributions and donations 12,450 27,360 14,910
Other 40,655 67,249 26,594
Total revenues 2,853,295 3,206,688 353,393
Expenditures
Current
General government 664,170 617,764 (46,406)
Public safety 1,463,305 1,459,196 (4,109)
Public works 395,590 353,421 (42,169)
Culture and recreation 256,905 317,839 60,934
Capital outlay
General government 2,760 6,007 3,247
Public safety 73,650 12,461 (61,189)
Public works 62,500 79,779 17,279
Culture and recreation - 2,000 2,000
Total expenditures 2,918,880 2,848,467 (70,413)
Excess of revenues over
(under) expenditures
(65,585) 358,221 423,806
Other Financing Sources (Uses)
Sale of property 350 1 (349)
Transfers in 34,365 2,865 (31,500)
Total other financing sources (uses) 34,715 2,866 (31,849)
Net change in fund balances$ (30,870) 361,087$ 391,957
Fund Balances
Beginning of year2,000,852
End of year$ 2,361,939
See notes to the financial statements.30
City of St. Joseph
Statement of Net Position - Proprietary Funds
December 31, 2016
Sanitary Sewer Storm Water Street Light
Water (601)(602)Refuse (603)(651)Utility (652)Total
Assets
Current assets
Cash and investments$ 60,868$ 5,778$ 247,662$ 241,498$ 22,772$ 578,578
Taxes receivable - delinquent 393 - - - - 393
Special assessments receivable
Delinquent 605 - - - - 605
Deferred 23,856 - - 5,612 - 29,468
Accounts receivable 143,587 220,348 53,661 18,313 11,170 447,079
Interest receivable 2,704 59 441 453 38 3,695
Due from other governments 427 - - - - 427
Total current assets 232,440 226,185 301,764 265,876 33,980 1,060,245
Noncurrent assets
Capital assets
Land 372,941 4,941 - - - 377,882
Easements - - - 67,915 - 67,915
Construction in progress 210,315 442,345 - 62,040 - 714,700
Buildings 7,502,432 1,295,254 - - - 8,797,686
Plants and lines 10,120,551 8,502,416 - 5,056,192 - 23,679,159
Machinery and equipment 207,183 532,147 45,842 2,382 - 787,554
Sewer rights - 8,569,212 - - - 8,569,212
Total capital assets 18,413,422 19,346,315 45,842 5,188,529 - 42,994,108
Less accumulated depreciation (4,858,912) (4,489,070) (26,224) (1,312,145) - (10,686,351)
Net capital assets 13,554,510 14,857,245 19,618 3,876,384 - 32,307,757
Total assets 13,786,950 15,083,430 321,382 4,142,260 33,980 33,368,002
Deferred Outflows of Resources
58,675 47,489 8,642 17,971 2,961 135,738
Deferred outflows of resources related to pensions
Total assets and deferred
$ 13,845,625$ 15,130,919$ 330,024 $ 4,160,231 $ 36,941 $ 33,503,740
outflows of resources
Liabilities
Current liabilities
Accounts payable$ 7,974$ 3,099$ 19,152 $ 2,154 $ 4,459 $ 36,838
Due to other governments 1,705 111,274 2,613 - - 115,592
Salaries and benefits payable 5,145 4,521 762 1,285 316 12,029
Interest payable 10,302 44,453 - - - 54,755
Due to other funds - 30,000 - - - 30,000
Long-term liabilities due
Within one year 496,115 565,058 778 1,709 311 1,063,971
Total current liabilities 521,241 758,405 23,305 5,148 5,086 1,313,185
Noncurrent liabilities
Compensated absences 54,096 54,096 8,419 10,804 3,367 130,782
Notes payable, net - 4,595,049 - - - 4,595,049
Bonds payable, net 5,392,633 1,892,393 - - - 7,285,026
Net opeb obligation 29,654 24,208 3,631 3,631 - 61,124
Net pension liability 141,097 114,199 20,781 43,216 7,120 326,413
Less amounts due within one year (496,115) (565,058) (778) (1,709) (311) (1,063,971)
Total noncurrent liabilities 5,121,365 6,114,887 32,053 55,942 10,176 11,334,423
Total liabilities 5,642,606 6,873,292 55,358 61,090 15,262 12,647,608
Deferred Inflows of Resources
15,322 12,401 2,257 4,693 773 35,446
Deferred inflows of resources related to pensions
Net Position
Net investment in capital assets 8,161,877 8,369,803 19,618 3,876,384 - 20,427,682
Unrestricted 25,820 (124,577) 252,791 218,064 20,906 393,004
Total net position 8,187,697 8,245,226 272,409 4,094,448 20,906 20,820,686
Total liabilities, deferred inflows
of resources and net position$ 13,845,625$ 15,130,919$ 330,024 $ 4,160,231 $ 36,941 $ 33,503,740
See notes to financial statements.31
City of St. Joseph
Reconciliation of the Statement
of Net Position - Business-Type Activities
December 31, 2016
Total net position - proprietary funds$ 20,820,686
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,
41,099
it is included as a business-type activity.
The sewer access capital project fund is proprietary in nature and
relates to sewer improvements for the applicable funds. Therefore,
(24,957)
it is included as a business-type activity.
Total net position - business-type activities
$ 20,836,828
See notes to financial statements. 32
City of St. Joseph
Statement of Revenues, Expenses, and Changes
in Net Position - Proprietary Funds
Year Ended December 31, 2016
Sanitary Storm Water Street Light
Water (601)Sewer (602)Refuse (603)(651)Utility (652)Total
Operating revenues
Charges for services$ 883,601 $ 997,206$ 286,603 $ 99,212 $ 60,550 $ 2,327,172
Operating Expenses
Wages and salaries 163,280 129,748 22,937 46,916 13,524 376,405
Materials and supplies 43,663 29,503 2,408 26 - 75,600
Repairs and maintenance 49,818 17,117 2,151 15,323 910 85,319
Professional services 26,321 32,129 3,844 11,410 - 73,704
Insurance 11,926 10,886 - - - 22,812
Utilities 64,000 16,035 503 - 45,740 126,278
Depreciation 412,265 452,913 6,606 102,763 - 974,547
Contracted services - 197,039 243,003 - - 440,042
Equipment 2,306 - - - - 2,306
Miscellaneous 8,478 1,440 828 1,751 3,153 15,650
Total operating expenses 782,057 886,810 282,280 178,189 63,327 2,192,663
Operating income (loss) 101,544 110,396 4,323 (78,977) (2,777) 134,509
Nonoperating revenues
(expenses)
Investment income 17,347 376 2,830 2,910 244 23,707
Special assessments 1,169 398 183 39 19 1,808
Property taxes 73,407 - - - 73,407
Interest expense (141,277) (155,427) - - - (296,704)
Amortization of bond premium 7,829 4,667 - - - 12,496
Other income 52,763 3,461 629 - - 56,853
Total nonoperating revenues
(expenses) 11,238 (146,525) 3,642 2,949 263 (128,433)
Loss before capital
Contributions and transfers 112,782 (36,129) 7,965 (76,028) (2,514) 6,076
Capital contributions 160,567 133,619 - 62,598 - 356,784
Transfers in 234,700 282,500 - - - 517,200
Transfers out (88,715) (43,435) (715) (18,250) - (151,115)
Change in net position 419,334 336,555 7,250 (31,680) (2,514) 728,945
Net Position
Beginning of year 7,768,363 7,908,671 265,159 4,126,128 23,420 20,091,741
End of year$ 8,187,697 $ 8,245,226$ 272,409 $ 4,094,448 $ 20,906 $ 20,820,686
See notes to financial statements. 33
City of St. Joseph
Reconciliation of the Statement of Revenues, Expenses,
and Changes in Net Position - Business-Type Activities
Year Ended December 31, 2016
Total net change in fund net position - proprietary funds$ 728,945
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. 40,904
Recognized current year activity from the sewer access capital project fund
with the business-type activities. (25,596)
Capital contributions from governmental activities (356,784)
Transfers in of capital assets from governmental activities 356,784
Change in net position - business-type activities$ 744,253
See notes to financial statements.34
City of St. Joseph
Statement of Cash Flows - Proprietary Funds
Year Ended December 31, 2016
Sanitary Refuse Storm Water Street Light
Water (601)Sewer (602)(603)(651)Utility (652)Total
Cash Flows - Operating Activities
Receipts from customers and users$ 861,789 $ 939,005$ 287,447$ 99,246$ 60,792$ 2,248,279
Payments to suppliers (238,420) (331,395) (249,764) (29,096) (49,300) (897,975)
Payments to employees (169,238) (135,869) (25,214) (46,182) (8,744) (385,247)
Net cash flows - operating activities 454,131 471,741 12,469 23,968 2,748 965,057
Cash Flows - Noncapital Financing
Activities
Other miscellaneous receipts 126,749 3,948 991 2,883 36 134,607
Loan from other fund - 30,000 - - - 30,000
Transfer from other funds 234,700 282,500 - - - 517,200
Transfer to other funds (88,715) (43,435) (715) (18,250) - (151,115)
Net cash flows - noncapital financing
Activities 272,734 273,013 276 (15,367) 36 530,692
Cash Flows - Capital and Related
Financing Activities
Principal paid on debt (545,000) (523,945) - - - (1,068,945)
Interest paid on debt (142,824) (159,426) - - - (302,250)
Bond proceeds - 226,568 - - - 226,568
Acquisition of capital assets - (283,406) - - - (283,406)
Net cash flows - capital and related
Financing activities (687,824) (740,209) - - - (1,428,033)
Cash Flows - Investing Activities
Interest and dividends received 19,473 483 3,011 3,101 246 26,314
Net change in cash and cash equivalents 58,514 5,028 15,756 11,702 3,030 94,030
Cash and Cash Equivalents
Beginning of year 2,354 750 231,906 229,796 19,742 484,548
End of year$ 60,868 $ 5,778$ 247,662$ 241,498$ 22,772$ 578,578
Reconciliation of Operating
Income (Loss) to Net Cash Flows -
Operating Activities
Operating income (loss)$ 101,544 $ 110,396$ 4,323$ (78,977)$ (2,777)$ 134,509
Adjustments to reconcile operating loss
to net cash flows - operating activities
Depreciation expense 412,265 452,913 6,606 102,763 - 974,547
Pension expense (7,678) (7,445) (2,746) 810 4,713 (12,346)
Accounts receivable (21,683) (58,201) 844 34 242 (78,764)
Due from other governments (129) - - - - (129)
Accounts payable (680) (8,830) 360 (586) 503 (9,233)
Contracts payable (31,727) - - - - (31,727)
Due to other governmental units 499 (18,416) 2,613 - - (15,304)
Salaries payable (430) (479) 100 204 12 (593)
Compensated absences payable 259 259 138 (511) 55 200
Net OPEB obligation
1,891 1,544 231 231 - 3,897
Total adjustments 352,587 361,345 8,146 102,945 5,525 830,548
Net cash flows - operating activities$ 454,131 $ 471,741$ 12,469$ 23,968$ 2,748$ 965,057
Non Cash Activities
Capital asset contributions from
governmental funds$ 160,567 $ 133,619$ -$ 62,598$ - $ 356,784
See notes to financial statements. 35
(THIS PAGE LEFT BLANK INTENTIONALLY)
36
City of St. Joseph
Notes to Financial Statements
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 represent 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. 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.
Separate financial statements are not prepared for the St. Joseph EDA.
37
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 areas that will be available to assist any of the participating
entities in the investigation and solution of major crimes. During 2016, the City contributed $6,865
to the organization. It is reported as a special revenue fund of the City of Sauk Rapids. Complete
financial statements can be obtained from: City of Sauk Rapids, 250 Summit Avenue North, Sauk
Rapids, Minnesota 56379.
The City of St. Cloud Human Rights Office is a joint venture between the cities of St. Cloud,
St. Joseph, Sauk Rapids, and Sartell, which works to enhance the lives of the citizens of the
communities. During 2016, the City contributed $283 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
nd
St. Cloud, 400 2 Street South, St. Cloud, Minnesota 56301.
B.Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the Statement of Net 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.
38
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
Government Center This Fund accounts for the costs associated with the construction of the
Government Center.
2016 Field Street Improvements This Fund accounts for the costs associated with the City's street
improvement project.
Proprietary Funds
Water Fund This Fund accounts for the operations of the City's water utility.
Sanitary Sewer Fund This Fund accounts for the operations of the City's sanitary sewer utility.
Refuse Fund This Fund accounts for the operations of the City's refuse and compost utility.
Storm Water Fund This Fund accounts for the operations of the City's storm water utility.
Street Light Utility Fund This Fund accounts for the operations of the City's street light utility.
39
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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, storm water, and street light utility 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, Sanitary Sewer, Refuse, Storm Water, and Street Light Utility Enterprise Funds are charges to
customers for sales and services. Operating expenses for enterprise funds include the cost of sales and
services, administrative expenses and depreciation on capital assets. All revenues and expenses not
meeting this definition are reported as nonoperating revenues and expenses.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
1. Cash and Investments
Cash and investments include balances from all funds that are combined and invested to the extent
available in various securities as authorized by state law. Earnings from the pooled investments are
allocated to the individual funds based on the average of month-end cash and investment balances
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-
term investments with original maturities of three months or less from the date of acquisition.
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.
Certain investments for the City are reported at fair value as disclosed in Note 3. The City
categorizes its fair value measurements within the fair value hierarchy established by generally
accepted accounting principles. The Hierarchy is based on the valuation inputs used to measure the
fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2
inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.
40
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
2. Receivables and Payables
All trade and property tax receivables are shown at a gross amount since both are assessable to the
property taxes and are collectible upon the sale of the property.
The City levies its property tax for the subsequent year during the month of December. December 28
is the last day the City can certify a tax levy to the County Auditor for collection the following year.
Such taxes become a lien on January 1 and are recorded as receivables by the City at that date. The
property tax is recorded as revenue when it becomes measurable and available. Stearns County is the
collecting agency for the levy and remits the collections to the City four times a year. The tax levy
notice is mailed in March with the first half of the payment due on May 15 and the second half due
on October 15. Taxes not collected as of December 31 each year are shown as delinquent taxes
receivable.
The County Auditor prepares the tax list for all taxable property in the City, applying the applicable
tax rate to the tax capacity of individual properties, to arrive at the actual tax for each property. The
County Auditor also collects all special assessments, except for certain prepayments paid directly to
the City.
The County Auditor submits the list of taxes and special assessments to be collected on each parcel
of property to the County Treasurer in January of each year.
3. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items in both government-wide and fund financial statements. Prepaid items are reported
using the consumption method and recorded as expenditures at the time of consumption.
4. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads,
sidewalks, and similar items), are reported in the applicable governmental or business-type activities
columns in the government-wide financial statements. Capital assets are defined by the City as assets
with an initial, individual cost of more than $1,000 and an estimated useful life in excess of two
years. Such assets are recorded at historical cost or estimated historical cost if purchased or
constructed. Donated capital assets are recorded at acquisition 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.
41
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
4. Capital Assets (Continued)
Property, plant, and equipment of the City are depreciated using the straight-line full year convention
method over the following estimated useful lives:
AssetsYears
Land improvements 5-20
Buildings30-40
Building improvements15
Infrastructure10-50
Sewer rights20-50
Furniture and fixtures 5-10
Vehicles 5-20
Equipment3-7
Machinery5-7
5. Deferred Outflows/ Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section for
deferred outflows of resources. This separate financial statement element represents a consumption
of net position that applies to future periods and so will not be recognized as an outflow of resources
(expense/expenditure) until that time. The City presents deferred outflows of resources on the
Statements of Net Position for deferred outflows of resources related to pensions for various estimate
differences that will be amortized and recognized over future years.
In addition to liabilities, the statement of financial position and fund financial statements will
sometimes report a separate section for deferred inflows of resources. This separate financial
statement element represents an acquisition of net position that applies to future periods and so will
not be recognized as an inflow of resources (revenue) until that time. The City has two items that
qualify for reporting in this category. The City presents deferred inflows of resources on the
Governmental Fund Balance Sheet as unavailable revenue. The governmental funds report
unavailable revenues from four sources: property taxes, special assessments, notes receivable, and
leases receivable. These amounts are deferred and recognized as an inflow of resources in the period
that the amounts become available. The City presents deferred inflows of resources on the
Statements of Net Position for deferred inflows of resources related to pensions for various estimate
differences that will be amortized and recognized over future years.
42
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
6. 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.
7. 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.
Bond premiums and discounts are deferred and amortized over the life of the bonds using the
effective interest method.
In the fund financial statements, governmental fund types recognize bond premiums and discounts,
as well as bond issuance costs, during the current period. The face amount of debt issued is reported
as other financing sources. Premiums received on debt issuances are reported as other financing
sources while discounts on debt issuances are reported as other financing uses. Issuance costs,
whether or not withheld from the actual debt proceeds received, are reported as debt service
expenditures.
8. Pensions
For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and
pension expense, information about the fiduciary net position of the Public Employees Retirement
Association (PERA) and the relief association and additions to/deductions from PERA's and the
relief association's fiduciary net position have been determined on the same basis as they are reported
by PERA and the relief association except that PERA's fiscal year end is June 30. For this purpose,
plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds
are recognized when due and payable in accordance with the benefit terms. Investments are reported
at fair value.
43
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
9. Fund Equity
a) Classification
In the fund financial statements, governmental funds report fund classifications that comprise a
hierarchy based primarily on the extent to which the City is bond to honor constraints on the
specific purpose for which amounts in those funds can be spent.
Nonspendable Fund Balance These are amounts that cannot be spent because they are
not in spendable form as they are legally or contractually required to be maintained intact
and include amounts set aside for prepaid items.
Restricted Fund Balance These are amounts that are restricted to specific purposes
either by a) constraints placed on the use of resources by creditors, grantors, contributors,
or laws or regulations of other governments, or b) imposed by law through enabling
legislation.
Committed Fund Balance These are amounts that can only be used for specific purposes
pursuant to constraints imposed by the City Council (highest level of decision making
authority) through resolution.
Assigned Fund Balance These are amounts that are constrained by the City's intent to be
used for specific purposes but are neither restricted nor committed. Assignments are made
by the City's Finance Director based on the City Council's direction.
Unassigned Fund Balance These are residual amounts in the General Fund not reported
in any other classification. The General Fund is the only fund that can report a positive
unassigned fund balance. Other funds would report a negative unassigned fund balance
should the total of nonspendable, restricted, committed, and assigned fund balances
exceed the total net resources of that fund.
When both restricted and unrestricted resources are available for use, it is the City's policy to first
use restricted resources, and then use unrestricted resources as they are needed. When committed,
assigned, and unassigned resources are available for use, it is the City's policy to use resources in
the following order: committed, assigned, and unassigned.
b) Minimum Fund Balance
The City's target General Fund balance is to maintain working capital, a portion of the
unassigned balance, in the amount of four to six months of the next year's budgeted expenditures
of the General Fund, excluding the fire department.
44
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. Assets, Liabilities, Deferred Outflows/ Inflows of Resources, and Net Position or Equity
(Continued)
10. Net Position
Net position represents the difference between assets, deferred outflows of resources, liabilities, and
deferred inflows of resources 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 $2,152,882
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 $1,783,415 includes $22,971 for tax
incrementing financing, $1,569,589 in state collected sales tax restricted by enabling legislation,
$8,054 restricted for lodging tax, $120,301 in park dedication fees, $2,072 restricted by donors for
future projects, $33,861 in revolving loan funds restricted for EDA projects and $26,567 of restricted
PEG access fees.
11. Use of Estimates
The preparation of 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. Estimates also affect the reported amounts of revenues and
expenditures/expenses during the reporting period. Actual results could differ from those estimates.
E.Budgetary Information
1. In August of each year, City staff submits to the City Council, a proposed operating budget for
the year commencing the following January 1. The operating budget includes proposed
expenditures and the means of financing them for the upcoming year.
2. Public hearings are conducted to obtain taxpayer comments.
3. The budget is legally enacted through passage of a resolution after obtaining taxpayer comments.
4. Budgets for the General Fund 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.
45
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E.Budgetary Information (Continued)
6. Annual appropriated budgets are adopted during the year for the General Fund and the Economic
Development Authority Special Revenue Fund. Budgetary control for the remaining special
revenue fund is done through the use of project controls when the council authorizes the project.
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.
NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Deficit Fund Balance
The following Fund had a deficit fund balance at December 31, 2016.
Nonmajor governmental funds
Special revenue
TIF 2-2 St. Joseph Meat Market$ 183
TIF 2-3 Bayou Blues/Alley Flat 5,669
TIF 3-1 Central Minnesota Credit Union 5,846
G.O. Capital Improvement Plan Bonds of 2011A 444
Sewer Access Fund 24,957
This deficit will be eliminated with future tax increment revenues and future debt levies, and future
sewer access and trunk changes.
NOTE 3 DEPOSITS AND INVESTMENTS
Cash balances of the City's funds are combined (pooled) and invested to the extent available in various
investments authorized by Minnesota Statutes. Each fund's portion of this pool (or pools) is displayed in
the financial statements as "cash and cash equivalents" or "investments." For purposes of identifying risk
of investing public funds, the balances and related restrictions are summarized as follows.
46
City of St. Joseph
Notes to Financial Statements
NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)
A. Deposits
Custodial Credit Risk Deposits: This is the risk that in the event of a bank failure, the City's deposits
may not be returned to it. The City has a policy that requires the District's deposits be collateralized as
required by Minnesota Statutes for an amount exceeding FDIC, SAIF, BIF, or FCUA coverage. As of
December 31, 2016, 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, 2016, the
City's deposits had a carrying value as shown below.
Certificates of deposit$ 420,724
Checking 590,385
Savings 5,324,420
Total$ 6,335,529
B.Investments
As of December 31, 2016, the City had the following investments:
ValueMaturity (Years)Rating
Brokered certificates of deposit$ 2,453,411 3.95N/A
Brokered money market 4,752 N/AN/A
Total$ 2,458,163
Credit Risk: Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations. Minnesota Statutes 118A.04 and 118A.05 limit investments that are in the top two ratings
issued by nationally recognized statistical rating organizations. The City's investment policy limits the
allowable investments in accordance with these statutes. As of December 31, 2016, the City's
investments were rated as listed in the table above.
47
City of St. Joseph
Notes to Financial Statements
NOTE 3 DEPOSITS AND INVESTMENTS (CONTINUED)
B.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. As of December 31 2016, the City's investments of CD's, Ally Bank (8.8%), ST
Bank of India (10.1%), American Express- Salt Lake City-UT (10.1%), Capital One Bank (10.2%),
Goldman Sachs BK NY NY (9.9%), Community Bank Jumbo (7.9%), Discover- Greenwood-
DE(8.8%), Capital One Natl Assn McLean VA (8.5%), and Kennett National BK MO (9.2%) exceeded
5% of the City's total investment portfolio. Money market accounts are not subject to concentration of
credit risk.
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.
The City has the following recurring fair value measurements as of December 31, 2016:
$2,453,411 of investments are valued using a matrix pricing model (Level 2 inputs)
C. Deposits and Investments
The following is a summary of deposits and investments as of December 31, 2016:
Deposits (Note 3.A.)$ 6,335,529
Investments (Note 3.B.) 2,458,163
Petty cash 275
Total$ 8,793,967
Deposits and investments are presented in the December 31, 2016, basic financial statements as follows:
Statement of Net Position
Cash and investments$ 8,793,967
48
City of St. Joseph
Notes to Financial Statements
NOTE 4 INTERFUND BALANCES AND TRANSFERS
A. Interfund Balances
The composition of interfund balances as of December 31, 2016, is as follows:
Amounts Due to Other Funds
Other
Governmental Sanitary
FundsSewer
Amounts Due from Other Funds Total
General Fund$ 700$ - $ 700
Other Governmental Funds 11,649 30,000 41,649
Total$ 12,349$ 30,000$ 42,349
The due from/due to other funds balances represent loans made to cover tax increment financing (TIF)
consulting costs to establish the TIF districts and to cover a cash deficit.
B.Transfers
The composition of interfund transfers as of December 31, 2016, is as follows:
Description Amount
Transfer InTransfer Out
Transfer retirement reserve funding$ 1,435
General FundSanitary Sewer
Transfer retirement reserve funding 715
General FundRefuse
Transfer retirement reserve funding 715
General FundWater
Transfer of residual funds for project
Government CenterOther Governmental Funds
costs
84,042
Transfer of funds for project costs 35,449
Other Governmental FundsGovernment Center
Transfer of residual funds for project
Other Governmental FundsOther Governmental Funds
costs
90,000
Transfer sales tax revenues committed
Other Governmental FundsOther Governmental Funds
for bond payments
164,480
Reimburse wac/ sac incentives
20,000
Other Governmental FundsOther Governmental Funds
Annual transfer for bond payment 88,000
Other Governmental FundsWater
Annual transfer for bond payment 35,000
Other Governmental FundsSanitary Sewer
Annual transfer for bond payment 18,250
Other Governmental FundsStorm Water
Transfer costs funded with the main
WaterSanitary Sewer
lift station project
7,000
Annual transfer for bond payment 227,700
WaterOther Governmental Funds
Annual transfer for bond payment 282,500
Sanitary SewerOther Governmental Funds
$ 1,055,286
49
City of St. Joseph
Notes to Financial Statements
NOTE 5 CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2016, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities
Capital assets not being depreciated
Land$ 561,194$ 312,939 $ - $ 874,133
Easements 25,664 150,209 - 175,873
Construction in progress 1,760,591 4,192,157 1,319,664 4,633,084
Total capital assets
not being depreciated 2,347,449 4,655,305 1,319,664 5,683,090
Capital assets being depreciated
Buildings 4,746,527 - - 4,746,527
Infrastructure
16,613,244 2,216,990 - 18,830,234
Improvements 118,699 -
1,237,728 1,356,427
290,318 165,373
Machinery and equipment 3,343,262 3,468,207
Total capital assets
being depreciated 25,940,761 2,626,007 165,373 28,401,395
Less accumulated depreciation for
Buildings 1,167,037 137,882 - 1,304,919
Infrastructure
12,262,955 1,152,729 - 13,415,684
Improvements 60,279 -
498,033 558,312
245,501 162,312
Machinery and equipment 2,288,000 2,371,189
Total accumulated
16,216,025 1,596,391 162,312 17,650,104
depreciation
Total capital assets being
9,724,736 1,029,616 3,061 10,751,291
depreciated, net
Governmental activities capital
$ 12,072,185$ 5,684,921$ 1,322,725$ 16,434,381
assets, net
50
City of St. Joseph
Notes to Financial Statements
NOTE 5 CAPITAL ASSETS (CONTINUED)
Beginning
Ending
BalanceIncreasesDecreasesBalance
Business-type activities
Capital assets not being depreciated
Land$ 377,882$ - $ - $ 377,882
Easements 67,915 - - 67,915
Construction in progress 1,154,199 629,171 1,068,670 714,700
Total capital assets
not being depreciated 1,599,996 629,171 1,068,670 1,160,497
Capital assets being depreciated
Buildings 8,797,686 - - 8,797,686
Plant and lines
22,599,469 1,079,690 - 23,679,159
Machinery and equipment - -
787,554 787,554
- -
Sewer rights 8,569,212 8,569,212
Total capital assets
being depreciated 40,753,921 1,079,690 - 41,833,611
Less accumulated depreciation for
Buildings 1,749,854 218,257 - 1,968,111
Plant and lines
5,971,086 485,199 - 6,456,285
Machinery and equipment 42,249 -
495,798 538,047
228,842 -
Sewer rights 1,495,066 1,723,908
Total accumulated
9,711,804 974,547 - 10,686,351
depreciation
Total capital assets being
31,042,117 105,143 - 31,147,260
depreciated, net
Business-type activities captial
$ 32,642,113$ 734,314$ 1,068,670$ 32,307,757
assets, net
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities
General government$ 51,401
Public safety 155,490
Public works 1,203,943
Culture and recreation 185,322
Economic development 235
Total depreciation expense - governmental activities$ 1,596,391
Business-type activities
Water$ 412,265
Sanitary sewer 452,913
Refuse 6,606
Storm sewer 102,763
Total depreciation expense - business-type activities$ 974,547
51
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT
A. General Obligation Bonds
The City issues General Obligation (G.O.) bonds to provide for financing improvement, development,
and street improvement projects.
G.O. bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally
are issued as 5 to 20 year serial bonds with equal debt service payments each year.
Revenue bonds are issued by the City where the City pledges income derived from the acquired or
constructed assets to pay debt service including access and trunk charges and utility user fees.
B.Components of Long-Term Liabilities
IssueInterestOriginalFinalPrincipalDue Within
DateRateIssueMaturityOutstandingOne Year
Governmental Activities
G.O. Bonds, including Refunding Bonds
G.O. Capital Improvement Plan
Refunding Bonds 2009B09/03/091.10%-3.75%$ 495,000 12/01/18$ 120,000 $ 60,000
G.O. Refunding Bonds of 2011A11/10/112.00% 430,000 10/01/17 75,000 75,000
G.O. Certificates of Indebtedness
of 2011A11/10/112.00%-2.40% 390,000 10/01/21 205,000 40,000
G.O. Capital Improvement Plan
Bonds of 2011A11/10/112.00%-2.40% 195,000 10/01/21 100,000 20,000
G.O. Certificates of Indebtedness of 2013A09/01/132.00% 265,000 12/01/18 115,000 55,000
G.O. Certificates of Indebtedness 2015A08/13/151.20%-2.00% 165,000 12/01/20 135,000 30,000
G.O. Certificates of Indebtedness 2016A07/07/162.00%-2.875% 4,275,00012/15/36 4,275,000 175,000
Total G.O. Bonds 5,025,000 455,000
G.O. Special Assessment Bonds
G.O. Improvement Crossover Refunding
Bonds of 2009A03/19/091.25%-2.90% 2,555,00012/01/17 350,000 350,000
G.O. Improvement Refunding Bonds of 2010B09/28/102.00%-3.25% 1,035,00012/01/20 535,000 130,000
G.O. Improvement Bonds of 2010B09/28/102.00%-3.25% 790,000 12/01/25 505,000 50,000
G.O. Improvement Crossover
Refunding Bonds of 2011A11/10/112.00%-2.40% 1,040,00010/01/21 670,000 130,000
G.O. Improvement Bonds of 2013A09/01/132.00%-3.00% 405,000 12/01/24 345,000 35,000
G.O. Improvement Bonds of 2014A06/15/142.00%-3.40% 2,010,00012/01/30 1,900,000 110,000
G.O. Improvement Bonds of 2015A08/13/151.20%-3.00% 595,000 12/01/25 540,000 55,000
G.O. Improvement Bonds of 2016B11/03/161.00%-3.00% 740,000 12/15/32 740,000 -
Total G.O. Special
Assessment Bonds 5,585,000 860,000
G.O. Abatement Bonds
G.O. Tax Abatement Bonds of 2015B08/13/152.00%-3.05% 1,840,00012/01/30 1,745,000 110,000
Unamortized premiums/discounts 121,847 -
Compensated absences 402,186 56,028
Total long-term liabilities,
governmental activities$ 12,879,033 $ 1,481,028
52
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT (CONTINUED)
B.Components of Long-Term Liabilities (Continued)
IssueInterestOriginalFinalPrincipalDue Within
DateRateIssueMaturityOutstandingOne Year
Business-type activities
G.O. Revenue Bonds
G.O. Sewer Revenue Crossover Refunding
Bonds of 2009A
03/19/091.25%-3.85% 455,000 12/01/21$ 210,000 $ 40,000
G.O. Sewer Revenue Bonds of 2011A
11/10/112.00-2.40% 225,000 10/01/21 125,000 25,000
G.O. Water Revenue Crossover Refunding
Bonds of 2012A
04/19/121.00-2.85% 4,860,000 12/01/28 4,750,000 455,000
G.O. Sewer Revenue Bonds of 2013A09/01/132.00-3.70% 1,875,000 12/01/28 1,545,000 115,000
G.O. Utility Improvement Bonds of 2014A06/15/142.00%-3.40% 660,000 12/01/32 600,000 35,000
Total G.O. Revenue Bonds 7,230,000 670,000
Utility Revenue Notes Payable
City of St. Cloud SIS
Phases 1 and 2 (2009B Bonds)10/26/092.00%-4.0% 835,000 08/01/19 275,000 90,000
City of St. Cloud SIS
Phase 3 (2010 Bonds)10/28/102.00%-2.5% 180,000 08/01/20 80,000 20,000
City of St. Cloud SIS
Phase 4 (2013B Bonds)11/01/133.00%-4.00% 650,000 02/01/29 585,000 35,000
City of St. Cloud RUE Project PFA Loan08/01/101.77% 4,527,703 08/20/30 3,424,371 217,671
City of St. Cloud Lift Station Improvements08/24/161.00% 226,568 08/20/26 226,568 16,272
Total notes payable 4,590,939 378,943
Unamortized premium 59,136 -
Compensated absences 130,782 15,028
Total business-type activities 12,010,857 1,063,971
Total all long-term liabilities$ 24,889,890 $ 2,544,999
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.
53
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT (CONTINUED)
C. Changes in Long-Term Liabilities
Long-term liability activity for the year ended December 31, 2016, was as follows:
BeginningEnding
BalanceAdditionsReductionsBalance
Governmental activities
Bonds payable
General obligation$ 1,020,000 $ 4,275,000 $ 270,000 $ 5,025,000
G.O. special assessment bonds 5,685,000 740,000 840,000 5,585,000
G.O. abatement bonds 1,840,000 - 95,000 1,745,000
Total bonds payable
8,545,000 5,015,000 1,205,000 12,355,000
Unamortized premiums/discounts 75,751 61,767 15,671 121,847
Compensated absences 428,803 119,108 145,725 402,186
Total governmental
activities
9,049,554 5,195,875 1,366,396 12,879,033
Business-type activities
Bonds payable
G.O. utility revenue bonds 7,940,000 - 710,000 7,230,000
Notes payable
City of St. Cloud notes 4,723,316 226,568 358,945 4,590,939
Unamortized premiums
71,632 - 12,496 59,136
Compensated absences 130,582 39,234 39,034 130,782
Total business-type
activities 12,865,530 265,802 1,120,475 12,010,857
Total long-term liabilities$ 21,915,084$ 5,461,677$ 2,486,871$ 24,889,890
For Governmental Activities, the General Fund typically liquidates the liability related to compensated
absences. For Business-Type Activities, the Water, Sanitary Sewer, Refuse, Storm Water, and Street
Light Utility Funds typically liquidates the liability related to the compensated absences.
54
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT (CONTINUED)
D. Minimum Debt Payments
Minimum annual principal and interest payments required to retire long-term liabilities:
Governmental Activities
G.O. Government ActivitiesG.O. Special Assessment Bonds
Year Ended
December 31,PrincipalInterestPrincipalInterest
2017$ 455,000$ 113,333$ 860,000$ 137,140
2018 395,000 103,723 575,000 115,538
2019 275,000 94,948 590,000 104,653
2020 280,000 89,622 600,000 93,043
2021 255,000 83,902 475,000 80,297
2022-2026 1,005,000 353,312 1,565,000 258,867
2027-2031 1,105,000 247,150 875,000 77,710
2032-2036 1,255,000 106,779 45,000 1,350
Total$ 5,025,000$ 1,192,769$ 5,585,000$ 868,598
Governmental Activities
Abatement Bonds
Year Ended
December 31,PrincipalInterestTotal
2017$ 110,000$ 44,335$ 1,719,808
2018 110,000 42,135 1,341,396
2019 115,000 39,935 1,219,536
2020 115,000 37,635 1,215,300
2021 120,000 35,335 1,049,534
2022-2026 635,000 135,550 3,952,729
2027-2031 540,000 40,973 2,885,833
Total$ 1,745,000$ 375,898 $ 13,384,136
55
City of St. Joseph
Notes to Financial Statements
NOTE 6 LONG-TERM DEBT (CONTINUED)
D. Minimum Debt Payments (Continued)
Business-Type Activities
Utility Revenue BondsNotes Payable
Year Ended
December 31,PrincipalInterestPrincipalInterestTotal
2017$ 670,000$ 177,640$ 378,943$ 97,836$ 1,324,419
2018 685,000 163,880 414,904 89,371 1,353,155
79,464
2019 700,000 149,440 429,318 1,358,222
69,082
2020 700,000 134,488 338,844 1,242,414
62,424
2021 705,000 119,485 323,258 1,210,167
2022-2026 3,000,000 352,120 1,480,008 211,013 5,043,141
2027-2031 725,000 54,415 1,225,664 56,483 2,061,562
2032-2036 45,000 1,530 - - 46,530
Total$ 7,230,000 $ 1,152,998 $ 4,590,939 $ 665,673 $ 13,639,610
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.
56
City of St. Joseph
Notes to Financial Statements
NOTE 7 FUND BALANCE
Fund equity balances are classified as follows to reflect the limitations and restrictions of the respective
funds.
2016 FieldNonmajor
GovernmentStreetGovernmental
GeneralCenterImprovementsFundTotal
Nonspendable
Prepaid expenses$ 23,479 $ -$ - $ -$ 23,479
Restricted
Peg access fees 26,567 - - - 26,567
Debt service - - - 1,095,841 1,095,841
Tax increments - - - 22,971 22,971
State collected sales tax projects - - - 1,569,589 1,569,589
Park dedication fees - - - 120,301 120,301
Chartitable gambling - - - 2,072 2,072
Lodging tax - - - 8,054 8,054
Revolving loan - - - 33,861 33,861
Total restricted 26,567 - - 2,852,689 2,879,256
Committed
Economic development - - - 133,380 133,380
Assigned
Elections 15,529 - - - 15,529
Street seal coating /crack filling 95,001 - - - 95,001
Street maintenance plan 10,000 - - - 10,000
Schneider Field 2,844 - - - 2,844
Loader tires 2,889 - - - 2,889
Fire operations 20,000 - - - 20,000
Fire debt service 160,000 - - - 160,000
Fire capital 396,622 - - - 396,622
Police forfeiture 7,346 - - - 7,346
Severance pay 99,763 - - - 99,763
Comp plan update 60,000 - - - 60,000
GASB updates 2,600 - - - 2,600
Capital outlay reserves - 468,238 1,233,489 577,649 2,279,376
Debt service relief - - - 291,206 291,206
Total assigned 872,594 468,238 1,233,489 868,855 3,443,176
Unassigned 1,439,299 - - (37,099) 1,402,200
Total$ 2,361,939$ 468,238 $ 1,233,489$ 3,817,825$ 7,881,491
57
City of St. Joseph
Notes to Financial Statements
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 2016 is
estimated to be immaterial based on workers' compensation rates and salaries for the year.
At December 31, 2016, 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 PENSION PLANS
Public Employees' Retirement Association
The City participates in various pension plans. Total pension expense for the year ended December 31,
2016 was $566,680. The components of pension expense are noted in the following plan summaries.
A. Plan Description
The City participates in the following cost-sharing multiple-employer defined benefit pension plans
administered by PERA. PERA's defined benefit pension plans are established and administered in
accordance with Minnesota Statutes, Chapters 353 ad 356. PERA's defined benefit pension plans are tax
qualified plans under Section 401(a) of the Internal Revenue Code.
General Employees Retirement Plan (General Employees Plan (accounted for in the General Employees
Fund))
All full-time and certain part-time employees of the City are covered by the General Employees Plan.
General Employees Plan members belong to either the Coordinated Plan or the Basic Plan. Coordinated
Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was
closed to new members in 1967. All new members must participate in the Coordinated Plan.
58
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
A. Plan Description (Continued)
Public Employees Police and Fire Plan (Police and Fire Plan (accounted for in the Police and Fire Fund))
The Police and Fire Plan, originally established for police officers and firefighters not covered by a local
relief association, now covers all police officers and firefighters hired since 1980. Effective July 1, 1999,
the Police and Fire Plan also covers police officers and firefighters belonging to a local relief association
that elected to merge with and transfer assets and administration to PERA.
B.Benefits Provided
PERA provides retirement, disability, and death benefits. Benefit provisions are established by state
statute and can only be modified by the state legislature.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding
ratio of the plan. Members in plans that are at least 90% funded for two consecutive years are given
2.5% increases. Members in plans that have not exceeded 90% funded, or have fallen below 80%, are
given 1% increases.
The benefit provisions stated in the following paragraphs of this section are current provisions and apply
to active plan participants. Vested, terminated employees who are entitled to benefits but are not
receiving them yet are bound by the provisions in effect at the time they last terminated their public
service.
General Employees Plan Benefits
General Employees Plan benefits are based on a member's highest average salary for any five successive
years of allowable service, age and years of credit at termination of service. Two methods are used to
compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the
higher of 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
ten 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 ten 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 members hired prior to July 1, 1989, a full
annuity is available when age plus years of service equal 90 and normal retirement age is 65. For
members hired on or after July 1, 1989, normal retirement age is the age for unreduced Social Security
benefits capped at 66.
59
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
B.Benefits Provided (Continued)
Police and Fire Plan Benefits
Benefits for the Police and Fire Plan members first hired after June 30, 2010, but before July 1, 2014,
vest on a prorated basis from 50% after five years up to 100% after ten years of credited service. Benefits
for Police and Fire Plan members first hired after June 30, 2014, vest on a prorated basis from 50% after
ten years up to 100% after twenty years of credited service. The annuity accrual rate is 3% of average
salary for each year of service. For Police and Fire Plan who were first hired prior to July 1, 1989, a full
annuity is available when age plus years of service equal at least 90.
C. Contributions
Minnesota Statutes Chapter 353 sets the rates for employer and employee contributions. Contribution
rates can only be modified by the state legislature.
General Employees Fund Contributions
Basic Plan members and Coordinated Plan members were required to contribute 9.1% and 6.5%,
respectively, of their annual covered salary in calendar year 2016. The City was required to contribute
11.78% of pay for Basic Plan members and 7.50% for Coordinated Plan members in calendar year 2016.
The City's contributions to the General Employees Fund for the year ended December 31, 2016, were
$66,294. The City's contributions were equal to the required contributions as set by state statute.
Police and Fire Fund Contributions
Plan members were required to contribute 10.8% of their annual covered salary in calendar year 2016.
The City was required to contribute 16.2% of pay for PEPFF members in calendar year 2016. The City's
contributions to the Police and Fire Fund for the year ended December 31, 2016, were $89,587. The
City's contributions were equal to the required contributions as set by state statute.
60
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs
General Employees Fund Pension Costs
At December 31, 2016, the City reported a liability of $1,096,133 for its proportionate share of the
General Employees Fund's net pension liability. The City's net pension liability reflected a reduction due
to the State of Minnesota's contribution of $6 million to the fund in 2016. The State of Minnesota is
considered a non-employer contributing entity and the State's contribution meets the definition of a
special funding situation. The State of Minnesota's proportionate share of the net pension liability
associated with the City totaled $14,341. The net pension liability was measured as of June 30, 2016,
and the total pension liability used to calculate the net pension liability was determined by an actuarial
valuation as of that date. The City's proportion of the net pension liability was based on the City's
contributions received by PERA during the measurement period for employer payroll paid dates from
July 1, 2015, through June 30, 2016, relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2016, the City's proportion share was 0.0135%, which was
a decrease of 0.0003% from its proportion measured as of June 30, 2015.
For the year ended December 31, 2016, the City recognized pension expense of $142,804 for its
proportionate share of General Employees Plan's pension expense. In addition, the City recognized an
additional $4,276 as pension expense (and grant revenue) for its proportionate share of the State of
Minnesota's contribution of $6 million to the General Employees Fund.
At December 31, 2016, the City reported its proportionate share of the General Employees Plan's
deferred outflows of resources and deferred inflows of resources, and its contributions subsequent to the
measurement date, related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
ResourcesResources
Differences between expected and actual economic experience$ -$ 89,043
Changes in actuarial assumptions 214,623 -
Difference between projected and actual investment earnings 208,053 -
Changes in proportion - 29,985
Contributions paid to PERA subsequent
to the measurement date 33,147 -
$ 455,823$ 119,028
61
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
$33,147 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2017. Other amounts reported as deferred outflows and deferred inflows of
resources related to pensions will be recognized in pension expense as follows:
Year Ended Pension Expense
December 31,Amount
2017$ 81,033
2018 81,036
2019 101,985
2020 39,594
2020
$ 303,648
Police and Fire Fund Pension Costs
At December 31, 2016, the City reported a liability of $2,167,114 for its proportionate share of the
Police and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2016,
and the total pension liability used to calculate the net pension liability was determined by an actuarial
valuation as of that date. The City's proportion of the net pension liability was based on the City's
contributions received by PERA during the measurement period for employer payroll paid dates from
July 1, 2015, through June 30, 2016, relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2016, the City's proportion was 0.054%, which was a
decrease of 0.003% from its proportion measured as of June 30, 2015.
For the year ended December 31, 2016, the City recognized pension expense of $373,185 for its
proportionate share of the Police and Fire Fund pension expense. The City also recognized $4,860 for
the year ended December 31, 2016, as pension expense (and grant revenue) for its proportionate share of
the State of Minnesota's on-behalf contributions to the Police and Fire Fund. Legislation passed in 2013
required the State of Minnesota to begin contributing $9 million to the Police and Fire Fund each year,
starting in fiscal year 2014.
At December 31, 2016, the City reported its proportionate share of the Police and Fire Plan's deferred
outflows of resources and deferred inflows of resources related to pensions from the sources below and
on the following page.
62
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Police and Fire Fund Pension Costs (Continued)
Deferred Deferred
Outflows of Inflows of
ResourcesResources
Differences between expected and actual economic experience$ -$ 248,611
Changes in actuarial assumptions 1,192,661 -
Difference between projected and actual investment earnings 330,720 -
Changes in proportion - 28,064
Contributions paid to PERA subsequent
to the measurement date 44,793 -
$ 1,568,174$ 276,675
$44,793 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2017. Other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense as follows:
Year Ended Pension Expense
December 31,Amount
2017$ 268,577
2018 268,577
2019 268,582
2020 241,848
2021 199,122
Total$ 1,246,706
63
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
E. Actuarial Assumptions
The total pension liability in the June 30, 2016, actuarial valuation was determined using the entry age
normal actuarial cost method and the following actuarial assumptions:
Inflation2.50%Per year
Active member payroll growth3.25Per year
Investment rate of return7.50
Salary increases were based on a service-related table. Mortality rates for active members, retirees,
survivors, and disabilitants were based on RP-2014 tables for the General Employees Plan and RP-2000
tables for the Police and Fire Plan for males or females, as appropriate, with slight adjustments. Cost of
living benefit increases for retirees are assumed to be 1% for all future years for the General Employees
Plan and Police and Fire Plan.
Actuarial assumptions used in the June 30, 2016, valuation were based on the results of actuarial
experience studies. The most recent four-year experience study in the General Employees Plan was
completed in 2015. The experience study for Police and Fire Plan was for the period July 1, 2004
through June 30, 2009.
The following changes in actuarial assumptions occurred in 2016:
General Employees Fund
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035
and 2.5% per year thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was
changed from 7.9% to 7.5%.
Other assumptions were changed pursuant to the experience study dated June 30, 2015. The
assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to 3.25%
for payroll growth and 2.50% for inflation.
Police and Fire Fund
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037
and 2.5% thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate
changed from 7.9% to 5.6%.
The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to
3.25% for payroll growth and 2.50% for inflation.
64
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
E.Actuarial Assumptions (Continued)
The State Board of Investment, which manages the investments of PERA, prepares an analysis of the
reasonableness on a regular basis of the long-term expected rate of return using a building-block method
in which best-estimate ranges of expected future rates of return are developed for each major asset class.
These ranges are combined to produce an expected long-term rate of return by weighting the expected
future rates of return by the target asset allocation percentages. The target allocation and best estimates
of geometric real rates of return for each major asset class are summarized in the following table:
Long-Term Expected
Asset ClassTarget AllocationReal Rate of Return
Domestic stocks45%5.50%
International stock156.00
Bonds181.45
Alternative assets206.40
Cash20.50
Total100%
F. Discount Rate
The discount rate used to measure the total pension liability in 2016 was 7.5%, a reduction from the
7.9% used in 2015. The projection of cash flows used to determine the discount rate assumed that
contributions from Plan members and employers will be made at rates set in Minnesota Statutes. Based
on those assumptions, the fiduciary net position of the General Employees Fund was projected to be
available to make all projected future benefit payments of current Plan members. Therefore, the long-
term expected rate of return on pension plan investments was applied to all periods of projected benefit
payments to determine the total pension liability.
In the Police and Fire Fund, the fiduciary net position was projected to be available to make all projected
future benefit payments of current plan members through June 30, 2056. Beginning in fiscal years ended
June 30, 2057, for the Police and Fire Fund, when projected benefit payments exceed the funds'
projected fiduciary net position, benefit payments were discounted at the municipal bond rate of 2.85%
based on an index of 20-year general obligation bonds with an average AA credit rating at the
measurement date. An equivalent single discount rate of 5.60% for the Police and Fire Fund was
determined that produced approximately the same present value of projected benefits when applied to all
years of projected benefits as the present value of projected benefits using 7.50% applied to all years of
projected benefits through the point of asset depletion and 2.85% after.
65
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
G. Pension Liability Sensitivity
The following table presents the City's proportionate share of the net pension liability for all plans it
participates in, calculated using the discount rate disclosed in the preceding paragraph, as well as what
the City's proportionate share of the net pension liability would be if it were calculated using a discount
rate 1 percentage point lower or 1 percentage point higher than the current discount rate:
% Decrease in1% Increase in
Discount Rate
Discount Rate Discount Rate
(6.5%)
(7.5%)(8.5%)
City's proportionate share of
the GERF net pension liability$ 1,556,834$ 1,096,133$ 716,641
1% Decrease in 1% Increase in
Discount Rate Discount Rate Discount Rate
(4.6%)(5.6%)(6.6%)
City's proportionate share of
the PEPFF net pension liability 3,033,672 2,167,114 1,459,070
H. Pension Plan Fiduciary Net Position
Detailed information about each pension plan's fiduciary net position is available in a separately-issued
PERA financial report that includes financial statements and required supplementary information. That
report may be obtained on the Internet at www.mnpera.org.
Public Employees Defined Contribution Plan (Defined Contribution Plan)
Five of the City's council members are covered by the Defined Contribution Plan, a multiple-employer
deferred compensation plan administered by PERA. The Defined Contribution Plan is a 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.
66
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees Defined Contribution Plan (Defined Contribution Plan)
The defined contribution plan consists of individual accounts paying a lump-sum benefit, plan benefits
depend solely on amounts contributed to the plan plus investment earnings, less administrative expenses,
therefore, there is no future liability to the employer. 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% (.0025) of the assets in each member's account annually.
Pension expense for the year is equal to contributions made. Total contributions made by the City during
fiscal year 2016 were:
Contribution AmountPercentage of Covered Payroll
EmployeeEmployerEmployeeEmployerRequired Rate
$ 1,492 $ 1,492 5%5%5%
Defined Benefit Pension Plan Volunteer Fire Fighter's Relief Association
A. Plan Description
The City of St. Joseph Volunteer Fire Department Relief Association is the administrator of a single
employer defined benefit pension plan established to provide benefits for members of the Relief
Association per Minnesota State Statutes.
The Association issues a publicly available financial report that includes financial statements and
required supplementary information. That report may be obtained by writing to the St. Joseph Volunteer
Fire Department Relief Association, 75 Callaway St E, St. Joseph, MN 56374.
B.Benefits Provided
Volunteer firefighters of the City are member of Joseph Volunteer Fire Department Relief Association.
Full retirement benefits are payable to members who have reached age 50 and have completed twenty
years of service for lump sum service pension. Partial benefits are payable to members who have reached
50 years and have completed ten years of service. Disability benefits and widow and children's survivor
benefits are also payable to members or their beneficiaries based upon requirements set forth in the
bylaws. These benefit provisions and all other requirements are consistent with enabling state statutes.
67
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan Volunteer Fire Fighter's Relief Association
C. Employees Covered by Benefit Terms
At December 31, 2016, the following employees were covered by the benefit terms:
Inactive employees entitled to but not yet receiving benefits3
Active employees29
Total32
D. Contributions.
Minnesota Statutes Chapter 424A.092 specifies minimum support rates required on an annual basis. The
minimum support rates from the municipality and from State aids are determined as the amount required
to meet the normal cost plus amortizing any existing prior service costs over a ten year period. The City's
obligation is the financial requirement for the year less state aids. Any additional payments by the City
shall be used to amortize the unfunded liability of the relief association. The Association is comprised of
volunteers: therefore, there are no payroll expenditures (i.e. there are no covered payroll percentage
calculations). During the year, the City recognized as revenue and as an expenditure an on behalf
payment of $56,111 made by the State of Minnesota for the Relief Association.
E.Net Pension Liability
The City's net pension liability was measured as of December 31, 2016, and the total pension liability
used to calculate the net pension liability was determined by an actuarial valuation as of that date.
Actuarial assumptions
The total pension liability in the December 31, 2016, actuarial valuation was determined using the
following actuarial assumptions, applied to all periods included in the measurement:
Inflation2.75%
Salary increase0%, average, including inflation
Investment rate of return5.75%, net of pensions plan investment
expense including inflation
The value of death benefits is similar to the value of the retirement pension. Because of low retirement
ages, the plan assumes no pre-retirement mortality. Post-retirement mortality does not apply as the
benefit structure and form of payment do not reflect lifetime benefits.
The long-term return on assets has been set based on the plan's target investment allocation along with
long-term return expectations by asset class. When there is sufficient historical evidence of market
outperformance, historical average returns may be considered. Best estimates of arithmetic real rates of
return for each major asset class included in the pension plan's target asset allocation as of the
measurement date are summarized in the table on the following page.
68
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan Volunteer Fire Fighter's Relief Association (Continued)
E.Net Pension Liability (Continued)
Long-Term Expected
Asset ClassTarget AllocationReal Rate of Return
Cash21.45%0.84%
Fixed income40.632.27
Real estate and alternatives0.904.44
Equities37.0211.29
Total100%
Discount rate
The discount rate used to measure the total pension liability was 5.75%. Assets were projected using
expected benefit payments and expected asset returns. Expected benefit payments by year were
discounted using the expected asset return assumption for years in which the assets were sufficient to
pay all benefit payments. Any remaining benefit payments after the trust fund is exhausted are
discounted at the municipal bond rate. The equivalent single rate is the discount rate.
F. Changes in the Net Pension Liability
Increase (Decrease)
Total Plan FiduciaryNet
PensionNet Pension
Liability PositionLiability
(a) (b)(a) - (b)
Balances at January 1, 2016$ 571,388$ 700,995$ (129,607)
Changes for the year
Service cost 25,691 - 25,691
Interest cost 35,786 - 35,786
Differences between expected and
actual experience (29,935) - (29,935)
Change in assumptions, changes
in benefit terms 56,691 - 56,691
Contributions - state and local - 63,111 (63,111)
Net investment income - 68,585 (68,585)
Benefit payments, including refunding of
employee contributions (49,000) (49,000) -
Administrative expense - (7,724) 7,724
Net charges 39,233 74,972 (35,739)
Balances at December 31, 2016$ 610,621$ 775,967$ (165,346)
69
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan Volunteer Fire Fighter's Relief Association (Continued)
F. Changes in the Net Pension Liability (Continued)
Sensitivity of the net pension liability to changes in the discount rate. The following presents the net
pension liability of the City, calculated using the discount rate of 5.75%, as well as what the City's net
pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower
(4.75%) or 1-percentage-point higher (6.75%) than the current rate:
1%Current1%
DecreaseDiscountIncrease
(4.75%)Rate (5.75%)(6.75%)
City's net pension liability$ (146,577) $ (165,346)$ (183,493)
Pension plan fiduciary net position. Detailed information about the pension plan's fiduciary net position
is available in the separately issued relief association financial report.
G. Pension Expense and Deferred Outflows of Resources, and Deferred Inflows of Resources
Related to Pensions
For the year ended December 31, 2016, the City recognized pension expense of $44,923. At
December 31, 2016, the City reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred Deferred
Outflows ofInflows of
ResourcesResources
Differences between expected and actual experience$ -$ 27,140
Changes of assumptions 96,639 -
Net difference between projected and actual earnings on
pension plan investments 33,747 -
Total$ 130,386$ 27,140
70
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Defined Benefit Pension Plan Volunteer Fire Fighter's Relief Association (Continued)
G. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions (Continued)
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized in pension expense as follows:
Year Ending
June 30,
2017$ 20,247
2018 20,247
2019 20,247
2020 2,582
2021 7,394
Therafter 32,529
Total$ 103,246
NOTE 10 POST EMPLOYMENT HEALTH CARE PLAN
A. Plan Description
The City provides a single-employer defined benefit health care plan to eligible retirees. The plan offers
medical coverage. Medical coverage is administered by BlueCross BlueShield. It is the City's policy to
periodically review its medical coverage, and to obtain requests for proposals in order to provide the
most favorable benefits and premiums for City employees and retirees.
B.Funding Policy
Retirees contribute to the health care plan at the same rate as City employees. This results in the retirees
receiving an implicit rate subsidy. Contribution requirements are established by the City, based on the
contract terms with BlueCross BlueShield. The required contributions are based on projected pay-as-
you-go financing requirements. For 2016, the City contributed $4,013 to the plan. As of December 31,
2016, there were no retirees receiving health benefits from the City's health plan and one retiree
.
71
City of St. Joseph
Notes to Financial Statements
NOTE 10 POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED)
C. Annual Other Post Employment Benefits Cost and Net Other Post Employment
Benefits Obligation
The City's annual other post employment benefits (OPEB) cost (expense) is calculated based on the
annual required contribution (ARC) of the City, an amount actuarially determined in accordance with the
parameters of GASB Statement No. 45. The City prospectively implemented this Statement during the
2009 year. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover
normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period
not to exceed 30 years. The table on the following page shows the components of the City's annual
OPEB cost of the year, the amount actually contributed to the plan, and changes in the City's net OPEB
obligation to the plan.
ARC$ 26,266
Interest on net OPEB obligation 10,097
Adjustment to ARC (14,597)
Annual OPEB cost 21,766
Contributions made 4,013
Increase in net OPEB obligation 17,753
Net OPEB obligation - beginning of year 252,424
Net OPEB obligation - end of year$ 270,177
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net
OPEB obligation for 2016, 2015, and 2014 was as follows:
Percentage of
Annual OPEB Employer Annual OPEB Cost Net OPEB
Year EndedCostContributionContributedObigation
12/31/14$ 35,044$ 4,91314%$ 236,718
12/31/15 21,094 5,38826% 252,424
12/31/16 21,766 4,01318% 270,177
D. Funded Status and Funding Progress
As of January 1, 2015, the most recent actuarial valuation date, the City had no assets deposited to fund
the plan. The actuarial accrued liability for benefits was $188,649 and the actuarial value of assets was
$0, resulting in an unfunded actuarial accrued liability (UAAL) of $188,649. The covered payroll
(annual payroll of active employees covered by the plan) was $1,522,110, and the ratio of the UAAL to
the covered payroll was 12.4%.
72
City of St. Joseph
Notes to Financial Statements
NOTE 10 POST EMPLOYMENT HEALTH CARE PLAN (CONTINUED)
D. Funded Status and Funding Progress (Continued)
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.
At the January 1, 2015, 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 7.2% initially, reduced incrementally to an ultimate rate of 5% after
seven years. The UAAL is being amortized as a level percentage of projected payroll on an open basis.
NOTE 11 COMMITMENTS
The City has entered into contracts for construction as follows:
Expended
Contractthrough
ProjectAmount12/31/16Commitment
Government Center$ 4,859,000 $ 3,848,828$ 1,010,172
2016 Field Street 1,513,338 517,562 995,776
2015 Jasmine Court 117,066 97,622 19,444
Total$ 2,025,392
73
City of St. Joseph
Notes to Financial Statements
NOTE 12 TAX INCREMENT FINANCING
The City has entered into five Tax Increment Financing agreements which meet the criteria for
disclosure under Governmental Accounting Standards Board Statement No. 77 Tax Abatement
Disclosures. The City's authority to enter into these agreements comes from Minnesota Statute 469. The
City entered into these agreements for the purpose of economic development.
Under each agreement, the City and developer agree on an amount of development costs to be
reimbursed to the developer by the City though tax revenues from the additional taxable value of the
property generated by the development (tax increment). A "pay-as-you-go" note is established for this
amount, on which the City makes payments for a fixed period of time with available tax increment
revenue after deducting for certain administrative costs.
During the year ended December 31, 2016, the City generated $42,507 in tax increment revenue and
made $38,464 in payments to developers.
In addition, the City had an abatement of $50,000 relating to a development agreement.
NOTE 13 NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED
GASB has issued GASB Statement 74 relating to postemployment benefit plans other than pension plans
administered through trusts that meet certain criteria and includes requirements for OPEB plans not
administered through trusts. This new statement requires additional note disclosures and additional
required supplementary information. This statement is effective for financial statements for fiscal years
beginning after June 15, 2016. We are recommending that a review of your actuarial study be completed
with your actuarial firm to ensure compliance with the new standard.
GASB has issued GASB statement 75 relating to accounting and financial reporting for postemployment
benefits other than pensions. The new statement requires governments in all types of OPEB plans to
present more extensive note disclosures and required supplementary information (RSI) about OPEB
liabilities. This statement is effective for financial statements for fiscal years beginning after June 15,
2017.
74
REQUIRED SUPPLEMENTARY INFORMATION
75
City of St. Joseph
Schedule of Funding Progress - Other Post Employment Benefits
December 31, 2016
ActuarialUAAL as a
ActuarialAccrued LiabilityUnfundedPercentage of
ActuarialValue of (AAL) -AALFunded CoveredCovered
ValuationAssetsEntry Age(UAAL)RatioPayrollPayroll
Date(a)(b)(b-a)(a/b)(c)((b-a)/c)
12/31/09$ -$ 345,319$ 345,3190.0%$ 1,070,51532.3%
12/31/12 - 239,852 239,8520.0% 1,386,05017.3%
12/31/15 - 188,649 188,6490.0% 1,522,11012.4%
76
City of St. Joseph
Schedule of City's Proportionate Share
of Net Pension Liability
General Employees Retirement Fund
Last Ten Years
City's Proportionate City's
State's Share of the Net Proportionate
City's City's Proportionate Pension Liablility Share of the Net
Proportionate Proportionate Share (Amount) and the State's Pension Liability Plan Fiduciary
Share Share (Amount) of the Net Pension Proportionate Share (Asset) as a Net Position as a
(Percentage) of of the Net Liability of the Net Pension Percentage of its Percentage of the
City's Covered-
For Fiscal Year the Net Pension Pension Liability Associated with Liablility Associated Covered-Total Pension
Ended June 30,Liability (Asset)(Asset) the Citywith the CityEmployee Payroll Employee Payroll Liability
20150.0138%$ 715,188$ -$ 715,188$ 799,77389.4%78.2%
20160.0135% 1,096,133 14,341 1,110,474 839,240130.6%68.9%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
Schedule of City's Proportionate Share
of Net Pension Liability
Public Employees Police and Fire Retirement Fund
Last Ten Years
City's Proportionate
Share of the Net
City's Pension Liability Plan Fiduciary
City's Proportion Proportionate (Asset) as a Net Position as a
of the Net Share of the Net Percentage of its Percentage of the
For Fiscal Year Pension Liability Pension Liability City's Covered-Covered-Employee Total Pension
Ended June 30,(Asset)(Asset) Employee PayrollPayroll Liability
20150.0570%$ 647,653$ 505,160 128.2%86.6%
20160.0540% 2,167,114 518,580 417.9%63.9%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
77
City of St. Joseph
Schedule of City Contributions -
General Employees Retirement Fund
Last Ten Years
Contributions in Contributions as
Relation to the a Percentage of
Fiscal Year Statutorily Statutorily Contribution City's Covered-Covered-
Ending Required Required Deficiency Employee Employee
December 31,ContributionContributions(Excess)PayrollPayroll
2015$ 57,804$ 57,804$ -$ 770,7207.5%
2016 66,294 66,294 - 883,9207.5%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
Schedule of City Contributions -
Public Employees Police and Fire Retirement Fund
Last Ten Years
Contributions in Contributions as
Relation to the a Percentage of
Fiscal Year Statutorily Statutorily Contribution City's Covered-Covered-
Ending Required Required Deficiency Employee Employee
December 31,ContributionContributions(Excess)PayrollPayroll
2015$ 85,925$ 85,925$ -$ 530,40116.2%
2016 89,587 89,587 - 553,00616.2%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
78
City of St. Joseph
Schedule of Changes in Net Pension Liability
and Related Ratios - Fire Relief Association
20152016
Total Pension Liability (TPL)
Service cost$ 20,898 $ 25,691
Interest 29,709 35,786
Differenced between expected and actual experience - (29,935)
Changes of assumptions 55,033 56,691
Changes of benefit terms 31,883 -
Benefit payments, including refunds, or member contributions (41,168) (49,000)
Net change in total pension liability 96,355 39,233
Beginning of year 475,033 571,388
End of Year$ 571,388 $ 610,621
Plan Fiduciary Net Pension (FNP)
Contributions - employer$ 52,164 $ 63,111
Net investment income (41,979) 68,585
Benefit payments, including refunds of member contributions (41,168) (49,000)
Administrative expense (8,121) (7,724)
Net change in plan fiduciary net position (39,104) 74,972
Beginning of year 740,099 700,995
End of year$ 700,995 $ 775,967
$ (129,607)$ (165,346)
Net Pension Liability (NPL)
Plan fiduciary net position as a percentage of the total
pension liability122.7%127.1%
Covered employee payrolln/an/a
Net pension liability as a percentage of covered payrolln/an/a
The City implemented the Provisions of Governmental Accounting Standards Board Statement No. 68 for
the year ended December 31, 2015. The schedules within the Require Supplementary Information section
required a ten year presentation, but does not require retroactive reporting. Information prior to 2015 is
not available. Additional years will be reported as they become available.
79
City of St. Joseph
Schedule of Employer Contributions
and Non-Employer Contributing
Entities - Fire Relief Association
20152016
Employer
Statutorily determined contribution (SDC)$ -$ -
Contribution in relation to the SDC 3,000 3,000
Contribution deficiency (excess)$ (3,000)$ (3,000)
Non-employer
2% aid$ 52,164 $ 60,111
Covered employee payrolln/an/a
Contributions as a percentage of covered employee payrolln/an/a
The Association implemented the Provisions of Governmental Accounting Standards Board Statement No. 68 for
the year ended December 31, 2015. The schedules within the Require Supplementary Information section required a
ten year presentation, but does not require retroactive reporting. Information prior to 2015 is not available.
Additional years will be reported as they become available.
80
City of St. Joseph
Notes to Required Supplementary Information
GENERAL EMPLOYEES FUND
2016 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2035
and 2.5% per year thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate was
changed from 7.9% to 7.5%.
Other assumptions were changed pursuant to the experience study dated June 30, 2015. The
assumed future salary increases, payroll growth, the inflation were decreased by 0.25% to 3.25%
for payroll growth and 2.50% for inflation.
2015 Changes
Changes in Plan Provisions
On January 1, 2015, the Minneapolis Employees Retirement Fund was merged into the General
Employees Fund, which increased the total pension liability by $1.1 billion and increased the
fiduciary plan net position by $892 million. Upon consolidation, state and employer
contributions were revised.
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2030
and 2.5% per year thereafter to 1.0% per year through 2035 and 2.5% per year thereafter.
POLICE AND FIRE FUND
2016 Changes
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2037
and 2.5% thereafter to 1.0% per year for all future years.
The assumed investment return was changed from 7.9% to 7.5%. The single discount rate
changed from 7.9% to 5.6%.
The assumed future salary increases, payroll growth, and inflation were decreased by 0.25% to
3.25% for payroll growth and 2.50% for inflation.
2015 Changes
Changes in Plan Provisions
The post-retirement benefit increase to be paid after attainment of the 90% funding threshold was
changed, from inflation up to 2.5%, to a fixed rate of 2.5%.
Changes in Actuarial Assumptions
The assumed post-retirement benefit increase rate was changed from 1.0% per year through 2030
and 2.5% per year thereafter to 1.0% per year through 2037 and 2.5% per year thereafter.
81
(THIS PAGE LEFT BLANK INTENTIONALLY)
82
SUPPLEMENTARY INFORMATION
83
City of St. Joseph
Schedule of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2016
Variance with
Original and Actual
Final Budget -
Final BudgetAmounts
Over (Under)
Revenues
Property taxes$ 1,062,065$ 1,083,060$ 20,995
Sales taxes - 7 7
Special assessments 3,000 3,740 740
Franchise fees 127,180 126,817 (363)
Licenses and permits 142,870 270,780 127,910
Intergovernmental revenue
Local government aid 913,700 913,701 1
Pera aid 1,540 1,541 1
Fire aid 42,000 55,736 13,736
Police aid 58,500 64,619 6,119
Federal grants 6,500 5,950 (550)
State grants 49,125 50,701 1,576
Other grants and aids 17,995 120,498 102,503
Total intergovernmental revenue 1,089,360 1,212,746 123,386
Charges for services
General government 28,385 69,297 40,912
Public safety 224,060 222,508 (1,552)
Public works 3,770 3,772 2
Culture and recreation 47,500 49,744 2,244
Total charges for services 303,715 345,321 41,606
Fines and forfeitures 41,000 46,747 5,747
Miscellaneous revenues
Investment income 31,000 22,861 (8,139)
Contributions and donations 12,450 27,360 14,910
Other 40,655 67,249 26,594
Total miscellaneous revenues 84,105 117,470 33,365
Total revenues 2,853,295 3,206,688 353,393
Expenditures
General government
Mayor and council 78,875 78,533 (342)
Administrative and finance 426,095 394,341 (31,754)
Other general government 159,200 144,890 (14,310)
Capital outlay 2,760 6,007 3,247
Total general government 666,930 623,771 (43,159)
84
City of St. Joseph
Schedule of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2016
Variance with
Original and Actual
Final Budget -
Final BudgetAmounts
Over (Under)
Expenditures
Public safety
Police
Current$ 1,025,445$ 998,061 $ (27,384)
Capital outlay - 5,333 5,333
Total police 1,025,445 1,003,394 (22,051)
Fire
Current 343,935 357,457 13,522
Capital outlay 73,650 7,128 (66,522)
Total fire 417,585 364,585 (53,000)
Other
Current 93,925 103,678 9,753
Total public safety 1,536,955 1,471,657 (65,298)
Public works
Streets and highways
Street maintenance and storm sewers 252,880 240,274 (12,606)
Snow and ice removal 112,710 66,413 (46,297)
Street engineering 30,000 46,734 16,734
Capital outlay 62,500 79,779 17,279
Total public works 458,090 433,200 (24,890)
Culture and recreation
Current 256,905 317,839 60,934
Capital outlay - 2,000 2,000
Total culture and recreation 256,905 319,839 62,934
Total expenditures 2,918,880 2,848,467 (70,413)
Excess of revenues over
(under) expenditures
(65,585) 358,221 423,806
Other Financing Sources (Uses)
Sale of property 350 1 (349)
Transfers in 34,365 2,865 (31,500)
Total other financing sources (uses) 34,715 2,866 (31,849)
Net change in fund balances$ (30,870) 361,087 $ 391,957
Fund Balances
Beginning of year2,000,852
End of year$ 2,361,939
85
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2016
Special Revenue
TIF 3-1
Economic TIF 2-1 Central
Development Millstream TIF 2-2 St. TIF 2-3 Bayou Minnesota
Authority Shops and Joseph Meat Blues/ Alley Credit Union
(150)Lofts (157)Market (158)Flat (159)(152)
Assets
Cash and investments$ 123,622 $ 20,737 $ 316 $ 31 $ 154
Taxes receivable - delinquent 630 - - - -
Special assessments receivable
Delinquent - - - - -
Deferred - - - - -
Accounts receivable 4,093 2,800 - - -
Interest receivable 181 36 1 - -
Due from other funds 11,649 - - - -
Due from other governments 633 688 - - -
Notes receivable - - - - -
Total assets$ 140,808 $ 24,261 $ 317 $ 31 $ 154
Liabilities
Accounts payable$ 5,648 $ 3,419 $ - $ 700 $ -
Contracts payable - - - - -
Due to other funds - - 500 5,000 6,000
Salaries and benefits payable 1,150 - - - -
Total liabilities 6,798 3,419 500 5,700 6,000
Deferred Inflows of Resources
Unavailable revenue - property taxes 630 - - - -
Unavailable revenue - special assessments - - - - -
Unavailable revenue - notes receivable - - - - -
630 - - - -
Total deferred inflows of resources
Fund Balances
Restricted - 20,842 - - -
Committed 133,380 - - - -
Assigned - - - - -
Unassigned - - (183) (5,669) (5,846)
Total fund balances 133,380 20,842 (183) (5,669) (5,846)
Total liabilities, deferred inflows
of resources, and fund balances$ 140,808 $ 24,261 $ 317 $ 31 $ 154
86
Special RevenueDebt Service
TIF 4-1 G.O. Crossover
Fortitude Park Charitable Refunding
Senior Housing State Collected Dedication Gambling Lodging Tax Revolving Bonds of
(153)Sales Tax (200)(205)(215)(220)Loan (250)Total2009A (318)
$ -$ 1,481,460 $ 120,162 $ 2,067$ 7,676 $ 25,212$ 1,781,437 $ 159,645
- - - - - - 630 528
- - - - - - - -
- - - - - - - 110,195
5,478 - 32 - 377 - 12,780 -
- - 185 5 1 35 444 522
- - - - - - 11,649 -
- 88,129 16 - - - 89,466 445
- - - - - 47,438 47,438 -
$ 5,478 $ 1,569,589 $ 120,395 $ 2,072$ 8,054 $ 72,685$ 1,943,844 $ 271,335
$ 3,200 $ -$ 94 $ -$ -$ -$ 13,061 $ 68
- - - - - - - -
149 - - - - - 11,649 -
- - - - - - 1,150 -
3,349 - 94 - - - 25,860 68
- - - - - - 630 528
- - - - - - - 110,195
- - - - - 38,824 38,824 -
- - - - - 38,824 39,454 110,723
2,129 1,569,589 120,301 2,072 8,054 33,861 1,756,848 160,544
- - - - - - 133,380 -
- - - - - - - -
- - - - - - (11,698) -
2,129 1,569,589 120,301 2,072 8,054 33,861 1,878,530 160,544
$ 5,478 $ 1,569,589 $ 120,395 $ 2,072$ 8,054 $ 72,685$ 1,943,844 $ 271,335
87
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2016
Debt Service
G.O. G.O.
Improvement G.O. G.O. Improvement
Fire Hall G.O. Bonds of Improvement Certificates of Bonds of
Refunding Bonds 2005B/2010B Bonds of 2013A Indebtedness of 2011A/2006C
of 2003B (331)(333)(348)2013A (349)(338)
Assets
Cash and investments$ 22,253$ 157,766$ 130,929$ 7,431$ 116,941
Taxes receivable - delinquent 184 169 46 350 372
Special assessments receivable
Delinquent - 2,685 - - -
Deferred - 273,966 51,763 - 201,872
Accounts receivable - - - - -
Interest receivable 89 366 272 23 208
Due from other funds - - - - -
Due from other governments 144 164 57 339 2,413
Notes receivable - - - - -
Total assets$ 22,670$ 435,116$ 183,067$ 8,143$ 321,806
Liabilities
Accounts payable$ 68$ 68$ 68$ 68$ 68
Contracts payable - - - - -
Due to other funds - - - - -
Salaries and benefits payable - - - - -
Total liabilities 68 68 68 68 68
Deferred Inflows of Resources
Unavailable revenue - property taxes 184 169 46 350 372
Unavailable revenue - special assessments - 276,651 51,763 - 201,872
Unavailable revenue - notes receivable - - - - -
184 276,820 51,809 350 202,244
Total deferred inflows of resources
Fund Balances
Restricted 22,418 158,228 131,190 7,725 119,494
Committed - - - - -
Assigned - - - - -
Unassigned - - - - -
Total fund balances 22,418 158,228 131,190 7,725 119,494
Total liabilities, deferred inflows
of resources, and fund balances$ 22,670$ 435,116$ 183,067$ 8,143$ 321,806
88
Debt Service
G.O. Capital G.O. G.O. G.O. Capital G.O. G.O. G.O. G.O. Tax
Improvement Improvement Certificates of Improvement Improvement Improvement Certificates of Abatement
Plan Bonds of Bonds of Indebtedness of Plan Bonds of Bonds of Bonds of Indebtedness Bonds of
2009B (343)2010B (345)2011A (346)2011A (347)2014A (350)2015A (351)2015A (352)2015B (353)
$ 5,747$ 195,202$ 3,526 $ 60$ 182,088$ 31,685$ 1,244$ 12,168
472 39 147 149 467 483 552 -
- - - - 2,315 284 -
-
- 121,180 - - 165,498 195,484 - -
- - - - - - -
-
20 399 16 104 755 404 128 115
- - - - - - -
-
391 832 131 160 574 871 686 -
- - - - - - -
-
$ 6,630$ 317,652$ 3,820 $ 473$ 351,697$ 229,211$ 2,610$ 12,283
$ 68$ 68$ 68 $ 68$ 68$ 68$ 68$ 68
- - - - - - -
-
- - - 700 - - -
-
- - - - - - -
-
68 68 68 768 68 68 68 68
472 39 147 149 467 483 552 -
- 121,180 - - 167,813 195,768 - -
- - - - - - -
-
472 121,219 147 149 168,280 196,251 552 -
6,090 196,365 3,605 - 183,349 32,892 1,990 12,215
- - - - - - -
-
- - - - - - -
-
- - - (444) - - -
-
6,090 196,365 3,605 (444) 183,349 32,892 1,990 12,215
$ 6,630$ 317,652$ 3,820 $ 473$ 351,697$ 229,211$ 2,610$ 12,283
89
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2016
Debt ServiceCapital Projects
G.O. Capital G.O.
Improvement Improvement Debt Service Park Terrace
Plan Bonds of Bonds of Relief Fund Improvements
2016A (301)2016B (304)(390)Total(450)
Assets
Cash and investments$ 56,585$ 1,376$ 220,080$ 1,304,726 $ 174,269
Taxes receivable - delinquent - - 277 4,235 -
Special assessments receivable
Delinquent - - 135 5,419 -
Deferred - - 145,165 1,265,123 -
Accounts receivable - - - - -
Interest receivable 1,671 240 - 5,332 -
Due from other funds - - 30,000 30,000 -
Due from other governments - - 27 7,234 -
Notes receivable - - - - -
Total assets$ 58,256$ 1,616$ 395,684$ 2,622,069 $ 174,269
Liabilities
Accounts payable$ 68$ 68$ - $ 1,088 $ -
Contracts payable - - - - -
Due to other funds - - - 700 -
Salaries and benefits payable - - - - -
Total liabilities 68 68 - 1,788 -
Deferred Inflows of Resources
Unavailable revenue - property taxes - - 277 4,235 -
Unavailable revenue - special assessments - - 145,300 1,270,542 -
Unavailable revenue - notes receivable - - - - -
- - 145,577 1,274,777 -
Total deferred inflows of resources
Fund Balances
Restricted 58,188 1,548 - 1,095,841 -
Committed - - - - -
Assigned - - 250,107 250,107 174,269
Unassigned - - - (444) -
Total fund balances 58,188 1,548 250,107 1,345,504 174,269
Total liabilities, deferred inflows
of resources, and fund balances$ 58,256$ 1,616$ 395,684$ 2,622,069 $ 174,269
90
Capital Projects
Clinton
Villiage/ 2015
Northland Equipment Total
Improvements Certificates General Capital Water Access Sewer Access Governmental
(451)(452)Outlay (490)Fund (501)Fund (502)TotalFunds
$ 208,291 $ 9,075 $ 263,036 $ 51,305 $ 11,182 $ 717,158 $ 3,803,321
- - - - - - 4,865
- - - - - - 5,419
- - - - - - 1,265,123
- - 1,015 - - 1,015 13,795
- - - 129 87 216 5,992
- - - - - - 41,649
- - 307 - - 307 97,007
- - - - - - 47,438
$ 208,291 $ 9,075 $ 264,358 $ 51,434 $ 11,269 $ 718,696 $ 5,284,609
$ 566 $ -$ -$ 10,335 $ 36,226 $ 47,127 $ 61,276
77,778 - - - - 77,778 77,778
- - - - - - 12,349
- - - - - - 1,150
78,344 - - 10,335 36,226 124,905 152,553
- - - - - - 4,865
- - - - - - 1,270,542
- - - - - - 38,824
- - - - - - 1,314,231
- - - - - - 2,852,689
- - - - - - 133,380
129,947 9,075 264,358 41,099 - 618,748 868,855
- - - - (24,957) (24,957) (37,099)
129,947 9,075 264,358 41,099 (24,957) 593,791 3,817,825
$ 208,291 $ 9,075 $ 264,358 $ 51,434 $ 11,269 $ 718,696 $ 5,284,609
91
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2016
Special Revenue
TIF 2-1 TIF 3-1 Central
Economic Millstream TIF 2-2TIF 2-3 Bayou Minnesota
Development Shops and St. Joseph Meat Blues/ Alley Credit Union
Authority (150)Lofts (157)Market (158)Flat (159)(152)
Revenues
Property taxes$ 123,442$ -$ -$ -$ -
Tax increments - 38,348 4,159 - -
Sales taxes - - - - -
Lodging taxes - - - - -
Special assessments - - - - -
Intergovernmental 67,425 - - - -
Charges for services 2,500 - - - -
Miscellaneous
Investment income 1,166 231 4 - -
Contributions and donations - - - - -
Revolving loan repayments - - - - -
Total revenues 194,533 38,579 4,163 - -
Expenditures
Current
Culture and recreation - - - - -
Economic development 146,517 35,067 4,090 1,406 249
Debt service
Principal - - - - -
Interest and other charges - - - - -
Capital outlay
General government - - - - -
Public safety - - - - -
Public works - - - - -
Culture and recreation - - - - -
Economic development 301 - - - -
Total expenditures 146,818 35,067 4,090 1,406 249
Excess of revenues over
(under) expenditures 47,715 3,512 73 (1,406) (249)
Other Financing Sources (Uses)
Sale of property - - - - -
Bonds issued - - - - -
Bond premium - - - - -
Transfers in - - - - -
Transfers out - - - - -
Total other financing sources (uses) - - - - -
Net change in fund balances 47,715 3,512 73 (1,406) (249)
Fund Balances
Beginning of year 85,665 17,330 (256) (4,263) (5,597)
End of year$ 133,380$ 20,842$ (183)$ (5,669)$ (5,846)
92
Special Revenue
TIF 4-1
Fortitude Park
Senior Housing State Collected Dedication Charitable Lodging Tax Revolving Loan
(153)Sales Tax (200)(205)Gambling (215)(220)(250)Total
$ -$ -$ 3,000$ -$ -$ -$ 126,442
- - - - - - 42,507
- 432,220 - - - - 432,220
- - - - 8,046 - 8,046
- - - - - - -
- - - - - - 67,425
2,500 - 62,661 - - - 67,661
- - 1,184 30 8 225 2,848
- - 1,200 4,650 - - 5,850
- - - - - 21,585 21,585
2,500 432,220 68,045 4,680 8,054 21,810 774,584
- - 1,119 5,008 - - 6,127
371 - - - - - 187,700
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- 376 6,352 - - - 6,728
- - - - - - 301
371 376 7,471 5,008 - - 200,856
2,129 431,844 60,574 (328) 8,054 21,810 573,728
- - - - - - -
- - - - - - -
- - - - - - -
- 35,449 - - - - 35,449
- (164,480) - - - - (164,480)
- (129,031) - - - - (129,031)
2,129 302,813 60,574 (328) 8,054 21,810 444,697
- 1,266,776 59,727 2,400 - 12,051 1,433,833
$ 2,129$ 1,569,589$ 120,301$ 2,072$ 8,054$ 33,861$ 1,878,530
93
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2016
Debt Service
G.O.
G.O. Crossover Fire Hall G.O. Improvement G.O. G.O.
Refunding Refunding Bonds of Improvement Certificates of
Bonds of Bonds of 2005B/2010B Bonds of Indebtedness of
2009A (318)2003B (331)(333)2013A (348)2013A (349)
Revenues
Property taxes$ 70,675$ 24,137$ 28,039$ 9,954$ 57,258
Tax increments - - - - -
Sales taxes - - - - -
Lodging taxes - - - - -
Special assessments 121,053 - 71,537 9,851 -
Intergovernmental - - - - -
Charges for services - 25,859 - - -
Miscellaneous
Investment income 3,344 573 2,345 1,744 146
Contributions and donations - - - - -
Revolving loan repayments - - - - -
Total revenues 195,072 50,569 101,921 21,549 57,404
Expenditures
Current
Culture and recreation - - - - -
Economic development - - - - -
Debt service
Principal 340,000 75,000 130,000 30,000 50,000
Interest and other charges 20,418 3,068 14,516 9,138 3,368
Capital outlay
General government - - - - -
Public safety - - - - -
Public works - - - - -
Culture and recreation - - - - -
Economic development - - - - -
Total expenditures 360,418 78,068 144,516 39,138 53,368
Excess of revenues over
(under) expenditures (165,346) (27,499) (42,595) (17,589) 4,036
Other Financing Sources (Uses)
Sale of property - - - - -
Bonds issued - - - - -
Bond premium - - - - -
Transfers in 60,000 - - - -
Transfers out - - - - -
Total other financing sources (uses) 60,000 - - - -
Net change in fund balances (105,346) (27,499) (42,595) (17,589) 4,036
Fund Balances
Beginning of year 265,890 49,917 200,823 148,779 3,689
End of year$ 160,544$ 22,418$ 158,228$ 131,190$ 7,725
94
Debt Service
G.O.
Improvement G.O. Capital G.O. G.O. G.O. Capital G.O. G.O.
Bonds of Improvement Improvement Certificates of Improvement Improvement Improvement
2011A/2006C Plan Bonds of Bonds of Indebtedness of Plan Bonds of Bonds of Bonds of
(338)2009B (343)2010B (345)2011A (346)2011A (347)2014A (350)2015A (351)
$ 50,380$ 65,524$ 4,547$ 22,131$ 27,536$ 99,567$ 27,517
- - - - - - -
- - - - - - -
- - - - - - -
76,100 - 24,710 - - 41,401 46,401
- - - - - - -
- - - 23,736 - - -
1,335 129 2,561 105 666 4,842 2,593
- - - - - - -
- - - - - - -
127,815 65,653 31,818 45,972 28,202 145,810 76,511
- - - - - - -
- - - - - - -
125,000 55,000 50,000 40,000 20,000 110,000 55,000
17,293 6,413 14,723 5,228 2,588 53,903 12,338
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
142,293 61,413 64,723 45,228 22,588 163,903 67,338
(14,478) 4,240 (32,905) 744 5,614 (18,093) 9,173
- - - - - - -
- - - - - - -
- - - - - - -
15,000 - 13,250 - - - -
- - - - - - -
15,000 - 13,250 - - - -
522 4,240 (19,655) 744 5,614 (18,093) 9,173
118,972 1,850 216,020 2,861 (6,058) 201,442 23,719
$ 119,494$ 6,090$ 196,365$ 3,605$ (444)$ 183,349$ 32,892
95
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2016
Debt Service
G.O. G.O. Tax G.O. Capital G.O.
Certificates of Abatement Improvement Improvement Debt Service
Indebtedness Bonds of Plan Bonds of Bonds of Relief Fund
2015A (352)2015B (353)2016A (301)2016B (304)(390)
Revenues
Property taxes$ 31,448$ -$ -$ -$ 1,227
Tax increments - - - - -
Sales taxes - - - - -
Lodging taxes - - - - -
Special assessments - - - - 31,074
Intergovernmental - - - - -
Charges for services - - - - -
Miscellaneous
Investment income 821 739 12,328 1,616 -
Contributions and donations - - - - -
Revolving loan repayments - - - - -
Total revenues 32,269 739 12,328 1,616 32,301
Expenditures
Current
Culture and recreation - - - - -
Economic development - - - - -
Debt service
Principal 30,000 95,000 - - -
Interest and other charges 2,538 61,715 153,047 36,482 -
Capital outlay
General government - - - - -
Public safety - - - - -
Public works - - - - 186
Culture and recreation - - - - -
Economic development - - - - -
Total expenditures 32,538 156,715 153,047 36,482 186
Excess of revenues over
(under) expenditures (269) (155,976) (140,719) (34,866) 32,115
Other Financing Sources (uses)
Sale of property - - - - -
Bonds issued - - 55,100 28,454 -
Bond premium - - 53,807 7,960 -
Transfers in - 164,480 90,000 - 53,000
Transfers out - - - - (20,000)
Total other financing sources (uses) - 164,480 198,907 36,414 33,000
Net change in fund balances (269) 8,504 58,188 1,548 65,115
Fund Balances
Beginning of year 2,259 3,711 - - 184,992
End of year$ 1,990$ 12,215$ 58,188$ 1,548$ 250,107
96
Debt ServiceCapital Projects
Clinton
City Hall/Police Villiage/ 2015
Garage Capital Park Terrace Northland Equipment
Improvements Improvements Improvements Certificates General Capital Water Access
Total(447)(450)(451)(452)Outlay (490)Fund (501)
$ 519,940$ -$ -$ -$ -$ 60,000$ -
- - - - - - -
- - - - - - -
- - - - - - -
422,127 - - - - - -
- - - - - 7,234 -
49,595 - - - - - 251,775
35,887 - - - - - 829
- - - 75,000 - - -
- - - - - - -
1,027,549 - - 75,000 - 67,234 252,604
- - - - - - -
- - - - - - -
1,205,000 - - - - - -
416,776 - - - - - -
- - - - - 16,582 -
- - - - 41,528 40,146 -
186 - 21,752 95,419 42,571 11,552 -
- - - - - - -
- - - - - - -
1,621,962 - 21,752 95,419 84,099 68,280 -
(594,413) - (21,752) (20,419) (84,099) (1,046) 252,604
- - - - - 7,015 -
83,554 - - - - - -
61,767 - - - - - -
395,730 - - - - - 16,000
(20,000) (174,042) - - - - (227,700)
521,051 (174,042) - - - 7,015 (211,700)
(73,362) (174,042) (21,752) (20,419) (84,099) 5,969 40,904
1,418,866 174,042 196,021 150,366 93,174 258,389 195
$ 1,345,504$ -$ 174,269$ 129,947$ 9,075$ 264,358$ 41,099
97
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2016
Capital Projects
Total Other
Sewer Access Governmental
Fund (502)TotalFunds
Revenues
Property taxes$ -$ 60,000$ 706,382
Tax increments - - 42,507
Sales taxes - - 432,220
Lodging taxes - - 8,046
Special assessments - - 422,127
Intergovernmental - 7,234 74,659
Charges for services 252,346 504,121 621,377
Miscellaneous
Investment income 558 1,387 40,122
Contributions and donations - 75,000 80,850
Revolving loan repayments - - 21,585
Total revenues 252,904 647,742 2,449,875
Expenditures
Current
Culture and recreation - - 6,127
Economic development - - 187,700
Debt service
Principal - - 1,205,000
Interest and other charges - - 416,776
Capital outlay
General government - 16,582 16,582
Public safety - 81,674 81,674
Public works - 171,294 171,480
Culture and recreation - - 6,728
Economic development - - 301
Total expenditures - 269,550 2,092,368
Excess of revenues over
(under) expenditures 252,904 378,192 357,507
Other Financing Sources (uses)
Sale of property - 7,015 7,015
Bonds issued - - 83,554
Bond premium - - 61,767
Transfers in 4,000 20,000 451,179
Transfers out (282,500) (684,242) (868,722)
Total other financing sources (uses) (278,500) (657,227) (265,207)
Net change in fund balances (25,596) (279,035) 92,300
Fund Balances
Beginning of year 639 872,826 3,725,525
End of year$ (24,957)$ 593,791$ 3,817,825
98
Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditor's Report
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, 2016, and the related notes to financial statements, which
collectively comprise the City's basic financial statements, and have issued our report
thereon dated April 20, 2017.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the 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
the City's internal control. Accordingly, we do not express an opinion on the effectiveness of
the City's internal control.
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 City's financial statements will
not be prevented, or detected and corrected, on a timely basis.
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Internal Control over Financial Reporting (Continued)
Our consideration of internal control was for the limited purpose described in the first
paragraph of this section 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. We did identify a
certain deficiency in internal control, as described in the accompanying Schedule of Finding
and Response on Internal Control that we consider to be a material weakness, listed as audit
finding 2006-001.
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 Finding and Response 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 results 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.
St. Cloud, Minnesota
April 20, 2017
100
Report on Legal Compliance
Independent Auditor's Report
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, 2016, and the related notes to financial statements, which
collectively comprise the City's basic financial statements, and have issued our report
thereon dated April 20, 2017.
The Minnesota Legal Compliance Audit Guide for Cities, promulgated by the State Auditor
pursuant to Minnesota Statutes § 6.65, contains 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 failed to comply with the provisions of the Minnesota Legal Compliance
Audit Guide for Cities. 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.
St. Cloud, Minnesota
April 20, 2017
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City of St. Joseph
Schedule of Finding and Response on
Internal Control
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING
Material Weakness
Audit Finding 2006-001 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. The lack of adequate segregation of accounting duties could adversely affect the City's ability
to initiate, record, process and report financial data consistent with the assertions of management in
the financial statements. 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 is also an authorized signer and has
access to the Mayor's electronic signature. The Administrator reviews and approves checks for
payment. At year-end, the Finance Director reconciles and records accounts and contracts
payable.
Capital Assets
The Finance Director records, processes, reconciles and posts journal entries related to capital
assets. The department heads review their listing for accuracy.
Payroll
The Finance Director enters employees' time, processes and posts payroll, generates a payroll
report, distributes paystubs to employees, and posts the journal entries related to payroll. In
addition, this same employee reconciles payroll accruals and time off balances. The City
Administrator does review payroll reports, time off balances, and calculated compensated
absences balances for the audit.
102
City of St. Joseph
Schedule of Finding and Response on
Internal Control
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING (CONTINUED)
Material Weakness (Continued)
Audit Finding 2006-001 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 and can enter manual adjustments. The Utility Billing Clerk 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.
During the course of the audit, we proposed a material audit adjustment that may not have been
identified as a result of the city's existing internal control and therefore, could have resulted in a
material misstatement of the financial statement.
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.
103