HomeMy WebLinkAbout2018 Audit Report
City of St. Joseph
Stearns County, Minnesota
Financial Statements
December 31, 2018
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 Revenues, Expenditures, and Changes in Fund Balance Budget
and Actual State Collected Sales Tax 31
Statement of Net Position Proprietary Funds 32
Reconciliation of the Statement of Net Position Business-Type Activities 33
Statement of Revenues, Expenses, and Changes in Fund Net Position
Proprietary Funds 34
Reconciliation of the Statement of Revenues, Expenses, and Changes in Net
Position Business-Type Activities 35
Statement of Cash Flows Proprietary Funds 36
Notes to Financial Statements 37
Required Supplementary Information
Schedule of City's Proportionate Share of Net Pension Liability General
Employees Retirement Fund 76
Schedule of City's Proportionate Share of Net Pension Liability Public
Employees Police and Fire Retirement Fund 76
Schedule of City Contributions General Employees Retirement Fund 77
Schedule of City Contributions Public Employees Police and Fire
Retirement Fund 77
Schedule of Changes in the Net Pension Liability and Related Ratios
Fire Relief Association 78
City of St. Joseph
Table of Contents
Required Supplementary Information (Continued)
Schedule of City Contributions and Non-Employer Contributing Entities
Fire Relief Association 79
Notes to Required Supplementary Information 80
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
Minnesota Legal Compliance 101
Schedule of Finding and Response on Internal Control 102
City of St. Joseph
Elected Officials and Administration
December 31, 2018
Elected OfficialsPositionTerm Expires
Rick SchultzMayor January 2019
Robert LosoCouncil MemberJanuary 2021
Troy GorackeCouncil MemberJanuary 2021
Dale WickCouncil MemberJanuary 2019
Anne BuckvoldCouncil MemberJanuary 2019
Matt Killam*Council MemberJanuary 2019
Administration
Judy WeyrensCity AdministratorAppointed
Lori BartlettFinance DirectorAppointed
*Council member Killam resigned May 2018 and was replaced with council member Buckvold
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, 2018, 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinions.
2
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, 2018, 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.
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.
3
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated April 18,
2019, 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 solely to describe the scope of our testing of internal control
over financial reporting and compliance and the results of that testing, and not to provide an opinion on
the effectiveness of the City's 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 18, 2019
4
City of St. Joseph
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, 2018.
FINANCIAL HIGHLIGHTS
Key financial highlights for 2018 include the following:
The assets of the City of St. Joseph exceeded its liabilities at the close of the most recent fiscal
year by $34,442,145. Of this amount, $3,703,661 may be used to meet government's ongoing
obligations to citizens and creditors (unrestricted net position).
The City of St. Joseph's total net position increased by $792,291 from 2017 to 2018. This is due
to paying down bonded debt, increase in development fees, sale of the old city hall, collection of
deferred special assessments, and reduction in the pension expense for the City's share of the
PERA retirement plans.
As of the close of the current fiscal year, the City of St. Joseph's governmental funds reported
combined ending fund balances of $6,402,969, an increase of $384,694. Of this amount
$1,459,560 is unassigned for spending at the City's discretion. The remaining balance of
$4,943,409 is set aside for specific future expenditures.
At the end of the current fiscal year, unassigned fund balance for the general fund was
$1,468,385 or 46% of the total general fund expenditures ($1,548,661 or 48% excluding the fire
and PEG access funds).
The City of St. Joseph's total long-term debt decreased by $925,725 during the current fiscal
year. The City had three debts paid in full in 2018 and issued two smaller debts. The new debts
issued paid for general city equipment and St. Joseph's portion of the St. Cloud biosolids
improvements.
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
financial statements. This report also contains other supplementary information in addition to the basic
financial statements themselves.
Government-Wide Financial Statements. The government-wide financial statements are designed to
provide readers with a broader overview of the City of St. Joseph's finances, in a manner similar to a
private-sector business.
The Statement of Net Position presents information on all of the City of St. Joseph's assets and
liabilities, with the difference between the two reported as net position. Over time, increases or
decreases in net position may serve as a useful indicator of whether the financial position of the City of
St. Joseph is improving or deteriorating.
5
City of St. Joseph
Management's Discussion and Analysis
Government-Wide Financial Statements (Continued) The Statement of Activities presents
information showing how the City's net position changed during the most recent fiscal year. All changes
in net position are reported as soon as the underlying event giving rise to the change occurs, regardless
of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some
items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but
unused vacation leave).
Both 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, utilized 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 one of
the following 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 forty-two individual governmental funds.
6
City of St. Joseph
Management's Discussion and Analysis
Governmental Funds (Continued) Information is presented separately in the governmental fund
balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund
balances for the general fund and state collected sales tax special revenue 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 and state collected sales tax funds. A budgetary comparison
statement has been provided for these funds (pages 30-31) to demonstrate compliance with the budgets.
The basic governmental fund financial statements can be found on pages 26 & 28 of this report.
Proprietary Funds. The City of St. Joseph maintains proprietary funds that are used to report the same
functions presented as business-type activities in the government-wide financial statements. The City of
St. Joseph uses proprietary funds to account for its water, sanitary sewer, refuse, 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 32-36 of this report.
Notes to 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 other information and combining statements referred to earlier in connection
with non-major governmental funds can be found on pages 76-98 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 $34,442,145 at the close of
the most recent fiscal year.
By far the largest portion of the City of St. Joseph's net position reflects its investment in capital assets
(e.g. land, buildings, machinery, and equipment) net accumulated depreciation, less any related debt
used to acquire those assets that is still outstanding. The City of St. Joseph utilizes these capital assets to
provide services to citizens; consequently, these assets are not available for future spending. Although
the City of St. Joseph's investment in its capital assets is reported net of related debt, it should be noted
that the resources needed to repay this debt must be provided from other sources, since the capital assets
themselves cannot be used to liquidate these liabilities.
7
City of St. Joseph
Management's Discussion and Analysis
NET POSITION
Governmental ActivitiesBusiness-Type ActivitiesTotal
Assets201820172018201720182017
Current and other assets$ 8,168,281$ 8,228,770$ 2,361,022$ 1,976,036$ 10,529,303$ 10,204,806
Capital assets, net 16,315,154 17,472,504 32,961,780 32,381,743 49,276,934 49,854,247
Total assets 24,483,435 25,701,274 35,322,802 34,357,779 59,806,237 60,059,053
Deferred Outflows
of Resources
Deferred outflows of resources
related to pensions 1,091,570 1,292,782 49,921 78,580 1,141,491 1,371,362
Total deferred outflows 1,091,570 1,292,782 49,921 78,580 1,141,491 1,371,362
Liabilities
Current liabilities 1,416,169 1,587,142 1,571,829 1,410,513 2,987,998 2,997,655
Long-term liabilities 11,182,087 12,280,610 10,814,010 10,877,865 21,996,097 23,158,475
Total liabilities 12,598,256 13,867,752 12,385,839 12,288,378 24,984,095 26,156,130
Deferred Inflows
of Resources
Deferred inflows of resources
related to lease receivables 132,460 173,356 - - 132,460 173,356
Deferred inflows of resources
related to pensions 1,325,459 1,399,302 63,569 51,773 1,389,028 1,451,075
Total deferred inflows 1,457,919 1,572,658 63,569 51,773 1,521,488 1,624,431
Net Position
Invested in capital assets,
net related debt 7,223,470 7,626,612 21,249,153 20,699,611 26,880,985 26,508,482
Restricted 3,857,499 4,173,509 - - 3,857,499 4,173,509
Unrestricted 437,861 (246,475) 1,674,162 1,396,597 3,703,661 2,967,863
Total net position$ 11,518,830$ 11,553,646$ 22,923,315$ 22,096,208$ 34,442,145$ 33,649,854
An additional portion of the City of St. Joseph's net position (11%) 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 $3,703,661, or a surplus of $2,112,023 after removing the unrestricted portion of
governmental debt for enterprise assets. The surplus is the result of the change in St. Joseph's realized
portion of the Minnesota employee's pension liability. The liability fluctuates significantly with changes
in amortization assumptions such as the rate of return. Without the net pension liability, the unrestricted
net position would be a surplus of $5,353,013.
8
City of St. Joseph
Management's Discussion and Analysis
At the end of the current fiscal year, the City of St. Joseph is able to report positive balances in all three
categories of net position for the government as a whole, as well as for its separate business-type
activities. The governmental activities had positive balances in all, but the unrestricted net position.
The governmental activities change in net position balance decreased by less than 1%. The City's
governmental operational activity was strong with development activity a key factor. The change in net
position would have been an increase if the City had received the full cash amount for selling the old
City Hall at the time of closing. In order to facilitate the sale of the former City Hall, the City negotiated
a selling price to Bad Habit Brewing Company collecting 25% of the purchase price at closing and
issuing a note for the remaining 75%. The old city hall was disposed of and shows a loss until the final
loan proceeds are received in five years. In addition, special assessment receivables decreased $309,116.
The revenue on the deferred assessments were realized in previous years. The decrease will affect the
net position change negatively as a result.
There was a 4% increase (a little more than 4% increase excluding net pension liability) in the total net
position for the business-type activities. The increase is due to paying down bonds, raising utility rates
and significant development fees collected. The full value of the assets is netted against the bonds
payable. Also, construction in progress includes assets contributed from governmental funds improving
the business-type net position.
Governmental Activities. Governmental activities reduced the City of St. Joseph's net position by
$34,816. The decrease is attributable to the collection of significant development fees including building
permit revenue of $271,689 and proceeds for selling the old City Hall for $400,000 ( $102,500 cash paid
down in 2018 and $297,500 in notes receivable). The loss on the sale of capital assets amounted to
$548,896. This is a difference in proceeds less accumulated depreciation and the capital asset to remove
from the financial statements. Reductions in bonded debt accounted for a $967,351 increase in the
overall net position.
Business-Type Activities. Business-type activities increased the City of St. Joseph's net position by
$827,107. The largest contributions were realized in the water and sewer funds. The Street Light Utility
Fund also realized a positive change in net position of $13,543. 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 $508,984 for 2018. In addition, the City
council increased water and sewer rates (4.65% and 6%, respectfully) to help cover the water and sewer
debt costs. The Storm Water and Refuse Funds ended the year with a decrease in net position due to the
decision of City council to reduce rates to buy down net position in an effort to allow for larger rate
increases in the water and sewer funds. The net position decreased $146,899 in the Storm Water Fund
and $24,000 in the Refuse Fund.
The graph and charts on the following pages summarize and graphically depict the changes in net
position for the governmental and business-type activities.
9
City of St. Joseph
Management's Discussion and Analysis
CHANGE IN NET POSITION
RevenuesGovernmental ActivitiesBusiness-Type ActivitiesTotal
Program Revenues201820172018201720182017
Charges for services$ 1,195,623$ 892,945$ 3,420,138$ 3,335,861$ 4,615,761$ 4,228,806
Operating grants and
contributions 176,940 150,126 (35,337) 293 141,603 150,419
Capital grants and
contributions 210,562 966,205 84,109 701 294,671 966,906
General Revenues
Property taxes 2,183,051 1,993,743 22,554 23,893 2,205,605 2,017,636
Tax increments 118,903 85,216 - - 118,903 85,216
Sales taxes 442,677 437,232 - - 442,677 437,232
Franchise fees 131,212 12,595 - - 131,212 12,595
Lodging taxes 15,930 129,242 - - 15,930 129,242
State aids 1,001,501 927,154 - - 1,001,501 927,154
Unrestricted investment earnings 33,638 52,710 22,551 23,458 56,189 76,168
Gain on disposal of assets - - 473 - 473 -
Total revenues 5,510,037 5,647,168 3,514,488 3,384,206 9,024,525 9,031,374
Expenses
General government 1,206,414 1,080,879 - - 1,206,414 1,080,879
Public safety 1,886,542 1,757,471 - - 1,886,542 1,757,471
Public works 1,415,942 1,284,017 - - 1,415,942 1,284,017
Economic development 187,355 141,853 - - 187,355 141,853
Culture and recreation 532,681 472,849 - - 532,681 472,849
Interest on long-term debt 283,649 299,612 - - 283,649 299,612
Water - - 1,044,241 920,296 1,044,241 920,296
Sanitary sewer - - 1,086,230 1,106,664 1,086,230 1,106,664
Storm water - - 307,941 289,557 307,941 289,557
Refuse - - 210,349 169,389 210,349 169,389
Street light utility - - 70,890 64,866 70,890 64,866
Total expenses 5,512,583 5,036,681 2,719,651 2,550,772 8,232,234 7,587,453
Increase (decrease) in net position
before transfers (2,546) 610,487 794,837 833,434 792,291 1,443,921
Transfers (32,270) (425,946) 32,270 425,946 - -
Change in net position (34,816) 184,541 827,107 1,259,380 792,291 1,443,921
Net Position
Net position - beginning 11,553,646 11,369,105 22,096,208 20,836,828 33,649,854 32,205,933
Net position - ending$ 11,518,830$ 11,553,646$ 22,923,315$ 22,096,208$ 34,442,145$ 33,649,854
10
City of St. Joseph
Management's Discussion and Analysis
PROGRAM REVENUES AND EXPENSES
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11
City of St. Joseph
Management's Discussion and Analysis
REVENUES BY SOURCE -BUSINESS-TYPE ACTIVITIES
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12
City of St. Joseph
Management's Discussion and Analysis
FINANCIAL ANALYSIS OF THE CITY'S FUNDS AT THE FUND LEVEL
Governmental Funds. 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 fiscal year 2018, its governmental funds reported
a combined fund balance of $6,402,969, an increase of $384,694 from 2017. Revenues for the City's
governmental funds were $5,970,093, while expenditures were $5,775,928. The excess of revenues over
expenditures is mainly attributed to substantial development fees collected for new construction, and the
decrease in wage expenditures due to staff turnover with new hires at lower pay rates. In addition, two
budgeted administrative positions were left unfilled for the last half of the year. Also an impact, the City
of St. Joseph sold the old City Hall to Bad Habit Brewing Company. Proceeds from the sale will pay
down the 2017A capital improvement bonds.
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 $1,468,385. 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 46%, (just under six months) working capital or 48%
after removing fire and PEG access funds. The City Council has adopted a financial policy which
includes a goal to maintain the general fund working capital fund balance equal to 4-6 months of
expenditures. The excess unassigned fund balance can be attributed to development related revenue. The
City experienced an increase in construction projects in 2018 resulting in permit and plan review fees in
excess of budgeted amounts by $156,689. In addition to the building permit revenue, police, fire and
municipal street state aids were higher than budgeted, providing a positive variance of $35,214.
General fund expenditures were less than budgeted by $95,242. The City of St. Joseph sets funds aside
for the street maintenance plan. The street maintenance plan expenditures fluctuate each year, increasing
in 2018 by $11,226. In addition to the general street maintenance, improvement projects are planned
over a five-year period. The City council opted to postpone street overlays and reconstructions in 2018
for one year. Even though major improvements were postponed, planning for the 2019 projects began
during the budget preparation. The feasibility study for the 2019 street improvements was assigned
through the general fund category of public work. However, once the project moves forward, the bond
proceeds will reimburse the general fund. General government expenditures were over budgeted
amounts mainly due to the completion of the comprehensive plan and costs relating to annexation of a
portion of the St. Joseph Township. Administrative and finance expenditures, along with police
expenditures ended the year under budget. Staff turnover and the decision to postpone hiring a finance
technician reflects in the final amounts. In the police department, staff positions were filled with officers
at lower steps. The fire capital outlay includes annual funding for the five-year capital equipment plan
where actual expenditures will occur in a future year.
As a result of the prudent financial policies of the City, the general fund remained stable.
The schedule below presents a summary of general fund revenues and expenditures.
13
City of St. Joseph
Management's Discussion and Analysis
December 31,December 31,IncreasePercent
Revenues20182017(Decrease)Change
Taxes$ 1,422,970$ 1,255,007$ 167,96313%
Special assessment 5,341 9,127 (3,786)-41%
Licenses and permits 357,138 356,990 1480%
Intergovernmental 1,227,716 1,133,362 94,3548%
Charges for services 396,183 376,946 19,2375%
Fines and forfeitures 58,620 55,474 3,1466%
Miscellaneous 59,377 71,131 (11,754)-17%
Total General fund revenue$ 3,527,345$ 3,258,037$ 269,3088%
December 31,December 31,IncreasePercent
Expenditures20182017(Decrease)Change
General government$ 746,022$ 749,008$ (2,986)0%
Public safety 1,636,585 1,611,596 24,9892%
Public works 502,660 397,662 104,99826%
Culture and recreation 335,306 270,980 64,32624%
Total General fund expenditures$ 3,220,573$ 3,029,246$ 191,3276%
General Fund Budgetary Highlights. Over the course of the year, the City of St. Joseph did not amend
the annual operating budget. Historically, the City has minimal budget amendments during the budget
year.
Actual revenues were $215,200 more than expected mainly due to development related charges.
In addition, state aids came in higher than budgeted. The City budgets conservatively for
revenues not known at the time the budget is set.
Actual expenditures were $95,242 less than budget. A couple points on the expenditure budget:
o To help minimize fluctuations in the budget, the City budgets family insurance coverage
for the majority of the employees even though some elect single or no coverage. The City
will be faced with a number of retirees in the next five (5) years. Along with that comes
the payment of unused accumulated benefit hours. Therefore, health insurance savings
between budget and 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 their insurance election and when new hires are
made.
14
City of St. Joseph
Management's Discussion and Analysis
o The City manages a five-year capital equipment plan (CEP) and capital improvement
plan (CIP). During the budget process each year the plans are reviewed, and the council
prioritizes which projects/equipment will be funded. The funds are set aside for future
purchases as the useful life of equipment and infrastructure are depleted, or as new
equipment needs are warranted. Due to the large costs associated with some of the
needed equipment (such as a street sweeper), setting funds aside minimizes the
fluctuations in the capital outlay budget.
o Staff changes in both the Police Department and Administration had a significant impact
on the expenditures for 2018. The resignation of the Police Chief resulted in the
promotion of the Police Sergeant to Police Chief. The position of Sergeant has remained
vacant and is expected to be filled in 2019. To bring the Police Department to full
staffing, an entry level police officer was hired late in 2018. Both positions experienced
lower wages than the level budgeted. A resignation in Administration created a vacancy
that left unfilled through the end of 2018. In addition, a part time finance technician was
budgeted with an anticipated start date of October but was delayed to 2019. The result
reflected in salaries and benefit savings in 2018.
o Culture and recreational expenditures ended 2018 over budget. In 2015 the City of St.
Joseph purchased the former Kennedy Elementary (Colts Academy) from Independent
School District 742. The building was leased to the school district and a child care center.
The school district moved out of the facility in June 2018, turning over the space to the
City. The City completed several repairs and upgrades needed to safely occupy the space.
The City opened the gym in October for public use. In addition, the St. Joseph Food Shelf
and Historical Society moved into vacant rooms. The costs to prepare the spaces to be
ready for the public use came in higher than anticipated. In addition, a part time boiler
technician was hired for daily boiler checks. A proper license is required for the boiler
maintenance. City maintenance staff do not have the boiler operational hours needed to
safely operate the boilers. The staff position was not budgeted in 2018.
o Engineering expenditures came in $31,024 over budget. The engineer completed the
feasibility report for the 2019 street improvements at a cost of $36,765. The expenditures
will be reimbursed by the bond funds in 2019.
o Other governmental expenditures were over budget by $30,455. The expenditures include
the completion of the comprehensive plan document (funding provided in previous years;
additional budgeted amount was not necessary to cover costs), and professional service
expenditures to complete the annexation of a portion of St. Joseph Township.
State Collected Sales Tax Fund. The state collected sales tax fund began in 2006. The State of
Minnesota and voters in the St. Cloud area approved a 0.5% local option sales tax to fund regional
projects such as a community facilities, transportation needs, and parks and trails. As of December 31,
2018, the City of St. Joseph collected $4,263,671; $860,917 more than originally budgeted when
legislative authority was granted. The City spent $5,273,100 since its inception. The fund received bond
proceeds and other revenues totaling $1,916,119. The fund balance at the end of the year was $906,690.
In 2018 the City authorized the construction of phase II/III of the RCR2 trail. The trail extends adjacent
th
to MN St W starting at 4 Avenue NW to CR 2 and then south along CR 2 to CR 51. The funding for
the trail includes a combination of federal funds administered through the St. Cloud Area Planning
Organization and sales tax revenue. Construction is anticipated to be completed in August 2019.
15
City of St. Joseph
Management's Discussion and Analysis
State Collected Sales Tax Fund Budgetary Highlights. The city council adopts a budget for the state
collected sales tax fund through the five-year capital improvement plan. Budgets were not amended
during the year. The fund ended the year $545,501 over budget. Sales tax revenues were $17,672 over
budgeted amount and capital outlay was $547,829 under budget. Sales tax revenues continue to exceed
original expectations when the State approved the St. Cloud area local option collection. The City
budgets conservatively to avoid over-committing available funds for project planning. The capital outlay
expenditures were under budget by over half. The CR2 trail project was anticipated to start earlier in
2018. Due to State of Minnesota approvals of the design plans, the planning period took longer than
anticipated. Construction began in fall 2018 and is expected to finish in 2019.
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 $568,481 overall. The following five paragraphs provide a
brief financial overview of each major proprietary fund.
Water Enterprise Fund. The water fund is used to account for the operations of the City's water utility.
In 2018, the water fund's net position increased $300,032. Before transfers and capital contributions, the
operating income reported a $152,395 surplus. The net position includes depreciation of $436,325. The
water operating revenues are covering over 100% of the depreciation, 69% when including non-
operating revenues and expenses. Bonded debt payments in the water fund totaled $700,961. Debt
payments are covered by water rates, debt levy, water connection and trunk fees, and transfers from the
sewer fund. Water rates have been incrementally increased over the past few years to cover operational
costs as well as water related debt. Future increases are anticipated to be up to 5%, depending upon new
connections that help cover the debt costs. Rates are reviewed annually as part of the budget adoption.
Sanitary Sewer Enterprise Fund. The sanitary sewer fund is used to account for the operations of the
city's sanitary sewer utility. In 2018, the Sanitary Sewer Fund's net position increased $425,805 and
realized $444,941 in operating income. User fees are covering 100% of the depreciation, 86% when
including non-operating revenues and expenses. 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 plant and
conveyance system. St. Joseph issued six (6) notes with the City of St. Cloud for various facility and
conveyance projects. In addition, St. Joseph issued three (3) bonds for improvement projects within the
City's sanitary sewer system. The large debt costs are partially paid with reserved Sewer Access Charges
(SAC), trunk fees and sewer usage rates. The development fees in 2018 greatly assisted in covering debt
costs. As a result, rate increases have slowed down to a more average increase (up to 3%) after a few
years of significant user rate increases. Rates are reviewed annually as part of the budget adoption.
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 ended 2018 with a net position of
$251,887. City council opted to reduce the 60-gallon refuse cart fee and maintain the compost rates to
allow for larger rate increases in other utility funds. The rate reduction does not cover operating costs,
even when excluding depreciation. As expected with the rate decisions, the net position decreased
$24,000. The overall net position is healthy and able to manage the decrease.
16
City of St. Joseph
Management's Discussion and Analysis
Storm Water Enterprise Fund. The storm water fund is used to account for the operations of the City's
storm water utility. In 2018, the storm water fund's net position decreased $146,899, a decrease of
$129,592 before capital contributions and transfers. The Storm Water Fund realized an operating loss of
$23,778 without depreciation. As with the refuse fund, the City council opted to reduce the storm water
usage rates by half in order to accommodate increases in other utilities. The net loss was anticipated, and
the Storm Water Fund could absorb with the healthy net position balance. In addition, the Storm Water
Fund collected $26,044 in development fees to assist in operational activities of the fund.
Street Light Utility Enterprise Fund. The Street Light Utility Fund is used to account for the
operations of the City's street lighting. As of December 31, 2018, the street light utility fund's change in
net position increased $13,543, and an operating income of $5,735. The City council increased rates
slightly to ensure expenses are covered by fees. The Street Light Utility Fund also covers expenses for
holiday lights on the street lights and other utility poles along Minnesota Street and College Avenue.
The St. Joseph Lion's Club donated $7,000 to help replace some of the holiday decorations in 2018.
Overall, the net position of the street light utility fund has grown to $34,692 since splitting from the
general fund in 2013.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets. The capital assets include land, intangible assets, buildings, improvements, machinery,
and equipment, infrastructure, easements, plant and lines, sewer rights, and construction in progress. The
City of St. Joseph's net capital assets for its governmental and business-type activities as of
December 31, 2018, amounts to $49,276,934 (net of accumulated depreciation), a decrease of $577,313.
The decrease in net capital assets was attributable to the sale of the old City Hall. The asset removed
from the asset listing totaled $869,924 less accumulated depreciation of $322,569. Net investment in
capital assets increased $372,503. The increase is attributable to capital asset construction in progress to
include the CR2 trail and St. Cloud area sewer improvements, and the decrease in related debt costs.
The City of St. Joseph issued two debts and decreased three debts (one paid in full early). The debt
issuance amounts were higher than the declined by $1.3 million. The overall debt related to capital
assets decreased $1.1 million.
The table below is a summary of the City of St. Joseph's capital assets.
CAPITAL ASSETS
Governmental ActivitiesBusiness-Type ActivitiesTotal
201820172018201720182017
Land$ 763,197$ 874,133$ 377,882 $ 377,882 $ 1,141,079 $ 1,252,015
Easements 200,085 175,873 67,915 67,915 268,000 243,788
Construction in progress 764,136 465,006 1,860,536 705,096 2,624,672 1,170,102
Improvements 20,389,483 1,369,201 - - 20,389,483 1,369,201
Infrastructure 8,735,795 20,176,666 8,797,686 - 17,533,481 20,176,666
Buildings 1,353,806 9,540,762 289,760 8,797,686 1,643,566 18,338,448
Intangible assets 200,000 200,000 - - 200,000 200,000
Plant and lines 3,860,682 - 865,445 24,275,118 4,726,127 24,275,118
Sewer rights - - 24,190,729 9,068,746 24,190,729 9,068,746
Machinery and equipment - 3,677,400 9,068,746 778,232 9,068,746 4,455,632
Less: accumulated
depreciation (19,952,030) (19,006,537) (12,556,919) (11,688,932) (32,508,949) (30,695,469)
Total net capital assets$ 16,315,154 $ 17,472,504$ 32,961,780 $ 32,381,743 $ 49,276,934 $ 49,854,247
17
City of St. Joseph
Management's Discussion and Analysis
Additional information on the City of St. Joseph's capital assets can be found in Note 5 on page 50 of
this report. Total depreciation expense for 2018 was $2,499,944.
Long-Term Liabilities. The City of St. Joseph's long-term liabilities includes bonded debt (including
notes payables), compensated absences and net pension liability. Overall the long-term liabilities totaled
$24,469,890 as of December 31, 2018, a decrease of $1,159,493.
At the end of the current fiscal year, the City of St. Joseph had total net bonded debt outstanding of
$22,461,205, a decrease of $936,856. Of this amount, $10,748,578 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 and net pension liabilities.
Compensated absences increased $11,131 in 2018. The general increase in wages including step
increases and the relatively low turnover rate caused the compensated absences liability to increase.
Net pension liability accounts for the City's portion of the Public Employees Retirement Association of
Minnesota (PERA). As per Minnesota Statutes, the City is required to participate in the PERA program.
The City's share of the liability fluctuates each year based on law changes and funding levels. For 2018,
the net pension liability decreased $233,768.
An illustration of the City's long-term liabilities is included in the table below.
OUTSTANDING LONG-TERM LIABILITIES
IncreasePercent
Governmental Activities20182017(Decrease)Change
General obligation bonds$ 4,719,469$ 4,958,545 $ (239,076)-5%
General obligation special assessment bonds 4,490,835 5,107,149 (616,314)-12%
General obligation abatement bonds 1,538,274 1,650,235 (111,961)-7%
Compensated absences payable 455,241 452,500 2,7411%
Net pension liability 1,150,594 1,351,208 (200,614)-15%
Total governmental activities$ 12,354,413$ 13,519,637$ (1,165,224)-9%
IncreasePercent
Business-Type Activities20182017(Decrease)Change
General obligation revenue bonds$ 6,194,866$ 6,959,071 $ (764,205)-11%
Notes payable 5,517,761 4,723,061 794,70017%
Compensated absences payable 151,629 143,239 8,3906%
Net penion liability 251,221 284,375 (33,154)-12%
Total business-type activities$ 12,115,477$ 12,109,746$ 5,7310%
18
City of St. Joseph
Management's Discussion and Analysis
Long-Term Liabilities (Continued).The City of St. Joseph issued $265,000 general obligation
equipment certificate of indebtedness, series 2018A in February 2018. The certificates were used to
purchase general equipment under the 5-year capital equipment plan.
In addition, the City of St. Joseph issued a public facilities (PFA) note with the City of St. Cloud for
wastewater biosolids treatment improvements in the amount of $1,251,197. The City of St. Joseph is a
part of the St. Cloud Area Wastewater Advisory Commission (SCAWAC). Wastewater treatment is
provided by the City of St. Cloud to six area cities. Each city purchases sewer treatment rights in the
wastewater treatment facility. Also part of the agreement, the area cities participate in conveyance costs
to transport the wastewater to the facility. With the 2018 PFA note addition, the City of St. Joseph has
six notes outstanding with the City of St. Cloud for treatment facility and conveyance projects.
As stated earlier, the City of St. Joseph reduced bonded indebtedness by $936,856. After the two bond
issues noted above, the City paid three debts in full in 2018. Bond payments for the year exceeded new
bonds issued. The City opted to postpone a major improvement in 2018 in an effort to reduce the bonded
debt and required revenues to pay for the debts.
The City of St. Joseph maintained their bond rating AA-/Stable from Standards and Poor's. The 2018
debt issues were under the threshold to receive a bond rating; therefore, a bond rating update was not
initiated
Minnesota 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 $10,278,591
which significantly exceeds the outstanding pure general obligation debt of $4,674,000.
Additional information on the City's long-term liabilities can be found in Note 6 beginning on page 52
of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
The past few years have been exciting in the City of St. Joseph after several years of contracting
economies from the 2008 Great Recession. After several years of declining market values and slow
development the City's taxable market value increased 11.61% the past four years and development has
been encouraging. As a result of improved conditions, the City has been able to keep a stable tax rate
while maintaining service levels.
In the development market the City added 25 new single-family homes and two multi-family facilities
for residential living units. New development on the commercial side included 13 remodels and
additions. Total market value additions in the building department added $10,911,933 in value. In the
past three years, new construction as well as remodels/additions and repairs added over $55.7 million in
market value for the City of St. Joseph.
.
19
City of St. Joseph
Management's Discussion and Analysis
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES (CONTINUED)
In addition to new construction, current structures have impacted the net tax capacity. The sale prices
have increased along with the assessors estimated market values for existing properties. To stay in
compliance with Minnesota Statutes, the sales price ration indicated the need to increase existing market
values. This combined with the new buildings; market values increased 5.34% for the 2018 property
values.
As stated, single family residential construction included 25 new homes built in 2018; the most since
2009. Nationally and in Minnesota the housing market is improving. In the City of St. Joseph, two
developers expanded their developments to provide 34 lots in three subdivisions. In addition, the
Country Manor senior development began construction of single-family homes in their first phase
development. The first phase includes twelve detached patio homes; two were constructed. 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.
Other new construction in 2018 included the completion of a Kwik Trip convenience store and O'Reilly
Auto Parts Store. The St. Joseph downtown continues to see economic development. Bad Habit Brewing
Company purchased the former city hall to convert the space to a destination brew pub. The facility will
include an outside patio that will be able to seat 200. Immediately across the street from Bad Habit is the
development entitled 24 North Lofts on College Ave. While this development stared in 2017 the
majority of the construction was completed in 2018.
The 24 North Lofts project includes 17 residential lofts and retail space that will be occupied by a New
Orleans restaurant named Krewe. The facility will also include a separate building that will house New
Orleans Bakery. The Lofts and restaurant will both open in 2019. Late in 2018 the City Council
approved the development plan that would allow for two market rate apartment buildings to be
constructed on the former Delwin property. Each building will consist of 35 units with the first building
starting in 2018 and the second building early 2019. Occupancy is expected in fall 2019.
Remodel projects in 2018 included remodeling a single-family home for an elementary school for grades
K-3. The Lillian Leonard Primary is a private school. Students are able to share facilities with Little
Saints Academy Daycare for recreational and food service activities. The College of St. Benedict's
completed construction of their athletic fields and artisan studios/administrative offices/welcome center
buildings. The College also completed several remodel and updates to existing dorms and educational
facilities.
20
City of St. Joseph
Management's Discussion and Analysis
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES (CONTINUED)
The City of St. Joseph anticipates commercial/industrial development with the expansion of the
Industrial Park in 2019. The City was awarded a $1,245,000 million BDPI development grant from the
Minnesota Department of Employment and Economic Development department (MN DEED) to assist
with costs for public streets and utilities to create shovel ready industrial lots. Phase one of the project
will begin mid-2019 and will include approximately 22 lots. The plat was designed with the majority of
lots one acre in size. Since it is easier to combine lots that it would be to split large lots, the small lots
allow for flexibility when selling lots and will be attractive to both small and large industries. The
industrial park project is a combined City and private partnership. The City secured the grant for the
public improvements and the private developer, CLC Partners LLC, own the property and will cover all
costs exceeding the grant amount. The City anticipates the construction of two office buildings adjacent
to CR 133 near Coborn's. One office building will house the home office for a construction company
and will consist of approximately 8,854 square feet. The other office building is anticipated to submit
plans in mid-2019. The City Council approved an application with the Central MN Housing Partnership
to secure funding through the Minnesota Small Cities Development Program Grant (SCDP) in the
amount of $178,624 in 2018. The grant provides funding to eligible property owners to complete major
repairs on their homes. Participants must meet income level eligibility requirements to receive a loan
that is forgivable incrementally over a seven-year period. The rehabilitation projects are anticipated to
be completed in 2019.
Besides developments and rehabilitation projects, the City added to their property market value with the
annexation of a large portion of the St. Joseph Township. The City of St. Joseph and St. Joseph
Township entered into an orderly annexation (OAA) agreement in 1997. In December 2017 the City
notified St. Joseph Township of the intent to exercise their right to annex all the properties included in
the OAA agreement effective April 2018. After negotiations with the Township, the City agreed to
annex a portion of the properties included in the OAA and retain land use controls over the properties
not annexed to the City but included in the OAA. The properties that were not annexed included
th
property east of Ridgewood Road to the Sauk River and properties east of the proposed 20 Avenue
Extension to the Sauk River. The annexation included approximately 230 properties area with a taxable
market value of $55.6 million. The annexation of the properties will have varied impacts to the City.
The City agreed to create a Rural Tax rate which would be equal to the Township Tax rate and be
adjusted annually in the same apportion as the City rate is adjusted. Properties zoned Rural Residential
qualify for this tax rate. The agreement includes conditions as to when the full city tax rate applies.
Therefore, all properties taxed at the Rural Tax rate will receive minimal services, equal to the services
received while under the jurisdiction of St. Joseph Township. All commercial and Industrial developed
property annexed will be phased into the City tax rate over a six year period in equal increments. The
annexation was approved and finalized by the State of Minnesota in January 2019.
21
City of St. Joseph
Management's Discussion and Analysis
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES (CONTINUED)
The City of St. Joseph submitted three bonding requests for State Legislative consideration. The projects
include: pedestrian crossing under CSAH 75 ($1.5 million); Jacob Wetterling Recreation Center ($2.5
million); and development of the East Park canoe and picnic area ($300,000). To help facilitate the
bonding process the City hired a lobbyist. The City has received hearings on the East Park and Jacob
Wetterling Recreation Center projects in the 2019 legislative session. The MN House has included the
Jacob Wetterling Recreation Center in their proposed bonding bill. As part of the bonding request, the
City agrees to at least match the bonding request. In addition to the bonding requests, the City of St.
Joseph hired Four Winds Consulting to conduct a feasibility study on raising funds for the Jacob
Wetterling Recreation Center.
In 2018, Independent School District 742 moved out of the Colts Academy facility upon completion of
their new building. The community center space was upgraded by the City for open gym, the St. Joseph
Historical Society and St. Joseph Food Shelf. Open gym and the Food Shelf began operating out of the
new space in 2018. The Historical Society has started moving into the facility with an anticipated
opening in 2019. The old spaces used by the Food Shelf and Historical Society will be considered for
disposal in 2019. Little Saints Academy also leases space in the community center and in December
2018 they requested the City Council approve an amendment to the lease to allow utilization of
additional space for a term of six months. The Little Saints Academy Lease continues until December
2020.
In 2017 the St. Joseph EDA recommended, and the City Council approved the implementation of a
lodging tax to help promote tourism. In 2018 the EDA approved the enabling resolution appoint
members to create a convention and visitors bureau. It is anticipated the EDA will approve the branding
and marketing in early 2019
All the factors were considered in preparing the City of St. Joseph's budget and fee schedule for 2018
and future reporting years. The budget for 2019 was prepared knowing the following projects were
anticipated or already in the construction phase: East Park canoe and picnic area design, East Park
reforestation and prairie restoration, CR 2 Trail construction from Minnesota Street West to CR 51,
industrial park expansion, 2019 street improvement project, public works maintenance shop expansion
planning and design, and Jacob Wetterling Recreation Center fundraising.
REQUESTS FOR INFORMATION
The audited 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, 2018
Governmental Business-Type
ActivitiesActivitiesTotal
Assets
Cash and investments (including cash equivalents)$ 5,905,425$ 1,864,482$ 7,769,907
Property tax receivable 19,279 272 19,551
Accounts receivable 51,525 459,163 510,688
Interest receivable 16,515 11,261 27,776
Due from other governments 122,671 154 122,825
Notes receivable 290,529 - 290,529
Lease receivable 132,460 - 132,460
Special assessments receivable
Delinquent 11,738 605 12,343
Deferred 1,396,991 25,085 1,422,076
Prepaid items 24,560 - 24,560
196,588
Net pension asset 196,588 -
Capital assets
Land 763,197 377,882 1,141,079
Easements 200,085 67,915 268,000
Construction in progress 764,136 1,860,536 2,624,672
Buildings 8,735,795 8,797,686 17,533,481
Infrastructure 20,389,483 - 20,389,483
Improvements 1,353,806 289,760 1,643,566
Intangible asset 200,000 - 200,000
Plant and lines - 24,190,729 24,190,729
Machinery and equipment 3,860,682 865,445 4,726,127
Sewer rights 9,068,746 9,068,746
-
Less accumulated depreciation (19,952,030) (12,556,919) (32,508,949)
Capital assets (net of accumulated depreciation) 16,315,154 32,961,780 49,276,934
24,483,435 35,322,802 59,806,237
Total assets
Deferred Outflows of Resources
Deferred outflows of resources related to pensions
1,091,570 49,921 1,141,491
$ 25,575,005$ 35,372,723$ 60,947,728
Total assets and deferred outflows of resources
Liabilities
Accounts payable$ 74,667$ 64,219$ 138,886
Contracts payable 12,134 - 12,134
Due to other governments 13,862 136,619 150,481
123,769 16,362 140,131
Salaries and benefits payable
19,411 53,162 72,573
Interest payable
Bond principal payable (net)
Payable within one year 1,087,000 771,000 1,858,000
Payable after one year 9,661,578 5,423,866 15,085,444
Notes payable (net)
Payable within one year - 510,541 510,541
Payable after one year - 5,007,220 5,007,220
Compensated absences payable
Payable within one year 85,326 19,926 105,252
Payable after one year 369,915 131,703 501,618
1,150,594 251,221 1,401,815
Net pension liability
Total liabilities 12,598,256 12,385,839 24,984,095
Deferred Inflows of Resources
Deferred inflows of resources related to lease receivables 132,460 - 132,460
Deferred inflows of resources related to pensions 1,325,459 63,569 1,389,028
Total deferred inflows of resources 1,457,919 63,569 1,521,488
Net Position
7,223,470 21,249,153 26,880,985
Net investment in capital assets
Restricted for
2,661,219 - 2,661,219
Debt service
1,196,280 - 1,196,280
Other purposes
Unrestricted 437,861 1,674,162 3,703,661
Total net position 11,518,830 22,923,315 34,442,145
Total liabilities, deferred inflows of resources, and net position$ 25,575,005$ 35,372,723$ 60,947,728
See notes to financial statements.24
-
473
13,35215,93056,189
(25,184)
409,685480,861749,259118,903442,677131,212792,291
(783,115) (169,263)(389,268)(283,649)(129,455)
2,205,6051,001,5013,972,490
Total
(1,065,353) (1,238,810) (3,929,458) (3,180,199)
33,649,85434,442,145
$
$
------------
473
13,35222,55422,55132,27077,848
(25,184)
409,685480,861749,259749,259827,107
(129,455)
22,096,20822,923,315
Activities
Business-Type
$
$
Net (Expense) Revenue
and Changes in Net Position
-------
15,93033,638
(32,270)(34,816)
118,903442,677131,212
(783,115) (169,263) (389,268) (283,649)
2,183,0511,001,5013,894,642
(1,065,353) (1,238,810) (3,929,458) (3,929,458)
11,553,64611,518,830
Activities
Governmental
$
$
-----
471
3,5007,000
72,61676,63884,109
134,446210,562294,671
Capital Grants
$
$
and Contributions
----
168184617
4,9911,152
(37,458)(35,337)
171,949176,940141,603
$
$
Operating Grants
and Contributions
Program Revenues
City of St. Joseph
-
Statement of Activities
42,68618,09270,79780,71076,625
Year Ended December 31, 2018
414,808649,240282,589
1,195,6231,452,3031,527,9113,420,1384,615,761
Services
Charges for
$ $
70,890
Total general revenues and transfers
187,355532,681283,649307,941210,349
1,206,4141,886,5421,415,9425,512,5831,044,2411,086,2302,719,6518,232,234
Property taxesTax incrementsSales taxesLodging taxesFranchise feesState aidsUnrestricted investment earningsGain on sale of assets
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
December 31, 2018
Special Revenue
General Fund Other Total
(101, 102, State Collected Governmental Governmental
105, 108)Sales Tax (200)FundsFunds
Assets
Cash and investments$ 2,485,494$ 827,524$ 3,090,356$ 6,403,374
Taxes receivable - delinquent 11,808 - 7,471 19,279
Special assessments receivable
Delinquent - - 11,738 11,738
Deferred 11,592 - 1,385,399 1,396,991
Accounts receivable 50,870 - 7,955 58,825
Interest receivable 8,916 - 9,055 17,971
Due from other funds - - 10,800 10,800
Due from other governments 13,987 92,471 16,213 122,671
Notes receivable - - 290,529 290,529
Lease receivable 132,460 - - 132,460
Prepaid items 24,560 - - 24,560
Total assets$ 2,739,687$ 919,995$ 4,829,516$ 8,489,198
Liabilities
Accounts payable$ 61,731$ 1,171$ 11,765$ 74,667
Contracts payable - 12,134 - 12,134
Due to other funds - - 10,800 10,800
Due to other governments 13,862 - - 13,862
Salaries and benefits payable 122,312 - 1,457 123,769
Total liabilities 197,905 13,305 24,022 235,232
Deferred Inflows of Resources
Unavailable revenue - property taxes 11,808 - 7,471 19,279
Unavailable revenue - special assessments 11,592 - 1,397,137 1,408,729
Unavailable revenue - notes receivable - - 290,529 290,529
Unavailable revenue - leases receivable 132,460 - - 132,460
155,860 - 1,695,137 1,850,997
Total deferred inflows of resources
Fund Balances
Nonspendable 24,560 - - 24,560
Restricted 5,051 906,690 1,395,835 2,307,576
Committed - - 198,716 198,716
Assigned 887,926 - 1,524,631 2,412,557
Unassigned 1,468,385 - (8,825) 1,459,560
Total fund balances 2,385,922 906,690 3,110,357 6,402,969
Total liabilities, deferred inflows
of resources, and fund balances$ 2,739,687$ 919,995$ 4,829,516$ 8,489,198
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, 2018
Total fund balances - governmental funds$ 6,402,969
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
36,267,184
Less accumulated depreciation
(19,952,030)
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.
(10,748,578)
Bond principal payable, net of premiums and discounts
(455,241)
Compensated absences payable
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.
19,279
Property taxes
11,738
Special assessments
Other long-term assets are not available to pay for current expenditures and,
therefore, are deferred in the funds.
1,396,991
Deferred special assessments
290,529
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 (1,325,459)
Deferred outflows of resources related to pensions 1,091,570
Fire relief net pension asset 196,588
Net pension liability (1,150,594)
The water access capital project fund is proprietary in nature and, therefore,
(415,429)
included in the business-type activities in the Statement of Net Position.
The sewer access capital project fund is proprietary in nature and, therefore,
(91,276)
included in the business-type activities in the Statement of Net Position.
Governmental funds do not report a liability for accrued interest
(19,411)
due and payable.
Total net position - governmental activities$ 11,518,830
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, 2018
Special Revenue
General Fund Other Total
(101, 102, 105, State Collected Governmental Governmental
108)Sales Tax (200)FundsFunds
Revenues
Property taxes$ 1,291,753$ -$ 888,153$ 2,179,906
Tax increments - - 118,903 118,903
Sales taxes 5 442,672 - 442,677
Lodging taxes - 15,930 15,930
Special assessments 5,341 - 364,245 369,586
Franchise fees 131,212 - - 131,212
Licenses and permits 357,138 - - 357,138
Intergovernmental 1,227,716 - - 1,227,716
Charges for services 396,183 - 561,522 957,705
Fines and forfeitures 58,620 - - 58,620
Miscellaneous
Investment income 16,160 - 18,098 34,258
Contributions and donations 7,966 - 730 8,696
Revolving loan repayments - - 5,098 5,098
Other 35,251 - 27,397 62,648
Total revenues 3,527,345 442,672 2,000,076 5,970,093
Expenditures
Current
General government 741,374 - 13,069 754,443
Public safety 1,606,132 - - 1,606,132
Public works 440,811 - - 440,811
Culture and recreation 331,861 - 5,584 337,445
Economic development - - 183,663 183,663
Debt service
Principal - - 1,218,000 1,218,000
Interest and other charges - - 306,003 306,003
Capital outlay
General government 4,648 - 20,405 25,053
Public safety 30,453 - 2,460 32,913
Public works 61,849 - 254,017 315,866
Culture and recreation 3,445 402,171 149,983 555,599
Total expenditures 3,220,573 402,171 2,153,184 5,775,928
Excess of revenues over
(under) expenditures
306,772 40,501 (153,108) 194,165
Other Financing Sources (Uses)
Insurance recoveries 12,779 - - 12,779
Sale of property - - 135,000 135,000
Bonds issued - - 265,000 265,000
Transfers in 4,111 - 599,880 603,991
Transfers out (293,563) (180,000) (352,678) (826,241)
Total other financing sources (uses) (276,673) (180,000) 647,202 190,529
Net change in fund balances 30,099 (139,499) 494,094 384,694
Fund Balances
Beginning of year2,355,823 1,046,189 2,616,263 6,018,275
End of year$ 2,385,922$ 906,690$ 3,110,357$ 6,402,969
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, 2018
Total net change in fund balances - governmental funds$ 384,694
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.
867,361
Capital outlays
47,500
Capital contributions
(1,458,295)
Depreciation expense
(548,896)
Loss on disposal
(65,020)
Transferred to proprietary funds
Principal payments on long-term debt are recognized as expenditures in the governmental
1,218,000
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.
8,003
Accrued interest payable
14,351
Amortization of bond discounts, premiums and issuance charges
Proceeds from long-term debt are recognized as an other financing source in the governmental
(265,000)
funds but as a decrease in net position in the Statement of Activities.
Compensated absence payments are recognized as paid in the
(2,741)
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.
4,415
Delinquent special assessments
3,145
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.
(309,116)
Deferred special assessments
285,504
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.
39,905
Pension expense
The water access capital project fund is proprietary in nature and, therefore, is reported
(173,708)
with business-type activities.
The sewer access capital project fund is proprietary in nature and, therefore, is reported
(84,918)
with business-type activities.
Change in net position - governmental activities$ (34,816)
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, 2018
Variance with
Original and Actual
Final Budget -
Final BudgetAmountsOver (Under)
Revenues
Property taxes$ 1,282,660$ 1,291,753 $ 9,093
Sales taxes - 5 5
Special assessments 3,000 5,341 2,341
Franchise fees 131,480 131,212 (268)
Licenses and permits 194,515 357,138 162,623
Intergovernmental 1,185,105 1,227,716 42,611
Charges for services 386,870 396,183 9,313
Fines and forfeitures 55,500 58,620 3,120
Miscellaneous revenues
Investment income 27,000 16,160 (10,840)
Contributions and donations 2,600 7,966 5,366
Other 43,415 35,251 (8,164)
Total revenues 3,312,145 3,527,345 215,200
Expenditures
Current
General government 726,470 741,374 14,904
Public safety 1,695,740 1,606,132 (89,608)
Public works 415,595 440,811 25,216
Culture and recreation 300,325 331,861 31,536
Capital outlay
General government 10,435 4,648 (5,787)
Public safety 89,750 30,453 (59,297)
Public works 77,500 61,849 (15,651)
Culture and recreation - 3,445 3,445
Total expenditures 3,315,815 3,220,573 (95,242)
Excess of revenues over
(under) expenditures (3,670) 306,772 310,442
Other Financing Sources (Uses)
Insurance recoveries - 12,779 12,779
Sale of property 200 - (200)
Transfers in 6,500 4,111 (2,389)
Transfers out - (293,563) (293,563)
Total other financing sources (uses) 6,700 (276,673) (283,373)
Net change in fund balances$ 3,030 30,099$ 27,069
Fund Balances
Beginning of year2,355,823
End of year$ 2,385,922
See notes to the financial statements.30
City of St. Joseph
Statement of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - State Collected Sales Tax
Year Ended December 31, 2018
Variance with
Original and Actual
Final Budget -
Final BudgetAmounts
Over (Under)
Revenues
Sales taxes$ 425,000$ 442,672$ 17,672
Expenditures
Capital outlay
Culture and recreation 950,000 402,171 (547,829)
Excess of revenues over
(under) expenditures
(525,000) 40,501 565,501
Other Financing Sources (Uses)
Transfers out (160,000) (180,000) (20,000)
Net change in fund balances$ (685,000) (139,499)$ 545,501
Fund Balances
Beginning of year1,046,189
End of year$ 906,690
See notes to the financial statements.31
City of St. Joseph
Statement of Net Position - Proprietary Funds
December 31, 2018
Sanitary Sewer Storm Water Street Light
Water (601)(602)Refuse (603)(651)Utility (652)Total
Assets
Current assets
Cash and investments$ 602,019$ 232,990 $ 244,488$ 251,993$ 35,043$ 1,366,533
Taxes receivable - delinquent 272 - - - - 272
Special assessments receivable
Delinquent 605 - - - - 605
Deferred 24,897 95 76 7 10 25,085
Accounts receivable 144,920 239,541 46,017 8,861 12,524 451,863
Interest receivable 2,492 5,297 922 989 105 9,805
Due from other governments 154 - - - - 154
Total current assets 775,359 477,923 291,503 261,850 47,682 1,854,317
Noncurrent assets
Capital assets
Land 372,941 4,941 - - - 377,882
Easements - - - 67,915 - 67,915
Construction in progress 58,876 1,686,660 - 115,000 - 1,860,536
Buildings 7,502,432 1,295,254 - - - 8,797,686
Improvements 289,760 - - - - 289,760
Plants and lines 10,283,251 8,684,608 - 5,222,870 - 24,190,729
Machinery and equipment 215,942 602,220 45,842 1,441 - 865,445
Sewer rights - 9,068,746 - - - 9,068,746
Total capital assets 18,723,202 21,342,429 45,842 5,407,226 - 45,518,699
Less accumulated depreciation (5,639,946) (5,355,359) (39,336) (1,522,278) - (12,556,919)
Net capital assets 13,083,256 15,987,070 6,506 3,884,948 - 32,961,780
Total assets 13,858,615 16,464,993 298,009 4,146,798 47,682 34,816,097
Deferred Outflows of Resources
Deferred outflows of resources related to pensions 23,256 18,809 2,360 4,552 944 49,921
Total assets and deferred
$ 13,881,871$ 16,483,802 $ 300,369$ 4,151,350$ 48,626$ 34,866,018
outflows of resources
Liabilities
Current liabilities
Accounts payable$ 25,959$ 13,107 $ 20,830$ 194$ 4,129$ 64,219
Due to other governments 2,333 131,272 3,014 - - 136,619
Salaries and benefits payable 7,252 6,250 964 1,560 336 16,362
Interest payable 8,926 44,236 - - - 53,162
Long-term liabilities due
Within one year 589,116 708,657 961 2,349 384 1,301,467
Total current liabilities 633,586 903,522 25,769 4,103 4,849 1,571,829
Noncurrent liabilities
Compensated absences 63,237 63,237 8,792 12,847 3,516 151,629
Notes payable, net - 5,517,761 - - - 5,517,761
Bonds payable, net 4,666,398 1,528,468 - - - 6,194,866
Net pension liability 117,032 94,655 11,877 22,906 4,751 251,221
Less amounts due within one year (589,116) (708,657) (961) (2,349) (384) (1,301,467)
Total noncurrent liabilities 4,257,551 6,495,464 19,708 33,404 7,883 10,814,010
Total liabilities 4,891,137 7,398,986 45,477 37,507 12,732 12,385,839
Deferred Inflows of Resources
Deferred inflows of resources related to pensions 29,614 23,952 3,005 5,796 1,202 63,569
Net Position
Net investment in capital assets 8,416,858 8,940,841 6,506 3,884,948 - 21,249,153
Unrestricted 544,262 120,023 245,381 223,099 34,692 1,167,457
Total net position 8,961,120 9,060,864 251,887 4,108,047 34,692 22,416,610
Total liabilities, deferred inflows
of resources, and net position$ 13,881,871$ 16,483,802 $ 300,369$ 4,151,350$ 48,626$ 34,866,018
See notes to financial statements.32
City of St. Joseph
Reconciliation of the Statement
of Net Position - Business-Type Activities
December 31, 2018
Total net position - proprietary funds$ 22,416,610
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,
415,429
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,
91,276
it is included as a business-type activity.
Total net position - business-type activities
$ 22,923,315
See notes to financial statements. 33
City of St. Joseph
Statement of Revenues, Expenses, and Changes
in Net Position - Proprietary Funds
Year Ended December 31, 2018
Sanitary Storm Water Street Light
Water (601)Sewer (602)Refuse (603)(651)Utility (652)Total
Operating revenues
Charges for services$ 1,030,342$ 1,387,894$ 280,981$ 80,710 $ 76,625$ 2,856,552
Operating Expenses
Wages and salaries 201,199 139,394 24,028 51,706 8,192 424,519
Materials and supplies 64,383 43,740 2,777 230 - 111,130
Repairs and maintenance 51,429 17,018 2,225 30,622 6,259 107,553
Professional services 30,050 25,133 5,014 19,168 87 79,452
Insurance 11,325 9,152 - - - 20,477
Utilities 71,899 18,899 446 - 46,375 137,619
Depreciation 436,325 493,004 6,506 105,814 - 1,041,649
Contracted services - 195,177 265,818 - - 460,995
Equipment - - - - 9,700 9,700
Miscellaneous 11,337 1,436 1,127 2,762 277 16,939
Total operating expenses 877,947 942,953 307,941 210,302 70,890 2,410,033
Operating income (loss) 152,395 444,941 (26,960) (129,592) 5,735 446,519
Nonoperating revenues
(expenses)
Investment income 4,552 9,676 1,684 1,806 191 17,909
Special assessments 726 96 77 8 10 917
Gain on disposal of asset - 473 - - - 473
Loss on disposal of asset (50,907) (47) - (47) - (51,001)
Property taxes 22,554 - - - - 22,554
Interest expense (121,726) (146,492) - - - (268,218)
Amortization of bond premium 6,339 3,262 - - - 9,601
Other income 53,161 1,495 1,699 176 7,607 64,138
Total nonoperating revenues
(expenses) (85,301) (131,537) 3,460 1,943 7,808 (203,627)
Income (loss) before capital
contributions and transfers 67,094 313,404 (23,500) (127,649) 13,543 242,892
Capital grant - 38,319 - - - 38,319
Capital contributions 32,438 32,582 - - - 65,020
Transfers in 207,000 55,000 - - - 262,000
Transfers out (6,500) (13,500) (500) (19,250) - (39,750)
Change in net position 300,032 425,805 (24,000) (146,899) 13,543 568,481
Net position
Beginning of year 8,661,088 8,635,059 275,887 4,254,946 21,149 21,848,129
End of year$ 8,961,120$ 9,060,864$ 251,887$ 4,108,047$ 34,692$ 22,416,610
See notes to financial statements. 34
City of St. Joseph
Reconciliation of the Statement of Revenues, Expenses,
and Changes in Net Position - Business-Type Activities
Year Ended December 31, 2018
Total net change in fund net position - proprietary funds$ 568,481
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. 173,708
Recognized current year activity from the sewer access capital project fund
with the business-type activities. 84,918
Capital contributions from governmental activities (65,020)
Transfers in of capital assets from governmental activities 65,020
Change in net position - business-type activities$ 827,107
See notes to financial statements.35
City of St. Joseph
Statement of Cash Flows - Proprietary Funds
Year Ended December 31, 2018
Sanitary Sewer Refuse Storm Water Street Light
Water (601)(602)(603)(651)Utility (652)Total
Cash Flows - Operating Activities
Receipts from customers and users$ 1,045,146$ 1,369,641$ 284,649$ 88,803$ 74,624 $ 2,862,863
Payments to suppliers (232,807) (226,403) (276,871) (52,597) (62,815) (851,493)
Payments to employees (193,571) (132,067) (23,717) (50,384) (8,110) (407,849)
Other miscellaneous receipts 76,156 1,580 1,780 2,991 7,624 90,131
Net cash flows - operating activities 694,924 1,012,751 (14,159) (11,187) 11,323 1,693,652
Cash Flows - Noncapital Financing
Activities
Transfer from other funds 207,000 55,000 - - - 262,000
Transfer to other funds (6,500) (13,500) (500) (19,250) - (39,750)
Net cash flows - noncapital financing
Activities 200,500 41,500 (500) (19,250) - 222,250
Cash Flows - Capital and Related
Financing Activities
Principal paid on debt (576,000) (635,101) - - - (1,211,101)
Interest paid on debt (124,961) (144,878) - - - (269,839)
Acquisition of capital assets (266,536) (51,142) - - - (317,678)
Net cash flows - capital and related
Financing activities (967,497) (831,121) - - - (1,798,618)
Cash Flows - Investing Activities
Interest and dividends received 3,710 7,514 1,383 1,466 143 14,216
Net change in cash and cash equivalents (68,363) 230,644 (13,276) (28,971) 11,466 131,500
Cash and Cash Equivalents
Beginning of year 670,382 2,346 257,764 280,964 23,577 1,235,033
End of year$ 602,019 $ 232,990 $ 244,488$ 251,993$ 35,043 $ 1,366,533
Reconciliation of Operating
Income (Loss) to Net Cash Flows -
Operating Activities
Operating income (loss)$ 152,395 $ 444,941 $ (26,960)$ (129,592)$ 5,735 $ 446,519
Adjustments to reconcile operating income (loss)
to net cash flows - operating activities
Depreciation expense 436,325 493,004 6,506 105,814 - 1,041,649
Pension expense 3,988 3,064 15 229 5 7,301
Other miscellaneous receipts 76,156 1,580 1,780 2,991 7,624 90,131
Accounts receivable 14,890 (18,253) 3,353 8,093 (2,001) 6,082
Due from other governments (86) - 315 - - 229
Accounts payable 7,521 10,451 247 185 (117) 18,287
Due to other governmental units 95 73,701 289 - - 74,085
Salaries payable 23 646 154 136 20 979
Compensated absences payable 3,617 3,617 142 957 57 8,390
Total adjustments 542,529 567,810 12,801 118,405 5,588 1,247,133
Net cash flows - operating activities$ 694,924 $ 1,012,751$ (14,159)$ (11,187)$ 11,323 $ 1,693,652
Non-Cash Capital and Financing Activities
Capital asset contributions from
governmental funds$ 32,438 $ 32,582 $ -$ -$ -$ 65,020
Capital asset contributions from
other governments - 1,289,516 - - - 1,289,516
Bond issued through other governments - 1,251,197 - - - 1,251,197
Capital grant - 38,319 - - - 38,319
See notes to financial statements. 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 financially accountable.
The financial statements present the City and its component units. The City includes all funds, account
groups, organizations, institutions, agencies, departments, and offices that are not legally separate from
such. Component units are legally separate organizations for which the elected officials of the City are
financially accountable and are included within the basic financial statements of the City because of the
significance of their operational or financial relationships with the City.
The City is considered financially accountable for a component unit if it appoints a voting majority of
the organization's governing body and it is able to impose its will on the organization by significantly
influencing the programs, projects, activities, or level of services performed or provided by the
organization, or there is a potential for the organization to provide specific financial benefits to or
impose specific financial burdens on, the City.
As a result of applying the component unit definition criteria above, certain organizations have been
defined and are presented in this report as follows:
Blended Component Unit Reported as if they were part of the City.
Joint Ventures The relationship of the City with the entity is disclosed.
For the categories above, the specific entities are identified as follows:
1. Blended Component Unit
The St. Joseph Economic Development Authority (EDA) was organized for the purpose of
preserving and creating jobs, enhancing the tax base, and promoting the general welfare of the people
of the City. The St. Joseph EDA is governed by a five member board appointed by the City Council,
two members of which are City Council Members. The St. Joseph EDA is included as a blended
component unit of the City because the St. Joseph EDA is financially accountable to the City, as the
City Council approves the budget. 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 2018, the City contributed $9,958
to the organization. It is reported as a special revenue fund of the City of Sauk Rapids for the first
quarter of the year and the City of Sartell for the remaining three quarters. Complete financial
statements can be obtained from: City of Sauk Rapids, 250 Summit Avenue North, Sauk Rapids,
Minnesota 56379 and City of Sartell, 125 Pine Cone Road North, Sartell, Minnesota 56377.
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 2018, the City contributed $0 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.
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
The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants
and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
measurable and available. Revenues are considered to be available when they are collectible within the
current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City
considers revenues to be available if they are collected within 60 days of the end of the current 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.
State Collected Sales Tax This fund accounts for the collection of state approved local option sales tax.
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.
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)
Description of Funds: (Continued)
Proprietary Funds: (Continued)
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.
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.
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)
1. Cash and Investments (Continued)
Minnesota Statutes authorizes the City to invest in obligations of the U.S. Treasury, agencies, and
instrumentalities, shares of investment companies whose only investments are in the aforementioned
securities, obligations of the State of Minnesota or its municipalities, bankers' acceptances, future
contracts, repurchase and reverse repurchase agreements, and commercial paper of the highest
quality with a maturity of no longer 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.
In accordance with GASB Statement No. 79, the Minnesota Municipal Investment Pool securities are
valued at amortized cost, which approximates fair value. There are no restrictions or limitations on
withdrawals from the 4M Liquid Asset Fund. Investments in the 4M Plus must be deposited for a
minimum of 14 calendar days. Withdrawals prior to the 14-day restriction period will be subject to a
penalty equal to seven days interest on the amount withdrawn. Seven days' notice of redemption is
required for withdrawals of investments in the 4M Term Series withdrawn prior to the maturity date
of that series. A penalty could be assessed as necessary to recoup the Series for any charges, losses,
and other costs attributable to the early redemption.
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.
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)
2. Receivables and Payables (Continued)
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.
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.
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)
5. Deferred Outflows/ Inflows of Resources (Continued)
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. The City presents deferred
inflows of resources related to lease receivables that will be recognized in future years.
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.
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)
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.
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. The City Council must also pass a resolution to remove the
constraint of committed resources.
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.
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)
9. Fund Equity (Continued)
a) Classification (Continued)
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 and PEG Access Fees.
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 $1,591,638 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 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 $1,196,280 includes $30,307 for tax incrementing financing, $906,690 in
state collected sales tax restricted by enabling legislation, $31,052 restricted for lodging tax, $111,757 in
park dedication fees, $2,104 restricted by donors for future projects, $35,009 DEED Funds, $74,310 in
revolving loan funds restricted for EDA projects and $5,051 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.
45
City of St. Joseph
Notes to Financial Statements
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E.Budgetary Information (Continued)
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 are adopted on a basis consistent with accounting principles generally accepted in the
United States of America.
5. Expenditures may not legally exceed budgeted appropriations at the department level. No fund's
budget can be increased without City Council approval. The City Council may authorize transfer
of budgeted amounts between departments within any fund. Management may amend budgets
within a department level, so long as the total department budget is not changed.
6. Annual appropriated budgets are adopted during the year for the General Fund and the Economic
Development Authority, State Collected Sales Tax and Park Dedication special revenue funds
and debt service funds. Budgetary control for the remaining special revenue fund is done through
the use of project controls when the council authorizes the project. 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, 2018.
Nonmajor governmental funds
Special Revenue
TIF 2-2 St. Joseph Meat Market$ 2
TIF 2-3 Bayou Blues/Alley Flat 8,522
TIF 3-1 Central Minnesota Credit Union 301
This deficit will be eliminated with future tax increment revenues.
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 on the following page.
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 City's deposits be collateralized as
required by Minnesota Statutes for an amount exceeding FDIC, SAIF, BIF, or FCUA coverage. As of
December 31, 2018, 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, 2018, the
City's deposits had a carrying value as shown below.
Certificates of deposit$ 3,755,528
Checking 877,230
Savings 826,693
Total$ 5,459,451
B.Investments
As of December 31, 2018, the City had the following investments:
Weighted
FairAverageMoody's
Investment TypeValueMaturity (Years)Rating
Brokered certificates of deposit$ 957,935 0.55N/A
Brokered money market 3,099N/AN/A
4M Fund 1,051,693N/AN/A
U.S. government securities 297,5046.01AA+
Total$ 2,310,231
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, 2018, the City's
investments were rated as listed in the table above.
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.
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 2018, the City's investments of CD's, As of December 31
2018, the City's investment in CD's: Community Bank Jumbo (8.2%), Sona Bank (5.5%), Eagle Bank
(10.0%), Financial Federal Bank (10.4%), AMEX Centurion Sale Lake City UT (7.4%) and the
government security Fed Home Ln MTG Corp Med Tern Note Step (12.9%), exceeded 5% of the
City's total investment portfolio. Money market accounts are not subject to concentration of credit risk.
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, 2018:
$1,258,538 of investments are valued using a matrix pricing model (Level 2 inputs)
C. Deposits and Investments
The following is a summary of deposits and investments as of December 31, 2018:
Deposits (Note 3.A.)$ 5,459,451
Investments (Note 3.B.) 2,310,231
Petty cash 225
Total$ 7,769,907
Deposits and investments are presented in the December 31, 2018, basic financial statements as follows:
Statement of Net Position
Cash and investments$ 7,769,907
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, 2018, is as follows:
Amounts Due to
Other Funds
Other
Governmental
Funds
Amounts Due from Other Funds
Other Governmental Funds$ 10,800
The due from/due to other funds balances represent loans made to cover tax increment financing (TIF)
consulting costs to establish the TIF districts.
B.Transfers
The composition of interfund transfers as of December 31, 2018, is as follows:
Transfer InTransfer OutDescription Amount
General FundWaterTransfer retirement reserve funding$ 500
Transfer retirement reserve funding 500
General FundSanitary Sewer
General FundRefuseTransfer retirement reserve funding 500
Transfer to close fund
General FundOther Governmental Funds 2,611
Transfer of residual funds for project costs 250,000
Other Governmental FundsGeneral Fund
Excess building permit revenue to fund 2018 DEED Grant
7,563
Other Governmental FundsGeneral Fund
Transfer to help fund cable access equipment updates
Other Governmental FundsGeneral Fund 36,000
Transfer sales tax revenue committed for bond payment
Other Governmental FundsState Collected Sales Tax 20,000
Transfer sales tax revenue committed for bond payment 160,000
Other Governmental FundsState Collected Sales Tax
Transfer of residual project funds to cover debt payment
Other Governmental FundsOther Governmental Funds 26,127
Transfer to reimburse costs from prior years
40
Other Governmental FundsOther Governmental Funds
Transfer of funds for bond payment
Other Governmental FundsOther Governmental Funds 60,000
Transfer of residual funds for future debt payments
Other Governmental FundsOther Governmental Funds 8,900
Annual transfer for bond payment 6,000
Other Governmental FundsWater
Annual transfer for bond payment
Other Governmental FundsSanitary Sewer 6,000
Annual transfer for bond payment 19,250
Other Governmental FundsStorm Water
Annual transfer of WAC fees for debt payments
WaterOther Governmental Funds 200,000
Annual transfer for bond payment
WaterSanitary Sewer 7,000
Annual transfer for debt payments 55,000
Sanitary SewerOther Governmental Funds
$ 865,991
49
City of St. Joseph
Notes to Financial Statements
NOTE 5 CAPITAL ASSETS
Capital asset activity for the year ended December 31, 2018, was as follows:
BeginningEnding
BalanceIncreasesDecreasesBalance
Governmental activities
Capital assets not being depreciated
Land$ 874,133$ - $ 110,936$ 763,197
Easements 175,873 24,212 - 200,085
Construction in progress 465,006 487,606 188,476 764,136
Total capital assets
not being depreciated 1,515,012 511,818 299,412 1,727,418
Capital assets being depreciated
Buildings 9,540,762 - 804,967 8,735,795
Infrastructure 20,176,666 212,817 - 20,389,483
Improvements 8,485 23,880
1,369,201 1,353,806
Intangible Assets
200,000 - - 200,000
Machinery and equipment 3,677,400 305,198 121,916 3,860,682
Total capital assets
being depreciated 34,964,029 526,500 950,763 34,539,766
Less accumulated depreciation for
Buildings 1,564,451 232,062 368,551 1,427,962
Infrastructure 14,358,618 872,317 - 15,230,935
Improvements 598,719 53,393 23,880 628,232
Intangible assets
10,000 10,000 - 20,000
290,523 120,371
Machinery and equipment 2,474,749 2,644,901
Total accumulated
depreciation 19,006,537 1,458,295 512,802 19,952,030
Total capital assets being
15,957,492 (931,795) 437,961 14,587,736
depreciated, net
Governmental activities capital
$ 17,472,504$ (419,977) $ 737,373$ 16,315,154
assets, net
50
City of St. Joseph
Notes to Financial Statements
NOTE 5 CAPITAL ASSETS (CONTINUED)
BeginningEnding
BalanceIncreasesDecreasesBalance
Business-type activities
Capital assets not being depreciated
Land$ 377,882$ - $ -$ 377,882
Easements 67,915 - - 67,915
Construction in progress 705,096 1,289,516 134,076 1,860,536
Total capital assets
not being depreciated 1,150,893 1,289,516 134,076 2,306,333
Capital assets being depreciated
Buildings 8,797,686 - - 8,797,686
Improvements other than buildings - 289,760 - 289,760
Plant and lines
24,275,118 97,381 181,770 24,190,729
Machinery and equipment 129,632 42,419
778,232 865,445
Sewer rights 9,068,746 - - 9,068,746
Total capital assets
being depreciated 42,919,782 516,773 224,189 43,212,366
Less accumulated depreciation for
Buildings 2,182,252 214,143 - 2,396,395
Improvements other than buildings - 14,488 - 14,488
Plant and lines 6,956,644 500,521 131,384 7,325,781
Machinery and equipment 58,678 42,278
572,308 588,708
253,819 -
Sewer rights 1,977,728 2,231,547
Total accumulated
depreciation 11,688,932 1,041,649 173,662 12,556,919
Total capital assets being
31,230,850 (524,876) 50,527 30,655,447
depreciated, net
Business-type activities captial
$ 32,381,743$ 764,640$ 184,603$ 32,961,780
assets, net
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities
General government$ 152,746
Public safety 164,544
Public works 932,217
Culture and recreation 208,554
Economic development 234
Total depreciation expense - governmental activities$ 1,458,295
Business-type activities
Water$ 436,325
Sanitary sewer 493,004
Refuse 6,506
Storm sewer 105,814
Total depreciation expense - business-type activities$ 1,041,649
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. Certificates of Indebtedness
of 2011A11/10/112.00%-2.40% 390,000 10/01/21 125,000 40,000
G.O. Capital Improvement Plan
G.O. Certificates of Indebtedness 2015A08/13/151.20%-2.00% 165,000 12/01/20 70,000 35,000
G.O. Certificates of Indebtedness 2016A07/07/162.00%-2.875% 4,275,000 12/15/36 3,920,000 180,000
G.O. Certificates of Indebtedness 2017A08/30/172.75% 337,000 12/15/25 294,000 42,000
G.O. Certificates of Indebtedness 2018A02/28/182.50% 265,000 12/15/23 265,000 50,000
Total G.O. Bonds 4,674,000 347,000
G.O. Special Assessment Bonds
G.O. Improvement Refunding Bonds of 2010B09/28/102.00%-3.25% 1,035,000 12/01/20 270,000 135,000
G.O. Improvement Bonds of 2010B09/28/102.00%-3.25% 790,000 12/01/25 405,000 55,000
G.O. Improvement Crossover
Refunding Bonds of 2011A11/10/112.00%-2.40% 1,040,000 10/01/21 410,000 135,000
G.O. Improvement Bonds of 2013A09/01/132.00%-3.00% 405,000 12/01/24 275,000 40,000
G.O. Improvement Bonds of 2014A06/15/142.00%-3.40% 2,010,000 12/01/30 1,675,000 115,000
G.O. Improvement Bonds of 2015A08/13/151.20%-3.00% 595,000 12/01/25 425,000 60,000
G.O. Improvement Bonds of 2016B11/03/161.00%-3.00% 740,000 12/15/32 690,000 50,000
G.O. Improvement Bonds of 2017B08/30/172.25%-3.00% 344,000 12/15/27 309,000 35,000
Total G.O. Special
Assessment Bonds 4,459,000 625,000
G.O. Abatement Bonds
G.O. Tax Abatement Bonds of 2015B08/13/152.00%-3.05% 1,840,000 12/01/30 1,525,000 115,000
Unamortized premiums/discounts 90,578 -
Compensated absences 455,241 85,326
Total long-term liabilities,
governmental activities$ 11,203,819$ 1,172,326
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 2009A03/19/091.25%-3.85% 455,000 12/01/21$ 130,000$ 45,000
G.O. Sewer Revenue Bonds of 2011A11/10/112.00-2.40% 225,000 10/01/21 75,000 25,000
G.O. Water Revenue Crossover Refunding
Bonds of 2012A04/19/121.00-2.85% 4,860,000 12/01/28 3,825,000 475,000
G.O. Sewer Revenue Bonds of 2013A09/01/132.00-3.70% 1,875,000 12/01/28 1,315,000 120,000
G.O. Utility Improvement Bonds of 2014A06/15/142.00%-3.40% 660,000 12/01/32 530,000 35,000
G.O. Water Improvement Bonds of 2017B08/30/172.25% 353,000 12/15/22 282,000 71,000
Total G.O. Revenue Bonds 6,157,000 771,000
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 95,000 95,000
City of St. Cloud SIS
Phase 3 (2010 Bonds)10/28/102.00%-2.5% 180,000 08/01/20 40,000 20,000
City of St. Cloud SIS
Phase 4 (2013B Bonds)11/01/133.00%-4.00% 650,000 02/01/29 515,000 40,000
City of St. Cloud RUE Project PFA Loan08/01/101.77% 4,527,703 08/20/30 2,985,190 225,461
City of St. Cloud Lift Station Improvements08/24/161.00% 469,263 08/20/26 404,596 48,857
City of St. Cloud NR2 Biosolids10/09/171.10% 1,517,380 08/20/37 1,477,183 81,223
Total notes payable 5,516,969 510,541
Unamortized premium 38,658 -
Compensated absences 151,629 19,926
Total business-type activities 11,864,256 1,301,467
Total all long-term liabilities$ 23,068,075$ 2,473,793
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, 2018, was as follows:
BeginningEnding
BalanceAdditionsReductionsBalance
Governmental activities
Bonds payable
General obligation$ 4,907,000 $ 265,000 $ 498,000$ 4,674,000
G.O. special assessment bonds 5,069,000 - 610,000 4,459,000
G.O. abatement bonds 1,635,000 - 110,000 1,525,000
Total bonds payable
11,611,000 265,000 1,218,000 10,658,000
Unamortized premiums/discounts 104,929 - 14,351 90,578
Compensated absences 452,500 206,053 203,312 455,241
Total governmental
activities
12,168,429 471,053 1,435,663 11,203,819
Business-type activities
Bonds payable
G.O. utility revenue bonds 6,913,000 - 756,000 6,157,000
Notes payable
City of St. Cloud notes 4,720,873 1,251,197 455,101 5,516,969
Unamortized premiums
48,259 - 9,601 38,658
Compensated absences 143,239 50,126 41,736 151,629
Total business-type
activities 11,825,371 1,301,323 1,262,438 11,864,256
Total long-term liabilities$ 23,993,800$ 1,772,376$ 2,698,101$ 23,068,075
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
2019$ 347,000$ 108,338$ 625,000$ 112,880
2020 354,000 101,008 635,000 100,483
2021 330,000 93,273 510,000 86,950
2022 291,000 85,912 374,000 75,740
2023 293,000 79,507 389,000 67,062
2024-2028 1,129,000 316,177 1,411,000 186,450
2029-2033 1,160,000 197,075 515,000 29,840
2034-2036 770,000 44,269 - -
Total$ 4,674,000$ 1,025,559 $ 4,459,000$ 659,405
Governmental Activities
Abatement Bonds
Year Ended
December 31,PrincipalInterestTotal
2019$ 115,000$ 39,935$ 1,348,153
2020 115,000 37,635 1,343,126
2021 120,000 35,335 1,175,558
2022 120,000 32,935 979,587
2023 125,000 30,535 984,104
2024-2028 660,000 100,700 3,803,327
2029-2030 270,000 12,353 2,184,268
Total$ 1,525,000$ 289,428 $ 11,818,123
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
2019$ 771,000$ 155,785$ 510,541$ 96,614$ 1,533,940
2020 771,000 139,235 420,903 86,858 1,417,996
79,301
2021 775,000 122,635 406,256 1,383,192
72,059
2022 725,000 105,340 416,950 1,319,349
64,628
2023 670,000 88,688 422,537 1,245,853
2024-2028 2,275,000 200,902 2,118,505 212,647 4,807,054
2029-2033 170,000 14,710 1,059,846 52,072 1,296,628
2034-2037 - - 388,786 10,700 399,486
Total$ 6,157,000 $ 827,295$ 5,744,324 $ 674,879 $ 13,403,498
*
* Balance does not agree to amounts listed in Note 6.C. due to payment schedule including estimated
PFA draw that is scheduled to occur in July 2019.
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.
StateNonmajor
CollectedGovernmental
GeneralSales TaxFundTotal
Nonspendable
Prepaid items$ 24,560 $ -$ -$ 24,560
Restricted
PEG access fees 5,051 - - 5,051
Debt service - - 1,111,296 1,111,296
Tax increments - - 30,307 30,307
State collected sales tax projects - 906,690 - 906,690
Park dedication fees - - 111,757 111,757
Chartitable gambling - - 2,104 2,104
Lodging tax - - 31,052 31,052
DEED CDAP - - 35,009 35,009
Revolving loan - - 74,310 74,310
Total restricted 5,051 906,690 1,395,835 2,307,576
Committed
Economic development - - 198,716 198,716
Assigned
Elections 5,300 - - 5,300
Street seal coating /crack filling 126,870 - - 126,870
Loader tires 6,388 - - 6,388
Fire operations 20,000 - - 20,000
Fire debt service 129,452 - - 129,452
Fire capital 470,973 - - 470,973
Police forfeiture 6,600 - - 6,600
Severance pay 122,343 - - 122,343
Capital outlay reserves - - 984,484 984,484
Debt service relief - - 540,147 540,147
Total assigned 887,926 - 1,524,631 2,412,557
Unassigned 1,468,385 - (8,825) 1,459,560
Total$ 2,385,922$ 906,690 $ 3,110,357$ 6,402,969
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 2018 is
estimated to be immaterial based on workers' compensation rates and salaries for the year.
AtDecember 31, 2018, 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
The City participates in various pension plans. Total pension expense for the year ended December 31,
2018, was $149,093. The components of pension expense are noted in the following plan summaries.
For governmental activities, the General Fund typically liquidates the liability related to pensions. For
Business-Type Activities, the Water, Sanitary Sewer, Refuse, Storm Water, and Street Light Utility
Funds typically liquidates the liability related to pensions.
Public Employees' Retirement Association
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 and 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 the Coordinated Plan. Coordinated Plan members are
covered by Social Security.
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. 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 Plan members. Members hired prior to July 1, 1989, receive
the higher of Method 1 or Method 2 formulas. Only Method 2 is used for members hired after June 30,
1989. Under Method 1, the accrual rate for a Coordinated members is 1.2% for each of the first ten years
of service and 1.7% for each additional year. Under Method 2, the accrual rate for Coordinated members
is 1.7% for all years 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.
Benefit increases are provided to benefit recipients each January. Increases are related to the funding
ratio of the plan. If the General Employees Plan is at least 90% funded for two consecutive years, benefit
recipients are given a 2.5% increase. If the plan has not exceeded 90% funded, or have fallen below
80%, benefit recipients are given a 1% increase. A benefit recipient who has been receiving a benefit for
at least 12 full months as of June 30, will receive a full increase. Members receiving benefits for at least
one month but less than 12 full months as of June 30, will receive a pro rata increase.
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.
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 (Continued)
Benefit increases are provided to benefit recipients each January. Police and Fire Plan benefit recipients
receive a future annual 1.0% increase. An annual adjustment will equal 2.5% any time the plan exceeds a
90% funded ratio for two consecutive years. If the adjustment is increased to 2.5% and the funded ratio
falls below 80% for one year or 85% for two consecutive years, the post-retirement benefit increase will
be lowered to 1%. A benefit recipient who has been receiving a benefit for at least 12 full months as of
June 30 will receive a full increase. Members receiving benefits for at least one month but less than 12
full months as of June 30 will receive a pro rata increase. For retirements after May 31, 2014, the first
increase will be delayed two years.
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
Coordinated Plan members were required to contribute 6.5%, of their annual covered salary in calendar
year 2018. The City was required to contribute 7.5% for Coordinated Plan members in calendar year
2018. The City's contributions to the General Employees Fund for the year ended December 31, 2018,
were $71,452. 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 and the City was
required to contribute 16.2% of pay for members in fiscal year 2018. The City's contributions to the
Police and Fire Fund for the year ended December 31, 2018, were $97,377. 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, 2018, the City reported a liability of $787,758 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 $16 million to the fund in 2018. 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 $25,900. The net pension liability was measured as of June 30, 2018,
and the total pension liability used to calculate the net pension liability was determined by an actuarial
valuation as of that date. The City's proportion of the net pension liability was based on the City's
contributions received by PERA during the measurement period for employer payroll paid dates from
July 1, 2017, through June 30, 2018, relative to the total employer contributions received from all of
PERA's participating employers. At June 30, 2018, the City's proportion share was 0.0142%, which was
the same as its proportion measured as of June 30, 2017.
City's proportionate share of the net pension liability$ 787,758
State of Minnesota's proportionate share of the net pension
liability associated with the City 25,900
Total$ 813,658
For the year ended December 31, 2018, the City recognized pension expense of $86,989 for its
proportionate share of General Employees Plan's pension expense. Included in the amount, the City
recognized $6,040 as pension expense (and grant revenue) for its proportionate share of the State of
Minnesota's contribution of $16 million to the General Employees Fund.
61
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
At December 31, 2018, the City reported its proportionate share of the General Employees Plan's
deferred outflows of resources and deferred inflows of resources related to pensions from the following
sources:
Deferred Deferred
Outflows of Inflows of
ResourcesResources
Differences between expected and actual economic experience$ 20,851$ 21,843
Changes in actuarial assumptions 71,541 88,513
Difference between projected and actual investment earnings - 85,094
Changes in proportion 28,418 3,887
Contributions paid to PERA subsequent
to the measurement date 35,726 -
Total$ 156,536$ 199,337
$35,726 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2019. Other amounts reported as deferred outflows and deferred inflows of
resources related to pensions will be recognized in pension expense as follows:
Year Ended Pension Expense
December 31,Amount
2019$ 32,286
2020 (30,451)
2021 (63,920)
2022 (16,442)
$ (78,527)
Total
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
At December 31, 2018, the City reported a liability of $614,057 for its proportionate share of the Police
and Fire Fund's net pension liability. The net pension liability was measured as of June 30, 2018, 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, 2017,
through June 30, 2018, relative to the total employer contributions received from all of PERA's
participating employers. At June 30, 2018, the City's proportion was 0.0581%, which was an increase of
0.0041% from its proportion measured as of June 30, 2017. The City also recognized $5,229 for the year
ended December 31, 2018 as revenue and an offsetting reduction of the net pension liability 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.
For the year ended December 31, 2018, the City recognized pension expense of $63,609 for its
proportionate share of the Police and Fire Fund pension expense.
At December 31, 2018, the City reported its proportionate share of the Police and Fire Plan's deferred
outflows of resources and deferred inflows of resources related to pensions from the sources below and
on the following page.
63
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees' Retirement Association (Continued)
D. Pension Costs (Continued)
Police and Fire Fund Pension Costs (Continued)
Deferred Deferred
Outflows of Inflows of
ResourcesResources
Differences between expected and actual economic experience$ 23,941$ 143,417
Changes in actuarial assumptions 715,596 848,797
Difference between projected and actual investment earnings - 126,592
Changes in proportion 46,130 17,043
Contributions paid to PERA subsequent
to the measurement date 48,688 -
Total$ 834,355$ 1,135,849
$48,688 reported as deferred outflows of resources related to pensions resulting from City contributions
subsequent to the measurement date will be recognized as a reduction of the net pension liability in the
year ended December 31, 2019. Other amounts reported as deferred outflows and inflows of resources
related to pensions will be recognized in pension expense as follows:
Year Ended Pension Expense
December 31,Amount
2019$ (12,067)
2020 (40,277)
2021 (81,904)
2022 (223,118)
2023 7,184
Total$ (350,182)
64
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, 2018, 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 for all plans were based on RP 2014 tables for males or females, as
appropriate, with slight adjustments to fit PERA's experience. Cost of living benefit increases after
retirement for retirees are assumed to be 1.25% per year for the General Employees Plan and 1.0% per
year for the Police and Fire Plan.
Actuarial assumptions used in the June 30, 2018 valuation were based on the results of actuarial
experience studies. The most recent six-year experience study in the General Employees Plan was
completed in 2015. The most recent four-year experience study for Police and Fire Plan was completed
in 2016. Economic assumptions were updated in 2017 based on a review of inflation and investment
return assumptions.
The following changes in actuarial assumptions occurred in 2018:
General Employees Fund
The mortality projection scale was changed from MP-2015 to MP-2017.
The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per year
thereafter to 1.25% per year.
Police and Fire Fund
The mortality projection scale was changed from MP-2016 to MP-2017.
As set by statute, the assumed post-retirement benefit increase was changed from 1.0% per year
through 2064 and 2.5% per year, thereafter, to 1.0% for all years, with no trigger.
65
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 stocks36%5.10%
International stock175.30
Bonds200.75
Alternative assets255.90
Cash20.00
Total100%
F. Discount Rate
The discount rate used to measure the total pension liability in 2018 was 7.5%. 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 and the Police and Fire 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.
66
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:
1% Decrease in1% Increase in
Discount Rate
Discount Rate Discount Rate
(6.5%)
(7.5%)(8.5%)
City's proportionate share of
the General Employees Fund
net pension liability$ 1,280,207$ 787,758$ 381,255
1% Decrease in 1% Increase in
Discount Rate Discount Rate Discount Rate
(6.5%)(7.5%)(8.5%)
City's proportionate share of
the Police and Fire Fund
net pension liability$ 1,322,559$ 614,057$ 28,155
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)
All 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.
67
City of St. Joseph
Notes to Financial Statements
NOTE 9 PENSION PLANS (CONTINUED)
Public Employees Defined Contribution Plan (Defined Contribution Plan) (Continued)
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 not 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. 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 2018 were:
Contribution AmountPercentage of Covered Payroll
EmployeeEmployerEmployeeEmployerRequired Rate
$ 1,599$ 1,5995%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 20 years
of service for lump sum service pension. Partial benefits are payable to members who have reached 50
years and have completed 10 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.
68
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, 2018, the following employees were covered by the benefit terms:
Inactive employees entitled to but not yet receiving benefits2
Active employees29
Total31
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 $53,565 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, 2018, 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, 2018, actuarial valuation was determined using the
following actuarial assumptions, applied to all periods included in the measurement:
Inflation2.50%
Salary increase0%, average, including inflation
Investment rate of return5.25%, 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.
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)
E.Net Pension Liability (Continued)
Long-Term Expected
Asset ClassTarget AllocationReal Rate of Return
Cash9.09%0.58%
Fixed income41.421.99
Real estate and alternatives0.404.19
Domestic equity40.134.95
International equity8.965.24
Total100%
Discount rate:
The discount rate used to measure the total pension liability was 5.25%. 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, 2018$ 555,598$ 785,526$ (229,928)
Changes for the year
Service cost 27,172 - 27,172
Interest cost 32,052 - 32,052
Differences between expected and
actual experience (35,760) - (35,760)
Change in assumptions, changes
in benefit terms 8,441 - 8,441
Contributions - state and local - 56,565 (56,565)
Net investment income - (50,418) 50,418
Administrative expense - (7,582) 7,582
Net charges 31,905 (1,435) 33,340
Balances at December 31, 2018$ 587,503$ 784,091$ (196,588)
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)
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 5.25%, 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
(4.25%) or 1-percentage-point higher (6.25%) than the current rate:
1%Current1%
DecreaseDiscountIncrease
(4.25%)Rate (5.25%)(6.25%)
City's net pension liability$ (176,638)$ (196,588)$ (216,081)
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, 2018, the City recognized pension expense of $3,104. At
December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resources
related to pensions from the following sources:
Deferred Deferred
Outflows ofInflows of
ResourcesResources
Differences between expected and actual experience$ - $ 53,842
Changes of assumptions 87,306 -
Net difference between projected and actual earnings on
pension plan investments 63,294 -
Total$ 150,600$ 53,842
71
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
December 31,Total
2019$ 30,189
2020 12,524
2021 17,338
2022 23,975
2023 5,183
Therafter 7,549
Total$ 96,758
NOTE 10 COMMITMENTS
The City has entered into contracts for construction as follows:
Expended
Contractthrough
ProjectAmount12/31/18Commitment
CR2 Trail, Phase II/III$ 1,172,954$ 242,875$ 930,079
72
City of St. Joseph
Notes to Financial Statements
NOTE 11 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, 2018, the City generated $118,903 in tax increment revenue and
made $107,228 in payments to developers.
In addition, the City had an abatement of $8,821 relating to a development agreement.
NOTE 12 NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED
GASB Statement No. 83, Certain Asset Retirement Obligations establishes criteria for determining the
timing and pattern of recognition of a liability and a corresponding deferred outflow of resources for
Asset Retirement Obligations (AROs). This statement requires that recognition occur when the liability
is both incurred and reasonably estimable. The determination of when the liability is incurred should be
based on the occurrence of external laws, regulations, contracts, or court judgments, together with the
occurrence of an internal event that obligates a government to perform asset retirement activities. Laws
and regulations may require governments to take specific actions to retire certain tangible capital assets
at the end of the useful lives of those capital assets, such as decommissioning nuclear reactors and
dismantling and removing sewage treatment plants. Other obligations to retire tangible capital assets
may arise from contracts or court judgments. Internal obligating events include the occurrence of
contamination, placing into operation a tangible capital asset that is required to be retired, abandoning a
tangible capital asset before it is placed into operation, or acquiring a tangible capital asset that has an
existing ARO. This statement will be effective for the year ending December 31, 2019.
GASB Statement No. 84, Fiduciary Activities establishes criteria for identifying fiduciary activities of all
state and local governments. The focus of the criteria generally is on (1) whether a government is
controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary
relationship exists. Separate criteria are included to identify fiduciary component units and
postemployment benefit arrangements that are fiduciary activities. This statement will be effective for
the year ending December 31, 2019.
GASB Statement No. 85, Omnibus 2017 addresses practice issues that have been identified during
implementation and application of certain GASB statements, including issues related to blending
component units, goodwill, fair value measurement and application, and post employment benefits. This
statement will be effective for the year ending December 31, 2018.
73
City of St. Joseph
Notes to Financial Statements
NOTE 12 NEW STANDARDS ISSUED BUT NOT YET IMPLEMENTED (CONTINUED)
GASB Statement No. 86, Certain Debt Extinguishment Issues improves consistency in accounting and
financial reporting for in-substance defeasance of debt by providing guidance for transactions in which
cash and other monetary assets acquired with only existing resources are placed in an irrevocable trust
for the sole purpose of extinguishing debt. This statement also improves accounting and financial
reporting for prepaid insurance on debt that is extinguished and notes to the financial statements for debt
that is defeased in substance. This statement will be effective for the year ending December 31, 2018.
GASB Statement No. 87, Leases establishes a single model for lease accounting based on the
foundational principle that leases are financings of the right to use an underlying asset. Under this
statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and
a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing
the relevance and consistency of information about governments' leasing activities. This statement will
be effective for the year ending December 31, 2020.
GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct
Placements improves the information that is disclosed in the notes to the financial statements. It also
clarifies which liabilities governments should include when disclosing information related to debt. This
statement will be effective for the year ending December 31, 2019.
GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period
enhances the relevance and comparability of information about capital assets and the cost of borrowing
for a reporting period and simplifies accounting for interest cost incurred before the end of a construction
period. This statement will be effective for the year ending December 31, 2020.
GASB Statement No. 90, Majority Equity Interests improves the consistency and comparability of
reporting a government's majority equity interest in a legally separate organization and to improve the
relevance of financial statement information for certain component units. This statement will be
effective for the year ending December 31, 2019.
NOTE 13 CONTINGENCIES AND LITIGATION
The City is currently involved in various pending litigation cases. After evaluation by the City's attorney,
it is unknown if the resolution of these cases will have a material impact on the financial statements.
74
REQUIRED SUPPLEMENTARY INFORMATION
75
City of St. Joseph
Schedule of City's Proportionate Share
of Net Pension Liability
General Employees Retirement Fund
Last Ten Years
City's
Proportionate
Share of the Net
State's Pension Liability City's
City's City's Proportionate and the State's Proportionate
Proportionate Proportionate Share (Amount) Proportionate Share of the Net Plan Fiduciary Net
Share Share (Amount) of the Net Pension Share of the Net Pension Liability Position as a
(Percentage) of of the Net Liability Pension Liability (Asset) as a Percentage of the
City's Covered
For Fiscal Year the Net Pension Pension Liability Associated with Associated with Percentage of its Total Pension
Ended June 30,Liability (Asset)(Asset) the Citythe CityPayroll Covered Payroll Liability
20150.0138%$ 715,188$ -$ 715,188$ 799,77389.42%78.19%
20160.0135% 1,096,133 14,341 1,110,474 839,240130.61%68.91%
20170.0142% 906,519 11,418 917,937 916,37398.92%75.90%
20180.0142% 787,758 25,900 813,658 955,44082.45%79.53%
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
City's Share of the Net Plan Fiduciary
City's Proportion Proportionate Pension Liability Net Position as a
of the Net Share of the Net (Asset) as a Percentage of the
For Fiscal Year Pension Liability Pension Liability City's Covered Percentage of its Total Pension
Ended June 30,(Asset)(Asset) PayrollCovered Payroll Liability
20150.0570%$ 647,653$ 505,160128.21%86.61%
20160.0540% 2,167,114 518,580417.89%63.88%
20170.0540% 729,064 554,975131.37%85.43%
20180.0581% 614,057 612,154100.31%88.84%
Note: Schedule is intended to show ten year trend. Additional years will be reported as they become available.
76
City of St. Joseph
Schedule of City Contributions -
General Employees Retirement Fund
Last Ten Years
Contributions in
Relation to the
Fiscal Year Statutorily Statutorily Contribution Contributions as a
Ending Required Required Deficiency City's Covered Percentage of
December 31,ContributionContributions(Excess)PayrollCovered Payroll
2015$ 57,804$ 57,804$ -$ 770,7207.5%
2016 66,294 66,294 - 883,9207.5%
2017 69,820 69,820 - 930,9337.5%
2018 71,452 71,452 - 952,6937.5%
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
Relation to the
Fiscal Year Statutorily Statutorily Contribution Contributions as a
Ending Required Required Deficiency City's Covered Percentage of
December 31,ContributionContributions(Excess)PayrollCovered Payroll
2015$ 85,925$ 85,925$ -$ 530,40116.2%
2016 89,587 89,587 - 553,006 16.2%
2017 93,325 93,325 - 576,080 16.2%
2018 97,377 97,377 - 601,093 16.2%
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 Changes in Net Pension Liability
and Related Ratios - Fire Relief Association
Measurement Date
2015201620172018
Total Pension Liability (TPL)
Service cost$ 20,898$ 25,691$ 25,641$ 27,172
Interest 29,709 35,786 33,188 32,052
Differenced between expected and actual experience - (29,935) - (35,760)
Changes of assumptions 55,033 56,691 4,299 8,441
Changes of benefit terms 31,883 - - -
Benefit payments, including refunds, or member contributions (41,168) (49,000) (118,151) -
Net change in total pension liability 96,355 39,233 (55,023) 31,905
Beginning of year 475,033 571,388 610,621 555,598
End of Year$ 571,388$ 610,621$ 555,598$ 587,503
Plan Fiduciary Net Pension (FNP)
Contributions - employer$ 52,164$ 63,111$ 58,310$ 56,565
Net investment income (41,979) 68,585 77,946 (50,418)
Benefit payments, including refunds of member contributions (41,168) (49,000) (118,151) -
Administrative expense (8,121) (7,724) (8,546) (7,582)
Net change in plan fiduciary net position (39,104) 74,972 9,559 (1,435)
Beginning of year 740,099 700,995 775,967 785,526
End of year$ 700,995$ 775,967$ 785,526$ 784,091
Net pension liability (NPL)$ (129,607)$ (165,346)$ (229,928)$ (196,588)
Plan fiduciary net position as a percentage of the total
pension liability122.7%127.1%141.4%133.5%
Covered employee payrolln/an/an/an/a
Net pension liability as a percentage of covered payrolln/an/an/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 Required 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.
78
City of St. Joseph
Schedule of Employer Contributions
and Non-Employer Contributing
Entities - Fire Relief Association
2015201620172018
Employer
Statutorily determined contribution (SDC)$ -$ -$ -$ -
Contribution in relation to the SDC 3,000 3,000 3,000 3,000
Contribution deficiency (excess)$ (3,000)$ (3,000)$ (3,000)$ (3,000)
Non-employer
2% aid$ 52,164$ 60,111$ 55,310 $ 53,565
Covered employee payrolln/an/an/an/a
Contributions as a percentage of covered employee payrolln/an/an/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 Required 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
Notes to Required Supplementary Information
GENERAL EMPLOYEES FUND
2018 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2015 to MP-2017.
The assumed benefit increase was changed from 1.0% per year through 2044 and 2.5% per
year thereafter to 1.25% per year.
2017 Changes
Changes in Actuarial Assumptions
The CSA loads were changed from 0.8% for active members and 60% for vested and non-
vested deferred members. The revised CSA loads are now 0.0% for active member liability,
15% for vested deferred member liability and 3% for non-vested deferred member liability.
The assumed post-retirement benefit increase rate was changed from 1.0% per year for all
years to 1.0% per year through 2044 and 2.5% per year thereafter.
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.
80
City of St. Joseph
Notes to Required Supplementary Information
POLICE AND FIRE FUND
2018 Changes
Changes in Actuarial Assumptions
The mortality projection scale was changed from MP-2016 to MP-2017.
As set by statute, the assumed post-retirement benefit increase was changed from 1.0% per
year through 2064 and 2.5% per year, thereafter, to 1.0% for all years, with no trigger.
2017 Changes
Changes in Actuarial Assumptions
Assumed salary increases were changed as recommended in the June 30, 2016 experience
study. The net effect is proposed rates that average 0.34% lower than the previous rates.
Assumed rates of retirement were changed, resulting in fewer retirements.
The CSA load was 30% for vested and non-vested deferred members. The CSA has been
changed to 33% for vested members and 2% for non-vested members.
The base mortality table for healthy annuitants was changed from the RP-2000 fully
generational table to the RP-2014 fully generational table (with a base year of 2006), with
male rates adjusted by a factor of 0.96. The mortality improvement scale was changed from
Scale AA to Scale MP-2016. The base mortality table for disabled annuitants was changed
from the RP-2000 disabled mortality table to the mortality tables assumed for healthy retirees.
Assumed termination rates were decreased to 3% for the first three years of service. Rates
beyond the select period of three years were adjusted, resulting in more expected terminations
overall.
Assumed percentage of married female members was decreased from 65% to 60%.
Assumed age difference was changed from separate assumptions for male members (wives
assumed to be 3 years younger) and female members (husbands assumed to be 4 years older)
to the assumption that males are 2 years older than females.
The assumed percentage of female members electing Joint and Survivor annuities was
increased.
The assumed post-retirement benefit increase rate was changed from 1% for all years to 1%
per year through 2064 and 2.5% thereafter.
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.
81
City of St. Joseph
Notes to Required Supplementary Information
POLICE AND FIRE FUND (CONTINUED)
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.
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, 2018
Variance with
Original and Actual Final Budget -
Final BudgetAmounts
Over (Under)
Revenues
Property taxes$ 1,282,660$ 1,291,753$ 9,093
Sales taxes - 5 5
Special assessments 3,000 5,341 2,341
Franchise fees 131,480 131,212 (268)
Licenses and permits 194,515 357,138 162,623
Intergovernmental revenue
Local government aid 989,464 989,464 -
PERA aid 1,541 1,541 -
Fire aid 49,000 57,865 8,865
Police aid 65,500 85,751 20,251
Federal grants 12,000 7,545 (4,455)
State grants 51,100 57,251 6,151
Other grants and aids 16,500 28,299 11,799
Total intergovernmental revenue 1,185,105 1,227,716 42,611
Charges for services
General government 33,495 33,225 (270)
Public safety 286,495 287,663 1,168
Public works 3,930 9,007 5,077
Culture and recreation 62,950 66,288 3,338
Total charges for services 386,870 396,183 9,313
Fines and forfeitures 55,500 58,620 3,120
Miscellaneous revenues
Investment income 27,000 16,160 (10,840)
Contributions and donations 2,600 7,966 5,366
Other 43,415 35,251 (8,164)
Total miscellaneous revenues 73,015 59,377 (13,638)
Total revenues 3,312,145 3,527,345 215,200
Expenditures
General government
Mayor and council 84,995 83,887 (1,108)
Administrative and finance 439,550 425,107 (14,443)
Other general government 201,925 232,380 30,455
Capital outlay 10,435 4,648 (5,787)
Total general government 736,905 746,022 9,117
84
City of St. Joseph
Schedule of Revenues, Expenditures, and
Changes in Fund Balance -
Budget and Actual - General Fund
Year Ended December 31, 2018
Variance with
Original and Actual Final Budget -
Final BudgetAmounts
Over (Under)
Expenditures
Public safety
Police
Current$ 1,207,630$ 1,111,840$ (95,790)
Capital outlay - 2,243 2,243
Total police 1,207,630 1,114,083 (93,547)
Fire
Current 391,120 391,691 571
Capital outlay 89,750 28,210 (61,540)
Total fire 480,870 419,901 (60,969)
Other
Current 96,990 102,601 5,611
Total public safety 1,785,490 1,636,585 (148,905)
Public works
Streets and highways
Street maintenance and storm sewers 260,360 271,586 11,226
Snow and ice removal 120,235 103,201 (17,034)
Street engineering 35,000 66,024 31,024
Capital outlay 77,500 61,849 (15,651)
Total public works 493,095 502,660 9,565
Culture and recreation
Current 300,325 331,861 31,536
Capital outlay - 3,445 3,445
Total culture and recreation 300,325 335,306 34,981
Total expenditures 3,315,815 3,220,573 (95,242)
Excess of revenues over
(under) expenditures (3,670) 306,772 310,442
Other Financing Sources (Uses)
Insurance recoveries - 12,779 12,779
Sale of property 200 - (200)
Transfers in 6,500 4,111 (2,389)
Transfers out - (293,563) (293,563)
Total other financing sources (uses) 6,700 (276,673) (283,373)
Net change in fund balances$ 3,030 30,099$ 27,069
Fund Balances
Beginning of year2,355,823
End of year$ 2,385,922
85
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2018
Special Revenue
Economic TIF 2-1
Development Millstream TIF 2-2 St. TIF 2-3 Bayou
Authority Shops and Joseph Meat Blues/Alley
(150)Lofts (157)Market (158)Flat (159)
Assets
Cash and investments$ 58,897$ 25,642$ 496$ 1,278
Taxes receivable - delinquent 922 - - -
Special assessments receivable
Delinquent - - - -
Deferred - - - -
Accounts receivable - - - -
Interest receivable 56 91 2 -
Due from other funds 10,800 - - -
Due from other governments 705 341 - -
Notes receivable - - - -
Total assets$ 71,380$ 26,074$ 498$ 1,278
Liabilities
Accounts payable$ 8,110$ 307$ -$ -
Due to other funds - - 500 9,800
Salaries and benefits payable 1,457 - - -
Total liabilities 9,567 307 500 9,800
Deferred Inflows of Resources
Unavailable revenue - property taxes 922 - - -
Unavailable revenue - special assessments - - - -
Unavailable revenue - notes receivable - - - -
922 - - -
Total deferred inflows of resources
Fund Balances
Restricted - 25,767 - -
Committed 60,891 - - -
Assigned - - - -
Unassigned - - (2) (8,522)
Total fund balances 60,891 25,767 (2) (8,522)
Total liabilities, deferred inflows
of resources, and fund balances$ 71,380$ 26,074$ 498$ 1,278
86
Special Revenue
TIF 3-1
Central TIF 4-1
Minnesota Fortitude Park Charitable
Credit Union Senior Dedication Gambling Lodging Tax Revolving Deed Housing
(152)Housing (153)(205)(215)(220)Loan (250)(225)
$ 184$ 4,528$ 111,372$ 2,096$ 30,335$ 211,359$ 34,946
- - - - - - -
- - - - - - -
- - - - - - -
- - 29 - 626 - -
15 12 413 8 91 776 63
- - - - - - -
- - 122 - - - -
- - - - - - -
$ 199$ 4,540$ 111,936$ 2,104$ 31,052$ 212,135$ 35,009
$ -$ -$ 179$ -$ -$ -$ -
500 - - - - - -
- - - - - - -
500 - 179 - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- 4,540 111,757 2,104 31,052 74,310 35,009
- - - - - 137,825 -
- - - - - - -
(301) - - - - - -
(301) 4,540 111,757 2,104 31,052 212,135 35,009
$ 199$ 4,540$ 111,936$ 2,104$ 31,052$ 212,135$ 35,009
87
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2018
Debt Service
G.O. G.O.
Improvement G.O. Improvement G.O.
Bonds of Improvement Bonds of Improvement
2005B/2010B Bonds of 2011A/2006C Bonds of
(333)2013A (348)(338)2010B (345)
Assets
Cash and investments$ 132,426$ 86,921$ 81,909$ 150,571
Taxes receivable - delinquent 262 80 435 63
Special assessments receivable
Delinquent 8,056 - 1,002 1,549
Deferred 94,582 37,269 109,310 92,944
Accounts receivable - - - -
Interest receivable 452 402 325 627
Due from other funds - - - -
Due from other governments 240 68 620 41
Notes receivable - - - -
Total assets$ 236,018$ 124,740$ 193,601$ 245,795
Liabilities
Accounts payable$ 128$ 128$ 128$ 128
Due to other funds - - - -
Salaries and benefits payable - - - -
Total liabilities 128 128 128 128
Deferred Inflows of Resources
Unavailable revenue - property taxes 262 80 435 63
Unavailable revenue - special assessments 102,638 37,269 110,312 94,493
Unavailable revenue - notes receivable - - - -
102,900 37,349 110,747 94,556
Total deferred inflows of resources
Fund Balances
Restricted 132,990 87,263 82,726 151,111
Committed - - - -
Assigned - - - -
Unassigned - - - -
Total fund balances 132,990 87,263 82,726 151,111
Total liabilities, deferred inflows
of resources, and fund balances$ 236,018$ 124,740$ 193,601$ 245,795
88
Debt Service
G.O. G.O. G.O. G.O. G.O. Tax G.O. Capital G.O.
Certificates of Improvement Improvement Certificates of Abatement Improvement Improvement
Indebtedness of Bonds of Bonds of Indebtedness Bonds of Plan Bonds of Bonds of
2011A (346)2014A (350)2015A (351)2015A (352)2015B (353)2016A (301)2016B (304)
$ 40$ 205,032$ 134,913$ 1,045$ 28,351$ 48,948$ 67,219
125 661 830 896 - 1,771 -
- 996 - - - - -
- 100,945 130,460 - - - 620,613
- - - - - - -
23 929 618 157 319 224 412
- - - - - - -
143 8,201 1,731 1,030 - 1,843 34
- - - - - - -
$ 331$ 316,764$ 268,552$ 3,128$ 28,670$ 52,786$ 688,278
$ 128$ 128$ 128$ 128$ 128$ 128$ 1,034
- - - - - - -
- - - - - - -
128 128 128 128 128 128 1,034
125 661 830 896 - 1,771 -
- 101,941 130,460 - - - 620,613
- - - - - - -
125 102,602 131,290 896 - 1,771 620,613
78 214,034 137,134 2,104 28,542 50,887 66,631
- - - - - - -
- - - - - - -
- - - - - - -
78 214,034 137,134 2,104 28,542 50,887 66,631
$ 331$ 316,764$ 268,552$ 3,128$ 28,670$ 52,786$ 688,278
89
City of St. Joseph
Combining Balance Sheet -
Nonmajor Governmental Funds
December 31, 2018
Debt Service
Capital G.O. 2018A
Improvement Improvement Equipment Debt Service
Bonds of Bonds of Certificate Relief Fund
2017A (303)2017B (305)(306)(390)
Assets
Cash and investments$ 104,072$ 52,970$ 50$ 539,508
Taxes receivable - delinquent - 45 - 1,381
Special assessments receivable
Delinquent - - - 135
Deferred - 75,911 - 123,365
Accounts receivable - - - -
Interest receivable 665 362 471 77
Due from other funds - - - -
Due from other governments - 61 - 562
Notes receivable 290,529 - - -
Total assets$ 395,266$ 129,349$ 521$ 665,028
Liabilities
Accounts payable$ 128$ 599$ 128$ -
Due to other funds - - - -
Salaries and benefits payable - - - -
Total liabilities 128 599 128 -
Deferred Inflows of Resources
Unavailable revenue - property taxes - 45 - 1,381
Unavailable revenue - special assessments - 75,911 - 123,500
Unavailable revenue - notes receivable 290,529 - - -
290,529 75,956 - 124,881
Total deferred inflows of resources
Fund Balances
Restricted 104,609 52,794 393 -
Committed - - - -
Assigned - - - 540,147
Unassigned - - - -
Total fund balances 104,609 52,794 393 540,147
Total liabilities, deferred inflows
of resources, and fund balances$ 395,266$ 129,349$ 521$ 665,028
90
Capital Projects
Jacob 2018
Wetterling Equipment General Total
Recreation Certificate Capital Outlay Water Access Sewer Access Governmental
Center (402)(406)(490)Fund (501)Fund (502)Funds
$ 2,469$ 65,256$ 409,574$ 409,129$ 88,820$ 3,090,356
- - - - - 7,471
- - - - - 11,738
- - - - - 1,385,399
- - - 5,000 2,300 7,955
9 - - 1,300 156 9,055
- - - - - 10,800
- - 471 - - 16,213
- - - - - 290,529
$ 2,478$ 65,256$ 410,045$ 415,429$ 91,276$ 4,829,516
$ -$ -$ -$ -$ -$ 11,765
- - - - - 10,800
- - - - - 1,457
- - - - - 24,022
- - - - - 7,471
- - - - - 1,397,137
- - - - - 290,529
- - - - - 1,695,137
- - - - - 1,395,835
- - - - - 198,716
2,478 65,256 410,045 415,429 91,276 1,524,631
- - - - - (8,825)
2,478 65,256 410,045 415,429 91,276 3,110,357
$ 2,478$ 65,256$ 410,045$ 415,429$ 91,276$ 4,829,516
91
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2018
Special Revenue
TIF 2-1
Economic Millstream TIF 2-2TIF 2-3 Bayou
Development Shops and St. Joseph Meat Blues/Alley
Authority (150)Lofts (157)Market (158)Flat (159)
Revenues
Property taxes$ 116,152$ -$ -$ -
Tax increments - 36,094 4,298 172
Lodging taxes - - - -
Special assessments - - - -
Charges for services - - - -
Miscellaneous
Investment income 102 165 3 -
Contributions and donations - - - -
Revolving loan repayments - - - -
Other - - - -
Total revenues 116,254 36,259 4,301 172
Expenditures
Current
General government - - - -
Culture and recreation - - - -
Economic development 63,290 33,903 4,177 1,574
Debt service
Principal - - - -
Interest and other charges - - - -
Capital outlay
General government - - - -
Public safety - - - -
Public works 31,847 - - -
Culture and recreation - - - -
Total expenditures 95,137 33,903 4,177 1,574
Excess of revenues over
(under) expenditures
21,117 2,356 124 (1,402)
Other Financing Sources (Uses)
Sale of property - - - -
Bonds issued - - - -
Transfers in - - 40 -
Transfers out - - - (40)
Total other financing sources (uses) - - 40 (40)
Net change in fund balances 21,117 2,356 164 (1,442)
Fund Balances
Beginning of year 39,774 23,411 (166) (7,080)
End of year$ 60,891$ 25,767$ (2)$ (8,522)
92
Special Revenue
TIF 3-1 Central TIF 4-1
Minnesota Fortitude Park
Credit Union Senior Housing Dedication Charitable Lodging Tax Revolving Deed Housing
(152)(153)(205)Gambling (215)(220)Loan (250)(225)
$ -$ -$ 20,000$ -$ - $ -$ -
43,270 35,069 - - - - -
- - - - 15,930 - -
- - - - - - -
- - 29,594 - - - -
27 21 754 14 167 1,417 115
- - 155 - - - -
- - - - - 5,098 -
- - - - - - 18,019
43,297 35,090 50,503 14 16,097 6,515 18,134
- - - - - - -
- - 5,584 - - - -
40,362 32,689 - - 5,800 35 1,833
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - 54,544 - - - -
40,362 32,689 60,128 - 5,800 35 1,833
2,935 2,401 (9,625) 14 10,297 6,480 16,301
- - - - - - -
- - - - - - -
- - - - - - 7,563
- - - - - - -
- - - - - - 7,563
2,935 2,401 (9,625) 14 10,297 6,480 23,864
(3,236) 2,139 121,382 2,090 20,755 205,655 11,145
$ (301)$ 4,540$ 111,757$ 2,104$ 31,052$ 212,135$ 35,009
93
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2018
Debt Service
G.O. G.O.
Improvement G.O. G.O. Improvement
Bonds of Improvement Certificates of Bonds of
2005B/2010B Bonds of Indebtedness of 2011A/2006C
(333)2013A (348)2013A (349)(338)
Revenues
Property taxes$ 36,381$ 9,986$ 56,602$ 49,984
Tax increments - - - -
Lodging taxes - - - -
Special assessments 131,248 8,497 - 55,388
Charges for services - - - -
Miscellaneous
Investment income 825 735 78 594
Contributions and donations - - - -
Revolving loan repayments - - - -
Other - - - -
Total revenues 168,454 19,218 56,680 105,966
Expenditures
Current
General government - - - -
Culture and recreation - - - -
Economic development - - - -
Debt service
Principal 135,000 35,000 60,000 130,000
Interest and other charges 9,374 7,898 1,200 12,254
Capital outlay
General government - - - -
Public safety - - - -
Public works - - - -
Culture and recreation - - - -
Total expenditures 144,374 42,898 61,200 142,254
Excess of revenues over
(under) expenditures
24,080 (23,680) (4,520) (36,288)
Other Financing Sources (Uses)
Sale of property - - - -
Bonds issued - - - -
Transfers in - - - 18,000
Transfers out - - (2,610) -
Total other financing sources (uses) - - (2,610) 18,000
Net change in fund balances 24,080 (23,680) (7,130) (18,288)
Fund Balances
Beginning of year 108,910 110,943 7,130 101,014
End of year$ 132,990$ 87,263$ -$ 82,726
94
Debt Service
G.O. Capital G.O. G.O. G.O. Capital G.O. G.O. G.O.
Improvement Improvement Certificates of Improvement Improvement Improvement Certificates of
Plan Bonds of Bonds of Indebtedness of Plan Bonds of Bonds of Bonds of Indebtedness
2009B (343)2010B (345)2011A (346)2011A (347)2014A (350)2015A (351)2015A (352)
$ 56,634$ 5,984$ 20,806$ 22,847$ 79,927$ 14,877$ 36,881
- - - - - - -
- - - - - - -
- 23,239 - - 46,806 44,483 -
- - 22,944 - - - -
91 1,189 60 25 1,697 1,128 287
- - - - - - -
- - - - - - -
- - - - - - -
56,725 30,412 43,810 22,872 128,430 60,488 37,168
- - - - - - -
- - - - - - -
- - - - - - -
60,000 50,000 40,000 80,000 115,000 60,000 35,000
2,250 12,781 3,688 2,469 49,563 11,077 1,878
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
62,250 62,781 43,688 82,469 164,563 71,077 36,878
(5,525) (32,369) 122 (59,597) (36,133) (10,589) 290
- - - - - - -
- - - - - - -
- 13,250 - 60,000 - - -
(5,213) - - (3,688) - - -
(5,213) 13,250 - 56,312 - - -
(10,738) (19,119) 122 (3,285) (36,133) (10,589) 290
10,738 170,230 (44) 3,285 250,167 147,723 1,814
$ -$ 151,111$ 78$ -$ 214,034$ 137,134$ 2,104
95
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2018
Debt Service
G.O. Tax G.O. Capital G.O. Capital
Abatement Improvement Improvement Improvement
Bonds of Plan Bonds of Bonds of Bonds of
2015B (353)2016A (301)2016B (304)2017A (303)
Revenues
Property taxes$ -$ 269,122$ 5,000$ -
Tax increments - - - -
Lodging taxes - - - -
Special assessments - - 24,278 -
Charges for services - - - -
Miscellaneous
Investment income 583 408 753 524
Contributions and donations - - - -
Revolving loan repayments - - - -
Other - - - 9,378
Total revenues 583 269,530 30,031 9,902
Expenditures
Current
General government - - - 6,669
Culture and recreation - - - -
Economic development - - - -
Debt service
Principal 110,000 180,000 50,000 43,000
Interest and other charges 42,262 93,370 13,979 13,023
Capital outlay
General government - - - -
Public safety - - - -
Public works - - 29,053 -
Culture and recreation - - - -
Total expenditures 152,262 273,370 93,032 62,692
Excess of revenues over
(under) expenditures
(151,679) (3,840) (63,001) (52,790)
Other Financing Sources (uses)
Sale of property - - - 102,500
Bonds issued - - - -
Transfers in 160,000 36,000 20,000 -
Transfers out - - - -
Total other financing sources (uses) 160,000 36,000 20,000 102,500
Net change in fund balances 8,321 32,160 (43,001) 49,710
Fund Balances
Beginning of year 20,221 18,727 109,632 54,899
End of year$ 28,542$ 50,887$ 66,631$ 104,609
96
Debt ServiceCapital Projects
G.O. 2018A Jacob 2018
Improvement Equipment Debt Service Wetterling CBD Alley Equipment
Bonds of Certificate Relief Fund Recreation Improvement Certificate
2017B (305)(306)(390)Center (402)Project (405)(406)
$ 8,955$ -$ 695$ -$ -$ -
- - - - - -
- - - - - -
19,297 - 11,009 - - -
- - - - - -
661 1,017 - 16 - -
- - - 575 - -
- - - - - -
- - - - - -
28,913 1,017 11,704 591 - -
- - - - - -
- - - - - -
- - - - - -
35,000 - - - - -
11,773 17,164 - - - -
- - - - - 20,340
- - - - - -
471 - 62,810 - 26,169 98,864
- - - - - 87,000
47,244 17,164 62,810 - 26,169 206,204
(18,331) (16,147) (51,106) 591 (26,169) (206,204)
- - - - - 23,000
- 16,540 - - - 248,460
26,127 - 258,900 - - -
- - (60,000) - (26,127) -
26,127 16,540 198,900 - (26,127) 271,460
7,796 393 147,794 591 (52,296) 65,256
44,998 - 392,353 1,887 52,296 -
$ 52,794$ 393$ 540,147$ 2,478$ -$ 65,256
97
City of St. Joseph
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds
Year Ended December 31, 2018
Capital Projects
Total Other
General Capital Water Access Sewer Access Governmental
Outlay (490)Fund (501)Fund (502)Funds
Revenues
Property taxes$ 77,320$ -$ -$ 888,153
Tax increments - - - 118,903
Lodging taxes - - - 15,930
Special assessments - - - 364,245
Charges for services - 369,697 139,287 561,522
Miscellaneous
Investment income - 4,011 631 18,098
Contributions and donations - - - 730
Revolving loan repayments - - - 5,098
Other - - - 27,397
Total revenues 77,320 373,708 139,918 2,000,076
Expenditures
Current
General government 6,400 - - 13,069
Culture and recreation - - - 5,584
Economic development - - - 183,663
Debt service
Principal - - - 1,218,000
Interest and other charges - - - 306,003
Capital outlay
General government 65 - - 20,405
Public safety 2,460 - - 2,460
Public works 4,803 - - 254,017
Culture and recreation 8,439 - - 149,983
Total expenditures 22,167 - - 2,153,184
Excess of revenues over
(under) expenditures
55,153 373,708 139,918 (153,108)
Other Financing Sources (uses)
Sale of property 9,500 - - 135,000
Bonds issued - - - 265,000
Transfers in - - - 599,880
Transfers out - (200,000) (55,000) (352,678)
Total other financing sources (uses) 9,500 (200,000) (55,000) 647,202
Net change in fund balances 64,653 173,708 84,918 494,094
Fund Balances
Beginning of year 345,392 241,721 6,358 2,616,263
End of year$ 410,045$ 415,429$ 91,276$ 3,110,357
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 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, 2018, and the related notes
to financial statements, which collectively comprise the City's basic financial statements, and have
issued our report thereon dated April 18, 2019.
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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
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 2018-001.
99
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 18, 2019
100
Minnesota 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, 2018, and the related notes
to financial statements, which collectively comprise the City's basic financial statements, and have
issued our report thereon dated April 18, 2019.
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.
The purpose of this report is solely to describe the scope of our testing of compliance and the results of
that testing, and not to provide an opinion on compliance. Accordingly, this communication is not
suitable for any other purpose.
St. Cloud, Minnesota
April 18, 2019
101
City of St. Joseph
Schedule of Finding and Response on
Internal Control
CURRENT AND PRIOR YEAR INTERNAL CONTROL FINDING
Material Weakness
Audit Finding 2018-001 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.
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 2018-001 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.
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
City of St. Joseph
Communications Letter
December 31, 2018
City of St. Joseph
Table of Contents
Report on Matters Identified as a Result of
the Audit of the Financial Statements 1
Material Weakness 3
Required Communication 5
Financial Analysis 8
Emerging Issues 22
Report on Matters Identified as a Result of
the Audit of the Financial Statements
Honorable Mayor, Members
of the City Council and Management
City of St. Joseph
St. Joseph, Minnesota
In planning and performing our audit of the financial statements of the governmental activities,
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, 2018, in accordance with auditing
standards generally accepted in the United States of America, we considered the City's internal control
over financial reporting (internal control) as a basis for designing 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.
Our consideration of internal control was for the limited purpose described in the preceding paragraph
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that
have not been identified. In addition, because of inherent limitations in internal control, including the
possibility of management override of controls, misstatements due to error, or fraud may occur and not
be detected by such controls. However, as discussed below, we identified a certain deficiency in internal
control that we consider to be a material weakness.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial reporting, 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. A reasonable possibility exists when the likelihood of an event
occurring is either reasonably possible or probable as defined as follows: reasonably possible the
chance of the future event or events occurring is more than remote but less than likely; probable the
future event or events are likely to occur. The material weakness identified is stated within this letter.
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
The City's written response to the material weakness identified in our audit has not been subjected to
audit procedures applied in the audit of the financial statements and, accordingly, we express no opinion
on it.
1
The accompanying memorandum also includes financial analysis provided as a basis for discussion. The
matters discussed herein were considered by us during our audit and they do not modify the opinion
expressed in our Independent Auditor's Report dated April 18, 2019, on such statements.
This communication is intended solely for the information and use of the City Council, management,
others within the City and state oversight agencies and is not intended to be, and should not be, used by
anyone other than these specified parties.
St. Cloud, Minnesota
April 18, 2019
2
City of St. Joseph
Material Weakness
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 enter cash and checks into the point of sale system,
reconcile the entries, and prepare the deposit. The Police Records Specialist records police receipts,
receives payments, and reconciles the collections.
Cash Disbursements
The Finance Director approves some invoices for payment, enters invoices into the system, and
generates checks and a check register. The Finance Director also is an authorized signer and has
access to the Mayor's electronic signature. At year-end, the Finance Director reconciles and records
accounts and contracts payable. The City Administrator reviews and approves checks for payment.
Capital Assets
The Finance Director records, processes, reconciles, and posts journal entries related to capital
assets. Department heads review their listing for accuracy.
Payroll
The Finance Director enters employee's time, processes and posts payroll, generates a payroll report,
distributes paystubs to employees, and posts the journal entries related to payroll. In addition, this
same employee reconciles payroll accruals and time off balances. The City Administrator does
review payroll reports and time off balances and calculates compensated absences balances for the
audit.
Utility Billing
The Utility Billing Clerk enters new accounts into the utility billing system and uploads meter
readings via interfacing with electronic readers. The Utility Billing Clerk enters any rate changes to
the system. The Utility Billing Clerk can enter manual adjustments, calculates, and enters final bills,
prints, and mails utility bills, reconciles receipts to billed amounts, and enters receipts batches.
Cash Reconciliation and Access
The Finance Director performs the above noted responsibilities, while also reconciling cash and
generating manual journal entries.
3
City of St. Joseph
Material Weakness
IMPROVE SEGREGATION OF ACCOUNTING DUTIES (CONTINUED)
We recommend management and the City Council review the above deficiencies and improve
segregation of accounting duties where possible to build upon the control environment. We also
recommend the City closely follow its internal control plan and follow through with the control
activities that have been designed.
4
City of St. Joseph
Required Communication
We have audited the financial statements of the governmental activities, business-type activities, each
major fund, and the aggregate remaining fund information of the City as of and for the year ended
December 31, 2018. Professional standards require that we advise you of the following matters related
to our audit.
OUR RESPONSIBILITY IN RELATION TO THE FINANCIAL STATEMENT AUDIT
As communicated in our engagement letter, our responsibility, as described by professional standards, is
to form and express opinions about whether the financial statements prepared by management with your
oversight are presented fairly, in all material respects, in accordance with accounting principles
generally accepted in the United States of America. Our audit of the financial statements does not
relieve you or management of its respective responsibilities.
As part of our audit, we considered the internal control of the City. Such considerations were solely for
the purpose of determining our audit procedures and not to provide any assurance concerning such
internal control.
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations,
contracts, and grants. However, the objective of our tests was not to provide an opinion on compliance
with such provisions.
Generally accepted accounting principles provide for certain required supplementary information (RSI)
to supplement the basic financial statements. Our responsibility with respect to the RSI, which
supplements the basic audit financial statements, is to apply certain limited procedures in accordance
with generally accepted auditing standards. However, the RSI was not audited and, because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance,
we do not express an opinion or provide any assurance on the RSI.
Our responsibility for the supplementary information accompanying the financial statements, as
described by professional standards, is to evaluate the presentation of the supplementary information in
relation to the financial statements as a whole and to report on whether the supplementary information is
fairly stated, in all material respects, in relation to the financial statements as a whole.
PLANNED SCOPE AND TIMING OF THE AUDIT
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit involved judgment about the number of transactions to be
examined and the areas to be tested.
Our audit included obtaining an understanding of the City and its environment, including internal
control, sufficient to assess the risks of material misstatement of the financial statements and to design
the nature, timing, and extent of further audit procedures. Material misstatements may result from
(1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or
governmental regulations that are attributable to the City or to acts by management or employees acting
on behalf of the City.
5
City of St. Joseph
Required Communication
COMPLIANCE WITH ALL ETHICS REQUIREMENTS REGARDING INDEPENDENCE
The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied
with all relevant ethical requirements regarding independence.
QUALITATIVE ASPECTS OF SIGNIFICANT ACCOUNTING PRACTICES
Management has the responsibility to select and use appropriate accounting policies. A summary of the
significant accounting policies adopted by the City is included in the notes to financial statements. There
have been no initial selection of accounting policies and no changes to significant accounting policies or
their application during 2018. We noted no transactions entered into by the City during the year for
which there is a lack of authoritative guidance or consensus. All significant transactions have been
recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
Depreciation The City is currently depreciating its capital assets over their estimated useful lives,
as determined by management, using the straight-line method.
Net Pension Liability, Deferred Outflows of Resources Relating to Pension Activity, and Deferred
Inflows of Resources relating to Pension Activity These balances are based on an allocation by
the pension plans using estimates based on contributions.
We evaluated the key factors and assumptions used to develop the accounting estimates in determining
that they are reasonable in relation to the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
SIGNIFICANT DIFFICULTIES ENCOUNTERED DURING THE AUDIT
We encountered no significant difficulties in dealing with management relating to the performance of
the audit.
UNCORRECTED AND CORRECTED MISSTATEMENTS
Professional standards require us to accumulate all known and likely misstatements identified during
the audit, other than those that are clearly trivial, and communicate them to the appropriate level of
management. Further, professional standards require us to also communicate the effect of
uncorrected misstatements related to prior periods on the relevant classes of transactions, account
balances or disclosures, and the financial statements as a whole. Management has corrected all such
misstatements.
6
City of St. Joseph
Required Communication
UNCORRECTED AND CORRECTED MISSTATEMENTS (CONTINUED)
In addition, none of the misstatements detected as a result of audit procedures and corrected by
management were material, either individually or in the aggregate, to the financial statements taken
as a whole.
DISAGREEMENTS WITH MANAGEMENT
For purposes of this letter, professional standards define a disagreement with management as a
matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or
auditing matter, which could be significant to the City's financial statements or the auditor's report.
No such disagreements arose during the course of the audit.
REPRESENTATIONS REQUESTED FROM MANAGEMENT
We requested certain written representations from management, which are included in the
management representation letter.
MANAGEMENT'S CONSULTATIONS WITH OTHER ACCOUNTANTS
In some cases, management may decide to consult with other accountants about auditing and accounting
matters. Management has informed us that, and to our knowledge, there were no consultations with
other accountants regarding auditing and accounting matters.
OTHER SIGNIFICANT MATTERS, FINDINGS, OR ISSUES
In the normal course of our professional association with the City, we generally discuss a variety of
matters, including the application of accounting principles and auditing standards, operating
conditions affecting the City, and operating plans and strategies that may affect the risks of material
misstatement. None of the matters discussed resulted in a condition to our retention as the City's
auditors.
OTHER MATTERS
We applied certain limited procedures to the RSI that supplements the basic financial statements. Our
procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
With respect to the supplementary information accompanying the financial statements, we made certain
inquiries of management and evaluated the form, content and methods of preparing the information to
determine that the information complies with accounting principles generally accepted in the United
States of America, the method of preparing it has not changed from the prior period, and the information
is appropriate and complete in relation to our audit of the financial statements. We compared and
reconciled the supplementary information to the underlying accounting records used to prepare the
financial statements or to the financial statements themselves.
7
City of St. Joseph
Financial Analysis
The following pages provide graphic representation of select data pertaining to the financial position and
operations of the City for the past five years. Our analysis of each graph is presented to provide a basis
for discussion of past performance and how implementing certain changes may enhance future
performance. We suggest you view each graph and document if our analysis is consistent with yours. A
subsequent discussion of this information should be useful for planning purposes.
TAX CAPACITY, LEVY, AND RATES
The certified levy increased more than the taxable tax capacity increased in 2018 causing the tax rate to
increase.
Tax Capacity, Levy, and Rates
$4,500,000100%
99.66%
99.61%
99.00%
98.38%
97.10%
90%
$4,000,000
80%
$3,565,731
$3,379,730
$3,342,661
$3,272,269
$3,500,000
$3,215,462
70%
60%
$3,000,000
61.46%
59.26%
55.01%
50%
54.78%
52.70%
$2,500,000
40%
30%
$2,000,000$2,191,595
$2,002,920
20%
$1,838,805
$1,500,000
$1,704,320
$1,673,870
10%
$1,000,0000%
20142015201620172018
Taxable Tax CapacityCertified Tax LevyTax RateCollection Rate
GENERAL FUND
For the year ended December 31, 2018, General Fund revenues exceeded expenditures by $306,772. In
addition to this, $12,779 of insurance recoveries, transfer out of $293,563 to other funds and transfers in
of $4,111 from other funds resulted in an increase in the General Fund balance of $30,099. Of the City's
General Fund balance at December 31, 2018, $887,926 was assigned for specific expenditures, such as
the fire department, elections, and a City structure/facility study. An additional $5,051 was restricted by
PEG access fees restricted for future cable access expenditures. The City also has $24,560 of its fund
balance in nonspendable form as the funds have already been spent on prepaid insurance. The
unassigned portion of the fund balance, which includes monies set aside for working capital, totaled
$1,468,385 represents approximately five months of 2018 General Fund expenditures. The City's target
General Fund balance is to maintain working capital, a portion of the unassigned balance, in the amount
of four to six months of the next year's budgeted expenditures of the General Fund, excluding the fire
department.
8
City of St. Joseph
Financial Analysis
GENERAL FUND
The graphs below and on the following page show the City's General Fund balance and the General
Fund revenues and expenditures for the last five years.
General Fund
$3,000,000
$23,479
$24,560
$2,500,000
$25,712
$26,567
$5,051
$34,370
$77
$295,972
$288,493
$267,501
$2,000,000
$22,423
$150,544
$620,425
$557,885
$576,622
$112,556
$1,500,000
$514,060
$500,085
$1,315,805
$1,000,000
$1,439,299
$1,449,363
$1,090,634$1,468,385
$500,000
$-
20142015201620172018
UnassignedAssigned for Fire FundAssigned for Other PurposesRestrictedNonspendable
9
City of St. Joseph
Financial Analysis
GENERAL FUND (CONTINUED)
General Fund
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$-
20142015201620172018
Total Revenues
$2,745,142$2,927,909$3,206,688$3,258,037$3,527,345
Total Expenditures
$2,656,243$2,682,512$2,848,467$3,029,246$3,220,573
Fund Balance
1,740,9142,000,8522,361,9392,355,8232,385,922
During the year ended December 31, 2018, the City's General Fund revenues increased $269,308, or
8.3%, from 2017, while expenditures increased by $191,327, or 6.3%. These changes in revenues and
expenditures will be discussed by source and function, respectively, on the following pages.
As discussed earlier, fund balance did increase $30,999 from 2017 to 2018. Fund balance has increased
$645,008 or 37.0% since 2014.
10
City of St. Joseph
Financial Analysis
GENERAL FUND REVENUES
20142015201620172018
Taxes$ 1,124,594$ 1,107,058$ 1,083,067$ 1,125,765$ 1,291,758
Special assessments 7,302 3,590 3,740 9,127 5,341
Franchise fees 124,940 124,283 126,817 129,242 131,212
Licenses and permits 105,929 152,158 270,780 356,990 357,138
Intergovernmental 1,018,932 1,107,840 1,212,746 1,133,362 1,227,716
Charges for services 243,067 270,508 345,321 376,946 396,183
Fines and forfeitures 38,330 50,489 46,747 55,474 58,620
Miscellaneous 82,048 111,983 117,470 71,131 59,377
Total Revenues$ 2,745,142$ 2,927,909$ 3,206,688$ 3,258,037$ 3,527,345
As discussed earlier, the City's revenue increased $269,308 from 2017 to 2018. The most significant
variance was an increase in property taxes of $165,993. This increase was due to an increase in the tax
levy. Intergovernmental revenues increased $94,354 from 2017, due primarily to the City receiving an
increase in local government aid funding. Other revenues stayed consistent with the prior year.
Total revenues have grown $782,203 since 2014, an increase of 28.5%. The largest variances between
the types of revenue have been the increases in licenses and permits and intergovernmental revenues.
The pie charts on the following page show the General Fund sources of revenue for 2018 and 2017 as a
percentage of total revenues. The allocation of sources of revenue fluctuates minimally from year-to-
year. Intergovernmental revenue and Taxes account for the two largest components of revenues, each
making up 35% and 37% of the total. The total of these two categories accounts for approximately 72%
and 69% of General Fund revenues in 2018 and 2017.
11
City of St. Joseph
Financial Analysis
GENERAL FUND REVENUES (CONTINUED)
2018 General Fund Revenues
Licenses and permits
10%
Intergovernmental
Franchise fees
35%
4%
Special Assessments
Less than 1%
Charges for services
11%
Taxes
36%
Miscellaneous
Fines and forfeitures
2%
2%
2017 General Fund Revenues
Intergovernmental
Licenses and permits
35%
11%
Franchise fees
4%
Special Assesments
Less than 1%
Charges for services
12%
Taxes
34%
Fines and forfeitures
Miscellaneous
2%
2%
12
City of St. Joseph
Financial Analysis
GENERAL FUND EXPENDITURES
20142015201620172018
General government$ 552,559$ 582,258$ 617,764$ 749,008$ 741,374
Public safety 1,419,890 1,376,624 1,459,196 1,537,183 1,606,132
Public works 403,435 329,004 353,421 342,806 440,811
Culture and recreation 199,011 264,168 317,839 270,555 331,861
Capital outlay 81,348 130,458 100,247 129,694 100,395
Total Expenditures$ 2,656,243$ 2,682,512$ 2,848,467$ 3,029,246$ 3,220,573
As discussed earlier, General Fund expenditures increased $191,327, or 6.3%, from 2017 to 2018. The
most significant increases in expenditures occurred in public works, public safety, and culture and
recreation. Public works increased $98,005 due to a feasibility study that was done for the 2019 project
as well as an increase in supplies due to the City purchasing more salt in 2018. Public safety increased
due to increases in salaries, insurance costs and legal fees. Culture and recreation increased due to an
increase in repairs and insurance costs. All other expenses remained consistent with the prior year.
Partially offsetting these increases was a decrease in capital outlay expenditures of $29,299, which was
the result of the City not having major projects ongoing in 2018.
The pie charts on the following page show the General Fund expenditures by function for 2018 and
2017 as a percentage of total expenditures. The allocation of expenditures by function was fairly
consistent from 2017 to 2018. Public safety remains the largest component of General Fund
expenditures, representing 50% and 51% of total expenditures for 2018 and 2017, respectively.
13
City of St. Joseph
Financial Analysis
GENERAL FUND EXPENDITURES (CONTINUED)
2018 General Fund Expenditures
Public safety
50%
Public works
14%
General government
23%
Culture and recreation
10%
Capital outlay
3%
2017 General Fund Expenditures
Public safety
51%
Public works
11%
General government
Culture and recreation
25%
9%
Capital outlay
4%
14
City of St. Joseph
Financial Analysis
GENERAL FUND BUDGET
The table below illustrates the General Fund budget and actual for 2018 revenues and expenditures by
function.
Variance
With Final
Actual
Original and
Budget -
Amounts
Final Budget
Over (under)
Revenues
Taxes$ 1,282,660$ 1,291,758$ 9,098
Special assessments 3,000 5,341 2,341
Franchise fees 131,480 131,212 (268)
Licenses and permits 194,515 357,138 162,623
Intergovernmental 1,185,105 1,227,716 42,611
Charges for services 386,870 396,183 9,313
Fines and forfeitures 55,500 58,620 3,120
Miscellaneous 73,015 59,377 (13,638)
Total revenues 3,312,145 3,527,345 215,200
Expenditures
General government 726,470 741,374 14,904
Public safety 1,695,740 1,606,132 (89,608)
Public works 415,595 440,811 25,216
Culture and recreation 300,325 331,861 31,536
Capital outlay 177,685 100,395 (77,290)
Total expenditures 3,315,815 3,220,573 (95,242)
Excess of receipts over
(under) disbursements
(3,670) 306,772 310,442
Other Financing Sources (Uses)
Insurance recoveries - 12,779 12,779
Sale of property 200 - (200)
Transfers in 6,500 4,111 (2,389)
Transfers out - (293,563) (293,563)
Total other financing sources
6,700 (276,673) (283,373)
Net change in fund balance$ 3,030$ 30,099$ 27,069
15
City of St. Joseph
Financial Analysis
GENERAL FUND BUDGET (CONTINUED)
General Fund revenues were over budget by $215,200 or 6.5% in 2018. The area with the largest budget
variance was licenses and permits, which exceeded budget by $162,623. Licenses and permits were over
budget due to the City budgeting conservatively for them as they can vary from year to year, 2018 was a
year of increased development resulting in revenues exceeding the budget.
Intergovernmental revenues were over budget $42,611. This was due receiving more police and fire aids
than budgeted. The remaining areas were on budget, with a total variance between them of $12,067 over
budget.
Public safety expenditures were under budget by $87,365, primarily due to the City's police being
understaffed during the year as a result of turnover at key positions. Capital outlay was $77,290 under
budget, primarily due to budgeting for the purchase of fire equipment that was not purchased in 2018.
General government, public works, and culture and recreation all came in slightly over budget by
$14,904, $25,216, and $31,536, respectively.
ENTERPRISE FUNDS
Enterprise funds are used to account for operations financed and operated in a manner, similar to private
business enterprises, where the City intends the cost of providing goods or services to the public be
financed or recovered primarily through user charges. The City's Enterprise Funds include the Water,
Sanitary Sewer, Refuse, Storm Water, and Street Light Utility Funds.
16
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS
Water Fund
The Water Fund showed operating income for the fourth consecutive year, with its only loss in the five
years presented occurring in 2014. Operating revenues increased $61,519, or 6.3%, from 2017 due to
rate increases, while operating expenses increased $86,168, or 10.9%, from 2017 to 2018, due to well
repairs during the year.
Operations produced operating income of $152,395, which is the second highest in the five years
presented. With the exclusion of $436,325 in depreciation expense, the Fund experienced operating
income of $588,720. However, depreciation should be considered as a true expense in operations, being
that most equipment and facilities will eventually need upgrades or replacement. The operations of the
Water Fund covered 100% of depreciation expense.
In addition to the operating revenues and expenses of the Water Fund, there were net non-operating
expenses of $85,301, which is comprised of property taxes and other income, offset by interest expense
on the outstanding bond debt. The operating and non-operating activities netted with capital
contributions and transfers resulted in an increase in net position of $300,032 to $8,961,120 at
December 31, 2018. The cash and investments balance at December 31, 2018, totaled $602,019, a
decrease of $68,363. A large portion of this decrease was attributed to principal and interest payments
on debt and the acquisition costs of capital assets.
Water Fund
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
$(200,000)
20142015201620172018
Operating Revenues
$723,850$770,889$883,601$968,823$1,030,342
Operating Expenses753,725762,423782,057791,779877,947
Operating Income (Loss) with Depreciation(29,875)8,466101,544177,044152,395
Operating Income without Depreciation349,539413,747513,809594,056588,720
17
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Sanitary Sewer Fund
Operating revenues increased $116,129, or 9.1%, from 2017 to 2018, while operating expenses
decreased $16,195, or 1.7%. The increase in revenue is due to the City raising rates. Expenses on the
other hand stayed relatively consistent with the previous year.
The Sewer Fund produced operating income for the third time in the five years presented. Due to the
nature and cost of the Sewer Fund's assets, it is difficult to establish sewer rates sufficient to cover
replacement of the assets represented by depreciation expense. Ideally, sewer revenues should cover all
operating expenses, including depreciation. However, depreciation of Sewer Fund assets is a difficult
cost to recover from system users since there are relatively few users in relation to the cost of asset
replacement. The operations of the Sewer Fund covered 100% of depreciation expense for three
consecutive years.
The graph below indicates the Sewer Fund did generate operating income each year when depreciation
expense is not considered, indicated by the orange bar.
In addition to the operating revenues and expenses of the Sewer Fund, there were net non-operating
expenses of $93,218, which is mainly due to $146,492 of interest expense paid on outstanding debt.
Capital contributions and transfers along with the operating and non-operating activities resulted in an
increase in net position of $425,805 to $9,060,864 at December 31, 2018. The cash balance at
December 31, 2018, totaled $232,990, an increase of $230,644.
Sanitary Sewer Fund
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
$-
$(200,000)
$(400,000)
20142015201620172018
Operating Revenues
$661,679$840,148$997,206$1,271,765$1,387,894
Operating Expenses850,112848,367886,810959,148942,953
Operating Income (Loss) with Depreciation(188,433)(8,219)110,396312,617444,941
Operating Income without Depreciation
204,478433,404563,309794,023937,945
18
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Refuse Fund
The following graph displays selected financial data for the Refuse Fund for the past five years. The
Fund consistently showed an operating loss each year, except for 2016. Operating revenues decreased
$7,170, or 2.5%, while operating expenses increased $18,384, or 6.3%, from 2017 to 2018. This increase
in expenses was a result of an increase in refuse fees. These changes resulted in an operating loss of
$26,960 for 2018. The Fund produced an operating loss of $20,454 when depreciation is not factored in.
The cash balance decreased $13,276 in 2018 and totaled $244,488 at December 31, 2018.
Refuse Fund
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$-
$(50,000)
20142015201620172018
Operating Revenues$285,197$284,585$286,603$288,151$280,981
Operating Expenses
322,397287,877282,280289,557307,941
Operating Income (Loss) with Depreciation
(37,200)(3,292)4,323(1,406)(26,960)
Operating Income (Loss) without Depreciation(30,694)3,31410,9295,200(20,454)
19
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Storm Water Fund
The Storm Water Fund showed operating losses in all five years presented. Operating revenues
decreased $46,457, or 36.5%, from 2017 to 2018, due to the City cutting rates in half. Operating
expenses increased $40,913, or 24.2% due to costs of repairs and a pension adjustment.
The Storm Water Fund produced an operating loss of $129,592 with depreciation and operating loss of
$23,778 without depreciation expense. The operations of the Storm Water Fund did not cover the
depreciation expense. The Storm Water Fund also had a transfer out totaling $19,250. Fund activity
resulted in a decrease in net position of $146,899. The cash balance decreased $28,971 in 2018 and
totaled $251,993 at December 31, 2018.
We recommend the City continue to monitor rates as well as operating expenses to ensure the Fund's
profitability in the future.
Storm Water Fund
$250,000
$200,000
$150,000
$100,000
$50,000
$-
$(50,000)
$(100,000)
$(150,000)
20142015201620172018
Operating Revenues
$97,505$98,133$99,212$127,167$80,710
Operating Expenses
167,939180,681178,189169,389210,302
Operating Loss with Depreciation
(70,434)(82,548)(78,977)(42,222)(129,592)
Operating Income without Depreciation
27,22415,21123,78662,991(23,778)
20
City of St. Joseph
Financial Analysis
ENTERPRISE FUNDS (CONTINUED)
Street Light Utility
The Street Light Utility Fund was opened during 2013 to track activity relating to the street light utility.
The Street Light Utility Fund showed an operating income for the first time in three years. Operating
revenues increased $15,266, from 2017 to 2018 due to a rate increase; while operating expenses
increased $6,024, or 9.3%.
The Street Light Utility Fund produced operating income of $5,735. The fund also reported non-
operating income including investment income, special assessments, and other income totaling $7,808,
which resulted in an increase in net position of $13,543. The cash balance increased $11,466 in 2018
and totaled $35,043 at December 31, 2018.
We recommend the City continue to monitor rates as well as operating expenses to ensure the Fund's
profitability in the future.
Street Light Utility
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$-
$(10,000)
20142015201620172018
Operating Revenues$63,037$60,564$60,550$61,359$76,625
Operating Expenses
50,53153,75163,32764,86670,890
Operating Income (Loss)
12,5066,813(2,777)(3,507)5,735
21
City of St. Joseph
Emerging Issues
Executive Summary
The following is an executive summary of financial and business related updates to assist you in staying
current on emerging issues in accounting and finance. This summary will give you a preview of the new
standards that have been recently issued and what is on the horizon for the near future. The most recent
and significant updates include:
Accounting Standard Update GASB Statement No. 84 Fiduciary Activities GASB has
issued GASB Statement No. 84 relating to accounting and financial reporting for fiduciary
activities. This new statement establishes clarity to determine when a government has fiduciary
responsibility for a certain activity.
Accounting Standard Update GASB Statement No. 87 Leases GASB has issued GASB
Statement No. 87 relating to accounting and financial reporting for leases. This new statement
establishes a single model for lease accounting based on the principle that leases are financing of
the right to use an underlying asset.
The following are extensive summaries of the current updates. As your continued business partner, we
are committed to keeping you informed of new and emerging issues. We are happy to discuss these
issues with you further and their applicability to your City.
ACCOUNTING STANDARD UPDATE GASB STATEMENT NO. 84 FIDUCIARY
ACTIVITIES
The objective of this Statement is to improve guidance regarding the identification of fiduciary activities
for accounting and financial reporting purposes and how those activities should be reported.
This Statement establishes criteria for identifying fiduciary activities of all state and local governments.
The focus of the criteria generally is on (1) whether a government is controlling the assets of the
fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria
are included to identify fiduciary component units and postemployment benefit arrangements that are
fiduciary activities. An activity meeting the criteria should be reported in a fiduciary fund in the basic
financial statements. Governments with activities meeting the criteria should present a statement of
fiduciary net position and a statement of changes in fiduciary net position. An exception to that
requirement is provided for a business-type activity that normally expects to hold custodial assets for
three months or less.
GASB Statement No. 84 describes four fiduciary funds that should be reported, if applicable: (1)
pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private-purpose trust
funds, and (4) custodial funds. Custodial funds generally should report fiduciary activities that are not
held in a trust or equivalent arrangement that meets specific criteria.
This Statement also provides for recognition of a liability to the beneficiaries in a fiduciary fund when
an event has occurred that compels the government to disburse fiduciary resources. Events that compel a
government to disburse fiduciary resources occur when a demand for the resources has been made or
when no further action, approval, or condition is required to be taken or met by the beneficiary to release
the assets.
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City of St. Joseph
Emerging Issues
ACCOUNTING STANDARD UPDATE GASB STATEMENT NO. 84 FIDUCIARY
ACTIVITIES (CONTINUED)
GASB Statement No. 84 is effective for reporting periods beginning after December 15, 2018. Earlier
application is encouraged.
Information provided above was obtained from www.gasb.org.
ACCOUNTING STANDARD UPDATE GASB STATEMENT NO. 87 LEASES
The objective of this Statement is to better meet the information needs of financial statement users by
improving accounting and financial reporting for leases by governments. This Statement increases the
liabilities for leases that previously were classified as operating leases and recognized as inflows of
resources or outflows of resources based on the payment provisions of the contract. It establishes a
single model for lease accounting based on the foundational principle that leases are financings of the
right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability
and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a
deferred inflow of resources, thereby enhancing the relevance and consistency of information about
sing activities.
(the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like
transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment. Any
contract that meets this definition should be accounted for under the leases guidance, unless specifically
excluded in this Statement.
A short-term lease is defined as a lease that, at the commencement of the lease term, has a maximum
possible term under the lease contract of 12 months (or less), including any options to extend, regardless
of their probability of being exercised. Lessees and lessors should recognize short-term lease payments
as outflows of resources or inflows of resources, respectively, based on the payment provisions of the
lease contract.
A lessee should recognize a lease liability and a lease asset at the commencement of the lease term,
unless the lease is a short-term lease or it transfers ownership of the underlying asset. The lease liability
should be measured at the present value of payments expected to be made during the lease term (less any
lease incentives). The lease asset should be measured at the amount of the initial measurement of the
lease liability, plus any payments made to the lessor at or before the commencement of the lease term
and certain direct costs. A lessee should reduce the lease liability as payments are made and recognize
an outflow of resources (for example, expense) for interest on the liability. The lessee should amortize
the lease asset in a systematic and rational manner over the shorter of the lease term or the useful life of
the underlying asset. The notes to financial statements should include a description of leasing
arrangements, the amount of lease assets recognized, and a schedule of future lease payments to be
made.
23
City of St. Joseph
Emerging Issues
ACCOUNTING STANDARD UPDATE GASB STATEMENT NO. 87 LEASES
(CONTINUED)
A lessor should recognize a lease receivable and a deferred inflow of resources at the commencement of
the lease term, with certain exceptions for leases of assets held as investments, certain regulated leases,
short-term leases, and leases that transfer ownership of the underlying asset. A lessor should not
derecognize the asset underlying the lease. The lease receivable should be measured at the present value
of lease payments expected to be received during the lease term. The deferred inflow of resources
should be measured at the value of the lease receivable plus any payments received at or before the
commencement of the lease term that relate to future periods. A lessor should recognize interest revenue
on the lease receivable and an inflow of resources (for example, revenue) from the deferred inflows of
resources in a systematic and rational manner over the term of the lease. The notes to financial
statements should include a description of leasing arrangements and the total amount of inflows of
resources recognized from leases.
GASB Statement No. 87 is effective for reporting periods beginning after December 15, 2019. Earlier
application is encouraged.
Information provided above was obtained from www.gasb.org.
24