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CITY OF LINO LAKES, MINNESOTA
<br />MANAGEMENT'S DISCUSSION AND ANALYSIS
<br />DECEMBER 31, 2013
<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, divides fund balances into
<br />five categories: nonspendable, restricted, committed, assigned and unassigned. Definitions of these
<br />categories can be found in Note 1.0 in the Notes to the Financial Statements. In particular, unassigned
<br />fund balance may serve as a useful measure of a government's net resources available for unrestricted
<br />spending at the end of the fiscal year. Approximately 8% of the total fund balance amount, or $1,815,739,
<br />constitutes unassigned fund balance, which is available for spending at the government's discretion. The
<br />remainder of fund balance is not available for new spending because it is restricted or has already been
<br />committed or assigned for other purposes. As of the end of the current fiscal year, the City of Lino Lakes'
<br />governmental funds reported combined ending fund balances of $21,577,573, an increase of $53,472, or
<br />0.2%, from the previous year. This increase is primarily due to the receipt of special assessment
<br />prepayments for the Improvement Note 2009F fund.
<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 $5,209,286, while the total fund balance was
<br />$5,386,083. 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 and financing uses. Unassigned fund balance
<br />represents 61% of total general fund expenditures and financing uses, while total fund balance
<br />represents 63% of that same amount.
<br />The fund balance of the City of Lino Lakes' general fund increased by $152,266 during the current fiscal
<br />year, while the city budget anticipated the use of up to $129,947 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 helped to offset the reduced
<br />revenues. Overall, the general fund's revenues were within approximately 2% of the amended budget,
<br />while expenditures and transfers were 4% below budgeted levels.
<br />The G.O. improvement bonds 2005A fund has a total fund deficit of ($2,101,738). 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 2009F 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 $996,291, an
<br />increase of $995,800. The increase was directly due to the prepayment of a special assessment in 2013
<br />for this project. This note, which was originally in the amount of $4,260,000, was reduced in 2011 to the
<br />current amount of $3,695,000 to reflect cost savings during the contruction of this project.
<br />The Municipal State Aid fund, a capital projects fund used to finance reconstruction of state aid eligible
<br />streets, ended the year with a fund balance of $4,595,797. This fund received a large advance from the
<br />Minnesota Municipal State Aid in 2012 equal to the next five annual construction installments. These
<br />funds will be used over the next several years to pay debt service on the Tax Increment Bonds 2007A
<br />and the Improvement Notes 2009F, and for future MSA projects.
<br />The area and unit charge fund has a total fund balance of $4,170,051, all of which is assigned for
<br />financing capital improvements. The fund balance during the current year increased by $197,335, due in
<br />large part to the partial repayment of an interfund loan from the Dedicated Parks fund.
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