Comprehensive Annual Financial Report 12/31/2004

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Mow lonw City of Lino Lakes, Minnesota Management's Discussion and Analysis December 31, 2004 FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS: As noted earlier, the City of Lino Lakes uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental Funds. The focus of the City of Lino Lakes' governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Lino Lakes' financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of Lino Lakes' governmental funds reported combined ending fund balances of $15,477,591, an increase of $23,013 over the previous year. Approximately 76% of this total amount, or $11,819,969, constitutes unreserved fund balance, which is available for spending at the government's discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed 1) to liquidate contracts and purchase orders of the prior period ($144,210), 2) to pay debt service ($2,556,300), or 3) to fund interfund advances ($957,112). The general fund is the chief operating fund of the City of Lino Lakes. At the end of the current fiscal year, unreserved fund balance of the general fund was $5,067,973, while the total fund balance was $5,210,465. As a measure of the general fund's liquidity, it may be useful to compare unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance. represents 75 percent of total general fund expenditures, while total fund balance represents 77 percent of that same amount. The fund balance of the City of Lino Lakes' general fund increased by $300,575 during the current fiscal year. Reasons for this increase include increased building activities which increased permit revenue, and increased collection of delinquent taxes, as well as reduced expenditures primarily for personal services and other services and charges. Overall, the general fund's revenues were slightly above the amended budget due primarily to the factors mentioned above, while expenditures were slightly below budgeted levels. The G.O. taxable improvement bonds 200B fund has a total fund balance of $503,628, all of which is reserved for the retirement of related debt. The net decrease of $18,167 in fund balance is the result of debt service payments. The dedicated parks fund has total deficit fund balance of ($669,450), the result of the purchase of land for a recreation complex in 1998. The net increase of $29,775 in fund balance is the direct result of increased park dedication fees. The area and unit charge fund has a total fund balance of $4,206,595, of which $957,112 is reserved for advances to other funds, and $3,249,483 is unreserved and available for financing capital improvements. The decrease in fund balance during the current year was $3,581,965 and was the result of funding infrastructure projects within the city and transfers for capital projects and for debt service payments. The municipal state aid fund has a total deficit fund balance of ($375,970), and an increase of $15,419 during the year. The increase in fund balance is primarily due project funding received from MnDOT. Proprietary funds. The City of Lino Lakes' proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. The water fund has total net assets of $12,720,946, of which $1,708,173 are unrestricted. The increase in _ net assets of $1,233,139 was due to contributions from private sources and an operating transfer from a capital projects fund.. 16