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CITY OF LINO LAKES, MINNESOTA
<br />MANAGEMENT'S DISCUSSION AND ANALYSIS
<br />December 31, 2011
<br />FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
<br />As noted earlier, the City of Lino Lakes uses fund accounting to ensure and demonstrate compliance with
<br />finance related legal requirements.
<br />Governmental Funds — The focus of the City of Lino Lakes' governmental funds is to provide information
<br />on near -term inflows, outflows, and balances of spendable resources. Such information is useful in
<br />assessing the City of Lino Lakes' financing requirements. GASB Statement 54, implemented for 2011,
<br />divides fund balances into five categories: Nonspendable, Restricted, Committed, Assigned and
<br />Unassigned. Definitions of these categories can be found in Note 1.0 in the Notes to the Financial
<br />Statements. In particular, unassigned fund balance may serve as a useful measure of a government's net
<br />resources available for unrestricted spending at the end of the fiscal year. Approximately 13% of the total
<br />fund balance amount, or $2,285,605, constitutes unassigned fund balance, which is available for
<br />spending at the government's discretion. The remainder of fund balance is not available for new
<br />spending because it has already been committed for other purposes. As of the end of the current fiscal
<br />year, the City of Lino Lakes' governmental funds reported combined ending fund balances of
<br />$16,933,540, a decrease of $4,232,807, or 20 %, from the previous year. This reduction is primarily due to
<br />expenditures for the construction of the interchange at I- 35E /CSAH14.
<br />The general fund is the primary operating fund of the City of Lino Lakes. At the end of the current fiscal
<br />year, unassigned fund balance of the general fund stood at $5,440,101, while the total fund balance was
<br />$5,605,180. As a measure of the general fund's liquidity, it may be useful to compare unassigned fund
<br />balance and total fund balance to total fund expenditures. Unassigned fund balance represents 64% of
<br />total general fund expenditures, while total fund balance represents 66% of that same amount.
<br />The fund balance of the City of Lino Lakes' general fund decreased by $21,625 during the current fiscal
<br />year, while the city budget anticipated the use of up to $300,000 of the general fund balance. Overall, the
<br />continued soft real estate market again resulted in reduced building activities this year which decreased
<br />permit revenue. Even as signs of economic recovery were being seen, the remaining effects of the
<br />recession also had an impact on property tax delinquencies. In addition, reduced expenditures, primarily
<br />for personal services through vacant positions, and contractual services offset the reduced revenues.
<br />— Overall, the general fund's revenues were within approximately 1.4% of the amended budget, while
<br />expenditures and transfers were 4.3% below budgeted levels.
<br />The G.O. improvement bonds 2005A fund has a total fund deficit of ($1,628,613). This fund is related to
<br />the bonds issued for the Legacy Woods Edge improvement project. The payment of debt service and
<br />delinquency in the collection of special assessments dedicated to this issue caused a significant
<br />decrease in this fund. An interfund loan from the Capital Improvements fund has aided in the payment of
<br />-- debt service for this issue.
<br />The Improvement Note 2009A fund, to service the debt issued to Anoka County as the City's financial
<br />commitment for the I -35E interchange project, ended the year with a fund balance of $491. This note was
<br />reduced during the year from the original $4,260,000 to $3,695,000 to reflect cost savings during the
<br />— contruction of this project.
<br />-- The 135E Interchange fund has a fund balance deficit at year -end of ($6,842), reduced significantly due
<br />to the construction activities.
<br />The area and unit charge fund has a total fund balance of $3,828,636, of which $578,641 is
<br />nonspendable due to advances to other funds, and $3,249,995 is assigned for financing capital
<br />improvements. The fund balance during the current year increased by $249,726, due in large part to the
<br />increased special assessment collections in 2011.
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