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MANAGEMENT'S DISCUSSION AND ANALYSIS
<br />As management of the City of Lino Lakes, Minnesota (the City), we offer readers of the
<br />City's financial statements this narrative overview and analysis of the financial activities of
<br />the City for the fiscal year ended December 31, 2019. We encourage readers to consider the
<br />information presented here in conjunction with additional information that we have furnished
<br />in our letter of transmittal, which can be found in the introductory section of this report.
<br />Financial Highlights
<br />The assets and deferred outflows of resources of the City exceeded its liabilities and deferred
<br />inflows ofresources at the close of the most recent fiscal year by $111,091,567 (net
<br />position). Of this amount, $33,877,263 (unrestricted net position) may be used to meet the
<br />City's ongoing obligations to citizens and creditors in accordance with the City's fund
<br />designations and fiscal policies.
<br />The City's total net position increased by $11,013,769.
<br />As of the close of the current fiscal year, the City's governmental funds reported combined
<br />ending fund balances of$30,223,529, a decrease of$3,031,672. Of this amount, $6,650,462
<br />is restricted by external constraints established by creditors, grantors, contributors, or by state
<br />statutory provisions.
<br />At the end of the current fiscal year, the general fund balance was $6,793,195. Unassigned
<br />fund balance for the general fund was $6,052,388, or 52% of total general fund expenditures
<br />and other financing uses.
<br />Total outstanding debt decreased by $2,426,540 during 2019. Certificates of indebtedness
<br />totaling $388,535 were issued, while regularly scheduled principal payments were made
<br />during the year.
<br />Overview of the Financial Statements
<br />This discussion and analysis is intended to serve as an introduction to the City's basic
<br />financial statements. The City's basic financial statements comprise three components: 1)
<br />government-wide financial statements, 2) fund financial statements, and 3) notes to the
<br />financial statements. This report also contains other supplementary information in addition
<br />to the basic financial statements themselves.
<br />Management's Discussion and Analysis
<br />Government-wide financial statements. The government-wide financial statements are
<br />designed to provide readers with a broad overview of the City's finances, in a manner similar
<br />to a private-sector business.
<br />The Statement of Net Position presents information on all of the City's assets and liabilities,
<br />with the difference between the two reported as net position. Over time, increases or
<br />decreases in net position may serve as a useful indicator of whether the financial position of
<br />the City is improving or deteriorating.
<br />The Statement of Activities presents information showing how the City's net position
<br />changed during the most recent fiscal year. All changes in net position are reported as soon
<br />as the underlying event giving rise to the change occurs, regardless of the timing of related
<br />cash flows. Thus, revenues and expenses are reported in this statement for some items that
<br />will only result in cash flows in future fiscal periods ( e.g. uncollected taxes and earned but
<br />unused vacation leave).
<br />Both of the government-wide financial statements distinguish functions of the City that are
<br />principally supported by taxes and intergovernmental revenues (governmental activities)
<br />from other functions that are intended to recover all or a significant portion of their costs
<br />through user fees and charges (business-type activities). The governmental activities of the
<br />City include general government, public safety, public services, conservation of natural
<br />resources and community development. The business-type activities of the City include a
<br />water utility and sewer utility.
<br />The government-wide financial statements are statements I and 2 of this report.
<br />Fund Financial statements. A fund is a grouping of related accounts that is used to
<br />maintain control over resources that have been segregated for specific activities or objectives.
<br />The City, like other state and local governments, uses fund accounting to ensure and
<br />demonstrate compliance with finance-related legal requirements. All of the funds of the City
<br />can be divided into two categories: governmental funds and proprietary funds.
<br />Governmental funds. Governmental funds are used to account for essentially the same
<br />functions reported as governmental activities in the government-wide financial statements.
<br />However, unlike the government-wide financial statements, governmental fund financial
<br />statements focus on near-term inflows and outflows of spendable resources, as well as on
<br />balances of spendable resources available at the end of the fiscal year. Such information may
<br />be useful in evaluating a government's near-term financial requirements.
<br />Because the focus of governmental funds is narrower than that of the government-wide
<br />financial statements, it is useful to compare the information presented for governmental
<br />funds wi!h similar information presented for governmental activities in the government-wide
<br />financial statements. By doing so, readers may better understand the long-term impact of the
<br />City's near-term financial decisions. Both the governmental fund balance sheet and
<br />governmental fund statement of revenues, expenditures and change in fund balance provide a IV-3
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