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MOP <br />ARNE H. CARLSON <br />STATE AUDITOR <br />STATE OF MINNESOTA <br />OFFICE OF THE STATE AUDITOR <br />SUITE 400 <br />525 PARK STREET <br />SAINT PALL 55103 <br />MINNESOTA FINANCIAL HEALTH PROGRAM <br />- A Synopsis - <br />The problems which create fiscal difficulties seldom emerge <br />overnight; rather, they develop slowly, thus making potential <br />difficulties less obvious. <br />- Is Your City Heading For Financial Difficulty? <br />Municipal Finance Officers Association, 1978 <br />296.2553 <br />Cities and counties in Minnesota have faced a number of factors to the '80's <br />which necessitated constant monitoring of their financial situations by elected <br />officials and community residents. High inflation in the early '80's has given <br />way to low inflation in the past few years. Intergovernmental revenues for <br />cities (funds from the federal, state and county governments) continue the <br />decline that started in the early '80's. Federal revenue sharing was discon- <br />tinued in 1986. <br />In addition to factors that influence the state as a whole, regional influences <br />have taken their toll. While the 7- county metro area, which Includes <br />Minneapolis and St. Paul, has remained strong, the mining- and farm- dependent <br />areas are feeling the stress associated with declining market values, increasing <br />unemployment and greater needs for welfare, health and social service programs. <br />The Office of State Auditor designed the Minnesota Financial Health Program <br />(MFHP) in 1980 to assist city and county government officials and community <br />residents in monitoring statewide and regional fiscal stress influences. The <br />MFHP then provides needed help in resolving financial problems. <br />The MFHP currently includes all 87 Minnesota counties and 180 cities with <br />populations of 2,500 or more as of the 1980 census. These cities and counties <br />prepare annual financial statements in conformity with Generally Accepted <br />Accounting Principles (GAAP) and use the Uniform Chart of Accounts, developed by <br />the Office of State Auditor. There are, however, 188 cities with populations of <br />less than 2,500 which, for the last two years, have elected to prepare annual <br />financial statements in accordance with GAAP. These cities are being reviewed <br />for possible addition to the MFHP data base in 1988. If added, the size of the <br />program will nearly double. <br />Five major fiscal trends have been identified in this program. By analyzing key <br />financial indicators for five -year periods, it is possible to establish trends <br />and patterns. It is from these statistics that interpretations of each local <br />unit's financial health can be determined. <br />AN EQUAL OPPORTUNITY EMPLOYER <br />